The following discussion contains statements reflecting the Company's views
about its future performance that constitute "forward-looking statements" under
the Private Securities Litigation Act of 1995. There are a number of important
factors that could cause actual results to differ materially from those
indicated by such forward-looking statements. Please read the information under
the caption entitled "Cautionary Statement under the Private Securities
Litigation Reform Act of 1995."

Throughout this Management's Discussion and Analysis ("MD&A"), references to Notes refer to the "Notes To (Unaudited) Condensed Consolidated Financial Statements" in Part 1, Item 1 of this Form 10-Q, unless otherwise indicated.



BUSINESS OVERVIEW

                                    Strategy

The Company is a global provider of hand tools, power tools, outdoor products
and related accessories, as well as a leading provider of engineered fastening
solutions and attachment tools for infrastructure applications. The Company has
executed a growth and acquisition strategy that involves industry, geographic
and customer diversification to foster sustainable revenue, earnings and cash
flow growth over the long term. Over the next two to three years, the Company is
focused on leveraging past acquisitions through an organic strategy that
optimizes the newly focused portfolio surrounding its tools, outdoor and
industrial businesses. Execution of this strategy means reducing complexity and
optimizing the operating structure to invest in the Company's leading franchises
to deliver above-market organic growth and to transform the supply chain to be
shorter, closer to customers and more responsive to demand.

A key enabler of the strategy is the long-standing Stanley Black & Decker
Operating Model ("SBD Operating Model") which has continually evolved over the
past 15 years as times have changed. The core tenets of the SBD Operating Model
include the concept of the interrelationship between people and technology,
which intersect and interact with the other key elements that are focused on
delivering capital efficient growth and margin expansion.

The Company's growth strategy is interdependent with its social responsibility
strategy focused on workforce upskilling, product innovation, and environmental
preservation including mitigating the impacts of climate change. These are core
business issues that ensure the long-term viability of the Company, its
customers, suppliers, and communities. The Company has established
environmental, social and corporate governance ("ESG") targets embodied in its
2030 ESG strategy that include empowering 10 million makers and creators,
enhancing 500 million lives through purpose-driven product innovation, becoming
carbon-neutral, landfill-free across its operations, and reducing water use in
water stressed and scarce areas. The carbon neutrality target includes
third-party approved science-based targets to reduce absolute scope 1 and 2
greenhouse gas emissions by greater than 100% by 2030, and to reduce supply
chain emissions by 35%. The Company's ESG strategy considers all life-cycle
stages including material procurement from supply chain partners, product
design, manufacturing, distribution and transportation, product use, product
service and end-of-life. Refer to section "Human Capital Management" in Item 1
Business of the Company's Form 10-K for the year ended January 1, 2022 for
additional information regarding the Company's commitment to upskilling its
employees and improving diversity, equity and inclusion.

In terms of capital allocation, the Company remains committed, over the
long-term, to returning approximately 50% of excess capital to shareholders
through a strong and growing dividend as well as opportunistically repurchasing
shares. The remaining capital (approximately 50%) will be deployed towards
acquisitions. Over the next two to three years the Company expects to prioritize
return of excess capital to shareholders.

Share Repurchases And Other Securities



During the first quarter of 2022, the Company repurchased 12,645,371 shares of
common stock for approximately $2.3 billion through a combination of an
accelerated share repurchase ("ASR") and open market share repurchases. The ASR
terms provided for an initial delivery of 85% of the total notional share
equivalent at execution, or 10,756,770 shares. The final delivery of the
remaining shares totaling 3,211,317 under the ASR was completed during the
second quarter of 2022. Refer to Note J, Equity Arrangements, for further
discussion.

In addition, on April 23, 2021, the Board of Directors approved repurchases by
the Company of its outstanding securities other than common stock up to an
aggregate amount of $3.0 billion. No repurchases have been executed pursuant to
this authorization to date.
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Pending Sale of Oil & Gas business



In June 2022, the Company announced that it had reached a definitive agreement
for the sale of its Oil & Gas business. The transaction is subject to regulatory
approval and other customary closing conditions, and is expected to close in the
second half of 2022.

Sale of Mechanical Access Solutions ("MAS")

On July 5, 2022, the Company completed the previously announced sale of its Mechanical Access Solutions ("MAS") business comprising of the automatic doors business to Allegion plc for proceeds of $922.8 million.

Sale of Convergent Security Solutions ("CSS")



On July 22, 2022, the Company completed the previously announced sale of its CSS
business comprising of commercial electronic security and healthcare businesses
to Securitas AB for proceeds of $3.2 billion.

Proceeds from the sale of these businesses are expected to be used to fund debt
reduction and to contribute to the Company's share repurchase program completed
during the first half of 2022. The use of proceeds towards a planned share
repurchase program is consistent with the Company's long-term capital allocation
strategy focused on value maximization.

Acquisitions



On December 1, 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. With over $2.6 billion of revenue in 2021, MTD designs,
manufactures and distributes lawn tractors, zero turn ride on mowers, walk
behind mowers, snow blowers, residential robotic mowers, handheld outdoor power
equipment and garden tools for both residential and professional consumers under
well-known brands like Cub Cadet® and Troy-Bilt®.

On November 12, 2021, the Company acquired Excel Industries ("Excel"). Excel is
a leading designer and manufacturer of premium commercial and residential
turf-care equipment under the brands of Hustler Turf Equipment® and BigDog Mower
Co®. The Company believes this is a strategically important bolt-on acquisition
that bolsters the presence in the independent dealer network.

