What changed in this filing

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Item 1. Business

2022-02-22 compared with 2021-02-18 · 124 added, 107 removed, 116 unchanged (67% of the section changed)

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The Company’s principal executive office is located at 1000 Stanley Drive, New Britain, Connecticut 06053 and its telephone number is (860) 225-5111.

The Company is a diversified global provider of hand tools, power tools and related accessories, engineered fastening systems and products, services and equipment for oil & gas and infrastructure applications, commercial electronic security and monitoring systems, healthcare solutions, and automatic doors, with 2020 consolidated annual revenues of $14.5 billion.

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.

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%).

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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 Consolidated Aerospace Manufacturing, LLC ("CAM") for approximately $1.4 billion, International Equipment Solutions Attachments Group ("IES Attachments") for approximately $654 million, Nelson Fastener Systems ("Nelson") for approximately $424 million, the Tools business of Newell Brands ("Newell Tools") for approximately $1.8 billion, and the Craftsman® brand from Sears Holdings Corporation ("Sears Holdings") for an estimated cash purchase price of approximately $937 million on a discounted basis.

The CAM acquisition further diversifies the Company's presence in the industrial markets and expands its portfolio of specialty fasteners in the aerospace and defense markets.

In recent years, the Company completed the acquisitions of the remaining 80 percent ownership stake of MTD Holdings Inc.

("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.

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.

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.

The Nelson acquisition was complementary to the Company's product offerings, enhanced its presence in the general industrial end markets, and expanded its portfolio of highly-engineered fastening solutions.

The Newell Tools acquisition, which included the industrial cutting, hand tool and power tool accessory brands IRWIN® and LENOX®, enhanced the Company’s position within the global tools & storage industry and broadened the Company’s product offerings and solutions to customers and end users, particularly within power tool accessories.

The Craftsman acquisition provided the Company with the rights to develop, manufacture and sell Craftsman®-branded products in non-Sears Holdings channels.

In January 2019, the Company acquired a 20 percent interest in MTD Holdings Inc.

("MTD"), a privately held global manufacturer of outdoor power equipment, for $234 million in cash.

Under the terms of the agreement, the Company has the option to acquire the remaining 80 percent of MTD beginning on July 1, 2021.

The investment in MTD increases the Company's presence in the greater than $20 billion lawn and garden segment and enables the two companies to work together to pursue revenue and cost opportunities, improve operational efficiency, and introduce new and innovative products for professional and residential outdoor equipment customers, utilizing each company's respective portfolios of strong brands.

In May 2019, the Company sold its Sargent and Greenleaf mechanical locks business within the Security segment for net proceeds of $79 million.

In February 2017, the Company completed the sale of the majority of its mechanical security businesses, which included the commercial hardware brands of Best Access, phi Precision and GMT, for net proceeds of approximately $717 million.

These divestitures allowed the Company to invest in other areas of the Company that fit into its long-term growth strategy.

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.

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.

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.

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.

Refer to Note E, Acquisitions and Investments, and Note T, Divestitures , of the Notes to Consolidated Financial Statements in Item 8 for further discussion.

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These are core business issues that ensure the long-term viability of the Company, its customers, suppliers, and communities.

The Company has established environmental, social and corporate governance targets embodied in its 2030 Corporate Social Responsibility (“CSR”) strategy that include upskilling 10 million makers and creators, enhancing 500 million lives through purpose driven product innovation, becoming carbon-positive, landfill-free, and reducing water use in water stressed and scarce areas.

The carbon positive target includes third-party approved science-based targets to reduce absolute scope 1 and 2 greenhouse gas emissions by greater than 100% by 2030, and to reduce supply chain emissions by 35%.

The Company’s CSR strategy considers all life-cycle stages including material procurement from supply chain partners, product design, manufacturing, distribution and transportation, product use, product service and end-of-life.

The Company has established environmental, social and corporate governance ("ESG") targets embodied in its 2030 ESG strategy that include empowering 10 million makers and creators, enhancing 500 million lives through purpose-driven product

innovation, becoming carbon-neutral, landfill-free across its operations, and reducing water use in water stressed and scarce areas.

The carbon neutrality target includes third-party approved science-based targets to reduce absolute scope 1 and 2 greenhouse gas emissions by greater than 100% by 2030, and to reduce supply chain emissions by 35%.

The Company’s ESG strategy considers all life-cycle stages including material procurement from supply chain partners, product design, manufacturing, distribution and transportation, product use, product service and end-of-life.

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 three reportable business segments, which also represent its operating segments:

Tools & Storage, Industrial and Security.

