Item 16. FORM 10-K SUMMARY

Not applicable.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

STANLEY BLACK & DECKER, INC.
By:						/s/ Donald Allan, Jr.
						Donald Allan, Jr., President and Chief Executive Officer
Date:						February 23, 2023

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

Signature						Title						Date
/s/ Donald Allan, Jr.						President and Chief Executive Officer						February 23, 2023
Donald Allan, Jr.
/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
Andrea J. Ayers
*						Director						February 23, 2023
Patrick D. Campbell
*						Director						February 23, 2023
Carlos M. Cardoso
*						Director						February 23, 2023
Robert B. Coutts
*						Director						February 23, 2023
Debra A. Crew
*						Director						February 23, 2023
Michael D. Hankin
*						Director						February 23, 2023
Robert J. Manning
*						Director						February 23, 2023
Adrian V. Mitchell
*						Director						February 23, 2023
Jane M. Palmieri
*						Director						February 23, 2023
Mojdeh Poul
*						Director						February 23, 2023
Irving Tan

*By: /s/ Janet M. Link
Janet M. Link (As Attorney-in-Fact)

Schedule II — Valuation and Qualifying Accounts

Stanley Black & Decker, Inc. and Subsidiaries

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

(Millions of Dollars)

									ADDITIONS
			Beginning Balance						Charged To Costs And Expenses						Charged To Other Accounts (b)						(a) Deductions						Ending Balance
Allowance for Credit Losses:
Year Ended 2022			$	95.9					$	14.3					$	16.9					$	(20.5)					$	106.6
Year Ended 2021			$	106.2					$	—					$	3.8					$	(14.1)					$	95.9
Year Ended 2020			$	91.5					$	24.6					$	7.4					$	(17.3)					$	106.2
Tax Valuation Allowance:
Year Ended 2022 (c)			$	1,067.2					$	21.2					$	(5.9)					$	(50.0)					$	1,032.5
Year Ended 2021			$	1,001.9					$	190.7					$	61.1					$	(186.5)					$	1,067.2
Year Ended 2020			$	1,006.4					$	296.9					$	(18.2)					$	(283.2)					$	1,001.9

(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, divestitures and net transfers to/from other accounts.

(c)Refer to Note Q, Income Taxes, of the Notes to Consolidated Financial Statements in Item 8 for further discussion.

The prior year amounts in the table above have been recast to exclude the amounts relating to businesses classified as discontinued operations. Refer to Note T, Divestitures, of the Notes to Consolidated Financial Statements in Item 8 for further discussion.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Stanley Black & Decker, Inc. 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.

Management has assessed the effectiveness of Stanley Black & Decker, Inc.’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, 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.

/s/ Donald Allan, Jr.
Donald Allan, Jr., President and Chief Executive Officer

/s/ Corbin B. Walburger
Corbin B. Walburger, Interim Chief Financial Officer

Report of Independent Registered Public Accounting Firm

To the Shareowners and Board of Directors of Stanley Black & Decker, Inc.

Opinion on the Financial Statements

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

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

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						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. 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

We have served as the Company’s auditor since 1932.

Hartford, Connecticut

February 23, 2023

Report of Independent Registered Public Accounting Firm

To the Shareowners and the Board of Directors of Stanley Black & Decker, Inc.

Opinion on Internal Control over Financial Reporting

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

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s 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 purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Hartford, Connecticut

February 23, 2023

Consolidated Statements of Operations

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

(Millions of Dollars, Except Per Share Amounts)

			2022						2021						2020
Net Sales			$	16,947.4					$	15,281.3					$	12,750.0
Costs and Expenses
Cost of sales			$	12,663.3					$	10,189.1					$	8,431.9
Selling, general and administrative			3,355.7						3,193.1						2,554.7
Provision for credit losses			14.3						—						24.6
Other, net			274.8						189.5						215.7
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)						—
Asset impairment charge			168.4						—						—
Loss on debt extinguishment			—						—						46.9
Interest income			(54.7)						(9.8)						(17.5)
Interest expense			338.5						185.4						222.7
			$	16,909.5					$	13,694.4					$	11,566.3
Earnings from continuing operations before income taxes and equity interest			37.9						1,586.9						1,183.7
Income taxes on continuing operations			(132.4)						55.1						38.0
Net earnings from continuing operations before equity interest			170.3						1,531.8						1,145.7
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
Less: 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.			$	170.1					$	1,552.5					$	1,153.9
Less: Preferred stock dividends and beneficial conversion feature			5.8						14.2						24.1
Net Earnings from Continuing Operations Attributable to Common Shareowners			$	164.3					$	1,538.3					$	1,129.8
Add: Contract adjustment payments accretion			1.2						1.3						1.7
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 (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
Net Earnings Attributable to Common Shareowners - Diluted			$	1,057.9					$	1,676.3					$	1,211.4
Net Earnings Attributable to Stanley Black & Decker, Inc.			$	1,062.5					$	1,689.2					$	1,233.8
Basic earnings per share of common stock:
Continuing operations			$	1.11					$	9.69					$	7.33
Discontinued operations			$	6.02					$	0.86					$	0.52
Total basic earnings per share of common stock			$	7.13					$	10.55					$	7.85
Diluted earnings per share of common stock:
Continuing operations			$	1.06					$	9.33					$	6.97
Discontinued operations			$	5.70					$	0.83					$	0.49
Total diluted earnings per share of common stock			$	6.76					$	10.16					$	7.46

See Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

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

(Millions of Dollars)

			2022						2021						2020
Net Earnings from Continuing Operations Attributable to Common Shareowners			$	164.3					$	1,538.3					$	1,129.8
Net earnings from discontinued operations			892.4						136.7						79.9
			$	1,056.7					$	1,675.0					$	1,209.7
Other comprehensive (loss) income:
Currency translation adjustment and other			(364.4)						(307.7)						281.9
Gains (losses) on cash flow hedges, net of tax			5.3						53.2						(48.8)
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)
Other comprehensive (loss) income			$	(273.9)					$	(131.9)					$	170.9
Comprehensive income attributable to common shareowners			$	782.8					$	1,543.1					$	1,380.6

See Notes to Consolidated Financial Statements.

Consolidated Balance Sheets

December 31, 2022 and January 1, 2022

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

			2022						2021
ASSETS
Current Assets
Cash and cash equivalents			$	395.6					$	142.1
Accounts and notes receivable, net			1,231.0						1,481.7
Inventories, net			5,861.1						5,419.9
Current assets held for sale			—						869.6
Prepaid expenses			441.4						507.0
Other current assets			45.6						106.1
Total Current Assets			7,974.7						8,526.4
Property, Plant and Equipment, net			2,353.1						2,336.8
Goodwill			8,502.7						8,590.7
Customer Relationships, net			1,821.3						2,000.0
Trade Names, net			2,645.7						2,681.8
Other Intangible Assets, net			7.8						13.2
Long-term assets held for sale			—						2,635.8
Other Assets			1,658.0						1,395.3
Total Assets			$	24,963.3					$	28,180.0
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Short-term borrowings			$	2,102.9					$	2,241.1
Current maturities of long-term debt			1.2						1.3
Accounts payable			2,344.4						3,423.6
Accrued expenses			2,120.7						2,641.0
Liabilities held for sale			—						460.4
Total Current Liabilities			6,569.2						8,767.4
Long-Term Debt			5,352.9						4,353.6
Deferred Taxes			709.2						711.2
Post-Retirement Benefits			353.9						474.1
Long-term liabilities held for sale			—						137.4
Other Liabilities			2,263.9						2,143.9
Commitments and Contingencies (Notes R and S)
Shareowners’ Equity
Stanley Black & Decker, Inc. Shareowners’ Equity
Preferred stock, without par value: Authorized 10,000,000 shares in 2022 and 2021 Issued and outstanding 750,000 shares in 2021			—						620.3
Common stock, par value $2.50 per share: Authorized 300,000,000 shares in 2022 and 2021 Issued 176,902,738 shares in 2022 and 2021			442.3						442.3
Retained earnings			9,333.3						8,742.4
Additional paid in capital			5,055.6						4,999.2
Accumulated other comprehensive loss			(2,119.5)						(1,845.6)
			12,711.7						12,958.6
Less: cost of common stock in treasury (23,919,208 shares in 2022 and 13,573,962 shares in 2021)			(2,999.6)						(1,368.1)
Stanley Black & Decker, Inc. Shareowners’ Equity			9,712.1						11,590.5
Non-controlling interests			2.1						1.9
Total Shareowners’ Equity			9,714.2						11,592.4
Total Liabilities and Shareowners’ Equity			$	24,963.3					$	28,180.0

See Notes to Consolidated Financial Statements.

Consolidated Statements of Cash Flows

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

(Millions of Dollars)

			2022						2021						2020
Operating Activities:
Net earnings from continuing operations			$	170.3					$	1,550.8					$	1,154.8
Net earnings from discontinued operations			892.4						136.7						79.9
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
Amortization of intangibles			202.5						203.1						201.6
Inventory step-up amortization			80.3						20.7						29.0
Loss on sales of businesses			8.4						0.6						13.5
Gain on equity method investment			—						(68.0)						—
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 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
Changes in operating assets and liabilities:
Accounts receivable			109.0						(280.6)						(39.6)
Inventories			(792.4)						(1,970.4)						(401.5)
Accounts payable			(991.4)						758.3						310.4
Deferred revenue			(29.9)						1.9						(0.3)
Other current assets			15.6						(166.8)						(100.2)
Other long-term assets			(351.3)						(438.8)						(14.0)
Accrued expenses			(176.3)						444.0						381.7
Defined benefit liabilities			(31.9)						(40.0)						(40.2)
Other long-term liabilities			173.4						277.7						79.5
Net cash (used in) provided by operating activities			(1,459.5)						663.1						2,022.1
Investing Activities:
Capital and software expenditures			(530.4)						(519.1)						(348.1)
Sales of assets			41.7						8.4						19.9
Business acquisitions, net of cash acquired			(71.9)						(2,043.8)						(1,324.4)
Sales of businesses, net of cash sold			4,147.1						5.3						59.1
Net investment hedge settlements			10.6						(55.1)						41.0
Other			(24.5)						(19.5)						(24.6)
Net cash provided by (used in) investing activities			3,572.6						(2,623.8)						(1,577.1)
Financing Activities:
Payments on long-term debt			—						(1.5)						(1,154.3)
Proceeds from debt issuances, net of fees			992.6						—						2,222.5
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 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
Craftsman deferred purchase price			—						—						(250.0)
Craftsman contingent consideration			(41.3)						(29.3)						(45.9)

CAM contingent consideration			—						—						(94.4)
Termination of interest rate swaps			22.7						(75.3)						(20.5)
Cash dividends on common stock			(465.8)						(474.8)						(431.8)
Cash dividends on preferred stock			(5.8)						(18.9)						(18.8)
Other			(11.7)						(13.8)						(10.6)
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
Change in cash, cash equivalents and restricted cash			110.1						(1,103.5)						1,083.7
Cash, cash equivalents and restricted cash, beginning of year			294.8						1,398.3						314.6
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 December 31, 2022 and January 1, 2022, as shown above:

			December 31, 2022						January 1, 2022
Cash and cash equivalents			$	395.6					$	142.1
Restricted cash included in Other current assets			9.3						7.6
Cash and cash equivalents included in Current assets held for sale			—						145.1
Cash, cash equivalents and restricted cash			$	404.9					$	294.8

See Notes to Consolidated Financial Statements.

Consolidated Statements of Changes in Shareowners’ Equity

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

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

			Preferred Stock						Common Stock						Additional Paid In Capital						Retained Earnings						Accumulated Other Comprehensive Loss						ESOP						Treasury Stock						Non- Controlling Interests						Shareowners’ Equity
Balance December 28, 2019			$	1,230.0					$	442.3					$	4,767.6					$	6,768.1					$	(1,884.6)					$	(2.3)					$	(2,184.8)					$	5.9					$	9,142.2
Net earnings																					1,233.8																								0.9						1,234.7
Other comprehensive 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)															(32.1)																								179.1												147.0
Repurchase of common stock (228,541 shares)															10.0																								(36.2)												(26.2)
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
ESOP																																	2.3																		2.3
Adoption of ASU 2016-13																					(3.8)																														(3.8)
Beneficial conversion feature			0.7																		(0.7)																														—
Balance January 2, 2021			$	1,370.3					$	442.3					$	4,967.8					$	7,542.2					$	(1,713.7)					$	—					$	(1,549.3)					$	6.8					$	11,066.4
Net earnings																					1,689.2																								(1.7)						1,687.5
Other comprehensive loss																											(131.9)																								(131.9)
Cash dividends declared — $2.98 per common share																					(474.8)																														(474.8)
Cash dividends declared — $50.00 per annum per preferred share																					(14.2)																														(14.2)
Issuance of common stock (1,636,532 shares)															(19.0)																								150.4												131.4
Repurchase of common stock (529,073 shares)															72.2																								(106.5)												(34.3)
Redemption and conversion of preferred stock (1,469,055 shares)			(750.0)												(137.3)																								137.3												(750.0)
Non-controlling interest buyout															(2.8)																														(3.2)						(6.0)
Stock-based compensation related															118.3																																				118.3
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
Net earnings																					1,062.5																								0.2						1,062.7
Other comprehensive loss																											(273.9)																								(273.9)
Cash dividends declared — $3.18 per common share																					(465.8)																														(465.8)
Cash dividends declared — $75.00 per annum per preferred share																					(5.8)																														(5.8)
Issuance of common stock (988,474 shares)															(76.9)																								115.6												38.7
Repurchase of common stock (16,057,220 shares)																																							(2,323.0)												(2,323.0)
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)			750.0																																																750.0
Redemption of remarketed Series D Preferred Stock (750,000 shares)			(750.0)																																																(750.0)
Stock-based compensation related															90.7																																				90.7
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.