The Company expects the combination of MTD, Excel and its existing outdoor
strategic business unit in Tools & Outdoor will create a global leader in the
$25 billion and growing outdoor category, with strong brands and growth
opportunities. As part of the integration of these businesses, the Company plans
to design, develop and manufacture battery and electric-powered solutions for
professional and residential users. This will position the combined businesses
to be a leader as preferences shift from gas powered equipment toward
electrified solutions in outdoor power equipment.

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

Implementing Global Cost Reduction Program That Is Expected To Deliver $1 Billion Of Cost Savings By End of 2023 And Approximately $2 Billion Within 3 Years



The Company has launched a series of initiatives designed to generate cost
savings by resizing the organization and maximizing cash flow, which will reduce
inventory while driving long term growth and improved profitability. These
initiatives will optimize the cost base for the current demand environment as
well as provide a platform to fund future investments to accelerate growth in
the core businesses. The Company expects these initiatives to generate cost
savings of approximately $150 million to $200 million in the remainder of 2022,
$1 billion by the end of 2023 and grow to approximately $2 billion within three
years. In addition, the Company is aggressively reducing inventory to support a
working capital reduction of $1.0 billion to $1.5 billion and strong free cash
flow generation in the second half of 2022.

The Company's primary areas of strategic focus are:



•Prioritizing cash flow generation and inventory optimization;
•Streamlining and simplifying the organization, as well as shifting resources to
prioritize investments that it believes impacts customers more directly;
•Accelerating the operations and supply chain transformation to better match the
needs of its customers; and
•Continuing to advance innovation, electrification and global market penetration
to achieve organic growth of 2-3 times the market.

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The Company expects to achieve $1 billion of cost savings by the end of 2023
through the following initiatives:

•Accelerating supply chain transformation ($0.5 billion);
•Simplifying the corporate structure ($0.2 billion);
•Optimizing organizational spans and layers and prioritizing investments in its
core businesses ($0.1 billion); and
•Reducing indirect spend ($0.2 billion).

While the supply chain transformation is expected to generate significant cost
savings through 2023, the Company is embarking on a three-year journey to
completely reshape its supply chain. By moving closer to its customers, becoming
more responsive to demand and enabling an agile innovation approach with shorter
cycle times, the Company expects to deliver approximately $1.5 billion of
cumulative cost savings to achieve 35%+ adjusted gross margins. To drive these
efficiencies, the plan will focus on:

•Leveraging strategic sourcing and contract manufacturing ($0.5 billion);
•Consolidating facilities with a 30%+ reduction in manufacturing facilities from
approximately 120 today ($0.3 billion);
•Executing the SBD Operating Model to deliver operational excellence through
efficiency, simplified organizational design and inventory optimization ($0.4
billion); and
•Platforming products and implementing initiatives to drive a 40%+ SKU reduction
($0.3 billion).

                                    Segments

The Company's operations are classified into two reportable business segments: Tools & Outdoor and Industrial.

Tools & Outdoor



The Tools & Outdoor segment is comprised of the Power Tools Group ("PTG"), Hand
Tools, Accessories & Storage ("HTAS"), and Outdoor Power Equipment ("Outdoor")
businesses. Annual revenues in the Tools & Outdoor segment were $12.8 billion in
2021, representing 82% of the Company's total revenues.

The PTG business includes both professional and consumer products. Professional
products include professional grade corded and cordless electric power tools and
equipment including drills, impact wrenches and drivers, grinders, saws, routers
and sanders, as well as pneumatic tools and fasteners including nail guns,
nails, staplers and staples, concrete and masonry anchors. Consumer products
include corded and cordless electric power tools sold primarily under the
BLACK+DECKER® brand, and home products such as hand-held vacuums, paint tools
and cleaning appliances.

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),
handheld outdoor power equipment, garden tools, and parts and accessories to
professionals and consumers under the DEWALT®, CUB CADET®, BLACK+DECKER®,
CRAFTSMAN®, TROY-BILT®, and HUSTLER® brand names.


Industrial

The Industrial segment is comprised of the Engineered Fastening and Infrastructure businesses. Annual revenues in the Industrial segment were $2.5 billion in 2021, representing 16% of the Company's total revenues.



The Engineered Fastening business primarily sells highly engineered components
such as fasteners, fittings and various engineered products, which are designed
for specific application across multiple verticals. The product lines include
externally threaded fasteners, blind rivets and tools, blind inserts and tools,
drawn arc weld studs and systems, engineered plastic and mechanical fasteners,
self-piercing riveting systems, precision nut running systems, micro fasteners,
high-strength structural fasteners, axel swage, latches, heat shields, pins, and
couplings.

The Infrastructure business consists of the Attachment Tools and Oil & Gas
product lines. Attachment Tools sells hydraulic tools and high quality,
performance-driven heavy equipment attachment tools for off-highway
applications. Oil & Gas sells and rents custom pipe handling, joint welding and
coating equipment used in the construction of large and small diameter pipelines
and provides pipeline inspection services.

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RESULTS OF OPERATIONS

The Company's results represent continuing operations and exclude the commercial
electronic security, healthcare, and automatic doors businesses, unless
specifically noted. These 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. Therefore, the
operating results of these businesses have been classified as discontinued
operations. The pending divestiture of the Oil & Gas business 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.


