What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-22 compared with 2021-02-18 · 809 added, 679 removed, 1760 unchanged (46% of the section changed)

CONTROLS AND PROCEDURES

Material Weaknesses in Internal Control Over Financial Reporting

The management of Stanley Black & Decker, Inc.

(the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting.

(the "Company") is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined under Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Under the supervision and with the participation of management, including the Chief Executive Officer and the President and Chief Financial Officer, the Company has assessed the effectiveness of its internal control over financial reporting as of the end of the period covered by this report based upon the criteria set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Control — Integrated Framework (2013 Framework).

Based on that assessment, the Chief Executive Officer and the President and Chief Financial Officer concluded that the Company's internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of its financial reporting and the preparation of its financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America as of January 1, 2022 due to the material weaknesses in internal control described below.

A material weakness, as defined in Rule 12b-2 under the Exchange Act, is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Subsequent to the filing of its 2020 Form 10-K, the Company received comments from the SEC Staff regarding its accounting for equity units issued in May 2017 and November 2019 (the “Equity Units”).

Upon further reflection of the comments received by the Staff and the nature of the Equity Units, the Company determined that errors were made in its original accounting conclusions resulting from material weaknesses in its internal control over financial reporting for such instruments.

The Company determined the errors were the result of the following deficiencies in internal control over financial reporting:

The design of its control to consider all the relevant authoritative accounting guidance for financial instruments with debt- and equity-like features;

The design of its control to consider financial instruments with debt- and equity-like features in the calculation of earnings per share.

The Company assessed whether there was a reasonable possibility that a material misstatement would not have been prevented or detected on a timely basis as a result of the above control deficiencies.

The first control deficiency could result in a determination that there are two units of account in which the forward stock purchase contracts, when evaluated separately as freestanding instruments, would be precluded from equity classification.

As a result, the asset or liability related to the forward stock purchase contracts would be subject to mark-to-market accounting, which would be significantly influenced by factors outside of the Company’s control, including fluctuations in its share price.

The second control deficiency resulted in material errors in the calculation of diluted earnings per share previously disclosed in the Company’s historical financial statements.

Based on these factors, the Company concluded that the deficiencies noted above each rise to the level of a material weakness.

Remediation of Material Weaknesses

The Company acknowledges that its management is responsible for establishing and maintaining adequate internal control over financial reporting and assessing the effectiveness of its internal controls.

The Company is committed to maintaining a strong internal control environment and implementing measures to ensure that the control deficiencies identified above are remediated as soon as possible.

Management is in the process of implementing its remediation plan, which includes steps to design and implement new controls and expand education and training related to the accounting considerations for complex financing transactions.

The Company will consider the material weakness remediated after the applicable controls operate for a sufficient period of time, and management has concluded, through testing, that the controls are operating effectively.

Evaluation of Disclosure Controls and Procedures

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

In February 2020, the Company acquired Consolidated Aerospace Manufacturing, LLC ("CAM") for approximately $1.4 billion.

During the fourth quarter of 2021, the Company acquired the remaining 80 percent ownership stake in MTD Holdings Inc.

("MTD") and Excel Industries ("Excel") for approximately $1.5 billion and $374 million, respectfully.

Since Stanley Black & Decker, Inc.

has not yet fully incorporated the internal controls and procedures of CAM into Stanley Black & Decker, Inc.'s internal control over financial reporting, management excluded this business from its assessment of the effectiveness of internal control over financial reporting as of January 2, 2021.

CAM accounted for 6% of Stanley Black & Decker, Inc.'s total assets as of January 2, 2021 and 2% of Stanley Black & Decker, Inc.'s net sales for the year then ended.

Management has assessed the effectiveness of the Company’s internal control over financial reporting as of January 2, 2021.

In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Control — Integrated Framework (2013 Framework).

Management concluded that based on its assessment, the Company’s internal control over financial reporting was effective as of January 2, 2021.

Ernst & Young LLP, the auditor of the financial statements included in this annual report, has issued an attestation report on the registrant’s internal control over financial reporting, a copy of which appears on page 65.

Under the supervision and with the participation of management, including the Company’s President and Chief Executive Officer and its Executive Vice President and Chief Financial Officer, the Company has, pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined under Rule 13a-15(e) of the Exchange Act).

Based upon that evaluation, the Company’s President and Chief Executive Officer and its Executive Vice President and Chief Financial Officer have concluded that, as of January 2, 2021, the Company’s disclosure controls and procedures are effective.

There has been no change in the Company’s internal control over financial reporting that occurred during the fiscal year ended January 2, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting aside from the previously mentioned acquisition of CAM.

As part of the ongoing integration activities, the Company will complete an assessment of existing controls and incorporate its controls and procedures into CAM.

has not yet fully incorporated the internal controls and procedures of MTD and Excel into Stanley Black & Decker, Inc.'s internal control over financial reporting, management excluded these businesses from its assessment of the effectiveness of internal control over financial reporting as of January 1, 2022.

MTD accounted for 5% of Stanley Black & Decker, Inc.'s total assets as of January 1, 2022 and 1% of Stanley Black & Decker, Inc.'s net sales for the year then ended.

Excel accounted less than 1% of Stanley Black & Decker, Inc.'s total assets as of January 1, 2022 and less than 1% of Stanley Black & Decker, Inc.'s net sales for the year then ended.

Other than those items noted above, there has been no change in the Company’s internal control over financial reporting that occurred during the fiscal year ended January 1, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Refer to Management’s Report On Internal Control Over Financial Reporting on page 63.

OTHER INFORMATION

1 unchanged sentence

The information required by this Item, except for certain information with respect to the Company’s Code of Ethics, the identification of the executive officers of the Company and any material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors, as set forth below, is incorporated herein by reference to the information set forth in the section of the Company’s definitive proxy statement (which will be filed pursuant to Regulation 14A under the Exchange Act within 120 days after the close of the Company’s fiscal year) under the headings “Information Concerning Nominees for Election as Directors,” and “Board of Directors".

Available on the Company's website at http://www.stanleyblackanddecker.com on the “Corporate Governance” section which appears under the “Investors” heading is the Code of Business Ethics applicable to all of its directors, officers and employees worldwide and a Code of Ethics for the Chief Executive Officer and senior financial officers including the Chief Financial Officer and principal accounting officer.

The Company intends to post on its website required information regarding any amendment to, or waiver from, the Code of Business Ethics that applies to our Chief Executive Officer and senior financial officers within four business days after any such amendment or waiver.

Available on the Company's website at http://www.stanleyblackanddecker.com under the “Who We Are” heading is the Code of Business Ethics applicable to all of its directors, officers, including the Chief Executive Officer, President and Chief Financial Officer, and Vice President, Chief Accounting Officer, and employees worldwide.

The Company intends to post on its website required information regarding any amendment to, or waiver from, the Code of Business Ethics that applies to the Company's Chief Executive Officer and senior financial officers within four business days after any such amendment or waiver.

The following is a list of the executive officers of the Company as of February 22, 2022:

Name and Age Office Date Elected to

Loree (62) President & Chief Executive Officer since August 2016.

Loree (63) Chief Executive Officer since August 2016.

President & Chief Operating Officer (2013);

2 unchanged sentences

Donald Allan, Jr.

(56) Executive Vice President & Chief Financial Officer since October 2016.

(57) President & Chief Financial Officer since April 2021.

Executive Vice President & Chief Financial Officer (2016);

Senior Vice President & Chief Financial Officer (2010);

3 unchanged sentences

Assistant Controller (1999).

Ansell (53) Executive Vice President, Stanley Black & Decker since July 2020.

Executive Vice President & President, Tools & Storage (2016);

Senior Vice President and Group Executive, Global Tools & Storage (2015);

Senior Vice President and Group Executive, Construction & DIY (2010);

Vice President & President, Stanley Consumer Tools Group (2006);

President - Consumer Tools and Storage (2004);

President of Industrial Tools & Storage (2002);

Vice President - Global Consumer Tools Marketing (2001);

Vice President Consumer Sales America (1999).

Senior Vice President, General Counsel and Secretary since July 2017.

16 unchanged sentences

Vice President-Consumer Products (Europe, Middle East and Africa), The Black & Decker Corporation (2006).

Raff (54) President, Stanley Security since November 2016.

Raff (55) Head of Outdoor Integration since July 2021.

President, Stanley Security (2016);

President, Stanley Electronic Security North America (2015);

3 unchanged sentences

General Manager, Construction & DIY (2002).

Robert Blackburn (52) Senior Vice President of Global Operations since May 2019.

Hoffman Group, CEO and Chairman of the Executive Board (2017);

BASF S.E., President of Supply Chain Operations & Information Services (2007).

Robinson (53) Senior Vice President & President, Stanley Industrial since April 2020.

34 unchanged sentences

No further awards will be issued under the Company's 2013 Long-Term Incentive Plan.

employees are eligible to contribute from 1% to 25% of their salary to a qualified tax deferred savings plan as described in the Employee Stock Ownership Plan ("ESOP") section of Note L, Employee Benefit Plans, of the Notes to the Consolidated Financial Statements in Item 8.

non-highly compensated employees are eligible to contribute from 1% to 25% of their salary to a qualified tax deferred savings plan as described in the Employee Stock Ownership Plan ("ESOP") section of Note L, Employee Benefit Plans, of the Notes to the Consolidated Financial Statements in Item 8.

The Company contributes an amount equal to one half of the employee contribution up to the first 7% of salary.

There is a non-qualified tax deferred savings plan for highly compensated salaried employees which mirrors the qualified plan provisions, but was not specifically approved by security holders.

There is a non-qualified tax deferred savings plan for highly compensated salaried employees which mirrors certain qualified plan provisions, but was not specifically approved by security holders.

Eligible highly compensated salaried U.S.

2 unchanged sentences

Effective January 1, 2019, the Company, at its discretion, will determine whether matching and core contributions will be made for the non-qualified tax deferred savings plan for a particular year.

If the Company decides to make matching contributions for a year, it will make contributions, in an amount determined in its discretion, that may constitute part or all of or more than the matching contributions that would have been made pursuant to the provisions of the Stanley Black & Decker Supplemental Retirement Account Plan that were in effect prior to 2019.

both qualified and non-qualified plans, the investment of the employee’s contribution and the Company’s contribution is controlled by the employee and may include an election to invest in Company stock.

If the Company decides to make matching contributions for a year, it will make contributions, in an amount determined at its discretion, that may constitute part or all of or more than the matching contributions that would have been made pursuant to the provisions of the Stanley Black & Decker Supplemental Retirement Account Plan that were

in effect prior to 2019.

For both qualified and non-qualified plans, the investment of the employee’s contribution and the Company’s matching contribution is controlled by the employee and may include an election to invest in Company stock.

Shares of the Company’s common stock may be issued at the time of a distribution from the qualified plan.

1 unchanged sentence

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Items 404 and 407(a) of Regulation S-K is incorporated by reference to the information set forth under the sections entitled "Corporate Governance," "Director Independence" and "Related Party Transactions" of the Company’s definitive proxy statement, which will be filed pursuant to Regulation 14A under the Exchange Act within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

The information required by Items 404 and 407(a) of Regulation S-K is incorporated by reference to the information set forth under the sections entitled "Corporate Governance," "Director Independence" and "Related Person Transactions" of the Company’s definitive proxy statement, which will be filed pursuant to Regulation 14A under the Exchange Act within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

13 unchanged sentences

Management’s Report on Internal Control Over Financial Reporting (page 63).

Report of Independent Registered Public Accounting Firm — Financial Statement Opinion (page 62).

Report of Independent Registered Public Accounting Firm (PCAOB ID:

000 42 ) — Financial Statement Opinion (page 64).

Report of Independent Registered Public Accounting Firm — Internal Control Opinion (page 67).

Consolidated Statements of Operations — fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018 (page 66).

Consolidated Statements of Comprehensive Income — fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018 (page 67).

Consolidated Balance Sheets — January 2, 2021 and December 28, 2019 (page 68).

Consolidated Statements of Cash Flows — fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018 (page 69).

Consolidated Statements of Changes in Shareowners’ Equity — fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018 (page 71).

Consolidated Statements of Operations — fiscal years ended January 1, 2022, January 2, 2021, and December 28, 2019 (page 69).

Consolidated Statements of Comprehensive Income — fiscal years ended January 1, 2022, January 2, 2021, and December 28, 2019 (page 70).

Consolidated Balance Sheets — January 1, 2022 and January 2, 2021 (page 71).

Consolidated Statements of Cash Flows — fiscal years ended January 1, 2022, January 2, 2021, and December 28, 2019 (page 72).

Consolidated Statements of Changes in Shareowners’ Equity — fiscal years ended January 1, 2022, January 2, 2021, and December 28, 2019 (page 74).

Notes to Consolidated Financial Statements (page 75).

6 unchanged sentences

STANLEY BLACK & DECKER, INC.

Loree, President and Chief Executive Officer

Loree, Chief Executive Officer

February 22, 2022

1 unchanged sentence

Signature Title Date

Loree President and Chief Executive Officer February 18, 2021

Loree Chief Executive Officer February 22, 2022

/s/ Donald Allan, Jr.

Executive Vice President and Chief Financial Officer February 18, 2021

President and Chief Financial Officer February 22, 2022

Donald Allan, Jr.

10 unchanged sentences

* Director February 22, 2022

(As Attorney-in-Fact)

2 unchanged sentences

and Subsidiaries

Fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018

Fiscal years ended January 1, 2022, January 2, 2021, and December 28, 2019

(Millions of Dollars)

14 unchanged sentences

The prior year amounts in the table above have been recast to exclude the amounts relating to businesses classified as discontinued operations.

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

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

3 unchanged sentences

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

In February 2020, the Company acquired Consolidated Aerospace Manufacturing, LLC ("CAM") for approximately $1.4 billion.

During the fourth quarter of 2021, the Company acquired the remaining 80 percent ownership stake in MTD Holdings Inc.

("MTD") and Excel Industries ("Excel") for approximately $1.5 billion and $374 million, respectfully.

Since Stanley Black & Decker, Inc.

CAM accounted for 6% of Stanley Black & Decker, Inc.'s total assets as of January 2, 2021 and 2% of Stanley Black & Decker, Inc.'s net sales for the year then ended.

MTD accounted for 5% of Stanley Black & Decker, Inc.'s total assets as of January 1, 2022 and 1% of Stanley Black & Decker, Inc.'s net sales for the year then ended.

Excel accounted for less than 1% of Stanley Black & Decker, Inc.'s total assets as of January 1, 2022 and less than 1% of Stanley Black & Decker, Inc.'s net sales for the year then ended.

Management has assessed the effectiveness of Stanley Black & Decker, Inc.’s internal control over financial reporting as of January 1, 2022.

Management concluded that based on its assessment, Stanley Black & Decker, Inc.’s internal control over financial reporting was effective as of January 2, 2021.

Management concluded that based on its assessment, and the existence of material weaknesses related to the accounting for equity units issued in May 2017 and November 2019, Stanley Black & Decker, Inc.’s internal control over financial reporting was not effective as of January 1, 2022.

Ernst & Young LLP, Registered Public Accounting Firm included in this annual report, has issued an attestation report on the registrant’s internal control over financial reporting, a copy of which appears on page 67.

Loree, President and Chief Executive Officer

Loree, Chief Executive Officer

/s/ Donald Allan, Jr.

Donald Allan, Jr., Executive Vice President and Chief Financial Officer

Donald Allan, Jr., President and Chief Financial Officer

Report of Independent Registered Public Accounting Firm

2 unchanged sentences

We have audited the accompanying consolidated balance sheets of Stanley Black & Decker, Inc.

(the Company) as of January 2, 2021 and December 28, 2019, the related consolidated statements of operations, comprehensive income, shareowners’ equity and cash flows for each of the three years in the period ended January 2, 2021, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 2, 2021 and December 28, 2019, and the results of its operations and its cash flows for each of the three years in the period ended January 2, 2021, in conformity with U.S.

(the Company) as of January 1, 2022 and January 2, 2021, the related consolidated statements of operations, comprehensive income, shareowners’ equity and cash flows for each of the three years in the period ended January 1, 2022, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 1, 2022 and January 2, 2021, and the results of its operations and its cash flows for each of the three years in the period ended January 1, 2022, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 2, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 18, 2021 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 1, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 22, 2022 expressed an adverse opinion thereon.

Basis for Opinion

1 unchanged sentence

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

8 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate .

Accounting for Acquisition of Consolidated Aerospace Manufacturing, LLC

Description of the Matter As discussed in Note E of the consolidated financial statements, the Company acquired the specialty fasteners and components manufacturer, Consolidated Aerospace Manufacturing, LLC, on February 24, 2020 for a total purchase price of approximately $1.46 billion, net of cash acquired.

The Company allocated the purchase price, on a preliminary basis, to the assets acquired and liabilities assumed based on their respective fair values, including identified intangible assets of $590 million and resulting goodwill of approximately $633 million.

Auditing the Company's accounting for the acquired intangible assets involved subjective auditor judgment due to the significant estimation required in management’s determination of the fair value of customer relationships.

Accounting for Acquisition of MTD Holdings, Inc.

Description of the Matter As discussed in Note E of the consolidated financial statements, the Company acquired the remaining 80 percent ownership stake of MTD Holdings, Inc., on December 1, 2021 for a total purchase price of approximately $1.5 billion, net of cash acquired.

The Company previously acquired a 20 percent interest in MTD in January 2019 for $234 million.

The Company allocated the purchase price, on a preliminary basis, to the assets acquired and liabilities assumed based on their respective fair values, which included identified intangible assets of $840 million.

The significant estimation was primarily due to the sensitivity of the significant assumptions in determining fair value, including discount rates, projected revenue growth rates and profit margins.

2 unchanged sentences

Our audit procedures included, among other procedures, testing controls over the valuation of customer relationships, including the valuation models and underlying assumptions used to develop such estimates.

To test the estimated fair value of the customer relationships, we performed audit procedures that included, among other procedures, evaluating the appropriateness of the valuation methodologies and testing the significant assumptions used in the model, as described above, including the completeness and accuracy of the underlying data.

To test the estimated fair value of the customer relationships and certain tradenames, we performed audit procedures that included, among other procedures, evaluating the appropriateness of the valuation methodologies and testing the significant assumptions used in the model, as described above, including the completeness and accuracy of the underlying data.

We compared the significant assumptions to current industry, market and economic trends, to the historical results of the acquired business and to other guideline companies within the same industry.

We performed sensitivity analyses to evaluate the change in the fair value of the customer relationships that would result from changes in the discount rates, projected revenue growth rates and profit margins.

We performed sensitivity analyses to evaluate the change in the fair value of the customer relationships and certain tradenames that would result from changes in the discount rates, projected revenue growth rates and profit margins.

We involved our internal valuation specialists to assist with our evaluation of the methodology used by the Company as well as certain assumptions within the valuation.

3 unchanged sentences

The Company’s goodwill is initially assigned to its reporting units as of the relevant acquisition date.

Auditing management’s annual goodwill impairment test for the Infrastructure reporting unit was challenging and highly judgmental due to the significant estimation required.

Auditing management’s annual goodwill impairment test for the Infrastructure reporting unit was challenging and highly judgmental due to the significant estimation required to determine the estimated fair value of the reporting unit.

In particular, the fair value estimate was sensitive to the significant assumption of revenue growth, which is affected by expected future market or economic conditions.

A substantial portion of the revenues of the Infrastructure reporting unit are derived from customers’ investments in cyclical industries that typically are subject to severe economic cycles, partially driven by the prices of oil and of scrap metal, which could have an impact on the goodwill impairment analysis for the Infrastructure reporting unit.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the determination of fair value, including the significant assumption of revenue growth discussed above, used in the Infrastructure goodwill impairment analysis.

11 unchanged sentences

The Company considers many factors when evaluating and estimating its tax positions such as, but not limited to, the settlements of on-going audits.

Auditing the measurement and determination of whether a tax position is more likely than not to be upheld under examination is challenging and subjective due to the Company’s global operations, the many tax jurisdictions in which it operates, the distinctive nature and unique facts and circumstances of each tax position and the interpretations of tax law and legal rulings.

Many of these same factors also make it challenging to audit the completeness of the uncertain tax reserves.

How We Addressed the Matter in Our Audit We identified and tested controls around the Company’s judgments and determinations on tax positions, including the Company’s process to verify that all uncertain tax positions are identified and considered as part of the analysis, controls addressing completeness of the uncertain tax positions and the determination of the more-likely-than-not amount of the positions to be upheld.

Auditing the completeness of the uncertain tax reserves is challenging and subjective due to the Company’s global operations, the many tax jurisdictions in which it operates, the distinctive nature and unique facts and circumstances of each tax position and the interpretations of tax law and legal rulings.

How We Addressed the Matter in Our Audit We identified and tested controls around the Company’s judgments and determinations on tax positions, including the Company’s process to verify that all uncertain tax positions are identified and considered as part of the analysis and controls addressing completeness of the uncertain tax positions.

With the support of our tax professionals, we performed an evaluation of the Company’s estimates with respect to uncertain tax positions including the technical merits of the Company’s tax positions.

12 unchanged sentences

We have audited Stanley Black & Decker, Inc.’s internal control over financial reporting as of January 1, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Stanley Black & Decker, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of January 2, 2021, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Consolidated Aerospace Manufacturing, LLC (“CAM”), which is included in the 2020 consolidated financial statements of the Company and constituted 6% of total assets as of January 2, 2021 and 2% of net sales for the fiscal year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of CAM.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 2, 2021 and December 28, 2019, the related consolidated statements of operations, comprehensive income, shareowners' equity and cash flows for each of the three fiscal years in the period ended January 2, 2021, and the related notes and schedule listed in the Index at Item 15(a) and our report dated February 18, 2021 expressed an unqualified opinion thereon.

In our opinion, because of the effect of the material weaknesses described below on the achievement of the objectives of the control criteria, Stanley Black & Decker, Inc.

(the Company) has not maintained effective internal control over financial reporting as of January 1, 2022, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified and included in management’s assessment.

Management has identified material weaknesses in controls related to (1) the design of its control to consider financial instruments with debt- and equity-like features in the calculation of earnings per share and (2) the design of its control to consider all the relevant authoritative accounting guidance for financial instruments with debt- and equity-like features.

or Excel Industries, which are included in the 2021 consolidated financial statements of the Company and constituted 5% and less than 1% of total and net assets, respectively, as of January 1, 2022 and 1% and less than 1% of net sales, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of MTD Holdings, Inc.

or Excel Industries.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 1, 2022 and January 2, 2021, related consolidated statements of comprehensive income, shareowners’ equity and cash flows for each of the three years in the period ended January 1, 2022, and the related notes and schedule listed in the Index at Item 15(a).

The material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the 2021 consolidated financial statements, and this report does not affect our report dated February 22, 2022, which expressed an unqualified opinion thereon.

Basis for Opinion

18 unchanged sentences

Consolidated Statements of Operations

Fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018

Fiscal years ended January 1, 2022, January 2, 2021, and December 28, 2019

(Millions of Dollars, Except Per Share Amounts)

8 unchanged sentences

Restructuring charges 14.5 73.8 138.4

Gain on equity method investment ( 68.0 ) — —

Loss on debt extinguishments — 46.9 17.9

2 unchanged sentences

$ 13,976.2 $ 11,837.9 $ 11,818.5

Earnings before income taxes and equity interest 1,267.0 1,130.0 1,022.1

Income taxes 41.4 160.8 416.3

Net earnings before equity interest $ 1,225.6 $ 969.2 $ 605.8

Earnings from continuing operations before income taxes and equity interest 1,641.0 1,219.8 1,094.4

Income taxes on continuing operations 61.4 43.0 126.8

Net earnings from continuing operations before equity interest 1,579.6 1,176.8 967.6

Share of net earnings (losses) of equity method investment 19.0 9.1 ( 11.2 )

Net earnings $ 1,234.7 $ 958.0 $ 605.8

Net earnings attributable to non-controlling interests 0.9 2.2 0.6

Net earnings from continuing operations 1,598.6 1,185.9 956.4

Net (losses) earnings attributable to non-controlling interests ( 1.7 ) 0.9 2.2

Net earnings from continuing operations attributable to Stanley Black & Decker, Inc.

$ 1,600.3 $ 1,185.0 $ 954.2

Preferred stock dividends and beneficial conversion feature 14.2 24.1 1.8

Net Earnings from Continuing Operations Attributable to Common Shareowners $ 1,586.1 $ 1,160.9 $ 952.4

Contract adjustment payments accretion 1.3 1.7 1.7

Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted $ 1,587.4 $ 1,162.6 $ 954.1

Earnings from discontinued operations before income taxes 70.2 47.2 35.6

Income taxes on discontinued operations ( 18.7 ) ( 1.6 ) 34.0

Net earnings from discontinued operations $ 88.9 $ 48.8 $ 1.6

Net Earnings Attributable to Common Shareowners - Diluted $ 1,676.3 $ 1,211.4 $ 955.7

Net Earnings Attributable to Stanley Black & Decker, Inc.

