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What changed in Stanley Black & Decker's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Stanley Black & Decker's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+427 added−492 removedSource: 10-K (2023-02-23) vs 10-K (2022-02-22)

Top changes in Stanley Black & Decker's 2023 10-K

427 paragraphs added · 492 removed · 312 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

67 edited+19 added−27 removed26 unchanged
Biggest changeThe Company plans to continue leveraging Operations Excellence to generate ongoing improvements, both in the existing business and future acquisitions, in working capital turns, cycle times, complexity reduction and customer service levels, with a long-term goal of delivering 10+ working capital turns.
Biggest changeAs a result of this focus, inventory as of December 31, 2022 was $5.9 billion, down $775 million from its peak at the end of the second quarter of 2022. The Company plans to continue leveraging Operations Excellence to generate ongoing improvements in working capital turns, cycle times, complexity reduction and customer service levels.
ITEM 1. BUSINESS Stanley Black & Decker, Inc. ("the Company") was founded in 1843 by Frederick T. Stanley and incorporated in Connecticut in 1852. In March 2010, the Company completed a merger ("the Merger") with The Black & Decker Corporation (“Black & Decker”), a company founded by S. Duncan Black and Alonzo G. Decker and incorporated in Maryland in 1910.
ITEM 1. BUSINESS Stanley Black & Decker, Inc. ("the Company") was founded in 1843 by Frederick T. Stanley and incorporated in Connecticut in 1852. In March 2010, the Company completed a merger with The Black & Decker Corporation (“Black & Decker”), a company founded by S. Duncan Black and Alonzo G. Decker and incorporated in Maryland in 1910.
Professional products include professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers and staples, concrete and masonry anchors.
Professional products include professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers and staples, and concrete and masonry anchors.
Refer to Item 1A. Risk Factors in Part I of this Form 10-K for additional information regarding various laws and regulations that affect the Company's business operations. The Company is also subject to various environmental laws and regulations in the U.S. and foreign countries where it has operations.
Refer to Item 1A. Risk Factors in Part I of this Form 10-K for additional information regarding various laws and regulations that affect the Company's business operations. 6 The Company is also subject to various environmental laws and regulations in the U.S. and foreign countries where it has operations.
The Company also has an emphasis on university recruiting at historically black colleges and universities and professional associations such as the Society of Hispanic Professional Engineers to expand its reach to identify diverse candidates.
The Company also has placed an emphasis on university recruiting at historically black colleges and universities and professional associations, such as the Society of Hispanic Professional Engineers, to expand its reach to identify diverse candidates.
In the Tools & Storage segment, significant trademarks include STANLEY®, BLACK+DECKER®, DEWALT®, FLEXVOLT®, IRWIN®, LENOX®, CRAFTSMAN®, PORTER-CABLE®, BOSTITCH®, FATMAX®, Powers®, Guaranteed Tough®, MAC TOOLS®, PROTO®, Vidmar®, FACOM®, Expert®, LISTA®, MTD®, CUB CADET®, TROY-BILT®, HUSTLER®, and the yellow & black color scheme for power tools and accessories.
In the Tools & Outdoor segment, significant trademarks include STANLEY®, BLACK+DECKER®, DEWALT®, FLEXVOLT®, IRWIN®, LENOX®, CRAFTSMAN®, PORTER-CABLE®, BOSTITCH®, FATMAX®, Powers®, Guaranteed Tough®, MAC TOOLS®, PROTO®, Vidmar®, FACOM®, Expert®, LISTA®, MTD®, CUB CADET®, TROY-BILT®, HUSTLER®, and the yellow & black color scheme for power tools and accessories.
The Outdoor business primarily sells corded and cordless electric lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, pressure washers and related accessories, and gas powered lawn and garden products, including lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, utility terrain vehicles (UTVs), handheld outdoor power equipment, garden tools, and parts and accessories to professionals and consumers under the DEWALT®, CUB CADET®, BLACK+DECKER®, CRAFTSMAN®, TROY-BILT®, and HUSTLER® brand names.
The Outdoor business primarily sells corded and cordless electric lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, pressure washers and related accessories, and gas powered lawn and garden products, including lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, utility terrain vehicles (UTVs), hand-held outdoor power equipment, garden tools, and parts and accessories to professionals and consumers under the DEWALT®, CUB CADET®, BLACK+DECKER®, CRAFTSMAN®, TROY-BILT®, and HUSTLER® brand names.
The Company owns numerous patents, none of which individually is material to the Company's 5 operations as a whole. These patents expire at various times over the next 20 years. The Company holds licenses, franchises and concessions, none of which individually or in the aggregate are material to the Company's operations as a whole.
The Company owns numerous patents, none of which individually are material to the Company's operations as a whole. These patents expire at various times over the next 20 years. The Company holds licenses, franchises and concessions, none of which individually or in the aggregate are material to the Company's operations as a whole.
Industrial The Industrial segment is comprised of the Engineered Fastening and Infrastructure businesses. Annual revenues in the Industrial segment were $2.5 billion in 2021, representing 16% of the Company’s total revenues. The Engineered Fastening business primarily sells highly engineered components such as fasteners, fittings and various engineered products, which are designed for specific application across multiple verticals.
Industrial The Industrial segment is comprised of the Engineered Fastening and Infrastructure businesses. Annual revenues in the Industrial segment were $2.5 billion in 2022, representing 15% of the Company’s total revenues. The Engineered Fastening business primarily sells highly engineered components such as fasteners, fittings and various engineered products, which are designed for specific application across multiple verticals.
All reportable segments have significant international operations and are exposed to translational and transactional impacts from fluctuations in foreign currency exchange rates.
Both reportable segments have significant international operations and are exposed to translational and transactional impacts from fluctuations in foreign currency exchange rates.
As of January 1, 2022, the Company has recorded $16.1 million in other assets related to funding by the Environmental Protection Agency ("EPA") and monies received have been placed in trust in accordance with the Consent Decree associated with the West Coast Loading Corporation ("WCLC") proceedings, as further discussed in Note S, Contingencies , of the Notes to Consolidated Financial Statements in Item 8 .
As of December 31, 2022, the Company has recorded $16.4 million in other assets related to funding by the Environmental Protection Agency ("EPA") and monies received have been placed in trust in accordance with the Consent Decree associated with the West Coast Loading Corporation ("WCLC") proceedings, as further discussed in Note S, Contingencies , of the Notes to Consolidated Financial Statements in Item 8 .
Health and safety requirements apply to all employees and operating unit locations worldwide, including all manufacturing facilities, distribution centers, warehouses, field service centers, retail, office locations and mobile units, as well as to the Company's subsidiaries and joint ventures (in which the Company exercises decision making control over operations).
EHS requirements apply to all employees and operating locations worldwide, including all manufacturing facilities, distribution centers, warehouses, laboratories, field service centers, retail locations, office locations and mobile units, as well as to the Company's subsidiaries and joint ventures (in which the Company exercises decision-making control over operations).
Excel is a strategically important bolt-on acquisition that bolsters the presence in the independent dealer network. The CAM acquisition further diversified the Company's presence in the industrial markets and expanded its portfolio of specialty fasteners in the aerospace and defense markets.
Excel was a strategically important bolt-on acquisition that bolstered the Company's presence in the independent dealer network. The CAM acquisition further diversified the Company's presence in the industrial markets and expanded its portfolio of specialty fasteners in the aerospace and defense markets.
Lowe's accounted for approximately 15%, 17% and 17% of the Company's consolidated net sales in 2021, 2020 and 2019, respectively, while The Home Depot accounted for approximately 15%, 14% and 12% of the Company's consolidated net sales in 2021, 2020 and 2019, respectively. No other customer exceeded 10% of the Company's consolidated net sales in 2021, 2020 or 2019.
Lowe's accounted for approximately 15%, 15% and 17% of the Company's consolidated net sales in 2022, 2021 and 2020, respectively, while The Home Depot accounted for approximately 13%, 15% and 14% of the Company's consolidated net sales in 2022, 2021 and 2020, respectively. No other customer exceeded 10% of the Company's consolidated net sales in 2022, 2021 or 2020.
The Company’s Environmental, Health and Safety (“EHS”) Management System Plan describes the core elements of health and safety responsibility and accountability, including policies and procedures, designed in alignment with global standards, the Company’s Code of Business Ethics, applicable law and individual facility needs.
The Company’s Environmental, Health and Safety (“EHS”) Management System Plan describes the core elements of EHS responsibility and accountability, including policies and procedures that are designed in alignment with global standards, the Company’s Code of Business Ethics, applicable laws and individual facility needs.
There were approximately 1,500 U.S. employees covered by collective bargaining agreements dispersed among 28 different local labor unions, and a majority of European employees are represented by Works Councils. Six U.S. collective bargaining agreements are scheduled for renegotiation in the next 12 months.
There were approximately 1,000 U.S. employees covered by collective bargaining agreements dispersed among 9 different local labor unions, and a majority of European employees are represented by Works Councils. Two U.S. collective bargaining agreements are scheduled for renegotiation in the next 12 months.
The Company launched a racial equity roadmap in 2020 with ten actions to confront racism and social injustice throughout its communities and across the world, which includes specific goals across culture, career, and community focus areas. Each of the ten items were initiated in 2021. Through the RISE (Reach. Inspire. Support.
The Company launched a racial equity roadmap in 2020 with ten actions to confront racism and social injustice throughout its communities and across the world, which includes specific goals across culture, career, and community focus areas. Each of the ten items were initiated in 2021 and the focus continued in 2022.
Refer to Note E, Acquisitions and Investments, and Note T, Divestitures , of the Notes to Consolidated Financial Statements in Item 8 for further discussion. The Company’s growth and acquisition strategy is interdependent with its social responsibility strategy focused on workforce upskilling, product innovation, and environmental preservation including mitigating the impacts of climate change.
Refer to Note E, Acquisitions and Investments, and Note T, Divestitures , of the Notes to Consolidated Financial Statements in Item 8 for further discussion. 3 The Company’s business strategy is interdependent with its social responsibility strategy that encompasses workforce upskilling, product innovation, and environmental preservation, including mitigating the impacts of climate change.
As of January 1, 2022 and January 2, 2021, the Company had reserves of $159.1 million and $174.2 million, respectively, for remediation activities associated with Company-owned properties, as well as for Superfund sites, for losses that are probable and estimable.
As of December 31, 2022 and January 1, 2022, the Company had reserves of $129.3 million and $159.1 million, respectively, for remediation activities associated with Company-owned properties, as well as for Superfund sites, for losses that are probable and estimable.
The CDO, with the support of a dedicated team of diversity, equity, and inclusion (“DEI”) professionals, intends to promote a broad approach to DEI with the goal of accelerating Company performance, optimizing organizational culture, enhancing transparency, and strengthening accountability.
The Chief Diversity Officer (“CDO”), with the support of a dedicated team of diversity, equity, and inclusion (“DEI”) professionals, promotes a broad approach to DEI with the goal of accelerating Company performance, optimizing organizational culture, enhancing transparency, and strengthening accountability.
The 7 Company’s People Analytics team has built an interactive cloud-based organizational portal that provides leaders with over 30 metrics related to headcount, hiring, and retention to enhance insight from people data and add new dimensions of forward looking, predictive capability.
The Company’s Human Resources ("HR") data team shared an interactive cloud-based organizational portal that provides certain leaders with over 30 metrics related to headcount, hiring, and retention to enhance insight from people data and add new dimensions of forward-looking, predictive capability.
While this consolidation and the domestic and international expansion of these large retailers have provided the Company with opportunities for growth, the increasing size and importance of individual customers creates a certain degree of exposure to potential sales volume loss.
A consolidation of retailers both in North America and abroad has occurred over time. While this consolidation and the domestic and international expansion of these large retailers have provided the Company with opportunities for growth, the increasing size and importance of individual customers creates a certain degree of exposure to potential sales volume loss.
The Company offers over 30,000 training courses to its colleagues, and employees attended more than 25,000 hours of online voluntary learning in 2021. Additionally, the Company focuses on leadership development anchored around its Leader Principles, Values and newly introduced leader habits and behaviors that highlight the importance of attributes like empathy, inclusivity and listening.
The Company offers over 50,000 training courses to its colleagues, and employees attended more than 40,000 hours of online voluntary learning in 2022. Additionally, the Company focuses on leadership development anchored around its Leadership Principles and Values, while promoting leadership habits and behaviors that highlight the importance of attributes like empathy, inclusivity and listening.
DEI quarterly reviews are completed by management to increase diverse representation at all levels of the organization by: 1) creating consistent visibility to employee demographic data and trends, 2) highlighting female and racially diverse talent, and 3) increasing leadership accountability for creating a diverse and inclusive workplace.
DEI reviews are regularly completed by management to increase diverse representation at all levels of the organization by 1) creating consistent visibility to employee demographic data and trends, 2) highlighting women and racially diverse talent, and 3) increasing leadership accountability for creating a diverse and inclusive workplace. The Company provides training and guidance to employees including inclusive workforce modules.
Accordingly, the Company's net cash obligation as of January 1, 2022 associated with the aforementioned remediation activities is $143.0 million. The range of environmental remediation costs that is reasonably possible is $93.7 million to $229.3 million, which is subject to change in the near term. The Company may be liable for environmental remediation of sites it no longer owns.
Accordingly, the Company's net cash obligation as of December 31, 2022 associated with the aforementioned remediation activities is $112.9 million. The range of environmental remediation costs that is reasonably possible is $58.5 million to $220.1 million, which is subject to change in the near term. The Company may be liable for environmental remediation of sites it no longer owns.
Each year, the Company conducts an extensive talent review with its CEO where the leadership team, key talent, succession plans and new investments are reviewed. Afterwards, the CEO, CHRO, and Chief Talent Officers lead a talent review with the Compensation & Talent Development Committee of the Board and the entire membership of the Board, at least annually.
Each year, the Company conducts an extensive talent review with its CEO where the leadership team, key talent, and succession plans are 9 reviewed. Afterwards, the CEO or CHRO leads a talent review with the Compensation & Talent Development Committee of the Board and the entire membership of the Board, at least annually. Refer to Item 10.
The Company strives to maintain a positive relationship with all its employees, as well as the unions and works councils representing them, where applicable. Talent Attraction, Development, and Retention Attraction In 2021, the Company invested in its employer of choice branding and specialty recruiting.
The Company strives to maintain a positive relationship with all its employees, as well as the unions and Works Councils representing them, where applicable. Talent Attraction, Development, and Retention 7 Attraction In 2022, the Company invested in expanding its employer of choice branding and building out a global talent acquisition center of excellence.
The Company's CEO was among the signatories of the CEO Action for Diversity & Inclusion. 8 Employee Wellness, Health and Safety The Company is committed to providing competitive benefits to attract and retain talent, that vary by country, including benefits and programs to support the broad wellness of its employees’ healthy lifestyles, mental health, and retirement readiness.
Employee Wellness, Health and Safety The Company is committed to providing competitive benefits to attract and retain talent, which vary by country, including benefits and programs to support the broad wellness of its employees’ healthy lifestyles, mental health, and retirement readiness.
The CEO and more than 75% of his direct staff also serve as an executive sponsor for one or more ERGs providing executive sponsorship and support, which serve as one of the cornerstones for inclusion and engagement of talent at scale.
The CEO and direct staff also provide executive sponsorship and support for one or more ERGs, which serves as one of the cornerstones for inclusion and engagement of talent at scale.
Working Capital The Company continues to practice the five operating principles encompassed by Operations Excellence, one element of the SBD Operating Model, which work in concert: sales and operations planning, operational lean, complexity reduction, global supply management, order-to-cash excellence, the application of Industry 4.0 and upskilling the Company's workforce.
Working Capital The Company continues to practice the operating principles encompassed by Operations Excellence, one element of the SBD Operating Model, which work in concert: sales and operations planning, operational lean, complexity reduction, global supply management, order-to-cash excellence, and upskilling the Company's workforce. The Company develops standardized business processes and system platforms to reduce costs and provide scalability.
Additional information regarding the Company’s business segments and geographic areas is incorporated herein by reference to the material captioned “ Business Segment Results ” in Item 7 and Note P, Business Segments and Geographic Areas , of the Notes to Consolidated Financial Statements in Item 8 .
Additional information regarding the Company’s business segments and geographic areas is incorporated herein by reference to the material captioned “ Business Segment Results ” in Item 7 and Note P, Business Segments and Geographic Areas , of the Notes to Consolidated Financial Statements in Item 8 . 4 Tools & Outdoor The Tools & Outdoor segment is comprised of the Power Tools Group ("PTG"), Hand Tools, Accessories & Storage ("HTAS"), and Outdoor Power Equipment ("Outdoor") businesses.
The Chief Executive Officer (“CEO”) and his direct staff are comprised of 36% female leaders versus 27% in 2020, and 36% racially or ethnically diverse leaders versus 20% in 2020. Females represent approximately 33% of the global workforce versus 31% in 2020. In the U.S., approximately 34% of employees are racially or ethnically diverse versus 33% in 2020.
The Chief Executive Officer (“CEO”) and his direct staff are comprised of 42% women leaders, versus 36% in 2021, and 25% racially or ethnically diverse leaders versus 36% in 2021. Women represent approximately 35% of the Company's global workforce versus 33% in 2021. In the U.S., approximately 35% of employees are racially or ethnically diverse versus 34% in 2021.
These ERGs are formed around various dimensions of diversity and participation across groups is encouraged. The ERGs include Abilities (including cognitive, social-emotional, and physical abilities), African Ancestry, Asian Heritage, Hispanic/Latino, Developing Professionals, Pride & Allies (LGBTQ+), Veterans, Women, and Working Parents. Company executives and leaders actively participate, sponsor and engage with the ERGs.
These ERGs are formed around various dimensions of diversity and are open to all employees. The ERGs include Abilities (visible and invisible abilities), African Ancestry, Asian Heritage, Hispanic/Latino/Latinx, Developing Professionals, Pride & Allies (LGBTQ+), Veterans, Women, and Working Parents. Company executives and leaders actively participate, sponsor and engage with the ERGs.
Of the 2021 amount, $46.1 million is classified as current and $113.0 million as long-term, which is expected to be paid over the estimated remediation period.
Of the 2022 amount, $39.4 million is classified as current and $89.9 million as long-term, which is expected to be paid over the estimated remediation period.
The MAS business primarily sells automatic doors to commercial customers. Products are sold predominantly on a direct sales basis. Other Information Competition The Company competes on the basis of its reputation for product quality, its well-known brands, its commitment to customer service, its strong customer relationships, the breadth of its product lines, its innovative products and customer value propositions.