Certain Items Impacting Earnings



The Company has provided a discussion of its results both inclusive and
exclusive of acquisition-related and other charges. Organic growth is also
utilized to describe results aside from the impacts of foreign currency
fluctuations, acquisitions during their initial 12 months of ownership, and
divestitures. The results and measures, including gross profit, selling,
general, and administrative ("SG&A"), Other, net, and segment profit, on a basis
excluding acquisition-related and other charges, and organic growth are Non-GAAP
financial measures. The Company considers the use of Non-GAAP financial measures
relevant to aid analysis and understanding of the Company's results and business
trends aside from the material impact of these items and ensures appropriate
comparability to operating results of prior periods.

The Company's operating results at the consolidated level as discussed below include and exclude acquisition-related and other charges impacting gross profit, SG&A, and Other, net. The Company's business segment results as discussed below include and exclude acquisition-related and other charges impacting gross profit and SG&A. These amounts for the second quarter and year-to-date periods of 2022 and 2021 are as follows:



Second Quarter 2022

                                                                                      Acquisition-
                                                                                    Related Charges &
      (Millions of Dollars)                                          GAAP                 Other               Non-GAAP
      Gross profit                                               $ 1,207.1          $         16.6          $ 1,223.7
      Selling, general and administrative1                           852.7                   (32.9)             819.8
      Operating profit                                               354.4                    49.5              403.9
      Earnings from continuing operations before income
      taxes and equity interest                                       15.9                   248.1              264.0
      Income taxes on continuing operations                          (62.8)                   52.5              (10.3)
      Net Earnings from Continuing Operations Attributable
      to Common Shareowners - Diluted                                 79.0                   195.6              274.6
      Diluted earnings per share of common stock -
      Continuing operations                                      $    0.51          $         1.26          $    1.77
    1 Includes provision for credit losses

The Acquisition-Related Charges and Other in the table above relate to the following:



•Charges reducing Gross profit primarily pertaining to inventory step-up
charges;
•Charges in SG&A primarily related to integration-related costs;
•Other charges included in Earnings from continuing operations before income
taxes and equity interest consisting of:
•$10.9 million in Other, net primarily related to a voluntary retirement
program;
•$0.2 million gain pertaining to a previously divested business;
•$168.4 million asset impairment charge related to the Oil & Gas business; and,
•$19.5 million of restructuring charges primarily pertaining to severance and
related costs;
•Income taxes on continuing operations include the tax effect on the above net
charges.

Year-To-Date 2022
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                                                                                       Acquisition-
                                                                                    Related Charges &
      (Millions of Dollars)                                          GAAP                 Other                Non-GAAP
      Gross profit                                               $ 2,512.5          $         105.4          $ 2,617.9
      Selling, general and administrative1                         1,813.0                   (111.8)           1,701.2
      Operating profit                                               699.5                    217.2              916.7
      Earnings from continuing operations before income
      taxes and equity interest                                      194.4                    469.5              663.9
      Income taxes on continuing operations                          (39.9)                    82.3               42.4
      Net Earnings from Continuing Operations Attributable
      to Common Shareowners - Diluted                                234.8                    387.2              622.0
      Diluted earnings per share of common stock -
      Continuing operations                                      $    1.47          $          2.41          $    3.88
    1 Includes provision for credit losses

The Acquisition-Related Charges and Other in the table above relate to the following:



•Charges reducing Gross profit primarily pertaining to inventory step-up charges
and the Russia business closure;
•Charges in SG&A primarily related to a voluntary retirement program,
integration-related costs, and the Russia business closure;
•Other charges included in Earnings from continuing operations before income
taxes and equity interest consisting of:
•$11.9 million in Other, net primarily related to a voluntary retirement program
and deal transaction costs;
•$0.2 million gain on a previously divested business;
•$168.4 million asset impairment charge related to the Oil & Gas business; and,
•$72.2 million of restructuring charges primarily pertaining to severance and
related costs;
•Income taxes on continuing operations include the tax effect on the above net
charges.


Second Quarter 2021

                                                                                      Acquisition-
                                                                                    Related Charges &
      (Millions of Dollars)                                          GAAP                 Other               Non-GAAP
      Gross profit                                               $ 1,361.8          $          1.3          $ 1,363.1
      Selling, general and administrative1                           767.1                   (18.4)             748.7
      Operating profit                                               594.7                    19.7              614.4
      Earnings from continuing operations before income
      taxes and equity interest                                      495.4                    33.2              528.6
      Income taxes on continuing operations                           67.3                     8.4               75.7
      Share of net earnings of equity method investment                4.4                    11.0               15.4
      Net Earnings from Continuing Operations Attributable
      to Common Shareowners - Diluted                                429.0                    35.8              464.8
      Diluted earnings per share of common stock -
      Continuing operations                                      $    2.60          $         0.21          $    2.81
    1 Includes provision for credit losses

The Acquisition-Related Charges and Other in the table above relate to the following:



•Charges reducing Gross profit pertaining to facility-related charges;
•Charges in SG&A primarily for functional transformation initiatives;
•Other charges included in Earnings from continuing operations before income
taxes and equity interest consisting of:
•$0.5 million in Other, net primarily related to deal transactions costs;
•$2.6 million net loss pertaining to a previously divested business; and
•$10.4 million of restructuring charges pertaining to severance and facility
closures;
•Income taxes on continuing operations include the tax effect on the above net
charges.

