What changed in this filing

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Item 1. Business

2024-02-27 compared with 2023-02-23 · 118 added, 101 removed, 137 unchanged (62% of the section changed)

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

The Company is a global provider of hand tools, power tools, outdoor products and related accessories, as well as a leading provider of engineered fastening solutions and attachment tools for infrastructure applications, with 2022 consolidated annual revenues of $16.9 billion.

The Company is a global provider of hand tools, power tools, outdoor products and related accessories, as well as a leading provider of engineered fastening solutions, with 2023 consolidated annual revenues of $15.8 billion.

Approximately 62% of the Company’s 2023 revenues were generated in the United States, with the remainder largely from Europe (16%), emerging markets (12%) and Canada (5%).

The Company continues to execute a business strategy that involves organic growth in excess of the market and industry, geographic and customer diversification to foster sustainable revenue, earnings and cash flow growth over the long term.

Over the past two years, the Company has focused the portfolio on its leading positions in the Tools & Outdoor and Industrial businesses.

Leveraging the benefits of a more focused portfolio, the Company initiated a business transformation that includes reinvestment for faster growth as well as the $2.0 billion Global Cost Reduction Program through 2025.

The Company’s primary areas of strategic focus are as follows:

• Continuing to advance innovation, electrification and global market penetration to achieve organic revenue growth of 2 to 3 times the market;

• Streamlining and simplifying the organization, as well as shifting resources to prioritize investments believed to have a positive and more direct impact to customers;

• Accelerating the operations and supply chain transformation to improve fill rates and better match the needs of its customers while improving adjusted gross margins back to historical 35%+ levels;

• Prioritizing cash flow generation and inventory optimization.

During this period, the focus for capital deployment will be on debt reduction, internal investment and shareholder return through dividends.

The Company has focused its portfolio through a series of acquisitions and divestitures.

In August 2022, the Company sold its Oil & Gas business comprised of the pipeline services and equipment businesses.

In July 2022, the Company sold its Convergent Security Solutions ("CSS") business comprised of the commercial electronic security and healthcare businesses for net proceeds of $3.1 billion and its Mechanical Access Solutions ("MAS") business comprised of the automatic doors business for net proceeds of $922 million.

These businesses were part of the previously reported Security segment.

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

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

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

The Company has also divested several smaller businesses in recent years that allowed the Company to invest in other areas that fit its long-term strategy.

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

("MTD") for $1.5 billion, Excel Industries ("Excel") for $374 million, and Consolidated Aerospace Manufacturing, LLC ("CAM") for $1.4 billion.

The MTD acquisition expanded the Company's presence in the $25 billion and growing outdoor category, with strong brands and growth opportunities.

In recent years, the Company has re-shaped its portfolio through a series of acquisitions and divestitures.

In December 2021, the Company completed the acquisitions of the remaining 80 percent ownership stake of MTD Holdings Inc.

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

The MTD acquisition expanded the Company's presence in the $25 billion outdoor category, with strong brands and growth opportunities.

Excel was a strategically important bolt-on acquisition that bolstered the Company's presence in the independent dealer network.

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

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

The Company’s business strategy is interdependent with its social responsibility strategy that encompasses workforce upskilling, product innovation, and environmental preservation, including mitigating the impacts of climate change.

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

In 2017, the Company established an environmental, social, and corporate governance ("ESG") strategy to drive positive impact for people, products, and the planet.

The recent portfolio transformation prompted the Company to re-baseline its ESG data and update its ESG targets to align with the more focused Company, while maintaining continuity with the legacy ESG pillars of people, products, and planet.

The updated strategy and targets will be described in more detail within the Company’s ESG report to be released in 2023.

In August 2022, the Company sold its Oil & Gas business comprised of the pipeline services and equipment businesses.

Most recently, the Company announced in December 2023 that it had entered into a definitive agreement to sell its Infrastructure business, comprised of the attachment and handheld hydraulic tools business, for $760 million in cash.