Notes to Consolidated Financial Statements

A. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION — The Consolidated Financial Statements include the accounts of Stanley Black & Decker, Inc. and its majority-owned subsidiaries (collectively the “Company”) which require consolidation, after the elimination of intercompany accounts and transactions. The Company’s fiscal year ends on the Saturday nearest to December 31. 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. ("MTD"), a privately held global manufacturer of outdoor power equipment. The Company previously acquired a 20 percent interest in MTD in January 2019. Prior to closing on the remaining 80 percent ownership stake, the Company applied the equity method of accounting to the 20% investment in MTD. In November 2021, the Company acquired Excel Industries ("Excel"), a leading designer and manufacturer of premium commercial and residential turf-care equipment. These acquisitions 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"). 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.

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. While management believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from these estimates. Certain amounts reported in previous years have been reclassified to conform to the 2022 presentation.

FOREIGN CURRENCY — For foreign operations with functional currencies other than the U.S. dollar, asset and liability accounts are translated at current exchange rates, while income and expenses are translated using average exchange rates. Translation adjustments are reported in a separate component of shareowners’ equity and exchange gains and losses on transactions are included in earnings.

CASH EQUIVALENTS — Highly liquid investments with original maturities of three months or less are considered cash equivalents.

ACCOUNTS AND FINANCING RECEIVABLE — Trade receivables are stated at gross invoice amounts less discounts, other allowances and provisions for credit losses. Financing receivables are initially recorded at fair value, less impairments or provisions for credit losses. 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's payment terms are generally consistent with the industries in which its businesses operate and typically range from 30-90 days globally. Additionally, the Company considers the credit quality of all past-due or delinquent financing receivables as nonperforming. 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.

ALLOWANCE FOR CREDIT LOSSES — The Company maintains an allowance for credit losses, which represents an estimate of expected losses over the remaining contractual life of its receivables. The allowance is determined using two methods. The amounts calculated from each of these methods are combined to determine the total amount reserved. First, a specific reserve is established for individual accounts where information indicates the customers may have an inability to meet financial obligations. Second, a reserve is determined for all customers based on a range of percentages applied to aging categories. These percentages are based on historical collection rates, write-off experience, and forecasts of future economic conditions. Actual write-offs are charged against the allowance when collection efforts have been unsuccessful.

INVENTORIES — U.S. inventories are primarily valued at the lower of Last-In, First-Out (“LIFO”) cost or market because the Company believes it results in better matching of costs and revenues. 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, 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. Costs related to maintenance and repairs which do not prolong the asset's useful life are expensed as incurred. Depreciation and amortization are provided using straight-line methods over the estimated useful lives of the assets as follows:

						Useful Life (Years)
Land improvements						10 — 20
Buildings						40
Machinery and equipment						3 — 15
Computer software						3 — 7

Leasehold improvements are depreciated over the shorter of the estimated useful life or the term of the lease.

The Company reports depreciation and amortization of property, plant and equipment in cost of sales and selling, general and administrative expenses based on the nature of the underlying assets. Depreciation and amortization related to the production of inventory and delivery of services are recorded in cost of sales. Depreciation and amortization related to distribution center activities, selling and support functions are reported in selling, general and administrative expenses.

The Company assesses its long-lived assets for impairment when indicators that the carrying amounts may not be recoverable are present. In assessing long-lived assets for impairment, the Company groups its long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are generated (“asset group”) and estimates the undiscounted future cash flows that are directly associated with, and expected to be generated from, the use of and eventual disposition of the asset group. If the carrying value is greater than the undiscounted cash flows, an impairment loss must be determined and the asset group is written down to fair value. The impairment loss is quantified by comparing the carrying amount of the asset group to the estimated fair value, which is generally determined using weighted-average discounted cash flows that consider various possible outcomes for the disposition of the asset group.

GOODWILL AND INTANGIBLE ASSETS — Goodwill represents costs in excess of values assigned to the underlying net assets of acquired businesses. Intangible assets acquired are recorded at estimated fair value. Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are tested for impairment annually during the third quarter, and at any time when events suggest an impairment more likely than not has occurred.

To assess goodwill for impairment, the Company, depending on relevant facts and circumstances, performs either a qualitative assessment or a quantitative analysis utilizing a discounted cash flow valuation model. In performing a qualitative assessment, the Company first assesses relevant factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. The Company identifies and considers the significance of relevant key factors, events, and circumstances that could affect the fair value of each reporting unit. These factors include external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as actual and planned financial performance. The Company also considers changes in each reporting unit's fair value and carrying amount since the most recent date a fair value measurement was performed. In performing a quantitative analysis, the Company determines the fair value of a reporting unit using management’s assumptions about future cash flows based on long-range strategic plans. This approach incorporates many assumptions including discount rates, future growth rates and expected profitability. In the event the carrying amount of a reporting unit exceeded its fair value, an impairment loss would be recognized.

Indefinite-lived intangible assets are tested for impairment utilizing either a qualitative assessment or a quantitative analysis. For a qualitative assessment, the Company identifies and considers relevant key factors, events, and circumstances to determine whether it is necessary to perform a quantitative impairment test. The key factors considered include macroeconomic, industry, and market conditions, as well as the asset's actual and forecasted results. For the quantitative impairment tests, the Company compares the carrying amounts to the current fair market values, usually determined by the estimated royalty savings attributable to owning the intangible assets.

Intangible assets with definite lives are amortized over their estimated useful lives to reflect the pattern over which the economic benefits of the intangible assets are consumed. Definite-lived intangible assets are also evaluated for impairment when impairment indicators are present. If the carrying amount exceeds the total undiscounted future cash flows, a discounted cash flow analysis is performed to determine the fair value of the asset. 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 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. As part of the Company’s risk management program, a variety of financial instruments such as interest rate swaps, currency swaps, purchased currency options, foreign exchange contracts and commodity contracts, may be used to mitigate interest rate exposure, foreign currency exposure and commodity price exposure. The Company recognizes all derivative instruments on the balance sheet at fair value.

Changes in the fair value of derivatives are recognized periodically either in earnings or in shareowners’ equity as a component of other comprehensive income (loss) ("OCI"), depending on whether the derivative financial instrument is undesignated or qualifies for hedge accounting, and if so, whether it represents a fair value, cash flow, or net investment hedge. Changes in the fair value of derivatives accounted for as fair value hedges are recorded in earnings in the same caption as the changes in the fair value of the hedged items. Gains and losses on derivatives designated as cash flow hedges, to the extent they are included in the assessment of effectiveness, are recorded in OCI and subsequently reclassified to earnings to offset the impact of the hedged items when they occur. In the event it becomes probable the forecasted transaction to which a cash flow hedge relates will not occur, the derivative would be terminated and the amount in accumulated other comprehensive income (loss) would be recognized in earnings. Changes in the fair value of derivatives that are designated and qualify as a hedge of the net investment in foreign operations, to the extent they are included in the assessment of effectiveness, are reported in OCI and are deferred until disposal of the underlying assets. Gains and losses representing components excluded from the assessment of effectiveness for cash flow and fair value hedges are recognized in earnings on a straight-line basis in the same caption as the hedged item over the term of the hedge. Gains and losses representing components excluded from the assessment of effectiveness for net investment hedges are recognized in earnings on a straight-line basis in Other, net over the term of the hedge.

The net interest paid or received on interest rate swaps is recognized as interest expense. Gains and losses resulting from the early termination of interest rate swap agreements are deferred and amortized as adjustments to interest expense over the remaining period of the debt originally covered by the terminated swap.

Changes in the fair value of derivatives not designated as hedges are reported in Other, net in the Consolidated Statements of Operations. Refer to Note I, Financial Instruments, for further discussion.

REVENUE RECOGNITION — The Company’s revenues result from the sale of goods or services and reflect the consideration to which the Company expects to be entitled. The Company records revenue based on a five-step model in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606"). For its contracts with customers, the Company identifies the performance obligations (goods or services), determines the transaction price, allocates the contract transaction price to the performance obligations, and recognizes the revenue when (or as) the performance obligation is transferred to the customer. A good or service is transferred when (or as) the customer obtains control of that good or service. 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 Oil & Gas business, disposed in the third quarter of 2022, were generated from equipment leased to customers. 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. Customer leases may include terms to allow for extension of leases for a short period of time, but typically do not provide for customer termination prior to the initial term. 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. 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. Such provisions are calculated using historical averages adjusted for any expected changes due to current business conditions. Consideration given to customers for cooperative advertising is recognized as a reduction of revenue except to the extent that there is a distinct good or service and evidence of the fair value of the advertising, in which case the expense is classified as selling, general, and administrative expense.

The Company’s revenues can be generated from contracts with multiple performance obligations. 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.

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 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. If the measure of remaining rights exceeds the measure of the remaining performance obligations, the Company records a contract asset. Conversely, if the measure of the remaining performance obligations exceeds the measure of the remaining rights, the Company records a contract liability.

Incremental costs of obtaining or fulfilling a contract with a customer that are expected to be recovered are recognized and classified in Other current assets or Other assets in the Consolidated Balance Sheets and are typically amortized over the contract period. The Company recognizes the incremental costs of obtaining or fulfilling a contract as expense when incurred if the amortization period of the asset is one year or less.

Customer billings for services not yet rendered are deferred and recognized as revenue as the services are rendered. 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, 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. 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. Selling, general & administrative costs ("SG&A") include the cost of selling products as well as administrative function costs. These expenses generally represent the cost of selling and distributing the products once they are available for sale and primarily include salaries and commissions of the Company’s sales force, distribution costs, notably salaries and facility costs, as well as administrative expenses for certain support functions and related overhead.

ADVERTISING COSTS — Television advertising is expensed the first time the advertisement airs, whereas other advertising is expensed as incurred. Advertising costs are classified in SG&A and amounted to $118.9 million in 2022, $98.6 million in 2021 and $76.6 million in 2020. Expense pertaining to cooperative advertising with customers reported as a reduction of Net Sales was $358.1 million in 2022, $374.1 million in 2021 and $351.0 million in 2020. Cooperative advertising with customers classified as SG&A expense amounted to $31.8 million in 2022, $19.5 million in 2021 and $15.8 million in 2020.

SALES TAXES — Sales and value added taxes collected from customers and remitted to governmental authorities are excluded from Net Sales reported in the Consolidated Statements of Operations.

SHIPPING AND HANDLING COSTS — The Company generally does not bill customers for freight. Shipping and handling costs associated with inbound and outbound freight are reported in Cost of sales. 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.

POSTRETIREMENT DEFINED BENEFIT PLAN — The Company uses the corridor approach to determine expense recognition for each defined benefit pension and other postretirement plan. The corridor approach defers actuarial gains and losses resulting from variances between actual and expected results (based on economic estimates or actuarial assumptions) and amortizes them over future periods. For pension plans, these unrecognized gains and losses are amortized when the net gains and losses exceed 10% of the greater of the market-related value of plan assets or the projected benefit obligation at the beginning of the year. For other postretirement benefits, amortization occurs when the net gains and losses exceed 10% of the accumulated postretirement benefit obligation at the beginning of the year. For ongoing, active plans, the amount in excess of the corridor is amortized on a straight-line basis over the average remaining service period for active plan participants. For plans with primarily inactive participants, the amount in excess of the corridor is amortized on a straight-line basis over the average remaining life expectancy of inactive plan participants.

INCOME TAXES — The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. Any changes in tax rates on deferred tax assets and liabilities are recognized in earnings in the period that includes the enactment date. The Company recognizes the tax on global intangible low-taxed income as a period expense in the period the tax is incurred.

The Company records net deferred tax assets to the extent that it is more likely than not that these assets will be realized. In making this determination, management considers all available positive and negative evidence, including future reversals of existing temporary differences, estimates of future taxable income, tax-planning strategies, and the realizability of net operating loss carryforwards. In the event that it is determined that an asset is not more likely that not to be realized, a valuation allowance is recorded against the asset. Valuation allowances related to deferred tax assets can be impacted by changes to tax laws, changes to statutory tax rates and future taxable income levels. In the event the Company were to determine that it would not be able to realize all or a portion of its deferred tax assets in the future, the unrealizable amount would be charged to earnings in the period in which that determination is made. Conversely, if the Company were to determine that it would be able to realize deferred tax assets in the future in excess of the net carrying amounts, it would decrease the recorded valuation allowance through a favorable adjustment to earnings in the period that the determination was made. 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 maintains

an accounting policy of recording interest and penalties on uncertain tax positions as a component of Income taxes in the Consolidated Statements of Operations.