Year-To-Date 2021
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                                                                                      Acquisition-
                                                                                    Related Charges &
      (Millions of Dollars)                                          GAAP                 Other               Non-GAAP
      Gross profit                                               $ 2,749.6          $          5.7          $ 2,755.3
      Selling, general and administrative1                         1,486.2                   (33.4)           1,452.8
      Operating profit                                             1,263.4                    39.1            1,302.5
      Earnings from continuing operations before income
      taxes and equity interest                                    1,068.7                    57.0            1,125.7
      Income taxes on continuing operations                          182.8                    14.4              197.2
      Share of net earnings of equity method investment                6.2                    11.2               17.4
      Net Earnings from Continuing Operations Attributable
      to Common Shareowners - Diluted                                880.0                    53.8              933.8
      Diluted earnings per share of common stock -
      Continuing operations                                      $    5.34          $         0.33          $    5.67
    1 Includes provision for credit losses

The Acquisition-Related Charges and Other in the table above relate to the following:



•Charges reducing Gross profit pertaining to facility-related charges;
•Charges in SG&A primarily for functional transformation initiatives;
•Other charges included in Earnings from continuing operations before income
taxes and equity interest consisting of:
•$2.1 million in Other, net primarily related to deal transactions costs;
•$3.6 million net loss pertaining to a previously divested business; and
•$12.2 million of restructuring charges pertaining to severance and facility
closures;
•Income taxes on continuing operations include the tax effect on the above net
charges.

Below is a summary of the Company's operating results at the consolidated level, followed by an overview of business segment performance.

Consolidated Results

Net Sales: Net sales were $4.393 billion in the second quarter of 2022 compared
to $3.799 billion in the second quarter of 2021, representing an increase of
16%, primarily driven by a 24% increase from strategic outdoor power equipment
acquisitions and a 7% increase from price realization, partially offset by a 13%
and 2% decrease from volume and foreign currency, respectively. Tools & Outdoor
net sales increased 17% compared to the second quarter of 2021 due to a 28%
increase from the MTD and Excel acquisitions and a 7% increase in price,
partially offset by a 16% decline in volume and a 2% decrease from foreign
currency. Industrial net sales increased by 8% compared to the second quarter of
2021 as an 8% increase in price and 4% increase in volume was partially offset
by a 4% impact from foreign currency.

Net sales were $8.841 billion in the first half of 2022 compared to $7.520
billion in the first half of 2021, representing an increase of 18%, primarily
driven by a 23% increase from strategic outdoor power equipment acquisitions and
a 6% increase from price realization, partially offset by 9% and 2% decreases
from volume and foreign currency, respectively. Tools & Outdoor net sales
increased 21% compared to the first half of 2021 due to a 28% increase from the
MTD and Excel acquisitions and a 6% increase in price, partially offset by an
11% decline in volume and a 2% decrease from foreign currency. Industrial net
sales increased 3% compared to the first half of 2021 as a 7% increase in price
was partially offset by a 3% impact from foreign currency and a modest decline
in volume of 1%.

Gross Profit: Gross profit was $1.207 billion, or 27.5% of net sales, in the
second quarter of 2022 compared to $1.362 billion, or 35.8% of net sales, in the
second quarter of 2021. Acquisition-related and other charges, which reduced
gross profit, were $16.6 million for the three months ended July 2, 2022 and
$1.3 million for the three months ended July 3, 2021. Excluding these charges,
gross profit was 27.9% of net sales for the three months ended July 2, 2022,
compared to 35.9% for the three months ended July 3, 2021, as price realization
was more than offset by commodity inflation, higher supply chain costs and lower
volume.

Gross profit was $2.513 billion, or 28.4% of net sales, in the first half of
2022 compared to $2.750 billion, or 36.6% of net sales, in the first half of
2021. Acquisition-related and other charges, which reduced gross profit, were
$105.4 million for the six months ended July 2, 2022 and $5.7 million for the
six months ended July 3, 2021. Excluding these charges, gross profit was 29.6%
of net sales for the six months ended July 2, 2022, compared to 36.6% for the
six months ended July 3, 2021, driven by the factors discussed above that
impacted the second quarter of 2022.

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SG&A Expenses: SG&A, inclusive of the provision for credit losses, was $852.7
million, or 19.4% of net sales, in the second quarter of 2022, compared to
$767.1 million, or 20.2% of net sales, in the second quarter of 2021. Within
SG&A, acquisition-related and other charges totaled $32.9 million for the three
months ended July 2, 2022 and $18.4 million for the three months ended July 3,
2021. Excluding these charges, SG&A was 18.7% of net sales for the three months
ended July 2, 2022, compared to 19.7% for the three months ended July 3, 2021.

SG&A, inclusive of the provision for credit losses, was $1.813 billion, or 20.5%
of net sales, in the first half of 2022, compared to $1.486 billion, or 19.8% of
net sales, in the first half of 2021. Within SG&A, acquisition-related and other
charges totaled $111.8 million for the six months ended July 2, 2022 and $33.4
million for the six months ended July 3, 2021. Excluding these charges, SG&A was
19.2% of net sales for the six months ended July 2, 2022, compared to 19.3% for
the six months ended July 3, 2021.

Distribution center costs (i.e. warehousing and fulfillment facility and
associated labor costs) are classified within SG&A. This classification may
differ from other companies who may report such expenses within cost of sales.
Due to diversity in practice, to the extent the classification of these
distribution costs differs from other companies, the Company's gross margins may
not be comparable.

Other, net: Other, net amounted to $79.1 million and $42.5 million in the second
quarter of 2022 and 2021, respectively. Excluding acquisition-related and other
charges of $10.9 million, Other, net totaled $68.2 million for the three months
ended July 2, 2022. Excluding acquisition-related and other charges of
$0.5 million, Other, net totaled $42.0 million for the three months ended
July 3, 2021. The increase in 2022 compared to 2021 is driven by higher
intangible asset amortization due to the MTD and Excel acquisitions.