These recent acquisitions and divestitures are part of the Company's strategic commitment to simplify and streamline its portfolio to focus on its leading market positions in tools and outdoor, as well as engineered fastening systems.

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

Leveraging the benefits of a more focused portfolio, the Company initiated a business transformation in mid-2022 that includes reinvestment for faster growth as well as the $2.0 billion Global Cost Reduction Program through 2025.

The Company’s primary areas of multi-year strategic focus remain unchanged as follows:

• Advancing innovation, electrification and global market penetration to achieve organic revenue growth of 2 to 3 times the market;

• Streamlining and simplifying the organization, and investing in initiatives that more directly impact the Company's customers and end users;

• Returning adjusted gross margins to historical 35%+ levels by accelerating the operations and supply chain transformation to improve fill rates and better match inventory with customer demand;

• Prioritizing cash flow generation and inventory optimization.

In terms of capital allocation, the Company remains committed, over time, to returning excess capital to shareholders through a strong and growing dividend as well as opportunistically repurchasing shares.

In the near term, the Company intends to direct any capital in excess of the quarterly dividend on its common stock toward debt reduction and internal growth investments.

The Company’s environmental, social and governance ("ESG") strategy is integrated into, and informed by, its overall long-term business strategy.

The portfolio changes discussed above prompted the Company to re-baseline its ESG data and update its ESG targets to align with the more focused Company and its business priorities and goals, while maintaining continuity with the legacy ESG pillars of people, products, and planet.

The Company’s renewed ESG priorities are as follows:

• Supporting the long-term viability of the skilled trades that the Company serves and which are integral to thriving economic communities by focusing philanthropic efforts on growing these trades;

• Driving responsible product innovation by considering sustainability throughout all aspects of the product lifecycle, including material procurement from supply chain partners, product design, manufacturing, distribution and transportation, product use, product service, and end-of-life;

• Improving the sustainability of its operations by reducing carbon emissions, waste to landfill, and water use in water-stressed and scarce areas.

Refer to the "Human Capital Management" section in this Item 1 below for additional information regarding the Company's commitment to supporting its employees and improving diversity, equity and inclusion.

• The People strategy includes broad based diversity, equity & inclusion ("DEI") initiatives supported by equal employment opportunities and the Company's Growing the Trades program.

Refer to the "Human Capital Management" section below for additional information regarding the Company's commitment to supporting its employees and improving DEI.

To grow the trades, the Company is tailoring its philanthropic efforts to fund trade skill-building initiatives with $30 million pledged by 2027.

The Company believes this will generate end-user loyalty and brand ambassadorship that fuels long-term demand.

• The Product strategy is focused on minimizing the environmental footprint of the Company’s products through an emphasis on Sustainable Innovation.

The Company’s products are increasingly designed with sustainability in mind – from more sustainable materials specified in product design and packaging, to more eco-friendly impacts resulting from the use of its products, to thoughtful end-of-life repair, reuse and recycling programs.

To measure progress in

this space, the Company set an intensity-based goal to reduce the greenhouse gas ("GHG") emissions of its products' material, transportation, and use phases (Scope 3) by 52% by 2030.

To reach this goal, the Company plans to engage two-thirds of its suppliers to set their own Scope 1 and 2 GHG emissions reduction targets by 2027.

The Company plans to work with customers and suppliers to try to reduce or eliminate problematic plastics in its packaging and improve packaging sustainability, with a specific goal to be set by 2025;

and plans to continue the transformation of its product portfolio to quieter, safer, and more eco-friendly offerings through electrification.

• The Planet strategy for Sustainable Operations is focused on the responsible stewardship of the Company’s owned and operated facilities.

The Company is implementing a climate science-based plan with a goal to reduce its internal operational GHG emissions by 42% (Scope 1 and Scope 2) by 2030, against the 2022 baseline.

The Company expects to do this by continuing to invest in renewable power sources, such as wind and solar, while improving efficiencies through capital investments, and evaluating additional tools like power purchase agreements and energy attribute certificates.