The Company is subject to income tax in a number of locations, including many state and foreign jurisdictions. Significant judgment is required when calculating the worldwide provision for income taxes. Many factors are considered when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments, and which may not accurately anticipate actual outcomes. It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company's unrecognized tax positions will significantly increase or decrease within the next twelve months. These changes may be the result of settlements of ongoing audits, litigation, or other proceedings with taxing authorities. The Company periodically assesses its liabilities and contingencies for all tax years still subject to audit based on the most current available information, which involves inherent uncertainty.

Refer to Note Q, Income Taxes, for further discussion.

EARNINGS PER SHARE — Basic earnings per share equals net earnings attributable to common shareowners divided by weighted-average shares outstanding during the year. Diluted earnings per share include the impact of common stock equivalents using the treasury stock method or the if-converted method, as applicable, when the effect is dilutive.

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. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The standard should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company 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). The new standard clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. 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).* The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance for the derivatives scope exception for contracts in an entity's own equity. The standard also amends and makes targeted improvements to the related earnings per share guidance. The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. 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): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The new standard provides optional expedients and exceptions that companies can apply during a limited time period to account for contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. Companies may elect to apply these optional expedients and exceptions beginning March 12, 2020 through December 31, 2022. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), to clarify the scope of Topic 848 and provide explicit guidance to help companies applying optional expedients and exceptions. This ASU is effective immediately for all entities that have applied optional expedients and exceptions. The Company 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.

B. ACCOUNTS AND NOTES RECEIVABLE, NET

(Millions of Dollars)			December 31, 2022						January 1, 2022
Trade accounts receivable			$	1,142.0					$	1,398.2
Trade notes receivable			100.1						75.3
Other accounts receivable			95.5						104.1
Accounts and notes receivable			1,337.6						1,577.6
Allowance for credit losses			(106.6)						(95.9)
Accounts and notes receivable, net			$	1,231.0					$	1,481.7

Trade receivables are dispersed among a large number of retailers, distributors and industrial accounts in many countries. Adequate reserves have been established to cover anticipated credit losses.

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
Balance beginning of period						$	95.9					$	106.2
Charged to costs and expenses						14.3						—
Other, including recoveries and deductions (a)						(3.6)						(10.3)
Balance end of period						$	106.6					$	95.9

(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. The Purchaser’s maximum cash investment in the receivables at any time is $110.0 million. The purpose of the program is to provide liquidity to the Company. These transfers qualify as sales under ASC 860, Transfers and Servicing, and receivables are derecognized from the Company’s Consolidated Balance Sheets when the BRS sells those receivables to the Purchaser. The Company has no retained interests in the transferred receivables, other than collection and administrative responsibilities. 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 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.

C. INVENTORIES, NET

(Millions of Dollars)			December 31, 2022						January 1, 2022
Finished products			$	3,460.8					$	3,486.2
Work in process			338.7						394.8
Raw materials			2,061.6						1,538.9
Total			$	5,861.1					$	5,419.9

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.

D. PROPERTY, PLANT AND EQUIPMENT

(Millions of Dollars)			December 31, 2022						January 1, 2022
Land			$	137.7					$	143.1
Land improvements			59.7						60.8
Buildings			793.0						738.5
Leasehold improvements			191.7						167.2
Machinery and equipment			3,394.4						3,394.5
Computer software			501.4						470.6
Property, plant & equipment, gross			$	5,077.9					$	4,974.7
Less: accumulated depreciation and amortization			(2,724.8)						(2,637.9)
Property, plant & equipment, net			$	2,353.1					$	2,336.8

Depreciation and amortization expense associated with property, plant and equipment was as follows:

(Millions of Dollars)			2022						2021						2020
Depreciation			$	330.4					$	326.3					$	332.6
Amortization			39.3						47.7						43.9
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

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

E. ACQUISITIONS AND INVESTMENTS

2021 ACQUISITIONS

MTD

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. 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)
Cash and cash equivalents			$	111.5
Accounts receivable, net			270.5
Inventories, net			855.7
Prepaid expenses and other assets			56.9
Property, plant and equipment			256.9
Trade names			390.0
Customer relationships			460.0
Other assets			38.5
Accounts payable			(394.6)
Accrued expenses			(201.1)
Deferred revenue			(0.9)
Long-term debt			(110.9)
Deferred taxes			(214.3)
Other liabilities			(68.4)
Total identifiable net assets			$	1,449.8
Goodwill			486.9
Total consideration			$	1,936.7

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

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected cost synergies of the combined business and assembled workforce. Goodwill of $0.6 million will be deductible for tax purposes.

Excel

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

2020 ACQUISITION

CAM

On February 24, 2020, the Company acquired CAM for a total estimated purchase price of approximately $1.46 billion, net of cash acquired. The purchase price consisted of an initial cash payment of approximately $1.30 billion, net of cash acquired, and future payments up to $200.0 million contingent on The Boeing Company ("Boeing") 737 MAX Airplanes receiving Federal Aviation Administration ("FAA") authorization to return to service and Boeing achieving certain production levels, which were valued at $155.3 million as of the acquisition date.

In November 2020, the FAA rescinded the 737 MAX grounding order and as a result of the subsequent return to revenue service of the 737 MAX in December 2020, the Company paid $100.0 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 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. The acquisition further diversified the Company's presence in the industrial markets and expanded its portfolio of specialty fasteners in the aerospace and defense markets. The results of CAM subsequent to the date of acquisition are included in the Company's Industrial segment.

The CAM acquisition 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)
Cash and cash equivalents			$	35.8
Accounts receivable, net			48.3
Inventories, net			124.3
Prepaid expenses and other assets			2.6
Property, plant and equipment			127.9
Trade names			25.0
Customer relationships			565.0
Accounts payable			(25.9)
Accrued expenses			(26.9)
Deferred taxes			(16.3)
Other liabilities			(0.3)
Total identifiable net assets			$	859.5
Goodwill			632.3
Contingent consideration			(155.3)
Total consideration paid			$	1,336.5

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

ACTUAL AND PRO-FORMA IMPACT FROM ACQUISITIONS

Actual Impact from Acquisitions

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

(Millions of Dollars, except per share amounts)			2022						2021
Net sales			$	16,947.4					$	17,890.8
Net earnings from continuing operations attributable to common shareowners - Diluted			318.3						1,666.0
Diluted earnings per share of common stock - Continuing operations			$	2.03					$	10.10

2022 Pro-forma Results

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:

• 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 January 2, 2021 to the acquisition dates.

• 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 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.

INVESTMENTS

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. 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.

F. GOODWILL AND INTANGIBLE ASSETS

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

(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
Foreign currency translation and other			(50.2)						(29.0)									(79.2)
Balance January 1, 2022			$	5,973.7					$	2,617.0								$	8,590.7
Acquisitions			90.5						—									90.5
Foreign currency translation and other			(124.5)						(54.0)									(178.5)
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 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. Also inherent in the discounted cash flow valuations were near-term revenue growth rates over the next six years. These assumptions contemplated business, market and overall economic conditions. 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 December 31, 2022 and January 1, 2022 were as follows:

			2022												2021
(Millions of Dollars)			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Amortized Intangible Assets — Definite lived
Patents and copyrights			$	25.8					$	(25.6)					$	27.0					$	(26.6)
Trade names			247.7						(118.0)						275.9						(118.8)
Customer relationships			2,881.2						(1,059.9)						3,027.5						(1,027.5)
Other intangible assets			129.6						(122.0)						147.6						(134.8)
Total			$	3,284.3					$	(1,325.5)					$	3,478.0					$	(1,307.7)

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.

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. 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 & Outdoor			$	108.1					$	64.1					$	61.5
Industrial			94.4						99.9						96.6
Discontinued Operations			—						39.1						43.5
Consolidated			$	202.5					$	203.1					$	201.6

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.

G. ACCRUED EXPENSES

(Millions of Dollars)			December 31, 2022						January 1, 2022
Payroll and related taxes			$	192.0					$	346.4
Income and other taxes			260.7						306.0
Customer rebates and sales returns			376.6						408.5
Insurance and benefits			95.3						83.0
Restructuring costs			62.3						31.7
Derivative financial instruments			16.1						8.7
Warranty costs			99.8						103.6
Deferred revenue			29.6						35.0
Freight costs			220.3						221.9
Environmental costs			39.4						46.1
Current lease liability			114.1						115.5
Forward stock purchase contract			—						330.4
Accrued interest			49.0						80.7
Other			565.5						523.5
Total			$	2,120.7					$	2,641.0

H. LONG-TERM DEBT AND FINANCING ARRANGEMENTS

						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
Notes payable due 2025			2.30%			$	500.0		$	(0.5)		$	—		$	—		$	(1.8)		$	497.7					$	—
Notes payable due 2026			3.40%			500.0			(0.3)			—			—			(1.4)			498.3						497.8
Notes payable due 2026			3.42%			25.0			—			—			1.4			—			26.4						24.9
Notes payable due 2026			1.84%			26.7			—			—			1.3			—			28.0						28.4
Notes payable due 2028			7.05%			150.0			—			6.0			5.8			—			161.8						163.9
Notes payable due 2028			4.25%			500.0			(0.2)			—			—			(2.6)			497.2						496.8
Notes payable due 2028			3.52%			50.0			—			—			3.8			(0.1)			53.7						49.9
Notes payable due 2030			2.30%			750.0			(1.8)			—			—			(3.7)			744.5						743.7
Notes payable due 2032			3.00%			500.0			(0.9)			—			—			(3.2)			495.9						—
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
Other, payable in varying amounts 2024 through 2027			4.10%-4.31%			3.0			—			—			—			—			3.0						4.3
Total long-term debt, including current maturities						$	5,404.7		$	(6.3)		$	(20.1)		$	12.3		$	(36.5)		$	5,354.1					$	4,354.9
Less: Current maturities of long-term debt																					(1.2)						(1.3)
Long-term debt																					$	5,352.9					$	4,353.6

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

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. The Company also recognized a pre-tax loss of $19.6 million relating to the unamortized loss on cash flow swap terminations related to the 2022 Term Notes. Refer to Note I, Financial Instruments, for further discussion.

Commercial Paper and Credit Facilities

The Company has a $3.5 billion commercial paper program which includes Euro denominated borrowings in addition to U.S. Dollars. 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. Dollars, Euros or Pounds Sterling. A sub-limit amount of $814.3 million is designated for swing line advances which may be drawn in Euros pursuant to the terms of the 5-Year Credit Agreement. Borrowings bear interest at a floating rate plus an applicable margin dependent upon the denomination of the borrowing and specific terms of the 5-Year Credit Agreement. The Company must repay all advances under the 5-Year Credit Agreement by the earlier of September 8, 2026 or upon termination. The 5-Year Credit Agreement is designated to be a liquidity back-stop for the Company's $3.5 billion U.S. Dollar and Euro commercial paper program. As of December 31, 2022, and January 1, 2022, the Company had not drawn on its five-year committed credit facility.

In September 2022, the Company terminated its 364-Day $1.0 billion committed 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 syndicated 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 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 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 Agreement"), 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 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 December 31, 2022, the Company had not 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, using 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 termination. 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 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.

I. FINANCIAL INSTRUMENTS

The Company is exposed to market risk from changes in foreign currency exchange rates, interest rates, stock prices and commodity prices. As part of the Company’s risk management program, a variety of financial instruments such as interest rate swaps, currency swaps, purchased currency options, foreign exchange contracts and commodity contracts, may be used to mitigate interest rate exposure, foreign currency exposure and commodity price exposure.

If the Company elects to do so and if the instrument meets the criteria specified in ASC 815, management designates its derivative instruments as cash flow hedges, fair value hedges or net investment hedges. Generally, commodity price exposures are not hedged with derivative financial instruments and instead are actively managed through customer pricing initiatives, procurement-driven cost reduction initiatives and other productivity improvement projects. 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 December 31, 2022 and January 1, 2022 follows:

(Millions of Dollars)						Balance Sheet Classification						2022						2021						Balance Sheet Classification						2022						2021
Derivatives designated as hedging instruments:
Interest Rate Contracts Cash Flow						Other current assets						$	—					$	1.2					Accrued expenses						$	—					$	1.9
Foreign Exchange Contracts Cash Flow						Other current assets						4.5						18.3						Accrued expenses						4.2						0.8
Net Investment Hedge						Other current assets						—						2.5						Accrued expenses						—						—
						LT other assets						—						3.3						LT other liabilities						—						—
Total Designated as hedging instruments												$	4.5					$	25.3											$	4.2					$	2.7
Derivatives not designated as hedging instruments:
Foreign Exchange Contracts						Other current assets						$	7.7					$	7.8					Accrued expenses						$	11.9					$	6.0
Total												$	12.2					$	33.1											$	16.1					$	8.7

The counterparties to all of the above mentioned financial instruments are major international financial institutions. The Company is exposed to credit risk for net exchanges under these agreements, but not for the notional amounts. 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. 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 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.