Other, net amounted to $141.1 million and $90.5 million in the first half of
2022 and 2021, respectively. Excluding acquisition-related and other charges of
$11.9 million, Other, net totaled $129.2 million for the six months ended
July 2, 2022. Excluding acquisition-related and other charges of $2.1 million,
Other, net totaled $88.4 million for the six months ended July 3, 2021. The
increase in 2022 compared to 2021 is driven by higher intangible asset
amortization due to the MTD and Excel acquisitions.

(Gain) Loss on Sales of Businesses: During the second quarter of 2022 and 2021,
the Company recorded a pre-tax gain of $0.2 million and a pre-tax loss of $2.6
million, respectively, related to previously divested businesses.

During the first half of 2022 and 2021, the Company recorded a pre-tax gain of $0.2 million and a pre-tax loss of $3.6 million, respectively, related to previously divested businesses.



Asset Impairment Charge: During the second quarter of 2022 the Company recorded
a pre-tax impairment loss of $168.4 million related to the Oil & Gas business.
Refer to Footnote T, Divestitures, for additional information on the pending
divestiture of the Oil & Gas business.

Interest, net: Net interest expense was $71.7 million in the second quarter of
2022 compared to $43.8 million in the second quarter of 2021. On a year-to-date
basis, net interest expense was $123.6 million in 2022 and $88.4 million in
2021. The year-over-year increase was primarily driven by higher U.S. interest
rates and higher average balances relating to the Company's commercial paper
borrowings, as well as the $2.25 billion credit facility and $1.0 billion
issuance of debt in the first quarter of 2022.

Income Taxes: The Company recognized income tax benefit of $62.8 million and
$39.9 million for the three and six months ended July 2, 2022, respectively,
resulting in effective tax rates of (395.0)% and (20.5)%. These effective tax
rates differ from the U.S. statutory tax rate primarily due to a benefit
associated with the anticipated disposition of the Company's Oil & Gas business,
the continued reorganization of the supply chain, the impact of lower forecasted
earnings in North America and the re-measurement of uncertain tax positions.
Excluding the impacts of the acquisition-related and other charges, the
effective tax rates were (3.9)% and 6.4% for the three and six months ended
July 2, 2022, respectively. These effective tax rates differ from the U.S.
statutory tax rate due to the items discussed above, excluding the benefit
associated with the anticipated disposition of the Company's Oil & Gas business.

The Company recognized income tax expense of $67.3 million and $182.8 million
for the three and six months ended July 3, 2021, respectively, resulting in
effective tax rates of 13.6% and 17.1%. Excluding the impacts of the
acquisition-related and other charges, the effective tax rates were 14.3% and
17.5% for the three and six months ended July 3, 2021, respectively. These
effective tax rates differ from the U.S. statutory tax rate primarily due to tax
on foreign earnings, the re-measurement of uncertain tax position reserves, the
re-measurement of the deferred tax assets and liabilities due to foreign
corporate income tax rate changes, and the tax benefit of equity-based
compensation.
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Business Segment Results



The Company's reportable segments are aggregations of businesses that have
similar products, services and end markets, among other factors. 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.

The Company's operations are classified into two reportable business segments: Tools & Outdoor and Industrial.



Tools & Outdoor:
                               Second Quarter                   Year-to-Date
(Millions of Dollars)       2022            2021            2022            2021
Net sales               $ 3,744.9       $ 3,196.5       $ 7,546.1       $ 6,259.4
Segment profit          $   361.6       $   627.0       $   740.1       $ 1,271.7
% of Net sales                9.7  %         19.6  %          9.8  %         20.3  %



Tools & Outdoor net sales increased $548.4 million, or 17%, in the second
quarter of 2022 compared to the second quarter of 2021, as a 28% increase from
the MTD and Excel acquisitions and a 7% increase in price were partially offset
by lower volume of 16% and 2% from unfavorable currency impacts. Regional
year-over-year organic revenue was flat in the emerging markets and had 10% and
11% declines in Europe and North America, respectively. Sales in outdoor
products were impacted by a very slow start to the season due to poor weather
and a slowing consumer demand environment in the last portion of the quarter,
and as a result, were down 8% on a proforma basis. The Tools business had
in-line performance through late May, after which, demand slowed significantly
for the remainder of the quarter. U.S. retail point-of-sale demand softened
during the last portion of the quarter and appears to be stabilizing above 2019
levels on a total dollar basis, supported by price increases and professional
demand.

Tools & Outdoor net sales increased $1.287 billion, or 21%, in the first half of
2022 compared to the first half of 2021, primarily driven by a 28% increase from
the MTD and Excel acquisitions and a 6% increase in price, partially offset by
lower volume of 11% and 2% from unfavorable currency impacts. Organic revenue in
emerging markets increased 3% year-over-year and declined in Europe and North
America by 4% and 7%, respectively. The year-over-year change was primarily
driven by the same factors that impacted the second quarter of 2022, as
discussed above.

Segment profit for the second quarter of 2022 was $361.6 million, or 9.7% of net
sales, compared to $627.0 million, or 19.6% of net sales, in the second quarter
of 2021. Excluding acquisition-related and other charges of $41.3 million and
$9.2 million for the three months ended July 2, 2022 and July 3, 2021,
respectively, segment profit was 10.8% of net sales in the second quarter of
2022 and 19.9% in the second quarter of 2021, as the benefit from price
realization was more than offset by inflation, higher supply chain costs and
lower volume.

