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Item 9A. Controls and Procedures

2023-02-23 compared with 2022-02-22 · 742 added, 861 removed, 1708 unchanged (48% 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, 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.

The management of Stanley Black & Decker, Inc.

(the “Company”) 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.

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 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.

Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022.

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 December 31, 2022.

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 62.

Under the supervision and with the participation of management, including the Company’s President and Chief Executive Officer and its Interim 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 Interim Chief Financial Officer have concluded that, as of December 31, 2022, the Company’s disclosure controls and procedures are effective.

Remediation of Previously Reported Material Weaknesses

To address the previously reported material weaknesses in internal control over financial reporting described in Part II, Item 9A of the Company's 2021 Form 10-K, the Company enhanced and revised the design of existing controls and procedures to properly account for financial instruments with debt- and equity-like features, including the impact to the calculation of earnings per share.

During the first quarter of fiscal 2022, the Company successfully completed the testing necessary to conclude that the material weaknesses have been remediated.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE REGISTRANT

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 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 information required by this Item, except for certain information with respect to the Company’s Code of Business Ethics, the identification of the executive officers of the Company and any material changes to the procedures by which shareholders 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 “Delinquent Section 16(a) Reports,” “Information Concerning Nominees for Election as Directors,” and “Board of Directors".

Available on the Company's website at http://www.stanleyblackanddecker.com under the “Impact” heading is the Code of Business Ethics applicable to all of its directors and officers, including the President and Chief Executive Officer, Interim Chief Financial Officer, and Chief Accounting Officer, and employees worldwide, as well as the Supplemental Code of Ethics for CEO and Senior Financial Officers, applicable to the Company’s President and Chief Executive Officer, and all senior financial officers, including the Interim Chief Financial Officer and Chief Accounting Officer.

The Company intends to post on its website required information regarding any amendment to, or waiver from, the Code of Business Ethics or the Code of Ethics for CEO and Senior Financial Officers that applies to the Company's President and 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 23, 2023:

Name and Age Office Date Elected to

Loree (63) Chief Executive Officer since August 2016.

President & Chief Operating Officer (2013);

Executive Vice President and Chief Operating Officer (2009);

Executive Vice President Finance and Chief Financial Officer (1999).

Name and Age Office Date Elected to Office as an Executive Officer

Donald Allan, Jr.

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

(58) President & Chief Executive Officer since July 2022.

President & Chief Financial Officer (2021);

Executive Vice President & Chief Financial Officer (2016);

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Assistant Controller (1999).

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

Walburger (52) Interim Chief Financial Officer since July 2022.

Vice President of Corporate Business Development (2008);

Vice President and Associate in Investment Banking Division, Goldman Sachs (1999);

Financial Analyst, Goldman Sachs (1995).

Greulach (40) Chief Accounting Officer since October 2022.

Business Unit Controller for Stanley Industrial (2021);

Director – Corporate and Technical Accounting (2018);

Director – Statutory Reporting and Tax Compliance (2017);

Director – External Reporting (2014);

Senior Manager – External Reporting (2012).

Link (53) Senior Vice President, General Counsel and Secretary since July 2017.

Executive Vice President, General Counsel, JC Penney Company, Inc.

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Vice President, Deputy General Counsel, Clear Channel Companies (2013).

Ramirez (54) Executive Vice President & President, Global Tools & Storage since July 2020.

Senior Vice President & Chief Operating Officer, Tools & Storage (2019);

Senior Vice President & President, Global Emerging Markets (2012);

President, Construction & DIY, Latin America (2010);

Vice President and General Manager - Latin America, Power Tools & Accessories, The Black & Decker Corporation (2008);

Vice President and General Manager - Andean Region The Black & Decker Corporation (2007).

Wyatt (63) Senior Vice President & President, Stanley Outdoor since January 2021.

Senior Vice President & President, Stanley Outdoor and Aerospace (2020);

President, Stanley Engineered Fastening (2016);

President, Sales & Marketing - Global Tools & Storage (2015);

President, Construction & DIY, Europe and ANZ (2012);

President, Construction & DIY, EMEA (2010);

President-Europe, Middle East, and Africa, Power Tools and Accessories, The Black & Decker Corporation (2008);

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

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

Raff (56) Interim Co-President & Chief Commercial Officer, Tools & Outdoor since July 2022.

Head of Outdoor Integration (2021);

President, Stanley Security (2016);

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Chief Marketing Officer and Vice President, Global Strategy & Marketing, Automation and Control Solutions (Honeywell International) (2014).

Stephen Subasic (53) Senior Vice President, Chief Human Resources Officer since January 2021.

Vice President, Human Resources & Corporate Talent Management (2019);

Vice President, Human Resources, Global Tools & Storage (2015);

Vice President, Human Resources, Construction & DIY (2011).

Wyatt (64) Interim Co-President & Senior Vice President, Tools & Outdoor since July 2022.

Senior Vice President & President, Stanley Outdoor (2021);

Senior Vice President & President, Stanley Outdoor and Aerospace (2020);

President, Stanley Engineered Fastening (2016);

President, Global Sales & Marketing - Global Tools & Storage (2014);

President, Construction & DIY, Europe and ANZ (2012);

President, Construction & DIY, EMEA (2010);

President-Europe, Middle East, and Africa, Power Tools and Accessories, The Black & Decker Corporation (2008);

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

Lucas (63) Chief Human Resources Officer since January 2023.

Founder & Principal, True North Human Capital Consulting, LLC (2019);

Senior Vice President and Chief Human Resources Officer, Goodyear Tire & Rubber Company (2015);

Senior Vice President, Human Resources & Communications, Lockheed Martin Corporation (2009).

EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference to the information set forth under the sections entitled "Compensation Discussion & Analysis" and “2021 Executive Compensation” 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 this Item is incorporated herein by reference to the information set forth under the sections entitled "Compensation Discussion & Analysis" and “2022 Executive Compensation Program” 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.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 403 of Regulation S-K is incorporated herein by reference to the information set forth under the sections entitled "Security Ownership of Certain Beneficial Owners," "Security Ownership of Directors and Officers," "Compensation Discussion & Analysis" and “2021 Executive Compensation” 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 Item 403 of Regulation S-K is incorporated herein by reference to the information set forth under the sections entitled "Security Ownership of Certain Beneficial Owners," "Security Ownership of Directors and Officers," "Compensation Discussion & Analysis" and “2022 Executive Compensation Program” 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.

EQUITY COMPENSATION PLAN INFORMATION

Compensation plans under which the Company’s equity securities are authorized for issuance at January 1, 2022 follow:

Compensation plans under which the Company’s equity securities are authorized for issuance at December 31, 2022 follow:

Plan Category Number of securities to be

issued upon exercise of

outstanding options and stock awards Weighted-average exercise

price of outstanding options Number of securities

outstanding options, warrants and rights Weighted-average exercise

price of outstanding options, warrants and rights Number of securities

remaining available for

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1,873,031 shares underlying time-vesting restricted stock units that have not yet vested and the maximum number of shares that will be issued pursuant to outstanding performance awards if all established goals are met;

and 109,937 of shares earned but related to which participants elected deferral of delivery.

and 134,614 of shares earned but for which participants elected deferral of delivery.

All stock-based compensation plans are discussed in Note J, Capital Stock , of the Notes to Consolidated Financial Statements in Item 8 .

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(3) Consists of 1,251,699 of shares available for purchase under the employee stock purchase plan ("ESPP") at the election of employees and 8,403,765 securities available for future grants by the Board of Directors under stock-based compensation plans.

On January 22, 2018, the Board of Directors adopted the 2018 Omnibus Award Plan (the "2018 Plan") and authorized the issuance of 16,750,000 shares of the Company's common stock in connection with the awards pursuant to the 2018 Plan.

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

On February 16, 2022, the Board of Directors adopted the 2022 Omnibus Award Plan (the "2022 Plan") and authorized the issuance of 9,800,000 shares of the Company's common stock in connection with awards pursuant to the 2022 Plan.

No further awards will be issued under the Company's 2018 Omnibus Award Plan.

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.

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

The number of securities remaining available for issuance under the plans at January 1, 2022 is not determinable, since the plans do not authorize a maximum number of securities.

The number of securities remaining available for issuance under the plans at December 31, 2022 is not determinable, since the plans do not authorize a maximum number of securities.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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Report of Independent Registered Public Accounting Firm — Internal Control Opinion (page 62).

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).

Consolidated Statements of Operations — fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021 (page 63).

Consolidated Statements of Comprehensive Income — fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021 (page 64).

Consolidated Balance Sheets — December 31, 2022 and January 1, 2022 (page 65).

Consolidated Statements of Cash Flows — fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021 (page 66).

Consolidated Statements of Changes in Shareowners’ Equity — fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021 (page 68).

Notes to Consolidated Financial Statements (page 69).

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STANLEY BLACK & DECKER, INC.

Loree, Chief Executive Officer

/s/ Donald Allan, Jr.

Donald Allan, Jr., President and Chief Executive Officer

February 23, 2023

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Signature Title Date

Loree Chief Executive Officer February 22, 2022

/s/ Donald Allan, Jr.

President and Chief Financial Officer February 22, 2022

President and Chief Executive Officer February 23, 2023

Donald Allan, Jr.

/s/ Jocelyn S.

Belisle Vice President and Chief Accounting Officer February 22, 2022

/s/ Corbin Walburger Interim Chief Financial Officer February 23, 2023

Corbin Walburger

/s/ Scot Greulach Chief Accounting Officer February 23, 2023

Scot Greulach

* Director February 23, 2023

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* Director February 23, 2023

(As Attorney-in-Fact)

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and Subsidiaries

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

Fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021

(Millions of Dollars)

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(a) With respect to the allowance for credit losses, deductions represent amounts charged-off less recoveries of accounts previously charged-off.

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

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

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

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.

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 has assessed the effectiveness of Stanley Black & Decker, Inc.’s internal control over financial reporting as of December 31, 2022.

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.

Management concluded that based on its assessment, Stanley Black & Decker, Inc.’s internal control over financial reporting was effective as of December 31, 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 62.

Loree, Chief Executive Officer

/s/ Donald Allan, Jr.

Donald Allan, Jr., President and Chief Financial Officer

Donald Allan, Jr., President and Chief Executive Officer

/s/ Corbin B.

Walburger, Interim Chief Financial Officer

Report of Independent Registered Public Accounting Firm

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

(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.

(the Company) as of December 31, 2022 and January 1, 2022, the related consolidated statements of operations, comprehensive income, shareowners’ equity and cash flows for each of the three years in the period ended December 31, 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 December 31, 2022 and January 1, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 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 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.

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 December 31, 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 23, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

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 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.

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 and certain tradenames.

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.

These assumptions related to the future performance of the acquired business, are forward-looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s accounting for business combinations.

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 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 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.

Annual Test of Impairment of Goodwill in the Infrastructure Reporting Unit

Description of the Matter At January 1, 2022, the Company’s goodwill balance was approximately $8,784 million.

As discussed in Note A of the consolidated financial statements, goodwill is not amortized but rather is tested for impairment at least annually at the reporting unit level.

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 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.

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.

Our audit procedures included, among other procedures, testing controls over the Company’s budgetary process and management’s review of that information.

To test the estimated fair value of the Infrastructure reporting unit, we performed audit procedures that included, among other procedures, assessing the Company’s methodologies and testing the revenue growth assumption discussed above and the underlying data used by the Company in its analysis.

We compared the revenue growth rates used by management to current industry and economic trends, including, among other factors, the price of oil and scrap metal, and considering the Company’s business model, customer base, product mix and other relevant factors.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses to evaluate the change in the fair value of the reporting unit that would result from changes in the revenue growth assumption.

In addition, we evaluated the reconciliation of the combined estimated fair value of the Company’s reporting units to the market capitalization of the Company and assessed the resulting control premium.

Further, we involved our internal valuation specialists to assist in the evaluation of the methodology and certain assumptions used to estimate the fair value of the Infrastructure reporting unit.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Uncertain Tax Positions

Description of the Matter At January 1, 2022, the Company had recorded a liability for uncertain tax positions of approximately $488 million.

As discussed in Notes A and Q of the consolidated financial statements, the Company conducts business globally and, as a result, is subject to income tax in a number of locations, including many state and foreign jurisdictions.

Description of the Matter As described in Notes A and Q, the Company conducts business globally and, as a result, files income tax returns in the U.S.

federal jurisdiction and various state and foreign jurisdictions.

In the normal course, the Company is subject to examinations by taxing authorities throughout the world.

Uncertainty in a tax position may arise as tax laws are subject to interpretation.

The Company uses significant judgment in (1) determining whether a tax position’s technical merits are more likely than not to be sustained and (2) measuring the amount of tax benefit that qualifies for recognition.

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 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.

This included assessing the Company’s analysis of jurisdictions with potential tax liabilities and other international tax considerations.

We considered the Company’s judgments and the factors involved with each significant tax position.

To support our evaluation, we used our knowledge of, and experience with, the application of international and local income tax laws by the relevant income tax authorities to evaluate the Company’s accounting for those tax positions.

We analyzed the Company’s assumptions and data used to determine the amount of tax benefit to recognize and tested the completeness and accuracy of the data used to determine the amount of tax benefits recognized and tested the accuracy of such calculations.

We also evaluated the Company’s income tax disclosures included in Note Q to the consolidated financial statements in relation to these matters.

At December 31, 2022, the Company has recorded approximately $503 million relating to uncertain tax positions.

The Company records uncertain tax positions in accordance with ASC 740, which requires a two-step process.

First, management determines whether it is more likely than not that a tax position will be sustained based on the technical merits of the position and second, for those tax positions that meet the more likely than not threshold, management recognizes the largest amount of the tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement with the related taxing authority.

The Company then evaluates uncertain tax positions in subsequent periods for recognition, de-recognition or re-measurement if changes have occurred, or when effective settlement or expiration of the statute of limitations occurs.

Auditing the uncertain tax positions is complex because of the judgmental nature of the tax accruals and various other tax return positions that might not be sustained upon review by taxing authorities.

The Company files tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world due to its complex global footprint.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls related to the recognition, measurement and the evaluation of changes in uncertain tax positions.

This included testing controls over management’s review of the tax positions, their evaluation of whether they met the measurement threshold and then recalculating the amounts recognized in the consolidated financial statements.

Our audit procedures to test the Company’s uncertain tax positions included, among others, involvement of our tax professionals, including transfer pricing professionals.

This included evaluating tax opinions and third-party transfer pricing studies obtained by the Company and assessing the Company’s correspondence with the relevant tax authorities.

We analyzed the Company’s assumptions and data used to determine the amount of tax benefit to recognize and tested the accuracy of the calculations.

Our testing also included the evaluation of the ongoing positions and consideration of changes, the recording of penalties and interest and the ultimate settlement and payment of certain tax matters.

/s/ Ernst & Young LLP

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Opinion on Internal Control over Financial Reporting

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, 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.

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 MTD Holdings, Inc.

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.