The tables below detail pre-tax amounts of derivatives designated as cash flow hedges in Accumulated other comprehensive loss during the periods in which the underlying hedged transactions affected earnings for 2022, 2021 and 2020:

2022 (Millions of Dollars)						Gain (Loss) Recorded in OCI						Classification of Gain (Loss) Reclassified from OCI to Income						Gain (Loss) Reclassified from OCI to Income						Gain (Loss) Recognized in Income on Amounts Excluded from Effectiveness Testing
Interest Rate Contracts						$	23.4					Interest expense						$	(5.8)					$	—
Foreign Exchange Contracts						$	30.6					Cost of sales						$	53.3					$	—

2021 (Millions of Dollars)						Gain (Loss) Recorded in OCI						Classification of Gain (Loss) Reclassified from OCI to Income						Gain (Loss) Reclassified from OCI to Income						Gain (Loss) Recognized in Income on Amounts Excluded from Effectiveness Testing
Interest Rate Contracts						$	14.9					Interest expense						$	(3.9)					$	—
Foreign Exchange Contracts						$	24.1					Cost of sales						$	(26.1)					$	—

2020 (Millions of Dollars)						Gain (Loss) Recorded in OCI						Classification of Gain (Loss) Reclassified from OCI to Income						Gain (Loss) Reclassified from OCI to Income (Effective Portion)						Gain (Loss) Recognized in Income (Ineffective Portion)
Interest Rate Contracts						$	(70.9)					Interest expense						$	(16.3)					$	—
Foreign Exchange Contracts						$	(16.1)					Cost of sales						$	12.4					$	—

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

			2022												2021												2020
(Millions of dollars)			Cost of Sales						Interest Expense						Cost of Sales						Interest Expense						Cost of Sales						Interest Expense
Total amount in the Consolidated Statements of Operations in which the effects of the cash flow hedges are recorded			$	12,663.3					$	338.5					$	10,189.1					$	185.4					$	8,431.9					$	222.7
Gain (loss) on cash flow hedging relationships:
Foreign Exchange Contracts:
Hedged Items			$	(53.3)					$	—					$	26.1					$	—					$	(12.4)					$	—
Gain (loss) reclassified from OCI into Income			$	53.3					$	—					$	(26.1)					$	—					$	12.4					$	—
Interest Rate Swap Agreements:
Gain (loss) reclassified from OCI into Income 1			$	—					$	(5.8)					$	—					$	(3.9)					$	—					$	(16.3)

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

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.

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.

Foreign Currency Contracts

Forward Contracts: Through its global businesses, the Company enters into transactions and makes investments denominated in multiple currencies that give rise to foreign currency risk. The Company and its subsidiaries regularly purchase inventory from subsidiaries with functional currencies different than their own, which creates currency-related volatility in the Company’s results of operations. The Company utilizes forward contracts to hedge these forecasted purchases and sales of inventory. 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 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

Interest Rate Risk: In an effort to optimize the mix of fixed versus floating rate debt in the Company’s capital structure, the Company enters into interest rate swaps. In prior years, the Company entered into interest rate swaps related to certain of its notes payable which were subsequently terminated. 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 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:

						2022						2021						2020
(Millions of dollars)						Interest Expense						Interest Expense						Interest Expense
Total amount in the Consolidated Statements of Operations in which the effects of the fair value hedges are recorded						$	338.5					$	185.4					$	222.7
Amortization of gain on terminated swaps						$	(0.4)					$	(0.4)					$	(3.0)

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 gain of $3.5 million relating to the remaining unamortized gain on fair value swap terminations related to the 2021 Term Notes.

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						2022 Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liability
Current maturities of long-term debt						$	1.2					Terminated Swaps						$	—
Long-Term Debt						$	533.1					Terminated Swaps						$	(20.1)

1Represents hedged items no longer designated in qualifying fair value hedging relationships.

(Millions of dollars)						2021 Carrying Amount of Hedged Liability****1						2021 Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liability
Current maturities of long-term debt						$	1.3					Terminated Swaps						$	—
Long-Term Debt						$	533.6					Terminated Swaps						$	(20.4)

1Represents hedged items no longer designated in qualifying fair value hedging relationships.

NET INVESTMENT HEDGES

Foreign Exchange Contracts: 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 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. Gains and losses representing components excluded from the assessment of effectiveness are recognized in earnings in Other, net on a straight-line basis over the term of the hedge. Gains and losses after a hedge has been de-designated are recorded directly to the Consolidated Statements of Operations in Other, net.

The pre-tax gains and losses from fair value changes during 2022, 2021 and 2020 were as follows:

						2022
(Millions of Dollars)						Total Gain (Loss) Recorded in OCI						Excluded Component Recorded in OCI						Income Statement Classification						Total Gain (Loss) Reclassified from OCI to Income						Excluded Component Amortized from OCI to Income
Forward Contracts						$	6.1					$	0.6					Other, net						$	0.7					$	0.7
Cross Currency Swap						$	(1.2)					$	2.5					Other, net						$	1.5					$	1.5
Non-derivative designated as Net Investment Hedge						$	(0.1)					$	—					Other, net						$	—					$	—

						2021
(Millions of Dollars)						Total Gain (Loss) Recorded in OCI						Excluded Component Recorded in OCI						Income Statement Classification						Total Gain (Loss) Reclassified from OCI to Income						Excluded Component Amortized from OCI to Income
Forward Contracts						$	(1.2)					$	1.6					Other, net						$	1.5					$	1.5
Cross Currency Swap						$	11.7					$	24.6					Other, net						$	3.7					$	3.7
Non-derivative designated as Net Investment Hedge						$	(6.7)					$	—					Other, net						$	—					$	—

						2020
(Millions of Dollars)						Total Gain (Loss) Recorded in OCI						Excluded Component Recorded in OCI						Income Statement Classification						Total Gain (Loss) Reclassified from OCI to Income						Excluded Component Amortized from OCI to Income
Forward Contracts						$	0.8					$	—					Other, net						$	—					$	—
Cross Currency Swap						$	(5.4)					$	60.7					Other, net						$	18.2					$	18.2
Non-derivative designated as Net Investment Hedge						$	(8.5)					$	—					Other, net						$	—					$	—

UNDESIGNATED HEDGES

Foreign Exchange Contracts: Currency swaps and foreign exchange forward contracts are used to reduce risks arising from the change in fair value of certain foreign currency denominated assets and liabilities (such as affiliate loans, payables and receivables). 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 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. The gain (loss) recorded in the Consolidated Statements of Operations from changes in the fair value related to derivatives not designated as hedging instruments under ASC 815 for 2022, 2021 and 2020 are as follows:

(Millions of Dollars)			Income Statement Classification						2022						2021						2020
Foreign Exchange Contracts			Other-net						$	5.0					$	(10.8)					$	(15.7)

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

			2022						2021						2020
Numerator (in millions):
Net Earnings from Continuing Operations Attributable to Common Shareowners			$	164.3					$	1,538.3					$	1,129.8
Add: Contract adjustment payments accretion			1.2						1.3						1.7
Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted			165.5						1,539.6						1,131.5
Net earnings from discontinued operations			892.4						136.7						79.9
Net Earnings Attributable to Common Shareowners - Diluted			$	1,057.9					$	1,676.3					$	1,211.4

			2022						2021						2020
Denominator (in thousands):
Basic weighted-average shares outstanding			148,170						158,760						154,176
Dilutive effect of stock contracts and awards			8,383						6,264						8,251
Diluted weighted-average shares outstanding			156,553						165,024						162,427

Earnings per share of common stock:
Basic earnings per share of common stock:
Continuing operations			$	1.11					$	9.69					$	7.33
Discontinued operations			$	6.02					$	0.86					$	0.52
Total basic earnings per share of common stock			$	7.13					$	10.55					$	7.85
Diluted earnings per share of common stock:
Continuing operations			$	1.06					$	9.33					$	6.97
Discontinued operations			$	5.70					$	0.83					$	0.49
Total dilutive earnings per share of common stock			$	6.76					$	10.16					$	7.46

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

			2022						2021						2020
Number of stock options			4,019						1,039						2,376

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 had a stated amount of $100 and initially 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 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. Upon completion of the remarketing, the holders of the 2017 Equity Units received 5,463,750 common shares and the Company issued 750,000 shares of Remarketed Series C Preferred Stock, without par, with a liquidation preference of $1,000 per share. Holders of the Remarketed Series C Preferred Stock were entitled to receive cumulative dividends, if declared by the Board of Directors, at an initial fixed rate equal to 5.0% per annum of the $1,000 per share liquidation preference (equivalent to $50.00 per annum per share). Beginning on May 15, 2020, the holders had the option to convert the Remarketed Series C Preferred Stock into common stock. At the election of the Company, upon conversion, the Company 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 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.

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

COMMON STOCK ACTIVITY — Common stock activity for 2022, 2021 and 2020 was as follows:

			2022						2021						2020
Outstanding, beginning of year			163,328,776						160,752,262						153,506,409
Issued from treasury			5,711,974						3,105,587						7,474,394
Returned to treasury			(16,057,220)						(529,073)						(228,541)
Outstanding, end of year			152,983,530						163,328,776						160,752,262
Shares subject to the forward share purchase contract			(3,645,510)						(3,645,510)						(3,645,510)
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 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 December 31, 2022 and January 1, 2022 are as follows:

			2022						2021
Employee stock purchase plan			1,251,699						1,388,655
Other stock-based compensation plans			8,403,765						5,260,005
Total shares reserved			9,655,464						6,648,660

STOCK-BASED COMPENSATION PLANS — The Company has stock-based compensation plans for salaried employees and non-employee members of the Board of Directors. 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 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 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 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.

The fair value of stock option grants is estimated on the date of grant using the Black-Scholes option pricing model. The following weighted-average assumptions were used to value grants made in 2022, 2021 and 2020:

			2022						2021						2020
Average expected volatility			38.6		%				34.0		%				35.0		%
Dividend yield			3.7		%				1.6		%				1.6		%
Risk-free interest rate			3.2		%				1.3		%				0.4		%
Expected life			4.2 years						5.3 years						5.3 years
Fair value per option			$	20.00					$	52.39					$	48.36
Weighted-average vesting period			1.7 years						2.9 years						2.8 years

Stock Options:

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

			Options						Price
Outstanding, beginning of year			5,573,672						$	151.46
Granted			868,139						78.83
Exercised			(295,451)						86.30
Forfeited			(864,647)						169.79
Outstanding, end of year			5,281,713						$	140.22
Exercisable, end of year			3,591,149						$	145.59

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 $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.

An excess tax benefit is generated on the extent to which the actual gain, or spread, an optionee receives upon exercise of an option exceeds the fair value determined at the grant date; that excess spread over the fair value of the option times the applicable tax rate represents the excess tax benefit. 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
Exercise Price Ranges			Options						Weighted- Average Remaining Contractual Life						Weighted- Average Exercise Price						Options						Weighted- Average Remaining Contractual Life						Weighted- Average Exercise Price
$100.00 and below			1,045,223						8.29						$	80.46					207,890						1.69						$	91.05
100.01 — 165.00			2,257,043						5.24						132.05						2,078,188						5.05						131.04
165.01 — higher			1,979,447						7.10						181.09						1,305,071						6.37						177.45
			5,281,713						6.54						$	140.22					3,591,149						5.34						$	145.59

Compensation cost for new grants is recognized on a straight-line basis over the vesting period. 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 December 31, 2022, both the aggregate intrinsic value of stock options outstanding and stock options exercisable was zero.

Employee Stock Purchase Plan:

The Employee Stock Purchase Plan (“ESPP”) enables eligible employees in the United States, Canada and Israel to purchase shares of the Company's common stock at the lower of 85.0% of the fair market value of the shares on the grant date ($151.46 per share for fiscal year 2022 purchases) or 85.0% of the fair market value of the shares on the last business day of each month. A maximum of 1,600,000 shares are authorized for subscription. 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. For 2022, the Company received $13.2 million in cash from ESPP purchases, and there was no related tax benefit. 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. The fair value of the employees’ purchase rights under the ESPP was estimated using the following assumptions for 2022, 2021 and 2020, respectively: dividend yield of 1.7%, 1.6% and 1.7%; expected volatility of 25.0%, 55.0% and 28.0%; risk-free interest rates of 0.2%, 0.1%, and 1.6%; and expected lives of one year. 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 $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 three or four years. RSU grants totaled 870,848 shares, 463,084 shares and 325,448 shares in 2022, 2021 and 2020, respectively. The weighted-average grant date fair value of RSUs granted in 2022, 2021 and 2020 was $85.05, $193.66 and $165.44 per share, respectively.