The Company will also pursue zero-waste-to-landfill across all its global manufacturing and distribution sites by 2040.

The Company believes the responsible stewardship of its operations is important for energy independence and operations resilience, and increasingly as a value proposition for its customers, who value sustainable upstream suppliers as they work to reduce their own carbon footprint.

The Company’s annual ESG report, issued in August 2023, details the evolution of its ESG strategy and refreshed public commitments.

The report includes a comprehensive review of the Company's ESG program and builds on a long history of annually reporting its sustainability metrics and public goals.

As explained in the ESG report, the Company's goals contemplate a number of assumptions and there can be no assurances that those assumptions will be correct or that such goals will be achieved or retained.

Description of the Business

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Tools & Outdoor

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

The Tools & Outdoor segment is comprised of the Power Tools Group ("PTG"), Hand Tools, Accessories & Storage ("HTAS"), and Outdoor Power Equipment ("Outdoor") product lines.

Annual revenues in the Tools & Outdoor segment were $13.4 billion in 2023, representing 85% of the Company’s total revenues.

The segment is a worldwide leader in the tools and outdoor markets and carries iconic brands in the industry, including DEWALT®, CRAFTSMAN®, STANLEY®, BLACK+DECKER® and CUB CADET®.

The PTG business includes both professional and consumer products.

Professional products include professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers and staples, and concrete and masonry anchors.

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

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

The PTG product line includes both professional and consumer products.

Professional products, primarily under the DEWALT® brand, include professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers and staples, and concrete and masonry anchors.

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

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

Hand tools include measuring, leveling and layout tools, planes, hammers, demolition tools, clamps, vises, knives, saws, chisels and industrial and automotive tools.

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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), 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 Outdoor product line 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®, CRAFTSMAN®, CUB CADET®, BLACK+DECKER®, and HUSTLER® brand names.

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

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Annual revenues in the Industrial segment were $2.4 billion in 2023, representing 15% of the Company’s total revenues.

The Engineered Fastening business primarily sells highly engineered components such as fasteners, fittings and various engineered products, which are designed for specific application across multiple verticals.

The Engineered Fastening business is a global leader of highly engineered, application-based solutions.

The business primarily sells highly engineered components such as fasteners, fittings and various engineered products, which are designed for specific application across multiple verticals.

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 business sells to customers in the automotive, manufacturing, electronics, construction, and aerospace industries, amongst others, and its products are distributed through a direct sales force and, to a lesser extent, third-party distributors.

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

The Infrastructure business designs, manufactures, and sells attachments, typically used on excavators, and handheld hydraulic and battery-powered tools for applications in infrastructure, construction, scrap recycling, demolition, and railroad infrastructure.

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

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Working Capital

The Company continues to practice the operating principles encompassed by Operations Excellence, one element of the SBD Operating Model, which work in concert:

sales and operations planning, operational lean, complexity reduction, global supply management, order-to-cash excellence, and upskilling the Company's workforce.

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

Working capital turns were 3.5 at the end of 2022, down 1.7 turns from 2021, as the Company focuses on optimizing inventory levels following the increased supply chain constraints and a consumer-driven slowdown in 2022 demand.

As a result of this focus, inventory as of December 31, 2022 was $5.9 billion, down $775 million from its peak at the end of the second quarter of 2022.

The Company plans to continue leveraging Operations Excellence to generate ongoing improvements in working capital turns, cycle times, complexity reduction and customer service levels.

The Company continues to practice the operating principles encompassed by Operational Excellence, one element of the supply chain transformation, leveraging the principles of:

sales and operations planning, operational lean, global supply management, order-to-cash excellence, and upskilling the Company's workforce.

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

Working capital turns were 4.2 at the end of 2023, up 0.7 turns from 2022, driven by the Company's focus on optimizing inventory levels via improved supply chain conditions and strategic inventory management.