All segments have significant international operations and are exposed to translational and transactional impacts from fluctuations in foreign currency exchange rates.

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").

All reportable segments have significant international operations and are exposed to translational and transactional impacts from fluctuations in foreign currency exchange rates.

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 .

Tools & Storage

The Tools & Storage segment is comprised of the Power Tools and Equipment ("PTE") and Hand Tools, Accessories & Storage ("HTAS") businesses.

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 PTE business includes both professional and consumer products.

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.

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

Consumer products include corded and cordless electric power tools sold primarily under the BLACK+DECKER® brand, and home products such as hand-held vacuums, paint tools and cleaning appliances.

The HTAS business sells hand tools, power tool accessories and storage products.

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Storage products include tool boxes, sawhorses, medical cabinets and engineered storage solution products.

The segment sells its products to professional end users, distributors, retail consumers and industrial customers in a wide variety of industries and geographies.

The majority of sales are distributed through retailers, including home centers, mass merchants, hardware stores, and retail lumber yards, as well as third-party distributors and a direct sales force.

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 segment sells its products to professional end users, distributors, independent dealers, retail consumers and industrial customers in a wide variety of industries and geographies.

The Industrial segment is comprised of the Engineered Fastening and Infrastructure businesses.

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Attachment Tools sells hydraulic tools and high quality, performance-driven heavy equipment attachment tools for off-highway applications.

Oil & Gas sells and rents custom pipe handling, joint welding and coating equipment used in the construction of large and small diameter pipelines, and provides pipeline inspection services.

Oil & Gas sells and

rents custom pipe handling, joint welding and coating equipment used in the construction of large and small diameter pipelines, and provides pipeline inspection services.

The Infrastructure business sells to the oil and natural gas pipeline industry and other industrial customers.

The products and services are primarily distributed through a direct sales force and, to a lesser extent, third-party distributors.

The Security segment is comprised of the Convergent Security Solutions ("CSS") and Mechanical Access Solutions ("MAS") businesses.

Annual revenues in the Security segment were $1.9 billion in 2020, representing 13% of the Company’s total revenues.

The CSS business designs, supplies and installs commercial electronic security systems and provides electronic security services, including alarm monitoring, video surveillance, fire alarm monitoring, systems integration and system maintenance.

Purchasers of these systems typically contract for ongoing security systems monitoring and maintenance at the time of initial equipment installation.

The business also sells healthcare solutions, which include asset tracking, infant protection, pediatric protection, patient protection, wander management, fall management, and emergency call products.

The CSS business sells to consumers, retailers, educational, financial and healthcare institutions, as well as commercial, governmental and industrial customers.

Mechanical Access Solutions

Annual revenues for the MAS segment were $0.3 billion in 2021, representing 2% of the Company’s total revenues.

The MAS business primarily sells automatic doors to commercial customers.

Products for both businesses are sold predominantly on a direct sales basis.

Products are sold predominantly on a direct sales basis.

Other Information

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Certain large customers offer private label brands (“house brands”) that compete across a wide spectrum of the Company’s Tools & Storage segment product offerings.

Competition in the Security segment is generally fragmented via both large international companies and regional providers.

Competition tends to be based primarily on price and the quality and comprehensiveness of services offered to customers.

Major Customers

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The Company develops standardized business processes and system platforms to reduce costs and provide scalability.

The continued focus on the operating principles above have been instrumental in reducing working capital and creating significant opportunities to generate incremental free cash flow (defined as cash flow from operations less capital and software expenditures).

Working capital turns were 10.4 at the end of 2020, up 0.6 turns from 2019, reflecting the strong revenue performance in 2020.

The 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 sustaining 10+ working capital turns.

Working capital turns were 5.1 at the end of 2021, down 6.0 turns from 2020, due to inventory investments to support the sustained strong demand outlook and longer lead times related to the challenged global supply chain which has substantially increased inventory in transit.

Raw Materials

The Company’s products are manufactured using resins, ferrous and non-ferrous metals including, but not limited to, steel, zinc, copper, brass, aluminum and nickel.

The Company also purchases components such as batteries, motors, and electronic components to use in manufacturing and assembly operations along with resin-based molded parts.

The Company also purchases components such as batteries, motors, engines, transmissions, and electronic components to use in manufacturing and assembly operations along with resin-based molded parts.

The raw materials required are procured globally and generally available from multiple sources at competitive prices.

As part of the Company's Enterprise Risk Management, the Company has implemented a supplier risk mitigation strategy in order to identify and address any potential supply disruption or material scarcity issues associated with commodities, components, finished goods and critical services.