Segment profit for the first half of 2022 was $740.1 million, or 9.8% of net
sales, compared to $1.272 billion, or 20.3% of net sales, in the first half of
2021. Excluding acquisition-related and other charges of $195.0 million and
$13.4 million for the six months ended July 2, 2022 and July 3, 2021,
respectively, segment profit was 12.4% of net sales in the first half of 2022
and 20.5% in the first half of 2021, primarily driven by the same factors
discussed above.

Industrial:


                             Second Quarter                 Year-to-Date
(Millions of Dollars)      2022          2021           2022            2021
Net sales               $ 648.1       $ 602.2       $ 1,294.7       $ 1,259.9
Segment profit          $  58.3       $  60.5       $    99.6       $   160.3
% of Net sales              9.0  %       10.0  %          7.7  %         12.7  %



Industrial net sales increased $45.9 million, or 8%, in the second quarter of
2022 compared to the second quarter of 2021, driven by an 8% increase in price
and 4% increase in volume partially offset by 4% from unfavorable currency
impacts. Engineered Fastening organic revenues were up by 7% led by growth in
aerospace, general industrial and automotive fasteners. Infrastructure organic
revenues were up 26%, with attachment tools delivering 17% growth while the
business maintained a healthy backlog.

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Industrial net sales increased $34.8 million, or 3%, in the first half of 2022
compared to the first half of 2021, as a 7% increase in price was partially
offset by unfavorable currency impacts of 3% and a modest decline in volume of
1%. Engineered Fastening and Infrastructure organic revenues grew 3% and 14%,
respectively, primarily driven by the same factors discussed above.

Industrial segment profit for the second quarter of 2022 totaled $58.3 million,
or 9.0% of net sales, compared to $60.5 million, or 10.0% of net sales, in the
corresponding 2021 period. Excluding acquisition-related and other charges of
$1.9 million and $3.0 million for the three months ended July 2, 2022 and
July 3, 2021, respectively, segment profit amounted to 9.3% of net sales in the
second quarter of 2022, down 120 basis points from 10.5% in the second quarter
of 2021 as volume growth and price realization were more than offset by
commodity inflation, higher supply chain costs and adverse mix.

Industrial segment profit for the first half of 2022 totaled $99.6 million, or
7.7% of net sales, compared to $160.3 million, or 12.7% of net sales, in the
corresponding 2021 period. Excluding acquisition-related and other charges of
$5.4 million and $6.6 million for the six months ended July 2, 2022 and July 3,
2021, respectively, segment profit amounted to 8.1% of net sales in the first
half of 2022 compared to 13.2% in the first half of 2021 primarily driven by the
same factors discussed above.

Corporate Overhead



Corporate Overhead includes the corporate overhead element of SG&A, which is not
allocated to the business segments. Corporate Overhead amounted to $65.5 million
and $92.8 million in the second quarter of 2022 and 2021, respectively.
Excluding acquisition-related and other charges of $6.3 million for the three
months ended July 2, 2022 and $7.5 million for the three months ended July 3,
2021, the corporate overhead element of SG&A was $59.2 million and $85.3 million
for the three months ended July 2, 2022 and July 3, 2021, respectively. The
decrease in 2022 compared to 2021 was primarily due to lower employee-related
costs.

On a year-to-date basis, the corporate overhead element of SG&A amounted to
$140.2 million in 2022 compared to $168.6 million in 2021. Excluding
acquisition-related and other charges of $16.8 million for the six months ended
July 2, 2022 and $19.1 million for the six months ended July 3, 2021, the
corporate overhead element of SG&A was $123.4 million and $149.5 million for the
six months ended July 2, 2022 and July 3, 2021, respectively, primarily driven
by the same factor discussed above.

RESTRUCTURING ACTIVITIES



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

                                 January 1,                                                                           July 2,
(Millions of Dollars)               2022              Net Additions            Usage             Currency              2022
Severance and related costs    $      28.2          $         64.6          $   (43.5)         $      2.1          $     51.4
Facility closures and asset
impairments                            3.5                     7.6               (8.6)                0.1                 2.6
Total                          $      31.7          $         72.2          $   (52.1)         $      2.2          $     54.0

For the three and six months ended July 2, 2022, the Company recognized net restructuring charges of $19.5 million and $72.2 million, primarily related to severance and related costs. The Company expects to achieve annual net cost savings of approximately $154 million by the end of 2022 related to the restructuring costs incurred during the six months ended July 2, 2022. The majority of the $54.0 million of reserves remaining as of July 2, 2022 is expected to be utilized within the next 12 months.

Segments:



The $72 million of net restructuring charges for the six months ended July 2,
2022 includes: $45 million in the Tools & Outdoor segment; $16 million in the
Industrial segment; and $11 million in Corporate.

The $19 million of net restructuring charges for the three months ended July 2, 2022 includes: $2 million in the Tools & Outdoor segment; $8 million in the Industrial segment; and $9 million in Corporate.

The anticipated annual net cost savings of approximately $154 million related to the 2022 restructuring actions include: $113 million in the Tools & Outdoor segment; $18 million in the Industrial segment; and $23 million in Corporate.