$ 1,689.2 $ 1,233.8 $ 955.8

Preferred stock dividends 23.4 — —

Net Earnings Attributable to Common Shareowners $ 1,210.4 $ 955.8 $ 605.2

Earnings per share of common stock:

Basic $ 7.85 $ 6.44 $ 4.06

Diluted $ 7.77 $ 6.35 $ 3.99

Basic earnings per share of common stock:

Continuing operations $ 9.99 $ 7.53 $ 6.42

Discontinued operations $ 0.56 $ 0.32 $ 0.01

Total basic earnings per share of common stock $ 10.55 $ 7.85 $ 6.43

Diluted earnings per share of common stock:

Continuing operations $ 9.62 $ 7.16 $ 6.10

Discontinued operations $ 0.54 $ 0.30 $ 0.01

Total diluted earnings per share of common stock $ 10.16 $ 7.46 $ 6.11

See Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

Fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018

Fiscal years ended January 1, 2022, January 2, 2021, and December 28, 2019

(Millions of Dollars)

2021 2020 2019

Net Earnings Attributable to Common Shareowners $ 1,210.4 $ 955.8 $ 605.2

Other comprehensive income (loss):

Net Earnings from Continuing Operations Attributable to Common Shareowners $ 1,586.1 $ 1,160.9 $ 952.4

Net earnings from discontinued operations 88.9 48.8 1.6

$ 1,675.0 $ 1,209.7 $ 954.0

Other comprehensive (loss) income:

Currency translation adjustment and other ( 307.7 ) 281.9 ( 36.0 )

(Losses) gains on cash flow hedges, net of tax ( 48.8 ) ( 27.4 ) 85.8

Gains (losses) on cash flow hedges, net of tax 53.2 ( 48.8 ) ( 27.4 )

(Losses) gains on net investment hedges, net of tax ( 1.0 ) ( 24.5 ) 34.0

Pension (losses) gains, net of tax ( 37.7 ) ( 40.9 ) 2.1

Other comprehensive income (loss) $ 170.9 $ ( 70.3 ) $ ( 225.2 )

Pension gains (losses), net of tax 123.6 ( 37.7 ) ( 40.9 )

Other comprehensive (loss) income $ ( 131.9 ) $ 170.9 $ ( 70.3 )

Comprehensive income attributable to common shareowners $ 1,543.1 $ 1,380.6 $ 883.7

1 unchanged sentence

Consolidated Balance Sheets

January 2, 2021 and December 28, 2019

(Millions of Dollars)

January 1, 2022 and January 2, 2021

(Millions of Dollars, Except Share and Per Share Amounts)

Current Assets

2 unchanged sentences

Inventories, net 5,446.8 2,638.9

Current assets held for sale 763.2 629.3

Prepaid expenses 507.3 326.8

6 unchanged sentences

Other Intangible Assets, net 13.3 19.0

Long-term assets held for sale 2,420.2 2,518.8

Other Assets 1,402.6 1,114.2

6 unchanged sentences

Accrued expenses 2,697.8 1,846.2

Liabilities held for sale 388.3 390.6

Total Current Liabilities 8,767.4 4,558.3

2 unchanged sentences

Post-Retirement Benefits 474.1 629.4

Long-term liabilities held for sale 130.4 162.9

Other Liabilities 2,150.9 2,403.4

5 unchanged sentences

Authorized 10,000,000 shares in 2021 and 2020

Issued and outstanding 1,500,000 shares in 2020 and 2019

Issued and outstanding 750,000 shares in 2021 and 1,500,000 shares in 2020

620.3 1,370.3

5 unchanged sentences

Accumulated other comprehensive loss ( 1,845.6 ) ( 1,713.7 )

ESOP — ( 2.3 )

12,958.6 12,608.9

8 unchanged sentences

Consolidated Statements of Cash Flows

Fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018

Fiscal years ended January 1, 2022, January 2, 2021, and December 28, 2019

(Millions of Dollars)

1 unchanged sentence

Operating Activities:

Net earnings $ 1,234.7 $ 958.0 $ 605.8

Net earnings from continuing operations $ 1,598.6 $ 1,185.9 $ 956.4

Net earnings from discontinued operations 88.9 48.8 1.6

Adjustments to reconcile net earnings to net cash provided by operating activities:

3 unchanged sentences

Loss (gain) on sales of businesses 0.6 13.5 ( 17.0 )

Gain on equity method investment ( 68.0 ) — —

Loss on debt extinguishments — 46.9 17.9

Craftsman contingent consideration remeasurement 101.1 — —

Stock-based compensation expense 118.3 109.1 88.8

26 unchanged sentences

Proceeds from debt issuances, net of fees — 2,222.5 496.2

Net short-term (repayments) borrowings ( 342.6 ) ( 18.1 ) 433.2

Net short-term borrowings (repayments) 2,224.6 ( 342.6 ) ( 18.1 )

Stock purchase contract fees ( 39.4 ) ( 59.8 ) ( 40.3 )

Purchases of common stock for treasury ( 34.3 ) ( 26.2 ) ( 27.5 )

Proceeds from issuances of preferred stock — 735.0 —

Proceeds from issuance of 2019 Equity Units — — 735.0

Premium paid on equity options — — ( 19.2 )

Proceeds from issuance of remarketed preferred stock — 750.0 —

Premium paid on debt extinguishment — ( 48.7 ) —

Proceeds from issuances of common stock 131.4 147.0 146.0

Redemption and conversion of preferred stock ( 750.0 ) — —

Craftsman deferred purchase price — ( 250.0 ) —

10 unchanged sentences

Cash, cash equivalents and restricted cash, end of year $ 294.8 $ 1,398.3 $ 314.6

The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances as of January 2, 2021 and December 28, 2019, as shown above:

January 2, 2021 December 28, 2019

The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances as of January 1, 2022 and January 2, 2021, as shown above:

January 1, 2022 January 2, 2021

Cash and cash equivalents $ 142.3 $ 1,241.9

Restricted cash included in Other current assets 7.6 17.3

Cash and cash equivalents included in Current assets held for sale 144.9 139.1

Cash, cash equivalents and restricted cash $ 294.8 $ 1,398.3

1 unchanged sentence

Consolidated Statements of Changes in Shareowners’ Equity

Fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018

(Millions of Dollars, Except Per Share Amounts)

Fiscal years ended January 1, 2022, January 2, 2021, and December 28, 2019

(Millions of Dollars, Except Share and Per Share Amounts)

Stock Additional

13 unchanged sentences

( 27.5 ) ( 27.5 )

Non-controlling interest buyout 0.3 0.3

Issuance of preferred stock ( 750,000 shares)

Premium paid on equity option ( 19.2 ) ( 19.2 )

Stock-based compensation related 88.8 88.8

Beneficial conversion feature 1.8 ( 1.8 ) —

Balance December 28, 2019 $ 1,230.0 $ 442.3 $ 4,767.6 $ 6,768.1 $ ( 1,884.6 ) $ ( 2.3 ) $ ( 2,184.8 ) $ 5.9 $ 9,142.2

Net earnings 1,233.8 0.9 1,234.7

Other comprehensive loss ( 70.3 ) ( 70.3 )

Other comprehensive income 170.9 170.9

Cash dividends declared — $ 2.78 per share

( 431.8 ) ( 431.8 )

Cash dividends declared — $ 50.00 per annum per preferred share

( 23.4 ) ( 23.4 )

Issuance of common stock ( 2,010,644 shares)

2 unchanged sentences

10.0 ( 36.2 ) ( 26.2 )

Issuance of preferred stock ( 750,000 shares)

Conversion of original Series C Preferred Stock ( 5,463,750 shares)

( 610.4 ) 113.2 492.6 ( 4.6 )

Equity units - stock contract fees ( 114.2 ) ( 114.2 )

Premium paid on equity option ( 19.2 ) ( 19.2 )

Issuance of remarketed Series C Preferred Stock 750.0 750.0

Stock-based compensation related 109.1 109.1

Balance December 28, 2019 $ 1,500.0 $ 442.3 $ 4,492.9 $ 6,772.8 $ ( 1,884.6 ) $ ( 2.3 ) $ ( 2,184.8 ) $ 5.9 $ 9,142.2

Adoption of ASU 2016-13 ( 3.8 ) ( 3.8 )

Beneficial conversion feature 0.7 ( 0.7 ) —

Balance January 2, 2021 $ 1,370.3 $ 442.3 $ 4,967.8 $ 7,542.2 $ ( 1,713.7 ) $ — $ ( 1,549.3 ) $ 6.8 $ 11,066.4

Net earnings 1,689.2 ( 1.7 ) 1,687.5

Other comprehensive income 170.9 170.9

Other comprehensive loss ( 131.9 ) ( 131.9 )

Cash dividends declared — $ 2.98 per common share

6 unchanged sentences

72.2 ( 106.5 ) ( 34.3 )

Preferred stock issuance costs ( 4.6 ) ( 4.6 )

Redemption and conversion of preferred stock ( 1,469,055 shares)

( 750.0 ) ( 137.3 ) 137.3 ( 750.0 )

Stock-based compensation related 118.3 118.3

Adoption of ASU 2016-13 ( 3.8 ) ( 3.8 )

Non-controlling interest buyout ( 2.8 ) ( 3.2 ) ( 6.0 )

Balance January 1, 2022 $ 620.3 $ 442.3 $ 4,999.2 $ 8,742.4 $ ( 1,845.6 ) $ — $ ( 1,368.1 ) $ 1.9 $ 11,592.4

5 unchanged sentences

The Company’s fiscal year ends on the Saturday nearest to December 31.

There were 53 weeks in fiscal year 2020 and 52 weeks in the fiscal years 2019 and 2018.

In February 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 is being accounted for as a business combination using the acquisition method of accounting and the results have been consolidated into the Company's Industrial segment.

In March 2019, the Company acquired International Equipment Solutions Attachments businesses, Paladin and Pengo, ("IES Attachments").

In April 2018, the Company acquired the industrial business of Nelson Fastener Systems ("Nelson"), which excluded Nelson's automotive stud welding business.

The results of IES Attachments and Nelson have been consolidated into the Company's Industrial segment.

The 2019 and 2018 acquisitions were accounted for as business combinations using the acquisition method of accounting.

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

There were 52 weeks in fiscal year 2021, 53 weeks in the fiscal years 2020, and 52 weeks in fiscal year 2019.

In December 2021, the Company acquired the remaining 80 percent ownership stake in MTD Holdings Inc.

("MTD"), a privately held global manufacturer of outdoor power equipment.

MTD manufactures and distributes gas-powered lawn tractors, zero turn mowers, walk behind mowers, snow throwers, trimmers, chain saws, utility vehicles and other outdoor power equipment.

Under the terms of the agreement, the Company has the option to acquire the remaining 80 percent of MTD beginning on July 1, 2021 and ending on January 2, 2029.

In the event the option is exercised, the companies have agreed to a valuation multiple based on MTD’s 2018 Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), with an equitable sharing arrangement for future EBITDA growth.

The Company is applying the equity method of accounting to the MTD investment.

The Company previously acquired a 20 percent interest in MTD in January 2019.

Prior to closing on the remaining 80 percent ownership stake, the Company applied the equity method of accounting to the 20 % investment in MTD.

In November 2021, the Company acquired Excel Industries ("Excel"), a leading designer and manufacturer of premium commercial and residential turf-care equipment.

These acquisitions are being accounted for as business combinations using the acquisition method of accounting and the results subsequent to the dates of acquisition are included in the Company's Tools & Storage segment.

In February 2020, the Company acquired Consolidated Aerospace Manufacturing, LLC ("CAM").

In March 2019, the Company acquired International Equipment Solutions Attachments businesses, Paladin and Pengo, ("IES Attachments").

The 2020 and 2019 acquisitions were accounted for as business combinations using the acquisition method of accounting and the results subsequent to the respective dates of acquisition are included in the Company's Industrial segment.

Refer to Note E, Acquisitions and Investments , for further discussion on these transactions.

In December 2021, upon announcing it reached a definitive agreement for the sale of most of its Security assets, the Company classified the Convergent Security Solutions ("CSS") business as held for sale on the Company's Consolidated Balance Sheets as of January 1, 2022 and January 2, 2021.

The operating results of CSS have been reported as discontinued operations in the Consolidated Financial Statements.

Amounts previously reported have been reclassified to conform to this presentation in accordance with Accounting Standard Codification ("ASC") 205 , Presentation of Financial Statements ("ASC 205") , to allow for meaningful comparison of continuing operations.

In November 2020, the Company sold its commercial electronic operations in five countries in Europe and emerging markets within the Security segment.

In October 2020, the Company sold a product line in Oil & Gas within the Industrial segment.

The operating results of these businesses have been reported in the Consolidated Financial Statements through the date of sale in 2020 and for the years ended December 28, 2019 and December 29, 2018.

In the second quarter of 2019, the Company sold its Sargent & Greenleaf mechanical locks business within the Security segment.

The operating results of this business have been reported in the Consolidated Financial Statements through the date of sale in 2019 and for the year ended December 29, 2018.

Refer to Note T, Divestitures , for further discussion.

The operating results of these businesses have been reported in the Consolidated Financial Statements through the dates of sale in 2020 and for the year ended December 28, 2019.

In May 2019, the Company sold its Sargent & Greenleaf mechanical locks business within the Security segment.

The operating results of this business have been reported in the Consolidated Financial Statements through the date of sale in 2019.

Refer to Note T, Divestitures , for further discussion on these transactions.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements.

8 unchanged sentences

Interest income earned from financing receivables that are not delinquent is recorded on the effective interest method.

The Company considers any financing receivable that has not been collected within 90 days of original billing date as past-due or delinquent.

The Company considers any financing receivable that has not been collected within 90 days of

original billing date as past-due or delinquent.

The Company's payment terms are generally consistent with the industries in which its businesses operate and typically range from 30-90 days globally.

Additionally, the Company considers the credit

quality of all past-due or delinquent financing receivables as nonperforming.

Additionally, the Company considers the credit quality of all past-due or delinquent financing receivables as nonperforming.

The Company does not adjust the promised amount of consideration for the effects of a significant financing component when the period between transfer of the product and receipt of payment is less than one year.

32 unchanged sentences

These factors include external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as actual and planned financial performance.

The Company also considers changes in each reporting unit's fair value and carrying amount since the most recent date a fair value measurement was performed.

In performing a quantitative analysis, the Company determines the fair value of a reporting unit using

management’s assumptions about future cash flows based on long-range strategic plans.

The Company also considers changes in each reporting unit's fair value and carrying amount since the most recent date a fair value measurement was

In performing a quantitative analysis, the Company determines the fair value of a reporting unit using management’s assumptions about future cash flows based on long-range strategic plans.

This approach incorporates many assumptions including discount rates, future growth rates and expected profitability.

24 unchanged sentences

REVENUE RECOGNITION — The Company’s revenues result from the sale of goods or services and reflect the consideration to which the Company expects to be entitled.

The Company records revenue based on a five-step model in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606").

The Company records revenue based on a five-step model in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606").

For its contracts with customers, the Company identifies the performance obligations (goods or services), determines the transaction price, allocates the contract transaction price to the performance obligations, and recognizes the revenue when (or as) the performance obligation is transferred to the customer.

1 unchanged sentence

The majority of the Company’s revenues are recorded at a point in time from the sale of tangible products.

A portion of the Company’s revenues within the Security and Infrastructure businesses is generated from equipment leased to customers.

A portion of the Company’s revenues within the CSS and Infrastructure businesses is generated from equipment leased to custome rs.

Customer arrangements are identified as leases if they include transfer of a tangible asset which is provided to the customer in exchange for payments typically at fixed rates payable monthly, quarterly or annually.

1 unchanged sentence

Some customer leases include terms to allow the customer to purchase the underlying asset, which occurs occasionally, and virtually no customer leases include residual value guarantee clauses.

Within the Security business, the

Within the CSS business, the

underlying asset typically has no value at termination of the customer lease, so no residual value asset is recorded in the financial statements.

5 unchanged sentences

When a contract involves multiple performance obligations, each obligation is separately identified and the transaction price is allocated based on the amount of consideration the Company expects to be entitled to in exchange for transferring the promised good or service to the customer.

Sales of security monitoring systems may have multiple performance obligations, including equipment, installation and monitoring or maintenance services.

Sales of security monitoring systems, within the CSS business, may have multiple performance obligations, including equipment, installation and monitoring or maintenance services.

In most instances, the Company allocates the appropriate amount of consideration to each performance obligation based on the standalone selling price ("SSP") of the distinct goods or services performance obligation.

3 unchanged sentences

The Company utilizes the method that most accurately depicts the progress toward completion of the performance obligation.

The Company’s contract sales for the installation of security intruder systems and other construction-related projects are generally recorded under the input method.

The Company’s contract sales for the installation of security intruder systems and other construction-related projects, within the CSS busines s, are generally recorded under the input method.

The input method recognizes revenue on the basis of the Company’s efforts or inputs to the satisfaction of a performance obligation relative to the total inputs expected to satisfy that performance obligation.

16 unchanged sentences

COST OF SALES AND SELLING, GENERAL & ADMINISTRATIVE — Cost of sales includes the cost of products and services provided, reflecting costs of manufacturing and preparing the product for sale.

These costs include expenses to acquire and manufacture products to the point that they are allocable to be sold to customers and costs to perform services pertaining to

service revenues (e.g.

These costs include expenses to acquire

and manufacture products to the point that they are allocable to be sold to customers and costs to perform services pertaining to service revenues (e.g.

installation of security systems, automatic doors, and security monitoring costs).

41 unchanged sentences

EARNINGS PER SHARE — Basic earnings per share equals net earnings attributable to common shareowners divided by weighted-average shares outstanding during the year.

Diluted earnings per share include the impact of common stock equivalents using the treasury stock method when the effect is dilutive.

NEW ACCOUNTING STANDARDS ADOPTED — In August 2018, the FASB issued Accounting Standards Update ("ASU") 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.

The standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

The Company adopted this standard in the first quarter of 2020 and it did not have a material impact on its consolidated financial statements.

In August 2018, the FASB is sued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20).

The standard modifies disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

The Company adopted this standard in the fourth quarter of 2020 and it did not have a material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) .

The standard modifies disclosure requirements of fair value measurements.

The Company adopted this standard in the first quarter of 2020 and it did not have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350).

The new standard simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test.

The Company adopted this standard in the first quarter of 2020 and it did not have an impact on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326).

The new standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including accounts and notes receivable.

The Company adopted this standard in the first quarter of 2020 and recognized a $3.8 million cumulative-effect adjustment to opening retained earnings related to the Company's allowance for credit losses on accounts and notes receivable.

Refer to Note B, Accounts and Notes Receivable, Net, for further discussion.

RECENTLY ISSUED ACCOUNTING STANDARDS NOT YET ADOPTED — In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) .

Diluted earnings per share include the impact of common stock equivalents using the treasury stock method or the if-converted method, as applicable, when the effect is dilutive.

NEW ACCOUNTING STANDARDS ADOPTED — In January 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) .

The new standard clarifies the interaction of accounting for the transition into and out of the equity method.

The new standard also clarifies the accounting for measuring certain purchased options and forward contracts to acquire investments.

The ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company adopted this guidance in the first quarter of 2021 and it did not have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740).

The new standard simplifies the accounting for income taxes by removing certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods.

The new standard also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

The ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company adopted this standard in the first quarter of 2021 and it did not have a material impact on the Company’s consolidated financial statements.

RECENTLY ISSUED ACCOUNTING STANDARDS NOT YET ADOPTED — In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

The new standard improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency.

The new standard requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers .

The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted, including adoption in an interim period.

The standard should be applied prospectively to business combinations occurring on or after the effective date of the amendments.

The Company will adopt this guidance in the first quarter of 2022 and does not expect it to have a material impact on its consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings per share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Equity (Subtopic 815-40).

The new standard clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange.

The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted, including adoption in an interim period.

The standard should be applied prospectively.

The Company will adopt this guidance in the first quarter of 2022 and does not expect it to have a material impact on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06 , Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40).

The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance for the derivatives scope exception for contracts in an entity's own equity.

3 unchanged sentences

The standard allows for either modified or full retrospective transition methods.

The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

The Company will adopt this guidance in the first quarter of 2022.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

2 unchanged sentences

Companies may elect to apply these optional expedients and exceptions beginning March 12, 2020 through December 31, 2022.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848) .

The objective of the new reference rate reform standard is to clarify the scope of Topic 848 and provide explicit guidance to help

companies applying optional expedients and exceptions.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), to clarify the scope of Topic 848 and provide explicit guidance to help companies applying optional expedients and exceptions.

This ASU is effective immediately for all entities that have applied optional expedients and exceptions.

The Company is currently evaluating these standards to determine the impact they may have on it consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) .

The new standard clarifies the interaction of accounting for the transition into and out of the equity method.

The new standard also clarifies the accounting for measuring certain purchased options and forward contracts to acquire investments.

The ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

Early adoption is permitted, including adoption in an interim period.

The Company will adopt this guidance in the first quarter of 2021 and does not expect it to have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) .

The new standard also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

The ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company will adopt this guidance in the first quarter of 2021 and does not expect it to have a material impact on its consolidated financial statements.

The Company plans to apply certain optional expedients and exceptions as needed to comply with regulatory and tax authorities for the transition to alternative reference rates.

The Company does not expect adoption to have a material impact to its consolidated financial statements.

ACCOUNTS AND NOTES RECEIVABLE

6 unchanged sentences

Accounts and notes receivable, net $ 1,560.8 $ 1,164.5

Long-term receivable, net $ 139.9 $ 146.1

Trade receivables are dispersed among a large number of retailers, distributors and industrial accounts in many countries.

Adequate reserves have been established to cover anticipated credit losses.

Long-term receivables, net of $ 139.9 million and $ 146.1 million at January 2, 2021 and December 28, 2019, respectively, are reported within Other Assets in the Consolidated Balance Sheets.

The Company's financing receivables are predominantly related to certain security equipment sales-type leases with commercial businesses.

As of January 2, 2021, the current portion of finance receivables within Trade notes receivable approximated $ 80.3 million.

Generally, the Company retains legal title to any equipment under lease and holds the right to repossess such equipment in an event of default.

All financing receivables are interest-bearing and the Company has not classified any financing receivables as held-for-sale.

Interest income earned from financing receivables that are not delinquent are recorded on the effective interest method.

The changes in the allowance for credit losses at January 2, 2021 are as follows:

(Millions of Dollars) Balance

2019 Cumulative Effect Adjustment (a) Charged To Costs and Expenses Charged To Other Accounts

(b) Deductions (c) Balance

Accounts receivable $ 99.3 $ 2.9 $ 41.1 $ 15.3 $ ( 31.9 ) $ 126.7

Notes receivable $ 13.1 $ 0.9 $ — $ 4.6 $ ( 4.2 ) $ 14.4

Total $ 112.4 $ 3.8 $ 41.1 $ 19.9 $ ( 36.1 ) $ 141.1

During the fourth quarter of 2021, as part of the acquisition of MTD, the Company acquired accounts receivable of $ 272.6 million.

Refer to Note E, Acquisitions and Investments , for further discussion.

The changes in the allowance for credit losses for the years ended January 1, 2022 and January 2, 2021 are as follows:

(Millions of Dollars) 2021 2020

Beginning Balance $ 110.9 $ 94.1

Cumulative Effect Adjustment (a) — 1.1

Charged To Costs and Expenses 3.9 29.0

Charged To Other Accounts (b) 3.9 7.4

Deductions (c) ( 15.6 ) ( 20.7 )

Balance end of period $ 103.1 $ 110.9

(a) Represents the cumulative-effect adjustment to opening retained earnings due to the adoption of ASU 2016-13.

Refer to Note A, Significant Accounting Policies , for further discussion.

(b) Amounts represent the impacts of foreign currency translation, acquisitions and net transfers to/from other accounts.

The Company considers any financing receivable that has not been collected within 90 days of original billing date as past-due or delinquent.

The Company's payment terms are generally consistent with the industries in which their businesses operate and typically range from 30-90 days globally.

Additionally, the Company considers the credit quality of all past-due or delinquent

financing receivables as nonperforming.

Any significant financing components for contracts greater than one year are included in revenue over time.

The following is a summary of the expected timing of receipt of payments from customers on an undiscounted basis as of January 2, 2021 relating to the Company's lease receivables:

(Millions of Dollars) Total Within 1 Year 2 Years 3 Years 4 Years 5 Years Thereafter

Finance receivables $ 209.5 $ 80.3 $ 56.5 $ 38.9 $ 21.4 $ 8.1 $ 4.3

Operating leases $ 39.7 $ 38.5 $ 0.9 $ 0.3 $ — $ — $ —

The following is a summary of lease revenue and sales-type lease profit for the years ended January 2, 2021 and December 28, 2019:

(Millions of Dollars) 2020 2019

Sales-type lease revenue $ 113.0 $ 88.9

Lease interest revenue 13.3 12.7

Operating lease revenue 131.5 148.9

Total lease revenue $ 257.8 $ 250.5

Sales-type lease profit $ 45.0 $ 35.3

At January 1, 2022 and January 2, 2021, the Industrial segment operating lease receivable was $ 21.2 million and $ 36.7 million, respectively, from leasing equipment to customers.

Net sales from operating lease revenue were $ 62.0 million and $ 113.7 million for the years ended January 1, 2022 and January 2, 2021, respectively.

The Company has an accounts receivable sale program.

5 unchanged sentences

The Company has no retained interests in the transferred receivables, other than collection and administrative responsibilities.

At January 2, 2021, the Company did not record a servicing asset or liability related to its retained responsibility based on its assessment of the servicing fee, market values for similar transactions and its cost of servicing the receivables sold.

At January 2, 2021 and December 28, 2019, net receivables of approximately $ 86.8 million and $ 100.0 million, respectively, were derecognized.

Proceeds from transfers of receivables to the Purchaser totaled $ 259.6 million and $ 495.4 million for the years ended January 2, 2021 and December 28, 2019, respectively, and payments to the Purchaser totaled $ 272.8 million and $ 495.5 million, respectively.

The program resulted in a pre-tax loss of $ 1.7 million and $ 3.6 million for the years ended January 2, 2021 and December 28, 2019, respectively, which included service fees of $ 0.6 million and $ 0.9 million, respectively.

At January 1, 2022, the Company did not

record a servicing asset or liability related to its retained responsibility based on its assessment of the servicing fee, market values for similar transactions and its cost of servicing the receivables sold.

At January 1, 2022 and January 2, 2021, net receivables of approximately $ 100.0 million and $ 86.8 million, respectively, were derecognized.

Proceeds from transfers of receivables to the Purchaser totaled $ 447.7 million and $ 259.6 million for the years ended January 1, 2022 and January 2, 2021, respectively, and payments to the Purchaser totaled $ 434.5 million and $ 272.8 million, respectively.

The program resulted in a pre-tax loss of $ 2.0 million and $ 1.7 million for the years ended January 1, 2022 and January 2, 2021, respectively, which included service fees of $ 0.9 million and $ 0.6 million, respectively.

All cash flows under the program are reported as a component of changes in accounts receivable within operating activities in the Consolidated Statements of Cash Flows since all the cash from the Purchaser is received upon the initial sale of the receivable.

As of January 2, 2021 and December 28, 2019, the Company's deferred revenue totaled $ 207.6 million and $ 209.8 million, respectively, of which $ 108.7 million and $ 108.9 million, respectively, was classified as current.

Revenue recognized for the years ended January 2, 2021 and December 28, 2019 that was previously deferred as of December 28, 2019 and December 29, 2018 totaled $ 96.8 million and $ 96.4 million, respectively.

As of January 2, 2021, approximately $ 1.107 billion of revenue from long-term contracts primarily in the Security segment was unearned related to customer contracts which were not completely fulfilled and will be recognized on a decelerating basis over the next 5 years.

This amount excludes any of the Company's contracts with an original expected duration of one year or less.

As of January 1, 2022 and January 2, 2021, the Company's deferred revenue totaled $ 126.7 million and $ 131.0 million, respectively, of which $ 42.2 million and $ 39.4 million, respectively, was classified as current.

Revenue recognized for the years ended January 1, 2022 and January 2, 2021 that was previously deferred as of January 2, 2021 and December 28, 2019 totaled $ 24.0 million and $ 30.4 million, respectively.