The products and services are primarily distributed through a direct sales force and, to a lesser extent, third-party distributors. Other Information Competition The Company competes on the basis of its reputation for product quality, its well-known brands, its commitment to customer service, its strong customer relationships, the breadth of its product lines, its innovative products and customer value propositions.
Refer to section "Human Capital Management" for additional information regarding the Company's commitment to upskilling its employees and improving diversity, equity and inclusion. Description of the Business The Company’s operations are classified into two reportable business segments: Tools & Storage and Industrial. The Company has one non-reportable business operating segment, Mechanical Access Solutions ("MAS").
Refer to the "Human Capital Management" section in this Item 1 below for additional information regarding the Company's commitment to supporting its employees and improving diversity, equity and inclusion. Description of the Business The Company’s operations are classified into two reportable business segments: Tools & Outdoor and Industrial.
Approximately 37% of total employees were employed in the U.S. In addition, the Company had approximately 10,400 temporary contractors globally, primarily in operations. The workforce is comprised of approximately 69% hourly-paid employees, principally in manufacturing, distribution centers and security monitoring operations, and 31% salaried employees.
As of December 31, 2022, the Company had approximately 54,200 employees in 59 countries. Approximately 35% of total employees were employed in the U.S. In addition, the Company had approximately 5,700 temporary contractors globally, primarily in operations. The workforce is comprised of approximately 72% hourly-paid employees, principally in manufacturing and distribution centers, and 28% salaried employees.
The business sells to customers in the automotive, manufacturing, electronics, construction, and aerospace industries, amongst others, and its products are distributed through direct sales forces and, to a lesser extent, third-party distributors. The Infrastructure business consists of the Attachment Tools and Oil & Gas product lines.
The business sells to customers in the automotive, manufacturing, electronics, construction, and aerospace industries, amongst others, and its products are distributed through a direct sales force and, to a lesser extent, third-party distributors. The Infrastructure business sells hydraulic tools and high quality, performance-driven heavy equipment attachment tools for off-highway applications.
Diversity, Equity & Inclusion The Company is committed to building and nurturing an inclusive culture of passion and belonging where employees feel valued, heard, and are positioned to succeed. As of January 1, 2022, the Company's Board of Directors (the “Board”) is comprised of 36% female and 9% racially or ethnically diverse directors.
Diversity, Equity & Inclusion The Company is committed to building and nurturing an inclusive culture of passion and belonging where employees feel valued and heard, and are positioned to succeed.
A copy of the Company's most recently filed Equal Employment Opportunity report to the U.S. government (EEO-1) can be found on the Company’s website. In early 2021, the Chief Diversity Officer (“CDO”) position was created and added to the CEO’s direct reports.
A copy of the Company's most recently filed Equal Employment Opportunity report to the U.S. government (EEO-1) can be found on the Company’s website.
The Company is a signatory of Paradigm for Parity committing to addressing the gender gap in corporate leadership. The Company also participates in the Business Roundtable Diversity & Inclusion Index, where many of the largest U.S.-based employers are committed to building a more inclusive environment.
The Company also participates in the Business Roundtable, where many of the largest U.S.-based employers are committed to building a more inclusive environment. The Company was also among the signatories of the CEO Action for Diversity & Inclusion initiative.
The reduction in spending in 2020 versus 2019 was primarily due to the temporary cost actions taken in response to COVID-19. 9 Available Information The Company’s website is located at http://www.stanleyblackanddecker.com. This URL is intended to be an inactive textual reference only. It is not intended to be an active hyperlink to the Company's website.
Available Information The Company’s website is located at http://www.stanleyblackanddecker.com. This URL is intended to be an inactive textual reference only. It is not intended to be an active hyperlink to the Company's website.
The information on the Company's website is not, and is not intended to be, part of this Form 10-K and is not incorporated into this report by reference.
Additional information regarding the Company's Human Capital programs and initiatives is available in the Company's Environmental, Social and Governance Report located under the "Impact" heading of the Company’s website. The information on the Company’s website is not, and is not intended to be, part of this Form 10-K and is not incorporated into this report by reference.
The Company is a diversified global provider of hand tools, power tools, outdoor products and related accessories, engineered fastening systems and products, services and equipment for oil & gas and infrastructure applications, and automatic doors, with 2021 consolidated annual revenues of $15.6 billion.
The Company is a global provider of hand tools, power tools, outdoor products and related accessories, as well as a leading provider of engineered fastening solutions and attachment tools for infrastructure applications, with 2022 consolidated annual revenues of $16.9 billion.
("MTD") for approximately $1.5 billion, Excel Industries ("Excel") for approximately $374 million, Consolidated Aerospace Manufacturing, LLC ("CAM") for approximately $1.4 billion, and International Equipment Solutions Attachments Group ("IES Attachments") for approximately $654 million. The MTD acquisition expands the Company's presence in the $25 billion and growing outdoor category, with strong brands and growth opportunities.
In recent years, the Company completed the acquisitions of the remaining 80 percent ownership stake of MTD Holdings Inc. ("MTD") for $1.5 billion, Excel Industries ("Excel") for $374 million, and Consolidated Aerospace Manufacturing, LLC ("CAM") for $1.4 billion. The MTD acquisition expanded the Company's presence in the $25 billion and growing outdoor category, with strong brands and growth opportunities.
The Company also supports its employees and promotes work/life balance through benefits such as paid parental leave, paid time off, flexible work arrangement and virtual/hybrid working model policies.
The Company also supports its employees and promotes work/life balance through benefits such as paid parental leave, paid time off, flexible work arrangements and virtual/hybrid working model policies. In 2022, the Company continued its commitment to navigating through the COVID-19 pandemic with employee health and safety as a non-negotiable, foundational priority.
Significant trademarks in the Industrial segment include STANLEY®, CRC®, NELSON®, LaBounty®, Dubuis®, CribMaster®, POP®, Avdel®, Heli-Coil®, Tucker®, NPR®, Spiralock®, PALADIN®, CAM®, Bristol Industries®, Voss™, Aerofit™, EA Patten™, Integra®, Optia®, PENGO® and STANLEY® Assembly Technologies. The MAS segment includes significant trademarks such as STANLEY® and Stanley Access Technologies™.
Significant trademarks in the Industrial segment include STANLEY®, NELSON®, LaBounty®, Dubuis®, CribMaster®, POP®, Avdel®, Tucker®, NPR®, Spiralock®, PALADIN®, CAM®, Bristol Industries®, Voss™, Aerofit™, EA Patten™, Integra®, Optia®, PENGO® and STANLEY® Assembly Technologies. The terms of these trademarks typically vary from 10 to 20 years, with most trademarks being renewable indefinitely for like terms.
With a focus on critical skills, up-skilling initiatives, and future career opportunities across its operations workforce, the Company is educating and developing the workforce together with advancements in manufacturing capabilities. Retention The Company monitors organizational health through a variety of channels including employee opinion surveys, townhalls, roundtables, listening sessions, and an internal communications and social collaboration platform called Workplace.
Retention The Company monitors organizational health through a variety of channels including employee opinion surveys, townhalls, roundtables, listening sessions, and an internal communications and social collaboration platform called Workplace.
The Company does not anticipate difficulties in obtaining supplies for any raw materials or energy used in its production processes.
The Company does not anticipate difficulties in obtaining supplies for any raw materials used in its production processes and has taken proactive measures to secure energy supply in its European factories to insulate the Company's production from supply constraints in the region.
Research and Development Costs Research and development costs, which are classified in Selling, general and administrative ("SG&A"), were $276.3 million, $200.0 million and $240.8 million for fiscal years 2021, 2020 and 2019, respectively.
Research and Development Costs Research and development costs, which are classified in Selling, general and administrative ("SG&A"), were $357.4 million, $276.3 million and $200.0 million for fiscal years 2022, 2021 and 2020, respectively. The Company continues to invest in its innovation model with both breakthrough and core innovations and places an emphasis on electrification.
The Company encounters active competition in the Tools & Storage and Industrial segments from both larger and smaller companies that offer the same or similar products and services. Certain large customers offer private label brands (“house brands”) that compete across a wide spectrum of the Company’s Tools & Storage segment product offerings.
The Company encounters active competition in the Tools & Outdoor and Industrial segments from both larger and smaller companies that offer the same or similar products and services or that produce different products appropriate for the same uses.
Mentorship programs have been created to grow the next generation of talent at the Company by pairing employee resource groups (“ERGs”) leadership, women, people of color, and early career talent with the Company’s leaders to encourage leadership development and mentor allyship.
An internal knowledge library of DEI resources is available on the Company intranet. Mentorship programs cultivate talent at the Company by pairing women, people of color, early career talent and DEI leadership development program participants with the Company’s leaders to influence leadership growth and mentor allyship. The Company has nine Employee Resource Groups ("ERGs") and two regional inclusion councils.
However, laws and regulations may be changed, accelerated or adopted that impose significant operational restrictions and compliance requirements upon the Company and which could negatively impact its operating results and financial condition. 6 Human Capital Management At Stanley Black & Decker, human capital management proliferates what the Company considers to be its Purpose (why the organization exists), Values (intrinsically important priorities), Leadership Principles (how the senior leadership thinks about problems and people), and Operating Model (the long-term plan of action and priorities).
However, laws and regulations may be changed, accelerated or adopted that impose significant operational restrictions and compliance requirements upon the Company and which could negatively impact its operating results and financial condition. Human Capital Management Stanley Black & Decker has a strategic vision to grow as an employer of choice with leading market positions in each of its major categories.
Engage.) Community program the Company provides Scholar students access to expanded experiential learning beyond their classrooms. The Company’s mission is to help its RISE Scholars discover their passions, expose them to business, technology, potential STEM career opportunities, and help to develop them as leaders.
The Company’s mission is to help its RISE scholars discover their passions, expose them to business, technology, STEM career opportunities and help to develop them as leaders. The Company is a signatory of the Paradigm for Parity coalition, which is committed to addressing the gender gap in corporate leadership.
In 2021, the CHRO presented a 3-year strategic plan to the Executive Committee and the Board on human capital and talent strategies. Code of Business Ethics, Workplace Harassment Prevention, and Managing Unconscious Bias training, among others, are provided to employees and the content is regularly reviewed and updated.
Directors, Executive Officers and Corporate Governance of the Registrant in Part III of this Form 10-K for additional information regarding the Company's Executive Officers. Code of Business Ethics, Workplace Harassment Prevention, and Managing Unconscious Bias training, among others, are provided to employees and the content is regularly reviewed and updated.
Approximately 37% of global new hires in 2021 were female, inclusive of recently acquired businesses, versus 35% in 2020, and in the U.S. approximately 45% of new employees were racially or ethnically diverse, inclusive of recently acquired businesses, versus 47% in 2020.
Approximately 39% of global new hires in 2022 were women versus 37% in 2021, and in the U.S. approximately 39% of new employees were racially or ethnically diverse versus 45% in 2021. Development Talent development is a key enabler of the People & Culture pillar of the Company's Focus Forward strategy.
Through December 2021, the Company reported a TRIR of 0.65, a LTIR of 0.22 and zero work-related fatalities. Reported total workforce numbers include employees and supervised contractors. Governance and Oversight The CEO and the management Executive Committee are entrusted with developing and advancing the Company’s human capital strategy which is reviewed annually with periodic updates on progress with the Board.
Legal requirements and responses may vary in the different countries in which the Company’s facilities are located. Governance and Oversight The CEO and the management Executive Committee are entrusted with developing and advancing the Company’s human capital strategy which is reviewed annually with periodic updates on progress with the Board.
These are core business issues that ensure the long-term viability of the Company, its customers, suppliers, and communities.
These are core business areas that ensure the long-term viability of the Company, its customers, suppliers, employee base, and communities. In 2017, the Company established an environmental, social, and corporate governance ("ESG") strategy to drive positive impact for people, products, and the planet.
Major Customers A significant portion of the Company’s Tools & Storage products are sold to home centers and mass merchants in the U.S. and Europe. A consolidation of retailers both in North America and abroad has occurred over time.
Certain large customers offer private label brands (“house brands”) that compete across a wide spectrum of the Company’s Tools & Outdoor segment product offerings. Major Customers 5 A significant portion of the Company’s Tools & Outdoor products are sold to home centers and mass merchants in the U.S. and Europe.
The Company is continuing to execute initiatives across the global workforce designed to foster an inclusive workplace and facilitate equitable career development opportunities. The Company provides training and guidance to employees regarding diversity, including inclusive workforce training and DEI training for new hires. An internal knowledge library of DEI resources is available on the Company intranet.
The Company is continuing to execute initiatives across the global workforce designed to foster an inclusive workplace and facilitate equitable career development opportunities. 8 Management monitors hiring, retention, promotion and continued progress toward achieving the Company's DEI goals.
In May 2019, the Company sold its Sargent and Greenleaf mechanical locks business for net proceeds of $79 million. The Company has also divested several smaller businesses in recent years that did not fit into its long-term strategic objectives. These divestitures allowed the Company to invest in other areas of the Company that fit into its long-term growth strategy.
In October 2020, the Company sold a product line in Oil & Gas within the Industrial segment. The Company has also divested several smaller businesses in recent years that allowed the Company to invest in other areas that fit its long-term strategy.
Approximately 60% of the Company’s 2021 revenues were generated in the United States, with the remainder largely from Europe (17%), emerging markets (14%) and Canada (5%). The Company continues to execute a growth and acquisition strategy that involves industry, geographic and customer diversification to foster sustainable revenue, earnings and cash flow growth.
Approximately 63% of the Company’s 2022 revenues were generated in the United States, with the remainder largely from Europe (15%), emerging markets (12%) and Canada (5%).
Compensation Compensation and benefits are globally managed and tailored by country to maintain market competitiveness, and effectively attract, retain, and reward employees.
This data will be available to all people leaders for their direct and indirect teams as the Company launches its new Human Capital Management tool by the end of 2023. Compensation Compensation and benefits are globally managed and tailored by country to maintain market competitiveness, and effectively attract, retain, and reward employees.
Tools & Storage The Tools & Storage segment is comprised of the Power Tools Group ("PTG"), Hand Tools, Accessories & Storage ("HTAS"), and Outdoor Power Equipment ("Outdoor") businesses. Annual revenues in the Tools & Storage segment were $12.8 billion in 2021, representing 82% of the Company’s total revenues. The PTG business includes both professional and consumer products.
Annual revenues in the Tools & Outdoor segment were $14.4 billion in 2022, representing 85% of the Company’s total revenues. The segment is a worldwide leader in the tools and outdoor markets and carries iconic brands in the industry, including DEWALT®, CRAFTSMAN®, STANLEY®, BLACK+DECKER® and CUB CADET®. The PTG business includes both professional and consumer products.
Development Talent development is a key enabler of the SBD Operating Model where people and technology sit at the center. Performance feedback is designed to happen in real time throughout the year. Lifelong learning is supported internally through the Stanley Black & Decker University and externally with third-party partners.
A key part of development is leader and performance feedback. Throughout 2022, the Talent Development team began planning the Company’s annual feedback process in its new Human Capital Management tool, which has a targeted implementation date by the end of 2023. Lifelong learning is supported internally through Stanley Black & Decker University and externally with third-party partners.
The Company also prioritizes investing in its communities by supporting individuals and organizations that advance DEI goals across cities and regions in which it operates. The Company has nine ERGs with more than 90 local chapters across the globe, and two regional inclusion councils newly formed in 2021. Over 12,000 employees are engaged with the Company’s ERGs and Inclusion Councils.
The Company prioritizes investing in its communities by supporting individuals and organizations that advance DEI goals across regions in which it operates. There is a wide array of program offerings provided through the Company's DEI external partnership network.
Examples of branding investments include launching a program for new hires to notify their social media networks upon joining the Company, new app-based technology that allows colleagues to share curated news about the Company externally, and a refresh of the Company’s public website.
Examples of branding investments include expanding the launch of an app-based technology that allows colleagues to share curated news about the Company externally. Examples of recruiting investments include hiring dedicated talent acquisition resources within the regions to better focus on skill shortages locally.
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The Company remains focused on delivering above-market organic growth with margin expansion by leveraging its proven and long-standing Stanley Black & Decker Operating Model (“SBD Operating Model”) which has continually evolved over the past 15 years as times have changed.
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The Company continues to execute a business strategy that involves organic growth in excess of the market and industry, geographic and customer diversification to foster sustainable revenue, earnings and cash flow growth over the long term. Over the past two years, the Company has focused the portfolio on its leading positions in the Tools & Outdoor and Industrial businesses.
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At the center of the SBD Operating Model is the concept of the interrelationship between people and technology, which intersect and interact with the other key elements: Performance Resiliency, Extreme Innovation, Operations Excellence and Extraordinary Customer Experience. Each of these elements co-exists synergistically with the others in a systems-based approach.
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Leveraging the benefits of a more focused portfolio, the Company initiated a business transformation that includes reinvestment for faster growth as well as the $2.0 billion Global Cost Reduction Program through 2025.
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The Company will leverage the SBD Operating Model to continue making strides towards achieving its vision of delivering top-quartile financial performance, becoming known as one of the world’s leading innovators and elevating its commitment to social responsibility.
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The Company’s primary areas of strategic focus are as follows: • Continuing to advance innovation, electrification and global market penetration to achieve organic revenue growth of 2 to 3 times the market; • Streamlining and simplifying the organization, as well as shifting resources to prioritize investments believed to have a positive and more direct impact to customers; • Accelerating the operations and supply chain transformation to improve fill rates and better match the needs of its customers while improving adjusted gross margins back to historical 35%+ levels; and • Prioritizing cash flow generation and inventory optimization.
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The above strategy has also resulted in approximately $13.5 billion of acquisitions since 2002 (excluding the Merger), which was enabled by strong cash flow generation and increased debt capacity. In recent years, the Company completed the acquisitions of the remaining 80 percent ownership stake of MTD Holdings Inc.
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During this period, the focus for capital deployment will be on debt reduction, internal investment and shareholder return through dividends. The Company has focused its portfolio through a series of acquisitions and divestitures. In August 2022, the Company sold its Oil & Gas business comprised of the pipeline services and equipment businesses.
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The IES Attachments acquisition further diversified the Company's presence in the industrial markets, expanded its portfolio of attachment solutions and provided a meaningful platform for continued growth. Furthermore, in December 2021, the Company announced that it had reached a definitive agreement for the sale of most of its Security assets to Securitas AB for $3.2 billion in cash.