Similar to other industries, the Company is experiencing supply chain constraints in semiconductors that is limiting its ability to fully serve its customer demand, however the Company has taken steps in 2021 to add supply and the Company's supply chain outlook for these electronic components continues to improve.

The Company does not anticipate difficulties in obtaining supplies for any raw materials or energy used in its production processes.

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No business segment is solely dependent, to any significant degree, on patents, licenses, franchises or concessions, and the loss of one or several of these patents, licenses, franchises or concessions would not have a material adverse effect on any of the Company's businesses.

The Company owns numerous patents, none of which individually is material to the Company's operations as a whole.

The Company owns numerous patents, none of which individually is material to the Company's

operations as a whole.

These patents expire at various times over the next 20 years.

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The Company has numerous trademarks that are used in its businesses worldwide.

In the Tools & Storage segment, significant trademarks include STANLEY®, BLACK+DECKER®, D E WALT®, FLEXVOLT®, IRWIN®, LENOX®, CRAFTSMAN®, PORTER-CABLE®, BOSTITCH®, FATMAX®, Powers®, Guaranteed Tough®, MAC TOOLS®, PROTO®, Vidmar®, FACOM®, Expert®, LISTA® and the yellow & black color scheme for power tools and accessories.

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.

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 Security segment includes significant trademarks such as STANLEY®, HSM®, SONITROL®, Stanley Access Technologies™, AeroScout®, Hugs®, WanderGuard®, Roam Alert®, MyCall®, Arial® and Bed-Check®.

The MAS segment includes significant trademarks such as STANLEY® and Stanley Access Technologies™.

The terms of these trademarks typically vary from 10 to 20 years, with most trademarks being renewable indefinitely for like terms.

Governmental Regulations

The Company's operations are subject to numerous federal, state and local laws and regulations, both within and outside the U.S., in areas such as environmental protection, international trade, data privacy, tax, consumer protection, government contracts, and others.

The Company is subject to import and export controls, tariffs, and other trade-related regulations and restrictions in the countries in which it has operations or otherwise does business.

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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 2, 2021 and December 28, 2019, the Company had reserves of $174.2 million and $213.8 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 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.

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.

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Additional information regarding environmental matters is available in Note S, Contingencies , of the Notes to Consolidated Financial Statements in Item 8 .

Compliance with government regulations, including environmental regulations, has not had, and based on current information and the applicable laws and regulations currently in effect, is not expected to have a material effect on the Company's capital expenditures, results of operations or competitive position.

Compliance with government regulations, including environmental and climate change regulations, has not had, and based on current information and the applicable laws and regulations currently in effect, is not expected to have a material effect on the Company's capital expenditures, results of operations or competitive position.

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

The Company’s purpose is For Those Who Make the World, which puts employees, customers, communities and plants at the heart of its human capital strategies and practices.

The Company defines success as delivering value for all stakeholders.

The Company believes its commitment to quality, safety and sustainability enables its vision to be the type of uniquely human-centered global industrial company that strives to keep every stakeholder in mind and the Company's values, operating model and oversight of its human capital support this purpose.

As of January 2, 2021, the Company had approximately 53,100 employees in over 60 countries, approximately one-third of whom were employed in the U.S.

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).

The Company is aware that the world in which it operates necessitates acceleration of how it prioritizes human capital and the enhanced focus on empathic leadership, health and well-being and the growing needs of a globally diverse workforce.

The Company believes its strategic focus on its people, culture and employer brand differentiates it in this dynamic, competitive landscape.

Tenets of its strategic focus include employee experience powered by the intersection of people and technology, hybrid working models, understanding how to maximize talent by leveraging people analytics, and driving leadership behaviors such as agility, inclusion, flexibility, among others in its management teams.

The Company continues to focus and invest in talent and people experiences, which it believes is critical to its continued success as a 179-year-old organization.

As of January 1, 2022, the Company had approximately 71,300 employees, inclusive of recently acquired businesses and approximately 8,000 employees included in the aforementioned pending sale of the CSS business, in over 60 countries.

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 68% hourly-paid employees, principally in manufacturing, distribution center and security monitoring operations, and 32% salaried employees.

Nearly 1,400 U.S.

employees are covered by collective bargaining agreements dispersed among 28 different local labor unions, and a majority of European employees are represented by workers councils.

The Company strives to maintain a positive relationship with all its employees, as well as the unions and workers councils representing them where applicable.

There have been no significant interruptions of the Company’s operations in recent years due to labor disputes.