(Millions of Dollars) 2021 2020

3 unchanged sentences

Total $ 5,446.8 $ 2,638.9

Net inventories in the amount of $ 1.3 billion at January 2, 2021 and $ 1.1 billion at December 28, 2019 were valued at the lower of LIFO cost or market.

If the LIFO method had not been used, inventories would have been higher than reported by $ 52.5 million at January 2, 2021 and $ 78.1 million at December 28, 2019.

As part of the CAM acquisition in the first quarter of 2020, the Company acquired net inventory with an estimated fair value of

$ 124.3 million.

Refer to Note E, Acquisitions and Investments , for further discussion of the CAM acquisition.

Net inventories in the amount of $ 2.6 billion at January 1, 2022 and $ 1.3 billion at January 2, 2021 were valued at the lower of LIFO cost or market.

If the LIFO method had not been used, inventories would have been higher than reported by $ 228.5 million at January 1, 2022 and $ 45.8 million at January 2, 2021.

As part of the MTD and Excel acquisitions in the fourth quarter of 2021, the Company acquired inventory with an estimated fair value of $ 900.7 million and $ 49.9 million, respectfully.

Refer to Note E, Acquisitions and Investments , for further discussion.

PROPERTY, PLANT AND EQUIPMENT

14 unchanged sentences

Depreciation and amortization expense $ 374.0 $ 376.5 $ 372.8

The amounts above are inclusive of depreciation and amortization expense for discontinued operations amounting to $ 22.1 million in 2021, $ 21.1 million in 2020, and $ 19.7 million in 2019.

ACQUISITIONS AND INVESTMENTS

2021 ACQUISITIONS

On December 1, 2021, the Company acquired the remaining 80 percent ownership stake in MTD, a privately held global manufacturer of outdoor power equipment, for $ 1.5 billion, net of cash acquired and an estimated working capital adjustment.

The Company previously acquired a 20 percent interest in MTD in January 2019 for $ 234 million.

T he Company’s pre-existing 20 % equity investment in MTD was remeasured at fair value of $ 295.1 million as of the transaction date based on the purchase price for the remaining 80 percent ownership, which was calculated using an EBITDA-based formula.

As a result, the Company recorded a $ 68.0 million gain recognized in Gain on equity method investment in the Consolidated Statements of Operations.

MTD designs, manufactures and distributes lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, handheld outdoor power equipment and garden tools for both residential and professional consumers under well-known brands like Cub Cadet® and Troy-Bilt®.

This combination will create a global leader in the outdoor category, with strong brands and growth opportunities.

The results of MTD subsequent to the date of acquisition are included in the Company's Tools & Storage segment.

The MTD acquisition is being accounted for as a business combination using the acquisition method of accounting, which requires, among other things, certain assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date.

The following table summarizes the estimated acquisition date value of identifiable net assets acquired and liabilities assumed:

(Millions of Dollars)

Cash and cash equivalents $ 111.6

Accounts receivable, net 272.6

Inventories, net 900.7

Prepaid expenses and other assets 97.7

Property, plant and equipment 223.5

Trade names 390.0

Customer relationships 450.0

Other assets 36.8

Accounts payable ( 391.8 )

Accrued expenses ( 253.6 )

Deferred revenue ( 0.9 )

Long-term debt ( 103.0 )

Deferred taxes ( 194.3 )

Other liabilities ( 71.3 )

Total identifiable net assets $ 1,468.0

Goodwill 436.7

Total consideration $ 1,904.7

The weighted-average useful life assigned to the definite-lived intangible assets was 15 years.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected cost synergies of the combined business and assembled workforce.

It is estimated that $ 0.6 million of goodwill will be deductible for tax purposes.

The acquisition accounting for MTD is preliminary in certain respects.

During the measurement period, the Company expects to record adjustments relating to the finalization of intangible assets, inventory and property, plant and equipment valuations, working capital accounts, and opening balance sheet contingencies, amongst others.

A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions.

The Company’s judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results from operations.

On November 12, 2021, the Company acquired Excel Industries ("Excel") for $ 373.6 million, net of cash acquired and an estimated working capital adjustment.

Excel is a leading designer and manufacturer of premium commercial and residential turf-care equipment under the brands of Hustler Turf Equipment and BigDog Mower Co.

The results of Excel subsequent to the date of acquisition are included in the Company's Tools & Storage segment.

The Company believes this is a strategically important bolt-on acquisition as it builds an outdoor products leader.

The Excel acquisition is being accounted for as a business combination, which requires, among other things, certain assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date.

The estimated value of identifiable net assets acquired, which includes $ 37.0 million of working capital, $ 48.7 million of deferred tax liabilities, and $ 203.5 million of intangible assets, is $ 200.3 million.

The related goodwill is $ 173.3 million.

The amount allocated to intangible assets includes $ 158.0 million for customer relationships.

The weighted-average useful life assigned to the intangible assets was 14 years.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected cost synergies of the combined business and assembled workforce.

It is estimated that $ 0.6 million of goodwill will be deductible for tax purposes.

The acquisition accounting for Excel is preliminary in certain respects.

During the measurement period, the Company expects to record adjustments relating to the finalization of intangible and inventory valuations, working capital accounts, and opening balance sheet contingencies, amongst others.

A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions.

Other 2021 Acquisitions

During 2021, the Company completed two other acquisitions for a total purchase price of $ 207.3 million, net of cash acquired.

The estimated acquisition date value of the identifiable net assets acquired is $ 49.5 million and working capital is $ 36.4 million.

The related goodwill is $ 157.8 million.

The results of these acquisitions subsequent to the dates of acquisition are included in the Company's Tools & Storage segment.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected cost synergies of the combined business and assembled workforce.

It is estimated that $ 44.5 million of goodwill will be deductible for tax purposes.

The acquisition accounting for these acquisitions is preliminary in certain respects.

During the measurement period, the Company expects to record adjustments relating to working capital accounts, various opening balance sheet contingencies and various income tax matters, amongst others.

2020 ACQUISITION

On February 24, 2020, the Company acquired CAM for a total estimated purchase price of approximately $ 1.46 billion, net of cash acquired.

The purchase price consists of an initial cash payment of approximately $ 1.30 billion, net of cash acquired, and future payments up to $ 200.0 million contingent on The Boeing Company ("Boeing") 737 MAX Airplanes receiving Federal Aviation Administration ("FAA") authorization to return to service and Boeing achieving certain production levels, which were valued at $ 155.3 million as of the acquisition date.

The purchase price consisted of an initial cash payment of approximately $ 1.30 billion, net of cash acquired, and future payments up to $ 200.0 million contingent on The Boeing Company ("Boeing") 737 MAX Airplanes receiving Federal Aviation Administration ("FAA") authorization to return to service and Boeing achieving certain production levels, which were valued at $ 155.3 million as of the acquisition date.

In November 2020, the FAA rescinded the 737 MAX grounding order and as a result of the subsequent return to revenue service of the 737 MAX in December 2020, the Company paid $ 100 million to the former owners of CAM.

The remaining contingent consideration was remeasured at January 2, 2021 and the Company concluded the achievement of certain production levels based on Boeing’s future forecast is remote and released the remaining $ 55.3 million contingent consideration liability to the Consolidated Statements of Operations in Other, net.

The remaining contingent consideration was remeasured at January 2, 2021 and the Company concluded the achievement of certain production levels based on Boeing’s future forecast was remote and released the remaining $ 55.3 million contingent consideration liability to the Consolidated Statements of Operations in Other, net.

As of January 1, 2022, the Company continues to consider the achievement of certain production levels based on Boeing’s future forecast as remote.

CAM is an industry-leading manufacturer of specialty fasteners and components for the aerospace and defense markets.

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

The results of CAM subsequent to the date of acquisition are included in the Company's Industrial segment.

The CAM acquisition is being accounted for as a business combination using the acquisition method of accounting, which requires, among other things, certain assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date.

The following table summarizes the estimated acquisition date value of identifiable net assets acquired and liabilities assumed:

The CAM acquisition was accounted for as a business combination using the acquisition method of accounting, which requires, among other things, certain assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date.

The following table summarizes the acquisition date value of identifiable net assets acquired and liabilities assumed:

(Millions of Dollars)

17 unchanged sentences

It is estimated that $ 569.8 million of goodwill will be deductible for tax purposes.

The acquisition accounting for CAM is substantially complete with the exception of certain tax matters.

The Company will complete its acquisition accounting in the first quarter of 2021.

Any measurement period adjustments resulting from the finalization of the Company’s acquisition accounting are not expected to be material.

A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions.

Other 2020 Acquisition

During 2020, the Company completed one smaller acquisition for $ 28.2 million, net of cash acquired.

The estimated acquisition date value of the identifiable net assets acquired is $ 13.4 million, which includes $ 14.8 million of customer relationships.

The related goodwill is $ 14.8 million.

The useful life assigned to the customer relationships is 8 years.

The results of this acquisition subsequent to the date of acquisition are included in the Company's Security segment.

The acquisition accounting for this acquisition is preliminary in certain respects.

During the measurement period, the Company

expects to record adjustments relating to working capital accounts and various opening balance sheet contingencies, amongst others.

These adjustments are not expected to have a material impact on the Company’s Consolidated Financial Statements.

The acquisition accounting for CAM is complete.

The measurement period adjustments recorded in 2021 did not have a material impact to the Company's Consolidated Financial Statements.

2019 ACQUISITIONS

2 unchanged sentences

IES Attachments is a manufacturer of high quality, performance-driven heavy equipment attachment tools for off-highway applications.

The acquisition further diversified the Company's presence in the industrial markets, expanded its portfolio of attachment solutions

and provided a meaningful platform for growth.

acquisition further diversified the Company's presence in the industrial markets, expanded its portfolio of attachment solutions and provided a meaningful platform for growth.

The results of IES Attachments subsequent to the date of acquisition are included in the Company's Industrial segment.

9 unchanged sentences

Other 2019 Acquisitions

During 2019, the Company completed five smaller acquisitions for $ 40.8 million, net of cash acquired.

During 2019, the Company completed two other acquisitions for $ 32.4 million, net of cash acquired.

The estimated acquisition date value of the identifiable net assets acquired, which included $ 6.3 million of working capital and $ 4.4 million of customer relationships, was $ 15.7 million.

The related goodwill was $ 16.7 million.

The useful lives assigned to the customer relationships ranged from 8 to 10 years.

The results of these acquisitions subsequent to the dates of acquisition are included in the Company's Industrial and Security segments.

The useful lives assigned to the customer relationships was 10 years.

The results of these acquisitions subsequent to the dates of acquisition are included in the Company's Industrial segment and Mechanical Access Solutions.

The acquisition accounting for these acquisitions is complete.

The measurement period adjustments recorded in 2020 did not have a material impact to the Company's Consolidated Financial Statements.

2018 ACQUISITIONS

Nelson Fastener Systems

On April 2, 2018, the Company acquired Nelson for $ 424.2 million, net of cash acquired.

Nelson 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 results of Nelson are included in the Company's Industrial segment.

The Nelson acquisition was accounted for as a business combination using the acquisition method of accounting.

The acquisition date value of identifiable net assets acquired, which included $ 64.2 million of working capital and $ 167.0 million of intangible assets, was $ 211.8 million.

The related goodwill was $ 216.9 million.

The amount allocated to intangible assets included $ 149.0 million for customer relationships.

The useful lives assigned to the intangible assets ranged from 12 to 15 years.

Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the expected cost synergies of the combined business, assembled workforce, and the going concern nature of Nelson.

Goodwill is not expected to be deductible for tax purposes.

Other 2018 Acquisitions

During 2018, the Company completed six smaller acquisitions for a total purchase price of $ 104.5 million, net of cash acquired.

The acquisition date value of the identifiable net assets acquired, which included $ 13.4 million of working capital and $ 35.5 million of intangible assets, was $ 38.1 million.

The related goodwill was $ 66.4 million.

The amount allocated to intangible assets included $ 32.0 million for customer relationships.

The useful lives assigned to intangible assets ranged from 10 to 14 years.

ACTUAL AND PRO-FORMA IMPACT FROM ACQUISITIONS

1 unchanged sentence

The net sales and net loss from the 2021 acquisitions included in the Company's Consolidated Statements of Operations for the year ended January 1, 2022 are shown in the table below.

The net loss includes amortization expense relating to intangible assets recorded upon acquisition, inventory step-up charges, transaction costs, and other integration-related costs.

The net loss includes amortization expense relating to intangible assets recorded upon acquisition, inventory step-up charges, transaction costs, gain on MTD investment, contingent consideration expense, and other integration-related costs.

(Millions of Dollars) 2021

Net sales $ 235.5

Net loss attributable to common shareowners $ ( 89.4 )

Net loss from continuing operations attributable to common shareowners $ ( 49.7 )

Pro-forma Impact from Acquisitions

4 unchanged sentences

Net sales $ 18,226.7 $ 16,000.5

Net earnings attributable to common shareowners 1,256.7 923.0

Diluted earnings per share $ 8.06 $ 6.13

Net earnings from continuing operations attributable to common shareowners - Diluted 1,714.3 1,138.4

Diluted earnings per share of common stock - Continuing operations $ 10.39 $ 7.01

2021 Pro-forma Results

1 unchanged sentence

Accordingly, the following adjustments were made:

• Elimination of the historical pre-acquisition intangible asset amortization expense and the addition of intangible asset amortization expense related to intangibles valued as part of the acquisition accounting that would have been incurred from December 29, 2019 to the acquisition dates.

• Additional depreciation expense for the property, plant, and equipment fair value adjustments that would have been incurred from December 29, 2019 to the acquisition date of CAM.

• Because the 2021 acquisitions were assumed to occur on December 29, 2019, there were no acquisition-related costs or inventory step-up charges factored into the 2021 pro-forma year, as such expenses would have occurred in the first year following the assumed acquisition date.

• Because the MTD acquisition was assumed to occur on December 29, 2019, the gain on investment and contingent consideration expense was not factored into the 2021 pro-forma year, as such gain and expense would have occurred in the first year following the assumed acquisition date.

2020 Pro-forma Results

1 unchanged sentence

Accordingly, the following adjustments were made:

• Additional depreciation expense for the property, plant, and equipment fair value adjustments that would have been incurred from December 30, 2018 to the acquisition date of IES attachments and for the year ended December 28, 2019 for CAM.

• Additional expense for acquisition-related costs and inventory step-up charges relating to the 2020 acquisitions, as such expenses would have been incurred during the year ended December 28, 2019.

• Additional depreciation expense for the property, plant, and equipment fair value adjustment that would have been incurred from December 29, 2019 to the acquisition date of CAM.

• Additional expense for acquisition-related costs and inventory step-up charges relating to the 2021 acquisitions, as such expenses would have been incurred during the year ended January 2, 2021.

• Additional gain on investment and contingent consideration expense relating to the MTD acquisition, as such gain and expense would have been incurred during the year ended January 2, 2021.

• Because the 2020 acquisitions were assumed to occur on December 30, 2018, there were no acquisition-related costs or inventory step-up charges factored into the 2020 pro-forma period, as such expenses would have occurred in the first year following the assumed acquisition date.

On January 2, 2019, the Company acquired a 20 percent interest in MTD, a privately held global manufacturer of outdoor power equipment, for $ 234 million in cash.

With annual revenues of approximately $ 2.6 billion, MTD manufactures and distributes gas-powered lawn tractors, zero turn mowers, walk behind mowers, snow throwers, trimmers, chain saws, utility vehicles and other outdoor power equipment.

Under the terms of the agreement, the Company has the option to acquire the remaining 80 percent of MTD beginning on July 1, 2021 and ending on January 2, 2029.

In the event the option is exercised, the companies have agreed to a valuation multiple based on MTD’s 2018 EBITDA, with an equitable sharing arrangement for future EBITDA growth.

The Company is applying the equity method of accounting to the MTD investment.

During 2021, 2020 and 2019, the Company made additional immaterial investments in new and emerging start-up companies focused on innovation, breakthrough products and advanced technologies.

2 unchanged sentences

GOODWILL — The changes in the carrying amount of goodwill by segment are as follows:

(Millions of Dollars) Tools & Storage Industrial Security Total

(Millions of Dollars) Tools & Storage Industrial Other Total

Balance December 28, 2019 $ 5,161.8 $ 1,995.5 $ 223.3 $ 7,380.6

1 unchanged sentence

Foreign currency translation and other 85.8 15.3 ( 31.0 ) 70.1

Balance December 28, 2019 $ 5,161.8 $ 1,995.5 $ 2,080.2 $ 9,237.5

Balance January 2, 2021 $ 5,247.7 $ 2,646.5 $ 192.3 $ 8,086.5

Acquisitions 777.3 ( 0.5 ) — 776.8

1 unchanged sentence

Balance January 1, 2022 $ 5,974.8 $ 2,617.0 $ 192.4 $ 8,784.2

The goodwill amount for the CAM acquisition is subject to change based upon the finalization of the acquisition accounting during the measurement period.

Goodwill totaling $ 1,894.5 million and $ 1,951.6 million was reclassed to assets held for sale as of January 1, 2022 and January 2, 2021, respectively.

The goodwill amount for the 2021 acquisitions is subject to change based upon the finalization of the acquisition accounting during the measurement period.

Refer to Note E, Acquisitions and Investments , for further discussion.

In accordance with ASC 350, Intangibles - Goodwill and Other , a portion of the goodwill associated with the Security segment was allocated to the aforementioned commercial electronic security divestiture based on the relative fair value of the business disposed of and the portion of the reporting unit that was retained.

In accordance with ASC 350, Intangibles - Goodwill and Other , a portion of the goodwill within Other was allocated to the aforementioned sale of the commercial electronic security business in five countries in Europe and emerging markets based on the relative fair value of the business disposed of and the portion of the reporting unit that was retained.

Accordingly, goodwill for the Security segment was reduced by $ 31.3 million and included in the gain on sale of this divestiture in 2020.

1 unchanged sentence

As required by the Company's policy, goodwill and indefinite-lived trade names were tested for impairment in the third quarter of 2021.

The Company assessed the fair values of its reporting units utilizing a discounted cash flow valuation model.

The Company assessed the fair values of three of its reporting units utilizing a discounted cash flow valuation model and determined that the fair values exceeded the respective carrying amounts.

The key assumptions used were discount rates and perpetual growth rates applied to cash flow projections.

1 unchanged sentence

These assumptions contemplated business, market and overall economic conditions.

For the remaining two reporting units, the Company determined qualitatively that it was not more likely than not that goodwill was impaired, and thus, the quantitative goodwill impairment test was not required.

In making this determination, the Company considered the significant excess of fair value over carrying amount as calculated in the most recent quantitative analysis, each reporting unit's 2021 performance compared to prior year and their respective industries, analyst multiples and other positive qualitative information.

Based on the results of the annual impairment testing performed in the third quarter of 2021, the Company determined that the fair values of each of its reporting units exceeded their respective carrying amounts.

INTANGIBLE ASSETS — Intangible assets at January 2, 2021 and December 28, 2019 were as follows:

INTANGIBLE ASSETS — Intangible assets at January 1, 2022 and January 2, 2021 were as follows:

(Millions of Dollars) Gross

8 unchanged sentences

Total $ 3,496.2 $ ( 1,321.4 ) $ 2,811.7 $ ( 1,169.3 )

Indefinite-lived trade names totaled $ 2.198 billion at January 2, 2021 and $ 2.186 billion at December 28, 2019.

The year-over-year change is primarily due to currency fluctuations.

The fair values of the Company's indefinite-lived trade names were assessed using quantitative analyses, which utilized discounted cash flow valuation models taking into consideration appropriate discount rates, royalty rates and perpetual growth rates applied to projected sales.

With the exception of an immaterial trade name, the Company determined that the fair values of its indefinite-lived trade names exceeded their respective carrying amounts.

Net intangibles totaling $ 177.8 millionand $ 217.7 million were reclassed to assets held for sale as of January 1, 2022 and January 2, 2021, respectively.

Indefinite-lived trade names totaled $ 2.525 billion at January 1, 2022 and $ 2.195 billion at January 2, 2021.

The year-over-year change is primarily due to the indefinite-lived trade names acquired in the MTD acquisition.

rates applied to projected sales.

The Company determined that the fair values of its indefinite-lived trade names exceeded their respective carrying amounts.

Intangible assets amortization expense by segment was as follows:

2 unchanged sentences

Industrial 99.9 96.6 69.6

Security 43.5 44.7 49.1

Other 39.1 43.5 44.7

Consolidated $ 203.1 $ 201.6 $ 187.4

The amounts above are inclusive of amortization expense for discontinued operations amounting to $ 38.4 million in 2021,

$ 42.8 million in 2020, and $ 44.4 million in 2019.

Future amortization expense in each of the next five years amounts to $ 206.3 million for 2022, $ 199.0 million for 2023, $ 192.8 million for 2024, $ 176.7 million for 2025, $ 163.2 million for 2026 and $ 1,236.8 million thereafter.

ACCRUED EXPENSES

Accrued expenses at January 2, 2021 and December 28, 2019 were as follows:

Accrued expenses at January 1, 2022 and January 2, 2021 were as follows:

(Millions of Dollars) 2021 2020

9 unchanged sentences

Environmental costs 46.1 46.7

Deferred purchase price — 249.2

Current lease liability 118.9 109.6

Forward stock purchase contract 330.4 —

Other 607.9 461.3

1 unchanged sentence

LONG-TERM DEBT AND FINANCING ARRANGEMENTS

Long-term debt and financing arrangements at January 2, 2021 and December 28, 2019 were as follows:

January 2, 2021 December 29, 2019

Long-term debt and financing arrangements at January 1, 2022 and January 2, 2021 were as follows:

January 1, 2022 January 2, 2021

(Millions of Dollars) Interest Rate Original Notional Unamortized Discount Unamortized Gain (Loss) Terminated Swaps 1

9 unchanged sentences

Notes payable due 2048 4.85 % 500.0 ( 0.5 ) — — ( 4.9 ) 494.6 494.3

Notes payable due 2050 2.75 % 750.0 ( 1.9 ) — — ( 8.1 ) 740.0 739.9

Notes payable due 2060 (junior subordinated) 4.00 % 750.0 — — — ( 9.1 ) 740.9 740.7

Other, payable in varying amounts 2022 through 2027 3.47 %- 4.31 %

4.3 — — — — 4.3 —

Total long-term debt, including current maturities $ 4,407.8 $ ( 5.3 ) $ ( 20.4 ) $ 6.8 $ ( 34.0 ) $ 4,354.9 $ 4,245.4

2 unchanged sentences

1 Unamortized gain (loss) associated with interest rate swaps are more fully discussed in Note I, Financial Instruments.

Included in the table above, during the fourth quarter of 2021, the Company assumed $ 103.0 million and $ 4.3 million of long-term debt from the acquisition of MTD and Excel, respectively.

Principal amounts and maturities are also included in the figures below.

As of January 1, 2022, the total aggregate annual principal maturities of long-term debt for the next five years and thereafter are as follows:

no principal maturities from 2021 to 2025, and $ 4.3 billion thereafter.

$ 1.3 million in 2022, $ 1.2 million in 2023, $ 1.1 million in 2024, $ 0.5 million in 2025, $ 553.7 million in 2026, and $ 3.850 billion thereafter.

These maturities represent the principal amounts to be paid and accordingly exclude the remaining $ 6.8 million of unamortized fair value adjustments made in purchase accounting, which increased the Black & Decker note payable due 2028, as well as a net loss of $ 25.7 million pertaining to unamortized termination gains and losses on interest rate swaps and unamortized discounts on the notes as described in Note I, Financial Instruments, and $ 34.0 million of unamortized deferred financing fees.

Interest paid during 2020, 2019 and 2018 amounted to $ 192.1 million, $ 252.9 million and $ 249.6 million, respectively.

Interest paid during 2021, 2020 and 2019 amounted t o $ 177.3 million, $ 192.1 million and $ 252.9 million, respectively.

In November 2020, the Company issued $ 750.0 million of senior unsecured term notes maturing November 15, 2050 ("2050 Term Notes").

The 2050 Term Notes will accrue interest at a fixed rate of 2.75 % 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.

The Company received total net proceeds from this offering of approximately $ 739.9 million, net of approximately $ 10.1 million of underwriting expenses and other fees associated with the transaction.

The Company received total proceeds from this offering of approximately $ 739.9 million, net of approximately $ 10.1 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 other borrowings.

4 unchanged sentences

In February 2020, the Company issued $ 750.0 million of senior unsecured term notes maturing March 15, 2030 ("2030 Term Notes") and $ 750.0 million of fixed-to-fixed reset rate junior subordinated debentures maturing March 15, 2060 (“2060 Junior Subordinated Debentures”).

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.

unsubordinated debt.

The 2060 Junior Subordinated Debentures bear interest at a fixed rate of 4.0 % per annum, payable semi-annually in arrears, up to but excluding March 15, 2025.

4 unchanged sentences

The 2060 Junior Subordinated Debentures are unsecured and rank subordinate and junior in right of payment to all of the Company’s existing and future senior debt.

The Company received total net proceeds from these offerings

of approximat ely $ 1.483 billion, net of underwriting expenses and other fees associated with the transactions.

The net proceeds from these offerings were used for ge neral corporate purposes, including acquisition funding.

In March 2019, the Company issued $ 500.0 million of senior unsecured notes maturing on March 1, 2026 ("2026 Term Notes").

The 2026 Term Notes accrue interest at a fixed rate of 3.40 % per annum with interest payable semi-annually in arrears.

The 2026 Term Notes rank equally in right of payment with all of the Company's existing and future unsecured and unsubordinated debt.

The Company received net cash proceeds of $ 496.2 million which reflected the notional amount offset by a discount, 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.

In November 2018, the Company issued $ 500.0 million of senior unsecured notes maturing on November 15, 2028 ("2028 Term Notes") and $ 500.0 million of senior unsecured notes maturing on November 15, 2048 ("2048 Term Notes").

The 2028 Term Notes and 2048 Term Notes accrue interest at fixed rates of 4.25 % per annum and 4.85 % per annum, respectively, with interest payable semi-annually in arrears on both notes.

The notes are unsecured and rank equally with all of the Company's existing and future unsecured and unsubordinated debt.

The Company received net proceeds of $ 990.0 million which reflected a discount of $ 0.9 million and $ 9.1 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 other borrowings.

Contemporaneously with the issuance of the 2028 Term Notes and 2048 Term Notes, the Company paid $ 977.5 million to settle its remaining obligations of two unsecured notes which matured in November 2018.

The Company received total net proceeds from these offerings of approximately $ 1.483 billion, net of underwriting expenses and other fees associated with the transactions.