We have audited Stanley Black & Decker, Inc.’s internal control over financial reporting as of December 31, 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 (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

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 December 31, 2022 and January 1, 2022, the related consolidated statements of operations, comprehensive income, shareowners’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and schedule listed in the Index at Item 15(a) and our report dated February 23, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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Consolidated Statements of Operations

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

Fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021

(Millions of Dollars, Except Per Share Amounts)

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Other, net 274.8 189.5 215.7

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

Loss on sales of businesses 8.4 0.6 13.5

Restructuring charges 140.8 14.5 73.8

Gain on equity method investment — ( 68.0 ) —

Loss on debt extinguishments — 46.9 17.9

Asset impairment charge 168.4 — —

Loss on debt extinguishment — — 46.9

Interest income ( 54.7 ) ( 9.8 ) ( 17.5 )

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Net earnings from continuing operations before equity interest 170.3 1,531.8 1,145.7

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

Share of net earnings of equity method investment — 19.0 9.1

Net earnings from continuing operations 170.3 1,550.8 1,154.8

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

Net earnings (losses) attributable to non-controlling interests 0.2 ( 1.7 ) 0.9

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

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Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted $ 165.5 $ 1,539.6 $ 1,131.5

Earnings from discontinued operations before income taxes 70.2 47.2 35.6

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

Earnings from discontinued operations before income taxes (including 2022 pre-tax gain on Security sale of $ 1,197.4 million)

1,210.9 124.3 83.3

Income taxes on discontinued operations (including 2022 income taxes for gain on Security sale of $ 312.5 million)

318.5 ( 12.4 ) 3.4

Net earnings from discontinued operations $ 892.4 $ 136.7 $ 79.9

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Consolidated Statements of Comprehensive Income

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

Fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021

(Millions of Dollars)

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Gains (losses) on cash flow hedges, net of tax 5.3 53.2 ( 48.8 )

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

Gains (losses) on net investment hedges, net of tax 2.0 ( 1.0 ) ( 24.5 )

Pension gains (losses), net of tax 83.2 123.6 ( 37.7 )

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Consolidated Balance Sheets

January 1, 2022 and January 2, 2021

December 31, 2022 and January 1, 2022

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

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Authorized 10,000,000 shares in 2022 and 2021

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

620.3 1,370.3

Issued and outstanding 750,000 shares in 2021

Common stock, par value $ 2.50 per share:

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Consolidated Statements of Cash Flows

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

Fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021

(Millions of Dollars)

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Net earnings from discontinued operations 892.4 136.7 79.9

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

Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:

Depreciation and amortization of property, plant and equipment 369.7 374.0 376.5

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Inventory step-up amortization 80.3 20.7 29.0

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

Loss on sales of businesses 8.4 0.6 13.5

Gain on equity method investment — ( 68.0 ) —

Loss on debt extinguishments — 46.9 17.9

Craftsman contingent consideration remeasurement 101.1 — —

Loss on debt extinguishment — — 46.9

Gain on sale of discontinued operations ( 1,197.4 ) — —

Asset impairment charge 168.4 — —

Craftsman contingent consideration remeasurement from MTD acquisition — 101.1 —

Stock-based compensation expense 90.7 118.3 109.1

Provision for credit losses 30.0 18.7 41.1

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

Deferred tax (benefit) expense ( 386.9 ) ( 241.7 ) ( 17.9 )

Share of net earnings of equity method investment — ( 19.0 ) ( 9.1 )

Deferred tax benefit ( 271.7 ) ( 386.9 ) ( 241.7 )

Other non-cash items 72.1 27.7 44.7

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Other long-term liabilities 173.4 277.7 79.5

Net cash provided by operating activities 663.1 2,022.1 1,505.7

Net cash (used in) provided by operating activities ( 1,459.5 ) 663.1 2,022.1

Investing Activities:

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Sales of businesses, net of cash sold 4,147.1 5.3 59.1

Purchases of investments ( 15.4 ) ( 18.7 ) ( 260.6 )

Net investment hedge settlements 10.6 ( 55.1 ) 41.0

Other ( 24.5 ) ( 19.5 ) ( 24.6 )

Net cash used in investing activities ( 2,623.8 ) ( 1,577.1 ) ( 1,208.6 )

Net cash provided by (used in) investing activities 3,572.6 ( 2,623.8 ) ( 1,577.1 )

Financing Activities:

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Proceeds from debt issuances, net of fees 992.6 — 2,222.5

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

Net short-term commercial paper (repayments) borrowings ( 138.1 ) 2,224.6 ( 342.6 )

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

Credit facility borrowings 2,500.0 — —

Credit facility repayments ( 2,500.0 ) — —

Purchases of common stock for treasury ( 2,323.0 ) ( 34.3 ) ( 26.2 )

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 — 750.0

Redemption and conversion of preferred stock ( 750.0 ) ( 750.0 ) —

Premium paid on debt extinguishment — — ( 48.7 )

Proceeds from issuances of common stock 38.7 131.4 147.0

Redemption and conversion of preferred stock ( 750.0 ) — —

Craftsman deferred purchase price — — ( 250.0 )

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Other ( 11.7 ) ( 13.8 ) ( 10.6 )

Net cash provided by (used in) financing activities 918.7 615.9 ( 292.5 )

Net cash (used in) provided by financing activities ( 1,971.1 ) 918.7 615.9

Effect of exchange rate changes on cash and cash equivalents ( 31.9 ) ( 61.5 ) 22.8

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Cash, cash equivalents and restricted cash, end of year $ 404.9 $ 294.8 $ 1,398.3

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

The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances as of December 31, 2022 and January 1, 2022, as shown above:

December 31, 2022 January 1, 2022

Cash and cash equivalents $ 395.6 $ 142.1

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Consolidated Statements of Changes in Shareowners’ Equity

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

Fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021

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

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Net earnings 1,233.8 0.9 1,234.7

Other comprehensive loss ( 70.3 ) ( 70.3 )

Cash dividends declared — $ 2.70 per share

Other comprehensive income 170.9 170.9

Cash dividends declared — $ 2.78 per common 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)

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10.0 ( 36.2 ) ( 26.2 )

Issuance of preferred stock ( 750,000 shares)

Premium paid on equity option ( 19.2 ) ( 19.2 )

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

( 610.4 ) 113.2 492.6 ( 4.6 )

Issuance of remarketed Series C Preferred Stock 750.0 750.0

Stock-based compensation related 109.1 109.1

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

Beneficial conversion feature 0.7 ( 0.7 ) —

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

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

Cash dividends declared — $ 2.78 per share

Other comprehensive loss ( 131.9 ) ( 131.9 )

Cash dividends declared — $ 2.98 per common share

( 474.8 ) ( 474.8 )

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72.2 ( 106.5 ) ( 34.3 )

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

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

( 750.0 ) ( 137.3 ) 137.3 ( 750.0 )

Issuance of remarketed Series C Preferred Stock 750.0 750.0

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

Stock-based compensation related 118.3 118.3

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

Beneficial conversion feature 0.7 ( 0.7 ) —

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

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( 2,323.0 ) ( 2,323.0 )

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

Conversion of original Series D Preferred Stock ( 4,723,500 shares)

( 620.3 ) 42.6 575.9 ( 1.8 )

Issuance of remarketed Series D Preferred Stock ( 750,000 shares)

Redemption of remarketed Series D Preferred Stock ( 750,000 shares)

( 750.0 ) ( 750.0 )

Stock-based compensation related 90.7 90.7

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

Balance December 31, 2022 $ — $ 442.3 $ 5,055.6 $ 9,333.3 $ ( 2,119.5 ) $ — $ ( 2,999.6 ) $ 2.1 $ 9,714.2

See Notes to Consolidated Financial Statements.

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

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

There were 52 weeks in fiscal years 2022 and 2021, and 53 weeks in the fiscal year 2020.

On August 19, 2022, the Company completed the sale of its Oil & Gas business.

This divestiture does not qualify for discontinued operations, and therefore, the results of the Oil & Gas business are included in the Company's continuing operations for all periods presented through the date of sale.

There were no assets or liabilities held for sale relating to the Oil & Gas business as of January 1, 2022.

On July 22, 2022, the Company completed the previously announced sale of its Convergent Security Solutions ("CSS") business comprised of the commercial electronic security and healthcare businesses.

On July 5, 2022, the Company completed the previously announced sale of its Mechanical Access Solutions ("MAS") business, the automatic doors business.

The assets and liabilities related to CSS and MAS are classified as held for sale on the Company's Consolidated Balance Sheets as of January 1, 2022.

The CSS and MAS divestitures represent a single plan to exit the Security segment and are considered a strategic shift that will have a major effect on the Company’s operations and financial results.

The operating results of CSS and MAS 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 Standards 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 security businesses 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 their respective dates of sale in 2020.

The divestitures above are part of the Company's strategic commitment to simplify and streamline its portfolio to focus on the core Tools & Outdoor and Industrial businesses.

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

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

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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.

These acquisitions were 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 & Outdoor 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.

This acquisition was accounted for as a business combination using the acquisition method of accounting and the results subsequent to the date 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 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.

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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.

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Other inventories are primarily valued at the lower of First-In, First-Out (“FIFO”) cost and net realizable value because LIFO is not permitted for statutory reporting outside the U.S.

Refer to Note C, Inventories , for a quantification of the LIFO impact on inventory valuation.

Refer to Note C, Inventories , Net , for a quantification of the LIFO impact on inventory valuation.

PROPERTY, PLANT AND EQUIPMENT — The Company generally values property, plant and equipment (“PP&E”), including capitalized software, at historical cost less accumulated depreciation and amortization.

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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

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.

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If the carrying amount of the asset was to exceed the fair value, it would be written down to fair value.

No significant goodwill or other intangible asset impairments were recorded during 2021, 2020 or 2019.

No significant goodwill or other intangible asset impairments were recorded during 2022, 2021 or 2020 as part of the Company's annual impairment testing.

Goodwill totaling $ 39.0 million was allocated to the Oil & Gas business based on the relative fair value of the business disposed, resulting in a reduction of goodwill which was included in the impairment loss relating to the Oil & Gas business in the second quarter of 2022.

Refer to Note T, Divestitures , for further discussion.

FINANCIAL INSTRUMENTS — Derivative financial instruments are employed to manage risks, including foreign currency, interest rate exposures and commodity prices and are not used for trading or speculative purposes.

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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 CSS and Infrastructure businesses is generated from equipment leased to custome rs.

A portion of the Company’s revenues within the Oil & Gas business, disposed in the third quarter of 2022, were 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.

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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 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.

For Infrastructure business leases, underlying assets are assessed for functionality at termination of the lease and, if necessary, an impairment to the leased asset value is recorded.

For Oil & Gas leases, underlying assets were assessed for functionality at termination of the lease and, if necessary, an impairment to the leased asset value was recorded.

Provisions for customer volume rebates, product returns, discounts and allowances are variable consideration and are recorded as a reduction of revenue in the same period the related sales are recorded.

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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, 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.

In circumstances where SSP is not observable, the Company allocates the consideration for the performance obligations by utilizing one of the following methods:

expected cost plus margin, the residual approach, or a mix of these estimation methods.

For performance obligations that the Company satisfies over time, revenue is recognized by consistently applying a method of measuring progress toward complete satisfaction of that performance obligation.

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, 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.

Revenue recognized on security contracts in process are based upon the allocated contract price and related total inputs of the project at completion.

The extent of progress toward completion is generally measured using input methods based on labor metrics.

Revisions to these estimates as contracts progress have the effect of increasing or decreasing profits each period.

Provisions for anticipated losses are made in the period in which they become determinable.

The revenues for monitoring and monitoring-related services are recognized as services are rendered over the contractual period.

The Company utilizes the output method for contract sales in the Oil & Gas product line.

The Company utilized the output method for contract sales in the Oil & Gas business.

The output method recognizes revenue based on direct measurements of the customer value of the goods or services transferred to date relative to the remaining goods or services promised under the contract.

The output method includes methods such as surveys of performance completed to date, appraisals of results achieved, milestones reached, time elapsed, and units produced or units delivered.

The Company sold the Oil & Gas business in the third quarter of 2022.

Refer to Note T, Divestitures , for further discussion

Contract assets or liabilities result from transactions with revenue recorded over time.

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The associated deferred revenue is included in Accrued expenses or Other liabilities, as appropriate, in the Consolidated Balance Sheets.

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

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

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.

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

Cost of sales is primarily comprised of freight, direct materials, direct labor as well as overhead which includes indirect labor and facility and equipment costs.

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.

Cost of sales is primarily comprised of freight, direct materials, direct labor as well as overhead which

includes indirect labor and facility and equipment costs.

Cost of sales also includes quality control, procurement and material receiving costs as well as internal transfer costs.

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Shipping and handling costs associated with inbound and outbound freight are reported in Cost of sales.

Distribution costs are classified in SG&A and amounted to $ 416.5 million, $ 347.3 million and $ 326.5 million in 2021, 2020 and 2019, respectively.

STOCK-BASED COMPENSATION — Compensation cost relating to stock-based compensation grants is recognized on a straight-line basis over the vesting period, which is generally four years .

Other distribution costs, primarily relating to salary and facility costs, are classified in SG&A and amounted to $ 498.7 million, $ 416.1 million and $ 346.9 million in 2022, 2021 and 2020, respectively.

STOCK-BASED COMPENSATION — Compensation cost relating to stock-based compensation grants is recognized on a straight-line basis over the vesting period, which is generally three or four years .

The expense for stock options and restricted stock units awarded to retirement-eligible employees (those aged 55 and over, and with 10 or more years of service) is recognized on the grant date, or (if later) by the date they become retirement-eligible.

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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 .

NEW ACCOUNTING STANDARDS ADOPTED — In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 new standard requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606.

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

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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.

The Company elected to early adopt this standard in the first quarter of 2022 and it did not 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).

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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.

The Company adopted this standard prospectively in the first quarter of 2022 and it did not 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).

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

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

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

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

The Company adopted this standard in the first quarter of 2022, using the modified retrospective method, which has no impact to prior periods.

In accordance with the standard, the Company increased weighted-average shares outstanding used to calculate diluted earnings per share for the year ended December 31, 2022 by 3.6 million shares, as required by the use of the if-converted method for convertible instruments that may be settled in cash or shares.

See Note J, Capital Stock , for further discussion.

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

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

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

(Millions of Dollars) 2021 2020

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

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date Topic of 848 , effective upon issuance, to defer the sunset date of Topic 848 from December 2022 to December 2024 following the cessation of LIBOR being moved to June 2023.

The Company's adoption of these standards did not have a material impact on its consolidated financial statements.

RECENTLY ISSUED ACCOUNTING STANDARDS NOT YET ADOPTED — In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.

The new standard requires that a buyer in a supplier finance program disclose sufficient information about the key terms of the program, the amount of outstanding confirmed obligations at period end, where the obligations are presented in the balance sheet, and a rollforward of the obligations during the annual period.

The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

The amendments in this update should be applied retrospectively to all periods in which a balance sheet is presented, except for the rollforward requirement, which is applied prospectively.

The Company will adopt this disclosure guidance in the first quarter of 2023 related to its supplier finance programs.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions .

The new standard clarifies that a contractual restriction on the sale of an equity security should not be considered in measuring the fair value of the security.

The new standard also requires certain disclosures related to equity securities with contractual sale restrictions.

The ASU is effective for fiscal years beginning after December 15, 2023, 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 is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815):

Fair Value Hedging—Portfolio Layer Method .

The new standard expands and clarifies the use of the portfolio layer method for fair value hedges of interest rate risk.

The new standard allows non-prepayable financial assets to also be included in a closed portfolio which is hedged using the portfolio layer method.

