UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October 1, 2016~~September 30, 2017.



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from [ ] to [ ]

Commission File Number 001-05224



STANLEY BLACK & DECKER, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)



CONNECTICUT		06-0548860
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)		(I.R.S. EMPLOYER IDENTIFICATION NUMBER)


1000 STANLEY DRIVE NEW BRITAIN, CONNECTICUT		06053
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)		(ZIP CODE)



(860) 225-5111

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, ~~or a~~ smaller reporting company, or an emerging growth company. See the definitions of “large accelerated ~~filer,”~~filer”, “accelerated filer” ~~and~~, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	þ		Accelerated filer	¨

Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

			Emerging growth company	¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

~~150,688,664~~153,351,694 shares of the registrant’s common stock were outstanding as of October ~~21, 2016~~19, 2017.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

THREE AND NINE MONTHS ENDED ~~OCTOBER 1, 2016~~SEPTEMBER 30, 2017 AND OCTOBER ~~3, 2015~~1, 2016

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


	Third Quarter						Year-to-Date						Third Quarter						Year-to-Date
	2016			2015			2016			2015			2017			2016			2017			2016
Net Sales	$	2,882.0		$	2,829.5		$	8,486.5		$	8,326.4		$	3,298.6		$	2,882.0		$	9,333.7		$	8,486.5
Costs and Expenses
Cost of sales	$	1,797.9		$	1,802.5		$	5,295.9		$	5,268.6		$	2,046.5		$	1,797.9		$	5,804.1		$	5,295.9
Selling, general and administrative	643.8			598.4			1,923.9			1,843.6			758.4			643.8			2,168.8			1,923.9
Provision for doubtful accounts	1.6			9.9			16.2			32.2			5.0			1.6			18.0			16.2
Other, net	56.8			54.0			150.6			168.2			65.5			56.8			232.0			150.6
Loss (gain) on sales of businesses													3.2			—			(265.1		)	—
Pension settlement													—			—			12.8			—
Restructuring charges	9.1			14.0			27.3			43.9			19.1			9.1			42.9			27.3
Interest expense	50.2			45.2			145.2			135.8			57.2			50.2			164.5			145.2
Interest income	(5.1		)	(3.6		)	(16.4		)	(10.3		)	(10.3		)	(5.1		)	(28.6		)	(16.4		)
	$	2,554.3		$	2,520.4		$	7,542.7		$	7,482.0		$	2,944.6		$	2,554.3		$	8,149.4		$	7,542.7
Earnings from continuing operations before income taxes	327.7			309.1			943.8			844.4
Income taxes on continuing operations	78.7			75.7			234.7			209.5
Earnings from continuing operations	$	249.0		$	233.4		$	709.1		$	634.9
Earnings before income taxes													354.0			327.7			1,184.3			943.8
Income taxes													79.8			78.7			239.8			234.7
Net earnings													$	274.2		$	249.0		$	944.5		$	709.1
Less: Net earnings (loss) attributable to non-controlling interests	0.1			(0.7		)	(0.7		)	(1.7		)	—			0.1			—			(0.7		)
Net earnings from continuing operations attributable to common shareowners	$	248.9		$	234.1		$	709.8		$	636.6
Net loss from discontinued operations	—			(5.4		)	—			(18.4		)
Net Earnings Attributable to Common Shareowners	$	248.9		$	228.7		$	709.8		$	618.2		$	274.2		$	248.9		$	944.5		$	709.8
Total Comprehensive Income Attributable to Common Shareowners	$	278.3		$	102.3		$	722.2		$	306.7		$	377.8		$	278.3		$	1,246.9		$	722.2
Basic earnings (loss) per share of common stock:
Continuing operations	$	1.71		$	1.60		$	4.88		$	4.28
Discontinued operations	—			(0.04		)	—			(0.12		)
Total basic earnings per share of common stock	$	1.71		$	1.57		$	4.88		$	4.15
Diluted earnings (loss) per share of common stock:
Continuing operations	$	1.68		$	1.55		$	4.81		$	4.15
Discontinued operations	—			(0.04		)	—			(0.12		)
Total diluted earnings per share of common stock	$	1.68		$	1.52		$	4.81		$	4.03
Dividends per share of common stock	$	0.58		$	0.55		$	1.68		$	1.59
Weighted Average Shares Outstanding (in thousands):
Earnings per share of common stock:
Basic	145,410			145,911			145,547			148,796			$	1.83		$	1.71		$	6.32		$	4.88
Diluted	147,975			150,781			147,717			153,405			$	1.80		$	1.68		$	6.21		$	4.81
Dividends per share of common stock													$	0.63		$	0.58		$	1.79		$	1.68
Weighted-average shares outstanding (in thousands):
Basic													149,689			145,410			149,464			145,547
Diluted													152,622			147,975			152,106			147,717

See Notes to (Unaudited) Condensed Consolidated Financial Statements.

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

~~OCTOBER 1, 2016~~SEPTEMBER 30, 2017 AND ~~JANUARY 2,~~DECEMBER 31, 2016

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


	October 1, 2016			January 2, 2016			September 30, 2017			December 31, 2016
ASSETS
Current Assets
Cash and cash equivalents	$	420.8		$	465.4		$	483.3		$	1,131.8
Accounts and notes receivable, net	1,730.2			1,331.8			2,009.8			1,302.8
Inventories, net	1,720.3			1,526.4			2,247.4			1,478.0
Assets held for sale							—			523.4
Other current assets	390.8			338.5			288.2			352.5
Total Current Assets	4,262.1			3,662.1			5,028.7			4,788.5
Property, Plant and Equipment, net	1,480.1			1,450.2			1,677.3			1,451.2
Goodwill	7,130.8			7,084.3			8,679.7			6,694.0
Intangibles, net	2,458.5			2,541.5			3,561.1			2,299.5
Other Assets	389.2			389.7			826.4			401.7
Total Assets	$	15,720.7		$	15,127.8		$	19,773.2		$	15,634.9
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Short-term borrowings	$	95.0		$	2.5		$	577.0		$	4.3
Current maturities of long-term debt	7.2			5.1			8.7			7.8
Accounts payable	1,741.2			1,533.1			2,091.6			1,640.4
Accrued expenses	1,619.6			1,261.9			1,324.9			1,101.5
Liabilities held for sale							—			53.5
Total Current Liabilities	3,463.0			2,802.6			4,002.2			2,807.5
Long-Term Debt	3,815.1			3,792.1			3,818.0			3,815.3
Deferred Taxes	757.4			825.9			1,182.3			735.4
Post-Retirement Benefits	620.4			669.4			635.7			644.3
Other Liabilities	983.6			1,178.6			2,116.2			1,258.8
Commitments and Contingencies (Note R)
Commitments and Contingencies (Note R)
Shareowners’ Equity
Stanley Black & Decker, Inc. Shareowners’ Equity
Preferred stock, without par value: Authorized and unissued 10,000,000 shares	—			—
Common stock, par value $2.50 per share: Authorized 300,000,000 shares in 2016 and 2015 Issued 176,902,738 shares in 2016 and 2015	442.3			442.3
Preferred stock, without par value: Authorized 10,000,000 shares in 2017 and 2016 Issued and outstanding 750,000 shares in 2017							750.0			—
Common stock, par value $2.50 per share: Authorized 300,000,000 shares in 2017 and 2016 Issued 176,902,738 shares in 2017 and 2016							442.3			442.3
Retained earnings	4,958.7			4,491.7			5,803.9			5,127.3
Additional paid in capital	4,480.5			4,421.7			4,631.8			4,774.4
Accumulated other comprehensive loss	(1,681.8		)	(1,694.2		)	(1,618.8		)	(1,921.2		)
ESOP	(27.1		)	(34.9		)	(20.0		)	(25.9		)
	8,172.6			7,626.6			9,989.2			8,396.9
Less: cost of common stock in treasury	(2,138.1		)	(1,815.0		)	(1,973.5		)	(2,029.9		)
Stanley Black & Decker, Inc. Shareowners’ Equity	6,034.5			5,811.6			8,015.7			6,367.0
Non-controlling interests	46.7			47.6			3.1			6.6
Total Shareowners’ Equity	6,081.2			5,859.2			8,018.8			6,373.6
Total Liabilities and Shareowners’ Equity	$	15,720.7		$	15,127.8		$	19,773.2		$	15,634.9

See Notes to (Unaudited) Condensed Consolidated Financial Statements.

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE AND NINE MONTHS ENDED ~~OCTOBER 1, 2016~~SEPTEMBER 30, 2017 AND OCTOBER ~~3, 2015~~1, 2016

(Unaudited, Millions of Dollars)


	Third Quarter						Year-to-Date						Third Quarter						Year-to-Date
	2016			2015			2016			2015			2017			2016			2017			2016
OPERATING ACTIVITIES
Net Earnings Attributable to Common Shareowners	$	248.9		$	228.7		$	709.8		$	618.2		$	274.2		$	248.9		$	944.5		$	709.8
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization of property, plant and equipment	66.6			64.8			196.4			190.2			76.6			66.6			218.1			196.4
Amortization of intangibles	36.5			39.1			108.8			118.2			44.1			36.5			119.9			108.8
Pre-tax loss (gain) on sales of businesses													3.2			—			(265.1		)	—
Changes in working capital	(182.9		)	(173.1		)	(393.3		)	(601.5		)	(214.9		)	(182.9		)	(784.2		)	(393.3		)
Changes in other assets and liabilities	77.6			79.5			28.3			29.0			173.7			77.6			234.6			28.3
Cash provided by operating activities	246.7			239.0			650.0			354.1			356.9			246.7			467.8			650.0
INVESTING ACTIVITIES
Capital expenditures	(78.1		)	(68.5		)	(221.7		)	(180.1		)
Capital and software expenditures													(91.0		)	(78.1		)	(277.9		)	(221.7		)
Business acquisitions, net of cash acquired	(38.3		)	(17.1		)	(59.3		)	(17.5		)	(152.0		)	(38.3		)	(2,582.1		)	(59.3		)
Proceeds from sale of assets	1.3			3.0			8.9			17.2
Proceeds from net investment hedge settlements	57.8			48.3			63.3			112.2
Proceeds from sales of assets													5.5			1.3			28.0			8.9
Proceeds from sales of businesses, net of cash sold													—			—			745.3			—
(Payments) proceeds from net investment hedge settlements													(27.9		)	57.8			(31.6		)	63.3
Other	(4.0		)	(14.4		)	(16.2		)	(35.0		)	(8.1		)	(4.0		)	(25.4		)	(16.2		)
Cash used in investing activities	(61.3		)	(48.7		)	(225.0		)	(103.2		)	(273.5		)	(61.3		)	(2,143.7		)	(225.0		)
FINANCING ACTIVITIES
Payments on long-term debt	—			(15.5		)	—			(16.1		)
Stock purchase contract fees	(3.5		)	(4.3		)	(10.4		)	(12.8		)	(9.9		)	(3.5		)	(9.9		)	(10.4		)
Net short-term (repayments) borrowings	(255.9		)	32.1			92.4			450.8			(64.4		)	(255.9		)	499.2			92.4
Cash dividends on common stock	(84.5		)	(79.7		)	(243.9		)	(239.2		)	(94.7		)	(84.5		)	(267.9		)	(243.9		)
Termination of interest rate swaps	—			—			27.0			—			—			—			—			27.0
Proceeds from issuances of common stock	19.1			9.3			51.3			84.0			14.6			19.1			47.5			51.3
Proceeds from issuance of preferred stock													—			—			727.5			—
Premium paid on equity option													—			—			(25.1		)	—
Purchases of common stock for treasury	(0.6		)	(192.1		)	(362.7		)	(640.1		)	(0.6		)	(0.6		)	(16.2		)	(362.7		)
Other	—			—			(0.5		)	—			(6.9		)	—			(9.2		)	(0.5		)
Cash used in financing activities	(325.4		)	(250.2		)	(446.8		)	(373.4		)
Cash (used in) provided by financing activities													(161.9		)	(325.4		)	945.9			(446.8		)
Effect of exchange rate changes on cash and cash equivalents	(7.4		)	(38.7		)	(22.8		)	(80.8		)	22.3			(7.4		)	81.5			(22.8		)
Change in cash and cash equivalents	(147.4		)	(98.6		)	(44.6		)	(203.3		)	(56.2		)	(147.4		)	(648.5		)	(44.6		)
Cash and cash equivalents, beginning of period	568.2			391.9			465.4			496.6			539.5			568.2			1,131.8			465.4
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	420.8		$	293.3		$	420.8		$	293.3		$	483.3		$	420.8		$	483.3		$	420.8

See Notes to (Unaudited) Condensed Consolidated Financial Statements.

STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES

NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~OCTOBER 1, 2016~~SEPTEMBER 30, 2017


A.	Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (hereinafter referred to as “generally accepted accounting principles”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations for the interim periods have been included and are of a normal, recurring nature. Operating results for the three and nine months ended ~~October 1, 2016~~September 30, 2017 are not necessarily indicative of the results that may be expected for a full fiscal year. For further information, refer to the consolidated financial statements and footnotes included in Stanley Black & Decker, Inc.’s (the “Company”) Form 10-K for the year ended ~~January 2,~~December 31, 2016, and subsequent related filings with the Securities and Exchange Commission.

~~During the fourth quarter of 2014,~~In February 2017, the Company ~~classified~~sold the majority of its mechanical security businesses within the Security ~~segment’s Spain~~segment, which included the commercial hardware brands of Best Access, phi Precision and ~~Italy operations as held for sale based on management's intention to sell these businesses.~~GMT. In ~~July 2015,~~addition, the Company ~~completed~~sold a small business within the ~~sale of these businesses.~~Tools & Storage segment on January 3, 2017 and a small business within the Industrial segment on September 2, 2017. The operating results of ~~Security Spain and Italy~~these businesses have been reported ~~as discontinued~~within continuing operations in the Condensed Consolidated Financial Statements through their respective dates of sale in 2017 and for the three and nine months ended October ~~3, 2015 through~~1, 2016. In addition, the ~~date~~assets and liabilities related to the businesses sold in the first quarter of ~~sale. Net sales~~2017 were classified as held for ~~discontinued operations totaled $3.9 million~~sale on the Company's Condensed Consolidated Balance Sheets as of December 31, 2016. Refer to Note T, Divestitures, for further discussion.

In March 2017, the Company acquired the Tools business of Newell Brands ("Newell Tools") and ~~$39.4 million~~the Craftsman brand, which are both being accounted for as business combinations. The results of these acquisitions are being consolidated into the ~~three and nine months ended October 3, 2015, respectively.~~Company's Tools & Storage segment. Refer to Note F, Acquisitions, for further discussion.

The preparation of financial statements in conformity with generally accepted accounting principles 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 the previous year have been reclassified to conform to the 2016 presentation.~~


B.	New Accounting Standards

In ~~June 2016,~~August 2017, the Financial Accounting Standards Boards ("FASB") issued Accounting Standards Update ("ASU") 2017-12, Derivatives and Hedging (Topic 815). The new standard amends the hedge accounting recognition and presentation requirements in ASC 815. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the timing of adopting the new guidance as well as the impact it may have on its consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715). The new standard improves the presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and should be applied retrospectively. Based on the Company's preliminary assessment, the anticipated impacts to the consolidated financial statements relate to classification of the components of net pension and postretirement benefit costs on the income statement.

In February 2017, the FASB issued ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610). The new standard provides guidance for recognizing gains and losses of nonfinancial assets in contracts with non-customers. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will adopt this guidance in the first quarter of 2018 and does not expect it to have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. This ASU will be applied prospectively and is effective for annual or interim goodwill

impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The new standard narrows the definition of a business and provides a framework for evaluation. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The new standard eliminates the exception to the principle in ASC 740, for all intra-entity sales of assets other than inventory, to be deferred, until the transferred asset is sold to a third party or otherwise recovered through use. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will adopt this guidance in the first quarter of 2018 and does not expect it to have a material impact on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). The objective of this update is to provide additional guidance and reduce diversity in practice when classifying certain transactions within the statement of cash flows. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The new standard requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. These standards are effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, ~~"Financial Instruments - Credit~~Financial Instruments-Credit Losses (Topic 326)." The new standard amends guidance on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, ~~"Stock~~Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment ~~Accounting."~~Accounting. The objective of this update is to simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU iswas effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. If an entity adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendmentsThe Company adopted this standard prospectively in the ~~same period. The Company is currently evaluating the timing~~first quarter of ~~adopting the new guidance as well as the~~2017 and it did not have a material impact ~~it may have~~ on its consolidated financial statements. Prior periods were not adjusted.