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In July 2022, the Company sold its Convergent Security Solutions ("CSS") business comprised of the commercial electronic security and healthcare businesses for net proceeds of $3.1 billion and its Mechanical Access Solutions ("MAS") business comprised of the automatic doors business for net proceeds of $922 million. These businesses were part of the previously reported Security segment.
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The proposed transaction includes the Company's Convergent Security Solutions ("CSS") business comprising of commercial electronic security and healthcare businesses. The transaction does not include the Company's automatic doors business. The sale is subject to regulatory approvals and other customary closing conditions, and is expected to close in the first half of 2022.
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These divestitures are part of the Company's strategic commitment to simplify and streamline its portfolio to focus on the core Tools & Outdoor and Industrial businesses. In November 2020, the Company sold its commercial electronic security businesses in five countries in Europe and emerging markets within the Security segment.
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Net proceeds from the sale are expected to be used to fund, in part, an approximately $4 billion share repurchase which is planned to be completed in 2022. The use of net proceeds towards a planned share repurchase program is consistent with the Company's long-term capital allocation strategy focused on value maximization.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks associated with business combination and investment transactions include the following, any of which could adversely affect the Company's financial results, including its effective tax rate: • the failure to identify the most suitable candidates for acquisitions; • difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, or the Company may dispose of a business at a price or on terms that are less desirable than the Company had anticipated for a divestiture; • the ability to conduct due diligence with respect to business combination and investment transactions, and the ability to evaluate the results of such due diligence, which is dependent on the veracity and completeness of statements and disclosures made or actions taken by third parties or their representatives and the failure to identify significant issues with the target company’s product quality, financial disclosures, accounting practices or internal control deficiencies or the factors necessary to estimate reasonably accurate costs, timing and other matters; • for an acquisition or other combination, the acquired business may have differing or inadequate cybersecurity and data protection controls, which could impact its exposure to data security incidents and potentially increase anticipated costs or time to integrate the business; • the difficulties and cost in obtaining any necessary regulatory approvals; • the ability to identify and close on appropriate acquisition opportunities within desired time frames at reasonable cost; • the anticipated additional revenues from the acquired companies do not materialize, despite extensive due diligence; • the acquired businesses will lose market acceptance or profitability; • the impact of divestitures on the Company's revenue growth may be larger than projected, as the Company may experience greater dis-synergies than expected; • the diversion of Company management’s attention and other resources; • incurring significant restructuring charges and amortization expense, assuming liabilities and ongoing or new lawsuits related to the transaction or otherwise, potential impairment of acquired goodwill and other intangible assets, and increasing the Company's expenses and working capital requirements; • the incurrence of unexpected costs and liabilities, including those associated with undisclosed pre-closing regulatory violations by the acquired business; • for a divestiture, if the Company does not satisfy pre-closing conditions and necessary regulatory and governmental approvals on acceptable terms, it may prevent the Company from completing the transaction; • continued financial involvement in a divested business, such as through continuing equity ownership, guarantees, indemnities or other financial obligations; and • the loss of key personnel, distributors, clients or customers of acquired companies.
Biggest changeRisks associated with business combinations and investment transactions include the following, any of which could adversely affect the Company's financial results, including its effective tax rate: • the failure to identify the most suitable candidates for acquisitions and to close on such acquisitions within desired time frames and at a reasonable cost; • difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, or disposing of a business at a price or on terms that are less desirable than the Company had anticipated; • the ability to conduct and evaluate the results of due diligence with respect to business combinations and investment transactions; • the failure to identify significant issues with a target company’s product quality, financial disclosures, accounting practices or internal control deficiencies or the factors necessary to estimate reasonably accurate costs, timing and other matters, and the failure to identify, or accurately assess the risks of, historical practices of target companies that would create liability or other exposures for the Company if they continue post-completion or as a result of successor liability; • the difficulties and cost in obtaining any necessary regulatory or government approvals on acceptable terms and any delay from the inability to satisfy pre-closing conditions; • the anticipated additional revenues from the acquired companies do not materialize, despite extensive due diligence; • the acquired businesses may lose market acceptance or profitability; • the impact of divestitures on the Company's revenue growth may be larger than projected, as the Company may experience greater dis-synergies than expected; • the diversion of Company management’s attention and other resources; • incurring significant restructuring charges and amortization expense, assuming liabilities, ongoing or new lawsuits related to the transaction or otherwise or pre-closing regulatory violations of the acquired business, potential impairment of acquired goodwill and other intangible assets, and increasing the Company's expenses and working capital requirements; • continued financial involvement in a divested business, such as through continuing equity ownership, guarantees, indemnities or other financial obligations; and • the loss of key personnel, distributors, clients or customers of acquired companies.
Changes in government cybersecurity and system requirements could negatively impact the Company’s eligibility for the award of future contracts, negatively impacting the Company’s business and reputation. Government contracts laws and regulations impose certain risks, and contracts are generally subject to audits, investigations and approval of policies, procedures and internal controls for compliance with procurement regulations and applicable law.
Changes in government cybersecurity and system requirements could negatively impact the Company’s eligibility for the award of future contracts, negatively impacting the Company’s business and reputation. Government contracts laws and regulations impose certain risks, and government contracts are generally subject to audits, investigations and approval of policies, procedures and internal controls for compliance with procurement regulations and applicable law.
Although these trade agreements generally have positive effects on trade liberalization, sourcing flexibility and cost of goods by reducing or eliminating the duties and/or quotas assessed on products manufactured in a particular country, trade agreements can also impose requirements that adversely affect the Company’s business, such as setting quotas on products that may be imported from a particular country into key markets including the U.S. or the European Union ("EU"), or making it easier for other 10 companies to compete, by eliminating restrictions on products from countries where the Company’s competitors source products.
Although these trade agreements generally have positive effects on trade liberalization, sourcing flexibility and cost of goods by reducing or eliminating the duties and/or quotas assessed on products manufactured in a particular country, trade agreements can also impose requirements that adversely affect the Company’s business, such as setting quotas on products that may be imported from a particular country into key markets including the U.S. or the European Union ("EU"), or making it easier for other companies to compete, by eliminating restrictions on products from countries where the Company’s competitors source products.
In addition, the Company is currently, and may in the future be held responsible for remedial investigations and clean-up costs resulting from the discharge of hazardous substances into the environment, including sites that have never been owned or operated by the Company but at which it has been identified as a potentially responsible party under federal and state environmental laws and regulations.
In addition, the Company is currently being, and may in the future be, held responsible for remedial investigations and clean-up costs resulting from the discharge of hazardous substances into the environment, including sites that have never been owned or operated by the Company but at which it has been identified as a potentially responsible party under federal and state environmental laws and regulations.
Increased public awareness and concern regarding global climate change may result in more international, regional and/or federal requirements or other stakeholder expectations that could mandate more restrictive or expansive standards, more prescriptive reporting of environmental, social and governance metrics than the voluntary commitments the Company adopted, or require related changes on a more accelerated time frame than the Company anticipates.
Increased public awareness and concern regarding global climate change may result in more international, regional and/or federal requirements or other stakeholder expectations that could mandate more restrictive or expansive standards, more prescriptive reporting of environmental, social and governance metrics than the voluntary commitments the Company adopted, or require 21 related changes on a more accelerated time frame than the Company anticipates.
In addition, the Company’s major customers are volume purchasers, a few of which are much larger than the Company and have strong bargaining power with suppliers. This limits the ability to recover cost increases through higher selling prices. Furthermore, unanticipated inventory adjustments by these customers can have a negative impact on the Company's net sales.
In addition, the Company’s major customers are volume purchasers, a few of which are much larger than the Company, and have strong bargaining power with suppliers. This factor limits the ability to recover cost increases through higher selling prices. Furthermore, unanticipated inventory adjustments by these customers can have a negative impact on the Company's net sales.
The Company’s sales to government customers exposes it to business volatility and risks, including government budgeting cycles and appropriations, procurement regulations, governmental policy shifts, early termination of contracts, audits, investigations, sanctions and penalties. The Company derives a portion of its revenues from contracts with the U.S. government, state and local governments and foreign governments.
The Company’s sales to government customers exposes it to business volatility and risks, including government budgeting cycles and appropriations, procurement regulations, governmental policy shifts, early termination of contracts, audits, investigations, sanctions and penalties. 22 The Company derives a portion of its revenues from contracts with the U.S. government, state and local governments and foreign governments.
In a limited number of circumstances, the magnitude of the Company’s purchases of certain items is of such significance that a change in established relationships with suppliers or increase in the costs of purchased raw materials, component parts or finished goods could result in manufacturing interruptions, delays, inefficiencies or an inability to market products.
In a limited number of circumstances, the magnitude of the Company’s purchases of certain items is of such significance that a change in established relationships with suppliers or increase in the costs of purchased raw materials, component parts or finished goods could result in manufacturing interruptions, delays, inefficiencies or an inability to market 16 products.
Significant judgment is required in determining the Company’s worldwide income tax provision and accordingly there are many transactions and computations for which the final income tax determination is uncertain. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately 21 anticipate actual outcomes.
Significant judgment is required in determining the Company’s worldwide income tax provision and accordingly there are many transactions and computations for which the final income tax determination is uncertain. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately anticipate actual outcomes.
Legal, Tax, Regulatory and Compliance Risks The Company’s brands are important assets of its businesses and violation of its trademark rights by imitators, or the failure of its licensees or vendors to comply with the Company’s product quality, manufacturing requirements, marketing standards, and other requirements could negatively impact revenues and brand reputation.
Legal, Tax, Regulatory and Compliance Risks The Company’s brands are important assets of its businesses and violation of its trademark rights by imitators, or the failure of its licensees or vendors to comply with the Company’s product quality, manufacturing requirements, marketing 19 standards, and other requirements could negatively impact revenues and brand reputation.
While the Company has procedures to monitor and limit exposure to credit risk on its trade and non-trade receivables, there can be no assurance 17 such procedures will effectively limit its credit risk and avoid losses, which could have an adverse effect on the Company’s financial condition and operating results.
While the Company has procedures to monitor and limit exposure to credit risk on its trade and non-trade receivables, there can be no assurance such procedures will effectively limit its credit risk and avoid losses, which could have an adverse effect on the Company’s financial condition and operating results.
Financing Risks The Company has incurred, and may incur in the future, significant indebtedness, and may in the future issue additional equity securities, including in connection with mergers or acquisitions, which may impact the manner in which it conducts business or the Company’s access to external sources of liquidity.
Financing Risks The Company has incurred, and may incur in the future, significant indebtedness, and may in the future issue additional equity or debt securities, including in connection with mergers or acquisitions, which may impact the manner in which it conducts business or the Company’s access to external sources of liquidity.
Low demand for new products and the inability to develop and introduce new products at favorable margins could adversely impact the Company’s performance and prospects for future growth. The Company’s competitive advantage is due in part to its ability to develop and introduce new products in a timely manner at favorable margins.
Low demand for new products and the inability to develop and introduce new products at favorable margins could adversely impact the Company’s performance and prospects for future growth. 13 The Company’s competitive advantage is due in part to its ability to develop and introduce new products in a timely manner at favorable margins.
The effects of climate change, such as severe weather, including droughts and water scarcity, could impact the Company’s business. The effects of climate change could also disrupt the Company’s operations by impacting the availability and costs of materials needed for manufacturing and could increase insurance and other operating costs.
The effects of climate change, such as severe weather, including droughts and water scarcity, could impact the Company’s business, disrupt the Company’s operations by impacting the availability and costs of materials needed for manufacturing and increase insurance and other operating costs.
If, in the future, the Company’s results of operations for a particular period do not meet its guidance or the expectations of investment analysts, the Company 23 reduces its guidance for future periods, or the Company withdraws guidance, the market price of the Company’s common stock could decline significantly.
If, in the future, the Company’s results of operations for a particular period do not meet its guidance or the expectations of investment analysts, the Company reduces its guidance for future periods, or the Company withdraws guidance, the market price of the Company’s common stock could decline significantly.
The Company has significant operations outside of the United States, which are subject to political, legal, economic and other risks arising from operating outside of the United States. 13 The Company generates a significant portion of its total revenue outside of the United States.
The Company has significant operations outside of the United States, which are subject to political, legal, economic and other risks arising from operating outside of the United States. The Company generates a significant portion of its total revenue outside of the United States.
The Company currently purchases renewable energy certificates (“RECs”) to mitigate the impact of carbon tax and is also assessing expanding its use of solar panels as an alternative energy source.
The Company currently purchases renewable energy certificates (“RECs”) to mitigate the potential impact of carbon tax and is also assessing expanding its use of solar panels as an alternative energy source.
The Company may also choose to withdraw guidan c e, as it did in response to the uncertainty of the COVID-19 pandemic, or lower guidance in future periods.
The Company may also choose to withdraw guidan c e, as it did in response to the uncertainty of the COVID-19 pandemic in 2020, or lower guidance in future periods.
Similar U.S. actions and any corresponding retaliatory efforts, could result in an increase in supply chain costs that the Company may not be able to offset or otherwise adversely impact the Company’s results of operations. Imports are also subject to unpredictable foreign currency variation which may increase the Company’s cost of goods sold.
Similar U.S. actions and any corresponding retaliatory efforts, could result in an increase in supply chain costs that the Company may not be able to offset or otherwise adversely impact the Company’s results of operations. Imports are also subject to unpredictable foreign currency changes which may increase the Company’s cost of goods sold.
In March 2021, UK Financial Conduct Authority announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative immediately after December 31, 2021. Banks currently reporting information used to set U.S. dollar LIBOR are presently expected to stop doing so during 2023.
In March 2021, UK Financial Conduct Authority announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative immediately after December 31, 2021. Banks currently reporting information used to set U.S. dollar LIBOR are presently expected to stop doing so by mid-2023.
The failure of the Company’s products, systems and services to be properly manufactured, configured, installed, designed or delivered, resulting in personal injuries, property damage or business interruption could subject the Company to claims for damages. The Company has and is currently 22 defending product liability claims, some of which have resulted in settlements or monetary judgments against the Company.
The failure of the Company’s products and services to be properly manufactured, configured, installed, designed or delivered, resulting in personal injuries, property damage or business interruption could subject the Company to claims for damages. The Company has and is currently defending product liability claims, some of which have resulted in settlements or monetary judgments against the Company.
In recent years, changes in U.S. policy regarding international trade, including import and export regulation and international trade agreements, have negatively impacted the Company’s business. For example, in 2018 the U.S. imposed tariffs on steel and aluminum as well as on goods imported from China and certain other countries, which resulted in retaliatory tariffs by China and other countries.
In recent years, changes in U.S. policy regarding international trade, including import and export regulation and international trade agreements, have negatively impacted the Company’s business. For example, in 2018 the United States imposed tariffs on steel and aluminum as well as on goods imported from China and certain other countries, which resulted in retaliatory tariffs by China and other countries.
The Company’s ability to access the credit markets, and the cost of these borrowings, is affected by the strength of its credit ratings and current market conditions.
The Company’s ability to access the credit markets, and the cost of these borrowings, is affected by the strength of its credit ratings and current 18 market conditions.
In addition, the Company’s ability to import these items in a timely and cost-effective manner has been and may continue to be affected by conditions at ports or issues that otherwise affect transportation and warehousing providers, such as fluctuations in freight costs, port and shipping capacity, labor disputes and shortages, severe weather due to climate change or increased homeland security requirements in the U.S. and other countries.
In addition, the Company’s ability to import these items in a timely and cost-effective manner may be affected by conditions at ports or issues that otherwise affect transportation and warehousing providers, such as fluctuations in freight costs, port and shipping capacity, labor disputes and shortages, severe weather due to climate change or increased homeland security requirements in the U.S. and other countries.
A shortage of key employees might jeopardize the Company’s ability to implement its growth strategy, and changes in the key management team can result in loss of continuity, loss of accumulated knowledge, departure of other key employees, disruptions to the Company’s operations and inefficiency during transitional periods.
A shortage of key employees might jeopardize the Company’s ability to implement its business strategy, and changes in the key management team can result in loss of continuity, loss of accumulated knowledge, departure of other key employees, disruptions to the Company’s operations and inefficiency during transitional periods.
Such covenants could restrict the Company in the manner in which it conducts business and operations as well as in the pursuit of its growth and acquisition strategy. The Company is exposed to counterparty risk in its hedging arrangements.
Such covenants could restrict the Company in the manner in which it conducts business and operations as well as in the pursuit of its business strategy. The Company is exposed to counterparty risk in its hedging arrangements.
In order to remain competitive, the Company will need to stay abreast of such technologies, require its employees to continue to learn and adapt to new technologies and be able to integrate them into its current and future business models, products, services and processes and also guard against existing and new competitors disrupting its business using such technologies.
To remain competitive, the Company will need to stay abreast of new technologies, require its employees to continue to learn and adapt to new technologies and be able to integrate them into current and future business models, products, services and processes and also guard against existing and new competitors disrupting the marketplace using such technologies.
The California Privacy Rights Act of 2020, which will become effective on January 1, 2023, amends and expands the CCPA, creating new industry requirements, consumer privacy rights and enforcement mechanisms. Virginia and Colorado have also passed robust privacy laws that will come into effect on January 1 and July 1, 2023, respectively.
The California Privacy Rights Act of 2020, which became effective on January 1, 2023, amends and expands the CCPA, creating new industry requirements, consumer privacy rights and enforcement mechanisms. Virginia and Colorado have also passed robust privacy laws that come into effect on January 1, 2023 and July 1, 2023, respectively.
The Company’s predominant currency exposures are related to the Euro, Canadian Dollar, British Pound, Australian Dollar, Brazilian Real, Argentine Peso, Chinese Renminbi (“RMB”) and the Taiwan Dollar.
The Company’s predominant currency exposures are related to the Euro, Canadian Dollar, British Pound, Australian Dollar, Brazilian Real, Chinese Renminbi (“RMB”) and the Taiwan Dollar.
To remain profitable and defend market share, the Company must maintain a competitive cost structure, develop new products and services, lead product innovation, respond to competitor innovations and enhance its existing products in a timely manner.
To remain profitable and maintain or grow market share, the Company must maintain a competitive cost structure, develop new products and services, lead product innovation, respond to competitor innovations and enhance its existing products in a timely manner.
Changes in environmental and other laws and regulations in both domestic and foreign jurisdictions could adversely affect the Company’s operations due to increased costs of compliance and potential liability for non-compliance. The Company manufactures products, configures and installs security systems and performs various services that create exposure to product and professional liability claims and litigation.