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 new guidance on hedging multiple layers in a closed portfolio should be applied prospectively and the guidance on the accounting for fair value basis adjustments should be applied on a modified retrospective basis.

The Company will adopt this guidance in the first quarter of 2023 and does not expect it to have a material impact on its consolidated financial statements.

ACCOUNTS AND NOTES RECEIVABLE, NET

(Millions of Dollars) December 31, 2022 January 1, 2022

Trade accounts receivable $ 1,142.0 $ 1,398.2

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Other accounts receivable 95.5 104.1

Gross accounts and notes receivable 1,663.9 1,275.4

Accounts and notes receivable 1,337.6 1,577.6

Allowance for credit losses ( 106.6 ) ( 95.9 )

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Adequate reserves have been established to cover anticipated credit losses.

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:

The changes in the allowance for credit losses for the years ended December 31, 2022 and January 1, 2022 are as follows:

(Millions of Dollars) 2022 2021

Beginning Balance $ 110.9 $ 94.1

Cumulative Effect Adjustment (a) — 1.1

Balance beginning of period $ 95.9 $ 106.2

Charged to costs and expenses 14.3 —

Charged To Other Accounts (b) 3.9 7.4

Deductions (c) ( 15.6 ) ( 20.7 )

Other, including recoveries and deductions (a) ( 3.6 ) ( 10.3 )

Balance end of period $ 106.6 $ 95.9

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

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

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

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.

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

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.

(a) Amounts represent charge-offs less recoveries, the impacts of foreign currency translation, acquisitions, divestitures and net transfers to/from other accounts.

At December 31, 2022 and January 1, 2022, the Industrial segment operating lease receivable was $ 0.7 million and $ 21.2 million, respectively, from leasing equipment to customers.

Net sales from operating lease revenue were $ 39.8 million and $ 62.0 million for the years ended December 31, 2022 and January 1, 2022, respectively.

The decrease in operating lease receivable and revenue compared to prior year was primarily due to the sale of the Oil & Gas business.

The Company has an accounts receivable sale program.

According to the terms, the Company sells certain of its trade accounts receivables at fair value to a wholly owned, consolidated, bankruptcy-remote special purpose subsidiary (“BRS").

The BRS, in turn, can sell such receivables to a third-party financial institution (“Purchaser”) for cash.

turn, can sell such receivables to a third-party financial institution (“Purchaser”) for cash.

The Purchaser’s maximum cash investment in the receivables at any time is $ 110.0 million .

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

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.

At December 31, 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 December 31, 2022 and January 1, 2022, net receivables of approximately $ 110.0 million and $ 100.0 million, respectively, were derecognized.

Proceeds from transfers of receivables to the Purchaser totaled $ 496.4 million and $ 447.7 million for the years ended December 31, 2022 and January 1, 2022, respectively, and payments to the Purchaser totaled $ 486.4 million and $ 434.5 million, respectively.

The program resulted in a pre-tax loss of $ 4.1 million and $ 2.0 million for the years ended December 31, 2022 and January 1, 2022, respectively, which included service fees of $ 0.9 million and $ 0.9 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 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

As of December 31, 2022 and January 1, 2022, the Company's deferred revenue totaled $ 122.9 million and $ 117.1 million, respectively, of which $ 29.6 million and $ 35.0 million, respectively, was classified as current.

Revenue recognized for the years ended December 31, 2022 and January 1, 2022 that was previously deferred as of January 1, 2022 and January 2, 2021 totaled $ 22.9 million and $ 24.0 million, respectively.

INVENTORIES, NET

(Millions of Dollars) December 31, 2022 January 1, 2022

Finished products $ 3,460.8 $ 3,486.2

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Total $ 5,861.1 $ 5,419.9

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.

Net inventories in the amount of $ 3.4 billion at December 31, 2022 and $ 2.6 billion at January 1, 2022 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 $ 486.9 million at December 31, 2022 and $ 215.6 million at January 1, 2022.

PROPERTY, PLANT AND EQUIPMENT

(Millions of Dollars) 2021 2020

(Millions of Dollars) December 31, 2022 January 1, 2022

Land $ 137.7 $ 143.1

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Depreciation and amortization expense $ 369.7 $ 374.0 $ 376.5

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.

The amounts above are inclusive of depreciation and amortization expense for discontinued operations amounting to

$ 0.4 million in 2022, $ 23.7 million in 2021, and $ 23.1 million in 2020.

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.

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.

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:

The Company’s pre-existing 20 percent 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 on investment during the fourth quarter of 2021.

MTD designs, manufactures and distributes lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, hand-held outdoor power equipment and garden tools for both residential and professional consumers under well-known brands like CUB CADET® and TROY-BILT®.

This combination created 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 & Outdoor segment.

The MTD 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 acquisition accounting for MTD is complete.

The measurement period adjustments recorded in 2022, primarily related to working capital accounts and opening balance sheet contingencies, did not have a material impact to the Company's Consolidated Financial Statements.

The following table summarizes the acquisition date value of identifiable net assets acquired and liabilities assumed adjusted for measurement period adjustments:

(Millions of Dollars)

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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.

Goodwill of $ 0.6 million will be deductible for tax purposes.

On November 12, 2021, the Company acquired Excel Industries ("Excel") for $ 373.7 million, net of cash acquired.

Excel is a leading designer and manufacturer of premium commercial and residential turf-care equipment under the HUSTLER® brand.

Excel was a strategically important bolt-on acquisition as the Company builds an outdoor products leader.

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

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

The acquisition accounting for Excel is complete.

The measurement period adjustments recorded in 2022 did not have a material impact to the Company's Consolidated Financial Statements.

The acquisition date value of identifiable net assets acquired, which included $ 31.4 million of working capital, $ 43.6 million of deferred tax liabilities, and $ 203.5 million of intangible assets, was $ 195.5 million.

The related goodwill was $ 178.2 million.

The amount allocated to intangible assets included $ 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.

Goodwill is not expected to be deductible for tax purposes.

Other 2021 Acquisitions

During 2021, the Company completed two other acquisitions for a total purchase price of $ 202.7 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.

The acquisition date value of the identifiable net assets acquired was $ 43.9 million and working capital was $ 30.6 million.

The related goodwill was $ 158.8 million.

The acquisition accounting for these acquisitions is complete.

The measurement period adjustments recorded in 2022 did not have a material impact to the Company's Consolidated Financial Statements.

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

Goodwill of $ 47.9 million related to these acquisitions will be deductible for tax purposes.

2020 ACQUISITION

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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 $ 100.0 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 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.

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 in the fourth quarter of 2020 to the Consolidated Statements of Operations in Other, net.

The period for the remaining contingent consideration ended in June 2022 and, consistent with the Company's expectations, Boeing did not meet the required production levels at that time.

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

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

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:

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

The following table summarizes the acquisition date value of identifiable net assets acquired and liabilities assumed adjusted for measurement period adjustments:

(Millions of Dollars)

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Total consideration paid $ 1,336.5

The weighted-average useful life assigned to the intangible assets is 20 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 $ 569.8 million of goodwill will be deductible for tax purposes.

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

IES Attachments

On March 8, 2019, the Company acquired IES Attachments for $ 653.5 million, net of cash acquired.

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

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.

The IES Attachments 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 estimated acquisition date value of identifiable net assets acquired, which included $ 77.8 million of working capital (primarily inventory), $ 78.3 million of deferred tax liabilities, and $ 328.0 million of intangible assets, was $ 342.2 million.

The related goodwill was $ 311.3 million.

The amount allocated to intangible assets included $ 304.0 million for customer relationships.

The weighted-average useful life assigned to the intangible assets was 20 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 and assembled workforce.

It is estimated that $ 2.4 million of goodwill, relating to the pre-acquisition historical tax basis of goodwill, will be deductible for tax purposes.

The acquisition accounting for IES Attachments is complete.

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

Other 2019 Acquisitions

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 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.

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.

Goodwill of $ 569.8 million will be deductible for tax purposes.

ACTUAL AND PRO-FORMA IMPACT FROM ACQUISITIONS

Actual Impact from Acquisitions

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, gain on MTD investment, contingent consideration expense, and other integration-related costs.

(Millions of Dollars) 2021

Net sales $ 235.5

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

The Company did not complete any material acquisitions during 2022.

As such, there was no material impact from new acquisitions on the Company's Consolidated Statements of Operations for the year ended December 31, 2022.

Pro-forma Impact from Acquisitions

The following table presents supplemental pro-forma information as if the 2021 acquisitions had occurred on December 29, 2019 and the 2020 acquisitions had occurred on December 30, 2018.

The pro-forma consolidated results are not necessarily indicative of what the Company’s consolidated net sales and net earnings would have been had the Company completed the acquisitions on the aforementioned dates.

The following table presents supplemental pro-forma information as if the 2021 acquisitions had occurred on December 29, 2019.

In addition, the pro-forma consolidated results do not purport to project the future results of the Company.

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2022 Pro-forma Results

The 2021 pro-forma results were calculated by combining the results of Stanley Black & Decker with the stand-alone results of the 2021 acquisitions for their respective pre-acquisition periods.

The 2022 pro-forma results were calculated by combining the actual results of Stanley Black & Decker, Inc.

for the year ended December 31, 2022, inclusive of the results of MTD and Excel, with the following adjustment:

• 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 2022 pro-forma period, as such expenses would have occurred in the first year following the assumed acquisition date.

2021 Pro-forma Results

The 2021 pro-forma results were calculated by combining the results of Stanley Black & Decker, Inc.

with the stand-alone results of the 2021 acquisitions for their respective pre-acquisition period.

Accordingly, the following adjustments were made:

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• 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

The 2020 pro-forma results were calculated by combining the results of Stanley Black & Decker with the stand-alone results of the 2020 and 2021 acquisitions for their respective pre-acquisition periods.

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 of the 2020 acquisition and for the year ended January 2, 2021 for the 2021 acquisitions.

• 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.

• Because the MTD acquisition was assumed to occur on December 29, 2019, the gain on investment and remeasurement of the Craftsman contingent consideration liability due to additional forecasted Craftsman sales resulting from the acquisition of MTD 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.

During 2022, 2021 and 2020, the Company made additional immaterial investments in new and emerging start-up companies focused on innovation, breakthrough products and advanced technologies.

These investments, which are included in Other assets in the Consolidated Balance Sheets, do not qualify for equity method accounting as the Company acquired less than 20 percent interest in each investment and does not have the ability to significantly influence the operating or financial decisions of any of the investees.

With the exception of two immaterial investments, these investments, which are included in Other assets in the Consolidated Balance Sheets, do not qualify for equity method accounting as the Company acquired less than 20 percent interest in each investment and does not have the ability to significantly influence the operating or financial decisions of any of the investees.

GOODWILL AND INTANGIBLE ASSETS

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

(Millions of Dollars) Tools & Storage Industrial Other Total

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

(Millions of Dollars) Tools & Outdoor Industrial Total

Balance January 2, 2021 $ 5,246.6 $ 2,646.5 $ 7,893.1

Acquisitions 777.3 ( 0.5 ) 776.8

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Foreign currency translation and other ( 124.5 ) ( 54.0 ) ( 178.5 )

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

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 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.

Balance December 31, 2022 $ 5,939.7 $ 2,563.0 $ 8,502.7

Goodwill totaling $ 2,088.0 million and $ 2,143.9 million from the previously reported Security segment was reclassified to assets held for sale as of January 1, 2022 and January 2, 2021, respectively.

In July 2022, the Company completed the sale of its Security segment and $ 2,001.4 million of goodwill was included in the gain on sale in the third quarter of 2022.

In addition, $ 39.0 million of goodwill was allocated to the Oil & Gas business based on the relative fair value of the business disposed, and was included in the determination of the impairment loss relating to the Oil & Gas business in the second quarter of 2022.

Refer to Note T, Divestitures , for further discussion.

As required by the Company's policy, goodwill and indefinite-lived trade names were tested for impairment in the third quarter of 2022.

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

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

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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 2022, the Company determined that the fair values of each of its reporting units exceeded their respective carrying amounts.

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

INTANGIBLE ASSETS — Intangible assets at December 31, 2022 and January 1, 2022 were as follows:

(Millions of Dollars) Gross

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Total $ 3,284.3 $ ( 1,325.5 ) $ 3,478.0 $ ( 1,307.7 )

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.

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.

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

Net intangibles totaling $ 182.2 million were recognized as assets held for sale as of January 1, 2022.

Indefinite-lived trade names totaled $ 2.516 billion at December 31, 2022 and $ 2.525 billion at January 1, 2022.

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

Based on the results of the annual impairment testing performed in the third quarter of 2022, 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:

(Millions of Dollars) 2022 2021 2020

Tools & Storage $ 64.1 $ 61.5 $ 73.1

Tools & Outdoor $ 108.1 $ 64.1 $ 61.5

Industrial 94.4 99.9 96.6

Other 39.1 43.5 44.7

Discontinued Operations — 39.1 43.5

Consolidated $ 202.5 $ 203.1 $ 201.6

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 $ 191.3 million for 2023, $ 186.1 million for 2024, $ 172.8 million for 2025, $ 162.2 million for 2026, $ 154.1 million for 2027 and $ 1,092.3 million thereafter.

ACCRUED EXPENSES

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

(Millions of Dollars) 2021 2020

(Millions of Dollars) December 31, 2022 January 1, 2022

Payroll and related taxes $ 192.0 $ 346.4

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Forward stock purchase contract — 330.4

Accrued interest 49.0 80.7

Other 565.5 523.5

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LONG-TERM DEBT AND FINANCING ARRANGEMENTS

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

December 31, 2022 January 1, 2022

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

Purchase Accounting FV Adjustment Deferred Financing Fees Carrying Value Carrying Value

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Notes payable due 2040 5.20 % 400.0 ( 0.2 ) ( 26.1 ) — ( 2.4 ) 371.3 369.7

Notes payable due 2048 4.85 % 500.0 ( 0.5 ) — — ( 4.7 ) 494.8 494.6

Notes payable due 2050 2.75 % 750.0 ( 1.9 ) — — ( 7.8 ) 740.3 740.0

Notes payable due 2060 (junior subordinated) 4.00 % 750.0 — — — ( 8.8 ) 741.2 740.9

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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:

$ 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 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 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.

Contemporaneously with the issuance of the 2050 Term Notes, the Company redeemed the 3.4 % senior unsecured term notes due 2021 (“2021 Term Notes”) and the 2.9 % senior unsecured term notes due 2022 (“2022 Term Notes”) for approximately $ 1.2 billion representing the outstanding principal amounts, accrued and unpaid interest, and a make-whole premium.

As of December 31, 2022, the total aggregate annual principal maturities of long-term debt for the next five years and thereafter are as follows:

$ 1.2 million in 2023, $ 1.1 million in 2024, $ 500.5 million in 2025, $ 551.9 million in 2026, and $ 4,350.0 million thereafter.

There are immaterial principal maturities of long-term debt in 2027.

These maturities represent the principal amounts to be paid and accordingly exclude the remaining $ 12.3 million of unamortized fair value adjustments made in acquisition accounting, which increased the Black & Decker note payable due 2028 and MTD notes payable due 2026 and 2028, as well as a net loss of $ 26.4 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 $ 36.5 million of unamortized deferred financing fees.

In February 2022, the Company issued $ 500.0 million of senior unsecured term notes maturing February 24, 2025 ("2025 Term Notes") and $ 500.0 million of senior unsecured term notes maturing May 15, 2032 (“2032 Term Notes”).