As a result of this focus and planned production curtailments initiated during the back half of 2022, inventory as of December 30, 2023 was $4.7 billion, down $1.9 billion from its peak at the end of the second quarter of 2022.

The Company plans to continue leveraging Operational Excellence to generate ongoing improvements in working capital turns, cycle times, and customer service levels.

Raw Materials

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

The Company does not anticipate difficulties in obtaining supplies for any raw materials used in its production processes and has taken proactive measures to secure energy supply in its European factories to insulate the Company's production from supply constraints in the region.

The Company does not anticipate difficulties in obtaining supplies for any raw materials used in its production processes and has maintained the proactive measures taken in 2022 to secure energy supply in its European factories to insulate the Company's production from supply constraints in the region.

Patents and Trademarks

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

In the Tools & Outdoor segment, significant trademarks include STANLEY®, BLACK+DECKER®, DEWALT®, FLEXVOLT®, IRWIN®, LENOX®, CRAFTSMAN®, PORTER-CABLE®, BOSTITCH®, FATMAX®, Powers®, Guaranteed Tough®, MAC TOOLS®, PROTO®, Vidmar®, FACOM®, Expert®, LISTA®, MTD®, CUB CADET®, TROY-BILT®, HUSTLER®, and the yellow & black color scheme for power tools and accessories.

Significant trademarks in the Industrial segment include STANLEY®, NELSON®, LaBounty®, Dubuis®, CribMaster®, POP®, Avdel®, Tucker®, NPR®, Spiralock®, PALADIN®, CAM®, Bristol Industries®, Voss™, Aerofit™, EA Patten™, Integra®, Optia®, PENGO® and STANLEY® Assembly Technologies.

In the Tools & Outdoor segment, significant trademarks include DEWALT®, CRAFTSMAN®, STANLEY®, BLACK+DECKER®, DEWALT FLEXVOLT®, DEWALT POWERSTACK®, DEWALT POWERSHIFT™, IRWIN®, LENOX®, PORTER-CABLE®, BOSTITCH®, FATMAX®, Powers®, Guaranteed Tough®, MAC TOOLS®, PROTO®, Vidmar®, FACOM®, Expert®, LISTA®, MTD®, CUB CADET®, TROY-BILT®, HUSTLER®, and the yellow & black color scheme for power tools and accessories.

Significant trademarks in the Industrial segment include STANLEY®, NELSON®, CribMaster®, POP®, Avdel®, Tucker®, NPR®, Spiralock®, CAM®, Bristol Industries®, Voss™, Aerofit™, EA Patten™, Integra®, and Optia®.

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

Governmental Regulations

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

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

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

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Refer to Item 1A.

Risk Factors in Part I of this Form 10-K for additional information regarding various laws and regulations that affect the Company's business operations.

Risk Factors in Part I of this Annual Report on Form 10-K for additional information regarding various laws and regulations that affect the Company's business operations.

The Company is also subject to various environmental laws and regulations in the U.S.

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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 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.

As of December 30, 2023 and December 31, 2022, the Company had reserves of $124.5 million and $129.3 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 2023 amount, $46.0 million is classified as current and $78.5 million as long-term, which is expected to be paid over the estimated remediation period.

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Accordingly, the Company's net cash obligation as of December 30, 2023 associated with the aforementioned remediation activities is $107.5 million.

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

As of December 30, 2023, the range of environmental remediation costs that is reasonably possible is $79.9 million to $226.8 million, which is subject to change in the near term.

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

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Human Capital Management

Stanley Black & Decker has a strategic vision to grow as an employer of choice with leading market positions in each of its major categories.

The Company’s human capital management fuels every part of the path to this vision.

The Company has a strategic vision to grow as an employer of choice with leading market positions in each of its major categories.

The Company’s human capital management fuels every part of the path to this vision, supporting long-term growth.

It begins with its Purpose (why we do what we do), Values (intrinsically what we prioritize), Leadership Principles (how we lead), Focus Forward Priorities (what we work on), Operating Model (how we work), and Key Performance Indicators (how we measure success).