Changes in environmental and other laws and regulations in both domestic and foreign jurisdictions could adversely affect the Company’s operations due to increased costs of compliance and potential liability for non-compliance. The Company manufactures products and performs various services that create exposure to product and professional liability claims and litigation.
In addition, the countries in which the Company’s products and materials are manufactured or imported from (including importation into the U.S. of the Company's products manufactured overseas) may from time to time impose additional quotas, duties, tariffs or other restrictions on its imports (including restrictions on manufacturing operations) or adversely modify existing restrictions.
In addition, the countries in which the Company’s products and materials are manufactured or imported from (including importation into the United States of the Company's products manufactured overseas) may from time to time impose additional quotas, duties, tariffs or other restrictions on its imports (including restrictions on manufacturing operations) or adversely modify existing restrictions.
Substantially all of its import operations are subject to customs requirements and to tariffs and quotas set by governments through mutual agreements, bilateral actions or, in some cases unilateral action.
Substantially all of the Company's import operations are subject to customs requirements and to tariffs and quotas set by governments through mutual agreements, bilateral actions or, in some cases unilateral action.
The Company’s long-term growth plans are dependent on, among other things, the availability of funding to support corporate initiatives and complete appropriate acquisitions and the ability to increase sales of existing product lines.
The Company’s long-term growth plans are dependent on, among other things, the availability of funding to support corporate initiatives and the ability to increase sales of existing product lines.
If the Company is unable to maintain effective internal control over financial reporting, its ability to record, process and report financial information timely and accurately could be adversely affected, which could subject the Company to litigation or investigations, require management resources, increase costs, negatively affect investor confidence and adversely impact its stock price. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If the Company is unable to maintain effective internal control over financial reporting, its ability to record, process and report financial information timely and accurately could be adversely affected, which could subject the Company to litigation or investigations, require management resources, increase costs, negatively affect investor confidence and adversely impact its stock price.
While the Company has not encountered financing difficulties to date, the capital and credit markets have experienced extreme volatility and disruption in the past and may again in the future. Market conditions could make it more difficult for the Company to borrow or otherwise obtain the cash required for significant new corporate initiatives and acquisitions.
While the Company has not encountered financing difficulties to date, the capital and credit markets have experienced extreme volatility and disruption in the past (including in connection with COVID-19) and may again in the future. Market conditions could make it more difficult for the Company to borrow or otherwise obtain the cash required for significant new corporate initiatives.
In 2021, the Company experienced significantly higher freight costs compared to freight costs incurred in 2020 and 2019. These issues have and could delay importation of products or require the Company to locate alternative ports or warehousing providers to avoid disruption to customers.
In 2022 and 2021, the Company experienced significantly higher freight costs compared to freight costs incurred in 2020. These issues have delayed, and could delay in the future, importation of products or require the Company to 11 locate alternative ports or warehousing providers to avoid disruption to customers.
As a result of the Black and Decker merger and other acquisitions, the Company has approximately $8.8 billion of goodwill, approximately $2.5 billion of indefinite-lived trade names and approximately $2.2 billion of net definite-lived intangible assets on January 1, 2022.
As a result of the Black and Decker merger and other acquisitions, the Company has approximately $8.5 billion of goodwill, approximately $2.5 billion of indefinite-lived trade names and approximately $2.0 billion of net definite-lived intangible assets on December 31, 2022.
While the Company believes any downturn in the European or emerging marketplaces might be offset to some degree by the relative stability in North America, the Company’s future growth, profitability and financial liquidity could be affected, in several ways, including but not limited to the following: • depressed consumer and business confidence may decrease demand for products and services; • customers may implement cost reduction initiatives or delay purchases to address inventory levels; • significant declines of foreign currency values in countries where the Company operates could impact both the revenue growth and overall profitability in those geographies; • a slowing or contracting Chinese economy could reduce China’s consumption and negatively impact the Company’s sales in that region, as well as globally; • a devaluation of foreign currencies could have an effect on the credit worthiness (as well as the availability of funds) of customers in those regions impacting the collectability of receivables; • a devaluation of foreign currencies could have an adverse effect on the value of financial assets of the Company in the effected countries; and • the impact of an event (individual country default, Brexit, or break up of the Euro) could have an adverse impact on the global credit markets and global liquidity potentially impacting the Company’s ability to access these credit markets and to raise capital.
While the Company believes any downturn in the European or emerging marketplaces might be offset to some degree by the relative stability in North America, the Company’s future growth, profitability and financial liquidity could be affected, in several ways, including, but not limited to, the following: • depressed consumer and business confidence may decrease demand for products and services; • customers may implement cost reduction initiatives or delay purchases to address inventory levels; • significant declines of foreign currency values in countries where the Company operates could impact both the revenue growth and overall profitability in those geographies; • a devaluation of foreign currencies could have an effect on the credit worthiness (as well as the availability of funds) of customers in those regions impacting the collectability of receivables; • a devaluation of foreign currencies could have an adverse effect on the value of financial assets of the Company in the effected countries; and • the impact of an event or changes to political and economic conditions (individual country default, Brexit, or break up of the Euro) could have an adverse impact on the global credit markets and global liquidity potentially impacting the Company’s ability to access these credit markets and to raise capital or disrupt global energy supply or supply chains.
The Company's patent applications may not be approved and any patents owned could be challenged, invalidated or designed around by third parties. In addition, the Company's patents may not be of sufficient scope or strength to provide meaningful protection or commercial advantage. The Company is exposed to risks related to cybersecurity.
The Company's patent applications may not be approved and any patents owned could be challenged, invalidated or designed around by third parties. In addition, the Company's patents may not be of sufficient scope or strength to provide meaningful protection or commercial advantage.
To conduct its operations, the Company regularly moves data across national borders, and consequently is subject to a variety of continuously evolving and developing laws and regulations in the United States and abroad regarding privacy, data protection and data security.
The Company is exposed to risks related to compliance with data privacy laws. 20 To conduct its operations, the Company regularly moves data across national borders, and consequently is subject to a variety of continuously evolving and developing laws and regulations in the United States and abroad regarding privacy, data protection and data security.
Business operations outside of the United States are subject to political, economic and other risks inherent in operating in certain countries, such as: • the difficulty of enforcing agreements and protecting assets through legal systems outside the U.S. including intellectual property rights, which may not be recognized, and which the Company may not be able to protect outside the U.S. to the same extent as under U.S. law; • managing widespread operations and enforcing internal policies and procedures such as compliance with U.S. and foreign anti-bribery, anti-corruption, and sanctions regulations; • trade protection measures and import or export licensing requirements including those related to the U.S.'s relationship with China; • the application of certain labor regulations outside of the United States; • compliance with a wide variety of non-U.S. laws and regulations; • ongoing stability or changes in the general political and economic conditions in the countries where the Company operates, particularly in emerging markets; • the threat of nationalization and expropriation; • increased costs and risks of doing business and managing a workforce in a wide variety of jurisdictions; • the increased possibility of cyber threats in certain jurisdictions; • government controls limiting importation of goods; • government controls limiting payments to suppliers for imported goods; • limitations on, or impacts from, the repatriation of foreign earnings; and • exposure to wage, price and capital controls.
Business operations outside of the United States are subject to political, economic and other risks inherent in operating in certain countries, such as: • the difficulty of enforcing agreements and protecting assets through legal systems outside the U.S. including intellectual property rights, which may not be recognized, and which the Company may not be able to protect outside the U.S. to the same extent as under U.S. law; • managing widespread operations and enforcing internal policies and procedures such as compliance with U.S. and foreign anti-bribery, anti-corruption, and sanctions regulations; • trade protection measures and import or export licensing requirements including those related to the U.S.'s relationship with China; • the application of certain labor regulations outside of the United States; • compliance with a wide variety of non-U.S. laws and regulations; • instability or changes in the general political and economic conditions in the countries where the Company operates (such as the conflict between Russia and Ukraine); • the threat of nationalization and expropriation; • increased costs and risks of doing business and managing a workforce in a wide variety of jurisdictions; • the increased possibility of cyber threats in certain jurisdictions; • government controls limiting importation of goods; • government controls limiting payments to suppliers for imported goods; • limitations on, or impacts from, the repatriation of foreign earnings; and • exposure to wage, price and capital controls. 14 Changes in the political or economic environments in the countries in which the Company operates could have a material adverse effect on its financial condition, results of operations or cash flows.
The Company also face risks related to the transition to a lower-carbon economy, such as its ability to successfully adopt new technology or to comply with more stringent and increasingly complex environmental regulations or requirements for the Company's manufacturing facilities and business operations, increased prices related to freight and shipping costs and other permitting requirements.
The Company also faces risks related to the transition to a lower-carbon economy, such as its ability to successfully adopt new technology, meet market-driven demands for carbon neutral and renewable energy technology, or to comply with more stringent and increasingly complex environmental regulations or requirements for the Company's manufacturing facilities and business operations, increased prices related to freight and shipping costs and other permitting requirements.
The interest coverage ratio must not be less than 2.5 times through December 31, 2021 and not less than 3.5 times thereafter and is computed quarterly, on a rolling twelve months (last twelve months) basis. Under this covenant definition, the interest coverage ratio was 14.9 times EBITDA or higher in each of the 2021 quarterly measurement periods.
During 2022, the interest coverage ratio must not be less than 3.5 times and is computed quarterly, on a rolling twelve months (last twelve months) basis. Under this covenant definition, the interest coverage ratio was 8.6 times EBITDA or higher in each of the 2022 quarterly measurement periods.
The report, rumor or assumption regarding a potential breach may have similar results, even if no breach has been attempted or occurred. Any of the foregoing may have a material adverse effect on the Company’s business, operating results and financial condition. The Company is exposed to risks related to compliance with data privacy laws.
The report, rumor or assumption regarding a potential breach may have similar results, even if no breach has been attempted or occurred. Any of the foregoing may have a material adverse effect on the Company’s business, operating results and financial condition.
As part of the Company's strategy, it may acquire businesses or assets, divest businesses or assets, enter into strategic alliances and joint ventures, and make investments to further its business (collectively, “business combination and investment transactions”), and also handle any post-closing issues, such as integration. For example, in 2021, the Company completed the MTD Holdings Inc.
As part of the Company's strategy, it may acquire businesses or assets, divest businesses or assets, enter into strategic alliances and joint ventures, and make investments to further its business (collectively, “business combinations and investment transactions”), and also handle any post-closing issues, such as integration and transition services.
The instruments and agreements governing certain of the Company’s current indebtedness contain requirements or restrictive covenants that include, among other things: • a limitation on creating liens on certain property of the Company and its subsidiaries; • a restriction on entering into certain sale-leaseback transactions; • customary events of default.
The instruments and agreements governing certain of the Company’s current indebtedness contain requirements or restrictive covenants that include, among other things: • a limitation on creating liens on certain property of the Company and its subsidiaries; • a restriction on entering into certain sale-leaseback transactions; • customary events of default, including repayment of all amounts outstanding in the event of the occurrence and continuance of an event of default; and • maintenance of a specified financial ratio.
In the event the Company is not successful in effectively applying the Operations Excellence principles to its key business processes, including those of acquired businesses, its ability to compete and future earnings could be adversely affected.
In the event the Company is not successful in effectively applying the Operations Excellence principles to its key business processes, including those of acquired businesses, its ability to compete and future earnings could be adversely affected. In addition, the Company may have to reduce prices on its products and services, or make other concessions, to stay competitive.
In addition, the Company has a number of key suppliers in South Korea. Escalation of hostilities with North Korea and/or military action in the region could cause disruptions in the Company's supply chain which could, in turn, cause product shortages, delays in delivery and/or increases in the Company's cost incurred to produce and deliver products to its customers.
In addition, the Company has a number of key suppliers in South Korea, China and Taiwan. Any future tensions or conflicts in such regions could cause material disruptions in the Company's supply chain which could, in turn, cause product shortages, delays in delivery and/or increases in the Company's cost incurred to produce and deliver products to its customers.
Discontinuation, reform or replacement of the London Inter-bank Offered Rate ("LIBOR") and other benchmark rates, or uncertainty related to the potential for any of the foregoing, may adversely affect the Company. A portion of the Company’s indebtedness bears interest at rates that fluctuate with changes in certain short-term prevailing interest rates, including the LIBOR.
Discontinuation, reform or replacement of the London Inter-bank Offered Rate ("LIBOR") and other benchmark rates, or uncertainty related to the potential for any of the foregoing, may adversely affect the Company. Certain of the Company’s contracts and derivative financial instruments use short-term prevailing interest rates, including LIBOR, as a reference rate.
Management does not believe it is reasonably likely the Company will breach this covenant. Failure to maintain this ratio could adversely affect further access to liquidity. Future instruments and agreements governing indebtedness may impose other restrictive conditions or covenants.
The minimum interest coverage ratio will revert back to 3.5 times for periods after the second quarter of 2024. Management does not believe it is reasonably likely the Company will breach this covenant. Failure to maintain these ratios could adversely affect further access to liquidity. Future instruments and agreements governing indebtedness may impose other restrictive conditions or covenants.
The impact of the COVID-19 pandemic has adversely affected, and may continue to adversely affect, the Company’s business, financial condition, workforce and operations and the operations of its customers, distributors, suppliers and contractors.
The COVID-19 pandemic, including new variants, and the responses of governments, consumers and other businesses have adversely affected, and may continue to adversely affect, the Company’s business, financial condition, workforce and operations and the operations of its customers, distributors, suppliers and contractors.
Lastly, it is possible that future income tax legislation may be enacted that could have a material impact on the Company’s worldwide income tax provision, cash tax liability, and effective tax rate beginning with the period that such legislation becomes enacted. Climate change and climate change legislation or regulations may adversely affect the Company's business.
Lastly, it is possible that future income tax legislation, including the Organization for Economic Cooperation and Development (“OECD”) Global Minimum Tax, may be enacted that could have a material impact on the Company’s worldwide income tax provision, cash tax liability, and effective tax rate beginning with the period that such legislation becomes enacted.
These alternatives have not and in the future may not be available on short notice or have and could result in higher transit costs, which could have an adverse impact on the Company’s business and financial condition.
These alternatives may not be available on short notice or could result in higher transit costs, which could have an adverse impact on the Company’s business and financial condition. The Company also relies on its ability to maintain inventory levels appropriate to meet consumer and customer demand.
The Company has undertaken restructuring actions, the savings of which may be mitigated by many factors, including economic weakness, inflation, competitive pressures, higher labor costs and decisions to increase costs in areas such as sales promotion or research and development above levels that were otherwise assumed.
The Company has undertaken restructuring and cost-reduction actions, the savings of which may be mitigated by many factors, including economic weakness, inflation, competitive pressures, higher labor costs and decisions to increase costs in areas such as sales promotion or research and development above levels that were otherwise assumed. 15 In the third quarter of 2022, the Company initiated a supply chain transformation aiming to improve fill rates and better match the needs of its customers, while improving gross margins.
The fair value of the defined benefit plan assets on January 1, 2022 was approximate ly $2.6 billion. Strategic Risks The successful execution of the Company’s business strategy depends on its ability to recruit, retain, train, motivate, and develop employees and execute effective succession planning.
Strategic Risks The successful execution of the Company’s business strategy depends on its ability to recruit, retain, train, motivate, and develop employees and execute effective succession planning.
If the Company is unable to mitigate any possible supply constraints, related increased costs or drive alternative technology through innovation, its profitably and financial results could be negatively impacted.
If the Company is unable to mitigate any possible supply constraints or related increased costs or drive alternative technology through innovation, its profitably and financial results could be negatively impacted. Uncertainty about the financial stability of economies outside the U.S. could have a significant adverse effect on the Company's business, results of operations and financial condition.
In 2021, the two largest customers comprised approximately 29% of net sales, with U.S. and international mass merchants and home centers collectively comprising approximately 46% of net sales.
The Company has certain significant customers, particularly home centers and major retailers. In 2022, the two largest customers comprised approximately 28% of consolidated net sales, with U.S. and international mass merchants and home centers collectively comprising approximately 41% of consolidated net sales.
The continued adverse effects of the COVID-19 pandemic and an indeterminate recovery period could have a materially negative impact on the Company’s business, operations, financial condition, results of operations, and liquidity, the nature and extent of which is highly uncertain.
The continuing adverse effects of the COVID-19 pandemic, including new variants, could have a materially negative impact on the Company’s business, operations, financial condition, results of operations, and liquidity.
In addition, the current and the proposed changes to the U.S. and foreign regulatory approval process and requirements in connection with an acquisition may cause approvals to take longer than anticipated to obtain, not be forthcoming or contain burdensome conditions, which may jeopardize, delay or reduce the anticipated benefits of the transaction to the Company and could impede the execution of the Company's business strategy.
In addition, the current and the proposed changes to the U.S. and foreign regulatory approval process and requirements in connection with an acquisition or divestiture may jeopardize, delay or reduce the anticipated benefits of the transaction to the Company.
The Company may not be able to compete effectively on all of these fronts and with all of its competitors, and the failure to do so could have a material adverse effect on its sales and profit margins. 12 Operations Excellence, one element of the SBD Operating Model, is a continuous operational improvement process applied to many aspects of the Company’s business such as procurement, quality in manufacturing, maximizing customer fill rates, integrating acquisitions and other key business processes.
Operations Excellence, one element of the SBD Operating Model, is a continuous operational improvement process applied to many aspects of the Company’s business such as procurement, quality in manufacturing, maximizing customer fill rates, integrating acquisitions and other key business processes.
A severe weather event in these countries could cause disruptions in the Company's supply chain which could, in turn, cause product shortages, delays in delivery and/or increases in the Company's cost incurred to produce and deliver products to its customers.
A severe weather event in these countries could cause disruptions in the Company's supply chain which could, in turn, cause product shortages, delays in delivery and/or increases in the Company's cost incurred to produce and deliver products to its customers. 12 Changes in customer preferences, the inability to maintain mutually beneficial relationships with large customers, inventory reductions by customers, and the inability to penetrate new channels of distribution could adversely affect the Company’s business.
Failure to achieve, or delays in achieving, projected levels of efficiencies and cost savings from such measures, or unanticipated inefficiencies resulting from manufacturing and administrative reorganization actions in progress or contemplated, would adversely affect the Company’s business and financial results.