The 2025 Term Notes accrue interest at a fixed rate of 2.3 % per annum and the 2032 Term Notes at a fixed rate of 3.0 % per annum, with interest payable semi-annually in arrears, and rank equally in right of payment with all of the Company's existing and future unsecured unsubordinated debt.

The Company received total net proceeds from this offering of approximately $ 992.6 million, net of approximately $ 7.4 million of underwriting expenses and other fees associated with the transaction.

The Company used the net proceeds from the offering for general corporate purposes, including repayment of indebtedness under the commercial paper facilities.

In 2021, the Company assumed $ 110.9 million and $ 3.0 million of long-term debt from the acquisitions of MTD and Excel, respectively.

In November 2020, the Company redeemed the 3.4 % senior unsecured term notes due 2021 (“2021 Term Notes”) and the 2.9 % senior unsecured term notes due 2022 (“2022 Term Notes”) for approximately $ 1.2 billion representing the outstanding principal amounts, accrued and unpaid interest, and a make-whole premium.

The Company recognized a net pre-tax loss of $ 46.9 million from the extinguishment, which was comprised of the $ 48.7 million make-whole premium payment and a $ 1.7 million loss related to the write-off of deferred financing fees, partially offset by a $ 3.5 million gain relating to the write-off of unamortized fair value swap terminations.

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

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.

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.

From and including March 15, 2025, the interest rate will be reset for each subsequent five-year reset period equal to the Five-Year Treasury Rate plus 2.657 %.

The Five-Year Treasury Rate is based on the average yields on actively traded U.S.

treasury securities adjusted to constant maturity, for five-year maturities.

On each five-year reset date, the 2060 Junior Subordinated Debentures can be called at 100 % of the principal amount, plus accrued interest, if any.

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 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”).

The 2053 Junior Subordinated Debentures bore interest at a fixed rate of 5.75 % per annum, payable semi-annually in arrears to, but excluding December 15, 2018.

From and including December 15, 2018, the 2053 Junior Subordinated Debentures bore interest at an annual rate equal to three-month LIBOR plus 4.304 %, payable quarterly in arrears.

In February 2019, the Company redeemed all of the outstanding 2053 Junior Subordinated Debentures for $ 405.7 million, which represented 100 % of the principal amount plus accrued and unpaid interest to the redemption date.

The Company recognized a net pre-tax loss of $ 3.2 million from the redemption, which was comprised of a $ 7.8 million loss related to the write-off of deferred financing fees partially offset by a $ 4.6 million gain relating to an unamortized terminated interest rate swap as described in more detailed in Note I, Financial Instruments .

In July 2012, the Company issued $ 750.0 million of junior subordinated debentures, maturing on July 25, 2052 (“2052 Junior Subordinated Debentures”) with fixed interest payable quarterly, in arrears, at a rate of 5.75 % per annum.

In December 2019, the Company redeemed all of the outstanding 2052 Junior Subordinated Debentures for $ 760.5 million, which represented 100 % of the principal amount plus accrued and unpaid interest.

The Company recognized a pre-tax loss of $ 17.9 million from the redemption related to the write-off of unamortized deferred financing fees.

Commercial Paper and Credit Facilities

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").

The Company has a $ 3.5 billion commercial paper program which includes Euro denominated borrowings in addition to U.S.

As of December 31, 2022 and January 1, 2022, the Company had commercial paper borrowings outstanding of $ 2.1 billion and $ 2.2 billion, respectively.

The Company has a five-year $ 2.5 billion committed credit facility (the “ 5 -Year Credit Agreement”).

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

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Dollar and Euro commercial paper program.

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 7, 2022 or u pon termination.

As of December 31, 2022, and January 1, 2022, the Company had no t drawn on its five-year committed credit facility.

In September 2022, the Company terminated its 364 -D ay $ 1.0 billion comm itted credit facility (the " 364 -Day Credit Agreement"), dated September 2021.

There were no outstanding borrowings under the 364 -Day Credit Agreement upon termination and as of January 1, 2022 .

Contemporaneously, the Company entered into a $ 1.5 billion s yndicated 364 -Day Credit Agreement (the “Syndicated 364 -Day Credit Agreement”) which is a revolving credit loan.

Borrowings under the Syndicated 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 Syndicated 364 -Day Credit Agreement.

The Company must repay all advances under the Syndicated 364 -Day Credit Agreement by the earlier of September 6, 2023 or upon termination.

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 Compan y’s $ 3.5 billion U .S.

The Syndicated 364 -Day Credit Agreement serves as part of the liquidity back-stop for the Company’s $ 3.5 billion U.S.

Dollar and Euro commercial paper program.

As of 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.

As of December 31, 2022, the Company had not drawn on its Syndicated 364 -Day Credit Agreement .

In September 2022, the Company terminated its second 364 -Day $ 1.0 billion committed credit facility (the "Second 364 -Day Credit A greement"), dated November 2021, and replaced it with a $ 0.5 billion revolving credit loan (the "Club 364 -Day Credit Agreement").

There were no outstanding borrowings under the Second 364 -Day Credit Agreement upon termination and as of January 1, 2022 .

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

Dollars and 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 Club 364 -Day Credit Agreement.

The Company must repay all advances under the Club 364 -Day Credit Agreement by the earlier of September 6, 2023 or u pon 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 firs t anniversary of the termination date provided that the Company, among other things, pays a fee to the administrative agent for the account of each lender.

As of December 31, 2022, the Company had no t drawn on its Club 364 -Day Credit Agreement .

In August 2022, the Company paid $ 2.5 billion to settle the outstanding amount of its third 364 -Day committed credit facility (the "Third 364 -Day Credit Agreement"), dated January 2022, usi ng proceeds from the sales of the Security and Oil & Gas businesses and subsequently terminated the agreement.

There were no outstanding borrowings under the Third 364 -Day Credit Agreement upon terminatio n.

The Company did not incur any termination penalties in connection with the termination.

In addition, the Company has other short-term lines of credit that are primarily uncommitted, with numerous banks, aggregating to $ 281.8 million, of which $ 191.8 million was available at December 31, 2022.

The $ 90 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.

Short-term arrangements are reviewed annually for renewal.

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 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.

At December 31, 2022, the aggregate amount of short-term and long-term committed and uncommitted lines of credit was approximately $ 4.8 billion.

In addition, at December 31, 2022, $ 2.1 billion was recorded as short-term commercial paper borrowings.

The weighted-average interest rates on U.S.

dollar denominated short-term borrowings for the years ended December 31, 2022 and January 1, 2022 were 2.3 % and 0.1 %, respectively.

The weighted-average interest rate on Euro denominated short-term borrowings for the year ended January 1, 2022 was negative 0.5 %.

For the year ended December 31, 2022, the Company had not drawn on its Euro denominated short-term borrowings.

Interest paid relating to the Company's indebtedness, including long-term debt and commercial paper borrowings, during 2022, 2021 and 2020 amounted to $ 320.8 million, $ 177.1 million and $ 191.6 million, 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 February 2023, the Company entered into amendments to its 5 -Year Credit Agreement, Syndicated 364 -Day Credit Agreement, and Club 364 -Day Credit Agreement to:

(a) amend the definition of Adjusted EBITDA to allow for additional adjustment addbacks, not to exceed $ 500 million in the aggregate, for amounts incurred during each four fiscal quarter period beginning with the period ending in the third quarter of 2023 through the period ending in the second quarter of 2024, and (b) amend the minimum interest coverage ratio from 3.5 times to not less than 1.5 to 1.0 times computed quarterly, on a rolling twelve months (last twelve months) basis, for the period from and including the third quarter of 2023 through the second quarter of 2024.

The minimum interest coverage ratio will revert back to 3.5 times for periods after the second quarter of 2024.

FINANCIAL INSTRUMENTS

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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 1, 2022 and January 2, 2021 follows:

A summary of the fair values of the Company’s derivatives recorded in the Consolidated Balance Sheets at December 31, 2022 and January 1, 2022 follows:

(Millions of Dollars) Balance Sheet

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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 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.

As of December 31, 2022 and January 1, 2022, there were no assets that had been posted as collateral related to the above mentioned financial instruments.

Cash flows related to derivatives, including those that are separately discussed below, resulted in net cash received of $ 86.2 million in 2022, net cash paid of $ 166.8 million in 2021, and net cash received of $ 33.4 million in 2020.

CASH FLOW HEDGES — There were after-tax mark-to-market losses of $ 44.5 million and $ 49.8 million as of December 31, 2022 and January 1, 2022, respectively, reported for cash flow hedge effectiveness in Accumulated other

comprehensive loss.

An after-tax loss of $ 2.9 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.

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1 Inclusive of the gain/loss amortization on terminated derivative financial instruments.

For 2021, 2020 and 2019 after-tax losses of $ 17.0 million, $ 15.4 million, and $ 13.1 million, respectively, were reclassified from Accumulated other comprehensive loss into earnings (inclusive of the gain/loss amortization on terminated derivative financial instruments) during the periods in which the underlying hedged transactions affected earnings.

For 2022, after-tax gains of $ 26.4 million were reclassified from Accumulated other comprehensive loss into earnings (inclusive of the gain/loss amortization on terminated derivative financial instruments) during the periods in which the underlying hedged transactions affected earnings.

For 2021 and 2020, after-tax losses of $ 17.0 million and $ 15.4 million, respectively, were reclassified.

Interest Rate Contracts:

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.

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

The Company has no outstanding forward starting swaps as of December 31, 2022, and had $ 400.0 million of forward starting swaps outstanding as of January 1, 2022.

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 2022, these swaps were terminated resulting in a gain of $ 22.7 million which was recorded in Accumulated other comprehensive loss and is being amortized to interest expense over future periods.

In addition, during 2021, swaps entered into in 2019 totaling $ 400.0 million matured resulting in a loss of $ 75.3 million, which was recorded in Accumulated other comprehensive loss and is being amortized to interest expense over future periods.

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.

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.

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

Foreign Currency Contracts

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

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:

The Company and its subsidiaries have entered into various intercompany transactions whereby the notional values are denominated in currencies other than the functional currencies of the party executing the trade.

In order to better match the cash flows of its intercompany obligations with cash flows from operations, the Company enters into purchased option contracts.

Gains and losses reclassified from Accumulated other comprehensive loss are recorded in Cost of sales as the hedged item affects earnings.

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

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

At December 31, 2022, and January 1, 2022, the notional values of the forward currency contracts outstanding were $ 281.7 million, maturing in 2023, and $ 512.1 million, maturing in 2022, respectively.

FAIR VALUE HEDGES

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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 1, 2022 or January 2, 2021.

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 December 31, 2022 or January 1, 2022.

A summary of the pre-tax effect of fair value hedge accounting on the Consolidated Statements of Operations for 2022, 2021 and 2020 is as follows:

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As a result, the Company recorded a pre-tax gain of $ 3.5 million relating to the remaining unamortized gain on fair value swap terminations related to the 2021 Term Notes.

In February 2019, the Company redeemed all of the outstanding 2053 Junior Subordinated Debentures, as further discussed in Note H, Long-Term Debt and Financing Arrangements.

As a result, the Company recorded a pre-tax gain of $ 4.6 million relating to the remaining unamortized gain on swap termination related to this debt.

A summary of the amounts recorded in the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges as of 2021 and 2020 is as follows:

A summary of the amounts recorded in the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges as of December 31, 2022 and January 1, 2022 is as follows:

(Millions of dollars) 2022 Carrying Amount of Hedged Liability 1

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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 $ 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.

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.

The total after-tax amounts in Accumulated other comprehensive loss were gains of $ 73.8 million and $ 71.8 million at December 31, 2022 and January 1, 2022, respectively.

As of December 31, 2022, the Company has no outstanding foreign exchange contracts.

As of January 1, 2022, the Company had a foreign exchange contract with a notional value 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.

During 2022, this swap was terminated resulting in a gain of $ 4.0 million.

Maturing foreign exchange contracts resulted in net cash received of $ 10.6 million in 2022, net cash paid of $ 55.1 million during 2021 and net cash received of $ 41.0 million during 2020.

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

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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 $ — $ —

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The objective of these practices is to minimize the impact of foreign currency fluctuations on operating results.

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 31, 2022 was $ 1.1 billion maturing on various dates through 2023.

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

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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 1, 2022, January 2, 2021, and December 28, 2019.

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 December 31, 2022, January 1, 2022, and January 2, 2021.

2022 2021 2020

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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 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 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 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.

Each unit had a stated amount of $ 100 and initial ly consisted of a three-year forward stock purchase contract ( “ 2022 Purchase Contracts”) for the purchase of a variable number of shares of common stock, on November 15, 2022, for a price of $ 100 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 shares associated with the forward stock purchase contracts component of the 2019 Equity Units have been reflected in diluted earnings per share using the if-converted method.

In November 2022, the Company generated cash proceeds of $ 750 million from the successful remarketing of the Series D Preferred Stock (the "Remarketed Series D Preferred Stock").

Upon completion of the remarketing, the holders of the 2019 Equity Units received 4,723,500 common shares and the Company issued 750,000 shares of Remarketed Series D Preferred Stock.

Holders of the Remarketed Series D Preferred Stock were entitled to receive cumulative dividends, if declared by the Board of Directors, at an initial fixed rate equal to 7.5 % per annum of the $ 1,000 per share liquidation preference (equivalent to $ 75.00 per annum per share).

On November 15, 2022, the Company informed holders that it would redeem all outstanding shares of the Remarketed Series D Preferred Stock on December 22, 2022 at $ 1,007.71 per share in cash, which was equal to 100 % of the liquidation preference of a share of Remarketed Series D Preferred Stock, plus accumulated and unpaid dividends to, but excluding December 22, 2022.

In December 2022, the Company redeemed the Remarketed Series D Preferred Stock, paying $ 750 million in cash.

Upon the adoption of 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) , beginning in the first quarter of 2022, the common shares that would be required to settle the applicable conversion value of the Series D Preferred Stock were included in the denominator of diluted earnings per share using the if-converted method.

In accordance with the standard, the Company increased weighted-average shares outstanding used to calculate diluted earnings per share for the year ended December 31, 2022 by 3.6 million shares.

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 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 .

The shares associated with the forward stock

purchase contracts component of the 2017 Equity Units have been reflected in diluted earnings per share using the if-converted method.

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.

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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 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.

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

In connection with the remarketing, 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 at $ 1,002.50 per share in cash, 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 June 3, 2021.

If a holder elected to convert its shares of Remarketed Series C Preferred Stock prior to June 3, 2021, 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.

Prior to the Series C 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.

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Outstanding, less shares subject to the forward share purchase contract 149,338,020 159,683,266 157,106,752

In March 2022, the Company executed accelerated share repurchase ("ASR") agreements with a notional amount of $ 2.0 billion, which was funded through borrowings under one of its existing 364-Day committed credit facilities.

The ASR terms provided for an initial delivery of 85 % of the total notional share equivalent at execution or 10,756,770 shares of common stock.

In May 2022, the Company received an additional 3,211,317 shares in aggregate, determined by the volume-weighted average price of the Company’s common stock during the term of the transaction.

The final shares delivered reflect a blended settlement price of $ 143.18 per share for the entire transaction.