To achieve this vision, the Company will be focusing intently on its Focus Forward strategy, which details the long-term focus areas that will guide the journey forward.

The priorities include a strong foundation of People & Culture, with Talent Attraction, Development, and Retention being core focus areas.

The priorities and core focus areas include a strong foundation of attracting, developing and retaining talent, building organizational capabilities, and evolving the Company's culture.

The Company’s People & Culture foundation is something that everyone is responsible for – especially people managers.

The Company’s goal is to continue to create an environment where its employees are included and can thrive.

The Company remains fully committed to its key priorities of:

The Company’s goal is to continue to strive to cultivate a diverse and inclusive environment where all employees thrive and are motivated to deliver their best work, extraordinary outcomes and achieve full potential.

The Company remains fully engaged in its key priorities of:

Health & Safety;

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

Talent Attraction, Development, and Retention

In 2022, the Company invested in expanding its employer of choice branding and building out a global talent acquisition center of excellence.

Examples of branding investments include expanding the launch of an app-based technology that allows colleagues to share curated news about the Company externally.

Examples of recruiting investments include hiring dedicated talent acquisition resources within the regions to better focus on skill shortages locally.

The Company also has placed an emphasis on university recruiting at historically black colleges and universities and professional associations, such as the Society of Hispanic Professional Engineers, to expand its reach to identify diverse candidates.

Talent Attraction, Development, Retention and Compensation

In 2023, the Company continued to invest in developing a global talent acquisition center of excellence, including hiring a dedicated Global Talent Acquisition Leader and continuing the work started in 2022 within the regions to better focus on skill shortages locally.

Additionally, the Company commenced work with a dedicated focus on improving the candidate experience, from attraction through onboarding to enhance the ease of application for job seekers.

The Company plans to continue this work through 2024.

The Company also began the rollout of a comprehensive hiring toolkit, which focuses on implementing equal employment opportunity principles, such as competency versus skills-based interviewing and aims to reduce bias in the recruitment process.

The Company has also placed an emphasis on fostering strategic partnerships with organizations that intentionally connect with candidates of diverse backgrounds, work experiences, global perspectives, and varied skills.

These include organizations such as Heroes MAKE America for Veterans, Ready Willing and Able (RWA), Community Living for individuals with intellectual disabilities, Hartford Promise Scholars, Society of Hispanic Professional Engineers, Society of Asian Scientists and Engineers, and Thurgood Marshall College Fund.

In addition, the Company has a partnership program with Historically Black Colleges and Universities (HBCUs) providing scholarships and career opportunities.

The Company has a process in place to post opportunities to diversity-focused job boards such as DirectEmployers Association, Inc.

to improve visibility of its career opportunities with diverse applicants.

Approximately 35% of global new hires in 2023 were women versus 39% in 2022, and in the U.S.

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Talent development is a key enabler of the People & Culture pillar of the Company's Focus Forward strategy.

A key part of development is leader and performance feedback.

Throughout 2022, the Talent Development team began planning the Company’s annual feedback process in its new Human Capital Management tool, which has a targeted implementation date by the end of 2023.

Key parts of development include clearly defined goals and performance feedback.

Throughout 2023, the Talent Development team has continued preparing for the Company’s annual feedback process and utilizing the new Human Capital Management tool.

The performance feedback process has been simplified and encourages both self-reflection and leader feedback against goals to support on-going development.

The process started in the fourth quarter of 2023 and is targeted for full implementation by the middle of 2024.

Lifelong learning is supported internally through Stanley Black & Decker University and externally with third-party partners.

The Company offers over 50,000 training courses to its colleagues, and employees attended more than 40,000 hours of online voluntary learning in 2022.

The Company offers over 25,000 training courses to its colleagues, and employees attended more than 29,000 hours of online and in-person voluntary learning in 2023.