The net proceeds from these offerings were used for general corporate purposes, including acquisition funding.

In December 2013, the Company issued $ 400.0 million aggregate principal amount of 5.75 % fixed-to-floating rate junior subordinated debentures maturing December 15, 2053 (“2053 Junior Subordinated Debentures”).

7 unchanged sentences

Commercial Paper and Credit Facilities

The Company has a $ 3.0 billion commercial paper program which includes Euro denominated borrowings in addition to U.S.

As of January 2, 2021, the Company had no borrowings outstanding.

As of December 28, 2019, the Company had $ 335.5 million of borrowings outstanding representing Euro denominated commercial paper, which was designated as a net investment hedge.

Refer to Note I, Financial Instruments, for further discussion.

The Company has a five-year $ 2.0 billion committed credit facility (the "5-Year Credit Agreement").

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.

As of January 1, 2022, the Company had $ 2.2 billion of borrowings outstanding.

As of January 2, 2021, the Company had no borrowings outstanding, Refer to Note I, Financial Instruments, for further discussion.

In September 2021, the Company amended and restated its existing five-year $ 2.0 billion committed credit facilit y with the concurrent execution of a new five year $ 2.5 billion co mmitted credit facility (the " 5 -year Credit Agreement").

Borrowings under the 5 -Year Credit Agreement may be made in U.S.

5 unchanged sentences

Dollar and Euro commercial paper program.

As of January 2, 2021 and December 28, 2019, the Company had not drawn on its five-year committed credit facility.

In September 2020, the Company terminated its 364-day $ 1.0 billion committed credit facility and concurrently executed a new 364-Day $ 1.0 billion committed credit facility (the "364-Day Credit Agreement").

As of January 1, 2022 and January 2, 2021, the Company had not drawn on its five-year committed credit facility.

In September 2021, the Company terminated its 364 -day $ 1.0 billion credit facility and concurrently executed a new 364 -Day $ 1.0 billion committed credit facility (the " 364 -Day Credit Agreement").

Borrowings under the 364 -Day Credit Agreement may be made in U.S.

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 8, 2021 or upon termination.

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 364-Day Credit Agreement serves as part of the liquidity back-stop for the Company’s $ 3.0 billion U.S.

The Company must repay all advances under the 364 -Day Credit Agreement by the earlier of September 7, 2022 or u pon termination.

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 2, 2021 and December 28, 2019, the Company had not drawn on its 364-Day committed credit facility.

As of January 1, 2022 and January 2, 2021, the Company had no t drawn on this 364 -Day committed credit facility.

In November 2021, the Company executed a second 364 -Day $ 1.0 billion committed credit facility (the "Second 364 -Day Credit A greement").

Borrowings under the Second 364 -Day Credit Agreement may be made in U.S.

Dollars and Euros and bear interest at a base rate plus an applicable margin determined at the time of borrowing.

The Company must repay all advances under the Second 364 -Day Credit Agreement by the earlier of November 15, 2022 or upon termination.

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.

As of January 1, 2022, the Company had not drawn on this 364 -Day committed credit facility.

In January 2022, the Company executed a third 364 -Day $ 2.5 billion committed credit facility (the "Third 364 -Day Credit Agreement").

Borrowings under the Third 364 -Day Credit Agreement shall be made in U.S.

Dollars and bear interest at a base rate plus an applicable margin determined at the time of the borrowing.

The Company must repay all advances under the Third 364 -Day Credit Agreement by the earlier of January 25, 2023 or upon termination.

The Company has not drawn on this 364 -Day committed credit facility.

In addition, the Company has other short-term lines of credit that are primarily uncommitted, with numerous banks, aggregating to $ 353.6 million, of which $ 262.7 million was available at January 1, 2022.

Short-term arrangements are reviewed annually for renewal.

At January 2, 2021, the aggregate amount of committed and uncommitted lines of credit, long-term and short-term, was approximately $ 3.5 billion.

At January 2, 2021, $ 1.5 million was recorded as short-term borrowings relating to amounts outstanding against uncommitted lines.

At January 1, 2022, the aggregate amount of committed and uncommitted lines of credit, long-term and short-term, was approximatel y $ 4.9 billion.

At January 1, 2022, $ 2.2 billion was recorded as short-term borrowings.

In addition, $ 90.9 million of the short-term credit lines was utilized primarily pertaining to outstanding letters of credit for which there are no required or reported debt balances.

The weight ed-average interest rates on U.S.

dollar denominated short-term borrowings for the years ended January 2, 2021 and December 28, 2019 were 1.3 % and 2.3 %, respectively.

The weighted-average interest rates on Euro denominated short-term borrowings for the years ended January 2, 2021 and December 28, 2019 were negative 0.2 % and 0.3 %, respectively.

The Company has an interest coverage covenant that must be maintained to permit continued access to its committed credit facilities described above.

The interest coverage ratio tested for covenant compliance compares adjusted Earnings Before Interest, Taxes, Depreciation and Amortization to adjusted Interest Expense ("adjusted EBITDA"/"adjusted Interest Expense").

In April 2020, the Company entered into an amendment to its 5-Year Credit Agreement to:

(a) amend the definition of Adjusted EBITDA to allow for additional adjustment addbacks, which primarily relate to anticipated incremental charges related to the COVID-19 pandemic, for amounts incurred beginning in the second quarter of 2020 through the second quarter of 2021, and (b) lower the minimum interest coverage ratio from 3.5 to 2.5 times for the period from and including the second quarter of 2020 through the end of fiscal year 2021.

These amendments are also applicable to the new 364-Day Credit Agreement described above.

dollar denominated short-term borrowings for the years ended January 1, 2022 and January 2, 2021 were 0.1 % and 1.3 %, respectively.

The weighted-average interest rates on Euro denominated short-term borrowings for the years ended January 1, 2022 and January 2, 2021 were negativ e 0.5 % and 0.2 %, respectively.

FINANCIAL INSTRUMENTS

4 unchanged sentences

Financial instruments are not utilized for speculative purposes.

A summary of the fair values of the Company’s derivatives recorded in the Consolidated Balance Sheets at January 2, 2021 and December 28, 2019 follows:

A summary of the fair values of the Company’s derivatives recorded in the Consolidated Balance Sheets at January 1, 2022 and January 2, 2021 follows:

(Millions of Dollars) Balance Sheet

3 unchanged sentences

Interest Rate Contracts Cash Flow Other current assets $ 1.2 $ — Accrued expenses $ 1.9 $ 90.9

LT other assets — — LT other liabilities — 40.5

Foreign Exchange Contracts Cash Flow Other current assets 18.3 — Accrued expenses 0.8 23.7

1 unchanged sentence

LT other assets 3.3 — LT other liabilities — 5.7

Non-derivative designated as hedging instrument:

Net Investment Hedge — — Short-term borrowings — 335.5

Total Designated as hedging instruments $ 25.3 $ 3.5 $ 2.7 $ 175.4

5 unchanged sentences

The credit risk is limited to the asset amounts noted above.

The Company limits its exposure and concentration of risk by contracting with diverse financial institutions and does not anticipate non-performance by any of its counterparties.

The Company limits its exposure and concentration of risk by contracting with

diverse financial institutions and does not anticipate non-performance by any of its counterparties.

Further, as more fully discussed in Note M, Fair Value Measurements , the Company considers non-performance risk of its counterparties at each reporting period and adjusts the carrying value of these assets accordingly.

The risk of default is considered remote.

As of January 2, 2021 and December 28, 2019, there were no assets that had been posted as collateral related to the above mentioned financial instruments.

In 2020, 2019 and 2018, cash flows related to derivatives, including those that are separately discussed below, resulted in net cash received of $ 33.4 million, $ 69.9 million and $ 2.4 million, respectively.

CASH FLOW HEDGES — There were after-tax mark-to-market losses of $ 103.0 million and $ 54.2 million as of January 2, 2021 and December 28, 2019, respectively, reported for cash flow hedge effectiveness in Accumulated other comprehensive loss.

An after-tax loss of $ 20.1 million is expected to be reclassified to earnings as the hedged transactions occur or as amounts are amortized within the next twelve months.

As of January 1, 2022 and January 2, 2021, there were no assets that had been posted as collateral related to the above mentioned financial instruments.

In 2021 cash flows related to derivatives, including those that are separately discussed below, resulted in net cash paid of $ 166.8 million, and in 2020 and 2019, cash flows related to derivatives resulted in net cash received of $ 33.4 million and $ 69.9 million, respectively.

CASH FLOW HEDGES — There were after-tax mark-to-market losses of $ 49.8 million and $ 103.0 million as of January 1, 2022 and January 2, 2021, respectively, reported for cash flow hedge effectiveness in Accumulated other comprehensive loss.

An after-tax gain of $ 11.1 million is expected to be reclassified to earnings as the hedged transactions occur or as amounts are amortized within the next twelve months.

The ultimate amount recognized will vary based on fluctuations of the hedged currencies and interest rates through the maturity dates.

10 unchanged sentences

Foreign Exchange Contracts $ 24.1 Cost of sales $ ( 26.1 ) $ —

2019 (Millions of Dollars) Gain (Loss)

2020 (Millions of Dollars)

Recorded in OCI Classification of

33 unchanged sentences

The Company enters into interest rate swap agreements in order to obtain the lowest cost source of funds within a targeted range of variable to fixed-rate debt proportions.

During 2021, the Company entered into forward starting interest rate swaps totaling $ 400.0 million to offset expected variability on future interest rate payments associated with debt instruments expected to be issued in the future.

During 2020, the Company entered into forward starting interest rate swaps totaling $ 1.0 billion to offset expected variability on future interest rate payments associated with debt instruments expected to be issued in the future.

The Company terminated these swaps in 2020 resulting in a loss of $ 20.5 million, which was recorded in Accumulated other comprehensive loss and is being amortized to interest expense over future periods.

The cash flows stemming from the maturity of such interest rate swaps designated as cash flow hedges are presented within other financing activities in the Consolidated Statements of Cash Flows.

During 2019, the Company entered into forward starting interest rate swaps totaling $ 650.0 million to offset expected variability on future interest rate payments associated with debt instruments expected to be issued in the future.

During 2019, swaps with a notional amount of $ 250.0 million matured resulting in a loss of $ 1.0 million, which was recorded in Accumulated other comprehensive loss and is being amortized to earnings as interest expense over future periods.

The cash flows stemming from the maturity of such interest rate swaps designated as cash flow hedges are presented within other financing activities in the Consolidated Statements of Cash Flows.

In 2018, forward starting interest rate swaps with an aggregate notional amount of $ 400 million fixing 10 years of interest payments ranging from 4.25 %- 4.85 % matured.

The objective of the hedges was to offset the expected variability on future payments associated with the interest rate on debt instruments.

This resulted in a loss of $ 22.7 million, which was recorded in Accumulated other comprehensive loss and is being amortized to earnings as interest expense over future periods.

The cash flows stemming from the maturity of such interest rate swaps designated as cash flow hedges are presented within other financing activities in the Consolidated Statements of Cash Flows.

During 2021, the remaining notional amount of $ 400.0 million matured resulting in a loss of $ 75.3 million, which was recorded in Accumulated other comprehensive loss, and will be amortized to interest expense over future periods.

The cash flows stemming from the maturity and termination of such interest rate swaps designated as cash flow hedges discussed above are presented within other financing activities in the Consolidated Statements of Cash Flows.

In December 2020, the Company redeemed all of the outstanding 2021 Term Notes and 2022 Term Notes, as further discussed in Note H, Long-Term Debt and Financing Arrangements.

As a result, the Company recorded a pre-tax loss of $ 19.6 million relating to the remaining unamortized loss on cash flow swap terminations related to the 2022 Term Notes.

As of January 2, 2021 and December 28, 2019, the Company had $ 400 million of forward starting swaps outstanding.

As of January 1, 2022 and January 2, 2021, the Company had $ 400.0 million of forward starting swaps outstanding.

Foreign Currency Contracts

5 unchanged sentences

There are no components excluded from the assessment of effectiveness for these contracts.

At January 2, 2021, and December 28, 2019, the notional values of the forward currency contracts outstanding was $ 595.8 million and $ 518.2 million, respectively, maturing on various dates through 2021.

At January 1, 2022, and January 2, 2021, the notional values of the forward currency contracts outstanding was $ 512.1 million and $ 595.8 million, respectively, maturing on various dates through 2022.

In January 2022, the Company entered into forward currency contracts with notional values totaling $ 100.0 million maturing on various dates in 2022.

Purchased Option Contracts:

3 unchanged sentences

There are no components excluded from the assessment of effectiveness for these contracts.

At January 2, 2021 and December 28, 2019 there were no outstanding option contracts.

At January 1, 2022 and January 2, 2021 there were no outstanding option contracts.

FAIR VALUE HEDGES

3 unchanged sentences

Amortization of the gain/loss on previously terminated swaps is reported as a reduction of interest expense.

Prior to termination, the changes in fair value of the swaps and the offsetting changes in fair value related to the underlying notes were recognized in earnings.

The Company did not have any active fair value interest rate swaps at January 2, 2021 or December 28, 2019.

Prior to termination, the changes in fair value of the swaps and the offsetting changes in fair

value related to the underlying notes were recognized in earnings.

The Company did not have any active fair value interest rate swaps at January 1, 2022 or January 2, 2021.

A summary of the pre-tax effect of fair value hedge accounting on the Consolidated Statements of Operations for 2021, 2020 and 2019 is as follows:

24 unchanged sentences

The Company utilizes net investment hedges to offset the translation adjustment arising from re-measurement of its investment in the assets and liabilities of its foreign subsidiaries.

The total after-tax amounts in Accumulated other comprehensive gains of $ 72.8 million and $ 97.3 million at January 2, 2021 and December 28, 2019, respectively.

The total after-tax amounts in Accumulated other comprehensive gains of $ 71.8 million and $ 72.8 million at January 1, 2022 and January 2, 2021, respectively.

As of January 1, 2022, the Company had a foreign exchange contract with a notional values of $ 75.0 million maturing in 2022 hedging a portion of its Taiwan dollar denominated net investments and a cross currency swap with a notional value of $ 100.0 million maturing in 2023 hedging a portion of its Japanese yen denominated net investments.

As of January 2, 2021, the Company had cross currency swaps with a notional value totaling $ 839.4 million maturing on various dates through 2023 hedging a portion of its Japanese yen, Euro and Swiss franc denominated net investments.

As of January 2, 2021, the Company had no Euro denominated commercial paper designated as a net investment hedge.

As of December 28, 2019, the Company had cross currency swaps with a notional value totaling $ 1.1 billion maturing on various dates through 2023 hedging a portion of its Japanese yen, Euro and Swiss franc denominated net investments and Euro denominated commercial paper with a value of $ 335.5 million maturing in 2020 hedging a portion of its Euro denominated net investments.

Maturing foreign exchange contracts resulted in net cash received of $ 41.0 million, $ 8.0 million, and $ 25.7 million during 2020, 2019 and 2018, respectively.

Maturing foreign exchange contracts resulted in net cash paid of $ 55.1 million in 2021, and net cash received of $ 41.0 million, and $ 8.0 million during 2020 and 2019, respectively.

Gains and losses on net investment hedges remain in Accumulated other comprehensive loss until disposal of the underlying assets.

5 unchanged sentences

Cross Currency Swap $ 11.7 $ 24.6 Other, net $ 3.7 $ 3.7

Option Contracts $ — $ — Other, net $ — $ —

Non-derivative designated as Net Investment Hedge $ ( 6.7 ) $ — Other, net $ — $ —

2 unchanged sentences

Cross Currency Swap $ ( 5.4 ) $ 60.7 Other, net $ 18.2 $ 18.2

Option Contracts $ ( 3.7 ) $ — Other, net $ — $ —

Non-derivative designated as Net Investment Hedge $ ( 8.5 ) $ — Other, net $ — $ —

4 unchanged sentences

Non-derivative designated as Net Investment Hedge $ 21.7 $ — Other, net $ — $ —

As discussed in Note H, Long-Term Debt and Financing Arrangements , the Company has a commercial paper program which authorizes Euro denominated borrowings in addition to U.S.

Euro denominated borrowings against this commercial paper program are designated as a net investment hedge against a portion of its Euro denominated net investment.

As of January 2, 2021 the Company had no Euro denominated borrowings outstanding against this commercial paper program and as of December 28, 2019, the Company had $ 335.5 million in Euro denominated borrowings outstanding against this commercial paper program.

UNDESIGNATED HEDGES

3 unchanged sentences

The total notional amount of the forward contracts outstanding at January 1, 2022 was $ 1.2 billion maturing on various dates through 2022.

The total notional amount of the forward contracts outstanding at December 28, 2019 was $ 946.8 million maturing on various dates through 2020.

The gain (loss) recorded in the income statement from changes in the fair value related to derivatives not designated as hedging instruments under ASC 815 for 2020, 2019 and 2018 are as follows:

The total notional amount of the forward contracts outstanding at January 2, 2021 was $ 1.3 billion maturing on various dates through 2021.

The gain (loss) recorded in the consolidated statements of operations from changes in the fair value related to derivatives not designated as hedging instruments under ASC 815 for 2021, 2020 and 2019 are as follows:

(Millions of Dollars) Income Statement

2 unchanged sentences

CAPITAL STOCK

EARNINGS PER SHARE — The following table reconciles net earnings attributable to common shareowners and the weighted-average shares outstanding used to calculate basic and diluted earnings per share for the fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018.

2021 2020 2019

Numerator (in millions):

Net Earnings Attributable to Common Shareowners $ 1,210.4 $ 955.8 $ 605.2

Net Earnings from Continuing Operations Attributable to Common Shareowners $ 1,586.1 $ 1,160.9 $ 952.4

Contract adjustment payments accretion 1.3 1.7 1.7

Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted 1,587.4 1,162.6 954.1

Net earnings from discontinued operations 88.9 48.8 1.6

Net Earnings Attributable to Common Shareowners - Diluted $ 1,676.3 $ 1,211.4 $ 955.7

2021 2020 2019

Denominator (in thousands):

3 unchanged sentences

Earnings per share of common stock:

Basic $ 7.85 $ 6.44 $ 4.06

Diluted $ 7.77 $ 6.35 $ 3.99

Basic earnings per share of common stock:

Continuing operations $ 9.99 $ 7.53 $ 6.42

Discontinued operations $ 0.56 $ 0.32 $ 0.01

Total basic earnings per share of common stock $ 10.55 $ 7.85 $ 6.43

Diluted earnings per share of common stock:

Continuing operations $ 9.62 $ 7.16 $ 6.10

Discontinued operations $ 0.54 $ 0.30 $ 0.01

Total dilutive earnings per share of common stock $ 10.16 $ 7.46 $ 6.11

The following weighted-average stock options were not included in the computation of weighted-average diluted shares outstanding because the effect would be anti-dilutive (in thousands):

2 unchanged sentences

In November 2019, the Company issued 7,500,000 Equity Units with a total notional value of $ 750.0 million ( “ 2019 Equity Units”).

Each unit initially consists of 750,000 shares of convertible preferred stock ("Series D Preferred Stock") and forward stock purchase contracts.

Each unit has a stated amount of $ 100 and initial ly 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”).

On and after November 15, 2022, the Series D Preferred Stock may be converted into common stock at the option of the holder.

At the election of the Company, upon conversion, the Company may deliver cash, common stock, or a combination thereof.

The conversion rate is initially 5.2263 shares of common stock per one share of Series D Preferred Stock, which was equivalent to an initial conversion price of approximately $ 191.34 per share of common stock.

The conversio n rate was init ially 5.2263 shares of common stock per one share of Series D Preferred Stock, which was equivalent to an initial conversion price of approximately $ 191.34 per share of common stock.

As of January 1, 2022, due to customary anti-dilution provisions, the conversion rate was 5.2330 , equivalent to a conversion price of approximately $ 191.10 per share of common stock.

The Series D Preferred Stock is excluded from the denominator of the diluted earnings per share calculation on the basis that the convertible preferred stock will be settled in cash except to the extent that the conversion value of the convertible preferred stock exceeds its liquidation preference.

Therefore, before any redemption or conversion, the common shares that would be required to settle the applicable conversion value in excess of the liquidation preference, if the Company elects to settle such excess in common shares, are included in the denominator of diluted earnings per share in periods in which they are dilutive.

The shares related to the Series D Preferred Stock were anti-dilutive during 2020 and during November and December of 2019.

The Series D Preferred Stock is excluded from the denominator of the diluted earnings per share calculation on the basis that the Series D Preferred Stock will be settled in cash except to the extent that the conversion value exceeds its liquidation preference.

Therefore, before any redemption or conversion, the common shares that would be required to settle the applicable conversion

value in excess of liquidation preference are included in the denominator of diluted earnings per share in periods in which they are dilutive.

In May 2017, the Company issued 7,500,000 Equity Units with a total notional value of $ 750.0 million ( “ 2017 Equity Units”).

Each unit initially consisted of 750,000 shares of convertible preferred stock ("Series C Preferred Stock") and forward stock purchase contracts.

In May 2020, the Company successfully remarketed the Series C Preferred Stock, generating cash proceeds of $ 750.0 million which were applied to settle the holders' stock purchase contract obligations, resulting in the Company issuing 5,463,750 common shares.

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).

In addition, holders have the option to convert the Series C Preferred Stock into common stock.

Each unit had a stated amount of $ 100 and initially consisted of a three-year forward stock purchase contract ( “ 2020 Purchase Contracts”) for the purchase of a variable number of shares of common stock, on May 15, 2020, for a price of $ 100 , and a 10 % beneficial ownership interest in one share of 0 % Series C Cumulative Perpetual Convertible Preferred Stock, without par, with a liquidation preference of $ 1,000 per share ( “ Series C Preferred Stock”).

The Shares associated with the forward stock purchase contracts component of the 2019 Equity Units and 2017 Equity Units have been reflected in diluted earnings per share using the if-converted method pursuant to paragraph 260-10-45-40 of ASC 260, Earnings per share .

In May 2020, the Company successfully remarketed the Series C Preferred Stock (the “ Remarketed Series C Preferred Stock”) resulting in cash proceeds of $ 750.0 million.

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, without par, with a liquidation preference of $ 1,000 per share.

Holders of the Remarketed Series C Preferred Stock were 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).

Beginning on May 15, 2020, the holders had the option to convert the Remarketed Series C Preferred Stock into common stock.

At the election of the Company, upon conversion, the Company may deliver cash, common stock, or a combination thereof.

In connection with the remarketing described above, the conversion rate was reset to 6.7352 shares of the Company's common stock per one share of Series C Preferred Stock, which was equivalent to a conversion price of approximately $ 148.47 per share of common stock.

As of January 2, 2021, due to customary anti-dilution provisions, the conversion rate was 6.7504 , equivalent to a conversion price of approximately $ 148.14 per share of common stock.

The Series C Preferred Stock is excluded from the denominator of the diluted earnings per share calculation on the basis that the convertible preferred stock will be settled in cash except to the extent that the conversion value of the convertible preferred stock exceeds its liquidation preference.

The shares related to the Series C Preferred Stock were anti-dilutive during certain months in 2020 and most of 2019.

In connection with the remarketing described above, the conversion rate was reset to 6.7352 shares of the Company's common stock per one share of Remarketed Series C Preferred Stock, which was equivalent to a conversion price of approximately $ 148.47 per share of common stock.

On April 28, 2021, the Company informed holders that it would redeem all outstanding shares of the Remarketed Series C Preferred Stock on June 3, 2021 (the “ Redemption Date”) at $ 1,002.50 per share in cash (the “ Redemption Price”) which was equal to 100 % of the liquidation preference of a share of Remarketed Series C Preferred Stock, plus accumulated and unpaid dividends to, but excluding, the Redemption Date.

If a holder elected to convert its shares of Remarketed Series C Preferred Stock prior to the Redemption Date, the Company elected a combination settlement with a specified cash amount of $ 1,000 per share.

In June 2021, the Company redeemed the Remarketed Series C Preferred Stock and settled all conversions, paying $ 750 million in cash and issuing 1,469,055 common shares.

The conversion rate used was 6.7548 (equivalent to a conversion price set at $ 148.04 per common share).

Prior to the Redemption Date, the Remarketed Series C Preferred Stock was excluded from the denominator of the diluted earnings per share calculation on the basis that the Remarketed Series C Preferred Stock would be settled in cash except to the extent that the conversion value exceeded its liquidation preference.

Therefore, before any redemption or conversion, the common shares that would be required to settle the applicable conversion value in excess of the liquidation preference were included in the denominator of diluted earnings per share in periods in which they were dilutive.

See “ Other Equity Arrangements” below for further details of the above transactions.

7 unchanged sentences

Outstanding, less shares subject to the forward share purchase contract 159,683,266 157,106,752 149,860,899

In May 2020, the Company issued 5,463,750 shares of common stock to settle the purchase contracts related to the 2017 Equity Units.

In April 2018, the Company repurchased 1,399,732 shares of common stock for approximately $ 200.0 million.

In July 2018, the Company repurchased 2,086,792 shares of common stock for approximately $ 300.0 million.

Upon completion of the remarketing of the Series C Preferred Stock in May 2020, the holders of the 2017 Equity Units received 5,463,750 shares of common stock and the Company issued 750,000 shares of Remarketed Series C Preferred Stock.

In March 2015, the Company entered into a forward share purchase contract with a financial institution counterparty for 3,645,510 shares of common stock.

2 unchanged sentences

The reduction of common shares outstanding was recorded at the inception of the forward share purchase contract in March 2015 and factored into the calculation of weighted-average shares outstanding at that time.

COMMON STOCK RESERVED — Common stock shares reserved for issuance under various employee and director stock plans at January 2, 2021 and December 28, 2019 are as follows:

COMMON STOCK RESERVED — Common stock shares reserved for issuance under various employee and director stock plans at January 1, 2022 and January 2, 2021 are as follows:

Employee stock purchase plan 1,388,655 1,480,962

12 unchanged sentences

Treasury securities with maturities equal to the expected life of the option;

and a seven percent forfeiture rate is assumed.

and a eight percent forfeiture rate is assumed.

The Company uses historical data in order to estimate forfeitures and holding period behavior for valuation purposes.

18 unchanged sentences

At January 1, 2022, the range of exercise prices on outstanding stock options was $ 70.61 to $ 193.97 .

Stock option expense was $ 31.6 million, $ 27.7 million and $ 23.9 million for the years ended January 2, 2021, December 28, 2019 and December 29, 2018, respectively.

Stock option expense was $ 36.4 million, $ 31.6 million and $ 27.7 million for the years ended January 1, 2022, January 2, 2021 and December 28, 2019, respectively.