In February 2022, the Company also executed open market share repurchases for a total of 1,888,601 shares of common stock for $ 300.0 million.

Upon completion of the remarketing of the Series D Preferred Stock in November 2022, the holders of the 2019 Equity Units received 4,723,500 common shares and the Company issued 750,000 shares of Remarketed Series D Preferred Stock.

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 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.

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.

The contract obligates the Company to pay $ 350.0 million, plus an additional amount related to the forward component of the contract.

In February 2020, the Company amended the settlement date to April 2022, or earlier at the Company's option.

The contract obligates the Company to pay $ 350.0 million, plus an additional amount

related to the forward component of the contract.

In November 2022, the Company amended the forward share purchase contract and updated the final settlement date to November 2024, or earlier at the Company's option.

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 1, 2022 and January 2, 2021 are as follows:

COMMON STOCK RESERVED — Common stock shares reserved for issuance under various employee and director stock plans at December 31, 2022 and January 1, 2022 are as follows:

Employee stock purchase plan 1,251,699 1,388,655

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The plans provide for discretionary grants of stock options, restricted stock units and other stock-based awards.

On February 16, 2022, the Board of Directors adopted the 2022 Omnibus Award Plan (the “2022 Plan”) and authorized the issuance of 9,800,000 shares of the Company’s common stock in connection with awards pursuant to the 2022 Plan and no further awards will be issued under the Company’s 2018 Omnibus Award Plan (the “2018 Plan”).

As discussed further below, the Company has granted stock options, restricted share units and awards, performance stock units, and long-term performance awards, under the 2022 Plan and 2018 Plan to senior management employees and non-employee members of the Board of Directors.

The plans are generally administered by the Compensation and Talent Development Committee of the Board of Directors, consisting of non-employee directors.

Stock Option Valuation Assumptions:

Stock options are granted at the fair market value of the Company’s stock on the date of grant and have a 10-year term.

Generally, stock option grants vest ratably over 4 years from the date of grant.

Stock options are granted at the fair market value of the Company’s common stock on the date of grant and have a maximum 10-year term.

Generally, stock option grants vest ratably over three or four years from the date of grant.

The following describes how certain assumptions affecting the estimated fair value of stock options are determined:

the dividend yield is computed as the annualized dividend rate at the date of grant divided by the strike price of the stock option;

expected volatility is based on an average of the market implied volatility and historical volatility for the 5.25 year expected life;

the expected volatility is based on an average of the market implied volatility and historical volatility for the expected life;

the dividend yield is computed as the annualized dividend rate at the date of the grant divided by the strike price of the stock option;

the risk-free interest rate is based on U.S.

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

and a eight percent forfeiture rate is assumed.

and a forfeiture rate of seven to nine percent is assumed.

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

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Stock Options:

The number of stock options and weighted-average exercise prices as of January 1, 2022 are as follows:

The number of stock options and weighted-average exercise prices as of December 31, 2022 are as follows:

Options Price

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Exercisable, end of year 3,591,149 $ 145.59

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

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.

At December 31, 2022, the range of exercise prices on outstanding stock options was $ 77.83 to $ 193.97 per share.

Stock option expense was $ 27.1 million, $ 36.4 million and $ 31.6 million for the years ended December 31, 2022, January 1, 2022 and January 2, 2021, respectively.

At December 31, 2022, the Company had $ 40.5 million of unrecognized pre-tax compensation expense for stock options.

This expense will be recognized over the remaining vesting periods which are 2.3 years on a weighted-average basis.

During 2022, the Company received $ 25.5 million in cash from the exercise of stock options.

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.

The related cash tax benefit from the exercise of these options wa s $ 1.2 million .

During 2022, 2021 and 2020, the total intrinsic value of options exercised was $ 4.6 million, $ 85.3 million and $ 104.3 million, respectively.

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

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that excess spread over the fair value of the option times the applicable tax rate represents the excess tax benefit.

During 2021, 2020 and 2019, the excess tax benefit arising from tax deductions in excess of recognized compensation cost totaled $ 14.1 million, $ 17.6 million and $ 25.8 million, respectively, and was recorded in income tax expense.

Outstanding and exercisable stock option information at January 1, 2022 follows:

During 2022, the shortfall recognized was $ 0.1 million.

During 2021 and 2020, the excess tax benefit arising from tax deductions in excess of recognized compensation cost totaled $ 14.1 million and $ 17.6 million, respectively, and was recorded in income tax expense.

Outstanding and exercisable stock option information at December 31, 2022 follows:

Outstanding Stock Options Exercisable Stock Options

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The expense for retirement eligible employees (those aged 55 and over and with 10 or more years of service) is recognized by the date they become retirement eligible, as such employees may retain their options for the 10 -year contractual term in the event they retire prior to the end of the vesting period stipulated in the grant.

As of January 1, 2022, the aggregate intrinsic value of stock options outstanding and stock options exercisable was $ 211.7 million and $ 173.5 million, respectively.

As of December 31, 2022, both the aggregate intrinsic value of stock options outstanding and stock options exercisable was zero.

Employee Stock Purchase Plan:

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A maximum of 1,600,000 shares are authorized for subscription.

In conjunction with the Company’s cost savings initiatives, the ESPP was temporarily suspended in 2019 and was subsequently reinstated in 2020.

During 2022, 2021 and 2020, 136,956 shares, 92,307 shares and 119,038 shares, respectively, were issued under the plan at average prices of $ 96.09 , $ 150.21 , and $ 110.97 per share, respectively, and the intrinsic value of the ESPP purchases was $ 2.3 million, $ 3.9 million and $ 3.3 million, respectively.

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The fair value of ESPP shares was estimated using the Black-Scholes option pricing model.

ESPP compensation cost is recognized ratably over the one year term based on actual employee stock purchases under the plan.

ESPP compensation cost is recognized ratably over

the one-year term based on actual employee stock purchases under the plan.

The fair value of the employees’ purchase rights under the ESPP was estimated using the following assumptions for 2022, 2021 and 2020, respectively:

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The weighted-average fair value of those purchase rights granted in 2022, 2021 and 2020 was $ 38.51 , $ 45.46 and $ 41.02 , respectively.

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

Total compensation expense recognized for ESPP was $ 3.3 million in 2022, $ 4.4 million in 2021 and $ 3.9 million in 2020.

Restricted Share Units and Awards:

Compensation cost for restricted share units and awards, including restricted shares granted to French employees in lieu of RSUs, (collectively “RSUs”) granted to employees is recognized ratably over the vesting term, which varies but is generally 4 years.

RSU grants totaled 870,848 shares, 463,084 shares and 325,448 shares in 2022, 2021 and 2020, respectively.

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The actual tax benefit received related to the shares that were delivered in 2022 was $ 6.2 million .

The excess tax benefit recognized was $ 2.5 million, $ 2.3 million, and $ 3.2 million in 2021, 2020 and 2019, respectively.

As of January 1, 2022, unrecognized compensation expense for RSUs amounted to $ 117.2 million and will be recognized over a weighted-average period of 2 years.

A summary of non-vested restricted stock unit and award activity as of January 1, 2022, and changes during the twelve month period then ended is as follows:

The shortfall recognized in 2022 was $ 3.6 million.

The e xcess tax benefit recognized in 2021 and 2020 was $ 2.5 million and $ 2.3 million, respectively.

As of December 31, 2022, unrecognized compensation expense for RSUs amounted to $ 94.1 million and will be recognized over a weighted-average period of 1.9 years.

A summary of non-vested restricted share units and award activity as of December 31, 2022, and changes during the year then ended is as follows:

Restricted Share

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Forfeited ( 273,954 ) 171.08

Non-vested at January 1, 2022 978,351 $ 173.06

The total fair value of shares vested (market value on the date vested) during 2021, 2020 and 2019 was $ 53.3 million, $ 58.5 million and $ 56.7 million, respectively.

Non-vested at December 31, 2022 1,266,462 $ 115.02

The total fair value of vested RSUs (market value on the date vested) during 2022, 2021 and 2020 was $ 38.9 million, $ 53.3 million and $ 58.5 million, respectively.

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.

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 annual grant in 2021 and 2020 was $ 2.0 million and $ 1.4 million, respectively.

In 2022, the Company recognized $ 9.8 million of income for these awards.

In 2021 and 2020, the Company recognized $ 1.1 million and $ 1.6 million of expense for these awards, respectively.

Beginning in 2020, the annual grant issued to non-employee members of the Board of Directors is stock settled.

The expense related to the annual grant in 2022, 2021, and 2020 was $ 1.8 million, $ 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 $ 1.2 million, $ 1.4 million, and $ 1.0 million was recognized for 2022, 2021 and 2020, respectively.

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Awards are payable in shares of common stock and generally no award is made if the employee terminates employment prior to the settlement dates.

The ultimate delivery of the shares related to the 2020 and 2019 MICP-PSU grant will occur ratably in 2021, 2022, and 2023 for the 2020 plan and in 2020, 2021, and 2022 for the 2019 plan.

The delivery of the shares related to the 2020 and 2019 MICP-PSU grant will occur ratably in 2021, 2022, and 2023 for the 2020 MICP and in 2020, 2021, and 2022 for the 2019 MICP.

The total shares to be delivered are based on actual 2020 and 2019 performance in relation to the established goals.

A summary of the activity pertaining to the maximum number of shares that may be issued is as follows:

Share Units Weighted-Average

MICP PSUs Weighted-Average

Date Fair Value

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Forfeited ( 37,109 ) 99.75

Non-vested at January 1, 2022 249,730 $ 100.73

Compensation cost for these performance awards is recognized ratably over the vesting term of 3 years.

Non-vested at December 31, 2022 67,698 $ 93.58

Compensation cost for these performance awards is recognized ratably over the vesting term of three years .

Total expense recognized in 2022, 2021 and 2020 related to these MICP-PSUs approximated $ 9.1 million, $ 15.7 million and $ 18.5 million, respectively.

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Long-Term Performance Awards:

The Company has granted Long-Term Performance Awards (“LTIP”) under its 2018 Omnibus Award Plan and 2013 Long Term Incentive Plan to senior management employees for achieving Company performance measures.

The Company has granted Long-Term Performance Awards (“LTIP”) under its 2022 Omnibus Award Plan and 2018 Omnibus Award Plan to senior management employees for achieving Company performance measures.

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 2020, 2021 and 2022.

Each grant has separate annual performance goals for each year within the respective three year performance period.

Each grant has two separate annual performance goals for each year within the respective three-year performance period and one market-based metric measured over the three-year performance period.

Earnings per share and cash flow return on investment represent 75 % of the grant value.

There is a third market-based metric, representing 25 % of the total grant, which measures the Company’s common stock return relative to peers over the performance period.

The market-based metric, representing 25 % of the total grant value measures the Company’s common stock return relative to peers over the three-year performance period.

The ultimate delivery of shares will occur in 2023, 2024, and 2025 for the 2020, 2021 and 2022 grants, respectively.

Share settlements are based on actual performance in relation to these goals.

Expense recognized for these performance awards amounted to $ 11.1 million in 2021, $ 17.1 million in 2020, and $ 9.0 million in 2019.

In 2022, income of $ 2.4 million was recognized related to these performance awards.

Expense recognized for these performance awards amounted to $ 11.1 million in 2021 and $ 17.1 million in 2020.

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 2022 and 2021 was $ 1.3 million and $ 0.8 million, respectively.

The excess tax benefit recognized was $ 0.1 million, $ 0.7 million, and $ 1.5 million in 2021, 2020 and 2019, respectively.

The shortfall recognized in 2022 was less than $ 0.1 million.

The excess tax benefit recognized was $ 0.1 million and $ 0.7 million in 2021 and 2020, respectively.

A summary of the activity pertaining to the maximum number of shares that may be issued is as follows:

Share Units Weighted-Average

LTIP Units Weighted-Average

Date Fair Value

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Forfeited ( 273,149 ) 139.67

Non-vested at January 1, 2022 649,806 $ 145.90

Non-vested at December 31, 2022 534,586 $ 158.18

OTHER EQUITY ARRANGEMENTS

2019 Equity Units and Capped Call Transactions

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.

In November 2019, in conjunction with the issuance of the 2019 Equity Units, 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 proceeds were used, together with cash on hand, to redeem long-term debt.

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.

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.

The 2019 Equity Units were 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 represented 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.

The convertible preferred stock will initially not bear any dividends and the liquidation preference of the convertible preferred stock will not accrete.

The convertible preferred stock has no maturity date and will remain outstanding unless converted by holders or redeemed by the Company.

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 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.

The Company may not redeem the Series D Preferred Stock prior to December 22, 2022.

At the election of the Company, on or after December 22, 2022, the Company may redeem for cash, all or any portion of the outstanding shares of the Series D 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 D Preferred Stock for redemption, holders may convert their shares immediately preceding the redemption date.

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.

The Series D Preferred Stock is pledged as collateral to guarantee the holders’ obligations to purchase common stock under the terms of the 2022 Purchase Contracts.

The initial settlement rate determining the number of shares that each holder must purchase will not exceed the maximum settlement rate and is determined over a market value averaging period immediately preceding November 15, 2022.

The initial maximum settlement rate of 0.6272 was calculated using an initial reference price of $ 159.45 , equal to the last reported sale price of the Company's common stock on November 7, 2019.

As of January 1, 2022, due to the customary anti-dilution provisions, the maximum settlement rate was 0.6280 , equivalent to a reference price of $ 159.23 .

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 per share divided by the applicable market value.

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 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 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 D Preferred Stock was pledged as collateral to support holders’ purchase obligations under the 2022 Purchase Contracts.

In November 2022, upon completion of the remarketing, the holders of the 2019 Equity Units converted their Series D Preferred Stock, valued at $ 620.3 million, and received 4,723,500 common shares using a reference price of $ 131.32 per common share.

The Company generated cash proceeds of $ 750.0 million from the successful remarketing and issued 750,000 shares of Remarketed Series D Preferred Stock.

The Company paid 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.

As of January 1, 2022, the present value of the Contract Adjustment Payments was $ 38.3 million.

The holders can settle the purchase contracts early, for cash, subject to certain exceptions and conditions in the prospectus supplement.

Upon early settlement of any purchase contracts, the Company will deliver the number of shares of its common stock equal to 85 % of the number of shares of common stock that would have otherwise been deliverable.

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.

On November 15, 2022, the Company paid the final contract adjustment payment related to the 2022 Purchase Contracts.

Capped Call Transactions

In order to offset the potential economic dilution associated with the common shares issuable upon conversion of the Series D Preferred Stock, to the extent that the conversion value of the convertible preferred stock exceeds its liquidation preference, the Company entered into capped call transactions with three major financial institutions.

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 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 .

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.

The number of shares the Company will receive will be determined by the terms of the contracts using a volume-weighted average price calculation for the market value of the Company's common stock, over an averaging period.

The market value determined will then be measured against the applicable strike price of the capped call transactions.

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.

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.

The Company paid $ 19.2 million, or an average of $ 4.90 per option, to enter into capped call transactions on 3.9 million shares of common stock.

The $ 19.2 million premium paid was recorded as a reduction of Shareowners’ Equity.

The aggregate fair value of the options at January 1, 2022 was $ 26.0 million.

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 D Preferred Stock.

In November 2022, the capped call options expired out of the money.

2017 Equity Units and Capped Call Transactions

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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 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.

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.

The 2017 Equity Units were 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 represented 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.