Total compensation expense recognized for RSUs amounted to $50.6 million, $47.3 million and $35.6 million in 2022, 2021 and 2020, respectively. The actual tax benefit received related to the shares that were delivered in 2022 was $6.2 million. The shortfall recognized in 2022 was $3.6 million. The excess 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 Units & Awards						Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2022			978,351						$	173.06
Granted			870,848						85.05
Vested			(308,783)						163.11
Forfeited			(273,954)						171.08
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 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.

Management Incentive Compensation Plan Performance Stock Units:

In 2020 and 2019, the Company granted Performance Stock Units (collectively "MICP-PSUs") under the Management Incentive Compensation Plan ("MICP") to participating employees. 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 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:

			MICP PSUs						Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2022			249,730						$	100.73
Granted			—						—
Vested			(144,923)						104.32
Forfeited			(37,109)						99.75
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. The actual tax benefit received related to the shares that were delivered in 2022 and 2021 was $3.6 million and $5.6 million, respectively.

Long-Term Performance Awards:

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 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. 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.

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 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:

			LTIP Units						Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2022			649,806						$	145.90
Granted			250,518						157.05
Vested			(92,589)						123.56
Forfeited			(273,149)						139.67
Non-vested at December 31, 2022			534,586						$	158.18

OTHER EQUITY ARRANGEMENTS

2019 Equity Units and Capped Call Transactions

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

2017 Equity Units and Capped Call Transactions

In conjunction with the issuance of the 2017 Equity Units in May 2017, as further discussed above, the Company received approximately $727.5 million in cash proceeds, net of offering expenses and underwriting costs and commissions. The proceeds were attributed to the issuance of 750,000 shares of Series C Preferred Stock for $605.0 million, $117.1 million for the present value of the Contract Adjustment Payments, and a beneficial conversion feature of $5.4 million. The proceeds were used for general corporate purposes, including repayment of short-term borrowings. The Company also used $25.1 million of the proceeds to enter into capped call transactions utilized to hedge potential economic dilution as described in more detail below.

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. 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 C Preferred Stock was pledged as collateral to support holders’ purchase obligations under the 2020 Purchase Contracts.

As discussed further above, the Company successfully remarketed the Series C Preferred Stock in May 2020. Subsequent to the remarketing, holders of the Remarketed Series C Preferred Stock were entitled to receive, if declared by the Board of Directors, cumulative dividends (i) from, and including May 15, 2020 to, but excluding, May 15, 2023 (the "dividend step-up date”) at a fixed rate equal to 5.0% per annum of the $1,000 per share liquidation preference (equivalent to $50.00 per annum per share) and (ii) from, and including, the dividend step-up date at a fixed rate equal to 10.0% per annum of the $1,000 per share liquidation preference (equivalent to $100.00 per annum per share). Dividends were cumulative on the $1,000 liquidation preference per share and 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.

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.

The Company paid Contract Adjustment Payments to the holders of the 2020 Purchase Contracts at a rate of 5.375% per annum, payable quarterly in arrears on February 15, May 15, August 15 and November 15, which commenced August 15, 2017. The $117.1 million initial present value of these Contract Adjustment Payments reduced the Series C Preferred Stock at inception. As each quarterly Contract Adjustment Payment was made, the related liability was reduced and the difference between the cash payments and the present value accreted to interest expense, approximately $1.3 million per year over the three-year term. On May 15, 2020, the Company paid the final contract adjustment payment related to the 2020 Purchase Contracts.

Capped Call Transactions

In May 2017, the Company entered into capped call transactions with three major financial institutions (the “counterparties”) in order to offset the potential economic dilution associated with the common shares issuable upon conversion of the Series C Preferred Stock, to the extent that the conversion value of the convertible preferred stock exceeds its liquidation preference. The Company paid $25.1 million, or an average of $5.43 per option, to enter into capped call transactions on 4.6 million shares of common stock. The $25.1 million premium paid was recorded as a reduction of Shareowners' Equity.

The capped call transactions had a term of approximately three years and were intended to cover the number of shares issuable upon conversion of the Series C Preferred Stock. Subject to customary anti-dilution adjustments, the capped call had an initial lower strike price of $162.27, which corresponded to the minimum 6.1627 settlement rate of the Series C Preferred Stock at inception, and an upper strike price of $179.53, which was approximately 30% higher than the closing price of the Company’s common stock on May 11, 2017. In June 2020, the capped call options expired out of the money.

2018 Capped Call Transactions

In March 2018, the Company purchased from a financial institution “at-the money” capped call options with an approximate term of three years, on 3.2 million shares of its common stock (subject to customary anti-dilution adjustments) for an aggregate premium of $57.3 million, or an average of $17.96 per share. The premium paid was recorded as a reduction of Shareowners’

Equity. The purpose of the capped call options was to hedge the risk of stock price appreciation between the lower and upper strike prices of the capped call options for a future share repurchase.

In February 2020, the Company net-share settled 0.6 million of the 3.2 million capped call options on its common stock and received 61,767 shares using an average reference price of $162.26 per common share.

On June 9, 2020, the Company amended the 2018 capped call options to align with and offset the potential economic dilution associated with the common shares issuable upon conversion of the Remarketed Series C Preferred Stock, as further discussed above. 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.

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.

K. 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 - January 2, 2021			$	(1,235.3)					$	(103.0)					$	72.8					$	(448.2)					$	(1,713.7)
Other comprehensive (loss) income before reclassifications			(307.7)						36.2						2.9						107.0						(161.6)
Reclassification adjustments to earnings			—						17.0						(3.9)						16.6						29.7
Net other comprehensive (loss) income			(307.7)						53.2						(1.0)						123.6						(131.9)
Balance - January 1, 2022			$	(1,543.0)					$	(49.8)					$	71.8					$	(324.6)					$	(1,845.6)
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 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
Total before taxes						$	47.5					$	(30.0)
Tax effect						(21.1)						13.0						Income taxes
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
Tax effect						(0.5)						(1.3)						Income taxes
Realized gains on net investment hedges, net of tax						$	1.7					$	3.9
Actuarial losses and prior service costs / credits						(13.3)						(21.0)						Other, net
Settlement losses						—						(1.1)						Other, net
Total before taxes						(13.3)						(22.1)
Tax effect						3.5						5.5						Income taxes
Amortization of defined benefit pension items, net of tax						$	(9.8)					$	(16.6)

L. EMPLOYEE BENEFIT PLANS

EMPLOYEE STOCK OWNERSHIP PLAN (“ESOP”) — Most U.S. employees may make contributions that do not exceed 25% of their eligible compensation to a tax-deferred 401(k) savings plan, subject to restrictions under tax laws. Employees generally direct the investment of their own contributions into various investment funds. An employer match benefit is provided under the plan equal to one-half of each employee’s tax-deferred contribution up to the first 7% of their compensation. Participants direct the entire employer match benefit such that no participant is required to hold the Company’s common stock in their 401(k) account. The employer match benefit totaled $32.2 million, $28.0 million and $9.2 million in 2022, 2021 and 2020, respectively. 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. salaried and non-union hourly employees are eligible to receive a non-contributory benefit under the Core benefit plan. Core benefit allocations range from 2% to 6% of eligible employee compensation based on age. Allocations for benefits earned under the Core plan were $28.9 million, $31.1 million, and $5.4 million in 2022, 2021 and 2020, respectively. In 2020, the Core allocations were also suspended from the second quarter to the end of the year. Assets held in participant Core accounts are invested in target date retirement funds which have an age-based allocation of investments.

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 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. Dividends on both allocated and unallocated shares were used for debt service and to credit participant accounts for dividends earned on allocated shares. Dividends paid on the shares acquired with the 1991 internal loan were used solely to pay internal loan debt service in all periods. 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.

PENSION AND OTHER BENEFIT PLANS — The Company sponsors pension plans covering most domestic hourly and certain executive employees, and approximately 14,300 foreign employees. Benefits are generally based on salary and years of service, except for U.S. collective bargaining employees whose benefits are based on a stated amount for each year of service.

The Company contributes to a number of multi-employer plans for certain collective bargaining U.S. employees. The risks of participating in these multi-employer plans are different from single-employer plans in the following aspects:

a. Assets contributed to the multi-employer plan by one employer may be used to provide benefit to employees of other participating employers.

b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be inherited by the remaining participating employers.

c. If the Company chooses to stop participating in some of its multi-employer plans, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

In addition, the Company also contributes to a number of multi-employer plans outside of the U.S. The foreign plans are insured, therefore, the Company’s obligation is limited to the payment of insurance premiums.

The Company has assessed and determined that none of the multi-employer plans to which it contributes are individually significant to the Company’s Consolidated Financial Statements. The Company does not expect to incur a withdrawal liability or expect to significantly increase its contributions over the remainder of the contract period.

In addition to the multi-employer plans, various other defined contribution plans are sponsored worldwide. 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. employees.

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 (benefit) expense			$	(2.4)					$	28.6					$	24.9

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

			U.S. Plans																		Non-U.S. Plans
(Millions of Dollars)			2022						2021						2020						2022						2021						2020
Service cost			$	6.2					$	6.5					$	6.8					$	15.1					$	17.6					$	16.1
Interest cost			33.6						23.0						35.3						22.9						16.7						22.5
Expected return on plan assets			(60.9)						(54.9)						(58.7)						(37.7)						(39.9)						(41.2)
Amortization of prior service cost (credit)			0.9						1.1						1.0						(0.7)						(0.8)						(0.7)
Actuarial loss amortization			5.9						9.2						8.5						7.9						12.2						11.7
Special termination benefit			—						—						—						—						—						0.2
Settlement / curtailment loss			0.2						0.4						—						0.2						0.7						0.6
Net periodic pension (benefit) expense			$	(14.1)					$	(14.7)					$	(7.1)					$	7.7					$	6.5					$	9.2

The Company provides medical and dental benefits for certain retired employees in the United States, Brazil, and Canada. Approximately 20,800 participants are covered under these plans. Net periodic post-retirement benefit expense was comprised of the following:

			Other Benefit Plans
(Millions of Dollars)			2022						2021						2020
Service cost			$	0.3					$	0.4					$	0.6
Interest cost			1.5						0.9						1.5
Amortization of prior service credit			—						(0.7)						(1.3)
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 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:

(Millions of Dollars)			2022
Current year actuarial gain			$	(75.1)
Amortization of actuarial loss			(13.3)
Prior service cost from plan amendments			1.2
Settlement / curtailment loss			—
Currency / other			(24.5)
Total gain recognized in Accumulated other comprehensive loss (pre-tax)			$	(111.7)

The changes in the pension and other post-retirement benefit obligations, fair value of plan assets, as well as amounts recognized in the Consolidated Balance Sheets, are shown below.

			U.S. Plans												Non-U.S. Plans												Other Benefits
(Millions of Dollars)			2022						2021						2022						2021						2022						2021
Change in benefit obligation
Benefit obligation at end of prior year			$	1,458.2					$	1,404.3					$	1,490.4					$	1,622.3					$	50.3					$	61.2
Service cost			6.2						6.5						15.1						17.6						0.3						0.4
Interest cost			33.6						23.0						22.9						16.7						1.5						0.9
Special termination benefit			—						—						—						—						6.9						—
Settlements/curtailments			(10.7)						(0.8)						(4.4)						(15.3)						(0.4)						—
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						—
Foreign currency exchange rate changes			—						—						(133.1)						(37.7)						(0.2)						(0.2)
Participant contributions			—						—						0.2						0.2						—						—
Acquisitions, divestitures, and other			(4.5)						152.4						2.2						28.9						—						—
Benefits paid			(85.3)						(80.8)						(52.9)						(50.0)						(6.5)						(5.4)
Benefit obligation at end of year			$	1,083.5					$	1,458.2					$	931.0					$	1,490.4					$	42.8					$	50.3
Change in plan assets
Fair value of plan assets at end of prior year			$	1,340.1					$	1,191.5					$	1,226.6					$	1,229.6					$	—					$	—
Actual return on plan assets			(279.0)						63.4						(281.3)						17.9						—						—
Participant contributions			—						—						0.2						0.2						—						—
Employer contributions			7.0						13.8						18.4						20.8						6.5						5.4
Settlements			(11.0)						(0.8)						(4.4)						(13.7)						—						—
Foreign currency exchange rate changes			—						—						(121.0)						(15.6)						—						—
Acquisitions, divestitures, and other			(4.5)						153.0						(2.2)						37.4						—						—
Benefits paid			(85.3)						(80.8)						(52.9)						(50.0)						(6.5)						(5.4)
Fair value of plan assets at end of plan year			$	967.3					$	1,340.1					$	783.4					$	1,226.6					$	—					$	—
Funded status — assets less than benefit obligation			$	(116.2)					$	(118.1)					$	(147.6)					$	(263.8)					$	(42.8)					$	(50.3)
Unrecognized prior service cost (credit)			2.9						3.5						(13.8)						(16.4)						0.4						0.1
Unrecognized net actuarial loss (gain)			233.2						213.4						143.1						268.3						(18.3)						(9.7)
Net amount recognized			$	119.9					$	98.8					$	(18.3)					$	(11.9)					$	(60.7)					$	(59.9)