In February 2016, the FASB issued ASU 2016-02, ~~"Leases~~Leases (Topic 842)." The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods and is to be applied utilizing a modified retrospective approach. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, ~~“Financial Instruments - Overall~~Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The main objective of this update is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The new guidance addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company ~~is currently evaluating this~~has evaluated the new guidance ~~to determine the impact it may have on its consolidated financial statements.~~

~~In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.” The objective of this update is to simplify the presentation of deferred income taxes by requiring all deferred tax assets~~ and liabilities to be classified as noncurrent in the statement of financial position. The amendments in this update do not affect the current requirement to offset deferred tax assets and liabilities for each tax-paying component within a tax jurisdiction. This ASU is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods, and can be applied either prospectively or retrospectively. Early adoption is permitted. ~~The Company currently intends to adopt this guidance in the fourth quarter of 2016 and is evaluating the impact~~expects it will ~~have on its consolidated financial statements.~~

~~In September 2015, the FASB issued ASU 2015-16, “~~Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.” This update requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The ASU requires that the acquirer record, in the financial statements of the period in which adjustments to provisional amounts are determined, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. This ASU is effective prospectively for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years, with early adoption permitted. ~~The Company adopted this standard in the first quarter of 2016 and it did~~ not have ana material impact on its consolidated financial statements.

In August 2015, the FASB issued ASU 2015-15, "Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line of Credit Arrangements." This ASU provides additional guidance to ASU 2015-03, discussed further below, which did not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. ASU 2015-15 noted that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted this standard in the first quarter of 2016.

In July 2015, the FASB issued ASU 2015-11, ~~"Inventory~~Inventory (Topic 330): Simplifying the Measurement of Inventory." This ASU changes the measurement principle for certain inventory methods from the lower of cost or market to the lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU does not apply to inventory that is measured using the Last-in First-out ("LIFO") or the retail inventory method. The provisions of ASU 2015-11 ~~are~~were effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company ~~does not expect this guidance to have a significant impact on its consolidated financial statements.~~

In April 2015, the FASB issued ASU 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." The new standard requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The standard also indicates that debt issuance costs do not meet the definition of an asset because they provide no future economic benefit. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company adopted this standard in the first quarter of ~~2016 on a retrospective basis. Refer to~~ ~~Note H, Long-Term Debt and Financing Arrangements, for further discussion.~~

In February 2015, the FASB issued ASU 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis." The new standard amends the consolidation guidance in ASC 810 and significantly changes the consolidation analysis required under current generally accepted accounting principles. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company adopted this standard in the first quarter of 20162017 and it did not have an impact on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, ~~"Revenue~~Revenue from Contracts with Customers (Topic 606)." The new revenue recognition standard outlines a comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition ~~guidance, including industry-specific~~ guidance. The new model provides a five-step analysis in determining when and how revenue is recognized. The core principle of the new guidance is that a company should recognize

revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB affirmed its proposal to defer the effective date of the standard to annual reporting periods (and interim reporting periods within those years) beginning after December 15, 2017. Entities are permitted to apply the new revenue standard early, but not before the original effective date of annual periods beginning after December 15, 2016. The standard shall be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. In March, April, May and ~~May~~December 2016, the FASB clarified the implementation guidance on principal versus agent, identifying

performance obligations, licensing, collectability and ~~collectibility.~~made technical corrections on various topics. The Company ~~is currently evaluating~~expects to apply the ~~new guidance~~full retrospective method of adoption starting with the first interim period after December 15, 2017. Based on the Company’s assessment, the anticipated impacts to ~~determine~~ the ~~impact it may have~~financial statements are primarily related to classification of outbound freight on ~~its consolidated financial statements.~~the income statement and presentation of sales returns reserve.


C.	Earnings Per Share

The following table reconciles net earnings attributable to common shareowners and the ~~weighted average~~weighted-average shares outstanding used to calculate basic and diluted earnings per share for the three and nine months ended ~~October 1, 2016~~September 30, 2017 and October ~~3, 2015~~1, 2016:

Third Quarter Year-to-Date
2016 2015 2016 2015
Numerator (in millions):
Net earnings from continuing operations attributable to common shareowners $ 248.9
$ 234.1
$ 709.8
$ 636.6
Net loss from discontinued operations —
(5.4 ) —
(18.4 )
Net Earnings Attributable to Common Shareowners $ 248.9
$ 228.7
$ 709.8
$ 618.2

Third Quarter Year-to-Date
2016 2015 2016 2015
Denominator (in thousands):
Basic earnings per share — weighted average shares 145,410
145,911
145,547
148,796
Dilutive effect of stock options, awards and other equity arrangements 2,565
4,870
2,170
4,609
Diluted earnings per share — weighted average shares 147,975
150,781
147,717
153,405
Earnings (loss) per share of common stock:
Basic earnings (loss) per share of common stock:
Continuing operations $ 1.71
$ 1.60
$ 4.88
$ 4.28
Discontinued operations —
(0.04 ) —
(0.12 )
Total basic earnings per share of common stock $ 1.71
$ 1.57
$ 4.88
$ 4.15
Diluted earnings (loss) per share of common stock:
Continuing operations $ 1.68
$ 1.55
$ 4.81
$ 4.15
Discontinued operations —
(0.04 ) —
(0.12 )
Total dilutive earnings per share of common stock $ 1.68
$ 1.52
$ 4.81
$ 4.03



	Third Quarter				Year-to-Date
	2017		2016		2017		2016
Numerator (in millions):
Net Earnings Attributable to Common Shareowners	$	274.2	$	248.9	$	944.5	$	709.8

Denominator (in thousands):
Basic earnings per share — weighted-average shares	149,689		145,410		149,464		145,547
Dilutive effect of stock contracts and awards	2,933		2,565		2,642		2,170
Diluted earnings per share — weighted-average shares	152,622		147,975		152,106		147,717
Earnings per share of common stock:
Basic	$	1.83	$	1.71	$	6.32	$	4.88
Diluted	$	1.80	$	1.68	$	6.21	$	4.81

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

Third Quarter Year-to-Date
2016 2015 2016 2015
Number of stock options —
636
854
751



	Third Quarter		Year-to-Date
	2017	2016	2017	2016
Number of stock options	2	—	388	854

As described in detail in Note J, Equity Arrangements, the Company issued $750 million Equity Units in May 2017 comprised of $750.0 million of convertible preferred stock and forward stock purchase contracts. On and after May 15, 2020, the convertible preferred stock may be converted into common stock at the option of the holder. At the election of the Company, upon conversion, the Company may deliver cash, common stock, or a combination thereof. The conversion rate was initially 6.1627 shares of common stock per one share of convertible preferred stock, which is equivalent to an initial conversion price of approximately $162.27 per share of common stock. As of September 30, 2017, due to the customary anti-dilution provisions, the conversion rate was 6.1649, equivalent to a conversion price of approximately $162.21 per share of common stock. The convertible preferred stock is excluded from the denominator of the diluted earnings per share calculation on the basis that the convertible preferred stock will be settled in cash except to the extent that the conversion value of the convertible preferred stock exceeds its liquidation preference. Therefore, before any redemption or conversion, the common shares that would be required to settle the applicable conversion value in excess of the liquidation preference, if the Company elects to settle such excess in common shares, would be included in the denominator of diluted earnings per share.

As described in detail in Note J, Equity Arrangements, the Company issued Equity Units in December 2013 comprised of $345.0 million of Notes and Equity Purchase Contracts, which ~~obligate~~obligated the holders to purchase on November 17, 2016, for $100, between 1.0122 and 1.2399 shares of the Company’s common stock. The shares related to the Equity Purchase Contracts were anti-dilutive during January and February ~~of 2016, and from January through April of 2015.~~2016. Upon the November 17, 2016 settlement date, the Company ~~will issue approximately 3.5 to 4.3 million~~issued 3,504,165 shares of common stock ~~subject to customary anti-dilution adjustments,~~ and ~~expects to receive additional~~received cash proceeds of $345.0 million.

D. Financing Receivables

Long-term trade financing receivables of ~~$185.5~~$191.1 million and ~~$182.1~~$180.9 million at ~~October 1, 2016~~September 30, 2017 and ~~January 2,~~December 31, 2016, respectively, are reported within Other Assets in the Condensed Consolidated Balance Sheets. Financing receivables and long-term financing receivables are predominantly related to certain security equipment leases with commercial businesses. Generally, the Company retains legal title to any equipment under lease and bears the right to repossess such equipment in an event of default. All financing receivables are interest bearing and the Company has not classified any financing receivables as held-for-sale. Interest income earned from financing receivables that are not delinquent 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. Additionally, the Company considers the credit quality of all past-due or delinquent financing receivables as non-performing.

The Company has an accounts receivable sale program that expires on January 5, 2018. According to the terms of that program, the Company is required to sell certain of its trade accounts receivables at fair value to a wholly-owned, consolidated, bankruptcy-remote special purpose subsidiary (“BRS”). The BRS, in turn, must sell such receivables to a third-party financial institution (“Purchaser”) for cash and a deferred purchase price receivable. The Purchaser’s maximum cash investment in the receivables at any time is $100.0 million. The purpose of the program is to provide liquidity to the Company. The Company accounts for these transfers as sales under ASC 860, "Transfers and Servicing." Receivables are derecognized from the Company’s consolidated balance sheet 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 and its right to the deferred purchase price receivable. At ~~October 1, 2016,~~September 30, 2017, 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 ~~October 1,~~September 30, 2017 and December 31, 2016, ~~and January 2, 2016, $79.0~~$61.0 million and ~~$100.4~~$100.5 million, respectively, of net receivables were derecognized. Gross receivables sold amounted to $546.1 million ($460.0 million, net) and $1,549.3 million ($1,312.9 million, net) for the three and nine months ended September 30, 2017, respectively. These sales resulted in a pre-tax loss of $2.0 million and $5.3 million, respectively, and included servicing fees of $0.4 million and $1.0 million, respectively, for the three and nine months ended September 30, 2017. Proceeds from transfers of receivables to the Purchaser totaled $432.1 million and $1,213.0 million for the three and nine months ended September 30, 2017, respectively. Collections of previously sold receivables, including deferred purchase price receivables, and all fees, which are settled one month in arrears, resulted in payments to the Purchaser of $471.9 million and $1,252.9 million for the three and nine months ended September 30, 2017, respectively.

Gross receivables sold amounted to $433.6 million ($364.8 million, net) and $1,307.1 million ($1,111.0 million, net) for the three and nine months ended October 1, 2016, respectively. These sales resulted in a pre-tax loss of $1.1 million and $3.5 million, respectively, and included servicing fees of $0.2 million and $0.6 million, respectively, for the three and nine months ended October 1, 2016. Proceeds from transfers of receivables to the Purchaser totaled $354.0 million and $1,031.6 million, respectively, for the three and nine months ended October 1, ~~2016, respectively.~~2016. Collections of previously sold receivables, including deferred purchase price receivables, and all fees, which are settled one month in arrears, resulted in payments to the Purchaser of $375.5 million and $1,053.1 million, respectively, for the three and nine months ended October 1, ~~2016, respectively.~~2016.

Gross receivables sold amounted to $386.7 million ($334.5 million, net) and $1,118.7 million ($975.3 million, net) for the three and nine months ended October 3, 2015, respectively. These sales resulted in a pre-tax loss of $1.0 million and $2.8 million, respectively, and included servicing fees of $0.1 million and $0.4 million, respectively, for the three and nine months ended October 3, 2015. Proceeds from transfers of receivables to the Purchaser totaled $336.6 million and $929.6 million for the three and nine months ended October 3, 2015, respectively. Collections of previously sold receivables, including deferred purchase price receivables, and all fees, which are settled one month in arrears, resulted in payments to the Purchaser of $338.1 million and $931.4 million for the three and nine months ended October 3, 2015, respectively.

The Company’s risk of loss following the sale of the receivables is limited to the deferred purchase price receivable, which was ~~$146.1~~$202.0 million at ~~October 1, 2016~~September 30, 2017 and ~~$41.1~~$83.2 million at ~~January 2,~~December 31, 2016. The deferred purchase price receivable will be repaid in cash as receivables are collected, generally within 30 days, and as such the carrying value of the receivable recorded approximates fair value. There were $0.1 million of delinquencies or credit losses for the three and nine months ended September 30, 2017 and October 1, ~~2016 and October 3, 2015.~~2016. Cash inflows related to the deferred purchase price receivable totaled $216.4 million and $504.8 million for the three and nine months ended September 30, 2017, respectively, and $135.2 million and $354.7 million for the three and nine months ended October 1, 2016, ~~respectively, and $98.2 million and $289.5 million for the three and nine months ended October 3, 2015,~~ respectively. All cash flows under the program are reported as a component of changes in ~~accounts receivable~~working capital within operating activities in the Condensed Consolidated Statements of Cash Flows since all the cash from the Purchaser is either: 1) received upon the initial sale of the receivable or 2) from the ultimate collection of the underlying receivables and the underlying receivables are not subject to significant risks, other than credit risk, given their short-term nature.


E.	Inventories

The components of Inventories, net at ~~October 1, 2016~~September 30, 2017 and ~~January 2,~~December 31, 2016 are as follows:


(Millions of Dollars)	October 1, 2016		January 2, 2016		September 30, 2017		December 31, 2016
Finished products	$	1,247.3	$	1,085.0	$	1,648.1	$	1,044.2
Work in process	128.6		136.1		166.0		133.3
Raw materials	344.4		305.3		433.3		300.5
Total	$	1,720.3	$	1,526.4	$	2,247.4	$	1,478.0

In the first quarter of 2017, the Company acquired inventory with estimated fair values of approximately $198.2 million and $15.7 million related to the Newell Tools and Craftsman brand acquisitions, respectively. Refer to Note F, Acquisitions, for further discussion of these acquisitions.


F.	Acquisitions

During the nine months ended October 1, 2016, the Company completed five small acquisitions for a total purchase price of $59.3 million, net of cash acquired, which are being integrated into the Company’s2017 ACQUISITIONS

Newell Tools & Storage and Security segments. The purchase price allocations for these acquisitions will be completed within the measurement period. The finalization of the purchase accounting assessments may result in changes in the valuation of assets acquired and liabilities assumed, which the Company does not expect to be material.

On ~~October 12, 2016,~~March 9, 2017, the Company ~~announced that it had entered into a definitive agreement to acquire~~acquired the Tools business of Newell Brands ("Newell Tools"), which includes the industrial cutting, hand tool and power tool accessory brands Irwin® and Lenox®, for ~~$1.95~~approximately $1.84 billion, ~~in cash.~~net of cash acquired and an estimated working capital adjustment. This acquisition ~~will enhance~~enhances the Company’s position within the global tools & storage industry and broadens the Company’s product offerings and solutions to customers and ~~end-users,~~end users, particularly within power tool accessories. The ~~transaction,~~results of Newell Tools are being consolidated into the Company's Tools & Storage segment.

The Newell Tools acquisition is being accounted for as a business combination, which requires, among other things, the assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date. The following table summarizes the estimated fair values of major assets acquired and liabilities assumed:



(Millions of Dollars)
Cash and cash equivalents	$	20.0
Accounts and notes receivable, net	26.9
Inventories, net	198.2
Prepaid expenses and other current assets	22.1
Property, plant and equipment, net	118.7
Trade names	283.0
Customer relationships	548.0
Other assets	8.2
Accounts payable	(70.2		)
Accrued expenses	(37.5		)
Deferred taxes	(307.9		)
Other liabilities	(3.1		)
Total identifiable net assets	$	806.4
Goodwill	1,051.0
Total consideration paid	$	1,857.4

The trade names were determined to have indefinite lives. The weighted-average useful life assigned to the customer relationships is 15 years.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined business, assembled workforce, and the going concern nature of Newell Tools. It is estimated that $14.9 million of goodwill, relating to the pre-acquisition historical tax basis of goodwill, will be deductible for tax purposes.