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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 were cumulative on the $ 1,000 liquidation preference per share and were payable, as 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.

In May 2020, 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.

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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.

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.

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

The following table summarizes the changes in the accumulated balances for each component of Accumulated other comprehensive loss:

The following table summarizes the changes in the accumulated balances for each component of Accumulated other

comprehensive loss:

(Millions of Dollars) Currency translation adjustment and other (Losses) gains on cash flow hedges, net of tax Gains (losses) on net investment hedges, net of tax Pension (losses) gains, net of tax Total

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

Adjustments related to sales of businesses 15.7 — — 0.6 16.3

Reclassification adjustments to earnings — 15.4 ( 13.8 ) 15.1 16.7

Net other comprehensive income (loss) 281.9 ( 48.8 ) ( 24.5 ) ( 37.7 ) 170.9

Balance - January 2, 2021 $ ( 1,235.3 ) $ ( 103.0 ) $ 72.8 $ ( 448.2 ) $ ( 1,713.7 )

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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:

Other comprehensive (loss) income before reclassifications ( 328.3 ) 31.7 3.7 73.4 ( 219.5 )

Adjustments related to sales of businesses ( 36.1 ) — — — ( 36.1 )

Reclassification adjustments to earnings — ( 26.4 ) ( 1.7 ) 9.8 ( 18.3 )

Net other comprehensive (loss) income ( 364.4 ) 5.3 2.0 83.2 ( 273.9 )

Balance - December 31, 2022 $ ( 1,907.4 ) $ ( 44.5 ) $ 73.8 $ ( 241.4 ) $ ( 2,119.5 )

The Company uses the portfolio method for releasing the stranded tax effects from Accumulated other comprehensive loss.

The reclassifications out of Accumulated other comprehensive loss for the years ended December 31, 2022 and January 1, 2022 were as follows:

(Millions of Dollars) 2022 2021

Components of Accumulated other comprehensive loss Reclassification adjustments Reclassification adjustments Affected line item in Consolidated Statements of Operations

Realized (losses) gains on cash flow hedges $ ( 26.1 ) $ 12.4 Cost of sales

Realized losses on cash flow hedges — ( 19.6 ) Other, net

Realized gains (losses) on cash flow hedges $ 53.3 $ ( 26.1 ) Cost of sales

Realized losses on cash flow hedges ( 5.8 ) ( 3.9 ) Interest expense

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Tax effect ( 21.1 ) 13.0 Income taxes

Realized losses on cash flow hedges, net of tax $ ( 17.0 ) $ ( 15.4 )

Realized gains (losses) on cash flow hedges, net of tax $ 26.4 $ ( 17.0 )

Realized gains on net investment hedges $ 2.2 $ 5.2 Other, net

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The employer match benefit totaled $ 32.2 million, $ 28.0 million and $ 9.2 million in 2022, 2021 and 2020, respectively.

In 2020, the Match was suspended from the second quarter to the end of the year.

In 2020, the employer match benefit was suspended from the second quarter to the end of the year.

In addition, approximately 9,370 U.S.

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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.

Shareowners' equity reflected 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.

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Dividends paid on the shares acquired with the 1991 internal loan were used solely to pay internal loan debt service in all periods.

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.

There were no unallocated shares remaining as of December 31, 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 $ 61.1 million, $ 59.1 million, and $ 4.4 million in 2022, 2021, and 2020 respectively.

Net ESOP activity recognized for 2022 and 2021 is comprised of the aforementioned Core and 401(k) match defined contribution benefits.

Net ESOP activity for 2020 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.

The Company made cash contributions totaling $ 67.8 million in 2022, $ 35.7 million in 2021 and $ 9.2 million in 2020, excluding additional contributions of $ 7.2 million in 2020, which was used by the ESOP to make additional payments on the 1991 internal loan.

These payments triggered the release of 226,212 shares of unallocated stock in 2020.

Dividends on ESOP shares, which were charged to shareowners’ equity as declared, were $ 1.3 million in 2020, net of the tax benefit which was recorded in earnings.

Interest costs incurred by the ESOP on the 1991 internal loan, which had no earnings impact, were $ 0.1 million for 2020.

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.

PENSION AND OTHER BENEFIT PLANS — The Company sponsors pension plans covering most domestic hourly and certain executive employees, and approximately 14,300 foreign employees.

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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:

As of December 31, 2022 and January 2, 2021, the Company had $ 95.6 million and $ 135.8 million, respectively, of liabilities pertaining to an unfunded supplemental defined contribution plan for certain U.S.

The expense (benefit) for defined contribution plans, aside from the earlier discussed ESOP plans, are as follows:

(Millions of Dollars) 2022 2021 2020

Multi-employer plan expense $ 6.0 $ 7.1 $ 7.8

Other defined contribution plan expense $ 28.6 $ 24.9 $ 31.3

The components of net periodic pension expense (benefit) are as follows:

Other defined contribution plan (benefit) expense $ ( 2.4 ) $ 28.6 $ 24.9

The components of net periodic pension (benefit) expense are as follows:

Plans Non-U.S.

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Approximately 20,800 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:

Other Benefit Plans

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Amortization of prior service credit — ( 0.7 ) ( 1.3 )

Actuarial loss amortization — 0.3 ( 0.3 )

Actuarial (gain) loss amortization ( 0.7 ) — 0.3

Settlement / curtailment gain ( 0.4 ) — —

Special termination benefit 6.9 — 16.1

Net periodic post-retirement expense $ 7.6 $ 0.6 $ 17.2

The components of net periodic benefit cost other than the service cost component are included in Other, net in the Consolidated Statements of Operations.

The components of net periodic post-retirement benefit expense other than the service cost component are included in Other, net in the Consolidated Statements of Operations.

Changes in plan assets and benefit obligations recognized in Accumulated other comprehensive loss in 2022 are as follows:

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Settlements/curtailments ( 10.7 ) ( 0.8 ) ( 4.4 ) ( 15.3 ) ( 0.4 ) —

Actuarial (gain) loss ( 47.2 ) 123.3 ( 92.4 ) 112.0 ( 6.6 ) ( 2.9 )

Actuarial gain ( 314.7 ) ( 47.2 ) ( 409.5 ) ( 92.4 ) ( 9.5 ) ( 6.6 )

Plan amendments 0.7 0.8 0.1 0.1 0.4 —

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Net amount recognized $ 119.9 $ 98.8 $ ( 18.3 ) $ ( 11.9 ) $ ( 60.7 ) $ ( 59.9 )

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 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:

For the year ended December 31, 2022, the overall funded position improved and the benefit obligation decreased primarily driven by the improvement in the single equivalent discount rate used to measure these obligations.

However, the actual return on plan assets during the year was less than assumed which partially offsets and decreases the funded position.

The accumulated benefit obligation for all benefit plans was $ 2.023 billion at December 31, 2022 and $ 2.943 billion at January 1, 2022.

The following table provides information regarding pension plans in which accumulated benefit obligations exceed plan assets as of December 31, 2022 and January 1, 2022:

Plans Non-U.S.

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Fair value of plan assets $ 862.0 $ 1,184.6 $ 25.7 $ 50.3

Information regarding pension plans in which projected benefit obligations (inclusive of anticipated future compensation increases) exceed plan assets as follows:

The following table provides information regarding pension plans in which projected benefit obligations (inclusive of anticipated future compensation increases) exceed plan assets as of December 31, 2022 and January 1, 2022:

Plans Non-U.S.

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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 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:

The Company’s worldwide asset allocations at December 31, 2022 and January 1, 2022 by asset category and the level of the valuation inputs within the fair value hierarchy established by ASC 820, Fair Value Measurement , were as follows:

Asset Category (Millions of Dollars)

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Total $ 2,566.7 $ 533.7 $ 2,033.0

and foreign equity securities primarily consist of companies with large market capitalizations and to a lesser extent mid and small capitalization securities.

and foreign equity securities primarily consist of companies with large market capitalization and to a lesser extent mid and small capitalization securities.

Government securities primarily consist of U.S.

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The Company’s target asset allocations include approximately 10 %- 30 % in equity securities, approximately 60 %- 80 % in fixed income securities and approximately 10 % in other securities.

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.

The funded status percentage (total plan assets divided by total projected benefit obligation) of all global pension plans was 87 % in both 2022 and 2021 and 80 % in 2020.

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 approxim ately $ 37 million to its pension and other post-retirement benefit plans in 2023.

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:

EXPECTED FUTURE BENEFIT PAYMENTS — Benefit payments, inclusive of amounts attributable to estimated future employee service, are expected to be paid over the next 10 years as follows:

(Millions of Dollars) Total Year 1 Year 2 Year 3 Year 4 Year 5 Years 6-10

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Value Level 1 Level 2 Level 3

January 1, 2022

December 31, 2022

Money market fund $ 9.4 $ 9.4 $ — $ —

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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 $ —

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The following table provides information about the Company's financial assets and liabilities not carried at fair value:

January 1, 2022 January 2, 2021

December 31, 2022 January 1, 2022

(Millions of Dollars) Carrying

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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 deferred compensation plan investments are considered Level 1 instruments 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 1, 2022 and January 2, 2021.

The fair values of the Company's variable rate short-term borrowings approximate their carrying values at December 31, 2022 and January 1, 2022.

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 1, 2022, the Company paid approximately $ 29.3 million for royalties owned.

channels through March 2032.

During the year ended December 31, 2022, the Company paid $ 41.3 million for royalties owed.

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 $ 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.

The estimated fair value of the contingent consideration liability was $ 268.7 million and $ 288.6 million as of December 31, 2022 and January 1, 2022, respectively.

Adjustments to the contingent consideration liability, with the exception of cash payments, are recorded in SG&A in the Consolidated Statements of Operations.

A 100-basis point reduction in the discount rate would result in an increase to the liability of approximately $ 10.5 million as of January 1, 2022.

A 100 -basis point reduction in the discount rate would result in an increase to the liability of approximately $ 8.6 million as of December 31, 2022.

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.

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OTHER COSTS AND EXPENSES

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 $ 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.

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, deal costs and related consulting costs, and certain pension gains or losses.

Deal costs and related consulting costs of $ 9.8 million, $ 24.2 million, and $ 27.4 million were included in Other, net for the years ended December 31, 2022, January 1, 2022, and January 2, 2021, respectively.

In 2022, Other, net also included a $ 7.1 million special termination benefit charge associated with a voluntary retirement program.

In 2020, Other, net included a $ 19.6 million loss relating to the unamortized loss on cash flow swap terminations, a $ 14.1 million special termination benefit charge associated with a voluntary retirement program, 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.

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 year-over-year increase in 2022 in Other, net was primarily driven by higher intangible asset amortization expense and appreciation of investments in 2021.

The year-over-year decrease in 2021 in Other, net was primarily due to appreciation of investments.

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.

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RESTRUCTURING CHARGES

A summary of the restructuring reserve activity from January 2, 2021 to January 1, 2022 is as follows:

A summary of the restructuring reserve activity from January 1, 2022 to December 31, 2022 is as follows:

(Millions of Dollars) January 1, 2022 Net

Additions Usage Currency January 1, 2022

Additions Usage Currency December 31, 2022

Severance and related costs $ 28.2 $ 125.9 $ ( 98.7 ) $ 1.6 $ 57.0

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Total $ 31.7 $ 140.8 $ ( 111.9 ) $ 1.7 $ 62.3

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.

The $ 15 million of net restructuring charges for the year ended January 1, 2022 includes:

$ 8 million pertaining to the Tools & Storage segment;

During 2022, the Company recognized net restructuring charges of $ 140.8 million, primarily related to severance and related costs.

The majority of the $ 62.3 million of reserves remaining as of December 31, 2022 is expected to be utilized within the next 12 months.

The $ 140.8 million of net restructuring charges for the year ended December 31, 2022 includes:

$ 80.7 million pertaining to the Tools & Outdoor segment;

$ 25.9 million pertaining to the Industrial segment;

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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.

Tools & Outdoor and Industrial.

The Tools & Outdoor 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, and home products such as hand-held vacuums, paint tools and cleaning appliances.

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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 Outdoor business primarily sells corded and cordless electric lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, pressure washers and related accessories, and gas powered lawn and garden products, including lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, utility terrain vehicles (UTVs), hand-held outdoor power equipment, garden tools, and parts and accessories to professionals and consumers under the DEWALT®, CUB CADET®, BLACK+DECKER®, CRAFTSMAN®, TROY-BILT®, and HUSTLER® brand names.

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

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The product lines include externally threaded fasteners, blind rivets and tools, blind inserts and tools, drawn arc weld studs and systems, engineered plastic and mechanical fasteners, self-piercing riveting systems, precision nut running systems, micro fasteners, high-strength structural fasteners, axel swage, latches, heat shields, pins, and couplings.

The Infrastructure business consists of the Attachment Tools and Oil & Gas product lines.

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

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

The Infrastructure business sells hydraulic tools and high quality, performance-driven heavy equipment attachment tools for off-highway applications.

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.

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(Millions of Dollars) 2022 2021 2020

Tools & Storage $ 12,817.4 $ 10,329.7 $ 10,062.1

Tools & Outdoor $ 14,423.7 $ 12,817.4 $ 10,329.7

Industrial 2,523.4 2,463.1 2,352.7

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Segment Profit

Tools & Storage $ 1,985.4 $ 1,820.3 $ 1,517.0

Tools & Outdoor $ 971.9 $ 1,985.4 $ 1,820.3

Industrial 236.2 256.6 220.6

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Other, net ( 274.8 ) ( 189.5 ) ( 215.7 )

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

Loss on sales of businesses ( 8.4 ) ( 0.6 ) ( 13.5 )

Restructuring charges ( 140.8 ) ( 14.5 ) ( 73.8 )

Gain on equity method investment — 68.0 —

Loss on debt extinguishments — ( 46.9 ) ( 17.9 )

Asset impairment charge ( 168.4 ) — —

Loss on debt extinguishment — — ( 46.9 )

Interest income 54.7 9.8 17.5

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Capital and Software Expenditures

Tools & Storage $ 374.8 $ 228.1 $ 300.8

Tools & Outdoor $ 438.5 $ 375.8 $ 228.6

Industrial 85.6 123.3 102.2

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Depreciation and Amortization

Tools & Storage $ 311.8 $ 309.5 $ 330.3

Tools & Outdoor $ 387.6 $ 312.9 $ 311.2

Industrial 184.2 201.4 200.0

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Segment Assets 2022 2021

Tools & Storage $ 19,537.9 $ 14,295.6

Tools & Outdoor $ 20,202.0 $ 19,537.9

Industrial 5,284.8 5,627.8

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Assets held for sale — 3,505.4

Corporate & Other assets ( 169.1 ) 501.5

Corporate assets ( 523.5 ) ( 491.1 )

Consolidated $ 24,963.3 $ 28,180.0

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.

Corporate Overhead & Other includes the results of the commercial electronic security business in five countries in Europe and emerging markets through its disposition in the fourth quarter of 2020, as well as the corporate overhead element of SG&A, which is not allocated to the business segments.

Corporate assets primarily consist of cash, deferred taxes, property, plant and equipment and right-of-use lease assets.

Based on the nature of the Company's cash pooling arrangements, at times corporate-related cash accounts will be in a net liability position.

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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 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 %

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:

For the years ended December 31, 2022, January 1, 2022, and January 2, 2021, the majority of the Company’s revenue was recognized at the time of sale.