Governance and Oversight

The CEO and the management Executive Committee are entrusted with developing and advancing the Company’s key human capital strategy which is reviewed with the Board of Directors.

The Chief Human Resource Officer is charged with the development and stewardship of this strategy on an enterprise-wide basis.

This incorporates a broad range of dimensions, including culture, values, labor and employee relations, leadership capabilities, performance management and total rewards.

Diversity, equity and inclusion are key to successfully achieving business and organizational objectives.

Key processes include ongoing performance and development feedback, quarterly diversity, equity and inclusion reviews, and periodic engagement surveys that are reviewed by the management Executive Committee and Board of Directors.

Code of Business Ethics, Workplace Harassment Prevention, and Managing Unconscious Bias trainings are provided to employees and the content is regularly reviewed for applicability and improvement, and updated as needed.

All employees have access to the INTEGRITY@SBD platform where support, guidance and resources are available on topics regarding integrity, code of ethics, diversity, compliance, and workplace harassment.

Employees are encouraged to address any concerns through multiple channels, including anonymously whenever possible, without fear of retaliation or retribution.

The workforce is comprised of approximately 69% hourly-paid employees, principally in manufacturing, distribution centers and security monitoring operations, and 31% salaried employees.

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.

collective bargaining agreements are scheduled for renegotiation in the next 12 months.

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

In 2021, the Company invested in its employer of choice branding and specialty recruiting.

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 recruiting investments include dedicated resources to source diverse talent, a new recruiting client resource management platform, and organizing internal recruiting teams to better focus on highly technical roles with skills shortages such as data scientists, software engineers, and battery engineers.

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.

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.

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.

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 invested in AI-based video technology to help its operations employees learn outside of the classroom and to increase uptake.

In 2021, the Company invested in development and talent initiatives for its operations workforce through a dedicated operations-focused Workforce Readiness organization.

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.

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.

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.

Compensation and benefits are globally managed and tailored by country to maintain market competitiveness, and effectively attract, retain, and reward employees.

The Company’s portfolio of programs is designed in the context of its compensation philosophy underpinned by the tenets of competitive pay, pay for performance, alignment with shareholder interests, and the Company's intent to provide fair and equitable pay supporting an inclusive culture.

In addition to standard compensation and benefits packages, a sizable portion of managers and select individual contributors receive annual incentives contingent on achievement of business objectives, and all employees are generally eligible for special recognition awards.

Diversity, Equity & Inclusion

The Company's management Executive Committee, Board of Directors and workforce are dedicated to diversity, equity and inclusion and work to ensure that all employees feel valued, heard and are positioned to succeed.

As of January 2, 2021, the Company's CEO and his direct staff reside in the U.S.

and are comprised of 27% women and 20% of the CEO and his direct staff are racially or ethnically diverse.

Women represent approximately 31% of the global workforce.

As stated in the Company's Equal Employment Opportunity reporting to the U.S.

government, in the U.S., approximately 33% of employees are racially or ethnically diverse.

The Company strives to create a culture of equality that unlocks human potential and uncovers the key drivers of a workplace in which everyone can advance and thrive.

The Company is executing initiatives across the global workforce designed to foster an inclusive workplace and facilitate equitable career development opportunities.

The Company has nine employee resource groups ("ERGs") with more than 90 local chapters across the globe.

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/Latinx, Developing Professionals, Pride & Allies (LGBTQ+),

Veterans, Women, and Working Parents.

Company leaders actively participate, sponsor and engage with the ERGs.

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.

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.

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.

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 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.

Management monitors hiring, retention, promotion and continued progress toward achieving the Company's diversity goals.

The Company also prioritizes investing in its communities by supporting individuals and organizations that advance these goals across cities and regions in which it operates.

In 2020, the management Executive Committee prioritized a focus on gender and racial/ethnic diversity across the Company.

The Company launched an equity campaign designed to reach, inspire, support and engage (“RISE”) women and people of color.

Through RISE, the Company has supported 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.

In 2019, the Company became a signatory of Paradigm for Parity committing to addressing the gender gap in corporate leadership.

The Company has also participated in the Business Roundtable Diversity & Inclusion Index, where the largest U.S.-based employers are committed to building a more inclusive environment.

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.

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.

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.

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.

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 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.

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 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's CEO was among the signatories of the CEO Action for Diversity & Inclusion.

Lifelong Learning

The Company believes a sustainable competitive advantage is achieved through lifelong learning.

The employees' rate of learning, resilience, and adaptive performance enables the Company to innovate, operate with excellence, and deliver value to customers and shareholders.