The purchase price allocation for Newell Tools is preliminary in certain respects. During the measurement period, the Company expects to record adjustments relating to the finalization of inventory and property, plant and equipment valuations, various opening balance sheet contingencies, including environmental remediation and risk insurance reserves, and various income tax matters, amongst others.

A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The Company’s judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results from operations. The Company will complete its purchase price allocation as soon as reasonably possible within the measurement period.

Craftsman Brand

On March 8, 2017, the Company purchased the Craftsman brand from Sears Holdings, which provides the Company with the rights to develop, manufacture and sell Craftsman®-branded products in non-Sears Holdings channels. The total estimated cash purchase price is $887.4 million, consisting of an initial cash payment of $569.4 million, which reflects the impact of working capital adjustments, a cash payment at the end of year three with an estimated present value of $234.0 million, and future payments to Sears Holdings of between 2.5% and 3.5% on sales of Craftsman products in new Stanley Black & Decker channels through March 2032, which was initially valued at $84.0 million at the acquisition date based on estimated future sales projections which are subject to ~~customary closing conditions, including regulatory approvals,~~change. Refer to Note M, Fair Value Measurements, for additional details. In addition, as part of the acquisition the Company also granted a perpetual license to Sears Holdings to continue selling Craftsman®-branded products in Sears-related channels. The perpetual license will be royalty-free until March 2032, which represents an estimated value of approximately $293.0 million, and 3% thereafter. The Craftsman results are being consolidated into the Company's Tools & Storage segment.

The Craftsman brand acquisition is being accounted for as a business combination which requires, among other things, the assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date. The estimated fair value of identifiable assets acquired, which includes $45.2 million of working capital and $433.0 million of intangible assets, is $589.8 million. The related goodwill is $590.6 million. The amount allocated to intangible assets includes $406.0 million of an indefinite-lived trade name. The useful life assigned to the customer relationships is 15 years.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined business and the going concern nature of the Craftsman brand. A portion of the goodwill is expected to ~~close~~be deductible for tax purposes.

The purchase price allocation for Craftsman is preliminary in certain respects. During the measurement period, the Company expects to record adjustments relating to the finalization of valuations for intangible assets, the contingent consideration liability relating to future payments to Sears Holdings, and various opening balance sheet contingencies, including warranty exposures, amongst others.

OTHER ACQUISITIONS

The Company completed an acquisition during the first quarter of 2017 for a total purchase price of $26.1 million, net of cash acquired, which is being consolidated into the Company's Security segment.

During the third quarter of 2017, the Company completed three acquisitions for a total purchase price of $152.0 million, net of cash acquired, which are being consolidated into the Company's Tools & Storage and Security segments.

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

2016 ACQUISITIONS

During 2016, the Company completed five acquisitions for a total purchase price of $59.3 million, net of cash acquired, which have been consolidated into the Company’s Tools & Storage and Security segments. The total purchase price for the acquisitions was allocated to the assets acquired and liabilities assumed based on their estimated fair values. The purchase accounting for these acquisitions is complete.

ACTUAL AND PRO-FORMA IMPACT OF THE ACQUISTIONS

Actual Impact from Acquisitions

The net sales and net earnings (loss) from 2017 acquisitions included in the Company's Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2017 are shown in the table below. These amounts include amortization relating to inventory step-up and intangible assets recorded upon acquisition, transaction costs, and other integration-related costs.



(Millions of Dollars)	Third Quarter 2017		Year-to-Date 2017
Net sales	$	252.5	$	532.9
Net earnings (loss) attributable to common shareowners	$	3.6	$	(39.3	)

Pro-forma Impact from Acquisitions

The following table presents supplemental pro-forma information as if the 2017 acquisitions had occurred on January 3, 2016. 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 January 3, 2016. In addition, the pro-forma consolidated results do not purport to project the future results of the Company.



	Third Quarter				Year-to-Date
(Millions of Dollars, except per share amounts)	2017		2016		2017		2016
Net sales	$	3,309.3	$	3,119.2	$	9,570.1	$	9,198.3
Net earnings attributable to common shareowners	292.2		251.8		1,044.8		667.5
Diluted earnings per share	$	1.91	$	1.70	$	6.87	$	4.52

2017 Pro-forma Results

The 2017 pro-forma results were calculated by combining the results of Stanley Black & Decker with the stand-alone results of the 2017 acquisitions for their respective pre-acquisition periods. Accordingly the following adjustments were made:

Elimination of the historical pre-acquisition intangible asset amortization expense and the addition of intangible asset amortization expense related to intangibles valued as part of the purchase price allocation that would have been incurred from January 1, 2017 to the acquisition dates.

Additional depreciation expense for the property, plant, and equipment fair value adjustments that would have been incurred from January 1, 2017 to the acquisition date of Newell Tools.

Because the 2017 acquisitions were assumed to occur on January 3, 2016, there were no deal costs or inventory step-up amortization factored into the 2017 pro-forma year, as such expenses would have occurred in the first ~~half~~year following the acquisition.

2016 Pro-forma Results

The 2016 pro-forma results were calculated by taking the historical financial results of ~~2017.~~Stanley Black & Decker and adding the historical results of the 2017 acquisitions for their respective pre-acquisition periods. Accordingly the following adjustments were made assuming the acquisitions commenced on January 3, 2016:

Additional expense for deal costs and inventory step-up, which would have been amortized as the corresponding inventory was sold.

Additional depreciation expense for the property, plant, and equipment fair value adjustments that would have been incurred for the three and nine months ended October 1, 2016 for Newell Tools.

G. Goodwill

Changes in the carrying amount of goodwill by segment are as follows:


(Millions of Dollars)	Tools & Storage			Security		Industrial		Total		Tools & Storage		Security		Industrial		Total
Balance January 2, 2016	$	3,343.4		$	2,317.2	$	1,423.7	$	7,084.3
Balance December 31, 2016										$	3,247.8	$	2,007.0	$	1,439.2	$	6,694.0
Acquisition adjustments	4.0			22.0		—		26.0		1,665.7		58.0		—		1,723.7
Foreign currency translation and other	(35.6		)	19.7		36.4		20.5		155.3		90.2		16.5		262.0
Balance October 1, 2016	$	3,311.8		$	2,358.9	$	1,460.1	$	7,130.8
Balance September 30, 2017										$	5,068.8	$	2,155.2	$	1,455.7	$	8,679.7

In the first nine months of 2017, goodwill increased by approximately $2.0 billion, which primarily related to the Newell Tools and Craftsman brand acquisitions. The goodwill amounts for these and other 2017 acquisitions are subject to change based upon the allocation of the consideration transferred to the assets acquired and liabilities assumed. Refer to Note F, Acquisitions, for further discussion.


H.	~~Long-Term Debt and Financing Arrangements~~

H. Long-Term Debt and Financing Arrangements

Long-term debt and financing arrangements at ~~October 1,~~September 30, 2017 and December 31, 2016 ~~and~~ ~~January 2, 2016~~ are as follows:

October 1, 2016 January 2, 2016
(Millions of Dollars) Interest Rate Original Notional Unamortized Discount Unamortized Gain/(Loss) Terminated Swaps Purchase Accounting FV Adjustment Deferred Financing Fees Carrying Value Carrying Value
Notes payable due in 2018 2.45% $ 632.5
$ —
$ —
$ —
$ (3.6 ) $ 628.9
$ 627.5
Notes payable due in 2018 (junior subordinated) 2.25% 345.0
—
—
—
(0.9 ) 344.1
343.8
Notes payable due 2021 3.40% 400.0
(0.2 ) 17.8
—
(1.7 ) 415.9
405.9
Notes payable due 2022 2.90% 754.3
(0.4 ) —
—
(3.8 ) 750.1
749.6
Notes payable due 2028 7.05% 150.0
—
12.8
12.4
—
175.2
167.0
Notes payable due 2040 5.20% 400.0
(0.2 ) (35.2 ) —
(3.3 ) 361.3
360.1
Notes payable due 2052 (junior subordinated) 5.75% 750.0
—
—
—
(19.6 ) 730.4
729.9
Notes payable due 2053 (junior subordinated) 5.75% 400.0
—
4.9
—
(8.4 ) 396.5
394.2
Other, payable in varying amounts through 2022 0.00% - 2.53% 19.9
—
—
—
—
19.9
19.2
Total long-term debt, including current maturities $ 3,851.7
$ (0.8 ) $ 0.3
$ 12.4
$ (41.3 ) $ 3,822.3
$ 3,797.2
Less: Current maturities of long-term debt (7.2 ) (5.1 )
Long-term debt $ 3,815.1
$ 3,792.1

In the first quarter of 2016, the Company adopted ASU 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." ASU 2015-03 requires debt issuance costs related to recognized debt liabilities to be presented in the balance sheet as a direct deduction from the debt liability rather than an asset. Accordingly, at October 1, 2016, approximately $41.3 million of deferred debt issuance costs were presented as a direct deduction within Long-Term Debt on the Company's Condensed Consolidated Balance Sheets. Furthermore, the Company reclassified approximately $45 million of deferred debt issuance costs from Other Assets to Long-Term Debt as of January 2, 2016.



		September 30, 2017																December 31, 2016
(Millions of Dollars)	Interest Rate	Original Notional		Unamortized Discount			Unamortized Gain/(Loss) Terminated Swaps (1)			Purchase Accounting FV Adjustment		Deferred Financing Fees			Carrying Value			Carrying Value
Notes payable due 2018	2.45%	$	632.5	$	—		$	—		$	—	$	(2.0	)	$	630.5		$	629.2
Notes payable due 2018	1.62%	345.0		—			—			—		(1.1		)	343.9			343.1
Notes payable due 2021	3.40%	400.0		(0.2		)	14.5			—		(1.4		)	412.9			415.2
Notes payable due 2022	2.90%	754.3		(0.3		)	—			—		(3.2		)	750.8			750.3
Notes payable due 2028	7.05%	150.0		—			11.7			11.4		—			173.1			174.7
Notes payable due 2040	5.20%	400.0		(0.2		)	(33.8		)	—		(3.1		)	362.9			361.7
Notes payable due 2052 (junior subordinated)	5.75%	750.0		—			—			—		(19.1		)	730.9			730.4
Notes payable due 2053 (junior subordinated)	5.75%	400.0		—			4.7			—		(8.1		)	396.6			396.5
Other, payable in varying amounts through 2022	0.00% - 2.73%	25.1		—			—			—		—			25.1			22.0
Total long-term debt, including current maturities		$	3,856.9	$	(0.7	)	$	(2.9	)	$	11.4	$	(38.0	)	$	3,826.7		$	3,823.1
Less: Current maturities of long-term debt															(8.7		)	(7.8		)
Long-term debt															$	3,818.0		$	3,815.3

⁽¹⁾Unamortized ~~gains and fair value adjustments~~gain/(loss) associated with interest rate ~~swaps and the impact of terminated~~ swaps are more fully discussed in Note I, ~~Derivative~~ Financial ~~Instruments~~.Instruments.

In January 2017, the Company amended its existing $2.0 billion commercial paper program to increase the maximum amount of notes authorized to be issued to $3.0 billion and to include Euro denominated borrowings in addition to U.S. Dollars. As of ~~October 1, 2016,~~September 30, 2017, the Company had ~~$89.3~~$573.1 million of borrowings outstanding against the Company’s ~~$2.0~~$3.0 billion commercial paper program, ~~and at January 2,~~of which approximately $471.3 million in Euro denominated commercial paper was designated as a Net Investment Hedge as described in more detail in Note I, Financial Instruments. At December 31, 2016, the Company had no commercial paper borrowings outstanding.

In January 2017, the Company also executed a 364-day $1.3 billion committed credit facility (the "2017 Credit Agreement"). The 2017 Credit Agreement consists of a $1.3 billion revolving credit loan and a sub-limit of an amount equal to the Euro equivalent of $400 million for swing line advances. Borrowings under the 2017 Credit Agreement may be made in U.S. Dollars or Euros, pursuant to the terms of the agreement, and bear interest at a floating rate dependent on the denomination of the borrowing. Repayments must be made by January 17, 2018 or upon an earlier termination of the 2017 Credit Agreement at the election of the Company. The 2017 Credit Agreement serves as a liquidity back-stop for the Company’s $3.0 billion U.S. Dollar and Euro commercial paper program, also authorized and amended in January 2017, as discussed above. As of ~~October 1,~~September 30, 2017, the Company had not drawn on this commitment.

As of September 30, 2017 and December 31, 2016, the Company ~~has~~had not drawn on its existing five-year $1.75 billion committed credit facility.

I. ~~Derivative~~ 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.

~~Derivative financial instruments that meet~~If the Company elects to do so and if the instrument meets the criteria specified in ASC 815, "Derivatives and Hedging,"~~are designated by~~ 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 ~~value~~values of the Company’s ~~derivatives~~financial instruments recorded in the Condensed Consolidated Balance Sheets at ~~October 1, 2016~~September 30, 2017 and ~~January 2,~~December 31, 2016 follows:


(Millions of Dollars)	Balance Sheet Classification	October 1, 2016		January 2, 2016		Balance Sheet Classification	October 1, 2016		January 2, 2016		Balance Sheet Classification	September 30, 2017		December 31, 2016		Balance Sheet Classification	September 30, 2017		December 31, 2016
Derivatives designated as hedging instruments:
Interest Rate Contracts Cash Flow	LT other assets	$	—	$	—	LT other liabilities	$	102.2	$	41.1	LT other assets	$	—	$	—	LT other liabilities	$	56.0	$	47.3
Interest Rate Contracts Fair Value	Other current assets	—		14.9		Accrued expenses	—		2.5
	LT other assets	—		1.4		LT other liabilities	—		5.2
Foreign Exchange Contracts Cash Flow	Other current assets	12.5		21.9		Accrued expenses	2.7		1.8		Other current assets	3.5		37.6		Accrued expenses	26.6		1.6
	LT other assets	3.3		3.7		LT other liabilities	0.1		—		LT other assets	0.9		—		LT other liabilities	11.7		—
Net Investment Hedge	Other current assets	49.9		30.3		Accrued expenses	0.1		4.8		Other current assets	9.9		44.1		Accrued expenses	6.7		1.8
	LT other assets	—		—		LT other liabilities	26.4		—		LT other assets	—		—		LT other liabilities	5.7		0.5
Non-derivative designated as hedging instrument:
Net Investment Hedge												—		—		Short-term borrowings	471.3		—
Total Designated		$	65.7	$	72.2		$	131.5	$	55.4		$	14.3	$	81.7		$	578.0	$	51.2
Derivatives not designated as hedging instruments:
Foreign Exchange Contracts	Other current assets	$	30.5	$	7.1	Accrued expenses	$	61.4	$	40.7	Other current assets	$	5.0	$	28.5	Accrued expenses	$	16.9	$	46.4
Total Undesignated		$	30.5	$	7.1		$	61.4	$	40.7		$	5.0	$	28.5		$	16.9	$	46.4

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.

During the nine months ended September 30, 2017 and October 1, 2016, ~~and October 3, 2015,~~ cash flows related to derivatives, including those that are separately discussed below, resulted in net cash paid of $4.2 million and net cash received of $67.9 million, ~~and $81.1 million,~~ respectively.