The percent of total segment revenue recognized over time for the Industrial segment for the years ended December 31, 2022, January 1, 2022 and January 2, 2021 was 4.6 %, 6.6 % and 9.2 %, respectively.

The following table is a further disaggregation of the Industrial segment revenue for the years ended December 31, 2022, January 1, 2022 and January 2, 2021:

(Millions of Dollars) 2022 2021 2020

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Consolidated $ 16,947.4 $ 15,281.3 $ 12,750.0

December 31, 2022 January 1, 2022

Property, Plant & Equipment, net

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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 $ 1,067.2 million and $ 1,001.9 million on deferred tax assets existing as of January 1, 2022 and January 2, 2021, respectively.

The Company recorded a valuation allowance of $ 1,032.5 million and $ 1,067.2 million on deferred tax assets existing as of December 31, 2022 and January 1, 2022, respectively.

The valuation allowances in 2022 and 2021 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, 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

As of December 31, 2022, the Company has approximately $ 5.2 billion of unremitted foreign earnings and profits.

Of the total amount, the Company has provided for deferred taxes of $ 45.4 million on approximately $ 1.5 billion, which is not indefinitely reinvested primarily due to the changes brought about by the Tax Cuts and Jobs 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.

and accordingly no taxes have been provided on such earnings.

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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.

Net operating loss carryforwards of $ 3.0 billion as of January 1, 2022 are available to reduce future tax obligations of certain U.S.

The income taxes applicable to such earnings and other outside basis differences are not readily determinable or practicable to calculate.

Net operating loss carryforwards of $ 3.0 billion as of December 31, 2022 are available to reduce future tax obligations of certain U.S.

and foreign companies.

The net operating loss carryforwards have various expiration dates beginning in 2023 with certain jurisdictions having indefinite carryforward periods.

The foreign capital loss carryforwards of $ 42.4 million as of January 1, 2022 have indefinite carryforward periods.

foreign tax credit carryforward balance as of January 1, 2022 totaled $ 20.6 million with various expiration dates beginning in 2028.

The foreign capital loss carryforwards of $ 56.5 million as of December 31, 2022 have indefinite carryforward periods.

foreign tax credit carryforward balance as of December 31, 2022 totaled $ 22.5 million with various expiration dates beginning in 2029.

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.

State tax credit carryforward balance as of December 31, 2022 totaled $ 23.2 million.

The carryforward balance is made up of various credit types spanning multiple state taxing jurisdictions and various expiration dates beginning in 2023.

The components of earnings before income taxes from continuing operations consisted of the following:

On August 9, 2022, the U.S.

government enacted the Creating Helpful Incentives to Produce Semiconductors (“CHIPS Act”), which includes an advanced manufacturing investment tax credit and tax incentives related to semiconductor manufacturing, among other provisions.

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act (“IRA”), which imposes a new corporate alternative minimum tax (“CAMT”), an excise tax on stock buybacks, and significant tax incentives for energy and climate initiatives, among other provisions.

The CAMT is effective for tax years beginning after December 31, 2022, while the excise tax applies to repurchases of stock after December 31, 2022.

The effective dates of the energy related incentives vary.

In response to a technical inquiry, the FASB provided guidance permitting a company to make an accounting policy election to either consider the effect of CAMT when evaluating the need for, and the amount of, a valuation allowance or account for the effects on deferred tax assets in the period they arise.

The Company has elected to account for the effects of CAMT on deferred tax assets in the period they arise.

The Company evaluated the impacts of the CHIPS Act and the IRA and concluded that they do not have a material impact on the Company’s consolidated financial statements.

The components of earnings from continuing operations before income taxes and equity interest consisted of the following:

(Millions of Dollars) 2022 2021 2020

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Earnings before income taxes and equity interest $ 37.9 $ 1,586.9 $ 1,183.7

Income tax expense (benefit) consisted of the following:

Income taxes on continuing operations consisted of the following:

(Millions of Dollars) 2022 2021 2020

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The reconciliation of the U.S.

federal statutory income tax provision to Income taxes in the Consolidated Statements of Operations from continuing operations is as follows:

federal statutory income tax provision to Income taxes on continuing operations in the Consolidated Statements of Operations is as follows:

(Millions of Dollars) 2022 2021 2020

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Change in tax rates ( 5.5 ) ( 31.1 ) ( 0.3 )

Tax credits ( 8.8 ) ( 6.7 ) ( 6.0 )

Capital loss — — ( 40.4 )

federal tax (benefit) expense on foreign earnings ( 123.9 ) ( 1.1 ) 13.7

federal tax expense (benefit) on foreign earnings 55.7 ( 118.1 ) 2.0

Intra-entity asset transfer of intellectual property ( 153.3 ) ( 114.2 ) ( 27.7 )

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income tax returns for the 2017 through 2019 tax years.

With few exceptions, as of January 1, 2022, the Company is no longer subject to U.S.

With few exceptions, as of December 31, 2022, the Company is no longer subject to U.S.

federal, state, local, or foreign examinations by tax authorities for years before 2012.

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Balance at end of year $ 502.7 $ 487.7 $ 428.3

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 gross unrecognized tax benefits from continuing operations at December 31, 2022 and January 1, 2022 include $ 496.0 million and $ 478.4 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 decreased by $ 11.2 million in 2022, increased by $ 9.6 million in 2021 and decreased by $ 3.4 million in 2020.

The liability for potential penalties and interest totaled $ 48.8 million as of December 31, 2022, $ 60.0 million as of January 1, 2022, and $ 49.2 million as of January 2, 2021.

The Company classifies all tax-related interest and penalties as income tax expense.

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COMMITMENTS — The Company has numerous assets, predominantly real estate, vehicles and equipment, under various lease arrangements.

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.

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.

From time to time, lease arrangements allow for, and the Company executes, the purchase of the underlying leased asset.

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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.

Leases with expected durations of less than 12 months from inception (i.e.

Leases with expected durations of less than twelve months from inception (i.e.

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

(Millions of Dollars) December 31, 2022 January 1, 2022

Right-of-use assets $ 431.5 $ 426.0

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

As a result of acquiring right-of-use assets from new leases entered into during the years ended December 31, 2022 and January 1, 2022, the Company's lease liabilities increased approximately $ 115.8 million and $ 84.1 million, respectively.

The Company has variable rate leases for certain manufacturing facilities, distribution centers and office buildings in which the periodic rental payments vary based on benchmark interest rates.

The following is a summary of the Company's total lease cost for the years ended December 31, 2022, January 1, 2022, and January 2, 2021:

(Millions of Dollars) 2022 2021 2020

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$ 178.1 $ 156.4 $ 144.4

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:

During 2022, 2021, and 2020, the Company paid $ 124.1 million, $ 110.8 million, and $ 111.2 million respectively, relating to leases included in the measurement of its lease liability and right-of-use asset.

The following is a summary of the Company's future lease obligations on an undiscounted basis at December 31, 2022:

(Millions of Dollars) Total 2023 2024 2025 2026 2027 Thereafter

Lease obligations $ 490.4 $ 116.2 $ 94.4 $ 70.8 $ 61.0 $ 46.4 $ 101.6

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:

The following is a summary of the Company’s future marketing commitments at December 31, 2022:

(Millions of Dollars) Total 2023 2024 2025 2026 2027 Thereafter

Marketing commitments $ 81.6 $ 45.1 $ 22.1 $ 7.2 $ 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:

As of December 31, 2022, the Company had unrecognized commitments that require the future purchase of goods or services (unconditional purchase obligations) to provide it with access to products and services at competitive prices.

These obligations consist of supplier agreements with long-term minimum material purchase requirements and freight forwarding arrangements with minimum quantity commitments.

The following is a summary of the Company's unconditional purchase obligations related to these agreements at December 31, 2022:

(Millions of Dollars) Total 2023 2024 2025 2026 2027 Thereafter

Supplier agreements $ 339.0 $ 142.2 $ 130.8 $ 56.0 $ 10.0 $ — $ —

GUARANTEES — The Company's financial guarantees at December 31, 2022 are as follows:

(Millions of Dollars) Term Maximum

Payment Carrying

Guarantees on the residual values of leased properties one to five years

Guarantees on the residual values of leased properties One to nine years

Standby letters of credit Up to three years

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Total $ 410.3 $ 12.7

The Company has guaranteed a portion of the residual values of certain leased assets including the previously discussed leases for one of its major distribution centers and two of its office buildings.

The Company has guaranteed a portion of the residual values associated with the variable rate leases mentioned previously.

The lease guarantees are for an amount up to $ 156.6 million while the fair value of the underlying assets is estimated at $ 189.5 million.

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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 1, 2022, January 2, 2021, and December 28, 2019:

The changes in the carrying amount of product warranties for the years ended December 31, 2022, January 1, 2022, and January 2, 2021 are as follows:

(Millions of Dollars) 2022 2021 2020

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Balance end of period $ 126.6 $ 134.5 $ 107.9

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

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As assessments and remediation progress at individual sites, the amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal information that becomes available.

As of January 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.

As of January 1, 2022, the range of environmental remediation costs that is reasonably possible is $ 93.7 million to $ 229.3 million which is subject to change in the near term.

As of December 31, 2022 and January 1, 2022, the Company had reserves of $ 129.3 million and $ 159.1 million, respectively, for remediation activities associated with Company-owned properties, as well as for Superfund sites, for losses that are probable and estimable.

Of the December 31, 2022 amount, $ 39.4 million is classified as current and $ 89.9 million as long-term which is expected to be paid over the estimated remediation period.

As of December 31, 2022, the range of environmental remediation costs that is reasonably possible is $ 58.5 million to $ 220.1 million which is subject to change in the near term.

The Company may be liable for environmental remediation of sites it no longer owns.

Liabilities have been recorded on those sites in accordance with the Company's policy.

As of January 1, 2022, the Company has recorded $ 16.1 million in other assets related to funding received by the Environmental Protection Agency (“EPA”) and placed in a trust in accordance with the final settlement with the EPA, embodied in a Consent Decree approved by the United States District Court for the Central District of California on July 3, 2013.

As of December 31, 2022, the Company has recorded $ 16.4 million in other assets related to funding received by the Environmental Protection Agency (“EPA”) and placed in a trust in accordance with the final settlement with the EPA, embodied in a Consent Decree approved by the United States District Court for the Central District of California on July 3, 2013.

Per the Consent Decree, Emhart Industries, Inc.

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The interim remedy requires the construction of a water treatment facility and the filtering of ground water at or around the site for a period of approximately 30 years or more.

As of January 1, 2022, the Company's net cash obligation associated with remediation activities, including WCLC assets, is $ 143.0 million.

As of December 31, 2022, the Company's net cash obligation associated with remediation activities, including WCLC assets, is $ 112.9 million.

The EPA also asserted claims in federal court in Rhode Island against Black & Decker and Emhart related to environmental contamination found at the Centredale Manor Restoration Project Superfund Site ("Centredale"), located in North Providence, Rhode Island.

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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.

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.

As of January 1, 2022, the Company has a remaining reserve of $ 57.2 million for this site.

As of December 31, 2022, the Company has a remaining reserve of $ 35.2 million for this site.

The Company and approximately 47 other companies comprise the Lower Passaic Cooperating Parties Group (the “CPG”).

The CPG members and other companies are parties to a May 2007 Administrative Settlement Agreement and Order on Consent (“AOC”) with the EPA to perform a remedial investigation/feasibility study (“RI/FS”) of the lower seventeen miles of the Lower Passaic River in New Jersey (the “River”).

Lower Passaic River in New Jersey (the “River”).

The Company’s potential liability stems from former operations in Newark, New Jersey.

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The cleanup plan adopted by the EPA is now considered a final action for the lower 8.3 miles of the River and will include the removal of 3.5 million cubic yards of sediment, placement of a cap over the entire lower 8.3 miles of the River, and, according to the EPA, will cost approximately $ 1.4 billion and take 6 years to implement after the remedial design is completed.

The Company and 105 other parties received a letter dated March 31, 2016 from the EPA notifying such parties of potential liability for the costs of the cleanup of the lower 8.3 miles of the River and a letter dated March 30, 2017 stating that the EPA had offered 20 of the parties (not including the Company) an early cash out settlement.

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.

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 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 the fourth quarter of 2022.

The remedial design is expected to be substantially completed in 2023.

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.

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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.

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.

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 for a cash-out settlement for remediation of the entire 17 -mile Lower Passaic River.

On December 16, 2022, the United States lodged a Consent Decree with the United States District Court for the District of New Jersey in United States v.

Alden Leeds, Inc.

2:22-cv-07326) that addresses the liability of 85 parties (including the Company) for an aggregate amount of $ 150 million based on the EPA-sponsored allocation report that found OCC 99.4 % responsible for the cleanup costs of the River.

The Consent Decree is subject to a 45-day public comment period (which may be extended by the Court) after which the Court will enter or disapprove the Consent Decree.

On December 20, 2022, various defendants (including the Company) in the OCC litigation filed an unopposed motion to stay the litigation for six months.

The Court has not yet ruled on the motion to stay.

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 and the EPA settlement process has not been completed and requires court approval.

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.

On March 15, 2017, the Company received formal notification from the EPA that the EPA had issued a ROD selecting the preferred alternative identified in the Proposed Cleanup Plan.

As of January 1, 2022, the Company has reserved $ 22.2 million for this site.

As of December 31, 2022, the Company has reserved $ 21.1 million for this site.

The environmental liability for certain sites that have cash payments beyond the current year that are fixed or reliably determinable have been discounted using a rate of 3.7 % to 4.8 %, depending on the expected timing of disbursements.

The discounted and undiscounted amount of the liability relative to these sites is $ 40.9 million and $ 44.7 million, respectively.

discounted and undiscounted amount of the liability relative to these sites is $ 38.6 million and $ 48.7 million, respectively.

The payments relative to these sites are expected to be $ 3.2 million in 2023, $ 3.5 million in 2024, $ 3.2 million in 2025, $ 3.1 million in 2026, $ 2.7 million in 2027, and $ 33.0 million thereafter.

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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

2022 DIVESTITURES

Oil & Gas business

On August 19, 2022, the Company completed the previously announced sale of its Oil & Gas business comprised of the pipeline services and equipment businesses to Pipeline Technique Limited and recognized a pre-tax loss of $ 8.6 million.

This divestiture did not qualify for discontinued operations and therefore, its results are included in the Company's continuing operations within the Industrial segment for all periods presented through the date of sale.

Following is the pre-tax (losses) income for this business for the years ended December 31, 2022, January 1, 2022 and January 2, 2021:

(Millions of Dollars) 2022 2021 2020

Pre-tax (losses) income $ ( 2.7 ) $ ( 16.8 ) $ 9.1

In addition, the Company recognized a $ 168.4 million pre-tax asset impairment charge to adjust the carrying amount of the long-lived assets of the Oil & Gas business to its fair value less the costs to sell during the second quarter of 2022.

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.

On July 22, 2022, the Company completed the previously announced sale of its Convergent Security Solutions ("CSS") business comprised of the commercial electronic security and healthcare businesses to Securitas AB for net proceeds of $ 3.1 billion and a pre-tax gain of $ 588 million.

As part of the purchase and sale agreement, the Company will perform transition services relating to certain administrative functions for Securitas AB for an initial period of one year or less, pending integration of these functions into their pre-existing business processes.