Failure to achieve, or delays in achieving, projected levels of efficiencies and cost savings from this transformation and other restructuring or cost reduction actions introduced by the Company, significant increases in the costs related to such actions, or unanticipated inefficiencies resulting from this transformation and other manufacturing and administrative reorganization actions in progress or contemplated, could adversely affect the anticipated cost savings.
There can be no assurance that the value of the defined benefit plan assets, or the investment returns on those plan assets, will be sufficient in the future.
During 2022, the Company made cash contributions to its defined benefit plans of approximately $32 million and expects to contribute $37 million to its defined benefit plans in 2023. There can be no assurance that the value of the defined benefit plan assets, or the investment returns on those plan assets, will be sufficient in the future.
The Company’s reputation, business, revenue and results of operations could be materially and adversely affected if it is unable to recruit, retain, train, motivate, and develop employees and successfully execute organizational change and management transitions at leadership levels.
The Company’s reputation, business, revenue and results of operations could be materially and adversely affected if it is unable to recruit, retain, train, motivate, and develop employees and successfully execute organizational change and management transitions at leadership levels. 10 The Company’s acquisitions, exiting of businesses, divestitures, strategic investments and alliances and joint ventures, as well as general business reorganizations, may result in financial results that are different than expected and certain risks for its business and operations.
Uncertainty about the financial stability of economies outside the U.S. could have a significant adverse effect on the Company's business, results of operations and financial condition. 15 The Company generates approximately 40% of its revenues outside the U.S., including 17% from Europe and 14% from various emerging market countries. Each of the Company’s segments generates sales in these marketplaces.
The Company generates approximately 37% of its revenues outside the U.S., including 15% from Europe and 12% from various emerging market countries. Each of the Company’s segments generates sales in these marketplaces.
The cost and operational consequences of implementing, maintaining and enhancing further data or system protection measures could increase significantly to overcome increasingly intense, complex, and sophisticated global cyber threats. Despite the Company’s best efforts, it is not fully insulated from data breaches and system disruptions.
The cost and operational consequences of implementing, maintaining and enhancing these measures could increase significantly to overcome increasingly intense, complex, and sophisticated global cyber threats.
If not remediated, the Company’s failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in its financial statements and a failure to meet its reporting and financial obligations, each of which could have a material adverse effect on the Company’s financial condition and the trading price of its common stock.
If the Company is unable to maintain effective internal control over financial reporting, the accuracy and timeliness of its financial reporting may be adversely affected , which could have a material adverse effect on the Company’s financial condition and the trading price of its common stock.
As described in Note H, Long-Term Debt and Financing Arrangements , of the Notes to Consolidated Financial Statements in Item 8 , the Company has a five-year $2.5 billion committed credit facility and $2.0 billion 364-day committed credit facilities. No amounts were outstanding against either of these facilities on January 1, 2022.
The potential issuance of such securities may limit the Company’s ability to implement elements of its business strategy and may have a dilutive effect on earnings. 17 As described in Note H, Long-Term Debt and Financing Arrangements , of the Notes to Consolidated Financial Statements in Item 8 , the Company has a five-year $2.5 billion committed credit facility, a $1.5 billion syndicated 364-Day Credit Agreement, and a $0.5 billion revolving credit loan.
Global supply chain constraints in the wake of the COVID-19 pandemic continue to decrease the Company's visibility into availability and lead times for the products and their component parts and raw materials.
Lead times for these items vary significantly and may be further impacted by global shortages of critical components. Global supply chain constraints in the wake of the COVID-19 pandemic limited the Company's visibility into availability and lead times for products and their component parts and raw materials but such constraints have softened in the second half of 2022.
As different geographical areas anticipate and begin moving into a recovery era, demand for the Company’s products may decrease as focus shifts to activities outside the home. The degree to which COVID-19 ultimately affects the Company’s business, liquidity, results and operations will depend on future developments, which continue to be highly uncertain and cannot be predicted.
The degree to which COVID-19 and related responses continue to affect the Company’s business, liquidity, results and operations will depend on future developments, which continue to be highly uncertain and cannot be predicted.
The Company cannot ensure that such integrations and reorganizations will be successfully completed or that all of the planned synergies and other benefits will be realized. Expansion of the Company’s activity in emerging markets may result in risks due to differences in business practices and cultures.
The Company cannot ensure that such integrations and reorganizations will be successfully completed or that all of the planned synergies and other benefits will be realized. Business and Operational Risks The Company’s business is subject to risks associated with sourcing, manufacturing and maintaining appropriate inventory levels. The Company imports large quantities of finished goods, component parts and raw materials.
If an event of default occurs and is continuing, the Company might be required to repay all amounts outstanding under the respective instrument or agreement; and 16 • maintenance of a specified financial ratio. The Company has an interest coverage covenant that must be maintained to permit continued access to its committed revolving credit facilities.
Specifically, the Company has an interest coverage covenant that must be maintained to permit continued access to its committed revolving credit facilities.
These uncertainties, include, but are not limited to, the duration and spread of the outbreak and the resurgence in cases,, its severity, the actions to contain the virus or treat its impact, the availability of vaccines, effectiveness against new variants of COVID-19 and achievement of sufficient vaccination levels, supply chain disruptions, competition in the labor market and how quickly and to what extent economic and operating conditions can become more predictable and certain.
These uncertainties, include, but are not limited to, the duration of the outbreak, the severity of any resurgence in cases, the actions to contain the virus or treat its impact and the availability and effectiveness of vaccines and other treatments. Any future global and national health concerns could lead to further and/or increased volatility in global capital and credit markets.
The Company has identified material weaknesses in its internal control over financial reporting.
As a public company, the Company is required to design and maintain proper and effective internal control over financial reporting and to report any material weaknesses in such internal control.
Removed
Business and Operational Risks The Company’s business is subject to risks associated with sourcing and manufacturing. The Company imports large quantities of finished goods, component parts and raw materials. Lead times for these items vary significantly and are increasing in light of global shortages of critical components, including semiconductors.
Added
For example, in 2022, the Company completed the divestitures of its Security and Oil & Gas businesses. The Company may make additional divestitures or pursue acquisitions in the future .
Removed
There continues to be significant uncertainty regarding restrictions on the Company's access to its manufacturing facilities or on its support operations or workforce, or similar limitations for its distributors and suppliers.
Added
During the second half of 2020 and during 2021, the Company experienced higher than historical customer demand and increased supply chain constraints, resulting in historically high inventory levels. As consumer and DIY demand softened in the second quarter of 2022, the Company’s inventory levels peaked in the first half of the year.
Removed
These measures have limited and could continue to limit customer demand and has and could continue to limit the Company's capacity to meet customer demand, which could have a material negative impact on its financial condition and results of operations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe buildings are in good condition, suitable for their intended use, adequate to support the Company’s operations, and generally fully utilized. Excluded from the table above, the Company identified one lease, larger than 100,000 square feet, which is part of discontinued operations.
Biggest changeThe buildings are in good condition, suitable for their intended use, adequate to support the Company’s operations, and generally fully utilized.
ITEM 2. PROPERTIES As of January 1, 2022, the Company and its subsidiaries owned or leased significant facilities used for manufacturing, distribution and sales offices in 23 states and 20 countries. The Company leases its corporate headquarters in New Britain, Connecticut.
ITEM 2. PROPERTIES As of December 31, 2022, the Company and its subsidiaries owned or leased significant facilities used for manufacturing, distribution and sales offices in 21 states and 22 countries. The Company leases its corporate headquarters in New Britain, Connecticut.
The Company has 110 facilities including its corporate headquarters that are larger than 100,000 square feet, as follows: Owned Leased Total Tools & Storage 46 38 84 Industrial 14 7 21 Mechanical Access Solutions 1 1 2 Corporate 2 1 3 Total 63 47 110 The combined size of these facilities is approximately 29 million square feet.
The Company has 121 facilities including its corporate headquarters that are larger than 100,000 square feet, as follows: Owned Leased Total Tools & Outdoor 52 44 96 Industrial 15 7 22 Corporate 2 1 3 Total 69 52 121 The combined size of these facilities is approximately 34 million square feet.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn the normal course of business, the Company is involved in various lawsuits and claims, including product liability, environmental, intellectual property, contract and commercial, advertising, employment and distributor claims, and administrative proceedings. The Company does not expect that the resolution of these matters will have a materially adverse effect on the Company’s consolidated financial position, results of operations or liquidity.
Biggest changeThe Company also may become a party to litigation or other legal proceedings over these matters. In addition to the matters above, in the normal course of business, the Company is involved in various lawsuits and claims, including product liability, environmental, intellectual property, contract and commercial, advertising, employment and distributor claims, and administrative proceedings.
ITEM 3. LEGAL PROCEEDINGS The Company has identified that certain expenses it incurred in previous years constituted undisclosed perquisites. The Company has voluntarily disclosed this information to the U.S. Securities and Exchange Commission ("SEC") and is cooperating with the SEC’s investigation of this matter.
ITEM 3. LEGAL PROCEEDINGS As previously disclosed, the Company has identified that certain expenses it incurred in previous years constituted undisclosed perquisites. The Company has voluntarily disclosed this information to the U.S. Securities and Exchange Commission (“SEC”) and is cooperating with the SEC’s investigation of this matter.
Given the ongoing nature of this matter, management cannot predict the duration, scope, or outcome of the SEC’s investigation or estimate the potential magnitude of any such loss or range of loss, or the cost of the ongoing SEC investigation.
Given the ongoing nature of these matters, management cannot predict the duration, scope, or outcome of the SEC’s and DOJ’s investigations or estimate the potential magnitude of any such loss or range of loss, or the cost of the ongoing investigations.
Any determination that the Company’s expense and perquisite reporting practices were not in compliance with existing laws or regulations could result in the imposition of fines, civil or criminal penalties, equitable remedies, including disgorgement, injunctive relief, or other sanctions against the Company. The Company also may become a party to litigation or other legal proceedings over these matters.
Any determination that the Company’s expense and perquisite reporting practices were not in compliance with existing laws or regulations or that certain transactions relating to the Company’s international operations were not in compliance with the FCPA could result in the imposition of fines, civil or criminal penalties, equitable remedies, including disgorgement, injunctive relief, or other sanctions against the Company.
The Company is in the process, with the assistance of professional advisors, of reviewing and further enhancing relevant policies, procedures, and controls. Currently the Company does not believe that this matter will have a material impact on its financial condition or results of operations, although it is possible that a loss related to this matter may be incurred.
Currently, the Company does not believe that these matters will have a material impact on its financial condition or results of operations, although it is possible that a loss related to these matters may be incurred.
These amounts relate principally to use of corporate aircraft and will be included in the Company’s proxy statement for its 2022 annual shareholders meeting. 24 The Company is committed to upholding the highest standards of corporate governance and is continuously focused on ensuring the effectiveness of its policies, procedures, and controls.
The Company is committed to upholding the highest standards of corporate governance and is continuously focused on ensuring the effectiveness of its policies, procedures, and controls. The Company is in the process, with the assistance of professional advisors, of reviewing and further enhancing relevant policies, procedures, and controls.
Removed
For the named executive officers in fiscal year 2021, the Company has calculated the amount of the undisclosed perquisites to be up to approximately $225,000 in 2020 and up to approximately $350,000 in 2019.
Added
Also, the Company has identified certain transactions relating to its international operations that may raise compliance questions under the U.S. Foreign Corrupt Practices Act (“FCPA”) and has voluntarily disclosed this information to the U.S. Department of Justice (“DOJ”) and the SEC. The Company is cooperating with both agencies in their investigations.
Removed
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 25 PART II
Added
The Company does not expect that the resolution of these matters occurring in the normal course of business will have a materially adverse effect on the Company’s consolidated financial position, results of operations or liquidity. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 24 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(b) On April 23, 2021, the Board of Directors approved a new repurchase program of up to 20.0 million shares of the Company's common stock (the "April 2021 Program") and terminated the previously approved repurchase program. As of January 1, 2022, the authorized shares available for repurchase under April 2021 Program totaled 20.0 million shares.
Biggest change(b) On April 21, 2022, the Board approved a share repurchase program of up to 20 million shares of the Company’s common stock (the “April 2022 Program”). The April 2022 Program does not have an expiration date.
The Company may repurchase shares under the repurchase program through open market purchases, privately negotiated transactions or share repurchase programs, including one or more accelerated share repurchase programs (under which an initial payment for the entire repurchase amount may be made at the inception of the program).
The Company may repurchase shares under the April 2022 Program through open market purchases, privately negotiated transactions or share repurchase programs, including one or more accelerated share repurchase programs (under which an initial payment for the entire repurchase amount may be made at the inception of the program).
The currently authorized shares available for repurchase under the new repurchase program do not include approximately 3.6 million shares reserved and authorized for purchase under the Company’s approved repurchase program in place prior to the April 2021 Program relating to a forward share purchase contract entered into 26 in March 2015.
The currently authorized shares available for repurchase under the April 2022 Program do not include approximately 3.6 million shares reserved and authorized for purchase under the Company’s approved repurchase program in place prior to the April 2022 Program relating to a forward share purchase contract entered into in March 2015.
Total return assumes reinvestment of dividends. 27 ITEM 6. REMOVED AND RESERVED
Total return assumes reinvestment of dividends. 26 ITEM 6. REMOVED AND RESERVED
Issuer Purchases of Equity Securities The following table provides information about the Company’s purchases of equity securities that are registered by the Company pursuant to Section 12 of the Securities Exchange Act of 1934 for the three months ended January 1, 2022: 2021 Total Number Of Shares Purchased (a) 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 (b) October 3 - November 6 3,980 $ 180.09 — 20,000,000 November 7 - December 4 58,996 177.99 — 20,000,000 December 5 - January 1 15,877 187.71 — 20,000,000 Total 78,853 $ 180.05 — 20,000,000 (a) The shares of common stock in this column were deemed surrendered to the Company by participants in various benefit plans of the Company to satisfy the participants’ taxes related to vesting or delivery of time-vesting restricted share units under those plans.
Issuer Purchases of Equity Securities The following table provides information about the Company’s purchases of equity securities that are registered by the Company pursuant to Section 12 of the Securities Exchange Act of 1934 for the three months ended December 31, 2022: 2022 Total Number Of Common Shares Purchased (a) Average Price Paid Per Common Share Total Number Of Common Shares Purchased As Part Of A Publicly Announced Plan or Program (In Millions) Maximum Number Of Common Shares That May Yet Be Purchased Under The Program (b) October 2 - November 5 2,824 $ 76.43 — 20 November 6 - December 3 15,211 81.85 — 20 December 4 - December 31 36,412 79.20 — 20 Total 54,447 $ 79.79 — 20 (a) Shares of common stock in this column were deemed surrendered to the Company by participants in various benefit plans of the Company to satisfy the participants’ taxes related to vesting or delivery of time-vesting restricted share units under those plans.
Refer to Note J, Capital Stock, of the Notes to Consolidated Financial Statements in Item 8 for further discussion. Stock Performance Graph The following line graph compares the yearly percentage change in the Company’s cumulative total shareholder return for the last five years to that of the S&P 500 Index and the S&P 500 Industrials Index.
Stock Performance Graph The following line graph compares the yearly percentage change in the Company’s cumulative total shareholder return for the last five years to that of the S&P 500 Index, S&P 500 Capital Goods Index and S&P 500 Industrials Index.
Such repurchases may be funded from cash on hand, short-term borrowings or other sources of cash at the Company’s discretion, and the Company is under no obligation to repurchase any shares pursuant to the repurchase program. In the second quarter of 2021, the Company net-share settled capped call options and received 344,004 shares.
Such repurchases may be funded from cash on hand, short-term borrowings or other sources of cash at the Company’s discretion, and the Company is under no obligation to repurchase any shares pursuant to the repurchase program.
Information required by Item 201(d) of Regulation S-K concerning securities authorized for issuance under equity compensation plans can be found under Item 12 of this Annual Report on Form 10-K.
As of February 1, 2023, there were 8,519 holders of record of the Company’s common stock. Information required by Item 201(d) of Regulation S-K concerning securities authorized for issuance under equity compensation plans can be found under Item 12 of this Annual Report on Form 10-K.
Removed
The Company’s high and low quarterly stock prices on the NYSE for the years ended January 1, 2022 and January 2, 2021 follow: 2021 2020 High Low Dividend Per Common Share High Low Dividend Per Common Share QUARTER: First $ 202.07 $ 169.35 $ 0.70 $ 172.53 $ 72.03 $ 0.69 Second $ 220.69 $ 194.92 $ 0.70 $ 148.23 $ 92.13 $ 0.69 Third $ 209.43 $ 174.87 $ 0.79 $ 166.25 $ 135.61 $ 0.70 Fourth $ 196.61 $ 171.07 $ 0.79 $ 190.94 $ 161.48 $ 0.70 Total $ 2.98 $ 2.78 As of February 4, 2022, there were 8,755 holders of record of the Company’s common stock.
Added
The Company increased its annual dividend per common share by $0.20 in 2022 compared to 2021 and intends to continue to pay quarterly dividends in 2023. In July 2022, the Company raised the quarterly dividend per common share, its 55th consecutive increase, which extended its record for the longest, consecutive quarterly and annual dividend payments among industrial companies.
Removed
On February 16, 2022, the Board of Directors terminated the April 2021 Program and approved a new repurchase program of up to the greater of (i) 20.0 million shares of the Company’s common stock; and (ii) the number of shares of the Company’s common stock in the aggregate that can be purchased for an amount up to $2.5 billion.
Added
Following the recent portfolio transformation, the Company has elected to replace the S&P 500 Industrials Index with the S&P 500 Capital Goods Index which it believes is a more appropriate comparison.
Removed
As of February 16, 2022, the authorized shares available for purchase under the new program totaled the greater of (i) 20.0 million shares; and (ii) the number of shares in the aggregate that can be purchased for an amount up to $2.5 billion. The new repurchase program does not have an expiration date.
Added
The S&P 500 Capital Goods Index represents a more focused group of 45 companies across major industrial manufacturing categories that carry similar operational characteristics to the Company. 25 THE POINTS IN THE ABOVE TABLE ARE AS FOLLOWS: 2017 2018 2019 2020 2021 2022 Stanley Black & Decker $ 100.00 $ 71.32 $ 101.54 $ 111.32 $ 119.46 $ 49.06 S&P 500 Index $ 100.00 $ 94.79 $ 126.03 $ 148.81 $ 191.48 $ 156.77 S&P 500 Capital Goods Index $ 100.00 $ 83.26 $ 110.83 $ 117.67 $ 139.93 $ 139.55 S&P 500 Industrials Index $ 100.00 $ 96.19 $ 128.70 $ 158.11 $ 202.22 $ 162.96 The comparison assumes $100 invested at the closing price on December 30, 2017 in the Company’s common stock, S&P 500 Index, S&P 500 Capital Goods Index, and S&P 500 Industrials Index.