CASH FLOW HEDGES

As of ~~October 1, 2016~~September 30, 2017 and ~~January 2,~~December 31, 2016, there was an after-tax mark-to-market loss of ~~$107.2~~$117.1 million and ~~$52.1~~$46.3 million, respectively, reported for cash flow hedge effectiveness in Accumulated other comprehensive loss. An after-tax ~~loss~~gain of ~~$8.1~~$12.6 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 reclassified from Accumulated other comprehensive loss into earnings for active derivative financial instruments during the periods in which the underlying hedged transactions affected earnings for the three and nine months ended September 30, 2017 and October 1, 2016 ~~and October 3, 2015~~ (in millions):

Third Quarter 2016 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 $ (7.0 ) Interest expense $ —
$ —
Foreign Exchange Contracts $ (0.9 ) Cost of sales $ (2.3 ) $ —


Year-to-Date 2016	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*)
Third Quarter 2017									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	$	(61.1	)	Interest expense	$	—	$	—	$	(1.6	)	Interest expense	$	—	$	—
Foreign Exchange Contracts	$	(5.3	)	Cost of sales	$	21.3	$	—	$	(26.5	)	Cost of sales	$	3.6	$	—


Third Quarter 2015	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*)
Year-to-Date 2017									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	$	(12.1	)	Interest expense	$	—	$	—	$	(8.8	)	Interest expense	$	—	$	—
Foreign Exchange Contracts	$	(73.7	)	Cost of sales	$	16.9	$	—	$	(65.1	)	Cost of sales	$	13.3	$	—


Year-to-Date 2015	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*)
Third Quarter 2016									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	$	7.4		Interest expense	$	—	$	—	$	(7.0	)	Interest expense	$	—		$	—
Foreign Exchange Contracts	$	(39.3	)	Cost of sales	$	39.8	$	—	$	(0.9	)	Cost of sales	$	(2.3	)	$	—



Year-to-Date 2016	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	$	(61.1	)	Interest expense	$	—	$	—
Foreign Exchange Contracts	$	(5.3	)	Cost of sales	$	21.3	$	—

* Includes ineffective portion and amount excluded from effectiveness testing on derivatives.

For the three and nine months ended September 30, 2017, the hedged items' impact to the Consolidated Statements of Operations and Comprehensive Income was a loss of $3.6 million and $13.3 million, respectively, in Cost of sales, which is offsetting the amounts shown above. For the three and nine months ended October 1, 2016, the hedged ~~items'~~items’ impact to the Consolidated Statements of Operations and Comprehensive Income was a gain of $2.3 million and a loss of $21.3 million, respectively, in Cost of sales, which is offsetting the amounts shown above. For the three and nine months ended October 3, 2015, the hedged items’ impact to the Consolidated Statements of Operations and Comprehensive Income was a loss of $16.9 million and $39.8 million, respectively. There was no impact related to the interest rate contracts' hedged items for all periods presented.

For the three ~~and~~months ended September 30, 2017, there was no net impact to earnings for hedged items. For the nine months ended ~~October 1, 2016, an after-tax loss of $3.6 million and~~September 30, 2017, an after-tax gain of ~~$6.2~~$1.4 million ~~respectively, were~~was reclassified from Accumulated other comprehensive loss into earnings (inclusive of the gain/loss amortization on terminated derivative instruments) during the periods in which the underlying hedged transactions affected earnings. For the three and nine months ended October ~~3, 2015,~~1, 2016, an after-tax ~~gains~~loss of ~~$9.0~~$3.6 million and ~~$15.0~~an after-tax gain of $6.2 million, respectively, ~~were~~was reclassified from Accumulated other comprehensive loss into earnings (inclusive of the gain/loss amortization on terminated derivative instruments) during the periods in which the underlying hedged transactions affected earnings.

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-debt proportions. At ~~October 1, 2016~~September 30, 2017 and ~~January 2,~~December 31, 2016, the Company had $400 million of forward starting swaps outstanding which were executed in 2014. The objective of the hedges is to offset the expected variability on future payments associated with the interest rate on debt instruments expected to be issued in 2018. Gains or losses on the

swaps are recorded in Accumulated other comprehensive loss and will be subsequently reclassified into earnings as the future interest expense is recognized in earnings or as ineffectiveness occurs.

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 for the effective portion of the hedge are recorded in Cost of sales. The ineffective portion, if any, as well as gains and losses incurred after a hedge has been de-designated are not recorded in Accumulated other comprehensive loss, but are recorded directly to the Consolidated Statements of Operations and Comprehensive Income in Other, net. At ~~October 1,~~September 30, 2017, the notional value of forward currency contracts outstanding was $626.3 million, maturing on various dates through 2018. At December 31, 2016, the notional value of forward currency contracts outstanding was ~~$499.5~~$503.8 million, maturing on various dates through 2017. ~~At January 2, 2016, the notional value of forward currency contracts outstanding was $439.3 million, maturing on various dates through 2017.~~

Purchased Option Contracts: The Company and its subsidiaries have entered into various intercompany transactions whereby the notional values are denominated in currencies other than the functional currencies of the party executing the trade. In order to better match the cash flows of its intercompany obligations with cash flows from operations, the Company enters into purchased option contracts. Gains and losses reclassified from Accumulated other comprehensive loss for the effective portions of the hedge are recorded in Cost of sales. The ineffective portion, if any, as well as gains and losses incurred after a hedge has been de-designated are not recorded in Accumulated other comprehensive loss, but are recorded directly to the Consolidated Statements of Operations and Comprehensive Income in Other, net. At ~~October 1,~~September 30, 2017, the notional value of purchased option contracts was $455.0 million maturing on various dates through 2019. As of December 31, 2016, the notional value of purchased option contracts was ~~$187.8~~$252.0 million, maturing on various dates through 2017. ~~As of January 2, 2016, the notional value of purchased option contracts was $197.4 million, maturing on various dates through 2016.~~

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 previous years, the Company entered into interest rate swaps on the first five years of the Company's $400 million 5.75% notes due 2053 and interest rate swaps with notional values which equaled the Company's $400 million 3.40% notes due 2021 and the Company's $150 million 7.05% notes due 2028. These interest rate swaps effectively converted the Company's fixed rate debt to floating rate debt based on LIBOR, thereby hedging the fluctuation in fair value resulting from changes in interest rates. In the second quarter of 2016, the Company terminated all of the above interest rate ~~swaps.~~swaps and there were no open contracts as of September 30, 2017 and December 31, 2016. The terminations resulted in cash receipts of $27.0 million. This gain was deferred and ~~will be~~is being amortized to earnings over the remaining life of the notes.

~~The~~Prior to termination of the Company’s interest rate swaps discussed above, the changes in fair value of the ~~interest rate~~ swaps ~~during the period were recognized in earnings as well as~~and the offsetting changes in fair value ofrelated to the underlying ~~notes. There~~notes were ~~no open contracts as of October 1, 2016. The notional value of open contracts was $950.0 million as of January 2, 2016.~~recognized in earnings. A summary of ~~the~~ fair value adjustments relating to these swaps is as follows (in millions):


	Third Quarter 2016				Year-to-Date 2016					Third Quarter 2016				Year-to-Date 2016
Income Statement Classification	Gain/(Loss) on Swaps*		Gain /(Loss) on Borrowings		Gain/(Loss) on Swaps*			Gain /(Loss) on Borrowings		Gain/(Loss) on Swaps*		Gain/(Loss) on Borrowings		Gain/(Loss) on Swaps*			Gain/(Loss) on Borrowings
Interest Expense	$	—	$	—	$	(3.3	)	$	3.8	$	—	$	—	$	(3.3	)	$	3.8

Third Quarter 2015 Year-to-Date 2015
Income Statement Classification Gain/(Loss) on
Swaps* Gain /(Loss) on
Borrowings Gain/(Loss) on
Swaps*
Gain /(Loss) on
Borrowings
Interest Expense $ 24.3
$ (23.9 ) $ 22.9
$ (22.4 )

*Includes ineffective portion and amount excluded from effectiveness testing.

Amortization of the gain/loss on terminated swaps of $0.8 million and $2.4 million are reported as a reduction of interest expense for the three and nine months ended September 30, 2017, respectively. In addition to the fair value adjustments in the table above, ~~the~~ net swap accruals ~~for each period~~ and amortization of the ~~gains~~gain/loss on terminated swaps of $0.8 million and $6.1 million are ~~also~~ reported as a reduction of interest expense ~~and totaled $0.8 million and $6.1 million~~ for the three and nine months ended October 1, 2016, ~~respectively, and $3.5 million and $10.9 million for the three and nine months ended October 3, 2015,~~ respectively. Interest expense on the underlying debt when the hedge was active was $19.9 million for the nine ~~months ended October 1, 2016 and $11.7 million and $35.4 million for the three and nine months ended October 3, 2015, respectively. Due to the~~

termination of the Company’s interest rate swaps in the second quarter of 2016 as discussed above, there was no interest expense on the underlying debt which related to fair value hedges for the three months ended October 1, 2016.

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 ~~$47.0~~$3.3 million and ~~$11.8~~$88.6 million at ~~October 1,~~September 30, 2017 and December 31, 2016, ~~and January 2, 2016,~~ respectively.

As of ~~October 1, 2016,~~September 30, 2017, the Company had foreign exchange forward contracts maturing on various dates ~~through~~in 2017 with notional values totaling ~~$1.2~~$749.6 million outstanding hedging a portion of its British pound sterling, Mexican peso, Swedish krona, Euro and Canadian dollar denominated net investments; a cross currency swap with a notional value totaling $250.0 million maturing in 2023 hedging a portion of its Japanese yen denominated net investment; and Euro denominated commercial paper with a value of $471.3 million maturing in 2017 hedging a portion of its Euro denominated net investments. As of

December 31, 2016, the Company had foreign exchange contracts maturing on various dates in 2017 with notional values totaling $1.0 billion outstanding hedging a portion of its British pound sterling, Mexican peso, Swedish krona, Euro and Canadian dollar denominated net investments, and a cross currency swap with a notional value totaling $250.0 million maturing in 2023 hedging a portion of its Japanese yen denominated net investment. Of the $1.2 billion discussed above, $252.6 million hedging a portion of the British pound sterling net investments had been de-designated as of October 1, 2016. As of January 2, 2016, the Company had foreign exchange contracts maturing on various dates through 2016 with notional values totaling $1.9 billion outstanding hedging a portion of its British pound sterling, Mexican peso, Swedish krona, Japanese yen, Euro and Canadian dollar denominated net investments. For the nine months ended September 30, 2017 and October 1, 2016, ~~and October 3, 2015,~~ maturing foreign exchange contracts resulted in net cash ~~receipts~~paid of $31.6 million and net cash received of $63.3 million, ~~and $112.2 million,~~ respectively.

Gains and losses on net investment hedges remain in Accumulated other comprehensive income (loss) until disposal of the underlying assets. Gains and losses after a hedge has been de-designated are recorded directly to the Consolidated Statements of Operations and Comprehensive Income in Other, net.

The pre-tax gain or loss from fair value changes ~~recorded in Accumulated other comprehensive loss~~ was as follows (in millions):


	Third Quarter 2016						Year-to-Date 2016						Third Quarter 2017							Year-to-Date 2017
Income Statement Classification	Amount Recorded in OCI Gain (Loss)		Effective Portion Recorded in Income Statement		Ineffective Portion* Recorded in Income Statement		Amount Recorded in OCI Gain (Loss)		Effective Portion Recorded in Income Statement		Ineffective Portion* Recorded in Income Statement		Amount Recorded in OCI (Loss) Gain			Effective Portion Recorded in Income Statement		Ineffective Portion* Recorded in Income Statement		Amount Recorded in OCI (Loss) Gain			Effective Portion Recorded in Income Statement		Ineffective Portion* Recorded in Income Statement
Other, net	$	16.0	$	—	$	—	$	53.8	$	—	$	—	$	(42.3	)	$	—	$	—	$	(131.3	)	$	—	$	—


	Third Quarter 2015						Year-to-Date 2015						Third Quarter 2016						Year-to-Date 2016
Income Statement Classification	Amount Recorded in OCI Gain (Loss)		Effective Portion Recorded in Income Statement		Ineffective Portion* Recorded in Income Statement		Amount Recorded in OCI Gain (Loss)		Effective Portion Recorded in Income Statement		Ineffective Portion* Recorded in Income Statement		Amount Recorded in OCI Gain (Loss)		Effective Portion Recorded in Income Statement		Ineffective Portion* Recorded in Income Statement		Amount Recorded in OCI Gain (Loss)		Effective Portion Recorded in Income Statement		Ineffective Portion* Recorded in Income Statement
Other, net	$	40.8	$	—	$	—	$	38.3	$	—	$	—	$	16.0	$	—	$	—	$	53.8	$	—	$	—

*Includes ineffective portion and amount excluded from effectiveness testing.

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 ~~October 1, 2016~~September 30, 2017 was ~~$1.8~~$1.3 billion, maturing on various dates through ~~2017. In addition, $252.6 million of previously designated net investment hedges had been de-designated and were outstanding as of October 1, 2016.~~2018. The total notional amount of the forward contracts outstanding at ~~January 2,~~December 31, 2016 was ~~$2.0~~$1.5 billion, maturing aton various dates in ~~2016.~~2017. The income statement impacts related to derivatives not designated as hedging instruments for the three and nine months ended September 30, 2017 and October 1, 2016 ~~and October 3, 2015~~ are as follows (in millions):



Derivatives Not Designated as Hedging Instruments under ASC 815	Income Statement Classification	Third Quarter 2017 Amount of Gain (Loss) Recorded in Income on Derivative		Year-to-Date 2017 Amount of Gain (Loss) Recorded in Income on Derivative
Foreign Exchange Contracts	Other, net	$	13.9	$	43.6



Derivatives Not Designated as Hedging Instruments under ASC 815	Income Statement Classification	Third Quarter 2016 Amount of Gain (Loss) Recorded in Income on Derivative		Year-to-Date 2016 Amount of Gain (Loss) Recorded in Income on Derivative
Foreign Exchange Contracts	Other, net	$	12.5	$	(24.5	)

Derivatives Not Designated as Hedging Instruments under ASC 815 Income Statement
Classification Third Quarter 2015
Amount of Gain (Loss)
Recorded in Income on
Derivative Year-to-Date 2015
Amount of Gain (Loss)
Recorded in Income on
Derivative
Foreign Exchange Contracts Other, net $ (33.4 ) $ (12.7 )

J. Equity Arrangements

In ~~February~~ 2016, the Company repurchased ~~3,763,145~~3,940,087 shares of common ~~stock.~~stock for approximately $374.1 million. Additionally, the Company net-share settled capped call options on its common stock and received ~~293,142 shares.~~711,376 shares during 2016. Refer to Note J, Capital Stock, of the Company's Form 10-K for the year ended December 31, 2016.

In November 2016, the Company issued 3,504,165 shares of common stock to settle the purchase contracts of the 2013 Equity Units. See further discussion below.

During 2015, the Company repurchased a total of 6,623,709 shares of common stock. Additionally, the Company net-share settled capped call options on its common stock and received 2,603,855 shares during 2015.

In March 2015, the Company entered into a forward share purchase contract ~~on its~~with a financial 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,~~contract. In November 2016, the Company amended the settlement date to ~~the financial institution counterparty not later than March 2017,~~April 2019, or earlier at the ~~Company’s option, for the 3,645,510 shares purchased.~~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~~weighted-average shares outstanding at that time.

In October 2014, the Company entered into a forward share purchase contract on its common stock. The contract ~~obligates~~obligated the Company to pay $150.0 million, plus an additional amount related to the forward component of the contract, to the financial institution counterparty not later than October 2016, or earlier at the Company’s option, for the 1,603,822 shares purchased. The reduction of common shares outstanding was recorded at the inception of the forward share purchase contract in October 2014 and factored into the calculation of ~~weighted average~~weighted-average shares outstanding at that time. In October 2016, the Company physically settled the contract, receiving 1,603,822 shares for a settlement amount of $147.4 million. Refer to Note J, Capital Stock, of the Company's Form 10-K for the year ended December 31, 2016, for additional disclosure related to the shares physically received.