A portion of the $ 3.1 billion net proceeds received at closing was deferred to reimburse the Company for transition service costs expected to be incurred.

Mechanical Access Solutions business

On July 5, 2022, the Company completed the sale of its Mechanical Access Solutions ("MAS") business comprised of the automatic doors business to Allegion plc for net proceeds of $ 922.2 million and a pre-tax gain of $ 609 million.

As part of the purchase and sale agreement, the Company will perform transition services relating to certain administrative functions for Allegion plc for an initial period of two years or less, pending integration of these functions into their pre-existing business processes.

As such, the operating results of CSS and MAS are reported as discontinued operations.

Amounts previously reported have been reclassified to conform to this presentation to allow for meaningful comparison of continuing operations.

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

Summarized operating results of discontinued operations are presented in the following table for each fiscal year ended:

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308.0 529.2 510.4

Gain on sale of discontinued operations 1,197.4 — —

Other, net and restructuring charges 47.3 59.2 56.2

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(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:

The following table presents the significant non-cash items and capital expenditures for the discontinued operations with respect to CSS and MAS that are included in the Consolidated Statements of Cash Flows for each fiscal year ended:

(Millions of Dollars) 2022 2021 2020

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Stock-based compensation $ 17.5 $ 7.9 $ 6.1

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

As of January 1, 2022, the assets and liabilities related to CSS and MAS were classified as held for sale on the Company's Consolidated Balance Sheets.

There were no assets or liabilities held for sale relating to the Oil & Gas business as of January 1, 2022.

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 are presented in the following table:

(Millions of Dollars) January 1, 2022

Cash and cash equivalents $ 145.1

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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 divestitures allow the Company to invest in other areas that fit into its long-term 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.

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 for the year ended December 28, 2019.

Pre-tax income for these businesses totaled $ 4.1 million for the year ended January 2, 2021.

SELECTED QUARTERLY FINANCIAL DATA (unaudited)

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960.3 852.7 799.8 757.2 3,370.0

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 )

Net earnings (loss) from continuing operations 155.6 78.7 36.6 ( 100.6 ) 170.3

Net earnings attributable to non-controlling interest 0.1 0.1 — — 0.2

Preferred stock dividends and beneficial conversion feature — — — 5.8 5.8

Net Earnings from Continuing Operations Attributable to Common Shareowners $ 461.6 $ 438.9 $ 394.1 $ 291.5 $ 1,586.1

Net Earnings (Loss) from Continuing Operations Attributable to Common Shareowners $ 155.5 $ 78.6 $ 36.6 $ ( 106.4 ) $ 164.3

Contract adjustment payments accretion 0.3 0.4 0.3 0.2 1.2

Net earnings from Continuing Operations Attributable to Common Shareowners - Diluted $ 461.8 $ 439.2 $ 394.5 $ 291.9 $ 1,587.4

Net Earnings (Loss) from Continuing Operations Attributable to Common Shareowners - Diluted $ 155.8 $ 79.0 $ 36.9 $ ( 106.2 ) $ 165.5

Net earnings from discontinued operations 19.8 9.0 808.0 55.6 892.4

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:

Net Earnings (Loss) Attributable to Common Shareowners - Diluted $ 175.6 $ 88.0 $ 844.9 $ ( 50.6 ) $ 1,057.9

Basic earnings (loss) per share of common stock:

Continuing operations $ 1.00 $ 0.54 $ 0.25 $ ( 0.72 ) $ 1.11

Discontinued operations $ 0.13 $ 0.06 $ 5.60 $ 0.38 $ 6.02

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

Total basic earnings (loss) per share of common stock $ 1.13 $ 0.60 $ 5.85 $ ( 0.35 ) $ 7.13

Diluted earnings (loss) per share of common stock:

Continuing operations $ 0.94 $ 0.51 $ 0.24 $ ( 0.72 ) $ 1.06

Discontinued operations $ 0.12 $ 0.06 $ 5.26 $ 0.37 $ 5.70

Total diluted earnings per share of common stock $ 2.91 $ 2.75 $ 2.51 $ 1.99 $ 10.16

Total diluted earnings (loss) per share of common stock $ 1.06 $ 0.57 $ 5.50 $ ( 0.34 ) $ 6.76

Net Sales $ 3,720.8 $ 3,798.9 $ 3,779.7 $ 3,981.9 $ 15,281.3

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Net earnings from continuing operations 459.6 432.5 379.5 279.2 1,550.8

Net (losses) earnings attributable to non-controlling interest ( 0.1 ) 0.3 0.3 0.4 0.9

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

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Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted $ 451.0 $ 429.0 $ 380.0 $ 279.6 $ 1,539.6

Net earnings (losses) from discontinued operations 8.8 ( 2.3 ) 21.6 20.7 48.8

Net earnings from discontinued operations 27.2 26.0 34.6 48.9 136.7

Net Earnings Attributable to Common Shareowners - Diluted $ 478.2 $ 455.0 $ 414.6 $ 328.5 $ 1,676.3

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(1) Includes provision for credit losses.

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 2022 year-to-date results above include $ 642 million of pre-tax acquisition-related and other charges and an $ 84 million tax benefit related to these charges.

The net impact of the above items and effect on diluted earnings per share by quarter was as follows:

Acquisition-Related Charges & Other Diluted EPS Impact

• Q1 2021 — $ 24 million loss ($ 18 million after-tax and equity interest)

• Q1 2022 — $ 221 million loss ($ 192 million after-tax)

$( 1.16 ) per diluted share

• Q2 2021 — $ 33 million loss ($ 36 million after-tax and equity interest)

• Q2 2022 — $ 248 million loss ($ 195 million after-tax)

$( 1.26 ) per diluted share

• Q3 2021 — $ 33 million loss ($ 26 million after-tax and equity interest)

• Q3 2022 — $ 119 million loss ($ 79 million after-tax)

$( 0.52 ) per diluted share

• Q4 2021 — $ 105 million loss ($ 62 million after-tax and equity interest)

• Q4 2022 — $ 54 million loss ($ 92 million after-tax)

$( 0.62 ) per diluted share

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 2021 year-to-date results above include $ 194 million of pre-tax acquisition-related and other charges, a $ 64 million tax benefit related to these 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:

2 unchanged sentences

$( 0.11 ) per diluted share

• Q2 2020 — $ 135 million loss ($ 13 million benefit after-tax and equity interest)

• Q2 2021 — $ 33 million loss ($ 36 million after-tax and equity interest)

$( 0.21 ) per diluted share

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(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).

(j) Certificate of Amendment to the Restated Certificate of Incorporation, dated November 15, 2022 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on November 17, 2022).

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).

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(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).

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 Current Report on Form 8-K filed on November 6, 2018).

(d) Seventh Supplemental Indenture, dated as of March 1, 2019, between Stanley Black & Decker, Inc.

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 Current Report on Form 8-K filed on 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).

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 Current Report on Form 8-K filed on February 10, 2020).

(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 (a) Sixth Supplemental Indenture, dated February 10, 2020, between Stanley Black & Decker, Inc.

and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 2.750% Notes due 2050 (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on November 2, 2020).

(g) Tenth Supplemental Indenture, dated as of February 24, 2022, 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 2025 and the 3.000% Notes due 2032 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on February 24, 2022).

4.3 Indenture, dated as of 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 filed on November 29, 2005).

4.4 Sixth Supplemental Indenture, dated as of 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 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 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.

4.5 Description of the Company's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (filed herewith).

10.1 (a) Amended and Restated Five Year Credit Agreement, dated as of September 8, 2021 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, 2021).#

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.

(b) Amendment No.

1 to Amended and Restated Five Year Credit Agreement, dated as of September 7, 2022 among Stanley Black & Decker, Inc., the lenders party thereto and Citibank, N.A.

as administrative agent for the lenders (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on September 13, 2022).

(b) 364-Day Credit Agreement, made as of September 8, 2021 among Stanley Black & Decker, Inc., the initial lenders named therein and Citibank, N.A.

2 to Amended and Restated Five Year Credit Agreement, dated as of February 23, 2023, by and among Stanley Black & Decker, Inc., the lenders identified on the signature pages thereto, and Citibank, N.A., as agent for the lenders (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on February 23, 2023).

10.2 (a) Syndicated 364-Day Credit Agreement, dated as of September 7, 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 September 13, 2022).

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 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.

Loree (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 25, 2016).*

(b) Amendment No.

1 to Syndicated 364-Day Credit Agreement, dated as of February 23, 2023, by and among Stanley Black & Decker, Inc., the lenders identified on the signature pages thereto, and Citibank, N.A., as agent for the lenders (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 23, 2023).

(c) Club 364-Day Credit Agreement, dated as of September 7, 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 10.2 to the Company’s Current Report on Form 8-K filed on September 13, 2022).

(d) Amendment No.

1 to Club 364-Day Credit Agreement, dated as of February 23, 2023, by and among Stanley Black & Decker, Inc., the lenders identified on the signature pages thereto, and Citibank, N.A., as agent for the lenders (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 23, 2023).

10.3 Agreement and Mutual Release, dated as of August 4, 2022, between Stanley Black & Decker, Inc.

and James Loree (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended October 1, 2022 filed on October 27, 2022).*

10.4 Letter Agreement, dated as of May 31, 2022, between Stanley Black & Decker, Inc.

and Donald Allan, Jr.

(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 1, 2022).*

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 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 filed on February 26, 2019 ).*

(b) Letter Agreement, dated January 23, 2020, between Stanley Black & Decker, Inc.

and Jeffery D.

Ansell (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on From 8-K, filed January 29, 2020).*

Wyatt dated as of 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 Agreement and General Release, by and between Jeffery D.

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.

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10.8 Form of Change in Control Severance Agreement (John H.

Wyatt and Jamie A.

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).*

Wyatt) (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).*

10.11 Stanley Black & Decker Supplemental Retirement Account Plan (as in effect January 1, 2019) (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the period ended July 2, 2022 filed on July 28, 2022).*

10.12 Stanley Black & Decker, Inc.

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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 for the period ended April 3, 2010 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 for the period ended April 3, 2010 filed on May 13, 2010).*

10.15 (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).*

(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 filed on February 27, 2018).*

(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 filed on February 21, 2014).*

(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 filed on February 21, 2014).*

(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).*

(b) Form of Award Document for Performance Awards granted to executive officers under the Stanley Black & Decker 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 filed on February 27, 2018).*

(c) Form of stock option certificate for grants to executive officers pursuant to the Stanley Black & Decker 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 filed on February 21, 2014).*

(d) Form of restricted stock unit award certificate for grants of restricted stock units to executive officers pursuant to the Stanley Black & Decker 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 filed on February 21, 2014).*

(e) Form of restricted stock unit retention award certificate for grants of restricted stock units to executive officers pursuant to the Stanley Black & Decker 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).*

10.16 (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).*

(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 period ended December 28, 2019 filed on February 21, 2020).*

(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 period ended December 28, 2019 filed on February 21, 2020).*

(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 period ended December 28, 2019 filed on February 21, 2020).*

(e) Form of Award Document for Performance Award granted to Executive Officers under the 2018 Omnibus Award (filed herewith).*

(b) Form of stock option certificate for grants to executive officers pursuant to the Stanley Black & Decker 2018 Omnibus Award Plan (incorporated by reference to Exhibit 10.16(b) to the Company's Annual Report on Form 10-K for the period ended December 28, 2019 filed on February 21, 2020).*

(c) Form of restricted stock unit award certificate for grants to executive officers pursuant to the Stanley Black & Decker 2018 Omnibus Award Plan (incorporated by reference to Exhibit 10.16(c) to the Company's Annual Report on Form 10-K for the period ended December 28, 2019 filed on February 21, 2020).*

(d) Form of restricted stock unit retention award certificate for grants to executive officers pursuant to the Stanley Black & Decker 2018 Omnibus Award Plan (incorporated by reference to Exhibit 10.16(d) to the Company's Annual Report on Form 10-K for the period ended December 28, 2019 filed on February 21, 2020).*

(e) Form of Award Document for Performance Award granted to executive officers under the Stanley Black & Decker 2018 Omnibus Award Plan (incorporated by reference to Exhibit 10.17(e) to the Company’s Annual Report on Form 10-K for the period ended January 1, 2022 filed on February 22, 2022).*

(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 filed on February 26, 2019).*

10.17 (a) The Stanley Black & Decker 2022 Omnibus Award Plan (incorporated by reference to Exhibit 99.1(a) to the Registration Statement on Form S-8 filed on April 5, 2022).*

(b) Form of stock option certificate for grants to executive officers pursuant to the Stanley Black & Decker 2022 Omnibus Award Plan (filed herewith).*

(c) Form of restricted stock unit award certificate for grants to executive officers pursuant to the Stanley Black & Decker 2022 Omnibus Award Plan (filed herewith).*

(d) Form of restricted stock unit retention award certificate for grants to executive officers pursuant to the Stanley Black & Decker 2022 Omnibus Award Plan (filed herewith).*

(e) Letter regarding 2022-2024 Long-Term Incentive Program – Special Grant to Donald Allan, Jr.

pursuant to the Stanley Black & Decker 2022 Omnibus Award Plan (filed herewith).*

10.18 The Stanley Black & Decker, Inc.

4 unchanged sentences

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 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).*

10.25 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).*

10.21 Special Severance Policy for Management Incentive Compensation Plan Participants Levels 1-5 as amended effective June 24, 2016 (filed herewith).*

10.22 Global Omnibus Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.1(a) to the Company’s Registration Statement on Form S-8 filed on November 13, 2019).*

10.23 Employment Offer Letter, dated June 12, 2017, between Stanley Black & Decker, Inc.

2 unchanged sentences

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.

10.25 Change in Control Severance Agreement (all other executive officers except Donald Allan Jr.

Wyatt) (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.

10.26 Underwriting Agreement, dated as of February 22, 2022, between Stanley Black & Decker, Inc.

and BofA Securities, Inc., Citigroup Global Markets Inc., J.P.

Morgan Securities LLC and Wells Fargo Securities, LLC.

(incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on February 24, 2022).

21 Subsidiaries of Registrant.

1 unchanged sentence

24 Power of Attorney.

31.1 (a) Certification by Chief Executive 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.

31.1 (a) Certification by President and Chief Executive Officer pursuant to Rule 13a-14(a).

31.1 (b) Certification by Interim Chief Financial Officer pursuant to Rule 13a-14(a).

32.1 Certification by President and 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 President and Chief Financial Officer pursuant to 18 U.S.C.

32.2 Certification by Interim Chief Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.1 Policy on Confidential Proxy Voting and Independent Tabulation and Inspection of Elections as adopted by The Board of Directors October 23, 1991 (incorporated by reference to Exhibit (28)(i) to the Quarterly Report on Form 10-Q for the quarter ended September 28, 1991).

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 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).

101 The following materials from Stanley Black & Decker Inc.'s Annual Report on Form 10-K for the year ended December 31, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language):

(i) Consolidated Statements of Operations for the fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021;

(ii) Consolidated Statements of Comprehensive Income for the fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021;

(iii) Consolidated Balance Sheets at December 31, 2022 and January 1, 2022;

(iv) Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021;

(v) Consolidated Statements of Changes in Shareowners' Equity for the fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021;

and (vi) 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 December 31, 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.

* Management contract or compensatory plan or arrangement.

P Paper Filing

4 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