Additionally, the Company focuses on leadership development anchored around its Leadership Principles and Values, while promoting leadership habits and behaviors that highlight the importance of attributes like empathy, inclusivity and listening.

In 2022, the Company invested in development and talent initiatives for its operations workforce through dedicated operations-focused Workforce Readiness enablement programs.

These programs had a dedicated focus on upskilling initiatives, and with future career opportunities across its operations workforce, the Company is educating and developing the workforce together with advancements in manufacturing capabilities.

The Company utilized AI-based video technology to help its operations employees learn on-the-job training.

In 2022, the Company had 12,932 users with 3,142 published videos and 172,465 workflow views to assist operations employees with on-the-job training.

The Company monitors organizational health through a variety of channels including employee opinion surveys, townhalls, roundtables, listening sessions, and an internal communications and social collaboration platform called Workplace.

The Company’s Human Resources ("HR") data team shared an interactive cloud-based organizational portal that provides certain leaders with over 30 metrics related to headcount, hiring, and retention to enhance insight from people data and add new dimensions of forward-looking, predictive capability.

This data will be available to all people leaders for their direct and indirect teams as the Company launches its new Human Capital Management tool by the end of 2023.

To further development in 2023, the Company invested in a 360-assessment process for many of its leaders where they had the chance to gain valuable feedback and insights into their leadership strengths and opportunities based on the leadership behaviors.

The Company intends to use this information through 2024 to aid in the creation of enterprise-wide training and development experiences and courses to aid in the accelerated preparation of the Company's leaders.

In 2023, the Company had approximately 4,600 users with 10,000 published videos and 179,000 workflow views to assist operations employees with on-the-job training.

The Company monitors organizational health through a variety of channels including employee opinion surveys, town halls, roundtables, listening sessions, and an internal communications and social collaboration platform called Workplace.

The Company recently launched its new Human Capital Management tool which will allow the Company’s Human Resources data team to continuously share new metrics, reports and dashboards related to headcount, hiring, and retention to provide value driven insight from people data.

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

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

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

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

Diversity, Equity & Inclusion

The Company is committed to building and nurturing an inclusive culture of passion and belonging where employees feel valued and heard, and are positioned to succeed.

The Company strives to build and nurture an inclusive culture of passion and belonging where employees feel valued and heard, and are positioned to succeed through equal employment opportunities.

As of December 30, 2023, the Company's Board of Directors (the “Board”) is comprised of 45% women versus 33% in 2022, 18% racially or ethnically diverse directors versus 17% in 2022, and 18% that are of a diverse national origin versus 17% in 2022.

The Chief Executive Officer (“CEO”) and his direct staff are comprised of 25% women leaders, versus 42% in 2022, and 25% racially or ethnically diverse leaders versus 25% in 2022.

Women represent approximately 35% of the Company's global workforce versus 33% in 2021.

In the U.S., approximately 35% of employees are racially or ethnically diverse versus 34% in 2021.

Women represented approximately 34% of the Company's global workforce in 2023 versus 35% in 2022.

In the U.S., approximately 35% of employees are racially or ethnically diverse in both 2023 and 2022.

A copy of the Company's most recently filed Equal Employment Opportunity report to the U.S.

government (EEO-1) can be found on the Company’s website.

The Chief Diversity Officer (“CDO”), with the support of a dedicated team of diversity, equity, and inclusion (“DEI”) professionals, promotes a broad approach to DEI with the goal of accelerating Company performance, optimizing organizational culture, enhancing transparency, and strengthening accountability.

The Chief Diversity Officer (“CDO”), with the support of a dedicated team of diversity, equity, and inclusion professionals, promotes a broad approach to DEI with the goal of accelerating Company performance, optimizing organizational culture, enhancing transparency, and strengthening accountability.

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

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

DEI reviews are regularly completed by management to increase diverse representation at all levels of the organization by 1) creating consistent visibility to employee demographic data and trends, 2) highlighting women and racially diverse talent, and 3) increasing leadership accountability for creating a diverse and inclusive workplace.