InAs described more fully in Note H, Long-Term Debt and Financing Arrangements, of the Company’s Form 10-K for the year ended December 31, 2016, in November 2013, the Company purchased from certain financial institutions “out-of-the-money” capped call options on 12.2 million shares of its common stock (subject to customary anti-dilution adjustments) for an aggregate premium of $73.5 million, or an average of $6.03 per share. 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 accordance with ASC 815-40, the premium paid was recorded as a reduction to equity. The contracts for the options provide that they may, at the Company’s election, subject to certain conditions, be cash settled, physically settled, modified-physically settled, or net-share settled (the default settlement method). ~~The capped call options had various expiration dates and initially had an average lower strike price of $86.07 and an average upper strike price of $106.56, subject to customary market adjustments.~~ In February 2015, the Company net-share settled 9.1 million of the 12.2 million capped call options on its common stock and received 911,077 shares using an average reference price of $96.46 per common share. ~~Additionally, the Company purchased directly from the counterparties participating in the net-share settlement, 3,381,162 shares for $326.1 million, equating to an average price of $96.46 per share.~~ In February 2016, the Company net-share settled the remaining 3.1 million capped call options on its common stock and received 293,142 shares using an average reference price of $94.34 per common share. ~~Additionally, the Company purchased 1,316,858 shares directly from the counterparty participating in the net-share settlement for $124.2 million.~~

Equity Units and Capped Call Transactions

~~In December 2013, the Company issued Equity Units comprised of $345.0 million of Notes and Equity Purchase Contracts as~~As described more fully in Note H, Long-Term Debt and Financing Arrangements, of the Company’s Form 10-K for the year ended ~~January 2, 2016.~~December 31, 2016, in December 2013, the Company issued Equity Units comprised of $345.0 million of Notes and Equity Purchase Contracts. The Equity Purchase Contracts ~~obligate~~obligated the holders to purchase on November 17, 2016, for ~~$100.00,~~$100, between 1.0122 and 1.2399 shares of the Company’s common stock, which ~~are~~were equivalent to an initial settlement price of $98.80 and $80.65, respectively, per share of common stock. ~~As of October 1, 2016, due to the customary anti-dilution provisions, the settlement rate on~~

In accordance with the Equity ~~Units Stock was 1.0157 (equivalent to a conversion price of approximately $98.46 per common share). Upon the~~Purchase Contracts, on November 17, 2016, ~~settlement date,~~ the Company ~~will issue approximately 3.5 to 4.3 million~~issued 3,504,165 common shares ~~of common stock, subject to customary anti-dilution adjustments,~~ and ~~expects to receive~~received additional cash proceeds of $345.0 million. ~~If a fundamental change occurs,~~The conversion rate used in ~~certain circumstances,~~calculating the ~~number~~average of ~~shares~~the daily volume-weighted-average price of common stock ~~deliverable upon~~during the market value averaging period, was 1.0157 (equivalent to the minimum settlement rate and a conversion price of ~~the Equity Purchase Contracts will be increased by the make-whole amount, resulting in the issuance of a maximum of approximately 4.9 million shares of~~$98.45 per common ~~stock. Holders may elect to settle their Equity Purchase Contracts early in cash prior to~~share) on November 17, 2016.

Contemporaneously with the issuance of the Equity Units described above, the Company paid $9.7 million, or an average of $2.77 per option, to enter into capped call transactions on 3.5 million shares of common stock with a major financial institution. The purpose of the capped call transactions iswas to offset the potential economic dilution associated with the common shares issuable upon the settlement of the Equity Purchase Contracts. ~~With respect to the impact on the Company, the capped call~~

transactions and the Equity Units, when taken together, result in the economic equivalent of having the conversion price on the Equity Units at $112.53, the upper strike price of the capped call as of October 1, 2016. Refer to Note H, Long-Term Debt and Financing Arrangements, of the Company’s Form 10-K for the year ended ~~January 2, 2016. In accordance with ASC 815-40, the~~December 31, 2016 for further discussion. The $9.7 million premium paid was recorded as a reduction to equity.

The capped call transactions ~~cover,~~covered, subject to customary anti-dilution adjustments, the number of shares equal to the number of shares issuable upon settlement of the Equity Purchase Contracts at the 1.0122 minimum settlement rate. In October and November 2016, the Company's capped call options on its common stock expired and were net-share settled resulting in the Company physically receiving 418,234 shares using an average reference price of $117.84 per common share.

$750 Million Equity Units and Capped Call Transactions

In May 2017, the Company issued 7,500,000 Equity Units with a total notional value of $750.0 million (“$750 million Equity Units”). Each unit has a stated amount of $100 and initially consists of a three-year forward stock purchase contract (“2020 Purchase Contracts”) for the purchase of a variable number of shares of common stock, on May 15, 2020, for a price of $100, and a 10% beneficial ownership interest in one share of 0% Series C Cumulative Perpetual Convertible Preferred Stock,

without par, with a liquidation preference of $1,000 per share (“Series C Preferred Stock”). The Company received approximately $727.5 million in cash proceeds from the $750 million Equity Units, net of underwriting costs and commissions, before offering expenses, and issued 750,000 shares of Series C Preferred Stock, recording $750.0 million in preferred stock. The proceeds were used for general corporate purposes, including repayment of short-term borrowings. The Company also used $25.1 million of the proceeds to enter into capped call transactions utilized to hedge potential economic dilution as described in more detail below.

Convertible Preferred Stock

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 will initially not bear any dividends and the liquidation preference of the convertible preferred stock will not accrete. The convertible preferred stock has no maturity date, and will remain outstanding unless converted by holders or redeemed by the Company. Holders of shares of the convertible preferred stock will generally have no voting rights.

The Series C Preferred Stock is pledged as collateral to support holders’ purchase obligations under the 2020 Purchase Contracts and can be remarketed. In connection with any successful remarketing, the Company may (but is not required to) modify certain terms of the convertible preferred stock, including the dividend rate, the conversion rate, and the earliest redemption date. After any successful remarketing in connection with which the dividend rate on the convertible preferred stock is increased, the Company will pay cumulative dividends on the convertible preferred stock, if declared by the board of directors, quarterly in arrears from the applicable remarketing settlement date.

On and after May 15, 2020, the Series C Preferred Stock may be converted into common stock at the option of the holder. The initial conversion rate was 6.1627 shares of common stock per one share of Series C Preferred Stock, which is equivalent to an initial conversion price of approximately $162.27 per share of common stock. As of September 30, 2017, due to the customary anti-dilution provisions, the conversion rate was 6.1649, equivalent to a conversion price of approximately $162.21 per share of common stock. At the election of the Company, upon conversion, the Company may deliver cash, common stock, or a combination thereof.

The Company may not redeem the Series C Preferred Stock prior to June 22, 2020. At the election of the Company, on or after June 22, 2020, the Company may redeem for cash, all or any portion of the outstanding shares of the Series C Preferred Stock at a redemption price equal to 100% of the liquidation preference, plus any accumulated and unpaid dividends. If the Company calls the Series C Preferred Stock for redemption, holders may convert their shares immediately preceding the redemption date.

2020 Purchase Contracts

The 2020 Purchase Contracts obligate the holders to purchase, on May 15, 2020, for a price of $100 in cash, a maximum number of 5.4 million shares of the Company’s common stock (subject to customary anti-dilution adjustments). The 2020 Purchase Contract holders may elect to settle their obligation early, in cash. The Series C Preferred Stock is pledged as collateral to guarantee the holders’ obligations to purchase common stock under the terms of the 2020 Purchase Contracts. The initial settlement rate determining the number of shares that each holder must purchase will not exceed the maximum settlement rate, and is determined over a market value averaging period immediately preceding May 15, 2020.

The initial maximum settlement rate of 0.7241 was calculated using an initial reference price of $138.10, equal to the last reported sale price of the Company's common stock on May 11, 2017. As of September 30, 2017, due to the customary anti-dilution provisions, the maximum settlement rate was 0.7244, equivalent to a reference price of $138.05. If the applicable market value of the Company's common stock is less than or equal to the reference price, the settlement rate will be the maximum settlement rate; and if the applicable market value of common stock is greater than the reference price, the settlement rate will be a number of shares of the Company's common stock equal to $100 divided by the applicable market value. Upon settlement of the 2020 Purchase Contracts, the Company will receive additional cash proceeds of $750 million.

The Company will pay the holders of the 2020 Purchase Contracts quarterly payments (“Contract Adjustment Payments”) at a rate of 5.375% per annum, payable quarterly in arrears on February 15, May 15, August 15 and November 15, commencing August 15, 2017. The $116.9 million present value of the Contract Adjustment Payments reduced Shareowners’ Equity at inception. As each quarterly Contract Adjustment Payment is made, the related liability is reduced and the difference between the cash payment and the present value will accrete to interest expense, approximately $1.3 million per year over the three-year term. As of September 30, 2017, the present value of the Contract Adjustment Payments was $107.5 million.

The holders can settle the purchase contracts early, for cash, subject to certain exceptions and conditions in the prospectus supplement. Upon early settlement of any purchase contracts, the Company will deliver the number of shares of its common stock equal to 85% of the number of shares of common stock that would have otherwise been deliverable.

Capped Call Transactions

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 entered into capped call transactions with three major financial institutions (the “counterparties”).

The capped call transactions have a term of approximately three years and ~~initially had a~~are 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 has an initial lower strike price of ~~$98.80,~~$162.27, which corresponds to the minimum 6.1627 settlement rate of the ~~Equity Purchase Contracts,~~Series C Preferred Stock, and an upper strike price of ~~$112.91,~~$179.53, which is approximately ~~40%~~30% higher than the closing price of the ~~Company’s~~Company's common stock on ~~November 25, 2013, and are subject~~May 11, 2017. As of September 30, 2017, due to the customary anti-dilution ~~adjustments.~~ provisions, the capped call transactions had an adjusted lower strike price of $162.21 and an adjusted upper strike price of $179.47.

The capped call transactions may be settled by ~~net-share~~net share settlement (the default settlement method) or, at the Company’s option and subject to certain conditions, cash settlement, physical settlement or modified physical settlement. The number of shares the Company will receive will be determined by the terms of the contracts using a volume-weighted average price calculation for the market value of the Company's common stock, over an averaging period. The market value determined will then be measured against the applicable strike price of the capped call transactions. The Company expects the capped call transactions to offset the potential dilution upon conversion of the Series C Preferred Stock if the calculated market value is greater than the lower strike price but less than or equal to the upper strike price of the capped call transactions. Should the calculated market value exceed the upper strike price of the capped call transactions, the dilution mitigation will be limited based on such capped value as determined under the terms of the contracts.

With respect to the impact on the Company, the capped call transactions and $750 million Equity Units, when taken together, result in the economic equivalent of having the conversion price on $750 million Equity Units at $179.47, the upper strike of the capped call as of September 30, 2017.

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 a reduction of Shareowners’ Equity. The aggregate fair value of the options at ~~October 1, 2016~~September 30, 2017 was ~~$48.0~~$28.2 million.

K. Accumulated Other Comprehensive Loss

The following tables summarize the changes in the ~~accumulated~~ balances for each component of accumulated other comprehensive loss:


(Millions of Dollars)	Currency translation adjustment and other			Unrealized losses on cash flow hedges, net of tax			Unrealized gains on net investment hedges, net of tax		Pension (losses) gains, net of tax			Total			Currency translation adjustment and other			Unrealized losses on cash flow hedges, net of tax			Unrealized gains (losses) on net investment hedges, net of tax			Pension (losses) gains, net of tax			Total
Balance - January 2, 2016	$	(1,300.9	)	$	(52.1	)	$	11.8	$	(353.0	)	$	(1,694.2	)
Balance - December 31, 2016															$	(1,586.3	)	$	(46.3	)	$	88.6		$	(377.2	)	$	(1,921.2	)
Other comprehensive income (loss) before reclassifications	$	9.9		$	(48.9	)	$	35.2	$	13.9		$	10.1		452.5			(69.4		)	(85.3		)	(19.0		)	278.8
Adjustments related to sales of businesses															4.7			—			—			2.6			7.3
Reclassification adjustments to earnings	—			(6.2		)	—		8.5			2.3			—			(1.4		)	—			17.7			16.3
Net other comprehensive income (loss)	$	9.9		$	(55.1	)	$	35.2	$	22.4		$	12.4		457.2			(70.8		)	(85.3		)	1.3			302.4
Balance - October 1, 2016	$	(1,291.0	)	$	(107.2	)	$	47.0	$	(330.6	)	$	(1,681.8	)
Balance - September 30, 2017															$	(1,129.1	)	$	(117.1	)	$	3.3		$	(375.9	)	$	(1,618.8	)

(Millions of Dollars) Currency translation adjustment and other Unrealized (losses) gains on cash flow hedges, net of tax Unrealized (losses) gains on net investment hedges, net of tax Pension (losses) gains, net of tax Total
Balance - January 3, 2015 $ (796.8 ) $ (50.9 ) $ (37.2 ) $ (385.3 ) $ (1,270.2 )
Other comprehensive (loss) income before reclassifications $ (358.6 ) $ 14.1
$ 23.8
$ 16.1
$ (304.6 )
Reclassification adjustments to earnings —
(15.0 ) —
8.1
(6.9 )
Net other comprehensive (loss) income $ (358.6 ) $ (0.9 ) $ 23.8
$ 24.2
$ (311.5 )
Balance - October 3, 2015 $ (1,155.4 ) $ (51.8 ) $ (13.4 ) $ (361.1 ) $ (1,581.7 )



(Millions of Dollars)	Currency translation adjustment and other			Unrealized losses on cash flow hedges, net of tax			Unrealized gains on net investment hedges, net of tax		Pension (losses) gains, net of tax			Total
Balance - January 2, 2016	$	(1,300.9	)	$	(52.1	)	$	11.8	$	(353.0	)	$	(1,694.2	)
Other comprehensive income (loss) before reclassifications	9.9			(48.9		)	35.2		13.9			10.1
Reclassification adjustments to earnings	—			(6.2		)	—		8.5			2.3
Net other comprehensive income (loss)	9.9			(55.1		)	35.2		22.4			12.4
Balance - October 1, 2016	$	(1,291.0	)	$	(107.2	)	$	47.0	$	(330.6	)	$	(1,681.8	)

The reclassifications out of accumulated other comprehensive loss for the nine months ended September 30, 2017 and October 1, 2016 ~~and October 3, 2015~~ were as follows (in millions):


Reclassifications from Accumulated other comprehensive loss to earnings	2016			2015			Affected line item in Consolidated Statements of Operations And Comprehensive Income	2017			2016			Affected line item in Consolidated Statements of Operations And Comprehensive Income
Realized gains on cash flow hedges	$	21.3		$	39.8		Cost of sales	$	13.3		$	21.3		Cost of sales
Realized losses on cash flow hedges	(11.2		)	(11.3		)	Interest expense	(11.3		)	(11.2		)	Interest expense
Total before taxes	$	10.1		$	28.5			$	2.0		$	10.1
Tax effect	(3.9		)	(13.5		)	Income taxes on continuing operations	(0.6		)	(3.9		)	Income taxes
Realized gains on cash flow hedges, net of tax	$	6.2		$	15.0			$	1.4		$	6.2
Amortization of defined benefit pension items:
Actuarial losses and prior service costs / credits	$	(7.8	)	$	(7.1	)	Cost of sales	$	(7.3	)	$	(7.8	)	Cost of sales
Actuarial losses and prior service costs / credits	(5.2		)	(4.7		)	Selling, general and administrative	(4.8		)	(5.2		)	Selling, general and administrative
Settlement loss								(12.8		)	—			Other, net
Total before taxes	$	(13.0	)	$	(11.8	)		$	(24.9	)	$	(13.0	)
Tax effect	4.5			3.7			Income taxes on continuing operations	7.2			4.5			Income taxes
Amortization of defined benefit pension items, net of tax	$	(8.5	)	$	(8.1	)		$	(17.7	)	$	(8.5	)

L. Net Periodic Benefit Cost — Defined Benefit Plans

Following are the components of net periodic pension (benefit) expense for the three and nine months ended ~~October 1, 2016~~September 30, 2017 and October ~~3, 2015~~1, 2016:


	Third Quarter																		Third Quarter
	Pension Benefits												Other Benefits						Pension Benefits												Other Benefits
	U.S. Plans						Non-U.S. Plans						All Plans						U.S. Plans						Non-U.S. Plans						All Plans
(Millions of Dollars)	2016			2015			2016			2015			2016			2015			2017			2016			2017			2016			2017			2016
Service cost	$	2.3		$	1.7		$	3.1		$	3.6		$	0.2		$	0.1		$	2.1		$	2.3		$	3.6		$	3.1		$	0.1		$	0.2
Interest cost	11.3			13.5			9.0			11.4			0.4			0.6			10.8			11.3			7.5			9.0			0.5			0.4
Expected return on plan assets	(17.0		)	(18.7		)	(10.8		)	(14.3		)	—			—			(16.1		)	(17.0		)	(11.6		)	(10.8		)	—			—
Amortization of prior service cost (credit)	1.3			0.3			0.1			0.4			(0.3		)	(0.4		)	0.4			1.3			(0.3		)	0.1			(0.3		)	(0.3		)
Amortization of net loss	1.8			1.9			1.4			1.5			—			—			2.0			1.8			2.3			1.4			—			—
Settlement / curtailment loss	—			—			0.3			0.4			—			—			—			—			—			0.3			—			—
Net periodic pension (benefit) expense	$	(0.3	)	$	(1.3	)	$	3.1		$	3.0		$	0.3		$	0.3		$	(0.8	)	$	(0.3	)	$	1.5		$	3.1		$	0.3		$	0.3


	Year-to-Date																		Year-to-Date
	Pension Benefits												Other Benefits						Pension Benefits												Other Benefits
	U.S. Plans						Non-U.S. Plans						All Plans						U.S. Plans						Non-U.S. Plans						All Plans
(Millions of Dollars)	2016			2015			2016			2015			2016			2015			2017			2016			2017			2016			2017			2016
Service cost	$	7.0		$	5.2		$	9.5		$	10.8		$	0.5		$	0.4		$	6.5		$	7.0		$	10.2		$	9.5		$	0.4		$	0.5
Interest cost	34.0			40.4			28.4			35.2			1.2			1.7			32.4			34.0			21.6			28.4			1.2			1.2
Expected return on plan assets	(50.9		)	(56.1		)	(34.3		)	(42.5		)	—			—			(48.3		)	(50.9		)	(33.8		)	(34.3		)	—			—
Amortization of prior service cost (credit)	3.9			0.7			0.2			0.6			(0.9		)	(1.0		)	0.9			3.9			(0.9		)	0.2			(1.0		)	(0.9		)
Amortization of net loss	5.3			5.8			4.5			5.7			—			—			6.2			5.3			6.9			4.5			—			—
Settlement / curtailment loss	—			—			0.4			0.7			—			—			—			—			12.8			0.4			—			—
Net periodic pension (benefit) expense	$	(0.7	)	$	(4.0	)	$	8.7		$	10.5		$	0.8		$	1.1		$	(2.3	)	$	(0.7	)	$	16.8		$	8.7		$	0.6		$	0.8

InFor the first quarter of 2016, the Company changed the method used to estimate the service and interest cost components of net periodic pension (benefit) expense. The new estimation method uses a full yield curve approach by applying specific spot rates along the yield curve used in the determination of the pension benefit obligation, to their underlying projected cash flows, and provides a more precise measurement of the service and interest cost components. Previously, the Company used a single weighted average discount rate derived from the corresponding yield curve used to measure the pension benefit obligation. The

~~change is applied prospectively as a change in estimate that is inseparable from a change in accounting principle and reduced service and interest cost for the three and~~ nine months ended ~~October 1, 2016~~September 30, 2017, the Company recorded pre-tax charges of approximately $12.8 million, reflecting losses previously reported in accumulated other comprehensive loss related to a non-U.S. pension plan for which the Company settled its obligation by ~~approximately $3.4 million~~purchasing an annuity and ~~$10.5 million, respectively.~~making lump sum payments to participants.

M. Fair Value Measurements

FASB 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 holds various ~~derivative~~ financial instruments that are employed to manage risks, including foreign currency and interest rate exposures. These financial instruments are carried at fair value and are included within the scope of ASC 820. The Company determines the fair ~~value~~values of ~~derivatives~~these financial instruments through the use of matrix or model pricing, which utilizes observable inputs such as market interest and currency rates. When determining the fair ~~value~~values of these financial instruments 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 counter-party.

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		Total		Level 1		Level 2		Level 3
October 1, 2016
September 30, 2017
Money market fund							$	3.2	$	3.2	$	—	$	—
Derivative assets							$	19.3	$	—	$	19.3	$	—
Derivative and non-derivative liabilities							$	594.9	$	—	$	594.9	$	—
Contingent consideration liability							$	84.0	$	—	$	—	$	84.0
December 31, 2016
Money market fund	$	5.7	$	5.7	$	—	$	4.3	$	4.3	$	—	$	—
Derivative assets	$	96.2	$	—	$	96.2	$	110.2	$	—	$	110.2	$	—
Derivative liabilities	$	192.9	$	—	$	192.9	$	97.6	$	—	$	97.6	$	—
January 2, 2016
Money market fund	$	7.0	$	7.0	$	—
Derivative assets	$	79.3	$	—	$	79.3
Derivative liabilities	$	96.1	$	—	$	96.1

The following table presents the carrying values and fair values of the Company's financial assets and liabilities, as well as the Company's debt, as of ~~October 1, 2016~~September 30, 2017 and ~~January 2,~~December 31, 2016:


	October 1, 2016				January 2, 2016				September 30, 2017				December 31, 2016
(Millions of Dollars)	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Other investments	$	10.3	$	10.7	$	11.7	$	11.7	$	8.9	$	9.3	$	8.9	$	9.2
Derivative assets	$	96.2	$	96.2	$	79.3	$	79.3	$	19.3	$	19.3	$	110.2	$	110.2
Derivative liabilities	$	192.9	$	192.9	$	96.1	$	96.1
Derivative and non-derivative liabilities									$	594.9	$	594.9	$	97.6	$	97.6
Long-term debt, including current portion	$	3,822.3	$	4,233.5	$	3,797.2	$	4,034.4	$	3,826.7	$	4,022.4	$	3,823.1	$	3,967.4

As discussed in Note F, Acquisitions, the Company recorded a contingent consideration liability in the first quarter of 2017 relating to the Craftsman brand acquisition representing the Company's obligation to make future payments to Sears Holdings of between 2.5% and 3.5% on sales of Craftsman products in new Stanley Black & Decker channels through March 2032, which was initially valued at $84.0 million at the acquisition date. The first payment is due the first quarter of 2020 relating to royalties owed for the previous eleven quarters, and future payments will be due quarterly through the first quarter of 2032. The fair value was estimated using Level 3 inputs including future sales projections, which are subject to change, and the contractual royalty rates. There was no change in the fair value of the contingent consideration as of September 30, 2017.

The Company had no other significant non-recurring fair value measurements, nor any other financial assets or liabilities measured using Level 3 inputs, during the ~~first~~ nine months of ~~2016~~2017 or ~~2015.~~2016.

The money market fund and other investments outlined in the tables above relate to the West Coast Loading Corporation ("WCLC") trust and are considered Level 1 instruments within the fair value hierarchy. The long-term debt instruments are considered Level 2 instruments and are measured using the stated cash flows in each obligation discounted at 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 ~~October 1, 2016~~September 30, 2017 and ~~January 2,~~December 31, 2016. The fair values of foreign

currency and interest rate swap agreements, comprising the derivative assets and liabilities in the table above, are based on current settlement values.

As discussed in Note D, Financing Receivables, the Company has a deferred purchase price receivable related to sales of trade receivables. The deferred purchase price receivable will be repaid in cash as receivables are collected, generally within 30 days, and as such the carrying value of the receivable approximates fair value.

Refer to Note I, ~~Derivative~~ Financial Instruments, for more details regarding ~~derivative~~ financial instruments, Note R, Commitments and 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 long-term debt.

N. Other Costs and Expenses

Other, net is primarily comprised of intangible asset amortization expense, ~~currency related~~currency-related gains or losses, environmental remediation expense and acquisition-related transaction and consulting costs. Acquisition-related transaction and consulting costs of $5.4 million and $51.0 million were included in Other, net for the three and nine months ended September 30, 2017, respectively.

O. Restructuring Charges

A summary of the restructuring reserve activity from ~~January 2,~~December 31, 2016 to ~~October 1, 2016~~September 30, 2017 is as follows:


(Millions of Dollars)	January 2, 2016		Net Additions		Usage			Currency		October 1, 2016		December 31, 2016		Net Additions		Usage			Currency		September 30, 2017
Severance and related costs	$	44.3	$	18.1	$	(39.7	)	$	0.4	$	23.1	$	21.4	$	34.4	$	(32.8	)	$	2.1	$	25.1
Facility closures and asset impairments	14.4		9.2		(19.1		)	—		4.5		14.2		8.5		(16.1		)	0.3		6.9
Total	$	58.7	$	27.3	$	(58.8	)	$	0.4	$	27.6	$	35.6	$	42.9	$	(48.9	)	$	2.4	$	32.0

For the nine months ended ~~October 1, 2016,~~September 30, 2017, the Company recognized net restructuring charges of ~~$27.3~~$42.9 million. This amount reflects ~~$18.1~~$34.4 million of net severance charges associated with the reduction of approximately ~~872 employees. The Company also had $4.8~~1,463 employees and $8.5 million of facility closure ~~costs~~ and ~~$4.4 million of asset impairments.~~other restructuring costs.

For the three months ended ~~October 1, 2016,~~September 30, 2017, the Company recognized net restructuring charges of ~~$9.1~~$19.1 million. This amount reflects ~~$8.4~~$16.3 million of net severance charges associated with the reduction of approximately ~~270 employees. The Company also had $0.6~~1,138 employees and $2.8 million of facility closure ~~costs~~ and ~~$0.1 million of asset impairments.~~other restructuring costs.

The majority of the ~~$27.6~~$32.0 million of reserves remaining as of ~~October 1, 2016~~September 30, 2017 is expected to be utilized within the next 12 months.

Segments: The ~~$27~~$43 million of net restructuring ~~charge~~charges for the nine months ended ~~October 1, 2016~~September 30, 2017 includes: $3$18 million ~~of net charges~~ pertaining to the Tools & Storage segment; ~~$12~~$17 million ~~of net charges~~ pertaining to the Security segment; $6$7 million ~~of net charges~~ pertaining to the Industrial ~~segment;~~segment and $6$1 million ~~of net charges~~ pertaining to Corporate.

The $9$19 million of net restructuring ~~charge~~charges for the three months ended ~~October 1, 2016~~September 30, 2017 includes: $2$9 million ~~of net charges~~ pertaining to the Tools & Storage segment; $4$8 million ~~of net charges~~ pertaining to the Security ~~segment;~~segment and $2 million ~~of net charges~~ pertaining to the Industrial ~~segment; and $1 million of net charges pertaining to Corporate.~~segment.


P.	Income Taxes

The Company recognized income tax expense of $79.8 million and $239.8 million for the three and nine months ended September 30, 2017, respectively, resulting in effective tax rates of 22.5% and 20.2%, respectively. The effective tax rates differ from the U.S. statutory tax rate during these periods primarily due to a portion of the Company’s earnings being realized in lower-taxed foreign jurisdictions, the utilization of U.S. tax attributes during the first quarter of 2017 due to the divestiture of the mechanical security businesses, the favorable settlement of certain income tax audits during the second quarter of 2017, and the acceleration of certain tax credits resulting in a tax benefit during the third quarter of 2017. Non-deductible transaction costs and other acquisition-related restructuring items partially offset the net tax benefits mentioned above for the three and

nine months ended September 30, 2017. Excluding the impact of the divestitures and acquisition-related charges for the three and nine months ended September 30, 2017, the effective tax rates were 23.0% and 23.7%, respectively.

The Company recognized income tax expense of $78.7 million and $234.7 million for the three and nine months ended October 1, 2016, respectively, resulting in effective tax rates of 24.0% and 24.9%, respectively. The effective tax rates ~~differ~~differed from the U.S. statutory tax rate during these periods primarily due to a portion of the Company’s earnings being realized in lower-taxed foreign jurisdictions, the finalization of audit settlements during the first quarter of 2016, adjustments to tax positions relating to undistributed foreign earnings during the second ~~and third quarters~~quarter of 2016, and adjustments relating to the filing of certain U.S. and foreign corporate income tax returns during the third quarter of 2016.

The Company recognized income tax expense of $75.7 million and $209.5 million for the three and nine months ended October 3, 2015, respectively, resulting in effective tax rates of 24.5% and 24.8%, respectively. The effective tax rates differed from the U.S. statutory tax rate during these periods primarily due to a portion of the Company’s earnings being realized in lower-taxed foreign jurisdictions and the reduction of certain potential foreign tax exposures, largely due to statute expirations. The income tax expense for the nine month period ended October 3, 2015 also included benefits related to the reversal of valuation allowances for certain foreign deferred tax assets which had become realizable.

The Company is subject to the examination of its income tax returns by the Internal Revenue Service and other taxing authorities both domestically and internationally. The final outcome of the future tax consequences of these examinations and legal proceedings, as well as the outcome of competent authority proceedings, changes and interpretation in regulatory tax laws, or expiration of statute of limitations could impact the Company’s financial statements. Accordingly, the Company has tax reserves recorded for which it is reasonably possible that the amount of the unrecognized tax benefit will increase or decrease which could have a material effect on the financial results for any particular fiscal quarter or year. However, based on the uncertainties associated with litigation and the status of examinations, including the protocols of finalizing audits by the relevant tax authorities which could include formal legal proceedings, it is not possible to estimate the impact of any such change.

Q. Business Segments

The Company's operations are classified into three reportable business segments, which also represent its operating segments: Tools & Storage, Security and Industrial.

The Tools & Storage segment is comprised of the Power Tools & Equipment ("PTE") and Hand Tools, Accessories & Storage ("HTAS") businesses. The ~~Power Tools~~PTE business includes both professional ~~products,~~and consumer ~~products and power tool accessories.~~products. Professional products include professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers and staples, concrete and masonry anchors. Consumer products include corded and cordless electric power tools sold primarily under the BLACK+DECKER brand, lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, edgers and related accessories, and home products such as hand-held vacuums, paint tools and cleaning appliances. The HTAS business sells 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, router bits, abrasives and saw blades.

~~The Hand Tools & Storage business sells measuring, leveling and layout tools, planes, hammers, demolition tools, knives, saws, chisels and industrial and automotive tools.~~ Storage products include tool boxes, sawhorses, medical cabinets and engineered storage solution products.

The Security segment is comprised of the Convergent Security Solutions ("CSS") and Mechanical Access Solutions ("MAS") businesses. The CSS business designs, supplies and installs commercial electronic security systems and provides electronic security services, including alarm monitoring, video surveillance, fire alarm monitoring, systems integration and system maintenance. Purchasers of these systems typically contract for ongoing security systems monitoring and maintenance at the time of initial equipment installation. The business also sells healthcare solutions, which include asset tracking, ~~solutions,~~ infant protection, pediatric protection, patient protection, wander management, fall management, and emergency call products. The MAS business primarily sells automatic ~~doors, commercial hardware, locking mechanisms, electronic keyless entry systems, keying systems, tubular and mortise door locksets.~~doors.

The Industrial segment is comprised of the Engineered Fastening and Infrastructure businesses. The Engineered Fastening business primarily sells engineered fastening products and systems designed for specific applications. The product lines include stud welding systems, blind rivets and tools, blind inserts and tools, drawn arc weld studs, engineered plastic and mechanical fasteners, self-piercing riveting systems, precision nut running systems, micro fasteners, and high-strength structural fasteners. The Infrastructure business consists of the Oil & Gas and Hydraulics businesses. The Oil & Gas business sells and rents custom pipe handling, joint welding and coating equipment used in the construction of large and small diameter pipelines, and provides pipeline inspection services. The Hydraulics business sells hydraulic tools and accessories.