Employee learning and development is a key enabler to engage, motivate and inspire the Company's workforce and is supported internally through the Stanley Black & Decker University and externally with key partners.

Tailored programs address career advancement, leadership development, and skill development needs of the workforce across the Company.

Employees consumed more than 25,000 hours of online voluntary learning in 2020.

As a leader in advanced manufacturing the Company also strives to provide meaningful training and development for critical skills, new skills, and ways of working with technology to its labor and factory workforce.

This includes new operational skills, maintenance, digital, and management skills.

The Company utilizes a broad range of capabilities, modes of learning, and platforms, including the use of artificial intelligence and data analytics to achieve its lifelong learning and advanced manufacturing objectives.

Talent Attraction, Advancement, and Retention

The diversity of skills, ways of working, and adaptability of the Company's operating model continue to increase and are reflected in all aspects of its talent management practices.

Approximately 35% of global new hires in 2020 were women, and in the U.S.

approximately 47% of new employees were racially or ethnically diverse.

Internal talent reviews are conducted annually to manage talent and leadership performance.

The Company utilizes feedback provided by employees through multiple channels, including internal social platforms, listening sessions, and periodic surveys to improve the employee experience and aspires to be the employer of choice.

Development and succession plans are managed in partnership with Human Resources and business segments.

Employee compensation and benefits are globally managed and locally adjusted to maintain market and skill competitiveness to attract and retain talent.

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 healthy lifestyles, mental health, and retirement readiness.

In 2020, the Company's commitment to ensuring the health and safety of its employees and supply chain partners was demonstrated through its agile and adaptive response to the ongoing novel coronavirus (COVID-19) pandemic.

The Company was able to sustain business operations by implementing critical safety measures and wellness policies, oversight and systems.

These actions proved to be highly effective in protecting critical manufacturing and operating employees in site locations and field operations.

The Company also quickly transitioned its office employees around the globe to a nearly complete virtual workforce, providing the necessary technical and collaboration support to enable these employees to adjust to a virtual working environment.

The Company believes the adopted hybrid work policies are likely to be a lasting result of the pandemic and will be a key enabler to support the broad needs of critical on-site to fully virtual employees.

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.

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.

In 2021, the Company's continued commitment to ensuring the health and safety of its employees and supply chain partners was demonstrated through its agile and adaptive response to the ongoing coronavirus pandemic (“COVID-19”).

Under the guidance of the Chief Medical Officer, the Company was able to sustain business operations by implementing safety measures and wellness policies, oversight, and systems, including expansion of the Employee Assistance Program to be available globally.

The Company maintained virtual working for its office employees around the globe where feasible, while providing the necessary technical and collaboration support to enable its employees to succeed in a virtual working environment.

The Company believes its adopted hybrid work model is likely to outlast the pandemic and will be a key enabler to support the broad needs of its employee whether they perform work on-site to fully virtual.

Additional information regarding the Company's response to COVID-19 is available under the caption “COVID-19 Pandemic” in Item 7.

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Reported total workforce numbers include employees and supervised contractors.

Additional information regarding the Company's Human Capital programs and initiatives is available in the Company's Annual Sustainability Report located under the Social Responsibility section of the Company’s website.

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.

The Chief Human Resources Officer (“CHRO”), who reports directly to the CEO, is charged with the development and stewardship of this strategy on an enterprise-wide basis.

This incorporates a broad range of dimensions, including culture, values, labor and employee relations, leadership expectations and capabilities, talent development, performance management and total rewards.

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.

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.

All employees have access to the INTEGRITY@SBD platform where support, guidance and resources are available.

Employees are encouraged to raise any concerns through multiple channels, including through the confidential Integrity Helpline, without fear of retaliation or retribution.

Additional information regarding the Company's Human Capital programs and initiatives is available in the Company's Annual Sustainability Report and in the Company’s Environmental, Social and Governance Report located under the Social Responsibility section 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.

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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.

The reduction in spending in 2020 versus 2019 was primarily due to the temporary cost actions taken in response to COVID-19 that were broadly reinstated.

In 2021, the Company plans to return to historic normalized spend levels consistent with 2019 as the Company continues to focus on becoming known as one of the world's greatest innovators and remains committed to generating new core and breakthrough innovations.

In 2021, the Company returned to normalized spend levels as the Company continues to focus on becoming known as one of the world's greatest innovators and remains committed to generating new core and breakthrough innovations.

The reduction in spending in 2020 versus 2019 was primarily due to the temporary cost actions taken in response to COVID-19.

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business