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2022 OUTLOOK
This outlook discussion is intended to provide broad insight into the Company's
near-term earnings and cash flow generation prospects. The Company is revising
its 2022 diluted earnings per share outlook to $0.80 - $2.05 on a diluted GAAP
basis, from $7.20 - $8.30, and on an adjusted diluted EPS basis to $5.00 to
$6.00 from $9.50 to $10.50. Free cash flow is expected to be approximately $0.4
billion to $1.0 billion in the second half of the year including tax payments of
$0.5 billion to $0.6 billion associated with Security divestitures. Excluding
such payments, cash generation is expected to be $1.0 billion to $1.5 billion
driven by working capital reductions. The Company is focused on serving its
customers by improving power tool supply while reducing inventory in other
categories. The Company remains focused on disciplined capital allocation, and
intends to balance share repurchase activity with its commitment to dividends
and strong investment grade credit ratings.

The Company has changed the following assumptions for 2022 from its prior
outlook: lower second half revenue, primarily driven by slowing consumer demand
in Tools & Outdoor and moderated expectations for price will approximate $4.25
of dilution to earnings per share; currency translation, other items below
operating margin and second quarter performance will approximate $0.55 of
dilution to earnings per share; the impact from plant production curtailments
will approximate $0.50 to $0.70 of dilution to earnings per share; and the 2022
impact from cost savings initiatives will approximate $0.80 to $1.00 of
accretion per diluted share.

The difference between the 2022 diluted earnings per share outlook and the
diluted earnings per share range, excluding charges, is $3.95 to $4.20,
consisting of acquisition-related and other charges. These forecasted charges
primarily relate to restructuring expenses, a voluntary retirement program, the
Russia business closure, integration-related costs, a non-cash impairment charge
for Oil & Gas, and non-cash inventory step-up charges.

FINANCIAL CONDITION

Liquidity, Sources and Uses of Capital: The Company's primary sources of liquidity are cash flows generated from operations and available lines of credit under various credit facilities.



Operating Activities: Cash flows used in operations were $443.9 million in the
second quarter of 2022 compared to cash provided by operations of $444.4 million
in the corresponding period of 2021, primarily driven by lower payable balances
and lower earnings. Year-to-date cash flows used in operations were $1.685
billion in 2022 compared to cash provided by operations of $286.6 million in
2021. The year-over-year change was mainly attributable to lower payable
balances, lower earnings, and higher inventory levels due to the impact of
softer demand and the dwindling effects of supply chain constraints.

Free Cash Flow: Free cash flow, as defined in the table below, was an outflow of
$589.6 million in the second quarter of 2022 compared to and inflow of $339.3
million in the corresponding period of 2021. On a year-to-date basis, free cash
flow was an outflow of $1.971 billion in 2022 compared to an inflow of $93.2
million in 2021.The decrease in free cash flow during both periods were due to
the same factors discussed above in operating activities. The Company has
implemented significant production curtailments to slow finished goods
manufacturing and expects inventory to decline sequentially beginning in the
third quarter of 2022. Management considers free cash flow an important
indicator of its liquidity, as well as its ability to fund future growth and
provide dividends to shareowners, and is useful information for investors. Free
cash flow does not include deductions for mandatory debt service, other
borrowing activity, discretionary dividends on the Company's common and
preferred stock and business acquisitions, among other items.

                                                                Second Quarter                       Year-to-Date
(Millions of Dollars)                                       2022              2021              2022               2021

Net cash (used in) provided by operating activities $ (443.9) $ 444.4 $ (1,685.0) $ 286.6 Less: capital and software expenditures

                    (145.7)          (105.1)             (285.5)          (193.4)
Free cash flow                                           $ (589.6)         $ 339.3          $ (1,970.5)         $  93.2


Investing Activities: Cash flows used in investing activities totaled $154.3
million and $108.8 million in the second quarter of 2022 and 2021, respectively,
primarily due to capital and software expenditures of $145.7 million and $105.1
million, respectively.

Year-to-date cash flows used in investing activities totaled $317.7 million in
2022 primarily due to capital and software expenditures of $285.5 million and
acquisitions of businesses, net of cash acquired, of $45.6 million. Cash flows
used in investing activities totaled $256.7 million in the first half of 2021,
primarily due to capital and software expenditures of $193.4 million and net
investment hedge settlements of $52.6 million.
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Financing Activities: Cash flows provided by financing activities totaled $608.2
million in the second quarter of 2022 primarily driven by net short-term
borrowings of $746.6 million, partially offset by cash dividend payments on
common stock of $114.0 million. Cash flows used in financing activities totaled
$853.3 million in the second quarter of 2021 primarily driven by the Series C
Preferred Stock redemption and conversion for $750.0 million and cash dividend
payments on common stock of $111.6 million.

Cash flows provided by financing activities totaled $2.034 billion in the first
quarter of 2022 primarily driven by net short-term borrowings of $3.591 billion
and proceeds from debt issuances, net of fees, of $992.6 million, partially
offset by share repurchases of $2.314 billion and cash dividend payments on
common stock of $230.3 million. Cash flows used in financing activities totaled
$948.3 million in the first half of 2021 primarily driven by by the Series C
Preferred Stock redemption and conversion for $750.0 million and cash dividend
payments on common stock of $221.7 million, partially offset by proceeds from
issuances of common stock of $100.4 million.

Credit Ratings & Liquidity:



The Company maintains strong investment grade credit ratings from the major
U.S. rating agencies on its senior unsecured debt (S&P A, Fitch A-, Moody's
Baa1), as well as its commercial paper program (S&P A-1, Fitch F1, Moody's P-2).
There were no changes to any of the Company's credit ratings, however Moody's
Corporation changed the Company's outlook from "stable" to "negative" during the
second quarter of 2022. Failure to maintain strong investment grade credit
rating levels could adversely affect the Company's cost of funds, liquidity and
access to capital markets, but would not have an adverse effect on the Company's
ability to access its existing committed credit facilities.