The Company utilizes segment profit, which is defined as net sales minus cost of sales and SG&A inclusive of the provision for doubtful accounts (aside from corporate overhead expense), and segment profit as a percentage of net sales to assess the profitability of each segment. Segment profit excludes the corporate overhead expense element of SG&A, interest income, interest expense, other, net (inclusive of intangible asset amortization expense), restructuring charges, gains or losses on sales of businesses, pension settlement and income taxes. Refer to Note O, Restructuring Charges, for the amount of net restructuring charges by segment. Corporate overhead is comprised of world headquarters facility expense, cost for the executive

management team and cost for certain centralized functions that benefit the entire Company but are not directly attributable to the businesses, such as legal and corporate finance functions. Transactions between segments are not material. Segment assets primarily include cash, accounts receivable, inventory, other current assets, property, plant and equipment, intangible assets and other miscellaneous assets.


	Third Quarter						Year-to-Date						Third Quarter						Year-to-Date
(Millions of Dollars)	2016			2015			2016			2015			2017			2016			2017			2016
NET SALES
Tools & Storage	$	1,896.9		$	1,838.2		$	5,535.4		$	5,309.8		$	2,318.2		$	1,896.9		$	6,432.2		$	5,535.4
Security	522.7			512.0			1,564.6			1,554.9			476.8			522.7			1,429.0			1,564.6
Industrial	462.4			479.3			1,386.5			1,461.7			503.6			462.4			1,472.5			1,386.5
Total	$	2,882.0		$	2,829.5		$	8,486.5		$	8,326.4		$	3,298.6		$	2,882.0		$	9,333.7		$	8,486.5
SEGMENT PROFIT
Tools & Storage	$	330.0		$	307.8		$	954.5		$	866.2		$	396.6		$	330.0		$	1,058.2		$	954.5
Security	71.4			60.8			199.3			170.8			54.0			71.4			156.8			199.3
Industrial	80.4			85.4			235.2			254.4			93.8			80.4			276.5			235.2
Segment profit	481.8			454.0			1,389.0			1,291.4			544.4			481.8			1,491.5			1,389.0
Corporate overhead	(43.1		)	(35.3		)	(138.5		)	(109.4		)	(55.7		)	(43.1		)	(148.7		)	(138.5		)
Other, net	(56.8		)	(54.0		)	(150.6		)	(168.2		)	(65.5		)	(56.8		)	(232.0		)	(150.6		)
(Loss) gain on sales of businesses													(3.2		)	—			265.1			—
Pension settlement													—			—			(12.8		)	—
Restructuring charges	(9.1		)	(14.0		)	(27.3		)	(43.9		)	(19.1		)	(9.1		)	(42.9		)	(27.3		)
Interest expense	(50.2		)	(45.2		)	(145.2		)	(135.8		)	(57.2		)	(50.2		)	(164.5		)	(145.2		)
Interest income	5.1			3.6			16.4			10.3			10.3			5.1			28.6			16.4
Earnings from continuing operations before income taxes	$	327.7		$	309.1		$	943.8		$	844.4
Earnings before income taxes													$	354.0		$	327.7		$	1,184.3		$	943.8

The following table is a summary of total assets by segment as of ~~October 1, 2016~~September 30, 2017 and ~~January 2,~~December 31, 2016:


(Millions of Dollars)	October 1, 2016			January 2, 2016			September 30, 2017			December 31, 2016
Tools & Storage	$	8,922.0		$	8,492.9		$	13,095.4		$	8,512.4
Security	3,802.1			3,741.6			3,429.0			3,139.0
Industrial	3,501.9			3,438.7			3,532.6			3,359.0
	16,226.0			15,673.2			20,057.0			15,010.4
Assets held for sale							—			523.4
Corporate assets	(505.3		)	(545.4		)	(283.8		)	101.1
Consolidated	$	15,720.7		$	15,127.8		$	19,773.2		$	15,634.9

Corporate assets primarily consist of cash, deferred taxes and property, plant and equipment. Based on the nature of the Company's cash pooling arrangements, at times corporate-related cash accounts will be in a net liability position.


R.	Commitments and 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 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. Some of these assert claims for damages and liability for remedial investigations and clean-up costs with respect to sites that have never been owned or operated by Black & Decker but at which Black & Decker has been identified as a potentially responsible party ("PRP"). Other matters involve current and former manufacturing facilities.

The Environmental Protection Agency (“EPA”) has asserted claims in federal court in Rhode Island against certain current and former affiliates of Black & Decker related to environmental contamination found at the Centredale Manor Restoration Project Superfund ("Centredale") site, located in North Providence, Rhode Island. The EPA has discovered a variety of contaminants at the site, including but not limited to, dioxins, polychlorinated biphenyls, and pesticides. The EPA alleges that Black & Decker and certain of its current and former affiliates 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 certain of its current and former affiliates contest the EPA's allegation that they are responsible for the contamination, and have asserted

contribution claims, counterclaims and cross-claims against a number of other PRPs, including the federal government as well as insurance carriers. The EPA released its Record of Decision ("ROD") in September 2012, which identified and described the EPA's selected remedial alternative for the site. Black & Decker and certain of its current and former affiliates are contesting the EPA's selection of the remedial alternative set forth in the ROD, on the grounds that the EPA's actions were arbitrary and capricious and otherwise not in accordance with law, and have proposed other equally-protective, more cost-effective alternatives. On June 10, 2014, the EPA issued an Administrative Order under Sec. 106 of CERCLA, instructing Emhart Industries, Inc. and Black & Decker to perform the remediation of Centredale pursuant to the ROD. Black & Decker and Emhart Industries, Inc. dispute the factual, legal and scientific bases cited by the EPA for such an Order and have provided the EPA with numerous good-faith bases for Black & Decker’s and Emhart Industries, Inc.’s declination to comply with the Order at this time. Black & Decker and Emhart Industries, Inc. continue to vigorously litigate the issue of their liability for environmental conditions at the Centredale site, including the completion of the Phase 1 trial in late July, ~~2015.~~2015 and the completion of the Phase 2 trial in April, 2017. The Court in ~~this initial phase~~Phase 1 of the trial found that dioxin contamination at the Centredale site was not ~~“divisible”,~~“divisible,” and that Emhart was jointly and severally liable for dioxin contamination at the Site. In its Phase 2 Findings of Fact and Conclusions of Law, entered on August 17, 2017, the Court found that certain components of EPA’s selected remedy were arbitrary and capricious, however, and remanded the matter to the EPA while retaining jurisdiction over the ongoing remedy selection and implementation process. The ~~next two phases~~Court also held in Phase 2 that Black & Decker had sufficient cause for its declination to comply with EPA’s June 10, 2014 Order and that no associated civil penalties or fines were warranted. The United States has filed a Motion for Reconsideration concerning the Court’s Phase 2 rulings, and a ruling on that motion is not expected until at least early 2018. The 3rd Phase of the litigation / trial, which is in its very early stages, will address ~~whether~~ the ~~EPA’s proposed remedy for the Site is “arbitrary and capricious”, and if necessary, the~~potential allocation of liability to other parties who may have contributed to contamination of the Site with dioxins, PCB’s and other contaminants of concern. ~~The second phase of the trial addressing the remedy and certain other issues commenced on September 26, 2016.~~ The Company's estimated remediation costs related to the Centredale site (including the EPA’s past costs as well as costs of additional investigation, remediation, and related costs such as EPA’s oversight costs, less escrowed funds contributed by primary PRPs who have reached settlement agreements with the EPA), which the Company considers to be probable and reasonably estimable, range from approximately $68.1 million to $139.7 million, with no amount within that range representing a more likely outcome until such time as the litigation is resolved through judgment or compromise. The Company’s reserve for this environmental remediation matter of $68.1 million reflects the fact that the EPA considers Metro-Atlantic, Inc. to be a primary source of contamination at the site. As the specific nature of the environmental remediation activities that may be mandated by the EPA at this site have not yet been finally determined through the on-going litigation, the ultimate remedial costs associated with the site may vary from the amount accrued by the Company at ~~October 1, 2016.~~September 30, 2017.

In the normal course of business, the Company is involved in various lawsuits and claims. In addition, the Company is a party to a number of proceedings before federal and state regulatory agencies relating to environmental remediation. Also, the Company, along with many other companies, has been named as a PRP in a number of administrative proceedings for the remediation of various waste sites, including 3129 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. In the event that 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 ~~October 1, 2016~~September 30, 2017 and ~~January 2,~~December 31, 2016 the Company had reserves of ~~$162.6~~$175.0 million and ~~$170.7~~$160.9 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 ~~2016~~2017 amount, ~~$19.0~~$21.7 million is classified as current and ~~$143.6~~$153.3 million as long-term which is expected to be paid over the estimated remediation period. As of ~~October 1, 2016,~~September 30, 2017, the Company has recorded ~~$16.0~~$12.1 million in other assets related to funding received by the 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, 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. Accordingly, as of ~~October 1, 2016,~~September 30, 2017, the Company's cash obligation associated with the aforementioned remediation activities including WCLC is ~~$146.6~~$162.9 million. The range of environmental remediation costs that is reasonably possible is ~~$123.7~~$142.4 million to ~~$264.7~~$276.2 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 policy.

The Company and approximately 60 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. ~~(The~~The EPA estimates that the remedial design will take four years to complete.) 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. There~~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 in the lower 8.3 mile ROD as the contaminants of concern. 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 Company asserts that it did not discharge dioxins, furans or polychlorinated biphenyls and should be eligible for a cash out settlement.There has been no determination as to how the RI/FS will be modified in light of the EPA’s decision to implement a final action for the lower 8.3 miles of the River. At this time, the Company cannot reasonably estimate its liability related to the remediation efforts, excluding the RI/FS and remediation actions at mile 10.9, as the RI/FS is ongoing, the ultimate remedial approach and associated cost for the upper portion of the River has not yet been determined, and the parties that will participate in funding the remediation and their respective allocations are not yet known. On September 30, 2016, Occidental Chemical Corporation entered into an agreement with EPA to perform the remedial design for the cleanup plan for the lower 8.3 miles of the river.

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. The cleanup adopted by the EPA is currently estimated to cost approximately $68.7 million. Accordingly, in the first quarter of 2017, the Company increased its reserve by $17.1 million which was recorded in Other, net in the Consolidated Statements of Operations and Comprehensive Income.

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.

S. Guarantees

The Company’s financial guarantees at ~~October 1, 2016~~September 30, 2017 are as follows:


(Millions of Dollars)	Term	Maximum Potential Payment		Carrying Amount of Liability		Term	Maximum Potential Payment		Carrying Amount of Liability
Guarantees on the residual values of leased properties	One to five years	$	59.4	$	—
Guarantees on the residual values of leased assets						One to five years	$	103.4	$	—
Standby letters of credit	Up to three years	77.7		—		Up to three years	71.7		—
Commercial customer financing arrangements	Up to six years	66.7		18.1		Up to six years	73.8		25.5
Total		$	203.8	$	18.1		$	248.9	$	25.5

The Company has guaranteed a portion of the residual values of leased ~~properties~~assets arising from its synthetic lease program. The lease guarantees are for an amount up to ~~$59.4~~$103.4 million while the fair value of the underlying ~~buildings~~assets is estimated at ~~$67.2~~$118.9 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 ~~$77.7~~$71.7 million in standby letters of credit that guarantee future payments which may be required under certain insurance programs.

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 ~~$66.7~~$73.8 million and the ~~$18.1~~$25.5 million carrying value of the guarantees issued is recorded in debt and other liabilities as appropriate in the Condensed Consolidated Balance Sheets.

The Company provides product and service warranties which vary across its businesses. The types of warranties offered generally range from one year to limited lifetime, ~~while~~and certain branded products recently acquired carry a lifetime warranty. There are also certain products ~~carry~~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 and service warranties for the nine months ended ~~October 1, 2016~~September 30, 2017 and October ~~3, 2015~~1, 2016 are as follows:


(Millions of Dollars)	2016			2015			2017			2016
Balance beginning of period	$	105.4		$	109.6		$	103.4		$	105.4
Warranties and guarantees issued	71.4			68.9			76.9			71.4
Warranty payments and currency	(69.6		)	(71.9		)	(71.8		)	(69.6		)
Balance end of period	$	107.2		$	106.6		$	108.5		$	107.2

T. Divestitures

On January 3, 2017, the Company sold a business within the Tools & Storage segment for $25.6 million. During the second quarter of 2017, the Company received additional proceeds of $0.5 million as a result of the finalization of the purchase price. On February 22, 2017, the Company sold the majority of its mechanical security businesses within the Security segment, which includes the commercial hardware brands of Best Access, phi Precision and GMT, for net proceeds of $719.2 million. The Company also sold a business in the Industrial segment during the third quarter of 2017, resulting in a loss of $3.2 million. As a result of these sales, the Company recognized an after-tax gain of $234.3 million in the first nine months of 2017, primarily related to the sale of the mechanical security businesses. These disposals do not qualify as discontinued operations in accordance with ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, and therefore, are included in the Company's continuing operations for all periods presented through their respective dates of sale in 2017.

The following table summarizes the pre-tax income for these businesses for the three and nine months ended September 30, 2017 and October 1, 2016:



	Third Quarter				Year-to-Date
(Millions of Dollars)	2017		2016		2017		2016
Pre-tax income	$	0.7	$	12.0	$	1.7	$	34.0

The carrying amounts of the assets and liabilities that were expected to be included in the sales of the mechanical security businesses and the business within the Tools & Storage segment were classified as held for sale as of December 31, 2016, as follows:



(Millions of Dollars)	December 31, 2016
Accounts and notes receivable, net	$	35.3
Inventories, net	33.2
Property, plant and equipment, net	52.3
Goodwill and other intangibles, net	399.8
Other assets	2.8
Total assets	$	523.4

Accounts payable and accrued expenses	$	38.0
Other liabilities	15.5
Total liabilities	$	53.5

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 diversified global provider of hand tools, power tools and related accessories, mechanical access solutions ~~(i.e.~~(primarily automatic ~~doors and~~doors), commercial ~~locking systems),~~ electronic security and monitoring systems, healthcare solutions, engineered fastening systems and products and services for various industrial applications. The Company ~~is continuing~~continues to pursue ~~an organic~~a growth and acquisition strategy that involves industry, geographic and customer diversification to foster sustainable revenue, earnings and cash flow growth. The Company isalso remains focused on ~~growing organically,~~organic growth, including increasing its presence in emerging markets, with a goal of generating greater than 20% of annual revenues from those markets over time, and leveraging the Stanley Fulfillment System, a now expanded program ("SFS 2.0") focused on upgrading innovation and digital capabilities while maintaining commercial and supply chain excellence, and funding required investments, in part, through functional transformation. ~~In June 2016,~~Strategic acquisitions, combined with strong innovation-driven organic growth performance, will help enable the Company ~~announced~~to reach its vision of doubling its size to $22 billion in revenue by 2022 while expanding the ~~launch of its D~~E~~WALT FLEXVOLT~~ ™ battery system representing the first major output of the SFS 2.0 Breakthrough Innovation initiative. This new battery technology changes voltages as the user changes tools, allowing for 20V - 60V - 120V (when two batteries are combined) power all within the same battery system, which is fully backward compatible with the Company's existing 20V line of cordless tools.margin rate.

~~The~~In March 2017, the Company ~~recently announced that it has entered into a definitive agreement to acquire~~acquired the Tools business of Newell Brands ("Newell Tools"), ~~discussed further below,~~ which is ananother important step in the Company's quest to strengthen its presence in the global tools ~~industry. In addition,~~industry, and the Craftsman brand, which grants the Company ~~intends~~the rights to ~~pursue targets that expand~~develop, manufacture and sell Craftsman®-branded products in non-Sears Holdings channels. Furthermore, in February 2017, the ~~Industrial platform in Engineered Fastening and Infrastructure. The~~ Company ~~also remains focused on improving~~completed the ~~operating results~~sale of the ~~Security business~~majority of its mechanical security businesses, which allowed the Company to deploy capital in a more accretive and ~~plans to communicate its strategic fit prior to the end of 2016.~~growth-oriented manner.