Ongoing DEI reviews are completed by management to support diverse representation throughout the organization and emphasize leadership accountability to support a diverse and inclusive workplace across various dimensions of diversity.

The Company provides training and guidance to employees including inclusive workforce modules.

An internal knowledge library of DEI resources is available on the Company intranet.

An internal knowledge library of DEI resources is available on the Company's intranet.

Mentorship programs cultivate talent at the Company by pairing women, people of color, early career talent and DEI leadership development program participants with the Company’s leaders to influence leadership growth and mentor allyship.

The Company has nine Employee Resource Groups ("ERGs") and two regional inclusion councils.

These ERGs are formed around various dimensions of diversity and are open to all employees.

These ERGs are formed around various dimensions of diversity and employees are encouraged to engage with all ERGs when and how they prefer.

The ERGs include Abilities (visible and invisible abilities), African Ancestry, Asian Heritage, Hispanic/Latino/Latinx, Developing Professionals, Pride & Allies (LGBTQ+), Veterans, Women, and Working Parents.

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The CEO and direct staff also provide executive sponsorship and support for one or more ERGs, which serves as one of the cornerstones for inclusion and engagement of talent at scale.

The Company launched a racial equity roadmap in 2020 with ten actions to confront racism and social injustice throughout its communities and across the world, which includes specific goals across culture, career, and community focus areas.

Each of the ten items were initiated in 2021 and the focus continued in 2022.

The Company's 10-point racial equity roadmap has guided its progress in this space since it was launched in 2020, and has been refined to align with the Company's timing and progress related to its ongoing business transformation.

In light of the business transformation, the Company is now revising the two outstanding points of the roadmap to align with its plan to build a new, resilient supply chain and to continue to strengthen and sustain its relationships with external partners supporting its DEI efforts.

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

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Through the RISE (Reach.

Engage.) Community program, the Company provides scholar students access to expanded experiential learning beyond their classrooms.

The Company’s mission is to help its RISE scholars discover their passions, expose them to business, technology, STEM career opportunities and help to develop them as leaders.

The Company is a signatory of the Paradigm for Parity coalition, which is committed to addressing the gender gap in corporate leadership.

Engage.) Community program, the Company provides scholar students, in high school and college, access to expanded experiential learning beyond their classrooms.

The Company’s goal is to help its RISE scholars discover their passions, expose them to business, technology, and STEM career opportunities, and help to develop them as leaders.

The Company continues to support gender representation in leadership as a part of its broader DEI goals.

The Company also participates in the Business Roundtable, where many of the largest U.S.-based employers are committed to building a more inclusive environment.

The Company was also among the signatories of the CEO Action for Diversity & Inclusion initiative.

Employee Wellness, Health and Safety

The Company is committed to providing competitive benefits to attract and retain talent, which vary by country, including benefits and programs to support the broad wellness of its employees’ healthy lifestyles, mental health, and retirement readiness.

Employee Well-being

The Company believes that employees who are thriving as individuals are best capable of sustainable and resilient high performance and contributing to a thriving company culture.

Therefore, the need to optimize employee well-being has been identified as a strategic enabler for the success of the Company's Focus Forward strategy.

In 2023, the Company embarked on a long-term vision to develop a global well-being strategy dedicated to supporting employee well-being as a competitive benefit to attract and retain talent.

The implementation of the strategy will vary by country but will include benefits to support the broad wellness of employees’ healthy lifestyles, mental health, and retirement readiness, which will be bolstered by programs to support a healthy, psychologically safe culture at work.

The Company also supports its employees and promotes work/life balance through benefits such as paid parental leave, paid time off, flexible work arrangements and virtual/hybrid working model policies.

In 2022, the Company continued its commitment to navigating through the COVID-19 pandemic with employee health and safety as a non-negotiable, foundational priority.

Guided by the Company's Chief Medical Officer, the Company transitioned away from a one-size-fits-all approach to COVID-19 prevention, given the great variability throughout the world in the state of the pandemic.