Removed
This transaction was completed under the approved repurchase program in place prior to the April 2021 Program.
Removed
The Company has decided to use the S&P 500 Industrials Index, which is utilized by a number of the Company’s industrial peers, for the purpose of this disclosure.
Removed
THE POINTS IN THE ABOVE TABLE ARE AS FOLLOWS: 2016 2017 2018 2019 2020 2021 Stanley Black & Decker $ 100.00 $ 150.48 $ 107.32 $ 152.79 $ 167.52 $ 179.76 S&P 500 $ 100.00 $ 121.82 $ 115.48 $ 153.54 $ 181.29 $ 233.28 S&P 500 Industrials $ 100.00 $ 122.71 $ 118.04 $ 157.93 $ 194.02 $ 248.15 The comparison assumes $100 invested at the closing price on December 31, 2016 in the Company’s common stock, S&P 500 Index, and S&P 500 Industrials Index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

152 edited+57 added−89 removed64 unchanged
Biggest changeThese amounts for the year-to-date periods of 2021, 2020 and 2019 are as follows: 33 2021 GAAP Acquisition- Related Charges & Other Non-GAAP Gross profit $ 5,194.2 $ 39.0 $ 5,233.2 Selling, general and administrative 1 3,240.4 (184.5) 3,055.9 Operating profit 1,953.8 223.5 2,177.3 Earnings from continuing operations before income taxes and equity interest 1,641.0 194.7 1,835.7 Income taxes on continuing operations 61.4 64.4 125.8 Share of net earnings of equity method investment 19.0 11.2 30.2 Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 1,587.4 141.5 1,728.9 Diluted earnings per share of common stock - Continuing operations $ 9.62 $ 0.86 $ 10.48 1 Includes provision for credit losses The Acquisition-Related Charges and Other in the table above relate to the following: • Charges reducing Gross profit pertaining to inventory step-up charges and facility-related costs; • Charges in SG&A primarily related to a non-cash fair-value adjustment and functional transformation initiatives; • Other charges included in Earnings from continuing operations before income taxes and equity interest consisting of: ◦ $24.1 million in Other, net primarily related to deal transactions costs; ◦ $0.6 million net loss pertaining to divested businesses; ◦ $14.5 million of restructuring charges pertaining to severance and facility closures; and ◦ $68.0 million gain recognized on the MTD equity method investment upon acquisition; • Income taxes on continuing operations include the tax effect on the above net charges; and • An after-tax, pre-acquisition charge related to the Company's share of MTD's net earnings related primarily to a one-time retroactive duty on imports of a specific component. 2020 GAAP Acquisition- Related Charges & Other Non-GAAP Gross profit $ 4,405.4 $ 61.7 $ 4,467.1 Selling, general and administrative 1 2,628.5 (123.2) 2,505.3 Operating profit 1,776.9 184.9 1,961.8 Earnings from continuing operations before income taxes and equity interest 1,219.8 325.9 1,545.7 Income taxes on continuing operations 43.0 192.5 235.5 Share of net earnings of equity method investment 9.1 9.8 18.9 Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 1,162.6 143.2 1,305.8 Diluted earnings per share of common stock - Continuing operations $ 7.16 $ 0.88 $ 8.04 1 Includes provision for credit losses The Acquisition-Related Charges and Other in the table above relate to the following: • Charges reducing Gross profit pertaining to inventory step-up charges, a cost reduction program and facility-related costs; • Charges in SG&A primarily for a cost reduction program and margin resiliency initiatives; • Other charges included in Earnings from continuing operations before income taxes and equity interest consisting of: ◦ $7.1 million in Other, net primarily related to a cost reduction program, loss on interest rate swaps in connection with the extinguishment of debt, and deal transactions costs, partially offset by a release of a contingent consideration liability relating to the CAM acquisition; ◦ $13.5 million net loss pertaining to divested businesses; ◦ $73.5 million of restructuring charges pertaining to severance and facility closures; and 34 ◦ $46.9 million charge related to a loss on the extinguishment of debt; • Income taxes on continuing operations include the tax effect on the above net charges, as well as a one-time tax benefit of $119 million associated with a supply chain reorganization; and • An after-tax, pre-acquisition charge related to the Company's share of MTD's net earnings related primarily to restructuring charges. 2019 GAAP Acquisition- Related Charges & Other Non-GAAP Gross profit $ 4,233.4 $ 28.0 $ 4,261.4 Selling, general and administrative 1 2,568.3 (71.2) 2,497.1 Operating profit 1,665.1 99.2 1,764.3 Earnings from continuing operations before income taxes and equity interest 1,094.4 262.4 1,356.8 Income taxes on continuing operations 126.8 54.4 181.2 Share of net losses of equity method investment (11.2) 24.3 13.1 Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 954.1 232.3 1,186.4 Diluted earnings per share of common stock - Continuing operations $ 6.10 $ 1.49 $ 7.59 1 Includes provision for credit losses The Acquisition-Related Charges and Other in the table above relate to the following: • Charges reducing Gross profit pertaining to facility-related and inventory step-up charges; • Charges in SG&A primarily for integration-related costs and margin resiliency initiatives; • Other charges included in Earnings from continuing operations before income taxes and equity interest consisting of: ◦ $27.6 million in Other, net primarily related to deal transaction costs; ◦ $17.0 million gain related to the sale of the Sargent & Greenleaf business; ◦ $134.7 million of restructuring charges pertaining to severance and facility closures associated with a cost reduction program; and ◦ $17.9 million non-cash loss on the extinguishment of debt; • Income taxes on continuing operations include the tax effect on the above net charges; and • An after-tax, pre-acquisition charge related to the Company's share of MTD's net earnings related primarily to an inventory step-up adjustment.
Biggest changeThe acquisition-related and other charges amounts for the year-to-date periods of 2022, 2021 and 2020 are as follows: 31 2022 GAAP Acquisition- Related Charges & Other Non-GAAP Gross profit $ 4,284.1 $ 127.4 $ 4,411.5 Selling, general and administrative 1 3,370.0 (180.3) 3,189.7 Operating profit 914.1 307.7 1,221.8 Earnings from continuing operations before income taxes and equity interest 37.9 642.2 680.1 Income taxes on continuing operations (132.4) 84.0 (48.4) Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 165.5 558.2 723.7 Diluted earnings per share of common stock - Continuing operations $ 1.06 $ 3.56 $ 4.62 1 Includes provision for credit losses The Acquisition-Related Charges and Other in the table above relate to the following: • Charges reducing Gross profit primarily pertaining to inventory step-up charges; • Charges in SG&A primarily related to integration-related costs and a voluntary retirement program; • Other charges included in Earnings from continuing operations before income taxes and equity interest consisting of: ◦ $16.9 million in Other, net primarily related to a voluntary retirement program and deal costs; ◦ $8.4 million net loss relating to the sale of the Oil & Gas business; ◦ $168.4 million asset impairment charge related to the Oil & Gas business; and ◦ $140.8 million of restructuring charges primarily pertaining to severance and related costs; and • Income taxes on continuing operations include the tax effect on the above net charges. 2021 GAAP Acquisition- Related Charges & Other Non-GAAP Gross profit $ 5,092.2 $ 39.0 $ 5,131.2 Selling, general and administrative 1 3,193.1 (183.6) 3,009.5 Operating profit 1,899.1 222.6 2,121.7 Earnings from continuing operations before income taxes and equity interest 1,586.9 193.9 1,780.8 Income taxes on continuing operations 55.1 64.1 119.2 Share of net earnings of equity method investment 19.0 11.2 30.2 Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 1,539.6 141.0 1,680.6 Diluted earnings per share of common stock - Continuing operations $ 9.33 $ 0.85 $ 10.18 1 Includes provision for credit losses The Acquisition-Related Charges and Other in the table above relate to the following: • Charges reducing Gross profit pertaining to inventory step-up charges and facility-related costs; • Charges in SG&A primarily related to a non-cash fair-value adjustment and functional transformation initiatives; • Other charges included in Earnings from continuing operations before income taxes and equity interest consisting of: ◦ $24.2 million in Other, net primarily related to deal transaction costs; ◦ $0.6 million net loss pertaining to divested businesses; ◦ $14.5 million of restructuring charges pertaining to severance and facility closures; and ◦ $68.0 million gain recognized on the MTD equity method investment upon acquisition; • Income taxes on continuing operations include the tax effect on the above net charges; and • An after-tax, pre-acquisition charge related to the Company's share of MTD's net earnings related primarily to a one-time retroactive duty on imports of a specific component. 32 2020 GAAP Acquisition- Related Charges & Other Non-GAAP Gross profit $ 4,318.1 $ 59.0 $ 4,377.1 Selling, general and administrative 1 2,579.3 (114.8) 2,464.5 Operating profit 1,738.8 173.8 1,912.6 Earnings from continuing operations before income taxes and equity interest 1,183.7 313.5 1,497.2 Income taxes on continuing operations 38.0 189.6 227.6 Share of net earnings of equity method investment 9.1 9.8 18.9 Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 1,131.5 145.8 1,277.3 Diluted earnings per share of common stock - Continuing operations $ 6.97 $ 0.82 $ 7.79 1 Includes provision for credit losses The Acquisition-Related Charges and Other in the table above relate to the following: • Charges reducing Gross profit pertaining to inventory step-up charges, a cost reduction program and facility-related costs; • Charges in SG&A primarily for a cost reduction program and margin resiliency initiatives; • Other charges included in Earnings from continuing operations before income taxes and equity interest consisting of: ◦ $5.8 million in Other, net primarily related to a cost reduction program, loss on interest rate swaps in connection with the extinguishment of debt, and deal transactions costs, partially offset by a release of a contingent consideration liability relating to the CAM acquisition; ◦ $13.5 million net loss pertaining to divested businesses; ◦ $73.5 million of restructuring charges pertaining to severance and facility closures; and ◦ $46.9 million charge related to a loss on the extinguishment of debt; • Income taxes on continuing operations include the tax effect on the above net charges, as well as a one-time tax benefit of $118.8 million associated with a supply chain reorganization; and • An after-tax, pre-acquisition charge related to the Company's share of MTD's net earnings related primarily to restructuring charges.
In accordance with Accounting Standards Update ("ASU") 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment , companies are permitted to first assess qualitative factors to determine whether it is more likely than not that the 46 fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test.
In accordance with Accounting Standards Update ("ASU") 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment , companies are permitted to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test.
The amount of liability recorded is based on an evaluation of currently available facts with respect to each individual site and includes such factors as existing technology, presently enacted laws and regulations, and prior experience in remediation of contaminated sites. The liabilities recorded do not take into account any claims for recoveries from insurance or third parties.
The amount of liability recorded is based on an evaluation of currently available facts with respect to each individual site and includes such factors as existing technology, presently enacted laws and regulations, and prior experience in remediation of contaminated sites. The liabilities recorded do not take into account any 44 claims for recoveries from insurance or third parties.
The operating model underpins the Company's ability to deliver above-market organic growth with margin expansion, maintain efficient levels of selling, general and administrative expenses ("SG&A") and deliver top-quartile asset efficiency.
The SBD Operating Model underpins the Company's ability to deliver above-market organic growth with margin expansion, maintain efficient levels of selling, general and administrative expenses ("SG&A") and deliver top-quartile asset efficiency.
The primary Black & Decker U.S. pension and post employment benefit plans were curtailed in late 2010, as well as the only material Black & Decker 47 international plan, and in their place the Company implemented defined contribution benefit plans.
The primary Black & Decker U.S. pension and post employment benefit plans were curtailed in late 2010, as well as the only material Black & Decker international plan, and in their place the Company implemented defined contribution benefit plans.
Driving Further Profitable Growth by Fully Leveraging The Company's Core Franchises Each of the Company's franchises share common attributes: they have world-class brands and attractive growth characteristics, they are scalable and defensible, they can differentiate through innovation, and they are powered by the SBD Operating Model. • The Tools & Storage business is the tool company to own, with strong brands, proven innovation, global scale, and a broad offering of power tools, hand tools, outdoor products, accessories, and storage & digital products across many channels in both developed and developing markets. • The Engineered Fastening business is a highly profitable, GDP+ growth business offering highly engineered, value-added innovative solutions with recurring revenue attributes and global scale.
Driving Further Profitable Growth by Fully Leveraging the Company's Core Franchises Each of the Company's franchises share common attributes: they have world-class brands and attractive growth characteristics, they are scalable and defensible, they can differentiate through innovation, and they are powered by the SBD Operating Model. • The Tools & Outdoor business is the tool company to own, with strong brands, proven innovation, global scale, and a broad offering of power tools, hand tools, outdoor products, accessories, and storage and digital products across many channels in both developed and developing markets. • The Engineered Fastening business within the Industrial segment is a highly profitable, GDP+ growth business offering highly engineered, value-added innovative solutions with recurring revenue attributes and global scale.
Excluding the one-time tax benefit of $118.8 million recorded in the second quarter 2020 to reverse a deferred tax liability previously established related to certain unremitted earnings of foreign subsidiaries not permanently reinvested as a result of initiating a supply chain reorganization and the impact of acquisition-related and other charges, the effective tax rate on continuing operations in 2020 was 15.2%.
Excluding the one-time tax benefit of $118.8 million recorded in 2020 to reverse a deferred tax liability previously established related to certain unremitted earnings of foreign subsidiaries not permanently reinvested as a result of initiating a supply chain reorganization and the impact of acquisition-related and other charges, the effective tax rate on continuing operations in 2020 was 15.2%.
Financing Activities: Cash flows provided by financing activities totaled $919 million in 2021 primarily driven by net short-term borrowings of $2.225 billion and $131 million of proceeds from issuances of common stock, partially offset by the redemption and conversion of preferred stock for $750 million, cash dividend payments on common stock of $475 million, and $75 million related to the termination of interest rate swaps.
Cash flows provided by financing activities totaled $919 million in 2021 primarily driven by net short-term commercial paper borrowings of $2.225 billion and $131 million of proceeds from issuances of common stock, partially offset by the redemption and conversion of preferred stock for $750 million, cash dividend payments on common stock of $475 million, and $75 million related to the termination of interest rate swaps.
The perpetual growth rate was decreased by 150 basis points with no impairment indicated. The Company also tested its indefinite-lived trade names for impairment during the third quarter of 2021 utilizing a discounted cash flow model. The key assumptions used included discount rates, royalty rates, and perpetual growth rates applied to the projected sales.
The perpetual growth rate was decreased by 150 basis points with no impairment indicated. The Company also tested its indefinite-lived trade names for impairment during the third quarter of 2022 utilizing a discounted cash flow model. The key assumptions used included discount rates, royalty rates, and perpetual growth rates applied to the projected sales.
The Company utilizes segment profit which is defined as net sales minus cost of sales and SG&A inclusive of the provision for credit losses (aside from corporate overhead expense), and segment profit as a percentage of net sales to assess the profitability of each segment. The Company’s operations are classified into two reportable business segments: Tools & Storage and Industrial.
The Company utilizes segment profit which is defined as net sales minus cost of sales and SG&A inclusive of the provision for credit losses (aside from corporate overhead expense), and segment profit as a percentage of net sales to assess the profitability of each segment. The Company’s operations are classified into two reportable business segments: Tools & Outdoor and Industrial.
Excluding acquisition-related and other charges of $13.1 million and $67.1 million in 2021 and 2020, respectively, segment profit amounted to 10.9% of net sales in 2021 compared to 12.2% in 2020, as volume, price and productivity was more than offset by commodity inflation, growth investments and unfavorable mix.
Excluding acquisition-related and other charges of $13.1 million and $67.1 million in 2021 and 2020, respectively, segment profit amounted to 10.9% of net sales in 2021 compared to 12.2% in 2020, as volume, price and productivity were more than offset by commodity inflation, growth investments and unfavorable mix.
Additional information regarding income taxes is available in Note Q, Income Taxes. 48 CAUTIONARY STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Additional information regarding income taxes is available in Note Q, Income Taxes. 45 CAUTIONARY STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
If the carrying value of a reporting unit (including the value of goodwill) is greater than its estimated fair value, an impairment charge would be recorded for the amount that the carrying amount of the reporting unit exceeded its fair value. As required by the Company’s policy, goodwill was tested for impairment in the third quarter of 2021.
If the carrying value of a reporting unit (including the value of goodwill) is greater than its estimated fair value, an impairment charge would be recorded for the amount that the carrying amount of the reporting unit exceeded its fair value. As required by the Company’s policy, goodwill was tested for impairment in the third quarter of 2022.
The 20% organic growth was driven by stronger volumes due to the consumer reconnection with the home and garden, eCommerce and strong professional demand as well as price. Segment profit amounted to $1.985 billion, or 15.5% of net sales, in 2021 compared to $1.820 billion, or 17.6% of net sales, in 2020.
The 20% organic growth was driven by stronger volumes due to the consumer reconnection with the home and garden, e-commerce and strong professional demand as well as price. Segment profit amounted to $1.985 billion, or 15.5% of net sales, in 2021 compared to $1.820 billion, or 17.6% of net sales, in 2020.
See Note J, Capital Stock, for further discussion. (g) This amount principally represents contributions either required by regulations or laws or, with respect to unfunded plans, necessary to fund current benefits.
See Note J, Capital Stock, for further discussion. (e) This amount principally represents contributions either required by regulations or laws or, with respect to unfunded plans, necessary to fund current benefits.
Storage products include tool boxes, sawhorses, medical cabinets and engineered storage solution products. 32 The Outdoor business primarily sells corded and cordless electric lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, pressure washers and related accessories, and gas powered lawn and garden products, including lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, utility terrain vehicles (UTVs), handheld outdoor power equipment, garden tools, and parts and accessories to professionals and consumers under the DEWALT®, CUB CADET®, BLACK+DECKER®, CRAFTSMAN®, TROY-BILT®, and HUSTLER® brand names.
Storage products include tool boxes, sawhorses, medical cabinets and engineered storage solution products. 30 The Outdoor business primarily sells corded and cordless electric lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, pressure washers and related accessories, and gas powered lawn and garden products, including lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, utility terrain vehicles (UTVs), hand-held outdoor power equipment, garden tools, and parts and accessories to professionals and consumers under the DEWALT®, CUB CADET®, BLACK+DECKER®, CRAFTSMAN®, TROY-BILT®, and HUSTLER® brand names.
