2016 Year in Review

Financial
Highlights

Financial
Highlights**

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(millions of dollars,
except per-share amounts)
SWK
2016 2015 2014 2013(1) 2012(1)
Revenue 11,406.9 11,171.8 11,338.6 10,889.5 10,022.4
Gross Margin – $ 4,267.2 4,072.0 4,102.7 3,933.2 3,686.9
Gross Margin – % 37.4% 36.4% 36.2% 36.1% 36.8%
Working Capital Turns 10.6 9.2 9.2 8.1 7.8
Free Cash Flow* 1,138 871 1,005 528 593
Diluted EPS from Continuing Operations 6.51 5.92 5.37 4.98 4.72
Tools & Storage
Revenue 7,469.2 7,140.7 7,033.0 6,705.0 6,413.0
Segment Profit – $ 1,266.9 1,170.1 1,074.4 969.6 951.3
Segment Profit – % 17.0% 16.4% 15.3% 14.5% 14.8%
Security
Revenue 2,097.4 2,092.9 2,261.2 2,295.9 2,259.3
Segment Profit – $ 269.2 239.6 259.2 273.0 342.6
Segment Profit – % 12.8% 11.4% 11.5% 11.9% 15.2%
Industrial
Revenue 1,840.3 1,938.2 2,044.4 1,888.6 1,350.1
Segment Profit – $ 304.4 339.9 350.6 300.3 232.1
Segment Profit – % 16.5% 17.5% 17.1% 15.9% 17.2%
(1) Excludes merger and acquisition-related charges, with the exception of Free Cash Flow.
* Free Cash Flow = Net cash provided by operating activities minus capital expenditures.
** In the first quarter of 2015, the Company combined the legacy CDIY business with certain complementary elements of the legacy IAR and Healthcare businesses (formerly part of the Industrial and Security segments, respectively) to form one Tools & Storage business. As a result of this change, the former CDIY segment was renamed Tools & Storage. The results from 2012–2014 were recast to align with this change in organizational structure. There is no impact to the consolidated financial statements of the Company as a result of this change.

2016
Scorecard

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EBITDA
(Continuing Operations)(a)
($ MILLIONS)

EPS
(Continuing Operations)(b)

Free Cash Flow(c)
($ MILLIONS)

Total Sales Growth

Organic Sales Growth

Working Capital Turns(d)

Average Capital Employed(e)
($ BILLIONS)

Cash Flow Return on Investment(f)

EBITDA
(Continuing Operations)(a)
($ MILLIONS)

EPS
(Continuing Operations)(b)

Free Cash Flow(c)
($ MILLIONS)

Total Sales Growth

Organic Sales Growth

Working Capital Turns(d)

Average Capital Employed(e)
($ BILLIONS)

Cash Flow Return on Investment(f)

 

(millions of dollars) 2016 2015 2014 2013 2012
Net earnings from continuing operations 965 904 857 520 458
Interest income (23) (15) (14) (13) (10)
Interest expense 194 180 177 160 144
Income taxes 261 249 227 69 76
Depreciation and amortization 408 414 444 434 400
EBITDA from continuing operations 1,805 1,732 1,691 1,170 1,068
(a) “EBITDA” (earnings before interest, taxes, depreciation, and amortization) is a non-GAAP measurement. Management believes it is important for the ability to determine the earnings power of the Company.
(b) The Company has excluded the 2013 and 2012 after-tax merger and acquisition-related charges of $270 million ($1.70 of diluted EPS) and $329 million ($1.97 of diluted EPS), respectively, in the calculation of diluted EPS. These amounts were excluded because the Company believes doing so provides a better indicator of operating trends when analyzing diluted EPS, due to the unusually large magnitude of these charges and the fact that they are non-recurring. Therefore, the Company has provided these measures both including and excluding such charges.
(c) Free Cash Flow – Net cash provided by operating activities minus capital expenditures.
(d) Working Capital Turns are computed as annualized fourth quarter sales divided by year-end working capital (accounts receivable, inventory, accounts payable, and deferred revenue).
(e) Average Capital Employed is computed by dividing the 2-point average of debt and equity.
(f) Cash Flow Return on Investment is computed as cash from operations plus after-tax expense, divided by the 2-point average of debt and equity.
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