			U.S. Plans												Non-U.S. Plans												Other Benefits
(Millions of Dollars)			2022						2021						2022						2021						2022						2021
Amounts recognized in the Consolidated Balance Sheets
Prepaid benefit cost (non-current)			$	4.1					$	0.6					$	67.7					$	62.4					$	—					$	—
Current benefit liability			(6.1)						(6.0)						(9.5)						(10.3)						(8.9)						(7.5)
Non-current benefit liability			(114.2)						(112.7)						(205.8)						(315.9)						(33.9)						(42.8)
Net liability recognized			$	(116.2)					$	(118.1)					$	(147.6)					$	(263.8)					$	(42.8)					$	(50.3)

Accumulated other comprehensive loss (pre-tax):
Prior service cost (credit)			$	2.9					$	3.5					$	(13.8)					$	(16.4)					$	0.4					$	0.1
Actuarial loss (gain)			233.2						213.4						143.1						268.3						(18.3)						(9.7)
			236.1						216.9						129.3						251.9						(17.9)						(9.6)
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 from the prior year. 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:

			U.S. Plans												Non-U.S. Plans
(Millions of Dollars)			2022						2021						2022						2021
Accumulated benefit obligation			$	982.3					$	1,299.8					$	208.7					$	326.1
Fair value of plan assets			$	862.0					$	1,184.6					$	25.7					$	50.3

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:

			U.S. Plans												Non-U.S. Plans
(Millions of Dollars)			2022						2021						2022						2021
Projected benefit obligation			$	982.3					$	1,303.3					$	266.7					$	399.1
Fair value of plan assets			$	862.0					$	1,184.6					$	51.3					$	72.9

The major assumptions used in valuing pension and post-retirement plan obligations and net costs were as follows:

			Pension Benefits
			U.S. Plans																		Non-U.S. Plans																		Other Benefits
			2022						2021						2020						2022						2021						2020						2022						2021						2020
Weighted-average assumptions used to determine benefit obligations at year end:
Discount rate			5.36		%				2.80		%				2.39		%				4.70		%				1.78		%				1.31		%				5.47		%				2.84		%				2.19		%
Rate of compensation increase			—						3.00		%				3.56		%				3.64		%				3.56		%				3.29		%				—						—						3.50		%
Weighted-average assumptions used to determine net periodic benefit cost:
Discount rate - service cost			3.14		%				2.95		%				3.58		%				2.67		%				1.41		%				1.57		%				4.41		%				4.42		%				5.62		%
Discount rate - interest cost			2.28		%				1.68		%				2.75		%				1.69		%				1.06		%				1.61		%				2.25		%				1.60		%				3.36		%
Rate of compensation increase			3.00		%				3.00		%				3.00		%				3.57		%				3.27		%				3.30		%				—						—						3.50		%
Expected return on plan assets			4.69		%				4.75		%				5.25		%				3.41		%				3.25		%				3.90		%				—						—						—

The expected rate of return on plan assets is determined considering the returns projected for the various asset classes and the relative weighting for each asset class. The Company will use a 6.03% weighted-average expected rate of return assumption to determine the 2023 net periodic benefit cost.

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 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)			2022						Level 1						Level 2
Cash and cash equivalents			$	42.3					$	28.2					$	14.1
Equity securities
U.S. equity securities			181.9						66.2						115.7
Foreign equity securities			123.3						33.0						90.3
Fixed income securities
Government securities			619.3						236.7						382.6
Corporate securities			702.5						—						702.5
Insurance contracts			36.7						—						36.7
Other			44.7						—						44.7
Total			$	1,750.7					$	364.1					$	1,386.6

Asset Category (Millions of Dollars)			2021						Level 1						Level 2
Cash and cash equivalents			$	74.2					$	55.7					$	18.5
Equity securities
U.S. equity securities			323.3						92.5						230.8
Foreign equity securities			205.9						44.8						161.1
Fixed income securities
Government securities			871.1						340.7						530.4
Corporate securities			996.3						—						996.3
Insurance contracts			49.6						—						49.6
Other			46.3						—						46.3
Total			$	2,566.7					$	533.7					$	2,033.0

U.S. 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. Treasury securities and foreign government securities with de minimus default risk. Corporate fixed income securities include publicly traded U.S. and foreign investment grade and to a small extent high yield securities. Assets held in insurance contracts are invested in the general asset pools of the various insurers, mainly debt and equity securities with guaranteed returns. Other investments include diversified private equity holdings. The level 2 investments are primarily comprised of institutional mutual funds that are not publicly traded; the investments held in these mutual funds are generally level 1 publicly traded securities.

The Company's investment strategy for pension assets focuses on a liability-matching approach with gradual de-risking taking place over a period of many years. The Company utilizes the current funded status to transition the portfolio toward investments that better match the duration and cash flow attributes of the underlying liabilities. Assets approximating 50% of the Company's current pension liabilities have been invested in fixed income securities, using a liability / asset matching duration strategy, with the primary goal of mitigating exposure to interest rate movements and preserving the overall funded status of the underlying plans. Plan assets are broadly diversified and are invested to ensure adequate liquidity for immediate- and medium-term benefit payments. 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 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 approximately $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 over the next 10 years as follows:

(Millions of Dollars)						Total						Year 1						Year 2						Year 3						Year 4						Year 5						Years 6-10
Future payments						$	1,451.7					$	151.6					$	149.0					$	146.6					$	144.6					$	143.5					$	716.4

These benefit payments will be funded through a combination of existing plan assets, the returns on those assets, and amounts to be contributed in the future by the Company.

HEALTH CARE COST TRENDS — The weighted-average annual assumed rate of increase in the per-capita cost of covered benefits (i.e., health care cost trend rate) is assumed to be 6.7% for 2022, reducing gradually to 4.6% by 2031 and remaining at that level thereafter.

M. FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurement, defines, establishes a consistent framework for measuring, and expands disclosure requirements about fair value. ASC 820 requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:

Level 1 — Quoted prices for identical instruments in active markets.

Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs and significant value drivers are observable.

Level 3 — Instruments that are valued using unobservable inputs.

The Company is exposed to market risk from changes in foreign currency exchange rates, interest rates, stock prices and commodity prices. The Company holds various financial instruments to manage these risks. These financial instruments are carried at fair value and are included within the scope of ASC 820. The Company determines the fair value of these financial instruments through the use of matrix or model pricing, which utilizes observable inputs such as market interest and currency rates. When determining fair value for which Level 1 evidence does not exist, the Company considers various factors including the following: exchange or market price quotations of similar instruments, time value and volatility factors, the Company’s own credit rating and the credit rating of the counterparty.

The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis for each of the hierarchy levels:

(Millions of Dollars)			Total Carrying Value						Level 1						Level 2						Level 3
December 31, 2022
Money market fund			$	9.4					$	9.4					$	—					$	—
Equity security			$	3.2					$	3.2					$	—					$	—
Deferred compensation plan investments			$	19.0					$	19.0					$	—					$	—
Derivative assets			$	12.2					$	—					$	12.2					$	—
Derivative liabilities			$	16.1					$	—					$	16.1					$	—
Contingent consideration liability			$	268.7					$	—					$	—					$	268.7
January 1, 2022
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					$	—
Derivative liabilities			$	8.7					$	—					$	8.7					$	—
Contingent consideration liability			$	288.6					$	—					$	—					$	288.6

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

			December 31, 2022												January 1, 2022
(Millions of Dollars)			Carrying Value						Fair Value						Carrying Value						Fair Value
Other investments			$	9.3					$	9.3					$	11.2					$	11.6
Long-term debt, including current portion			$	5,354.1					$	4,662.9					$	4,354.9					$	4,850.2

The money market fund and other investments related to the West Coast Loading Corporation ("WCLC") trust are considered Level 1 instruments within the fair value hierarchy. The equity security is considered a Level 1 instrument and is recorded at its quoted market price. The deferred compensation plan investments are considered Level 1 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 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, Inc. 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 $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 $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. The Company's judgments used to determine the estimated contingent consideration liability discussed above, including estimated future sales projections, can materially impact the Company's results of operations.

The Company had no significant non-recurring fair value measurements, nor any other financial assets or liabilities measured using Level 3 inputs, during 2022 or 2021.

Refer to Note I, Financial Instruments, for more details regarding derivative financial instruments, Note S, Contingencies, for more details regarding the other investments related to the WCLC trust, and Note H, Long-Term Debt and Financing Arrangements, for more information regarding the carrying values of the Company's long-term debt.

N. 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, 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 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. The charges were primarily related to costs associated with a voluntary retirement program as well as restructuring costs related to headcount actions.

Research and development costs, which are classified in SG&A, were $357.4 million, $276.3 million and $200.0 million for fiscal years 2022, 2021 and 2020, respectively.

O. RESTRUCTURING CHARGES

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						December 31, 2022
Severance and related costs			$	28.2					$	125.9					$	(98.7)					$	1.6					$	57.0
Facility closures and asset impairments			3.5						14.9						(13.2)						0.1						5.3
Total			$	31.7					$	140.8					$	(111.9)					$	1.7					$	62.3

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.

Segments: 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; and $34.2 million pertaining to Corporate.

P. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS

The Company’s operations are classified into two reportable business segments: 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, 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. Hand tools include measuring, leveling and layout tools, planes, hammers, demolition tools, clamps, vises, knives, saws, chisels and industrial and automotive tools. Power tool accessories include drill bits, screwdriver bits, router bits, abrasives, saw blades and threading products. 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 Industrial segment is comprised of the Engineered Fastening and Infrastructure businesses. 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 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 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. Transactions between segments are not material. Segment assets primarily include cash, accounts receivable, inventory, other current assets, property, plant and equipment, right-of-use lease assets and intangible assets. Net sales and long-lived assets are attributed to the geographic regions based on the geographic locations of the end customer and the Company subsidiary, respectively.

BUSINESS SEGMENTS

(Millions of Dollars)			2022						2021						2020
Net Sales
Tools & Outdoor			$	14,423.7					$	12,817.4					$	10,329.7
Industrial			2,523.4						2,463.1						2,352.7
Corporate Overhead & Other			0.3						0.8						67.6
Consolidated			$	16,947.4					$	15,281.3					$	12,750.0
Segment Profit
Tools & Outdoor			$	971.9					$	1,985.4					$	1,820.3
Industrial			236.2						256.6						220.6
Segment Profit			1,208.1						2,242.0						2,040.9
Corporate Overhead & Other			(294.0)						(342.9)						(302.1)
Other, net			(274.8)						(189.5)						(215.7)
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						—
Asset impairment charge			(168.4)						—						—
Loss on debt extinguishment			—						—						(46.9)
Interest income			54.7						9.8						17.5
Interest expense			(338.5)						(185.4)						(222.7)
Earnings from continuing operations before income taxes and equity interest			$	37.9					$	1,586.9					$	1,183.7
Capital and Software Expenditures
Tools & Outdoor			$	438.5					$	375.8					$	228.6
Industrial			85.6						123.3						102.2
Corporate Overhead & Other			—						—						0.2
Discontinued operations			6.3						20.0						17.1
Consolidated			$	530.4					$	519.1					$	348.1
Depreciation and Amortization
Tools & Outdoor			$	387.6					$	312.9					$	311.2
Industrial			184.2						201.4						200.0
Corporate Overhead & Other			—						—						0.3
Discontinued operations			0.4						62.8						66.6
Consolidated			$	572.2					$	577.1					$	578.1

Segment Assets			2022						2021
Tools & Outdoor			$	20,202.0					$	19,537.9
Industrial			5,284.8						5,627.8
			25,486.8						25,165.7
Assets held for sale			—						3,505.4
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, 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.

Lowe's accounted for approximately 15%, 15% and 17% of the Company's consolidated net sales in 2022, 2021 and 2020, respectively, while The Home Depot accounted for approximately 13%, 15% and 14% of the Company's consolidated net sales in 2022, 2021 and 2020, respectively.