The Company may, however, convert all advances outstanding upon termination into a term loan that shall be repaid in full no later than the first anniversary of the termination date provided that the Company, among other things, pays a fee to the administrative agent for the account of each lender.
The Company may, however, convert all advances outstanding upon termination into a term loan that shall be repaid in full no later than the firs t anniversary of the termination date provided that the Company, among other things, pays a fee to the administrative agent for the account of each lender.
Each unit has a stated amount of $100 and initially consists of a three-year forward stock purchase contract ("2022 Purchase Contracts") for the purchase of a variable number of shares of common stock, on November 15, 2022, for a price of $100, and a 10% beneficial ownership interest in one share of 0% Series D Cumulative Perpetual Convertible Preferred Stock, without par, with a liquidation preference of $1,000 per share ("Series D Preferred Stock").
Each unit had a stated amount of $100 and initially consisted of a three-year forward stock purchase contract ("2022 Purchase Contracts") for the purchase of a variable number of shares of common stock, on November 15, 2022, for a price of $100 per share, and a 10% beneficial ownership interest in one share of 0% Series D Cumulative Perpetual Convertible Preferred Stock, without par, with a liquidation preference of $1,000 per share ("Series D Preferred Stock").
For example, if an exposure occurs from a European entity sourcing product from a U.S. supplier it may be possible to change to a European supplier. Management estimates the combined translational and transactional impact, on pre-tax earnings, of a 10% overall movement in exchange rates is approximately $209 million, or approximately $1.18 per diluted share.
For example, if an exposure occurs from a European entity sourcing product from a U.S. supplier it may be possible to change to a European supplier. Management estimates the combined translational and transactional impact, on pre-tax earnings, of a 10% overall movement in exchange rates is approximately $244 million, or approximately $1.23 per diluted share.
All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections or guidance of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.
All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections or guidance of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.
The debt portfolio including both trade and affiliate debt, is managed to achieve capital structure targets and reduce the overall cost of borrowing by using a combination of fixed and floating rate debt as well as interest rate swaps, and cross-currency swaps.
The debt portfolio including both trade and affiliate debt, is managed to achieve capital structure targets and reduce the overall cost of borrowing by leveraging, as appropriate, a combination of fixed and floating rate debt as well as interest rate swaps, and cross-currency swaps.
Excluding these charges, gross profit was 33.5% of net sales in 2021 compared to 34.2% in 2020, as higher volume, productivity, price realization, and mix benefits from innovation were more than offset primarily by commodity inflation and higher supply chain costs to serve demand.
Excluding these charges, gross profit was 33.6% of net sales in 2021 compared to 34.3% in 2020, as higher volume, productivity, price realization, and mix benefits from innovation were more than offset primarily by commodity inflation and higher supply chain costs to serve demand.
The range of environmental remediation costs that is reasonably possible is $94 million to $229 million which is subject to change in the near term. The Company may be liable for environmental remediation of sites it no longer owns. Liabilities have been recorded on those sites in accordance with this policy.
The range of environmental remediation costs that is reasonably possible is $59 million to $220 million which is subject to change in the near term. The Company may be liable for environmental remediation of sites it no longer owns. Liabilities have been recorded on those sites in accordance with this policy.
Management estimates the foreign currency impact from its derivative financial instruments outstanding at the end of 2021 would have been an incremental pre-tax loss of approximately $30 million based on a hypothetical 10% adverse movement in all net derivative currency positions.
Management estimates the foreign currency impact from its derivative financial instruments outstanding at the end of 2022 would have been an incremental pre-tax loss of approximately $32 million based on a hypothetical 10% adverse movement in all net derivative currency positions.
Any statements contained herein (including without limitation statements to the effect that Stanley Black & Decker, Inc. or its management “believes,” “expects,” “anticipates,” “plans” and similar expressions) that are not statements of historical fact should be considered forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict.
Any statements contained herein (including without limitation statements to the effect that the Company or its management “believes,” “expects,” “anticipates,” “plans” and similar expressions) that are not statements of historical fact should be considered forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict.
Additional factors that could cause actual results to differ materially from forward-looking statements are set forth in this Annual Report on Form 10-K, including under the heading “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the Consolidated Financial Statements and the related Notes. 49 Forward-looking statements in this Annual Report on Form 10-K speak only as of the date hereof, and forward-looking statements in documents attached that are incorporated by reference speak only as of the date of those documents.
Additional factors that could cause actual results to differ materially from forward-looking statements are set forth in this Annual Report on Form 10-K, including under the headings “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the Consolidated Financial Statements and the related Notes. 46 Forward-looking statements in this Annual Report on Form 10-K speak only as of the date hereof, and forward-looking statements in documents that are incorporated by reference herein speak only as of the date of those documents.
The Company has considered the implications of paying the required one-time transition tax, and believes it will not have a material impact on its liquidity. In October 2021, the Company increased its commercial paper program from $3.0 billion to $3.5 billion, which includes Euro denominated borrowings in addition to U.S. Dollars.
The Company has considered the implications of paying the required one-time transition tax, and believes it will not have a material impact on its liquidity. The Company has a $3.5 billion commercial paper program which includes Euro denominated borrowings in addition to U.S. Dollars.
The Company believes that its strong financial position, operating cash flows, committed long-term credit facilities and borrowing capacity, and ability to access equity markets, provide the financial flexibility necessary to continue its record of annual dividend payments, to invest in the routine needs of its businesses, to make strategic acquisitions and to fund other initiatives encompassed by its growth strategy and maintain its strong investment grade credit ratings.
The Company believes that its strong financial position, expected operating cash flows, committed long-term credit facilities and borrowing capacity, and ability to access equity markets, provide the financial flexibility necessary to continue its record of annual dividend payments, to invest in the routine needs of its businesses, and to fund other initiatives encompassed by its business strategy and maintain its strong investment grade credit ratings.
Cash flows provided by financing activities totaled $616 million in 2020 primarily driven by net proceeds from debt issuances of $2.223 billion, proceeds generated from the remarketing of the Series C Preferred Stock of $750 million and $147 million of proceeds from issuances of common stock, partially offset by payments on long-term debt of $1.154 billion, cash dividend payments of $432 million, net repayments of short-term borrowings of $343 million under the Company's commercial paper program, and a $250 million Craftsman deferred purchase price payment.
Cash flows provided by financing activities totaled $616 million in 2020 primarily driven by net proceeds from debt issuances of $2.223 billion, proceeds from the issuance of the remarketed Series C Preferred Stock of $750 million and $147 million of proceeds from issuances of common stock, partially offset by payments on long-term debt of $1.154 billion, cash dividend payments of $432 million, net repayments of short-term commercial paper borrowings of $343 million, and a $250 million Craftsman deferred purchase price payment.
In 2021, translational and transactional foreign currency fluctuations negatively impacted pre-tax earnings from continuing operations by approximately $17 million, or approximately $0.10 per diluted share. The Company’s exposure to interest rate risk results from its outstanding debt and derivative obligations, short-term investments, and derivative financial instruments employed in the management of its debt portfolio.
In 2022, translational and transactional foreign currency fluctuations negatively impacted pre-tax earnings from continuing operations by approximately $144 million, or approximately $0.73 per diluted share. The Company’s exposure to interest rate risk results from its outstanding debt and derivative obligations, short-term investments, and derivative financial instruments employed in the management of its debt portfolio.
This financial and business analysis should be read in conjunction with the Consolidated Financial Statements and related notes. All references to “ Notes ” in this Item 7 refer to the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report.
This financial and business analysis should be read in conjunction with the Consolidated Financial Statements and related notes. All references to “ Notes ” in this Item 7 refer to the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
As assessments and remediation progress at individual sites, the amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal information that becomes available. As of January 1, 2022, the Company had reserves of $159 million for remediation activities associated with Company-owned properties as well as for Superfund sites, for losses that are probable and estimable.
As assessments and remediation progress at individual sites, the amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal information that becomes available. As of December 31, 2022, the Company had reserves of $129 million for remediation activities associated with Company-owned properties as well as for Superfund sites, for losses that are probable and estimable.
Credit Ratings and Liquidity: The Company maintains strong investment grade credit ratings from the major U.S. rating agencies on its senior unsecured debt (S&P A, Fitch A-, Moody's Baa1), as well as its commercial paper program (S&P A-1, Fitch F1, Moody's P-2).
Credit Ratings and Liquidity: The Company maintains strong investment grade credit ratings from the major U.S. rating agencies on its senior unsecured debt (S&P A, Fitch BBB+, Moody's Baa2), as well as its commercial paper program (S&P A-1, Fitch F2, Moody's P-2).
The 2030 Term Notes accrue interest at a fixed rate of 2.3% per annum, with interest payable semi-annually in arrears, and rank equally in right of payment with all of the Company's existing and future unsecured and unsubordinated debt.
The 2025 Term Notes will accrue interest at a fixed rate of 2.3% per annum and the 2032 Term Notes at a fixed rate of 3.0% per annum, with interest payable semi-annually in arrears, and rank equally in right of payment with all of the Company's existing and future unsecured unsubordinated debt.
Among the Company's most valuable assets, STANLEY®, BLACK+DECKER® and DEWALT® are recognized as three of the world's great brands, while CRAFTSMAN® is recognized as a premier American brand.
Among the Company's most valuable assets, STANLEY®, BLACK+DECKER®, DEWALT®, and CUB CADET® are recognized as four of the world's great brands, while CRAFTSMAN® is recognized as a premier American brand.
FINANCIAL CONDITION Liquidity, Sources and Uses of Capital: The Company’s primary sources of liquidity are cash flows generated from operations and available lines of credit under various credit facilities. Operating Activities: Cash flows provided by operations were $663.1 million in 2021 compared to $2.022 billion in 2020.
FINANCIAL CONDITION Liquidity, Sources and Uses of Capital: The Company’s primary sources of liquidity are cash flows generated from operations and available lines of credit under various credit facilities. Operating Activities: Cash flows used in operations were $1.460 billion in 2022 compared to cash provided by operations of $663.1 million in 2021.
However, due to the high degree of uncertainty regarding the timing of potential future cash flows associated with the contingent consideration liability related to the Craftsman acquisition and the unrecognized tax liabilities of $289 million and $548 million, respectively, at January 1, 2022, the Company is unable to make a reliable estimate of when (if at all) these amounts may be paid.
However, due to the high degree of uncertainty regarding the timing of potential future cash flows associated with the contingent consideration liability related to the Craftsman acquisition and the unrecognized tax liabilities of $269 million and $552 million, respectively, at December 31, 2022, the Company is unable to make a reliable estimate of when (if at all) these amounts may be paid.
Fluctuations in foreign currency rates negatively impacted cash by $62 million in 2021 and $1 million in 2019 due to the strengthening of the U.S. Dollar against other currencies. Fluctuations in foreign currency rates positively impacted cash by $23 million in 2020 due to the weakening of the U.S. dollar against other currencies.
Fluctuations in foreign currency rates negatively impacted cash by $32 million and $62 million in 2022 and 2021, respectively, due to the strengthening of the U.S. Dollar against other currencies. Fluctuations in foreign currency rates positively impacted cash by $23 million in 2020 due to the weakening of the U.S. dollar against other currencies.
Based on the results of this testing, the Company determined that the fair value for each of these reporting units exceeded its carrying amount by in excess of 50%.
Based on the results of this testing, the Company determined that the fair value for each of the reporting units exceeded its carrying amount in excess of 25%.
(f) In March 2015, the Company entered into a forward share purchase contract with a financial institution counterparty which obligates the Company to pay $350 million, plus an additional amount related to the forward component of the contract. In February 2020, the Company amended the settlement date to April 2022, or earlier at the Company's option.
(d) In March 2015, the Company entered into a forward share purchase contract with a financial institution counterparty which obligates the Company to pay $350 million, plus an additional amount related to the forward component of the contract. In November 2022, the Company amended the settlement date to November 2024, or earlier at the Company's option.
The PTG business includes both professional and consumer products. Professional products include professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers and staples, concrete and masonry anchors.
Professional products include professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers and staples, and concrete and masonry anchors.
The product lines include externally threaded fasteners, blind rivets and tools, blind inserts and tools, drawn arc weld studs and systems, engineered plastic and mechanical fasteners, self-piercing riveting systems, precision nut running systems, micro fasteners, high-strength structural fasteners, axel swage, latches, heat shields, pins, and couplings. The Infrastructure business consists of the Attachment Tools and Oil & Gas product lines.
The product lines include externally threaded fasteners, blind rivets and tools, blind inserts and tools, drawn arc weld studs and systems, engineered plastic and mechanical fasteners, self-piercing riveting systems, precision nut running systems, micro fasteners, high-strength structural fasteners, axel swage, latches, heat shields, pins, and couplings.
Dollars or Euros and bear interest at a floating rate plus an applicable margin dependent upon the denomination of the borrowing and pursuant to the terms of the 364-Day Credit Agreement. The Company must repay all advances under the 364-Day Credit Agreement by the earlier of September 7, 2022 or u pon termination.
Dollars or Euros and bear interest at a floating rate plus an applicable margin dependent upon the denomination of the borrowing and pursuant to the terms of the Syndicated 364-Day Credit Agreement. The Company must repay all advances under the Syndicated 364-Day Credit Agreement by the earlier of September 6, 2023 or upon termination.
Corporate Overhead & Other Corporate Overhead & Other includes the results of the commercial electronic security business in five countries in Europe and emerging markets through its disposition in the fourth quarter of 2020 and the Mechanical Access Solutions business, a non-reportable business operating segment, as well as the corporate overhead element of SG&A, which is not allocated to the business segments.
Corporate Overhead & Other Corporate Overhead & Other includes the results of the commercial electronic security business in five countries in Europe and emerging markets through its disposition in the fourth quarter of 2020 as well as the corporate overhead element of SG&A, which is not allocated to the business segments.
Cash and cash equivalents totaled $142 million and $1.242 billion as of January 1, 2022 and January 2, 2021, respectively, which was primarily held in the U.S. 40 As a result of the Tax Cuts and Jobs Act ("Act"), the Company's tax liability related to the one-time transition tax associated with unremitted foreign earnings and profits totaled $296 million at January 1, 2022.
As of January 1, 2022, cash and cash equivalents totaled $142 million, which was primarily held in the U.S. As a result of the Tax Cuts and Jobs Act ("Act"), the Company's tax liability related to the one-time transition tax associated with unremitted foreign earnings and profits totaled $242 million at December 31, 2022.
Consolidated Results Net Sales: Net sales were $15.617 billion in 2021 compared to $13.058 billion in 2020, representing an increase of 20% with organic growth of 17%, driven by a 14% increase in volume and 3% increase in price, 2% increases from both acquisitions and foreign currency, partially offset by a 1% decrease from divestitures.
Net sales were $15.281 billion in 2021 compared to $12.750 billion in 2020, representing an increase of 20% with organic growth of 17%, driven by a 14% increase in volume and 3% increase in price, 2% increases from both acquisitions and foreign currency, partially offset by a 1% decrease from divestitures.
On February 24, 2020, the Company acquired Consolidated Aerospace Manufacturing, LLC ("CAM"), an industry-leading manufacturer of specialty fasteners and components for the aerospace and defense markets. The acquisition further diversified the Company's presence in the industrial markets and expanded its portfolio of specialty fasteners in the aerospace and defense markets.
On February 24, 2020, the Company acquired Consolidated Aerospace Manufacturing, LLC ("CAM"), an industry-leading manufacturer of specialty fasteners and components for the aerospace and defense markets. The acquisition further diversified the Company's presence in the industrial markets and expanded its portfolio of specialty fasteners in the aerospace and defense markets. Refer to Note E, Acquisitions and Investments, for further discussion.
The National Collegiate Athletic Association sponsorship delivered an estimated 308+ million views through TV-visible DEWALT® branding at 25 colleges and universities across five (Atlantic Coast Conference, Big Ten, Big 12, Pac-12 and Mountain West) Division 1 conferences.
During 2022, the National Collegiate Athletic Association sponsorship delivered DEWALT® to an estimated 269+ million viewers through TV-visible branding at 25 colleges and universities across five Division 1 conferences (Atlantic Coast Conference, Big Ten, Big 12, Pac-12 and Mountain West).
The Company will us e a 4.07% we ighted-average expected rate of return assumption to determine the 2022 net periodic benefit cost. A 25 basis point reduction in the expected rate of return assumption would increase 2022 net periodic benefit cost by approximately $6 million on a pre-tax basis.
The Company will us e a 6.03% we ighted-average expected rate of return assumption to determine the 2023 net periodic benefit cost. A 25 basis point reduction in the expected rate of return assumption would increase 2023 net periodic benefit cost by approximatel y $4 million on a pre-tax basis.
Business Segment Results The Company’s reportable segments are aggregations of businesses that have similar products, services and end markets, among other factors.
Business Segment Results The Company’s reportable segments represent businesses that have similar products, services and end markets, among other factors.
The Company recognized approximately $8 million of defined benefit plan income in 2021, which may fluctuate in future years depending upon various factors including future discount rates and actual returns on plan assets.
The Company recognized approximately $1 million of defined benefit plan expense in 2022, which may fluctuate in future years depending upon various factors including future discount rates and actual returns on plan assets.
During 2020, the Company recognized net restructuring charges of $73.8 million, primarily related to severance costs associated with a cost reduction program announced in the second quarter of 2020. The 2020 actions resulted in net cost savings of approximately $125 million in 2021.
During 2020, the Company recognized net restructuring charges of $74 million, primarily related to severance costs associated with a cost reduction program announced in the second quarter of 2020. The Company estimates that these actions resulted in annual net cost savings of approximately $125 million in 2021.
Holders of the Remarketed Series C Preferred Stock are entitled to receive cumulative dividends, if declared by the Board of Directors, at an initial fixed rate equal to 5.0% per annum of the $1,000 per share liquidation preference (equivalent to $50.00 per annum per share).
Holders of the Remarketed Series D Preferred Stock were entitled to receive cumulative dividends, if declared by the Board of Directors, at an initial fixed rate equal to 7.5% per annum of the $1,000 per share liquidation preference (equivalent to $75.00 per annum per share).
As discussed further in Note L, Employee Benefit Plans , the Company develops the expected return on plan assets considering various factors, which include its targeted asset allocation percentages, historic returns, and expected future returns. The Company’s expected rate of return assumptions for the United States and international pension plans were 4.75% and 3.25%, respectively, at January 1, 2022.