At January 1, 2022, the Company had $ 73.9 million of unrecognized pre-tax compensation expense for stock options.

1 unchanged sentence

During 2021, the Company received $ 117.5 million in cash from the exercise of stock options.

The related tax benefit from the exercise of these options was $ 24.6 million.

During 2020, 2019 and 2018, the total intrinsic value of options exercised was $ 104.3 million, $ 143.7 million and $ 18.3 million, respectively.

The related cash tax benefit from the exercise of these options was $ 19.7 million.

During 2021, 2020 and 2019, the total intrinsic value of options exercised

was $ 85.3 million, $ 104.3 million and $ 143.7 million, respectively.

When options are exercised, the related shares are issued from treasury stock.

11 unchanged sentences

435,269 1.78 $ 80.63 435,269 1.78 $ 80.63

$125.01 and higher 3,964,356 8.55 157.87 1,378,999 7.70 152.56

100.01 — 165.00

2,572,398 6.50 133.35 1,850,961 6.06 128.88

165.01 — higher

2,566,005 8.45 181.63 947,405 6.69 171.83

5,573,672 7.04 $ 151.46 3,233,635 5.67 $ 134.97

Compensation cost for new grants is recognized on a straight-line basis over the vesting period.

15 unchanged sentences

The weighted-average fair value of those purchase rights granted in 2021, 2020 and 2019 was $ 45.46 , $ 41.02 and $ 27.75 , respectively.

Total compensation expense recognized for ESPP was $ 3.9 million in 2020, de minimus in 2019 and $ 6.6 million in 2018.

Total compensation expense recognized for ESPP was $ 4.4 million in 2021, $ 3.9 million in 2020 and de minimus in 2019.

Restricted Share Units and Awards:

1 unchanged sentence

RSU grants totaled 463,084 shares, 325,448 shares and 282,598 shares in 2021, 2020 and 2019, respectively.

weighted-average grant date fair value of RSUs granted in 2020, 2019 and 2018 was $ 165.44 , $ 149.14 and $ 133.90 per share, respectively.

The weighted-average grant date fair value of RSUs granted in 2021, 2020 and 2019 was $ 193.66 , $ 165.44 and $ 149.14 per share, respectively.

Total compensation expense recognized for RSUs amounted to $ 47.3 million, $ 35.6 million and $ 41.2 million in 2021, 2020 and 2019, respectively.

6 unchanged sentences

Date Fair Value

Non-vested at December 28, 2019 866,520 $ 139.23

Non-vested at January 2, 2021 831,384 $ 151.26

Granted 463,084 193.66

4 unchanged sentences

Prior to 2020, non-employee members of the Board of Directors received annual restricted share-based grants which must be cash settled and accordingly mark-to-market accounting is applied.

The Company recognized $ 1.6 million and $ 6.8 million of expense for these awards in 2020 and 2019, respectively, and $ 3.4 million of income in 2018.

In 2021, 2020 and 2019 the Company recognized $ 1.1 million, $ 1.6 million and $ 6.8 million of expense for these awards, respectively.

Beginning in 2020, the annual grant issued to non-employee members of the Board of Directors will be stock settled.

The expense related to the 2020 annual grant was $ 1.4 million in 2020.

The expense related to the annual grant in 2021 and 2020 was $ 2.0 million and $ 1.4 million, respectively.

Additionally, members of the Board of Directors were granted restricted share units for which compensation expense of $ 1.4 million, $ 1.0 million, and $ 1.2 million was recognized for 2021, 2020 and 2019, respectively.

7 unchanged sentences

Date Fair Value

Non-vested at December 28, 2019 346,011 $ 127.27

Granted 508,860 93.58

Non-vested at January 2, 2021 593,035 $ 99.93

Vested ( 165,480 ) 104.91

2 unchanged sentences

Compensation cost for these performance awards is recognized ratably over the vesting term of 3 years.

Total expense recognized in 2020 and 2019 related to these MICP-PSUs approximated $ 18.5 million and $ 9.5 million, respectively.

The actual tax benefit received related to the shares that were delivered in 2020 was $ 1.9 million.

Total expense recognized in 2021, 2020 and 2019 related to these MICP-PSUs approximated $ 15.7 million, $ 18.5 million and $ 9.5 million, respectively.

The actual tax benefit received related to the shares that were delivered in 2021 and 2020 was $ 5.6 million a nd $ 1.9 million, respectively.

Long-Term Performance Awards:

1 unchanged sentence

Awards are payable in shares of common stock, which may be restricted if the employee has not achieved certain stock ownership levels, and generally no award is made if the employee terminates employment prior to the settlement date.

LTIP grants were made in

2018, 2019 and 2020.

LTIP grants were made in 2019, 2020 and 2021.

Each grant has separate annual performance goals for each year within the respective three year performance period.

5 unchanged sentences

With the exception of the market-based metric comprising 25 % of the award, in the event performance goals are not met, compensation cost is not recognized and any previously recognized compensation cost is reversed.

The actual tax benefit received related to the shares that were delivered in 2020 was $ 3.9 million.

The excess tax benefit recognized was $ 0.7 million and $ 1.5 million in 2020 and 2019, respectively.

There was no excess tax benefit recognized in 2018.

The actual tax benefit received related to the shares that were delivered in 2021 and 2020 was $ 0.8 million and $ 3.9 million, respectively.

The excess tax benefit recognized was $ 0.1 million, $ 0.7 million, and $ 1.5 million in 2021, 2020 and 2019, respectively.

A summary of the activity pertaining to the maximum number of shares that may be issued is as follows:

1 unchanged sentence

Date Fair Value

Non-vested at December 28, 2019 607,532 $ 131.46

Non-vested at January 2, 2021 608,738 $ 142.58

Granted 211,894 163.45

4 unchanged sentences

2019 Equity Units and Capped Call Transactions

In November 2019, the Company issued 7,500,000 Equity Units with a total notional value of $ 750.0 million (“2019 Equity Units”).

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”).

The Company received approximately $ 735.0 million in cash proceeds from the 2019 Equity Units net of offering expenses and underwriting costs and commissions, and issued 750,000 shares of Series D Preferred Stock, recording $ 750.0 million in preferred stock.

The proceeds were used for general corporate purposes, including repayment of short-term borrowings.

In conjunction with the issuance of the 2019 Equity Units in November 2019, as further discussed above, the Company received approximately $ 734.5 million in cash proceeds, net of offering expenses and underwriting costs and commissions.

The proceeds were attributed to the issuance of 750,000 shares of Series D Preferred Stock for $ 620.3 million and $ 114.2 million for the present value of the quarterly payments to holders of the 2022 Purchase Contracts (“Contract Adjustment Payments”), as discussed further below.

The proceeds were used, together with cash on hand, to redeem the 2052 Junior Subordinate Debentures in December 2019.

The Company also used $ 19.2 million of the proceeds to enter into capped call transactions utilized to hedge potential economic dilution as described in more detail below.

Convertible Preferred Stock

The 2019 Equity Units are accounted for as one unit of account based on the economic linkage between the 2022 Purchase Contracts and Series D Preferred Stock, as well as the combination criteria outlined in ASC 815.

The 2019 Equity Units represent mandatorily convertible preferred stock.

In November 2019, the Company issued 750,000 shares of Series D Preferred Stock, without par, with a liquidation preference of $ 1,000 per share.

2 unchanged sentences

Holders of shares of the convertible preferred stock will generally have no voting rights.

The Series D Preferred Stock is pledged as collateral to support holders’ purchase obligations under the 2022 Purchase Contracts and can be remarketed.

The Series D Preferred Stock is pledged as collateral to support holders’ purchase obligations under the 2022 Purchase Contracts and will be remarketed.

In connection with any successful remarketing, the Company may (but is not required to) modify certain terms of the convertible preferred stock, including the dividend rate, the conversion rate, and the earliest redemption date.

After any successful remarketing in connection with which the dividend rate on the convertible preferred stock is increased, the Company will pay cumulative dividends on the convertible preferred stock, if declared by the Board of Directors, quarterly in arrears from the applicable remarketing settlement date.

On and after November 15, 2022, the Series D Preferred Stock may be converted into common stock at the option of the holder.

The conversion rate was initially 5.2263 shares of common stock per one share of Series D Preferred Stock, which was equivalent to an initial conversion price of approximately $ 191.34 per share of common stock.

As of January 2, 2021, due to customary anti-dilution provisions, the conversat ion rate was 5.2269 , equivalent to a conversion price of approximately $ 191.32

per share of common stock.

At the election of the Company, upon conversion, the Company may deliver cash, common stock, or a combination thereof.

The Company may not redeem the Series D Preferred Stock prior to December 22, 2022.

1 unchanged sentence

If the Company calls the Series D Preferred Stock for redemption, holders may convert their shares immediately preceding the redemption date.

2022 Purchase Contracts

The 2022 Purchase Contracts obligate the holders to purchase, on November 15, 2022, for a price of $ 100 in cash, a maximum number of 4.7 million shares of the Company’s common stock (subject to customary anti-dilution adjustments).

The 2022 Purchase Contracts obligate the holders to purchase, on November 15, 2022, for a price of $ 100 per share in cash, a maximum number of 4.7 million shares of the Company’s common stock (subject to customary anti-dilution adjustments).

The 2022 Purchase Contract holders may elect to settle their obligation early, in cash.

4 unchanged sentences

If the applicable market value of the Company's common stock is less than or equal to the reference price, the settlement rate will be the maximum settlement rate;

and if the applicable market value of the Company's common stock is greater than the reference price, the settlement rate will be a number of shares of the Company's common stock equal to $ 100 divided by the applicable market value.

Upon settlement of the 2022 Purchase Contracts, the Company will receive additional cash proceeds of $ 750 million.

The Company pays the holders of the 2022 Purchase Contracts quarterly payments (“Contract Adjustment Payments”) at a rate of 5.25 % per annum, payable quarterly in arrears on February 15, May 15, August 15 and November 15, which commenced on February 15, 2020.

The $ 114.2 million present value of the Contract Adjustment Payments reduced Shareowners’ Equity at inception.

Upon a successful remarketing of the Series D Preferred Stock (the "Remarketed Series D Preferred Stock"), the Company will receive additional cash proceeds of $ 750 million and issue shares of Remarketed Series D Preferred Stock.

The Company pays Contract Adjustment Payments to holders of the 2022 Purchase Contracts at a rate of 5.25 % per annum, payable quarterly in arrears on February 15, May 15, August 15 and November 15, which commenced on February 15, 2020.

The $ 114.2 million present value of the Contract Adjustment Payments reduced the Series D Preferred Stock at inception.

As each quarterly Contract Adjustment Payment is made, the related liability is reduced and the difference between the cash payment and the present value will accrete to interest expense, approximately $ 1.3 million per year over the three-year term.

5 unchanged sentences

The capped call transactions have a term of approximately three years and are intended to cover the number of shares issuable upon conversion of the Series D Preferred Stock.

Subject to customary anti-dilution adjustments, the capped call has an initial lower strike price of $ 191.34 , which corresponds to the minimum 5.2263 settlement rate of the Series D Preferred Stock, and an upper strike price of $ 207.29 , which is approximately 30 % higher than the closing price of the Company's common stock on November 7, 2019.

Subject to customary anti-dilution adjustments, the capped call had an initial lower strike price of $ 191.34 , which corresponded to the minimum 5.2263 settlement rate of the Series D Preferred Stock, and an upper strike price of $ 207.29 , which was approximately 30 % higher than the closing price of the Company’s common stock on November 7, 2019.

As of January 1, 2022, due to the customary anti-dilution provisions, the capped call transactions were at an adjusted lower strike price of $ 191.10 and an adjusted upper strike price of $ 207.02 .

3 unchanged sentences

The Company expects the capped call transactions to offset the potential dilution upon conversion of the Series D Preferred Stock if the calculated market value is greater than the lower strike price but less than or equal to the upper strike price of the capped call transactions.

Should the calculated market

value exceed the upper strike price of the capped call transactions, the dilution mitigation will be limited based on such capped value as determined under the terms of the contracts.

Should the calculated market value exceed the upper strike price of the capped call transactions, the dilution mitigation will be limited based on such capped value as determined under the terms of the contracts.

With respect to the impact on the Company, the capped call transactions and 2019 Equity Units, when taken together, result in the economic equivalent of having the conversion price on the 2019 Equity Units at $ 207.02 , the upper strike price of the capped call as of January 1, 2022.

3 unchanged sentences

2017 Equity Units and Capped Call Transactions

In May 2017, the Company issued 7,500,000 Equity Units with a total notional value of $ 750.0 million (“2017 Equity Units”).

Each unit has a stated amount of $ 100 and initially consists of a three-year forward stock purchase contract (“2020 Purchase Contracts”) for the purchase of a variable number of shares of common stock, on May 15, 2020, for a price of $ 100 , and a 10% beneficial ownership interest in one share of 0% Series C Cumulative Perpetual Convertible Preferred Stock, without par, with a liquidation preference of $ 1,000 per share (“Series C Preferred Stock”).

The Company received approximately $ 726.0 million in net cash proceeds from the 2017 Equity Units net of offering expenses and underwriting costs and commissions, and issued 750,000 shares of Series C Preferred Stock, recording $ 750.0 million in preferred stock.

The proceeds were used for general corporate purposes, including repayment of short-term borrowings.

In conjunction with the issuance of the 2017 Equity Units in May 2017, as further discussed abo ve, t he Company received approximately $ 727.5 million in cash proceeds, net of offering expenses and underwriting costs and commissions.

The proceeds were attributed to the issuance of 750,000 shares of Series C Preferred Stock for $ 605.0 million, $ 117.1 million for the present value of the Contract Adjustment Payments, and a beneficial conversion feature of $ 5.4 million.

The proceeds were used for

general corporate purposes, including repayment of short-term borrowings.

The Company also used $ 25.1 million of the proceeds to enter into capped call transactions utilized to hedge potential economic dilution as described in more detail below.

Convertible Preferred Stock

The 2017 Equity Units are accounted for as one unit of account based on the economic linkage between the 2020 Purchase Contracts and the Series C Preferred Stock, as well as the combination criteria outlined in ASC 815.

The 2017 Equity Units represent mandatorily convertible preferred stock.

In May 2017, the Company issued 750,000 shares of Series C Preferred Stock, without par, with a liquidation preference of $ 1,000 per share.

The convertible preferred stock initially did not bear any dividends and the liquidation preference of the convertible preferred stock did not accrete.

The convertible preferred stock has no maturity date and remains outstanding unless converted by holders or redeemed by the Company.

Holders of shares of the convertible preferred stock generally have no voting rights.

The convertible preferred stock had no maturity date and remained outstanding unless converted by holders or redeemed by the Company.

Holders of shares of the convertible preferred stock generally had no voting rights.

The Series C Preferred Stock was pledged as collateral to support holders’ purchase obligations under the 2020 Purchase Contracts.

In May 2020, the Company successfully remarketed the Series C Preferred Stock.

In connection with the remarketing, the conversation rate was reset to 6.7352 shares of the Company's common stock, which is equivalent to a conversion price of approximately $ 148.47 per s hare.

Beginning on May 15, 2020, t he holders have the option to convert the Series C Preferred Stock into common stock.

At the election of the Company, upon conversion, the Company may delivery cash, common stock, or a combination thereof.

As of January 2, 2021 due to the customary anti-dilution provisions, the conversion rate was 6.7504 , equivalent to a conversion price of approximately $ 148.14 per share of common stock.

Subsequent to the remarketing, holders of the convertible preferred stock will be entitled to receive, if declared by the Board of Directors, cumulative dividends (i) from, and including May 15, 2020 to, but excluding, May 15, 2023 (the "dividend step-up date") at a fixed rate equal to 5.0 % per annum of the $ 1,000 per share liquidation preference (equivalent to $ 50.00 per annum per share) and (ii) from, and including, the dividend step-up date at a fixed rate equal to 10.0 % per annum of the $ 1,000 per share liquidation preference (equivalent to $ 100.00 per annum per share).

Dividends will be cumulative on the $ 1,000 liquidation preference per share and will be payable, if declared by the Board of Directors, quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, beginning on August 15, 2020.

Dividends accrued on the Series C Preferred Stock reduce net earnings for purposes of calculating earnings per share.

The Company does not have the right to redeem the Series C Preferred Stock prior to May 15, 2021.

At the election of the Company, on or after May 15, 2021, the Company may redeem for cash, all or any portion of the outstanding shares of the Series C Preferred Stock at a redemption price equal to 100 % of the liquidation preference, plus any accumulated and unpaid dividends.

If the Company calls the Series C Preferred Stock for redemption, holders may convert their shares immediately preceding the redemption date.

2020 Purchase Contracts

The remarketing resulted in cash proceeds of $ 750.0 million, which were automatically applied to satisfy in full the related unit holders' obligations to purchase common shares under their 2020 Purchase Contracts.

In May 2020, the Company issued

5,463,750 common shares, settling all 2020 Purchase Contracts using the maximum settlement rate of 0.7285 (equivalent to a reference price of $ 137.26 per common share).

The Company paid the holders of the 2020 Purchase Contracts quarterly payments (“Contract Adjustment Payments”) at a rate of 5.375 % per annum, payable quarterly in arrears on February 15, May 15, August 15 and November 15, which commenced August 15, 2017.

The $ 117.1 million initial present value of these Contract Adjustment Payments reduced Shareowners’ Equity at inception.

As each quarterly Contract Adjustment Payment was made, the related liability was reduced and the difference between the cash payment and the present value accreted to interest expense, approximately $ 1.3 million per year over the three-year term.

As discussed further above, the Company successfully remarketed the Series C Preferred Stock in May 2020.

Subsequent to the remarketing, holders of the Remarketed Series C Preferred Stock were entitled to receive, if declared by the Board of Directors, cumulative dividends (i) from, and including May 15, 2020 to, but excluding, May 15, 2023 (the "dividend step-up date ” ) at a fixed rate equal to 5.0 % per annum of the $ 1,000 per share liquidation preference (equivalent to $ 50.00 per annum per share) and (ii) from, and including, the dividend step-up date at a fixed rate equal to 10.0 % per annum of the $ 1,000 per share liquidation preference (equivalent to $ 100.00 per annum per share).

Dividends were cumulative on the $ 1,000 liquidation preference per share and will be payable, if declared by the Board of Directors, quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, beginning on August 15, 2020.

Dividends accrued on the Remarketed Series C Preferred Stock reduced net earnings for purposes of calculating earnings per share.

The Company did not have the right to redeem the Remarketed Series C Preferred Stock prior to May 15, 2021.

On April 28, 2021, the Company informed holders that it would redeem all outstanding shares of the Remarketed Series C Preferred Stock on June 3, 2021 (the “Redemption Date”) at $ 1,002.50 per share in cash (the “ Redemption Price ” ), which was equal to 100 % of the liquidation preference of a share of Remarketed Series C Preferred Stock, plus accumulated and unpaid dividends to, but excluding, the Redemption Date.

In June 2021, the Company redeemed the Remarketed Series C Preferred Stock and settled all conversions, paying $ 750 million in cash and issuing 1,469,055 common shares.

The conversion rate used was 6.7548 (equivalent to a conversion price set at $ 148.04 per common share).

The Company generated cash proceeds of $ 750.0 million from the successful remarketing of the Series C Preferred Stock.

Upon completion of the remarketing in May 2020, the holders of the 2017 Equity Units received 5,463,750 common shares using the maximum settlement rate of 0.7285 (equivalent to a reference price of $ 137.26 per common share), and the Company issued 750,000 shares of Remarketed Series C Preferred Stock.

The Company paid Contract Adjustment Payments to the holders of the 2020 Purchase Contracts at a rate of 5.375 % per annum, payable quarterly in arrears on February 15, May 15, August 15 and November 15, which commenced August 15, 2017.

The $ 117.1 million initial present value of these Contract Adjustment Payments reduced the Series C Preferred Stock at inception.

As each quarterly Contract Adjustment Payment was made, the related liability was reduced and the difference between the cash payments and the present value accreted to interest expense, approximately $ 1.3 million per year over the three-year term.

On May 15, 2020, the Company paid the final contract adjustment payment related to the 2020 Purchase Contracts.

Capped Call Transactions

In May 2017, the Company entered into capped call transactions with three major financial institutions (the "counterparties") in order to offset the potential economic dilution associated with the common shares issuable upon conversion of the Series C preferred Stock, to the extent that the conversion value of the conversion preferred stock exceeds its liquidation preference.

In May 2017, the Company entered into capped call transactions with three major financial institutions (the “counterparties”) in order to offset the potential economic dilution associated with the common shares issuable upon conversion of the Series C Preferred Stock, to the extent that the conversion value of the convertible preferred stock exceeds its liquidation preference.

The Company paid $ 25.1 million, or an average of $ 5.43 per option, to enter into capped call transactions on 4.6 million shares of common stock.

The $ 25.1 million paid was recorded as a reduction of Shareowners' Equity.

The $ 25.1 million premium paid was recorded as a reduction of Shareowners' Equity.

The capped call transactions had a term of approximately three years and were intended to cover the number of shares issuable upon conversion of the Series C Preferred Stock.

2 unchanged sentences

2018 Capped Call Transactions

In March 2018, the Company purchased from a financial institution "at-the money" capped call options with an approximate term of three years , on 3.2 million shares of its common stock (subject to customary anti-dilution adjustments) for an aggregate premium of $ 57.3 million, or an average of $ 17.96 per share.

The premium paid was recorded as reduction of Shareowners' Equity.

In March 2018, the Company purchased from a financial in stitution “at-the money” ca pped call options with an approximate term of three years , on 3.2 million shares of its common stock (subject to customary anti-dilution adjustments) for an aggregate premium of $ 57.3 million, or an average of $ 17.96 per share.

The premium paid was recorded as a reduction of Sha reowners’

The purpose of the capped call options was to hedge the risk of stock price appreciation between the lower and upper strike prices of the capped call options for a future share repurchase.

2 unchanged sentences

Subsequent to the amendment, the capped call options, subject to anti-dilution, had an initial lower strike price of $ 148.34 and an upper strike price of $ 165.00 , which was approximately 30 % higher than the closing price of the Company ’ s common stock on June 9, 2020.

As of January 2, 2021, due to the customary anti-dilution provisions, the capped call transactions had adjusted lower and upper strike prices of $ 148.14 and $ 164.77 , respectively.

The aggregate fair value of the options at January 2, 2021 was $ 53.4 million.

With the respect to the impact on the Company, the capped call transactions and Series C Preferred Stock, when taken together, result in the economic equivalent of having the conversion price on the Series C Preferred Stock at $ 164.77 , the upper strike price of the capped call as of January 2, 2021.

The capped call transactions may be settled by net share settlement (the default settlement method) or, at the Company ’ s option and subject to certain conditions, cash settlement, physical settlement or modified physical settlement.

1 unchanged sentence

The market value determined will then be measured against the applicable strike price of the capped call transactions.

During the second quarter of 2021, the Company net-share settled the remaining capped call options on its common stock and received 344,004 shares using an average reference price of $ 209.80 per common share.

ACCUMULATED OTHER COMPREHENSIVE LOSS

2 unchanged sentences

Balance - December 28, 2019 $ ( 1,517.2 ) $ ( 54.2 ) $ 97.3 $ ( 410.5 ) $ ( 1,884.6 )

Other comprehensive (loss) income before reclassifications ( 36.0 ) ( 40.5 ) 60.0 ( 53.3 ) ( 69.8 )

Reclassification adjustments to earnings — 13.1 ( 26.0 ) 12.4 ( 0.5 )

Net other comprehensive (loss) income ( 36.0 ) ( 27.4 ) 34.0 ( 40.9 ) ( 70.3 )

Balance - December 28, 2019 $ ( 1,517.2 ) $ ( 54.2 ) $ 97.3 $ ( 410.5 ) $ ( 1,884.6 )

Other comprehensive income (loss) before reclassifications 266.2 ( 64.2 ) ( 10.7 ) ( 53.4 ) 137.9

3 unchanged sentences

Balance - January 2, 2021 $ ( 1,235.3 ) $ ( 103.0 ) $ 72.8 $ ( 448.2 ) $ ( 1,713.7 )

The reclassifications out of Accumulated other comprehensive loss for the twelve months ended January 2, 2021 and December 28, 2019 were as follows:

Other comprehensive (loss) income before reclassifications ( 307.7 ) 36.2 2.9 107.0 ( 161.6 )

Reclassification adjustments to earnings — 17.0 ( 3.9 ) 16.6 29.7

Net other comprehensive (loss) income ( 307.7 ) 53.2 ( 1.0 ) 123.6 ( 131.9 )

Balance - January 1, 2022 $ ( 1,543.0 ) $ ( 49.8 ) $ 71.8 $ ( 324.6 ) $ ( 1,845.6 )

The reclassifications out of Accumulated other comprehensive loss for the twelve months ended January 1, 2022 and January 2, 2021 were as follows:

(Millions of Dollars) 2021 2020

Components of accumulated other comprehensive loss Reclassification adjustments Reclassification adjustments Affected line item in Consolidated Statements of Operations

Realized gains (losses) on cash flow hedges $ 12.4 $ ( 6.5 ) Cost of sales

Realized (losses) gains on cash flow hedges $ ( 26.1 ) $ 12.4 Cost of sales

Realized losses on cash flow hedges — ( 19.6 ) Other, net

3 unchanged sentences

Realized losses on cash flow hedges, net of tax $ ( 17.0 ) $ ( 15.4 )

Realized (losses) gains on net investment hedges $ ( 18.2 ) $ 34.2 Other, net

Realized gains on net investment hedges $ 5.2 $ 18.2 Other, net

Tax effect ( 1.3 ) ( 4.4 ) Income taxes

Realized (losses) gains on net investment hedges, net of tax $ ( 13.8 ) $ 26.0

Realized gains on net investment hedges, net of tax $ 3.9 $ 13.8

Actuarial losses and prior service costs / credits ( 21.0 ) ( 19.5 ) Other, net

10 unchanged sentences

Participants direct the entire employer match benefit such that no participant is required to hold the Company’s common stock in their 401(k) account.

The employer match benefit, which was suspended in the second quarter of 2020, totaled $ 10.9 million, $ 28.8 million and $ 28.0 million in 2020, 2019 and 2018, respectively.

In addition to the regular employer match, $ 0.7 million was allocated to the employee's accounts for forfeitures and a surplus resulting from appreciation of the Company's share value in 2018.

There was no additional employer match allocated to employee's accounts in 2020 and 2019.

The employer match benefit totaled $ 28.0 million, $ 9.2 million and $ 24.6 million in 2021, 2020 and 2019, respectively.

In 2020, the Match was suspended from the second quarter to the end of the year.