As described in Note A, Significant Accounting Policies, the Company recognizes revenue at a point in time from the sale of tangible products or over time depending on when the performance obligation is satisfied. For the years ended 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
Engineered Fastening			$	1,874.8					$	1,842.1					$	1,717.8
Infrastructure			648.6						621.0						634.9
Industrial			$	2,523.4					$	2,463.1					$	2,352.7

GEOGRAPHIC AREAS

(Millions of Dollars)			2022						2021						2020
Net Sales
United States			$	10,733.1					$	9,073.1					$	7,828.3
Canada			835.7						696.0						575.0
Other Americas			839.4						833.6						587.9
France			489.8						488.8						393.0
Other Europe			2,664.9						2,847.2						2,288.7
Asia			1,384.5						1,342.6						1,077.1
Consolidated			$	16,947.4					$	15,281.3					$	12,750.0

			December 31, 2022						January 1, 2022
Property, Plant & Equipment, net
United States			$	1,465.8					$	1,433.6
Canada			7.4						21.6
Other Americas			249.8						178.1
France			30.7						36.6
Other Europe			272.9						318.9
Asia			326.5						348.0
Consolidated			$	2,353.1					$	2,336.8

Q. INCOME TAXES

Significant components of the Company’s deferred tax assets and liabilities from continuing operations at the end of each fiscal year were as follows:

(Millions of Dollars)			2022						2021
Deferred tax liabilities:
Depreciation			$	160.1					$	132.2
Intangible assets			907.5						917.3
Liability on undistributed foreign earnings			45.4						48.2
Lease right-of-use asset			108.2						106.5
Inventory			59.4						79.6
Other			46.7						48.4
Total deferred tax liabilities			$	1,327.3					$	1,332.2
Deferred tax assets:
Employee benefit plans			$	130.9					$	204.2
Basis differences in liabilities			104.0						100.4
Operating loss, capital loss and tax credit carryforwards			817.4						830.7
Lease liability			110.4						109.7
Intangible assets			556.8						417.7
Basis difference in debt obligations			268.0						205.1
Capitalized research and development costs			134.7						86.0
Other			204.3						206.6
Total deferred tax assets			$	2,326.5					$	2,160.4
Net Deferred Tax Asset before Valuation Allowance			$	999.2					$	828.2
Valuation Allowance			$	(1,032.5)					$	(1,067.2)
Net Deferred Tax Liability after Valuation Allowance			$	(33.3)					$	(239.0)

The increase in intangible deferred tax assets relates to the intra-entity asset transfer of certain intangible assets between two of the Company's foreign subsidiaries. The recognized deferred tax benefit represents the difference between the basis of the intellectual property for financial statement purposes and the basis of the intellectual property for tax purposes.

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 $1,032.5 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.

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. The cash held by the Company’s non-U.S. subsidiaries for indefinite reinvestment is generally used to finance foreign operations and investments, including acquisitions. The income taxes applicable to such earnings 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 $56.5 million as of December 31, 2022 have indefinite carryforward periods.

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

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
United States			$	(1,233.8)					$	(77.7)					$	144.5
Foreign			1,271.7						1,664.6						1,039.2
Earnings before income taxes and equity interest			$	37.9					$	1,586.9					$	1,183.7

Income taxes on continuing operations consisted of the following:

(Millions of Dollars)			2022						2021						2020
Current:
Federal			$	(79.0)					$	0.3					$	55.4
Foreign			248.6						388.0						183.2
State			(16.7)						31.8						19.8
Total current			$	152.9					$	420.1					$	258.4
Deferred:
Federal			$	(61.2)					$	(124.7)					$	(25.1)
Foreign			(222.5)						(210.1)						(192.1)
State			(1.6)						(30.2)						(3.2)
Total deferred			(285.3)						(365.0)						(220.4)
Income taxes			$	(132.4)					$	55.1					$	38.0

Net income taxes paid for continuing operations during 2022, 2021 and 2020 were $482.6 million, $441.8 million and $241.6 million, respectively. The 2022, 2021 and 2020 amounts include refunds of $41.8 million, $50.1 million and $43.8 million, respectively, primarily related to prior year overpayments and settlement of tax audits.

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

(Millions of Dollars)			2022						2021						2020
Tax at statutory rate			$	8.0					$	333.2					$	248.6
State income taxes, net of federal benefits			(19.3)						1.4						12.0
Foreign tax rate differential			(28.8)						(63.5)						(58.6)
Uncertain tax benefits			26.3						49.6						17.7
Change in valuation allowance			(25.1)						(11.9)						(12.7)
Change in deferred tax liabilities on undistributed foreign earnings			12.8						23.1						(118.8)
Stock-based compensation			7.3						(6.3)						(9.2)
Change in tax rates			(5.5)						(31.1)						(0.3)
Tax credits			(8.8)						(6.7)						(6.0)
Capital loss			—						—						(40.4)
U.S. 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)
Other			(1.7)						(0.4)						31.4
Income taxes			$	(132.4)					$	55.1					$	38.0

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. The Internal Revenue Service is currently examining the Company's consolidated U.S. income tax returns for the 2017 through 2019 tax years. 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.

The Company’s liabilities for unrecognized tax benefits relate to U.S. and various foreign jurisdictions. The following table summarizes the activity related to the unrecognized tax benefits from continuing operations:

(Millions of Dollars)			2022						2021						2020
Balance at beginning of year			$	487.7					$	428.3					$	392.0
Additions based on tax positions related to current year			27.2						33.6						27.8
Additions based on tax positions related to prior years			41.1						53.5						34.4
Reductions based on tax positions related to prior years			(37.8)						(17.2)						(19.0)
Settlements			(7.0)						(1.3)						(0.5)
Statute of limitations expirations			(8.5)						(9.2)						(6.4)
Balance at end of year			$	502.7					$	487.7					$	428.3

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.

The Company considers many factors when evaluating and estimating its tax positions and the impact on income tax expense, which may require periodic adjustments, and which may not accurately anticipate actual outcomes. It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company's unrecognized tax positions will significantly increase or decrease within the next twelve months. However, based on the uncertainties associated with finalizing audits with the relevant tax authorities including formal legal proceedings, it is not possible to reasonably estimate the impact of any such change.

R. COMMITMENTS AND GUARANTEES

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. From time to time, lease arrangements allow for, and the Company executes, the purchase of the underlying leased asset. Lease arrangements may also contain renewal options or early termination options. 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 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)			December 31, 2022						January 1, 2022
Right-of-use assets			$	431.5					$	426.0
Lease liabilities			$	440.5					$	439.1
Weighted-average incremental borrowing rate			3.6		%				3.5		%
Weighted-average remaining term			6 years						6 years

Right-of-use assets are included within Other assets in the Consolidated Balance Sheets, while lease liabilities are included within Accrued expenses and Other liabilities, as appropriate. The Company determines its incremental borrowing rate based on interest rates from its debt issuances, taking into consideration adjustments for collateral, lease terms and foreign currency.

As a result of acquiring right-of-use assets from new leases entered into during the years ended 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
Operating lease cost			$	147.1					$	126.3					$	116.7
Short-term lease cost			27.6						25.5						21.0
Variable lease cost			5.9						5.9						7.0
Sublease income			(2.5)						(1.3)						(0.3)
Total lease cost			$	178.1					$	156.4					$	144.4

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 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					$	—					$	—

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 Potential Payment						Carrying Amount of Liability
Guarantees on the residual values of leased properties			One to nine years						$	156.6					$	—
Standby letters of credit			Up to three years						174.0						—
Commercial customer financing arrangements			Up to six years						79.7						12.7
Total									$	410.3					$	12.7

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. The related assets would be available to satisfy the guarantee obligations and therefore it is unlikely the Company will incur any future loss associated with these guarantees.

The Company has issued $174.0 million in standby letters of credit that guarantee future payments which may be required under certain insurance programs and in relation to certain environmental remediation activities described more fully in Note S, Contingencies.

The Company provides various limited and full recourse guarantees to financial institutions that provide financing to U.S. and Canadian Mac Tool distributors and franchisees for their initial purchase of the inventory and trucks necessary to function as a distributor and franchisee. In addition, the Company provides limited and full recourse guarantees to financial institutions that extend credit to certain end retail customers of its U.S. Mac Tool distributors and franchisees. The gross amount guaranteed in these arrangements is $79.7 million and the $12.7 million carrying value of the guarantees issued is recorded in Other liabilities in the Consolidated Balance Sheets.

The Company provides warranties on certain products across its businesses. The types of product warranties offered generally range from one year to limited lifetime. There are also certain products with no warranty. Further, the Company sometimes incurs discretionary costs to service its products in connection with product performance issues. Historical warranty and service claim experience forms the basis for warranty obligations recognized. 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 December 31, 2022, January 1, 2022, and January 2, 2021 are as follows:

(Millions of Dollars)			2022						2021						2020
Balance beginning of period			$	134.5					$	107.9					$	94.4
Warranties and guarantees issued			155.3						150.1						126.9
Warranties assumed in acquisitions			—						33.4						—
Warranty payments and currency			(163.2)						(156.9)						(113.4)
Balance end of period			$	126.6					$	134.5					$	107.9

S. CONTINGENCIES

The Company is involved in various legal proceedings relating to environmental issues, employment, product liability, workers’ compensation claims and other matters. The Company periodically reviews the status of these proceedings with both inside and outside counsel, as well as an actuary for risk insurance. Management believes that the ultimate disposition of these matters will not have a material adverse effect on operations or financial condition taken as a whole.

In the normal course of business, the Company is a party to administrative proceedings and litigation, before federal and state regulatory agencies, relating to environmental remediation with respect to claims involving the discharge of hazardous substances into the environment, generally at current and former manufacturing facilities. In addition, some of these claims assert that the Company is responsible for damages and liability, for remedial investigation and clean-up costs, with respect to sites that have never been owned or operated by the Company, but the Company has been identified as a potentially responsible party ("PRP").

In connection with the 2010 merger with Black & Decker, the Company assumed certain commitments and contingent liabilities. Black & Decker is a party to litigation and administrative proceedings with respect to claims involving the discharge of hazardous substances into the environment at current and former manufacturing facilities and has also been named as a PRP in certain administrative proceedings.

The Company, along with many other companies, has been named as a PRP in numerous administrative proceedings for the remediation of various waste sites, including 26 active Superfund sites. Current laws potentially impose joint and several liabilities upon each PRP. In assessing its potential liability at these sites, the Company has considered the following: whether responsibility is being disputed, the terms of existing agreements, experience at similar sites, and the Company’s volumetric contribution at these sites.

The Company’s policy is to accrue environmental investigatory and remediation costs for identified sites when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If no amount in the range of probable loss is considered most likely, the minimum loss in the range is accrued. The amount of liability recorded is based on an evaluation of currently available facts with respect to each individual site and includes such factors as existing technology, presently enacted laws and regulations, and prior experience in remediation of contaminated sites. The liabilities recorded do not take into account any claims for recoveries from insurance or third parties. 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. 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 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. (a dissolved and liquidated former indirectly wholly-owned subsidiary of The Black & Decker Corporation) (“Emhart”) has agreed to be responsible for an interim remedy at a site located in Rialto, California and formerly operated by West Coast Loading Corporation (“WCLC”), a defunct company for which Emhart was alleged to be liable as a successor. The remedy will be funded by (i) the amounts received from the EPA as gathered from multiple parties, and, to the extent necessary, (ii) Emhart's affiliate. 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 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. The EPA discovered a variety of contaminants at the site, including but not limited to, dioxins, polychlorinated biphenyls, and pesticides. The EPA alleged that Black & Decker and Emhart are liable for site clean-up costs under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") as successors to the liability of Metro-Atlantic, Inc., a former operator at the site, and demanded reimbursement of the EPA’s costs related to this site. Black & Decker and Emhart then vigorously litigated the issue of their liability for environmental conditions at the Centredale site, including completing trial on Phase 1 of the proceedings in late July 2015 and completing trial on Phase 2 of the proceedings in April 2017. On July 9, 2018, a Consent Decree was lodged with the United States District Court documenting the terms of a settlement between the Company and the United States for reimbursement of EPA's past costs and remediation of environmental contamination found at the Centredale site. The terms of the Consent Decree were subject to public comment and Court approval. After a full hearing on March 19, 2019, the Court approved and entered the Consent Decree on April 8, 2019. The settlement resolves outstanding issues relating to Phase 1 and 2 of the litigation with the United States. The Company is complying with the terms of the settlement. The District Court's entry of the Consent Decree was appealed by several PRPs at the site to the United States Court of Appeals for the First Circuit. The District Court's actions were affirmed by the First Circuit on February 17, 2021. Phase 3 of the litigation, is addressing the potential allocation of liability to other PRPs who may have contributed to contamination of the Centredale site with dioxins, polychlorinated biphenyls and other contaminants of concern. 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”). The Company’s potential liability stems from former operations in Newark, New Jersey. As an interim step related to the 2007 AOC, on June 18, 2012, the CPG members voluntarily entered into an AOC with the EPA for remediation actions focused solely at mile 10.9 of the River. The Company’s estimated costs related to the RI/FS and focused remediation action at mile 10.9, based on an interim allocation, are included in its environmental reserves. On April 11, 2014, the EPA issued a Focused Feasibility Study (“FFS”) and proposed plan which addressed various early action remediation alternatives for the lower 8.3 miles of the River. The EPA received public comment on the FFS and proposed plan (including comments from the CPG and other entities asserting that the FFS and proposed plan do not comply with CERCLA) which public comment period ended on August 20, 2014. The CPG submitted to the EPA a draft RI report in February 2015 and draft FS report in April 2015 for the entire lower seventeen miles of the River. On March 4, 2016, the EPA issued a Record of Decision ("ROD") selecting the remedy for the lower 8.3 miles of the River. 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. 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 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. According to the complaint, OCC has incurred or is incurring costs which include the estimated cost ($165 million) to complete the remedial design for the cleanup plan for the lower 8.3 miles of the River. OCC also seeks a declaratory judgment to hold the defendants liable for their proper shares of future response costs for OCC's ongoing activities in connection with the River. The Company and other defendants have answered the complaint and currently are engaged in discovery with OCC. On February 24, 2021, the Company and other defendants filed a third party complaint against the Passaic Valley Sewerage Commissioners and forty-two municipalities to require those entities to pay their equitable share of response costs. On October 10, 2018, the EPA issued a letter directing the CPG to prepare a streamlined feasibility study for the upper 9 miles of the River based on an iterative approach using adaptive management strategies. The CPG submitted a revised draft Interim Remedy Feasibility Study to the EPA on December 4, 2020, which identifies various targeted dredge and cap alternatives with costs that range from $420 million to $468 million (net present value). The EPA approved the Interim Remedy Feasibility Study on December 11, 2020. The EPA issued the Interim Remedy Proposed Plan on April 14, 2021, selecting an alternative that the EPA estimates will cost $441 million (net present value). The CPG continues to conduct work to complete the RI/FS for the entire 17-mile River. The EPA issued the Interim Remedy ROD on September 28, 2021. 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 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. et al. (No. 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 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 $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.