Cash and cash equivalents totaled $282.3 million and $142.1 million as of July 2, 2022 and January 1, 2022, respectively, which was primarily held in the U.S.



As a result of the Tax Cuts and Jobs Act (the "Act"), the Company's tax
liability related to the one-time transition tax associated with unremitted
foreign earnings and profits totaled $252 million at July 2, 2022. The Act
permits a U.S. company to elect to pay the net tax liability interest-free over
a period of up to eight years. The Company has considered the implications of
paying the required one-time transition tax and believes it will not have a
material impact on its liquidity.

The Company has a $3.5 billion commercial paper program which includes Euro denominated borrowings in addition to U.S. Dollars. As of July 2, 2022 and January 1, 2022, the Company had borrowings outstanding of $3.3 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 July 2, 2022 and January 1, 2022, the Company had not drawn on
its five-year committed credit facility.

The Company has a 364-Day $1.0 billion committed credit facility (the "364-Day
Credit Agreement"). Borrowings under the 364-Day Credit Agreement may be made in
U.S. Dollars or Euros and bear interest at a floating rate plus an applicable
margin dependent upon the denomination of the borrowing and pursuant to the
terms of the 364-Day Credit Agreement. The Company must repay all advances under
the 364-Day Credit Agreement by the earlier of September 7, 2022 or upon
termination. The Company may, however, convert all advances outstanding upon
termination into a term loan that shall be repaid in full no later than the
first anniversary of the termination date provided that the Company, among other
things, pays a fee to the administrative agent for the account of each lender.
The 364-Day Credit Agreement serves as part of the liquidity back-stop for the
Company's $3.5 billion U.S. Dollar and Euro commercial paper program. As of
July 2, 2022 and January 1, 2022, the Company had not drawn on its 364-Day
committed credit facility.

The Company has a second 364-Day $1.0 billion committed credit facility (the
"Second 364-Day Credit Agreement"). Borrowings under the Second 364-Day Credit
Agreement may be made in U.S. Dollars and Euros and bear interest at a base rate
plus an applicable margin determined at the time of the borrowing. The Company
must repay all advances under the Second 364-Day Credit Agreement by the earlier
of November 15, 2022 or upon termination. The Company may, however, convert all
advances outstanding upon termination into a term loan that shall be repaid in
full no later than the first anniversary
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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 July 2,
2022 and January 1, 2022, the Company had not drawn on its Second 364-Day Credit
Agreement.

In January 2022, the Company executed a third 364-Day $2.5 billion committed
credit facility (the "Third 364-Day Credit Agreement"). Borrowings under the
Third 364-Day Credit Agreement shall be made in U.S. Dollars and bear interest
at a base rate plus an applicable margin determined at the time of the
borrowing. The Company must repay all advances under the Third 364-Day Credit
Agreement by the earlier of January 25, 2023 or upon termination. The Company
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 July 2, 2022, the
Company had $2.5 billion outstanding on its Third 364-Day Credit Agreement.

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 will 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 November 2019, the Company issued 7,500,000 Equity Units with a total
notional value of $750 million ("2019 Equity Units"). Each unit has a stated
amount of $100 and initially consists of a three-year forward stock purchase
contract ("2022 Purchase Contracts") for the purchase of a variable number of
shares of common stock, on November 15, 2022, for a price of $100, and a 10%
beneficial ownership interest in one share of 0% Series D Cumulative Perpetual
Convertible Preferred Stock, without par, with a liquidation preference of
$1,000 per share ("Series D Preferred Stock"). The Company received
approximately $735 million in cash proceeds from the 2019 Equity Units, net of
offering expenses and underwriting costs and commissions, and issued 750,000
shares of Series D Preferred Stock. The proceeds were used, together with cash
on hand, to redeem the 2052 Junior Subordinated Debentures in December 2019. The
Company also used $19 million of the proceeds to enter into capped call
transactions utilized to hedge potential economic dilution. On and after
November 15, 2022, the Series D Preferred Stock may be converted into common
stock at the option of the holder. At the election of the Company, upon
conversion, the Company may deliver cash, common stock, or a combination
thereof. On or after December 22, 2022, the Company may elect to redeem for
cash, all or any portion of the outstanding shares of the Series D Preferred
Stock at a redemption price equal to 100% of the liquidation preference, plus
any accumulated and unpaid dividends. If the Company calls the Series D
Preferred Stock for redemption, holders may convert their shares immediately
preceding the redemption date. Upon a successful remarketing of the Series D
Preferred Stock (the "Remarketed Series D Preferred Stock"), the Company will
receive additional cash proceeds of $750 million and issue shares of Remarketed
Series D Preferred Stock. The Company pays the holders of the 2022 Purchase
Contracts quarterly contract adjustment payments, which commenced February 15,
2020. As of July 2, 2022, the present value of the contract adjustment payments
was approximately $19 million.

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 million, plus an additional amount
related to the forward component of the contract. In February 2022, the Company
amended the settlement date to April 2023, or earlier at the Company's option.

Refer to Note H, Long-Term Debt and Financing Arrangements, and Note J, Equity Arrangements, for further discussion of the Company's financing arrangements.


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OTHER MATTERS

Critical Accounting Estimates: There have been no significant changes in the Company's critical accounting estimates during the second quarter of 2022.



Refer to the "Other Matters" section of Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Company's Form 10-K for the
year ended January 1, 2022 for a discussion of the Company's critical accounting
estimates.

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