With agility, the Company began the process of transitioning to a future state in which it stands ready with the right tools to re-introduce mitigation strategies where needed, while continuing these mitigation methods in areas of high risk.

The Company foresees a future in which it will continue to monitor COVID-19 and any future risks with strategies in place to ensure business continuity and employee health.

The Company’s Environmental, Health and Safety (“EHS”) Management System Plan describes the core elements of EHS responsibility and accountability, including policies and procedures that are designed in alignment with global standards, the Company’s Code of Business Ethics, applicable laws and individual facility needs.

EHS requirements apply to all employees and operating locations worldwide, including all manufacturing facilities, distribution centers, warehouses, laboratories, field service centers, retail locations, office locations and mobile units, as well as to the Company's subsidiaries and joint ventures (in which the Company exercises decision-making control over operations).

Environment, Health and Safety

The Company’s Environmental, Health and Safety (“EHS”) Management System describes the core elements of EHS responsibility and accountability, including policies and procedures that are designed in alignment with global standards, the Company’s Code of Business Ethics, applicable laws and individual facility needs.

In 2023, the Company reinforced EHS as a

key priority that applies to employees and operating locations worldwide, including manufacturing facilities, distribution centers, warehouses, laboratories, field service centers, retail locations, office locations and mobile units, as well as to the Company's subsidiaries.

With a focus on continuous improvement, the Company launched efforts to update its EHS Management System to better align with its current organization and allows the Company to be even more proactive in risk recognition and mitigation at all levels.

Legal requirements and responses may vary in the different countries in which the Company’s facilities are located.

The Company also organized the Corporate EHS team to support technically and more effectively with developing capabilities that enable strong performance at the Company’s sites globally.

Governance and Oversight

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

Each year, the Company conducts an extensive talent review with its CEO where the leadership team, key talent, and succession plans are

Each year, the Company conducts an extensive talent review with its CEO where the leadership team, key talent, and succession plans are reviewed.

Afterwards, the CEO or CHRO leads a talent review with the Compensation & Talent Development Committee of the Board and the entire membership of the Board, at least annually.

Refer to Item 10.

Directors, Executive Officers and Corporate Governance of the Registrant in Part III of this Form 10-K for additional information regarding the Company's Executive Officers.

Refer to the caption "Information About Our Executive Officers" in Part 1 of this Annual Report on Form 10-K and Item 10.

Directors, Executive Officers and Corporate Governance of the Registrant in Part III of this Annual Report on Form 10-K for additional information regarding the Company's Executive Officers.

Code of Business Ethics, Workplace Harassment Prevention, and Managing Unconscious Bias training, among others, are provided to employees and the content is regularly reviewed and updated.

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

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

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

Additional information regarding the Company's Human Capital programs and initiatives is available in the Company's Environmental, Social and Governance Report located under the "Impact" heading of the Company’s website.

The information on the Company’s website is not, and is not intended to be, part of this Form 10-K and is not incorporated into this report by reference.

Additional information regarding the Company's Human Capital programs and initiatives is available in the Company's ESG Report located under the "Impact" heading of the Company’s website.

The information on the Company’s website is not, and is not intended to be, part of this Annual Report on Form 10-K and is not incorporated into this report by reference.

Research and Development Costs

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It is not intended to be an active hyperlink to the Company's website.

The information on the Company's website is not, and is not intended to be, part of this Form 10-K and is not incorporated into this report by reference.

Additionally, this Annual Report on Form 10-K includes several website addresses and references to additional materials found on those websites.

These websites and materials, including the information on the Company's website that may be referenced in this Annual Report on Form 10-K, is provided for convenience only and is not intended to be part of this Annual Report on Form 10-K and is not incorporated into this report by reference.

The Company makes its Forms 10-K, 10-Q, 8-K and amendments to each available free of charge on its website as soon as reasonably practicable after filing them with, or furnishing them to, the U.S.

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

What changed 10-K

Item 1. Business