The amount recorded for identified contingent liabilities is based on estimates. Amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal information that becomes available. Actual costs to be incurred in future periods may vary from the estimates, given the inherent uncertainties in evaluating certain exposures. 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.

T. DIVESTITURES

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

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.

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. 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:

(Millions of Dollars)			2022						2021						2020
Net Sales			$	1,056.3					$	1,971.4					$	1,784.7
Cost of sales			687.5						1,258.7						1,134.8
Selling, general, and administrative(1)			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
Earnings from discontinued operations before income taxes			$	1,210.9					$	124.3					$	83.3
Income taxes on discontinued operations			318.5						(12.4)						3.4
Net earnings from discontinued operations			$	892.4					$	136.7					$	79.9

(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 and MAS that are included in the Consolidated Statements of Cash Flows for each fiscal year ended:

(Millions of Dollars)			2022						2021						2020
Depreciation and amortization			$	0.4					$	62.8					$	66.6
Capital expenditures			$	6.3					$	20.0					$	17.1
Stock-based compensation			$	17.5					$	7.9					$	6.1

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
Accounts and notes receivable, net			513.9
Inventories, net			169.4
Other current assets			41.2
Property, plant and equipment, net			84.3
Goodwill and other intangibles, net			2,270.2
Other assets			281.3
Total assets			$	3,505.4
Accounts payable and accrued expenses			$	460.4
Other long-term liabilities			137.4
Total liabilities			$	597.8

2020 DIVESTITURES

On November 2, 2020, the Company sold its commercial electronic security businesses in five countries in Europe and emerging markets within the Security segment, which resulted in net proceeds of $60.9 million. The Company also sold a product line within Oil & Gas in the Industrial segment during the fourth quarter of 2020. As a result of these sales, the Company recognized a net pre-tax loss of $13.5 million in 2020, consisting of a $17.7 million loss on the sale of a product line within Oil & Gas partially offset by a $4.2 million gain on the sale of the commercial electronic security businesses. During the first quarter of 2021, the Company recognized a pre-tax loss of $1.0 million as a result of the finalization of the purchase price for the commercial electronic security divestiture.

These divestitures allow the Company to invest in other areas 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 for the year ended January 2, 2021.

SELECTED QUARTERLY FINANCIAL DATA (unaudited)

						Quarter
(Millions of Dollars, except per share amounts)						First						Second						Third						Fourth						Year
2022
Net Sales						$	4,448.0					$	4,393.0					$	4,119.6					$	3,986.8					$	16,947.4
Gross profit						1,305.4						1,207.1						1,018.1						753.5						4,284.1
Selling, general and administrative (1)						960.3						852.7						799.8						757.2						3,370.0
Net earnings (loss) from continuing operations						155.6						78.7						36.6						(100.6)						170.3
Less: Net earnings attributable to non-controlling interest						0.1						0.1						—						—						0.2
Less: Preferred stock dividends and beneficial conversion feature						—						—						—						5.8						5.8
Net Earnings (Loss) from Continuing Operations Attributable to Common Shareowners						$	155.5					$	78.6					$	36.6					$	(106.4)					$	164.3
Add: Contract adjustment payments accretion						0.3						0.4						0.3						0.2						1.2
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 (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 (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 (loss) per share of common stock						$	1.06					$	0.57					$	5.50					$	(0.34)					$	6.76
2021
Net Sales						$	3,720.8					$	3,798.9					$	3,779.7					$	3,981.9					$	15,281.3
Gross profit						1,387.8						1,361.8						1,215.6						1,127.0						5,092.2
Selling, general and administrative (1)						719.1						767.1						773.5						933.4						3,193.1
Net earnings from continuing operations						459.6						432.5						379.5						279.2						1,550.8
Less: Net losses attributable to non-controlling interest						(0.6)						(1.0)						(0.1)						—						(1.7)
Less: Preferred stock dividends and beneficial conversion feature						9.4						4.8						—						—						14.2
Net Earnings from Continuing Operations Attributable to Common Shareowners						$	450.8					$	428.7					$	379.6					$	279.2					$	1,538.3
Add: Contract adjustment payments accretion						0.2						0.3						0.4						0.4						1.3
Net Earnings from Continuing Operations Attributable to Common Shareowners - Diluted						$	451.0					$	429.0					$	380.0					$	279.6					$	1,539.6
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
Basic earnings per share of common stock:
Continuing operations						$	2.86					$	2.70					$	2.38					$	1.75					$	9.69
Discontinued operations						$	0.17					$	0.16					$	0.22					$	0.31					$	0.86
Total basic earnings per share of common stock						$	3.04					$	2.87					$	2.60					$	2.06					$	10.55
Diluted earnings per share of common stock:
Continuing operations						$	2.74					$	2.60					$	2.30					$	1.69					$	9.33
Discontinued operations						$	0.17					$	0.16					$	0.21					$	0.30					$	0.83
Total diluted earnings per share of common stock						$	2.91					$	2.75					$	2.51					$	1.99					$	10.16

(1) Includes provision for credit losses.

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 2022 — $221 million loss ($192 million after-tax)						$(1.16) per diluted share
• Q2 2022 — $248 million loss ($195 million after-tax)						$(1.26) per diluted share
• Q3 2022 — $119 million loss ($79 million after-tax)						$(0.52) per diluted share
• Q4 2022 — $54 million loss ($92 million after-tax)						$(0.62) per diluted share

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:

Acquisition-Related Charges & Other						Diluted EPS Impact
• Q1 2021 — $24 million loss ($18 million after-tax and equity interest)						$(0.11) per diluted share
• Q2 2021 — $33 million loss ($36 million after-tax and equity interest)						$(0.21) per diluted share
• Q3 2021 — $33 million loss ($26 million after-tax and equity interest)						$(0.15) per diluted share
• Q4 2021 — $104 million loss ($61 million after-tax and equity interest)						$(0.37) per diluted share

EXHIBIT INDEX

STANLEY BLACK & DECKER, INC.

EXHIBIT LIST

Some of the agreements included as exhibits to this Annual Report on Form 10-K (whether incorporated by reference to earlier filings or otherwise) may contain representations and warranties, recitals or other statements that appear to be statements of fact. These agreements are included solely to provide investors with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. Representations and warranties, recitals, and other common disclosure provisions have been included in the agreements solely for the benefit of the other parties to the applicable agreements and often are used as a means of allocating risk among the parties. Accordingly, such statements (i) should not be treated as categorical statements of fact; (ii) may be qualified by disclosures that were made to the other parties in connection with the negotiation of the applicable agreements, which disclosures are not necessarily reflected in the agreement or included as exhibits hereto; (iii) may apply standards of materiality in a way that is different from what may be viewed as material by or to investors in or lenders to the Company; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, representations and warranties, recitals or other disclosures contained in agreements may not describe the actual state of affairs as of the date they were made or at any other time and should not be relied on by any person other than the parties thereto in accordance with their terms. Additional information about the Company may be found in this Annual Report on Form 10-K and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

2.1						Acquisition Agreement by and between Stanley Black & Decker, Inc. and Securitas AB, dated as of December 8, 2021 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on December 8, 2021).#
3.1			(a)			Restated Certificate of Incorporation dated September 15, 1998 (incorporated by reference to Exhibit 3(i) to the Company’s Quarterly Report on Form 10-Q for the period ended April 3, 2010 filed on May 13, 2010).
			(b)			Certificate of Amendment to the Restated Certificate of Incorporation dated December 21, 2009 (incorporated by reference to Exhibit 3(ii) to the Company’s Quarterly Report on Form 10-Q for the period ended April 3, 2010 filed on May 13, 2010).
			(c)			Certificate of Amendment to the Restated Certificate of Incorporation dated March 12, 2010 (incorporated by reference to Exhibit 3(iii) to the Company’s Quarterly Report on Form 10-Q for the period ended April 3, 2010 filed on May 13, 2010).
			(d)			Certificate of Amendment to the Restated Certificate of Incorporation dated November 5, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 9, 2010).
			(e)			Certificate of Amendment to the Restated Certificate of Incorporation dated April 17, 2012 (incorporated by reference to Exhibit 3(i) to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2012 filed on May 2, 2012).
			(f)			Certificate of Amendment to the Restated Certificate of Incorporation dated May 17, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 17, 2017).
			(g)			Certificate of Amendment to the Restated Certificate of Incorporation dated November 13, 2019 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on November 13, 2019).
			(h)			Certificate of Amendment to the Restated Certificate of Incorporation dated May 15, 2020 (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on May 15, 2020).
			(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).
4.1			(a)			Indenture, dated as of June 26, 1998, by and among Black & Decker Holdings Inc., as Issuer, The Black & Decker Corporation, as Guarantor, and The First National Bank of Chicago, as Trustee (incorporated by reference to Exhibit 4.9 to the Company’s Current Report on Form 8-K filed on March 12, 2010).

4.2			(a)			Indenture, dated as of November 1, 2002 between The Stanley Works and The Bank of New York Mellon Trust Company, N.A., as successor trustee to JPMorgan Chase Bank (incorporated by reference to Exhibit 4(vi) to the Company’s Annual Report on Form 10-K for the period ended December 28, 2002 filed on February 28, 2003).

			(b)			Third Supplemental Indenture, dated as of September 3, 2010, to the Indenture dated as of November 1, 2002, among Stanley Black & Decker, Inc., The Black & Decker Corporation and The Bank of New York Mellon Trust Company, N.A., as successor trustee to JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank), as Trustee, 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 Stanley Black & Decker, Inc. 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 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 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						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).#
			(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).
			(c)			Amendment No. 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).

			(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. and John H. 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. 2022).
10.7						Change in Control Severance Agreement, dated December 4, 2018 between Stanley Black & Decker, Inc. and Donald Allan Jr. (incorporated by reference to Exhibit 10.5 to the Company's Annual Report on Form 10-K for the period ended December 29, 2018 filed on February 26, 2019).*
10.8						Form of Change in Control Severance Agreement (John H. 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						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. Supplemental Executive Retirement Program as amended and restated effective October 15, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 16, 2015).*
10.13						New 1991 Loan Agreement, dated June 30, 1998, between The Stanley Works, as lender, and Citibank, N.A. as trustee under the trust agreement for the Stanley Account Value Plan, to refinance the 1991 Salaried Employee ESOP Loan and the 1991 Hourly ESOP Loan and their related promissory notes (incorporated by reference to Exhibit 10(ii) to the Company’s Quarterly Report on Form 10-Q for the period ended July 4, 1998 filed on August 18, 1998).

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). P
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 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 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. Deferred Compensation Plan Relating to Long-Term Performance Awards (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the period ended December 29, 2018 filed on February 26, 2019). *

10.19						The Stanley Black & Decker, Inc. Restricted Stock Unit Plan for Non-Employee Directors, as amended and restated through October 1, 2020 (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the period ended January 2, 2021 filed on February 18, 2021).*
10.20						The Stanley Black & Decker, Inc. 2020 Restricted Stock Unit Deferral Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.19 on the Company's Annual Report on Form 10-K for the period ended December 28, 2019 filed on February 21, 2020).*

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. and Janet M. Link (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the period ended December 30, 2017 filed on February 27, 2018).*
10.24						Employment Offer Letter, dated February 24, 2020, between Stanley Black & Decker, Inc. 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).*
10.25						Change in Control Severance Agreement (all other executive officers except Donald Allan Jr. and John H. 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. 2021).*
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.
23						Consent of Independent Registered Public Accounting Firm.
24						Power of Attorney.
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 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). P
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 compensatory plan or arrangement.
P			Paper Filing
**			Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.