In addition, approximately 10,850 U.S.

1 unchanged sentence

Core benefit allocations range from 2 % to 6 % of eligible employee compensation based on age.

Allocations for benefits earned under the Core plan, which were suspended in the second quarter of 2020, were $ 5.6 million, $ 28.8 million, and $ 29.0 million in 2020, 2019 and 2018, respectively.

Allocations for benefits earned under the Core plan were $ 31.1 million, $ 5.4 million, and $ 28.4 million in 2021, 2020 and 2019, respectively.

In 2020, the Core allocations were also suspended from the second quarter to the end of the year.

Assets held in participant Core accounts are invested in target date retirement funds which have an age-based allocation of investments.

Shares of the Company's common stock held by the ESOP were purchased with the proceeds of borrowings from the Company in 1991 ("1991 internal loan").

Shareowners' equity reflects a reduction equal to the cost basis of unearned (unallocated) shares purchased with the internal borrowings.

In 2019 and 2018, the Company made additional contributions to the ESOP for $ 7.2 million, and $ 7.0 million, respectively, which were used by the ESOP to make additional payments on the 1991 internal loan.

These payments triggered the release of 226,212 and 207,049 shares of unallocated stock in 2019 and 2018, respectively.

Net ESOP activity recognized is comprised of the cost basis of shares released, the cost of the aforementioned Core and 401(k) match defined contribution benefits, less the fair value of shares released and dividends on unallocated ESOP shares.

The Company’s net ESOP activity resulted in expense of $ 6.3 million in 2020, income of $ 0.5 million in 2019 and expense of $ 0.4 million in 2018.

ESOP expense is affected by the market value of the Company’s common stock on the monthly dates when shares are released.

The weighted-average market value of shares released was $ 146.08 per share in 2020, $ 138.67 per share in 2019 and $ 139.45 per share in 2018.

Unallocated shares are released from the trust based on current period debt principal and interest payments as a percentage of total future debt principal and interest payments.

Dividends on both allocated and unallocated shares may be used for debt service and to credit participant accounts for dividends earned on allocated shares.

Prior to 2021, shares of the Company's common stock that were purchased with the proceeds of borrowings from the Company in 1991 ("1991 internal loan") were held by the ESOP.

Shareowners' equity reflects a reduction equal to the cost basis of unallocated shares purchased with the internal borrowings.

Unallocated shares were released from the trust based on current period debt principal and interest payments as a percentage of total future debt principal and interest payments.

Dividends on both allocated and unallocated shares were used for debt service and to credit participant accounts for dividends earned on allocated shares.

Dividends paid on the shares acquired with the 1991 internal loan were used solely to pay internal loan debt service in all periods.

Dividends on ESOP shares, which are charged to shareowners’ equity as declared, were $ 1.3 million, $ 6.3 million and $ 7.7 million in 2020, 2019, and 2018, respectively, net of the tax benefit which is recorded in earnings.

Dividends on ESOP shares were utilized entirely for debt service in all years.

Interest costs incurred by the ESOP on the 1991 internal loan, which have no earnings impact, were $ 0.1 million, $ 0.5 million and $ 1.6 million for 2020, 2019 and 2018, respectively.

Both allocated and unallocated ESOP shares are treated as outstanding for purposes of computing earnings per share.

There are no unallocated shares remaining as of January 1, 2022, as all shares in the ESOP trust holding account were released as of the first quarter of 2020.

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.

Net ESOP activity recognized for 2021 is comprised of the aforementioned Core and 401(k) match defined contribution benefits.

Net ESOP activity for 2020 and 2019 is comprised of the cost basis of shares released, the cost of the aforementioned Core and 401(k) match defined contribution benefits, less the fair value of shares released and dividends on unallocated ESOP shares and was affected by the market value of the Company’s common stock on the monthly dates when shares were released.

The weighted-average market value of shares released was $ 146.08 per share in 2020 and $ 138.67 per share in 2019.

The Company made cash contributions totaling $ 35.7 million in 2021, $ 9.2 million in 2020 and $ 2.2 million in 2019, excluding additional contributions of $ 7.2 million and $ 7.0 million in 2020 and 2019, which were used by the ESOP to make additional payments on the 1991 internal loan.

These payments triggered the release of 226,212 and 207,049 shares of unallocated stock in 2020 and 2019, respectively.

Dividends on ESOP shares, which were charged to shareowners’ equity as declared, were $ 1.3 million and $ 6.3 million in 2020 and 2019, respectively, net of the tax benefit which is recorded in earnings.

Interest costs incurred by the ESOP on the 1991 internal loan, which have no earnings impact, were $ 0.1 million and $ 0.5 million for 2020 and 2019, respectively.

Both allocated and unallocated ESOP shares were treated as outstanding for purposes of computing earnings per share.

As of January 2, 2021, the cumulative number of ESOP shares allocated was 15,541,357 , of which participants held 1,638,044 shares.

There are no unallocated shares remaining as of January 2, 2021, as all shares in the ESOP trust holding account have been released.

The Company made cash contributions totaling $ 9.2 million in 2020, $ 2.2 million in 2019 and $ 2.3 million in 2018, excluding additional contributions of $ 7.2 million and $ 7.0 million in 2019 and 2018, respectively, as discussed previously.

PENSION AND OTHER BENEFIT PLANS — The Company sponsors pension plans covering most domestic hourly and certain executive employees, and approximately 14,800 foreign employees.

11 unchanged sentences

In addition to the multi-employer plans, various other defined contribution plans are sponsored worldwide.

As of January 1, 2022 and January 2, 2021 the Company had $ 135.8 million and $ 120.2 million, respectively, of liabilities pertaining to an unfunded supplemental defined contribution plan for certain U.S.

The expense for defined contribution plans, aside from the earlier discussed ESOP plans, is as follows:

15 unchanged sentences

Approximately 16,160 participants are covered under these plans.

Net periodic post-retirement benefit expense was comprised of the following elements:

Net periodic post-retirement benefit expense was comprised

of the following elements:

Other Benefit Plans

9 unchanged sentences

(Millions of Dollars) 2021

Current year actuarial loss $ 51.9

Current year actuarial gain $ ( 133.4 )

Amortization of actuarial loss ( 21.0 )

2 unchanged sentences

Currency / other ( 7.8 )

Total loss recognized in Accumulated other comprehensive loss (pre-tax) $ 50.4

The amounts in Accumulated other comprehensive loss expected to be recognized as components of net periodic benefit costs during 2021 total $ 22.3 million, representing amortization of actuarial losses.

Total gain recognized in Accumulated other comprehensive loss (pre-tax) $ ( 162.4 )

The changes in the pension and other post-retirement benefit obligations, fair value of plan assets, as well as amounts recognized in the Consolidated Balance Sheets, are shown below.

8 unchanged sentences

Settlements/curtailments ( 0.8 ) — ( 15.3 ) ( 5.5 ) — —

Actuarial loss (gain) 123.3 130.4 112.0 140.6 ( 2.9 ) 8.6

Actuarial (gain) loss ( 47.2 ) 123.3 ( 92.4 ) 112.0 ( 6.6 ) ( 2.9 )

Plan amendments 0.8 0.1 0.1 0.1 — —

32 unchanged sentences

Actuarial losses and gains reflected in the table above are driven by changes in demographic experience, changes in assumptions, and differences in actual returns on investments compared to estimated returns.

For the year ended January 2, 2021, the increase in the benefit obligation as a result of actuarial losses was primarily driven by the decline in the single equivalent discount rate used to measure these obligations.

These actuarial losses were partially offset by an improved funded position, as the actual return on plan assets during the year exceeded the estimated return, and an updated mortality improvement scale which slightly reduced the projected obligation.

The accumulated benefit obligation for all defined benefit pension plans was $ 3.022 billion at January 2, 2021 and $ 2.768 billion at December 28, 2019.

For the year ended January 1, 2022, the decrease in the benefit obligation is primarily driven by the improvement in the single equivalent discount rate used to measure these obligations.

The actual return on plan assets during the year also varied in comparison to what was assumed, which also impacted the funded position.

These impacts were partially offset by an updated mortality improvement scale which increased the projected obligations.

The accumulated benefit obligation for all defined benefit pension plans was $ 2.943 billion at January 1, 2022 and $ 3.022 billion at January 2, 2021.

Information regarding pension plans in which accumulated benefit obligations exceed plan assets follows:

3 unchanged sentences

Fair value of plan assets $ 1,184.6 $ 1,191.5 $ 50.3 $ 1,201.3

Information regarding pension plans in which projected benefit obligations (inclusive of anticipated future compensation increases) exceed plan assets follows:

Information regarding pension plans in which projected benefit obligations (inclusive of anticipated future compensation increases) exceed plan assets as follows:

Plans Non-U.S.

18 unchanged sentences

PENSION PLAN ASSETS — Plan assets are invested in equity securities, government and corporate bonds and other fixed income securities, money market instruments and insurance contracts.

The Company’s worldwide asset allocations at January 2, 2021 and December 28, 2019 by asset category and the level of the valuation inputs within the fair value hierarchy established by ASC 820, Fair Value Measurement , are as follows:

The Company’s worldwide asset allocations at January 1, 2022 and January 2, 2021 by asset category and the level of the valuation inputs within the fair value hierarchy established by ASC 820, Fair Value Measurement , are as follows:

Asset Category (Millions of Dollars)

36 unchanged sentences

The Company’s target asset allocations include approximately 20 %- 40 % in equity securities, approximately 50 %- 70 % in fixed income securities and approximately 10 % in other securities.

In 2020, the funded status percentage (total plan assets divided by total projected benefit obligation) of all global pension plans was 80 %, which is consistent with 79 % in 2019 and 78 % in 2018.

The funded status percentage (total plan assets divided by total projected benefit obligation) of all global pension plans was 87 % in 2021, 80 % in 2020 and 79 % in 2019.

The increase in 2021 compared to 2020 and 2019 primarily relates to the pension plan assumed in the MTD acquisition.

CONTRIBUTIONS — The Company’s funding policy for its defined benefit plans is to contribute amounts determined annually on an actuarial basis to provide for current and future benefits in accordance with federal law and other regulations.

The Company expects to contribute approximately $ 41 million to its pension and other post-retirement benefit plans in 2021.

The Company expects to contribute approxim ately $ 41 million to its pension and other post-retirement benefit plans in 2022.

EXPECTED FUTURE BENEFIT PAYMENTS — Benefit payments, inclusive of amounts attributable to estimated future employee service, are expected to be paid as follows over the next 10 years:

24 unchanged sentences

Money market fund $ 11.0 $ 11.0 $ — $ —

Equity security $ 13.8 $ 13.8 $ — $ —

Deferred compensation plan investments

$ 26.2 $ 26.2 $ — $ —

Derivative assets $ 33.1 $ — $ 33.1 $ —

1 unchanged sentence

Contingent consideration liability $ 288.6 $ — $ — $ 288.6

December 28, 2019

January 2, 2021

Money market fund $ 10.3 $ 10.3 $ — $ —

1 unchanged sentence

Derivative liabilities $ 191.0 $ — $ 191.0 $ —

Non-derivative hedging instrument $ 335.5 $ — $ 335.5 $ —

Contingent consideration liability $ 187.0 $ — $ — $ 187.0

The following table provides information about the Company's financial assets and liabilities not carried at fair value:

January 2, 2021 December 28, 2019

January 1, 2022 January 2, 2021

(Millions of Dollars) Carrying

3 unchanged sentences

The money market fund and other investments related to the West Coast Loading Corporation ("WCLC") trust are considered Level 1 instruments within the fair value hierarchy.

The equity security is considered a Level 1 instrument and is recorded at its quoted market price.

The deferred compensation plan investments are considered Level 1 instrument and are recorded at their quoted market price.

The long-term debt instruments are considered Level 2 instruments and are measured using a discounted cash flow analysis based on the Company’s marginal borrowing rates.

The differences between the carrying values and fair values of long-term debt are attributable to the stated interest rates differing from the Company's marginal borrowing rates.

The fair values of the Company's variable rate short-term borrowings approximate their carrying values at January 2, 2021 and December 28, 2019.

The fair values of the Company's variable rate short-term borrowings approximate their carrying values at January 1, 2022 and January 2, 2021.

The fair values of derivative financial instruments in the table above are based on current settlement values.

As part of the Craftsman® brand acquisition in March 2017, the Company recorded a contingent consideration liability representing the Company's obligation to make future payments to Transform Holdco, LLC, which operates Sears and Kmart retail locations, of between 2.5 % and 3.5 % on sales of Craftsman products in new Stanley Black & Decker channels through March 2032.

During the year ended January 2, 2021, the Company paid $ 45.9 million, which included a $ 33.0 million payment in the second quarter of 2020 relating to royalties owed for the first twelve quarters.

During the year ended January 1, 2022, the Company paid approximately $ 29.3 million for royalties owned.

The Company will continue making future payments quarterly through the second quarter of 2032.

The estimated fair value of the contingent consideration liability is determined using a discounted cash flow analysis taking into consideration future sales projections, forecasted payments to Transform Holdco, LLC, based on contractual royalty rates, and the related tax impacts.

The estimated fair value of the contingent consideration liability was $ 187.0 million and $ 196.1 million as of January 2, 2021 and December 28, 2019, respectively.

The estimated fair value of the contingent consideration liability was $ 288.6 million and $ 187.0 million as of January 1, 2022 and January 2, 2021, respectively.

The liability increased $ 101 million in 2021 compared to 2020 due to additional forecasted Craftsman sales resulting from the acquisition of MTD.

Adjustments to the contingent consideration liability, with the exception of cash payments, are recorded in SG&A in the Consolidated Statements of Operations.

5 unchanged sentences

OTHER COSTS AND EXPENSES

During 2020, the Company recognized pre-tax charges of approximately $ 185.0 million related to the comprehensive cost reduction and efficiency program in response to the impact of the COVID-19 pandemic.

The charges were primarily related to costs associated with a voluntary retirement program as well as restructuring costs related to headcount actions, as further discussed in Note O, Restructuring Charges .

Other, net is primarily comprised of intangible asset amortization expense (see Note F, Goodwill and Intangible Assets ), currency-related gains or losses, environmental remediation expense, acquisition-related transaction and consulting costs, and certain pension gains or losses.

Acquisition-related transaction and consulting costs of $ 28.6 million, $ 30.2 million, and $ 30.4 million were included in Other, net for the years ended January 2, 2021, December 28, 2019, and December 29, 2018, respectively.

Acquisition-related transaction and consulting costs of $ 24.1 million, $ 28.7 million, and $ 27.6 million were included in Other, net for the years ended January 1, 2022, January 2, 2021, and December 28, 2019, respectively.

In 2020, Other, net also included a $ 14.1 million special termination benefit charge associated with the voluntary retirement program, a $ 19.6 million loss relating to the unamortized loss on cash flow swap terminations, and a $ 55.3 million release of a contingent consideration liability relating to the CAM acquisition.

Refer to Note E, Acquisitions and Investments , for further discussion of the CAM contingent consideration.

In addition, Other, net included a $ 77.7 million environmental remediation charge recorded in 2018 related to a settlement with the Environmental Protection Agency ("EPA").

Refer to Note S, Contingencies , for further discussion of the EPA settlement.

The year-over-year decrease in 2021 was primarily due to appreciation of Stanley Ventures' investments.

The year-over-year increase in 2020 driven by higher intangible asset amortization and negative impacts from foreign currency.

The charges were primarily related to costs associated with a voluntary retirement program as well as restructuring costs related to headcount actions.

Research and development costs, which are classified in SG&A, were $ 276.3 million, $ 200.0 million and $ 240.8 million for fiscal years 2021, 2020 and 2019, respectively.

RESTRUCTURING CHARGES

A summary of the restructuring reserve activity from December 28, 2019 to January 2, 2021 is as follows:

(Millions of Dollars) December 28, 2019 Net

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

2 unchanged sentences

Total $ 79.8 $ 14.5 $ ( 64.4 ) $ 2.0 $ 31.9

During 2020, the Company recognized net restructuring charges of $ 83.0 million, primarily related to severance costs associated with a cost reduction program announced in the second quarter of 2020.

During 2021, the Company recognized net restructuring charges of $ 14.5 million, primarily related to facility closures and asset impairments.

The majority of the $ 31.9 million of reserves remaining as of January 1, 2022 is expected to be utilized within the next 12 months.

2 unchanged sentences

$ 2 million pertaining to the Industrial segment;

$ 9 million pertaining to the Security segment;

and $ 5 million pertaining to Corporate.

BUSINESS SEGMENTS AND GEOGRAPHIC AREAS

The Company's operations are classified into three reportable segments, which also represent its operating segments:

Tools & Storage, Industrial and Security.

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

The PTE business includes both professional and consumer products.

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").

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

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.

2 unchanged sentences

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

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

4 unchanged sentences

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

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 MAS business primarily sells automatic doors.

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.

Segment profit excludes the corporate overhead expense element of SG&A, other, net (inclusive of intangible asset amortization expense), gain or loss on sales of businesses, restructuring charges, loss on debt extinguishments, interest income, interest expense, income taxes and share of net earnings or losses of equity method investment.

Corporate overhead is comprised of world headquarters facility expense, cost for the executive management team and expenses pertaining to certain centralized functions that benefit the entire Company but are not directly attributable to the businesses, such as legal and corporate finance functions.

Refer to Note F, Goodwill and Intangible Assets , and Note O, Restructuring Charges, for the amount of intangible asset amortization expense and net restructuring charges, respectively, attributable to each segment.

Transactions between segments are not material.

5 unchanged sentences

Industrial 2,463.1 2,352.7 2,434.7

Security 1,852.2 1,945.4 1,980.6

Corporate Overhead & Other 336.7 375.3 416.1

Consolidated $ 15,617.2 $ 13,057.7 $ 12,912.9

2 unchanged sentences

Industrial 256.6 220.6 330.0

Security 108.7 126.6 169.3

Segment Profit 2,242.0 2,040.9 1,847.0

Corporate overhead ( 297.7 ) ( 229.5 ) ( 202.8 )

Corporate Overhead & Other ( 288.2 ) ( 264.0 ) ( 181.9 )

Other, net ( 190.1 ) ( 217.8 ) ( 201.1 )

1 unchanged sentence

Restructuring charges ( 14.5 ) ( 73.8 ) ( 138.4 )

Gain on equity method investment 68.0 — —

Loss on debt extinguishments — ( 46.9 ) ( 17.9 )

1 unchanged sentence

Interest expense ( 185.4 ) ( 222.6 ) ( 282.2 )

Earnings before income taxes and equity interest $ 1,267.0 $ 1,130.0 $ 1,022.1

Earnings from continuing operations before income taxes and equity interest $ 1,641.0 $ 1,219.8 $ 1,094.4

Capital and Software Expenditures

1 unchanged sentence

Industrial 123.1 102.1 90.5

Security 20.9 37.9 42.6

Corporate Overhead & Other 3.3 2.3 3.3

Discontinued operations 17.9 15.6 30.1

Consolidated $ 519.1 $ 348.1 $ 424.7

2 unchanged sentences

Industrial 201.2 199.6 159.9

Security 70.2 73.1 80.5

Corporate Overhead & Other 3.6 5.1 5.9

Discontinued operations 60.5 63.9 64.1

Consolidated $ 577.1 $ 578.1 $ 560.2

2 unchanged sentences

Industrial 5,627.8 5,621.1

Security 3,493.5 3,448.6 3,413.6

25,165.7 19,916.7

Corporate assets 156.5 ( 701.4 ) ( 748.7 )

Assets held for sale 3,183.4 3,148.1

Corporate & Other assets ( 169.1 ) 501.5

Consolidated $ 28,180.0 $ 23,566.3

Corporate assets primarily consist of cash, equity method investment, deferred taxes, property, plant and equipment and right-of-use lease assets.

The increase in Corporate assets at January 2, 2021 compared to December 28, 2019 and December 29, 2018 is due to the increase in the Company's cash position.

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 assets primarily consist of cash, equity method investment, deferred taxes, property, plant and equipment and right-of-use lease assets, and include assets directly attributable to the MAS business.

The decrease in Corporate Overhead & Other assets at January 1, 2022 compared to January 2, 2021 is due to the decrease in the Company's cash position.

Based on the nature of the Company's cash pooling arrangements, at times corporate-related cash accounts will be in a net liability position.

Sales to Lowe's were approximately 21 % of the Tools & Storage segment net sales in 2020 and 2019, and 17 % in 2018.

Sales to The Home Depot were approximately 17 %, 15 %, and 14 % of the Tools & Storage segment net sales in 2020, 2019 and 2018, respectively.

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.

As described in Note A, Significant Accounting Policies , the Company recognizes revenue at a point in time from the sale of tangible products or over time depending on when the performance obligation is satisfied.

For the years ended January 2, 2021, December 28, 2019, and December 29, 2018, the majority of the Company’s revenue was recognized at the time of sale.

following table provides the percent of total segment revenue recognized over time for the Industrial and Security segments for the years ended January 2, 2021, December 28, 2019 and December 29, 2018:

For the years ended January 1, 2022, January 2, 2021, and December 28, 2019, the majority of the Company’s revenue was recognized at the time of sale.

The following table provides the percent of total segment revenue recognized over time for the Industrial segment for the years ended January 1, 2022, January 2, 2021 and December 28, 2019:

2021 2020 2019

Industrial 6.6 % 9.2 % 10.9 %

Security 44.4 % 45.8 % 44.9 %

The following table is a further disaggregation of the Industrial segment revenue for the years ended January 2, 2021, December 28, 2019 and December 29, 2018:

The following table is a further disaggregation of the Industrial segment revenue for the years ended January 1, 2022, January 2, 2021 and December 28, 2019:

(Millions of Dollars) 2021 2020 2019

19 unchanged sentences

Consolidated $ 2,347.1 $ 1,973.1

Significant components of the Company’s deferred tax assets and liabilities at the end of each fiscal year were as follows:

Significant components of the Company’s deferred tax assets and liabilities from continuing operations at the end of each fiscal year were as follows:

(Millions of Dollars) 2021 2020

4 unchanged sentences

Lease right-of-use asset 106.5 107.4

Inventory 79.6 26.2

Other 48.4 62.9

6 unchanged sentences

Intangible assets 417.7 301.3

Basis difference in debt obligations

Capitalized research and development costs 86.0 52.2

7 unchanged sentences

A valuation allowance is recorded on certain deferred tax assets if it has been determined it is more likely than not that all or a portion of these assets will not be realized.

The Company recorded a valuation allowance of $ 1,058.9 million and $ 1,065.0 million on deferred tax assets existing as of January 2, 2021 and December 28, 2019, respectively.

The valuation allowance in 2020 is primarily attributable to foreign and state net operating loss carryforwards, intangible assets, and foreign capital loss carryforwards.

The valuation allowance in 2019 was primarily attributable to foreign and state net operating loss carryforwards and foreign capital loss carryforwards.

The Company recorded a valuation allowance of $ 1,067.2 million and $ 1,001.9 million on deferred tax assets existing as of January 1, 2022 and January 2, 2021, respectively.

The valuation allowances in 2021 and 2020 are primarily attributable to foreign and state net operating loss carryforwards, intangible assets, foreign capital loss carryforwards, and state tax credits.

Beginning in 2022, the Tax Cuts and Jobs Act ("Act") eliminates the option to deduct research and development expenditures and requires taxpayers to amortize domestic expenditures over five years and foreign expenditures over fifteen years.

While it is possible that Congress may modify or repeal this provision before it becomes effective, the Company has no assurance that these provisions will be modified or repealed.

While it is possible that Congress may modify or repeal this provision, the Company has no assurance that these provisions will be modified or repealed.

Therefore, based on current assumptions, this would decrease the Company's cash from operations beginning in 2022 and continue over the five year amortization period.

On March 11, 2021, the American Rescue Plan Act of 2021 (the “ARPA”) was enacted.

The ARPA, among other things, includes provisions to expand the IRC Section 162(m) disallowance for deduction of certain compensation paid by publicly held corporations, provide a 100% COBRA subsidy, temporarily increase the income exclusion for dependent care assistance, and to extend and modify the employee retention credit and the Families First Coronavirus Response Act paid leave credit.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted.

The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

The Company completed its evaluation of the ARPA and CARES Act, and concluded that they did not have a material impact on the Company’s consolidated financial statements.

As of January 1, 2022, the Company has approximately $ 4.7 billion of unremitted foreign earnings and profits.

Of the total amount, the Company has provided for deferred taxes of $ 48.2 million on approximately $ 1.5 billion, which is not indefinitely reinvested primarily due to the changes brought about by the Act.

The Company otherwise continues to consider the remaining undistributed earnings of its foreign subsidiaries to be permanently reinvested based on its current plans for use outside of the U.S.

The Company otherwise continues to consider the remaining undistributed earnings of its foreign subsidiaries to be permanently reinvested based on its current plans for use outside of the

and accordingly no taxes have been provided on such earnings.

The cash that the Company’s non-U.S.

subsidiaries hold for indefinite reinvestment is generally used to finance foreign operations and investments, including acquisitions.

The cash held by the Company’s non-U.S.

subsidiaries for indefinite reinvestment is generally used to finance foreign operations and investments, including acquisitions.

The income taxes applicable to such earnings are not readily determinable or practicable to calculate.

3 unchanged sentences

The foreign capital loss carryforwards of $ 42.4 million as of January 1, 2022 have indefinite carryforward periods.

The components of earnings before income taxes and equity interest consisted of the following:

foreign tax credit carryforward balance as of January 1, 2022 totaled $ 20.6 million with various expiration dates beginning in 2028.

foreign tax credit carryforward of $ 12.9 million is included in unrecognized tax benefits and subject to an annual limitation, which constitutes a change of ownership as defined under the Internal Revenue Code Section 382.

State tax credit carryforward balance as of January 1, 2022 totaled $ 18.7 million.

The carryforward balance is made up of various credit types spanning multiple state taxing jurisdictions and various expiration dates beginning in 2022.

The components of earnings before income taxes from continuing operations consisted of the following:

(Millions of Dollars) 2021 2020 2019

13 unchanged sentences

Income taxes $ 61.4 $ 43.0 $ 126.8

Net income taxes paid during 2020, 2019 and 2018 were $ 206.9 million, $ 250.1 million and $ 339.4 million, respectively.

Net income taxes paid for continuing operations during 2021, 2020 and 2019 were $ 441.8 million, $ 241.6 million and $ 234.6 million, respectively.

The 2021, 2020 and 2019 amounts include refunds of $ 50.1 million, $ 43.8 million and $ 65.3 million, respectively, primarily related to prior year overpayments and settlement of tax audits.