As discussed further in Note L, Employee Benefit Plans , the Company develops the expected return on plan assets considering various factors, which include its targeted asset allocation percentages, historic returns, and expected future returns. The Company’s expected rate of return assumptions for the United States and international pension plans were 4.69% and 3.41%, respecti vely, at December 31, 2022.
The Company’s net ESOP activity resulted in expense of $59.1 million and $4.4 million in 2021 and 2020, respectively, and income of $5.1 million in 2019 . U.S. defined contribution retirement plan expense increased in 2021 as all remaining unallocated shares in the ESOP were released in the first quarter of 2020.
The Company’s net ESOP activity resulted in expense of $61.1 million, $59.1 million, and $4.4 million in 2022, 2021 and 2020, respectively. U.S. de fined contribution retirement plan expense increased in 2021 as all remaining unallocated shares in the ESOP were released in the first quarter of 2020.
The Company’s weighted-average discount rates used to determine benefit obligations at January 2, 2021 for the United States and international pension plans were 2.39% and 1.31%, respectively.
The Company’s weighted-average discount rates used to determine benefit obligations at January 1, 2022 for the United States and international pension plans were 2.80% and 1.78%, respectively.
Industrial net sales increased 5% compared to 2020 primarily due to a 2% increase in volume, a 1% increase in price, and 1% increases from both acquisitions and foreign currency.
Industrial net sales increased $110.4 million, or 5%, in 2021 compared to 2020, due to a 2% increase in volume, a 1% increase in price, and 1% increases from both acquisitions and foreign currency.
Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common and preferred stock and business acquisitions, among other items.
Free cash flow and cash from operations used in CFROI do not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common and preferred stock and business acquisitions, among other items.
The Company expects to achieve annual net cost savings of approximately $24 million by the end of 2022 related to restructuring costs incurred during 2021. The majority of the $31.9 million of reserves remaining as of January 1, 2022 is expected to be utilized within the next twelve months.
The Company expects to achieve annual net cost savings of approximately $300 million by the end of 2023 related to the restructuring costs incurred during 2022. The majority of the $62 million of reserves remaining as of December 31, 2022 is expected to be utilized within the next twelve months.
The Company has made a significant commitment to the SBD Operating Model and management believes that its success will be characterized by continued asset efficiency, organic growth in the 4-6% range in the long-term as well as expanded operating margin rates over the next 3 to 5 years as the Company leverages the growth and pursues structural cost reductions with the margin resiliency initiatives.
The Company has made a significant commitment to the SBD Operating Model and management believes that its success will be characterized by asset efficiency, organic revenue growth 2 to 3 times the market in the long-term as well as expanded adjusted operating margin rates over the next 3 to 5 years as the Company leverages the growth and pursues structural cost reductions.
The key assumptions applied to the cash flow projections were discount rates, which ranged from 7.0% to 8.0%, near-term revenue growth rates over the next six years, which represented cumulative annual growth rates ranging from approximately 4% to 7%, and perpetual growth rates of 3%. These assumptions contemplated business, market and overall economic conditions.
With respect to the quantitative tests, the key assumptions applied to the cash flow projections were discount rates, which ranged from 9.5% to 10.0%, near-term revenue growth rates over the next six years, which represented cumulative annual growth rates ranging from approximately 5% to 6%, and perpetual growth rates of 3%. These assumptions contemplated business, market and overall economic conditions.
Discount rates are developed considering the yields available on high-quality fixed income investments with maturities corresponding to the duration of the related benefit obligations. The Company’s weighted-average discount rates used to determine benefit obligations at January 1, 2022 for the United States and international pension plans were 2.80% and 1.78%, respectively.
Discount rates are developed considering the yields available on high-quality fixed income investments with maturities corresponding to the duration of the related benefit obligations. The Company’s weighted-average discount rates used to determine benefit obligations at December 31, 2022 for the United States and international pension plans were 5.36% and 4.70%, respectively.
Accordingly, market fluctuations in the fair value of plan assets can affect the net periodic benefit cost in the following year. The projected benefit obligation for defined benefit plans exceeded the fair value of plan assets by $432 million at January 1, 2022.
Accordingly, market fluctuations in the fair value of plan assets can affect the net periodic benefit cost in the following year. The projected benefit obligation for defined benefit plans exceeded the fair value of plan ass ets by $307 million at December 31, 2022.
The anticipated annual net cost savings of approximately $24 million related to the 2021 restructuring actions include: $13 million in the Tools & Storage segment; $10 million in the Industrial segment; and $1 million in Corporate. 2022 OUTLOOK This outlook discussion is intended to provide broad insight into the Company’s near-term earnings and cash flow generation prospects.
The anticipated annual net cost savings of approximately $300 million related to the 2022 restructuring actions include: $184 million in the Tools & Outdoor segment; $36 million in the Industrial segment; and $80 million in Corporate. 2023 OUTLOOK This outlook discussion is intended to provide broad insight into the Company's near-term earnings and cash flow generation prospects.
The Company expects the combination of MTD, Excel and its existing outdoor strategic business unit in Tools & Storage will create a global leader in the $25 billion and growing outdoor category, with strong brands and growth opportunities.
The combination of MTD, Excel and the Company's existing outdoor strategic business unit in Tools & Outdoor created a global leader in the $25 billion and growing outdoor category, with strong brands and growth opportunities.
The SBD Operating Model: Winning in the 2020s Over the past 15 years, the Company has successfully leveraged its proven and continually evolving operating model to focus the organization to sustain top-quartile performance, resulting in asset efficiency, above-market organic growth and expanding operating margins.
The SBD Operating Model Over the past 15 years, the Company has successfully leveraged its proven and continually evolving operating model to focus the organization to target asset efficiency, above-market organic growth and expanding operating margins.
The Company received total net proceeds from this offering of approximately $740 million, net of underwriting expenses and other fees associated with the transaction. The Company used the net proceeds from the offering for general corporate purposes, including repayment of other borrowings.
The Company received total net proceeds from this offering of approximately $993 million, net of approximately $7 million of underwriting expenses and other fees associated with the transaction. The Company used the net proceeds from the offering for general corporate purposes, including repayment of indebtedness under the commercial paper facilities.
At January 1, 2022, the Company reported $8.784 billion of goodwill, $2.525 billion of indefinite-lived trade names and $2.175 billion of net definite-lived intangibles. Management tests goodwill for impairment at the reporting unit level.
At December 31, 2022, the Company reported $8.503 billion of goodwill, $2.516 billion of indefinite-lived trade names and $1.959 billion of net definite-lived intangibles. Management tests goodwill for impairment at the reporting unit level.
The latest evolution occurred in 2020, when the Company launched the SBD Operating Model: Winning in the 2020s, which recognized the changing dynamics of the world in which the Company operates, including the acceleration of technological change, geopolitical instability and the changing nature of work.
The latest evolution occurred in 2020, when the Company launched the SBD Operating Model, which recognized the changing dynamics of the world in which the Company operates, including the acceleration of technological change, geopolitical instability and the changing nature of work. At the center of the model is the concept of the interrelationship between people and technology.
The results and measures, including gross profit, selling, general, and administrative ("SG&A"), Other, net, and segment profit, on a basis excluding acquisition-related and other charges, and organic growth are Non-GAAP financial measures.
The results and measures, including gross profit, SG&A, Other, net, and segment profit (including Corporate Overhead), on a basis excluding acquisition-related and other charges, free cash flow, CFROI and organic growth are Non-GAAP financial measures.
Important factors that could cause the Company's actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in its forward-looking statements include, among others, the following: (i) successfully developing, marketing and achieving sales from new products and services and the continued acceptance of current products and services; (ii) macroeconomic factors, including global and regional business conditions (such as Brexit), commodity prices, inflation and deflation, and currency exchange rates; (iii) laws, regulations and governmental policies affecting the Company's activities in the countries where it does business, including those related to tariffs, taxation, data privacy, anti-bribery, anti-corruption, government contracts and trade controls such as section 301 tariffs and section 232 steel and aluminum tariffs; (iv) the economic, political, cultural and legal environment of emerging markets, particularly Latin America, Russia, China and Turkey; (v) realizing the anticipated benefits of mergers, acquisitions, joint ventures, strategic alliances or divestitures; (vi) pricing pressure and other changes within competitive markets; (vii) availability and price of raw materials, component parts, freight, energy, labor and sourced finished goods; (viii) the impact the tightened credit markets and change to LIBOR and other benchmark rates may have on the Company or its customers or suppliers; (ix) the extent to which the Company has to write off accounts receivable or assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers; (x) the Company's ability to identify and effectively execute productivity improvements and cost reductions; (xi) potential business and distribution disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, pandemics, sanctions, political unrest, war, terrorism or natural disasters; (xii) the continued consolidation of customers, particularly in consumer channels and the Company’s continued reliance on significant customers; (xiii) managing franchisee relationships; (xiv) the impact of poor weather conditions and climate change; (xv) maintaining or improving production rates in the Company's manufacturing facilities, responding to significant changes in customer preferences, product demand and fulfilling demand for new and existing products, and learning, adapting and integrating new technologies into products, services and processes; (xvi) changes in the competitive landscape in the Company's markets; (xvii) the Company's non-U.S. operations, including sales to non-U.S. customers; (xviii) the impact from demand changes within world-wide markets associated with homebuilding and remodeling; (xix) potential adverse developments in new or pending litigation and/or government investigations; (xx) the incurrence of debt and changes in the Company's ability to obtain debt on commercially reasonable terms and at competitive rates; (xxi) substantial pension and other postretirement benefit obligations; (xxii) potential regulatory liabilities, including environmental, privacy, data breach, workers compensation and product liabilities; (xxiii) attracting and retaining key employees, managing a workforce in many jurisdictions, work stoppages or other labor disruptions; (xxiv) the Company's ability to keep abreast with the pace of technological change; (xxv) changes in accounting estimates; (xxvi) the Company’s ability to protect its intellectual property rights and associated reputational impacts; (xxvii) the continued adverse effects of the COVID-19 pandemic and an indeterminate recovery period; (xxviii) the possibility that the Company does not achieve the intended financial benefits from the acquisition of MTD; (xxix) the failure to consummate, or a delay in the consummation of, the Security sale transaction for various reasons (including but not limited to failure to receive, or delay in receiving, required regulatory approvals and meet customary closing conditions); (xxx) the failure to undertake or complete, or a delay in the timing of, the share repurchase program; and (xxxi) failure to realize the expected benefits of the Company's capital allocation strategy and share repurchase program.
Important factors that could cause the Company's actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in its forward-looking statements include, among others, the following: (i) successfully developing, marketing and achieving sales from new products and services and the continued acceptance of current products and services; (ii) macroeconomic factors, including global and regional business conditions (such as Brexit), commodity prices, inflation and deflation, and currency exchange rates; (iii) laws, regulations and governmental policies affecting the Company's activities in the countries where it does business, including those related to tariffs, taxation, data privacy, anti-bribery, anti-corruption, government contracts and trade controls such as section 301 tariffs and section 232 steel and aluminum tariffs; (iv) the economic, political, cultural and legal environment of emerging markets, particularly Latin America, Russia, China and Turkey; (v) realizing the anticipated benefits of mergers, acquisitions, joint ventures, strategic alliances or divestitures, including the divestitures of the Security and Oil & Gas businesses; (vi) pricing pressure and other changes within competitive markets; (vii) availability and price of raw materials, component parts, freight, energy, labor and sourced finished goods; (viii) the impact the tightened credit markets and any discontinuation, reform or replacement of LIBOR and other benchmark rates may have on the Company or its customers or suppliers; (ix) the extent to which the Company has to write off accounts receivable or assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers; (x) the Company's ability to identify and effectively execute productivity improvements and cost reductions; (xi) potential business and distribution disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, pandemics, sanctions, political unrest, war, terrorism or natural disasters; (xii) the continued consolidation of customers, particularly in consumer channels and the Company’s continued reliance on significant customers; (xiii) managing franchisee relationships; (xiv) the impact of poor weather conditions and climate change; (xv) maintaining or improving production rates in the Company's manufacturing facilities, responding to significant changes in customer preferences, product demand and fulfilling demand for new and existing products, and learning, adapting and integrating new technologies into products, services and processes; (xvi) changes in the competitive landscape in the Company's markets; (xvii) the Company's non-U.S. operations, including sales to non-U.S. customers; (xviii) the impact from demand changes within world-wide markets associated with homebuilding and remodeling; (xix) potential adverse developments in new or pending litigation and/or government investigations; (xx) the incurrence of debt and changes in the Company's ability to obtain debt on commercially reasonable terms and at competitive rates; (xxi) substantial pension and other postretirement benefit obligations; (xxii) potential regulatory liabilities, including environmental, privacy, data breach, workers compensation and product liabilities; (xxiii) attracting and retaining key employees, managing a workforce in many jurisdictions, labor shortages, work stoppages or other labor disruptions; (xxiv) the Company's ability to keep abreast with the pace of technological change; (xxv) changes in accounting estimates; (xxvi) the Company’s ability to protect its intellectual property rights and associated reputational impacts; (xxvii) the continuing impact of the COVID-19 pandemic; and (xxviii) the Company’s ability to implement, and achieve the expected benefits (including cost savings and reduction in working capital) from its Global Cost Reduction Program including: continuing to advance innovation, electrification and global market penetration to achieve organic revenue growth of 2-3 times the market; streamlining and simplifying the organization, as well as shifting resources to prioritize investments believed to have a positive and more direct impact to customers; accelerating the operations and supply chain transformation to improve fill rates and better match the needs of its customers while improving adjusted gross margins back to historical 35%+ levels; prioritizing cash flow generation and inventory optimization; leveraging strategic sourcing and contract manufacturing; consolidating facilities and optimizing the distribution network; executing the SBD Operating Model to deliver operational excellence through efficiency, simplified organizational design and inventory optimization; and platforming products.
As part of the integration of these businesses, the Company plans to design, develop and manufacture battery and electric-powered solutions for professional and residential users. This will position the combined businesses to be a leader as preferences shift from gas powered equipment toward electrified solutions in outdoor power equipment.
As part of the integration of these businesses into the Tools & Outdoor segment, the Company designed, developed and manufactured battery and electric-powered solutions for professional and residential users. This positioned the combined businesses to be a leader in outdoor power equipment as preferences shift from gas powered equipment toward electrified solutions.
Refer to Note M, Fair Value Measurements, for further discussion.
Refer to Note M, Fair Value Measurements, and Note Q, Income Taxes, for further discussion.
Distribution center costs (i.e. warehousing and fulfillment facility and associated labor costs) are classified within SG&A. This classification may differ from other companies who may report such expenses within cost of sales. Due to diversity in practice, to the extent the classification of these distribution costs differs from other companies, the Company’s gross margins may not be comparable.
This classification may differ from other companies who may report such expenses within cost of sales. Due to diversity in practice, to the extent the classification of these distribution costs differs from other companies, the Company’s gross margins may not be comparable.
A 25 basis point reduction in the discount rate would have increased the projected benefit obligation by approximately $101 million at January 1, 2022.
A 25 basis point reduction in the discount rate would have increased the projected benefit obligation by approximately $50 million a t December 31, 2022.
The year-over-year increase in 2020 compared to 2019 was driven by higher employee-related costs. 38 RESTRUCTURING ACTIVITIES A summary of the restructuring reserve activity from January 2, 2021 to January 1, 2022 is as follows: (Millions of Dollars) January 2, 2021 Net Additions Usage Currency January 1, 2022 Severance and related costs $ 77.8 $ (3.5) $ (47.9) $ 2.0 $ 28.4 Facility closures and asset impairments 2.0 18.0 (16.5) — 3.5 Total $ 79.8 $ 14.5 $ (64.4) $ 2.0 $ 31.9 During 2021, the Company recognized net restructuring charges of $14.5 million, primarily related to facility closures and asset impairments.
The year-over-year increase in 2021 compared to 2020 was driven by functional investments. 36 RESTRUCTURING ACTIVITIES A summary of the restructuring reserve activity from January 1, 2022 to December 31, 2022 is as follows: (Millions of Dollars) January 1, 2022 Net Additions Usage Currency December 31, 2022 Severance and related costs $ 28.2 $ 125.9 $ (98.7) $ 1.6 $ 57.0 Facility closures and asset impairments 3.5 14.9 (13.2) 0.1 5.3 Total $ 31.7 $ 140.8 $ (111.9) $ 1.7 $ 62.3 During 2022, the Company recognized net restructuring charges of $141 million, primarily related to severance and related costs.
Upon completion of the remarketing, the holders of the 2017 Equity Units received 5,463,750 common shares and the Company issued 750,000 shares of Remarketed Series C Preferred Stock.
Upon completion of the remarketing, the holders of the 2019 Equity Units received 4,723,500 common shares and the Company issued 750,000 shares of Remarketed Series D Preferred Stock.
The Company considers the use of Non-GAAP financial measures relevant to aid analysis and understanding of the Company’s results and business trends aside from the material impact of these items and ensures appropriate comparability to operating results of prior periods.
The Company considers the use of Non-GAAP financial measures relevant to aid analysis and understanding of the Company’s results and business trends aside from the material impact of these items and ensures appropriate comparability to operating results of prior periods. Supplemental Non-GAAP information should not be considered in isolation or as a substitute for the related GAAP financial measures.
The 364-Day Credit Agreement serves as part of the liquidity back-stop for the Compan y’s $3.5 billion U .S. Dollar and Euro commercial paper program. As of January 1, 2022 and January 2, 2021, the Company had not drawn on this 364-Day committed credit facility.
The Syndicated 364-Day Credit Agreement serves as part of the liquidity back-stop for the Company’s $3.5 billion U.S. Dollar and Euro commercial paper program. As of December 31, 2022, the Company had not drawn on its Syndicated 364-Day Credit Agreement .
Failure to maintain strong investment grade rating levels could adversely affect the Company’s cost of funds, liquidity and access to capital markets, but would not have an adverse effect on the Company’s ability to access its existing committed credit facilities.
Failure to maintain strong investment grade rating levels could adversely affect the Company’s cost 38 of funds, liquidity and access to capital markets, but would not have an adverse effect on the Company’s ability to access its existing committed credit facilities. Cash and cash equivalents totaled $396 million as of December 31, 2022, which was primarily held in foreign jurisdictions.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSuch Financial Statements and Financial Statement Schedule are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 51
Biggest changeSuch Financial Statements and Financial Statement Schedule are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 48

Other SWK 10-K year-over-year comparisons