The reconciliation of the U.S.

federal statutory income tax provision to Income taxes in the Consolidated Statements of Operations is as follows:

federal statutory income tax provision to Income taxes in the Consolidated Statements of Operations from continuing operations is as follows:

(Millions of Dollars) 2021 2020 2019

6 unchanged sentences

Stock-based compensation ( 6.3 ) ( 9.2 ) ( 23.7 )

Federal tax reform — — 199.6

Change in tax rates ( 31.1 ) ( 0.3 ) 2.4

Capital loss — ( 40.4 ) —

federal tax on foreign earnings ( 17.7 ) 4.1 2.7

federal tax (benefit) expense on foreign earnings ( 123.9 ) ( 1.1 ) 13.7

Intra-entity asset transfer of intellectual property ( 114.2 ) ( 27.7 ) —

5 unchanged sentences

The Internal Revenue Service is currently examining the Company's consolidated U.S.

income tax returns for the 2015 and 2016 tax years.

income tax returns for the 2015 through 2018 tax years.

With few exceptions, as of January 1, 2022, the Company is no longer subject to U.S.

2 unchanged sentences

and various foreign jurisdictions.

The following table summarizes the activity related to the unrecognized tax benefits:

The following table summarizes the activity related to the unrecognized tax benefits from continuing operations:

(Millions of Dollars) 2021 2020 2019

6 unchanged sentences

Balance at end of year $ 487.7 $ 428.3 $ 392.0

The gross unrecognized tax benefits at January 2, 2021 and December 28, 2019 include $ 433.3 million and $ 398.2 million, respectively, of tax benefits that, if recognized, would impact the effective tax rate.

The liability for potential penalties and interest related to unrecognized tax benefits increased by $ 2.3 million in 2020 and decreased by $ 4.3 million in 2019 and $ 15.8 million in 2018.

The liability for potential penalties and interest totaled $ 50.1 million as of January 2, 2021, $ 47.8 million as of December 28, 2019, and $ 52.1 million as of December 29, 2018.

The gross unrecognized tax benefits from continuing operations at January 1, 2022 and January 2, 2021 include $ 478.4 million and $ 418.6 million, respectively, of tax benefits that, if recognized, would impact the effective tax rate.

The liability for potential penalties and interest related to unrecognized tax benefits from continuing operations increased by $ 9.6 million in 2021 and decreased by $ 3.4 million in 2020 and $ 4.3 million in 2019.

The liability for potential penalties and interest totaled $ 60.0 million as of January 1, 2022, $ 49.2 million as of January 2, 2021, and $ 45.8 million as of December 28, 2019.

The Company classifies all tax-related interest and penalties as income tax expense.

5 unchanged sentences

At inception of arrangements with vendors, the Company determines whether the contract is or contains a lease based on each party’s rights and obligations under the arrangement.

If the lease arrangement also contains non-lease components, the lease and non-lease elements are separately accounted for in accordance with the appropriate accounting guidance for each item.

If the lease arrangement also contains non-lease components, the lease and non-lease elements are separately accounted for in accordance with the appropriate accounting

guidance for each item.

From time to time, lease arrangements allow for, and the Company executes, the purchase of the underlying leased asset.

1 unchanged sentence

As part of its lease liability and right-of-use asset calculation, consideration is given to the likelihood of exercising any extension or termination options.

The present value of the Company’s lease liability was calculated using a weighted-average incremental borrowing rate of approximately 3.6 %.

The Company determined its incremental borrowing rate based on interest rates from its debt issuances and taking into consideration adjustments for collateral, lease terms and foreign currency.

As a result of acquiring right-of-use assets from new leases entered into during the year ended January 2, 2021, the Company's lease liability increased approximately $ 117.5 million.

As of January 2, 2021, the Company recognized a lease liability of approximately $ 534.4 million and a right-of-use asset of approximately $ 522.8 million.

The right-of-use asset is included within Other assets in the Consolidated Balance Sheets, while the lease liability is included within Accrued expenses and Other liabilities , as appropriate.

Leases with expected durations of less than 12 months from inception (i.e.

short-term leases) were excluded from the Company’s calculation of its lease liability and right-of-use asset, as permitted by ASC 842, Leases .

short-term leases) are excluded from the Company’s calculation of lease liabilities and right-of-use assets, as permitted by ASC 842, Leases .

The following is a summary of the Company's right-of-use-assets and lease liabilities:

(Millions of Dollars) 2021 2020

Right-of-use assets $ 433.3 $ 437.7

Lease liabilities $ 446.5 $ 449.3

Weighted-average incremental borrowing rate

Weighted-average remaining term

6 years 7 years

Right-of-use assets are included within Other assets in the Consolidated Balance Sheets, while lease liabilities are included within Accrued expenses and Other liabilities , as appropriate.

The Company determines its incremental borrowing rate based on interest rates from its debt issuances, taking into consideration adjustments for collateral, lease terms and foreign currency.

As a result of acquiring right-of-use assets from new leases entered into during the years ended January 1, 2022 and January 2, 2021, the Company's lease liabilities increased approximately $ 86.2 million and $ 91.0 million, respectively.

The Company acquired $ 38.9 million specifically from the acquisition of MTD.

As of January 1, 2022 and January 2, 2021, $ 77.7 million and $ 85.1 million of right-of-use assets, respectively, were reclassed to assets held-for-sale.

As of January 1, 2022 and January 2, 2021, $ 75.1 million and $ 85.0 million of lease liabilities, respectively, were reclassed to liabilities held-for-sale.

The Company is a party to leases for one of its major distribution centers and two of its office buildings in which the periodic rental payments vary based on interest rates (i.e.

The leases qualify as operating leases for accounting purposes.

The following is a summary of the Company's total lease cost for the year ended January 2, 2021 and December 28, 2019:

The following is a summary of the Company's total lease cost for the years ended January 1, 2022, January 2, 2021, and December 28, 2019:

(Millions of Dollars) 2021 2020 2019

7 unchanged sentences

$ 185.9 $ 187.9 $ 183.9

During 2020 and 2019, the Company paid approximately $ 149.8 million and $ 154.4 million, respectively, relating to leases included in the measurement of its lease liability and right-of-use asset.

The weighted-average remaining term for the Company's leases is approximately 7 years.

The amounts above are inclusive of lease cost for discontinued operations amounting to $ 22.9 million in 2021, $ 25.4 million in 2020, and $ 36.0 million in 2019.

During 2021, 2020, and 2019, the Company paid approximately $ 129.4 million, $ 117.9 million, and $ 128.2 million respectively, relating to leases included in the measurement of its lease liability and right-of-use asset.

Lease payments relating to discontinued operations during 2021, 2020, and 2019 were $ 29.0 million, $ 31.9 million, and $ 26.2 million respectively.

The following is a summary of the Company's future lease obligations on an undiscounted basis at January 1, 2022:

1 unchanged sentence

Lease obligations $ 577.2 $ 146.4 $ 109.8 $ 87.9 $ 64.6 $ 55.4 $ 113.1

In 2019, the Company completed many actions within the Margin Resiliency Program and one rooftop footprint initiative resulting in a sale-leaseback arrangement related to one of its distribution centers, which resulted in cash proceeds of $ 93.0 million, a pre-tax gain of $ 69.5 million and a twelve-year lease obligation.

The Company's rental expense, exclusive of sublease income, for operating leases was $ 177.6 million in 2018.

The amounts above include undiscounted future lease obligations for discontinued operations totaling $ 80.7 million;

$ 25.4 million in 2022, $ 19.1 million in 2023, $ 14.0 million in 2024, $ 9.5 million in 2025, $ 6.1 million in 2026, and $ 6.6 million thereafter.

The following is a summary of the Company’s future marketing commitments at January 1, 2022:

1 unchanged sentence

Marketing commitments $ 77.0 $ 54.2 $ 15.6 $ 7.2 $ — $ — $ —

The amounts above include future marketing commitments for discontinued operations totaling $ 1.0 million;

$ 0.9 million in 2022 and $ 0.1 million in 2023.

GUARANTEES — The Company's financial guarantees at January 1, 2022 are as follows:

10 unchanged sentences

The Company provides various limited and full recourse guarantees to financial institutions that provide financing to U.S.

and Canadian Mac Tool distributors and franchisees for their initial purchase of the inventory and truck necessary to function as a distributor and franchisee.

and Canadian Mac Tool distributors and franchisees for their initial purchase of the inventory and trucks necessary to function as a distributor and franchisee.

In addition, the Company provides limited and full recourse guarantees to financial institutions that extend credit to certain end retail customers of its U.S.

7 unchanged sentences

Adjustments are recorded to the warranty liability as new information becomes available.

The changes in the carrying amount of product warranties for the years ended January 2, 2021, December 28, 2019, and December 29, 2018:

The changes in the carrying amount of product warranties for the years ended January 1, 2022, January 2, 2021, and December 28, 2019:

(Millions of Dollars) 2021 2020 2019

1 unchanged sentence

Warranties and guarantees issued 150.8 127.7 127.2

Warranties assumed in acquisitions 33.4 — —

Warranty payments and currency ( 157.8 ) ( 114.1 ) ( 129.1 )

Balance end of period $ 135.2 $ 108.8 $ 95.2

Product warranties totaling $ 4.6 million, and $ 5.0 million were reclassed to held for sale as of January 1, 2022 and January 2, 2021, respectively.

CONTINGENCIES

2 unchanged sentences

Management believes that the ultimate disposition of these matters will not have a material adverse effect on operations or financial condition taken as a whole.

On January 25, 2019, IPS Worldwide, LLC ("IPS"), a third-party provider of freight payment processing services for the Company, filed for Chapter 11 bankruptcy protection and listed the Company as an unsecured creditor.

As of December 29, 2018, there were outstanding obligations of approximately $ 50.8 million owed to certain of the Company's freight carriers.

Such amounts had previously been remitted to IPS through a third-party financing program for ultimate payment to these freight carriers.

However, due to nonperformance of IPS with respect to processing these payments and the Company's obligation to its freight carriers, an incremental $ 50.8 million charge was recorded in the fourth quarter of 2018.

This charge did not include any amounts that the Company will attempt to recover from insurance and/or through the bankruptcy proceedings, which could ultimately reduce the loss exposure recorded.

In the normal course of business, the Company is a party to administrative proceedings and litigation, before federal and state regulatory agencies, relating to environmental remediation with respect to claims involving the discharge of hazardous substances into the environment, generally at current and former manufacturing facilities.

11 unchanged sentences

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.

11 unchanged sentences

The EPA alleged that Black & Decker and Emhart are liable for site clean-up costs under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") as successors to the liability of Metro-Atlantic, Inc., a former operator at the site, and demanded reimbursement of the EPA’s costs related to this site.

Black & Decker and Emhart contested the EPA's allegation that they are responsible for the contamination, and asserted contribution claims, counterclaims and cross-claims against a number of other PRPs, including the federal government as well as insurance carriers.

The EPA released its Record of Decision ("ROD") in September 2012, which identified and described the EPA's selected remedial alternative for the site.

Black & Decker and Emhart contested the EPA's selection of the remedial alternative set forth in the ROD on the grounds that the EPA's actions were arbitrary and capricious and otherwise not in accordance with law, and proposed other equally-protective, more cost-effective alternatives.

On June 10, 2014, the EPA issued an Administrative Order under Sec.

106 of CERCLA, instructing Black & Decker and Emhart to perform the remediation of Centredale pursuant to the ROD.

Black & Decker and Emhart disputed the factual, legal and scientific bases cited by the EPA for such an administrative order and provided the EPA with numerous good-faith bases for their declination to comply with the administrative order.

Black & Decker and Emhart then vigorously litigated the issue of their liability for environmental conditions at the Centredale site, including completing trial on Phase 1 of the proceedings in late July 2015 and completing trial on Phase 2 of the proceedings in April 2017.

Following the Phase I trial, the Court found that dioxin contamination at the Centredale site was not "divisible" and that Black & Decker and Emhart were jointly and severally liable for dioxin contamination at the site.

Following the Phase 2 trial, the Court found that certain components of the EPA's selected remedy were arbitrary and capricious, and remanded the matter to the EPA while retaining jurisdiction over the ongoing remedy selection and implementation process.

The Court also held in Phase 2 that Black & Decker and Emhart had sufficient cause for their declination to comply with the EPA's June 10, 2014 administrative order and that no associated civil penalties or fines were warranted.

The United States filed a Motion for Reconsideration concerning the Court's Phase 2 rulings and appealed the ruling to the United States Court of Appeals for the First Circuit.

Black & Decker and Emhart's Motion to Dismiss the Appeal was denied without prejudice for consideration with the merits.

On July 9, 2018, a Consent Decree was lodged with the United States District Court documenting the terms of a settlement between the Company and the United States for reimbursement of EPA's past costs and remediation of environmental contamination found at the Centredale site.

2 unchanged sentences

The settlement resolves outstanding issues relating to Phase 1 and 2 of the litigation with the United States.

The Company is complying with the terms of the settlement while several PRPs at the site have appealed the District Court's entry of the Consent Decree to the United States Court of Appeals for the First Circuit.

The Company is complying with the terms of the settlement.

The District Court's entry of the Consent Decree was appealed by several PRPs at the site to the United States Court of Appeals for the First Circuit.

The District Court's actions were affirmed by the First Circuit

on February 17, 2021.

Phase 3 of the litigation, is addressing the potential allocation of liability to other PRPs who may have contributed to contamination of the Centredale site with dioxins, polychlorinated biphenyls and other contaminants of concern.

Based on the Company's estimated remediation and response cost obligations arising out of the settlement reached with the United States (including the EPA’s past costs as well as costs of additional investigation, remediation, and related costs such as EPA’s oversight costs), the Company has increased its reserve for this site.

Accordingly, in 2018, a $ 77.7 million increase was recorded in Other, net in the Consolidated Statements of Operations.

As of January 1, 2022, the Company has a remaining reserve of $ 57.2 million for this site.

11 unchanged sentences

In a letter dated May 17, 2017, the EPA stated that these 20 parties did not discharge any of the eight hazardous substances identified as the contaminants of concern in the lower 8.3 mile ROD.

In the March 30,

2017 letter, the EPA stated that other parties who did not discharge dioxins, furans or polychlorinated biphenyls (which are considered the contaminants of concern posing the greatest risk to human health or the environment) may also be eligible for cash out settlement, but expects those parties' allocation to be determined through a complex settlement analysis using a third-party allocator.

In the March 30, 2017 letter, the EPA stated that other parties who did not discharge dioxins, furans or polychlorinated biphenyls (which are considered the contaminants of concern posing the greatest risk to human health or the environment) may also be eligible for cash out settlement, but expects those parties' allocation to be determined through a complex settlement analysis using a third-party allocator.

The EPA subsequently clarified this statement to say that such parties would be eligible to be "funding parties" for the lower 8.3 mile remedial action with each party's share of the costs determined by the EPA based on the allocation process and the remaining parties would be "work parties" for the remedial action.

The Company is participating in the allocation process.

The allocator selected by the EPA issued a confidential financial report on December 28, 2020, which is under review by the EPA.

The Company asserts that it did not discharge dioxins, furans or polychlorinated biphenyls and should be eligible to be a "funding party" for the lower 8.3 mile remedial action.

The Company participated in the allocation process.

The allocator selected by the EPA issued a confidential allocation report on December 28, 2020, which was reviewed by the EPA.

As a result of the allocation process, on February 11, 2022, the EPA and certain parties (including the Company) reached an agreement in principle, subject to the negotiation and court entry of a consent decree, concerning a cash-out settlement for remediation of the entire 17-mile Lower Passaic River.

On September 30, 2016, Occidental Chemical Corporation ("OCC") entered into an agreement with the EPA to perform the remedial design for the cleanup plan for the lower 8.3 miles of the River.

The remedial design is expected to be substantially completed in May 2021.

The remedial design is expected to be substantially completed in the fourth quarter of 2022.

On June 30, 2018, OCC filed a complaint in the United States District Court for the District of New Jersey against over 100 companies, including the Company, seeking CERCLA cost recovery or contribution for past costs relating to various investigations and cleanups OCC has conducted or is conducting in connection with the River.

2 unchanged sentences

The Company and other defendants have answered the complaint and currently are engaged in discovery with OCC.

On February 24, 2021, the Company and other defendants filed a third party complaint against the Passaic Valley Sewerage Commissioners and forty-two municipalities to require those entities to pay their equitable share of response costs.

On October 10, 2018, the EPA issued a letter directing the CPG to prepare a streamlined feasibility study for the upper 9 miles of the River based on an iterative approach using adaptive management strategies.

1 unchanged sentence

The EPA approved the Interim Remedy Feasibility Study on December 11, 2020.

The EPA announced that it intends to issue the Interim Remedy ROD in the Winter of 2020/2021.

At this time, the Company cannot reasonably estimate its liability related to the litigation and remediation efforts, excluding the RI/FS and remediation actions at mile 10.9, as the RI/FS is ongoing, the ultimate remedial approach and associated cost for the upper portion of the River has not yet been determined, and the parties that will participate in funding the remediation and their respective allocations are not yet known.

The EPA issued the Interim Remedy Proposed Plan on April 14, 2021, selecting an alternative that the EPA estimates will cost $ 441 million (net present value).

The CPG continues to conduct work to complete the RI/FS for the entire 17-mile River.

The EPA issued the Interim Remedy ROD on September 28, 2021.

At this time, the Company cannot reasonably estimate its liability related to the litigation and remediation efforts, excluding the RI/FS and remediation actions at mile 10.9, as the OCC litigation is pending, the EPA settlement process is ongoing and the parties that will participate in funding the remediation and their respective allocations are not yet known.

Per the terms of a Final Order and Judgment approved by the United States District Court for the Middle District of Florida on January 22, 1991, Emhart is responsible for a percentage of remedial costs arising out of the Kerr McGee Chemical Corporation Superfund Site located in Jacksonville, Florida.

8 unchanged sentences

Subject to the imprecision in estimating future contingent liability costs, the Company does not expect that any sum it may have to pay in connection with these matters in excess of the amounts recorded will have a materially adverse effect on its financial position, results of operations or liquidity.

PENDING DIVESTITURE

Commercial Electronic Security and Healthcare businesses

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 ("Purchaser") for approximately $ 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.

As part of the purchase and sale agreement, the Company will perform transition services relating to certain administrative functions for Purchaser primarily for a period of one year or less, pending Purchaser's integration of these functions into their pre-existing business processes.

A portion of the $ 3.2 billion received at closing reimburses the Company for transition service costs expected to be incurred.

In December 2021, upon announcing it reached a definitive agreement for the sale of most of its Security assets, the assets and liabilities related to CSS were classified as held for sale on the Company's Consolidated Balance Sheets as of January 1, 2022 and January 2, 2021.

In addition, the sale of CSS represents a strategic shift and has a major effect on the Company's operations and financial results.

As such, the operating results of the CSS are reported as discontinued operations, in accordance with ASC 205.

Amounts previously reported have been reclassified to conform to this presentation to allow for meaningful comparison of continuing operations.

Summarized operating results of discontinued operations are presented in the following table for each fiscal year ended:

(Millions of Dollars) 2021 2020 2019

Net Sales $ 1,635.5 $ 1,476.9 $ 1,529.3

Cost of sales 1,024.8 914.3 957.2

Selling, general, and administrative (1)

481.8 461.1 472.7

Other, net and restructuring charges 58.7 54.3 63.8

Earnings from discontinued operations before income taxes $ 70.2 $ 47.2 $ 35.6

Income taxes on discontinued operations ( 18.7 ) ( 1.6 ) 34.0

Net earnings from discontinued operations $ 88.9 $ 48.8 $ 1.6

(1) Includes provision for credit losses.

The following table presents the significant non-cash items and capital expenditures for the discontinued operations with respect to CSS that are included in the Consolidated Statements of Cash Flows (in millions) for each fiscal year ended:

(Millions of Dollars) 2021 2020 2019

Depreciation and amortization $ 60.5 $ 63.9 $ 64.1

Capital expenditures $ 17.9 $ 15.6 $ 30.1

Stock-based compensation $ 6.0 $ 5.3 $ 3.2

The carrying amounts of the assets and liabilities that were aggregated in assets held for sale and liabilities held for sale as of January 1, 2022 and January 2, 2021 are presented in the following table:

(Millions of Dollars) 2021 2020

Cash and cash equivalents $ 144.9 $ 139.1

Accounts and notes receivable, net 434.8 347.7

Inventories, net 142.5 98.5

Other current assets 41.0 44.0

Property, plant and equipment, net 74.0 80.7

Goodwill and other intangibles, net 2,072.3 2,169.3

Other assets 273.9 268.8

Total assets $ 3,183.4 $ 3,148.1

Accounts payable and accrued expenses $ 388.3 $ 390.6

Other long-term liabilities 130.4 162.9

Total liabilities $ 518.7 $ 553.5

2020 DIVESTITURES

On November 2, 2020, the Company sold its commercial electronic security businesses in five countries in Europe and emerging markets within the Security segment, which resulted in net proceeds of $ 60.9 million.

1 unchanged sentence

As a result of these sales, the Company recognized a net pre-tax loss of $ 13.5 million in 2020, consisting of a $ 17.7 million loss on the sale of a product line within Oil & Gas partially offset by a $ 4.2 million gain on the sale of the commercial electronic security businesses.

During the first quarter of 2021, the Company recognized a pre-tax loss of $ 1.0 million as a result of the finalization of the purchase price for the commercial electronic security divestiture.

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

These disposals do not qualify as discontinued operations and are included in the Company's Consolidated Statements of Operations for all periods presented through their respective dates of sale in 2020.

Following is the pre-tax income for these businesses for the years ended January 2, 2021, December 28, 2019, and December 29, 2018:

(Millions of Dollars) 2020 2019 2018

Pre-tax income $ 4.1 $ 3.0 $ 4.0

Pre-tax income for these businesses totaled $ 4.1 million and $ 3.0 million for the years ended January 2, 2021, and December 28, 2019, respectively.

2019 DIVESTITURE

On May 30, 2019, the Company sold its Sargent & Greenleaf mechanical locks business within the Security segment, which resulted in net proceeds of $ 79.0 million and a pre-tax gain of $ 17.0 million.

This divestiture did not qualify as a discontinued operation and is included in the Company's Consolidated Statements of Operations through the date of sale in 2019.

Pre-tax income for this business was $ 4.6 million and $ 11.7 million for the years ended December 28, 2019 and December 29, 2018, respectively.

Pre-tax income for this business was $ 4.6 million for the year ended December 28, 2019.

SELECTED QUARTERLY FINANCIAL DATA (unaudited)

4 unchanged sentences

731.3 778.5 783.8 946.8 3,240.4

Net earnings 133.1 238.7 395.2 467.7 1,234.7

Net earnings attributable to non-controlling interest ( 0.1 ) 0.3 0.3 0.4 0.9

Preferred stock dividends — 4.7 9.4 9.3 23.4

Net Earnings Attributable to Common Shareowners $ 133.2 $ 233.7 $ 385.5 $ 458.0 $ 1,210.4

Earnings per share of common stock:

Basic $ 0.89 $ 1.52 $ 2.47 $ 2.92 $ 7.85

Diluted $ 0.88 $ 1.52 $ 2.44 $ 2.88 $ 7.77

Net earnings from continuing operations 470.4 442.7 394.0 291.5 1,598.6

Net losses attributable to non-controlling interest ( 0.6 ) ( 1.0 ) ( 0.1 ) — ( 1.7 )

Preferred stock dividends and beneficial conversion feature 9.4 4.8 — — 14.2

Net Earnings from Continuing Operations Attributable to Common Shareowners $ 461.6 $ 438.9 $ 394.1 $ 291.5 $ 1,586.1

Contract adjustment payments accretion 0.2 0.3 0.4 0.4 1.3

Net earnings from Continuing Operations Attributable to Common Shareowners - Diluted $ 461.8 $ 439.2 $ 394.5 $ 291.9 $ 1,587.4

Net earnings from discontinued operations 16.4 15.7 20.1 36.7 88.9

Net Earnings Attributable to Common Shareowners - Diluted $ 478.2 $ 454.9 $ 414.6 $ 328.6 $ 1,676.3

Basic earnings per share of common stock:

Continuing operations $ 2.93 $ 2.77 $ 2.47 $ 1.83 $ 9.99

Discontinued operations $ 0.10 $ 0.10 $ 0.13 $ 0.23 $ 0.56

Total basic earnings per share of common stock $ 3.04 $ 2.87 $ 2.60 $ 2.06 $ 10.55

Diluted earnings per share of common stock

Continuing operations $ 2.81 $ 2.66 $ 2.39 $ 1.77 $ 9.62

Discontinued operations $ 0.10 $ 0.09 $ 0.12 $ 0.22 $ 0.54

Total diluted earnings per share of common stock $ 2.91 $ 2.75 $ 2.51 $ 1.99 $ 10.16

Net Sales $ 2,760.6 $ 2,806.3 $ 3,488.1 $ 4,002.7 $ 13,057.7

2 unchanged sentences

630.6 618.3 632.1 747.5 2,628.5

Net earnings 170.4 357.4 231.1 199.1 958.0

Net earnings attributable to non-controlling interest 0.5 1.1 0.6 — 2.2

Net Earnings Attributable to Common Shareowners $ 169.9 $ 356.3 $ 230.5 $ 199.1 $ 955.8

Earnings per share of common stock:

Basic $ 1.15 $ 2.41 $ 1.55 $ 1.34 $ 6.44

Diluted $ 1.13 $ 2.37 $ 1.53 $ 1.32 $ 6.35

Net earnings from continuing operations 124.3 241.0 373.6 447.0 1,185.9

Net (losses) earnings attributable to non-controlling interest ( 0.1 ) 0.3 0.3 0.4 0.9

Preferred stock dividends and beneficial conversion feature 0.5 4.9 9.4 9.3 24.1

Net Earnings from Continuing Operations Attributable to Common Shareowners $ 123.9 $ 235.8 $ 363.9 $ 437.3 $ 1,160.9

Contract adjustment payments accretion 0.9 0.5 0.1 0.2 1.7

Net earnings from Continuing Operations Attributable to Common Shareowners - Diluted $ 124.8 $ 236.3 $ 364.0 $ 437.5 $ 1,162.6

Net earnings (losses) from discontinued operations 8.8 ( 2.3 ) 21.6 20.7 48.8

Net Earnings Attributable to Common Shareowners - Diluted $ 133.6 $ 234.0 $ 385.6 $ 458.2 $ 1,211.4

Basic earnings per share of common stock:

Continuing operations $ 0.82 $ 1.54 $ 2.33 $ 2.79 $ 7.53

Discontinued operations $ 0.06 $ ( 0.01 ) $ 0.14 $ 0.13 $ 0.32

Total basic earnings per share of common stock $ 0.88 $ 1.52 $ 2.47 $ 2.92 $ 7.85

Diluted earnings per share of common stock

Continuing operations $ 0.77 $ 1.46 $ 2.24 $ 2.68 $ 7.16

Discontinued operations $ 0.05 $ ( 0.01 ) $ 0.13 $ 0.13 $ 0.30

Total diluted earnings per share of common stock $ 0.83 $ 1.45 $ 2.37 $ 2.80 $ 7.46

(1) Includes provision for credit losses.

The 2020 year-to-date results above include $ 400 million of pre-tax acquisition-related and other charges, a $ 211 million tax benefit related to the pre-tax acquisition-related and other charges and a one-time tax benefit related to a supply chain reorganization, as well as $ 10 million of after-tax charges related to the Company's share of equity method investment earnings.

The quarterly amounts above have been adjusted for the divestiture of the CSS business, which has been excluded from continuing operations and is reported as a discontinued operation.

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

The 2021 year-to-date results above include $ 195 million of pre-tax acquisition-related and other charges, a $ 64 million tax benefit related to the pre-tax acquisition-related and other charges, as well as $ 11 million of after-tax charges related to the Company's share of equity method investment earnings.

The net impact of the above items and effect on diluted earnings per share by quarter was as follows:

8 unchanged sentences

$( 0.37 ) per diluted share

The 2019 year-to-date results above include $ 363 million of pre-tax acquisition-related and other charges, a $ 78 million tax benefit of the pre-tax acquisition-related and other charges, as well as $ 24 million of after-tax charges related to the Company's share of equity method investment earnings.

The 2020 year-to-date results above include $ 326 million of pre-tax acquisition-related and other charges, a $ 193 million tax benefit related to the pre-tax acquisition-related and other charges and a one-time tax benefit related to a supply chain reorganization, as well as $ 10 million of after-tax charges related to the Company's share of equity method investment earnings.

The net impact of the above items and effect on diluted earnings per share by quarter was as follows:

2 unchanged sentences

$( 0.24 ) per diluted share

• Q2 2019 — $ 33 million loss ($ 44 million after-tax and equity interest)

• Q2 2020 — $ 135 million loss ($ 13 million benefit after-tax and equity interest)

$ 0.08 per diluted share

14 unchanged sentences

Additional information about the Company may be found in this Annual Report on Form 10-K and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

3.1 (a) Restated Certificate of Incorporation dated September 15, 1998 (incorporated by reference to Exhibit 3(i) to the Company’s Quarterly Report on Form 10-Q filed on May 13, 2010).

(b) Certificate of Amendment to the Restated Certificate of Incorporation dated December 21, 2009 (incorporated by reference to Exhibit 3(ii) to the Company’s Quarterly Report on Form 10-Q filed on May 13, 2010).

(c) Certificate of Amendment to the Restated Certificate of Incorporation dated March 12, 2010 (incorporated by reference to Exhibit 3(iii) to the Company’s Quarterly Report on Form 10-Q filed on May 13, 2010).

2.1 Acquisition Agreement by and between Stanley Black & Decker, Inc.

and Securitas AB, dated as of December 8, 2021 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on December 8, 2021).#

3.1 (a) Restated Certificate of Incorporation dated September 15, 1998 (incorporated by reference to Exhibit 3(i) to the Company’s Quarterly Report on Form 10-Q for the period ended April 3, 2010 filed on May 13, 2010).

(d) Certificate of Amendment to the Restated Certificate of Incorporation dated November 5, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 9, 2010).

(e) Certificate of Amendment to the Restated Certificate of Incorporation dated April 17, 2012 (incorporated by reference to Exhibit 3(i) to the Company’s Quarterly Report on Form 10-Q filed on May 2, 2012).

(f) Certificate of Amendment to the Restated Certificate of Incorporation dated May 17, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 17, 2017).

1 unchanged sentence

(h) Certificate of Amendment to the Restated Certificate of Incorporation dated May 15, 2020 (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on May 15, 2020).

3.2 (a) Amended & Restated ByLaws (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on January 21, 2020).

(i) Certificate of Amendment to the Restated Certificate of Incorporation, dated May 12, 2021 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 13, 2021) .

3.2 Amended and Restated Bylaws, effective May 12, 2021 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 13, 2021).

4.1 (a) Indenture, dated as of June 26, 1998, by and among Black & Decker Holdings Inc., as Issuer, The Black & Decker Corporation, as Guarantor, and The First National Bank of Chicago, as Trustee (incorporated by reference to Exhibit 4.9 to the Company’s Current Report on Form 8-K filed on March 12, 2010).

4.2 (a) Senior Indenture, dated as of November 1, 2002 between The Stanley Works and The Bank of New York Mellon Trust Company, N.A., as successor trustee to JPMorgan Chase Bank (incorporated by reference to Exhibit 4(vi) to the Company’s Annual Report on Form 10-K for the year ended December 28, 2002).

4.2 (a) Indenture, dated as of November 1, 2002 between The Stanley Works and The Bank of New York Mellon Trust Company, N.A., as successor trustee to JPMorgan Chase Bank (incorporated by reference to Exhibit 4(vi) to the Company’s Annual Report on Form 10-K for the period ended December 28, 2002 filed on February 28, 2003).

(b) Third Supplemental Indenture dated as of September 3, 2010, to the Indenture dated as of November 1, 2002, among Stanley Black & Decker, Inc., The Black & Decker Corporation and The Bank of New York Mellon Trust Company, N.A., as successor trustee to JPMorgan Chase Bank, N.A.

(formerly known as JPMorgan Chase Bank), as trustee (incorporated by reference to the Company’s Current Report on Form 8-K filed on September 7, 2010).

(c) Fourth Supplemental Indenture, dated as of November 22, 2011, among Stanley Black & Decker, Inc., The Black & Decker Corporation, as Guarantor, and the Bank of New York Mellon Trust Company, N.A., as Trustee, relating to the 3.40% Notes due 2021 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 22, 2011).

(d) Fifth Supplemental Indenture, dated as of November 6, 2012, among Stanley Black & Decker, Inc., The Black & Decker Corporation, as Guarantor, and the Bank of New York Mellon Trust Company, N.A., as Trustee, relating to the 2.90% Notes due 2022 (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed on November 6, 2012).

(e) Sixth Supplemental Indenture, dated as of November 6, 2018, between the Company and the Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 4.250% Notes due 2028 and the 4.850% Notes due 2048 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K dated November 6, 2018).

(f) Seventh Supplemental Indenture, dated as of March 1, 2019, between the Company and the Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 3.400% Notes due 2026 (incorporated by reference to Exhibit 4.2 to the Company's Form 8-K dated March 1, 2019).

(g) Eight Supplemental Indenture, dated as of February 10, 2020, between Stanley Black & Decker, Inc.

(formerly known as JPMorgan Chase Bank), as Trustee, relating to the 5.20% Notes due 2040 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on September 7, 2010).

(c) Sixth Supplemental Indenture, dated as of November 6, 2018, between the Company and the Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 4.250% Notes due 2028 and the 4.850% Notes due 2048 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K dated November 6, 2018).

(d) Seventh Supplemental Indenture, dated as of March 1, 2019, between the Company and the Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 3.400% Notes due 2026 (incorporated by reference to Exhibit 4.2 to the Company's Form 8-K dated March 1, 2019).

(e) Eight Supplemental Indenture, dated as of February 10, 2020, between Stanley Black & Decker, Inc.

and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 2.300% Notes due 2030 (incorporated by reference to Exhibit 4.2 to the Company's Form 8-K dated February 10, 2020).

(h) Ninth Supplemental Indenture, dated as of November 2, 2020, between Stanley Black & Decker, Inc.

(f) Ninth Supplemental Indenture, dated as of November 2, 2020, between Stanley Black & Decker, Inc.

and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 2.750% Notes due 2050 (incorporated by reference to Exhibit 4.2 to the Company's Form 8-K dated November 2, 2020).

4.3 (a) Indenture, dated November 22, 2005, between The Stanley Works and HSBC Bank USA, National Association, as indenture trustee (incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K dated November 29, 2005).

4.4 (b) Sixth Supplemental Indenture, dated February 10, 2020, between Stanley Black & Decker, Inc.

4.4 (a) Sixth Supplemental Indenture, dated February 10, 2020, between Stanley Black & Decker, Inc.

and HSBC Bank USA, National Association, as trustee, relating to the 4.000% Fixed-to-Fixed Reset Rate Junior Subordinated Debentures due 2060 (incorporated by reference to Exhibit 4.5 to the Company’s Form 8-K dated February 10, 2020).

4.5 0% Series C Cumulative Perpetual Preferred Stock Certificate (incorporated by reference to Exhibit 4.5 of the Company’s Current Report on Form 8-K filed May 17, 2017).

4.5 0% Series C Cumulative Perpetual Preferred Stock Certificate (incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K filed May 17, 2017).

4.6 Purchase Contract and Pledge Agreement, dated November 13, 2019, among the Company, The Bank of New York Mellon Trust Company, National Association, as Purchase Contract Agent, and HSBC Bank USA, National Association, as Collateral Agent, Custodial Agent and Securities Intermediary (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed November 13, 2019).

4.7 Form of Corporate Unit (incorporated by reference as part of Exhibit 4.1 of the Company's Current Report on Form 8-K filed November 13, 2019).

4.8 Form of Treasury Unit (incorporated by reference as part of Exhibit 4.1 of the Company's Current Report on Form 8-K filed November 13, 2019).

4.9 Form of Cash Settled Unit (incorporated by reference as part of Exhibit 4.1 of the Company's Current Report on Form 8-K filed November 13, 2019).

4.10 0% Series D Cumulative Perpetual Preferred Stock Certificate (incorporated by reference to Exhibit 4.5 of the Company's Current Report on Form 8-K filed November 13, 2019).

4.11 Description of the Company's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.

4.7 Form of Corporate Unit (incorporated by reference as part of Exhibit 4.1 to the Company's Current Report on Form 8-K filed November 13, 2019).

4.8 Form of Treasury Unit (incorporated by reference as part of Exhibit 4.1 to the Company's Current Report on Form 8-K filed November 13, 2019).

4.9 Form of Cash Settled Unit (incorporated by reference as part of Exhibit 4.1 to the Company's Current Report on Form 8-K filed November 13, 2019).

4.10 0% Series D Cumulative Perpetual Preferred Stock Certificate (incorporated by reference to Exhibit 4.5 to the Company's Current Report on Form 8-K filed November 13, 2019).

4.11 Description of the Company's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.11 to the Company’s Annual Report on Form 10-K for the period ended January 2, 2021 filed on February 18, 2021).

10.1 Amended and Restated Five Year Credit Agreement, made as of September 12, 2018 among Stanley Black & Decker, Inc., the initial lenders named therein and Citibank, N.A.

as administrative agent for the Lenders (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 14, 2018).

10.2 (a) Amended and Restated Five Year Credit Agreement, made as of September 8, 2021 among Stanley Black & Decker, Inc., the initial lenders named therein and Citibank, N.A.

2 unchanged sentences

as administrative agent for the lenders (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 14, 2021) .

10.3 364-Day Credit Agreement, made as of January 26, 2022 among Stanley Black & Decker, Inc., the initial lenders named therein and Citibank, N.A.

as administrative agent for the lenders (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 28, 2022) .

10.4 (a) Letter Agreement, dated July 21, 2016, between Stanley Black & Decker, Inc.

Loree (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on July 25, 2016).*

Loree (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 25, 2016).*

(b) Second Amended and Restated Change in Control Severance Agreement dated July 21, 2016, between Stanley Black & Decker, Inc.

1 unchanged sentence

10.5 Letter Agreement between Stanley Black & Decker, Inc.

Wyatt effective December 22, 2014, as amended February 17, 2016 (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K filed on February 19, 2016).*

Wyatt effective December 22, 2014, as amended February 17, 2016 (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the period ended January 2, 2016 filed on February 19, 2016).*

10.6 (a) Change in Control Severance Agreement, dated December 4, 2018 between Stanley Black & Decker, Inc.

and Jeffery D.

Ansell (incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the period ended December 29, 2018).*

Ansell (incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the period ended December 29, 2018 filed on February 26, 2019 ).*

(b) Letter Agreement, dated January 23, 2020, between Stanley Black & Decker, Inc.

1 unchanged sentence

Ansell (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on From 8-K, filed January 29, 2020).*

Ansell and Stanley Black & Decker, Inc., dated as of February 4, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 4.

10.7 Change in Control Severance Agreement, dated December 4, 2018 between Stanley Black & Decker, Inc.

and Donald Allan Jr.

(incorporated by reference to Exhibit 10.5 to the Company's Annual Report on Form 10-K for the period ended December 29, 2018.*

(incorporated by reference to Exhibit 10.5 to the Company's Annual Report on Form 10-K for the period ended December 29, 2018 filed on February 26, 2019) .*

10.8 Form of Change in Control Severance Agreement (John H.

Wyatt and Jamie A.

Ramirez) (filed herewith).*

10.7 Deferred Compensation Plan for Non-Employee Directors, as amended through October 1, 2020 (filed herewith).*

10.8 Deferred Compensation Plan for Participants in Stanley’s Management Incentive Plan amended and restated as of December 11, 2007 (incorporated by reference to Exhibit 10(ix) to the Company’s Annual Report on Form 10-K for the year ended December 29, 2007).*

10.9 (a) Stanley Black & Decker Supplemental Retirement Account Plan (as in effect, January 1, 2011, except as otherwise provided therein) (incorporated by reference to the Company’s Annual Report on Form 10-K for the period ended January 1, 2011).*

(b) Stanley Black & Decker Supplemental Retirement Plan (effective, January 1, 2011, except as otherwise provided therein) (incorporated by reference to the Company’s Annual Report on Form 10-K for the period ended January 1, 2011).*

Ramirez) (incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the period ended January 2, 2021 filed on February 18, 2021).*

10.9 Deferred Compensation Plan for Non-Employee Directors, as amended through October 1, 2020 (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the period ended January 2, 2021 filed on February 18, 2021).*

10.10 Deferred Compensation Plan for Participants in Stanley’s Management Incentive Plan amended and restated as of December 11, 2007 (incorporated by reference to Exhibit 10(ix) to the Company’s Annual Report on Form 10-K for the period ended December 29, 2007 filed on February 25, 2008 ).*

10.11 (a) Stanley Black & Decker Supplemental Retirement Account Plan (as in effect, January 1, 2011, except as otherwise provided therein) (incorporated by reference to Exhibit 10.12(a) to the Company’s Annual Report on Form 10-K for the period ended January 1, 2011 filed on February 18, 2011).*

(b) Stanley Black & Decker Supplemental Retirement Plan (effective, January 1, 2011, except as otherwise provided therein) (incorporated by reference to Exhibit 10.12(b) to the Company’s Annual Report on Form 10-K for the period ended January 1, 2011 filed on February 18, 2011).*

10.12 Stanley Black & Decker, Inc.

1 unchanged sentence

10.13 New 1991 Loan Agreement, dated June 30, 1998, between The Stanley Works, as lender, and Citibank, N.A.

as trustee under the trust agreement for the Stanley Account Value Plan, to refinance the 1991 Salaried Employee ESOP Loan and the 1991 Hourly ESOP Loan and their related promissory notes (incorporated by reference to Exhibit 10(ii) to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 4, 1998).

10.12 The Stanley Works Non-Employee Directors’ Benefit Trust Agreement dated December 27, 1989 and amended as of January 1, 1991 by and between The Stanley Works and Fleet National Bank, as successor trustee (incorporated by reference to Exhibit (10)(xvii)(a) to the Company’s Annual Report on Form 10-K for year ended December 29, 1990).

10.14 The Stanley Works Non-Employee Directors’ Benefit Trust Agreement dated December 27, 1989 and amended as of January 1, 1991 by and between The Stanley Works and Fleet National Bank, as successor trustee (incorporated by reference to Exhibit (10)(xvii)(a) to the Company’s Annual Report on Form 10-K for the period ended December 29, 1990).

10.15 (a) The Stanley Works 2009 Long-Term Incentive Plan (as amended March 12, 2010) (incorporated by reference Exhibit 4.7 to the Company’s Registration Statement on Form S-8 Reg.

333-165454 filed on March 12, 2010).*

(b) Form of award letter for restricted stock unit grants to executive officers pursuant to the Company’s 2009 Long Term Incentive Plan (as amended March 12, 2010) (incorporated by reference to Exhibit 10(vi)(b) to the Company’s Quarterly Report on Form 10-Q filed on May 13, 2010).*

(c) Form of stock option certificate for executive officers pursuant to the Company’s 2009 Long Term Incentive Plan (as amended March 12, 2010) (incorporated by reference to Exhibit 10(vi)(c) to the Company’s Quarterly Report on Form 10-Q filed on May 13, 2010).*

10.14 (a) The Stanley Black & Decker 2013 Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 30, 2013).*

(b) Form of Award Document for Performance Awards granted to Executive Officers under 2013 Long Term Incentive Plan, updated 2018 (incorporated by reference to Exhibit 10.16(b) to the Company's Annual Report on Form 10-K for the period ended December 30, 2017).*

(c) Form of stock option certificate for grants to executive officers pursuant to the Company’s 2013 Long Term Incentive Plan (incorporated by reference to Exhibit 10.18(c) to the Company’s Annual Report on Form 10-K for the period ended December 28, 2013).*

(d) Form of restricted stock unit award certificate for grants of restricted stock units to executive officers pursuant to the Company’s 2013 Long Term Incentive Plan (incorporated by reference to Exhibit 10.18(d) to the Company’s Annual Report on Form 10-K for the period ended December 28, 2013).*

(e) Form of restricted stock unit retention award certificate for grants of restricted stock units to executive officers pursuant to the Company’s 2013 Long Term Incentive Plan (incorporated by reference to the Company’s Annual Report on Form 10-K for the period ended December 31, 2016).*

10.15 (a) The Stanley Black & Decker 2018 Omnibus Award Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on July 20, 2018).*

(b) Form of stock option certificate for grants to executive officers pursuant to the Company’s 2018 Omnibus Award Plan (incorporated by reference to Exhibit 10.16(b) on the Company's Annual Report on Form 10-K for the year ended December 28, 2019).*

(c) Form of restricted stock unit award certificate for grants to executive officers pursuant to the Company’s 2018 Omnibus Award Plan (incorporated by reference to Exhibit 10.16(c) on the Company's Annual Report on Form 10-K for the year ended December 28, 2019).*

(d) Form of restricted stock unit retention award certificate for grants to executive officers pursuant to the Company’s 2018 Omnibus Award Plan (incorporated by reference to Exhibit 10.16(d) on the Company's Annual Report on Form 10-K for the year ended December 28, 2019).*

(e) Form of Award Document for Performance Award granted to Executive Officers under the 2018 Omnibus Award (incorporated by reference to Exhibit 10.16(e) to the Company's Annual Report on Form 10-K for the period ended December 29, 2018).*

(f) Form of Award Document granted to Executive Officers under the 2019 and 2020 Management Incentive Compensation Plan (incorporated by reference to Exhibit 10.16(f) to the Company's Annual Report on Form 10-K for the period ended December 29, 2018).*

10.16 (a) The Stanley Black & Decker 2013 Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 30, 2013 filed on April 26, 2013).*

(e) Form of restricted stock unit retention award certificate for grants of restricted stock units to executive officers pursuant to the Company’s 2013 Long Term Incentive Plan (incorporated by reference to Exhibit 10.18(e) to the Company’s Annual Report on Form 10-K for the period ended December 31, 2016 filed on February 15, 2017).*

10.17 (a) The Stanley Black & Decker 2018 Omnibus Award Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2018 filed on July 20, 2018).*

(e) Form of Award Document for Performance Award granted to Executive Officers under the 2018 Omnibus Award (filed herewith).*

10.18 The Stanley Black & Decker, Inc.

Deferred Compensation Plan Relating to Long-Term Performance Awards (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the period ended December 29, 2018).

Deferred Compensation Plan Relating to Long-Term Performance Awards (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the period ended December 29, 2018 filed on February 26, 2019).

10.19 The Stanley Black & Decker, Inc.

Restricted Stock Unit Plan for Non-Employee Directors, as amended and restated through October 1, 2020 (filed herewith).*

Restricted Stock Unit Plan for Non-Employee Directors, as amended and restated through October 1, 2020 (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the period ended January 2, 2021 filed on February 18, 2021).*

10.20 The Stanley Black & Decker, Inc.

2020 Restricted Stock Unit Deferral Plan For Non-Employee Directors (incorporated by reference to Exhibit 10.19 on the Company's Annual Report on Form 10-K for the year ended December 28, 2019).*

2020 Restricted Stock Unit Deferral Plan For Non-Employee Directors (incorporated by reference to Exhibit 10.19 on the Company's Annual Report on Form 10-K for the period ended December 28, 2019 filed on February 21, 2020).*

10.21 The Stanley Black & Decker, Inc.

2017 Management Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the period ended April 1, 2017).*

10.20 Special Severance Policy for Management Incentive Compensation Plan Participants Levels 1-5 as amended effective October 17, 2008 (incorporated by reference to Exhibit 10(xxi) to the Company’s Annual Report on Form 10-K for the period ended January 3, 2009).*

2017 Management Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the period ended April 1, 2017 filed on April 25, 2017).*

10.22 Special Severance Policy for Management Incentive Compensation Plan Participants Levels 1-5 as amended effective October 17, 2008 (incorporated by reference to Exhibit 10(xxi) to the Company’s Annual Report on Form 10-K for the period ended January 3, 2009 filed on February 26, 2009).*

10.23 Global Omnibus Employee Stock Purchase Plan approved by shareholders of the Company on April 17, 2019 (incorporated by reference to Exhibit 99.1(a) to the Company’s Registration Statement on Form S-8 filed on November 13, 2019).*

10.24 The Black & Decker 2003 Stock Option Plan, as amended (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on March 12, 2010).*

10.23 Form of Nonqualified Stock Option Agreement relating to The Black & Decker Corporation’s stock option plans (incorporated by reference to Exhibit 10(xix) to the Company’s Quarterly Report on Form 10-Q filed on May 13, 2010).*

10.24 (a) The Black & Decker Supplemental Pension Plan, as amended and restated (incorporated by reference to Exhibit 10(xx) to the Company’s Quarterly Report on Form 10-Q filed on May 13, 2010).*

(b) First Amendment to The Black & Decker Supplemental Pension Plan (incorporated by reference to Exhibit 10(xxi) to the Company’s Quarterly Report on Form 10-Q filed on May 13, 2010).*

10.25 The Black & Decker Supplemental Executive Retirement Plan, as amended and restated (incorporated by reference to Exhibit 10(xxii) to the Company’s Quarterly Report on Form 10-Q filed on May 13, 2010).*

10.25 Form of Nonqualified Stock Option Agreement relating to The Black & Decker Corporation’s stock option plans (incorporated by reference to Exhibit 10(xix) to the Company’s Quarterly Report on Form 10-Q for the period ended April 3, 2010 filed on May 13, 2010).*

10.26 (a) The Black & Decker Supplemental Pension Plan, as amended and restated (incorporated by reference to Exhibit 10(xx) to the Company’s Quarterly Report on Form 10-Q for the period ended April 3, 2010 filed on May 13, 2010).*

(b) First Amendment to The Black & Decker Supplemental Pension Plan (incorporated by reference to Exhibit 10(xxi) to the Company’s Quarterly Report on Form 10-Q for the period ended April 3, 2010 filed on May 13, 2010).*

10.27 The Black & Decker Supplemental Executive Retirement Plan, as amended and restated (incorporated by reference to Exhibit 10(xxii) to the Company’s Quarterly Report on Form 10-Q for the period ended April 3, 2010 filed on May 13, 2010).*

10.28 Employment Offer Letter, dated June 12, 2017, between Stanley Black & Decker, Inc.

Link (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the period ended December 30, 2017).*

10.27 Employment Offer Letter, dated April 1, 2019, between Stanley Black & Decker, Inc.

and Robert Blackburn (incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the period ended December 28, 2019).*

Link (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the period ended December 30, 2017 filed on February 27, 2018).*

10.29 Employment Offer Letter, dated February 24, 2020, between Stanley Black & Decker, Inc.

and Graham Robinson (filed herewith).*

10.29 Change in Control Severance Agreement (all other executive officers) (filed herewith).*

and Graham Robinson (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the period ended January 2, 2021 filed on February 18, 2021).*

10.30 Change in Control Severance Agreement (all other executive officers) (incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the period ended January 2, 2021 filed on February 18.

21 Subsidiaries of Registrant.

2 unchanged sentences

31.1 (a) Certification by Chief Executive Officer pursuant to Rule 13a-14(a).

31.1 (b) Certification by Chief Financial Officer pursuant to Rule 13a-14(a).

31.1 (b) Certification by President and Chief Financial Officer pursuant to Rule 13a-14(a).

32.1 Certification by Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification by Chief Financial Officer pursuant to 18 U.S.C.

32.2 Certification by President and Chief Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

1 unchanged sentence

101 The following materials from Stanley Black & Decker Inc.'s Annual Report on Form 10-K for the year ended January 1, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language):

(i) Consolidated Statements of Operations for the fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018;

(ii) Consolidated Statements of Comprehensive Income for the fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018;

(iii) Consolidated Balance Sheets at January 2, 2021 and December 28, 2019;

(iv) Consolidated Statements of Cash Flows for the fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018;

(v) Consolidated Statements of Changes in Shareowners' Equity for the fiscal years ended January 2, 2021, December 28, 2019, and December 29, 2018;

(i) Consolidated Statements of Operations for the fiscal years ended January 1, 2022, January 2, 2021, and December 28, 2019;

(ii) Consolidated Statements of Comprehensive Income for the fiscal years ended January 1, 2022, January 2, 2021, and December 28, 2019;

(iii) Consolidated Balance Sheets at January 1, 2022 and January 2, 2021;

(iv) Consolidated Statements of Cash Flows for the fiscal years ended January 1, 2022, January 2, 2021, and December 28, 2019;

(v) Consolidated Statements of Changes in Shareowners' Equity for the fiscal years ended January 1, 2022, January 2, 2021, and December 28, 2019;

and (v) Notes to Consolidated Financial Statements.**

104 The cover page of Stanley Black & Decker Inc.'s Annual Report on Form 10-K for the year ended January 1, 2022, formatted in iXBRL (included within Exhibit 101).

# Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K and the Company agrees to furnish supplementally to the SEC a copy of any omitted schedules or exhibits upon request.

* Management contract or compensation plan or arrangement.

5 unchanged sentences

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 9A. Controls and Procedures