In terms of capital allocation, the Company remains committed, over time, to returning approximately 50% of free cash flow to shareholders through a strong and growing dividend as well as opportunistically repurchasing shares. The remaining free cash flow (approximately 50%) will be deployed towards acquisitions.

Refer to the “Strategic Objectives” 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 2,~~December 31, 2016 for additional strategic discussions.

Segments

The Company's operations are classified into three reportable business segments, which also represent its operating segments: Tools & Storage, Security and Industrial.

Tools & Storage

The Tools & Storage segment is comprised of the Power Tools & Equipment ("PTE") and Hand Tools, Accessories & Storage ("HTAS") businesses. ~~Revenues~~Annual revenues in the Tools & Storage segment were ~~$7.1~~$7.5 billion in ~~2015,~~2016, representing ~~64%~~66% of the Company’s total revenues.

The ~~Power Tools~~PTE business includes both professional ~~products,~~and consumer ~~products and power tool accessories.~~products. Professional products include professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers and staples, concrete and masonry anchors. Consumer products include corded and cordless electric power tools sold primarily under the BLACK+DECKER brand, lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, edgers and related accessories, and home products such as hand-held vacuums, paint tools and cleaning appliances.

The HTAS business sells 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, router bits, abrasives and saw blades.

Security

The Security segment is comprised of the Convergent Security Solutions ("CSS") and Mechanical Access Solutions ("MAS") businesses. ~~Revenues~~Annual revenues in the Security segment were $2.1 billion in ~~2015,~~2016, representing ~~19%~~18% of the Company’s total revenues.

The CSS business designs, supplies and installs commercial electronic security systems and provides electronic security services, including alarm monitoring, video surveillance, fire alarm monitoring, systems integration and system maintenance. Purchasers of these systems typically contract for ongoing security systems monitoring and maintenance at the time of initial equipment installation. The business also sells healthcare solutions, which include asset tracking solutions, infant protection, pediatric protection, patient protection, wander management, fall management, and emergency call products.

The MAS business primarily sells automatic ~~doors, commercial hardware, locking mechanisms, electronic keyless entry systems, keying systems, tubular and mortise door locksets.~~doors.

Industrial

The Industrial segment is comprised of the Engineered Fastening and Infrastructure businesses. Annual Industrial segment revenues totaled ~~$1.9~~$1.8 billion in ~~2015,~~2016, representing ~~17%~~16% of the Company’s total revenues.

The Engineered Fastening business primarily sells engineered fastening products and systems designed for specific applications. The product lines include stud welding systems, blind rivets and tools, blind inserts and tools, drawn arc weld studs, engineered plastic and mechanical fasteners, self-piercing riveting systems, precision nut running systems, micro fasteners, and high-strength structural fasteners.

The Infrastructure business consists of the Oil & Gas and Hydraulics businesses. The Oil & Gas business sells and rents custom pipe handling, joint welding and coating equipment used in the construction of large and small diameter pipelines, and provides pipeline inspection services. The Hydraulics business sells hydraulic tools and accessories.

Acquisitions

On ~~October 12, 2016,~~March 8, 2017, the Company ~~announced that it had entered into a definitive agreement~~completed the purchase of the Craftsman brand from Sears Holdings, which provides the Company with the rights to ~~acquire~~develop, manufacture and sell Craftsman®-branded products in non-Sears Holdings channels. The Company plans to significantly increase the ~~Tools business~~availability of Craftsman®-branded products to consumers in previously underpenetrated channels, enhance innovation, and add manufacturing jobs in the U.S. to support growth.

On March 9, 2017, the Company acquired Newell ~~Brands,~~Tools, which includes the highly attractive industrial cutting, hand tool and power tool accessory brands Irwin® and Lenox®~~, for $1.95 billion in cash. This~~. The acquisition ~~will enhance~~enhances the Company’s position within the global tools & storage industry and broadens the Company’s product offerings and solutions to customers and end-users, particularly within power tool accessories.

Divestitures

On February 22, 2017, the Company completed the sale of the majority of its mechanical security businesses, which included the commercial hardware brands of Best Access, phi Precision and GMT. The ~~acquisition~~sale allowed the Company to deploy capital in a more accretive and growth-oriented manner.

Certain Items Impacting Earnings

Throughout MD&A, the Company has provided a discussion of the outlook and results both inclusive and exclusive of acquisition-related charges and gains or losses on sales of businesses. The acquisition-related charges relate primarily to the Newell Tools isand Craftsman brand acquisitions. The amounts and measures, including gross profit and segment profit, on a basis excluding such charges are considered relevant to aid analysis and understanding of the Company’s results aside from the material impact of these charges. In addition, these measures are utilized internally by management to understand business trends, as once the anticipated cost synergies from these acquisitions, as applicable, are realized, such charges are not expected to ~~be approximately $0.15 accretive~~recur. These amounts for the three and nine months ended September 30, 2017 are as follows:

Acquisition-Related Charges

During the three months ended September 30, 2017, the Company reported $30 million in pre-tax acquisition-related charges, which were comprised of the following:

$10 million reducing Gross Profit primarily pertaining to amortization of the ~~Company's diluted earnings per share~~inventory step-up adjustment for the Newell Tools acquisition;

$7 million in the first year after closing (increasing to approximately $0.50 accretive to diluted earnings per share by year three), excluding approximately $125 to $140 million of restructuring and other deal relatedSG&A primarily for integration-related costs and consulting fees;

$5 million in Other, net primarily for deal transaction costs; and

$8 million in Restructuring charges pertaining to facility closures and employee severance.

The tax effect on the above charges during the third quarter of 2017 was $9 million, resulting in after-tax charges of $21 million, or approximately $40 million of non-cash inventory step-up charges, which in the aggregate will largely be incurred during years one and two. The Company expects the transaction to result in annual cost synergies of approximately $80 to $90 million by year three. The transaction, which is subject to customary closing conditions, including regulatory approvals, is expected to close in the first half of 2017.$0.13 per diluted share.

During the nine months ended ~~October 1, 2016,~~September 30, 2017, the Company ~~completed five small acquisitions~~reported $130 million in pre-tax acquisition-related charges, which were comprised of the following:

$43 million reducing Gross Profit primarily pertaining to amortization of the inventory step-up adjustment for the Newell Tools acquisition;

$26 million in SG&A primarily for integration-related costs and consulting fees;

$51 million in Other, net primarily for deal transaction costs; and

$10 million in Restructuring charges pertaining to facility closures and employee severance.

The tax effect on the above charges during the first nine months of 2017 was $39 million, resulting in after-tax charges of approximately $91 million, or $0.59 per diluted share.

Sales of Businesses

During the three months ended September 30, 2017, the Company reported a ~~total purchase price~~$3 million loss, or $0.02 per diluted share, relating to the sale of ~~$59.3~~a business in the Industrial segment. During the nine months ended September 30, 2017, the Company reported a $265 million ~~net~~pre-tax gain primarily relating to the previously discussed sale of ~~cash acquired. These acquisitions are being integrated into~~ the ~~Company’s Tools & Storage and Security segments.~~majority of the mechanical security businesses. The tax effect of the gain was $31 million, resulting in an after-tax gain of $234 million, or $1.54 per diluted share.

~~2016~~2017 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 raising the mid-point of and tightening ~~the range~~its 2017 EPS outlook to $8.20 - $8.30 ($7.33 - $7.43 excluding acquisition-related charges and net gain on sales of ~~its previously communicated guidance~~businesses) from $8.05 - $8.25 ($7.18 - $7.38 excluding acquisition-related charges and net gain on ~~diluted earnings per share for 2016~~sales of businesses) as it expects stronger full year results attributable primarily to ~~$6.40 - $6.50 (up 8% - 10% versus 2015) from $6.30 - $6.50, and~~higher organic growth expectations. The Company is also reiterating its free cash flow conversion estimate, defined as free cash flow divided by net income, excluding the net gain on sales of businesses, of approximately 100%.

RESULTS OF OPERATIONS

Net Sales: Net sales were $3.299 billion in the third quarter of 2017 compared to $2.882 billion in the third quarter of 2016, ~~compared to $2.830 billion in the third quarter of 2015,~~ representing an increase of 2%14% fueled by strong organic growth of 7%. ~~Volume~~Acquisitions, primarily Newell Tools, volume and ~~price~~foreign currency increased 2%sales by 9%, 7%, and 1%, respectively, ~~and were partially offset~~while the impact of businesses sold decreased sales by ~~a 1% decrease due to negative impacts from foreign currency.~~3%. Tools & Storage net sales increased 3%22% compared to the third quarter of ~~2015~~2016 due to ~~continued~~strong organic growth of 5%9%, ~~driven primarily by strong~~with solid growth ~~in North America~~across all regions, acquisition growth of 13% and ~~Europe,~~favorable foreign currency of 1%, partially offset by ~~foreign currency pressure~~a 1% decline from the sale of ~~2%.~~a business in the first quarter of 2017. The impact of price was relatively neutral compared to the third quarter of 2016. Net sales in the Security segment ~~increased 2%~~decreased 9% compared to the third quarter of

~~2015 driven by organic growth of 2%, including growth in all regions, and~~ 2016 as increases from small bolt-on commercial electronic security acquisitions of ~~1%, which~~3% and foreign currency of 2% were ~~partially~~more than offset by ~~foreign currency declines~~a decline of ~~1%.~~14% from the sale of the majority of the mechanical security businesses. Industrial net sales ~~decreased 4%~~increased 9% compared to the third quarter of ~~2015~~2016 primarily due to an 8% increase in volume, ~~declines~~fueled by organic sales growth of 6% in ~~the~~ Engineered Fastening ~~business as~~and 15% in Infrastructure, and a result of weaker electronics volumes attributable to a major customer as well as pressured industrial volumes, which more than offset organic growth of 5% in the Infrastructure business driven by higher Oil & Gas on-shore project activity.1% increase from foreign currency.

Net sales were $9.334 billion in the first nine months of 2017 compared to $8.487 billion in the first nine months of 2016, ~~compared to $8.326 billion in the first nine months of 2015,~~ representing an increase of 10% fueled by strong organic growth of 6%. Acquisitions, primarily Newell Tools, and volume each increased sales by 6% while the impact of businesses sold decreased sales by 2%. ~~Volume and price increased 3% and 1%, respectively, and were partially offset by a 2% decrease due to negative impacts from foreign currency.~~ Tools & Storage net sales increased 4%16% compared to the first nine months of ~~2015~~2016 due to strong organic growth of 7%8%, ~~driven~~fueled by solid growth across all regions, and acquisition growth of 9%, partially offset by ~~foreign currency pressure~~a 1% decline from the sale of ~~3%.~~a business in the first quarter of 2017. Net sales in the Security segment ~~were up 1%~~declined 9% compared to the first nine months of ~~2015~~2016 as organic growth of 1% and small bolt-on commercial electronic security acquisitions of 1%2% were ~~partially~~more than offset by ~~foreign currency~~ declines of 11% from the sale of the majority of the

mechanical security businesses and 1%. from foreign currency. Industrial net sales ~~declined 5%~~increased 6% compared to the first nine months of ~~2015~~2016 primarily due to a ~~4% decrease~~7% increase in volume, ~~which was mainly~~ driven by organic ~~declines~~growth of 6% in Engineered Fastening ~~as a result of lower industrial~~ and ~~electronics volumes, and~~12% in Infrastructure, partially offset by a 1% decrease ~~from~~in foreign ~~currency pressures.~~currency.

Gross Profit: Gross profit was $1.252 billion, or 38.0% of net sales, in the third quarter of 2017 compared to $1.084 billion, or 37.6% of net sales, in the third quarter of ~~2016~~2016. Acquisition-related charges, which reduced gross profit, were $9.6 million for the three months ended September 30, 2017, primarily relating to the amortization of the inventory step-up adjustment for the Newell Tools acquisition. Excluding acquisition-related charges, gross profit was 38.2% of net sales for the three months ended September 30, 2017 compared to ~~$1.027~~37.6% of net sales for the three months ended October 1, 2016, as volume leverage and productivity more than offset increasing commodity inflation.

Gross profit was $3.530 billion, or ~~36.3%~~37.8% of net sales, in the ~~third quarter~~first nine months of ~~2015, as price, productivity, cost actions and commodity deflation more than offset unfavorable currency.~~

~~Gross profit was~~2017 compared to $3.191 billion, or 37.6% of net sales, in the first nine months of ~~2016 compared~~2016. Acquisition-related charges, which reduced gross profit, were $42.5 million for the nine months ended September 30, 2017, primarily relating to ~~$3.058 billion, or 36.7%~~the amortization of the inventory step-up adjustment for the Newell Tools acquisition. Excluding acquisition-related charges, gross profit was 38.3% of net sales infor the ~~first~~ nine months ended September 30, 2017, compared to 37.6% of ~~2015.~~net sales for the nine months ended October 1, 2016. The year-over-year increase in the profit rate was ~~driven by price,~~attributable to volume leverage, productivity and cost ~~actions and commodity deflation,~~control, which more than offset ~~unfavorable currency.~~currency and increasing commodity inflation.

SG&A Expenses: SG&A, inclusive of the provision for doubtful accounts, was $763.4 million, or 23.1% of net sales, in the third quarter of 2017 compared to $645.4 million, or 22.4% of net sales, in the third quarter of ~~2016 compared to $608.3~~2016. Within SG&A, acquisition-related integration and consulting costs totaled $7.4 million ~~or 21.5%~~for the three months ended September 30, 2017. Excluding these charges, SG&A was 22.9% of net sales for the three months ended September 30, 2017 compared to 22.4% for the three months ended October 1, 2016, as investments in ~~the~~ growth initiatives were partially offset by continued cost management.~~third~~ ~~quarter of 2015.~~

On a year-to-date basis, SG&A, inclusive of the provision for doubtful accounts, was $2.187 billion, or 23.4% of net sales, in 2017 compared to $1.940 billion, or 22.9% of net sales, in ~~2016 compared to $1.876 billion, or 22.5%~~2016. Within SG&A, acquisition-related integration and consulting costs totaled $26.8 million for the nine months ended September 30, 2017. Excluding these charges, SG&A was 23.1% of net sales ~~in 2015. The higher rate in each period was driven by~~for the nine months ended September 30, 2017 compared to 22.9% for the nine months ended October 1, 2016, as investments in ~~key SFS 2.0~~growth initiatives ~~moderated~~were partially offset by continued ~~tight management of costs.~~cost management.

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.

Corporate Overhead: The corporate overhead element of SG&A, which is not allocated to the business segments, amounted to ~~$43.1~~$55.7 million, or ~~1.5% of net sales, and $35.3 million, or 1.2%~~1.7% of net sales, in the third quarter of ~~2016 and 2015, respectively. The year-over-year change was primarily due~~2017 compared to ~~higher employee-related costs.~~

$43.1 million, or 1.5% of net sales, in the corresponding period of 2016. On a year-to-date basis, the corporate overhead element of SG&A, amounted to $148.7 million, or 1.6% of net sales, in 2017 compared to $138.5 million, or 1.6% of net sales, in 2016 compared to $109.4 million, or 1.3% of net sales, in the corresponding period of 2015. The year-over-year change was primarily due to increased investments in SFS 2.0 initiatives and higher employee-related costs.2016.

Other, net: Other, net ~~expense~~amounted to $65.5 million and $232.0 million for the three and nine months ended September 30, 2017, respectively. Excluding acquisition-related transaction costs of $5.4 million and $51.0 million for the three and nine months ended September 30, 2017, respectively, Other, net totaled $60.1 million and $181.0 million for the three and nine months ended September 30, 2017, respectively. Other, net amounted to $56.8 million inand $150.6 million for the ~~third quarter of~~three and nine months ended October 1, 2016, ~~compared to $54.0 million in the third quarter of 2015.~~respectively. The year-over-year increase in both periods was primarily driven by ~~acquisition-related costs, which more than offset lower~~higher amortization ~~expense. On a year-to-date basis, Other, net~~ expense, ~~amounted to $150.6 million in 2016 compared to $168.2 million in 2015. The year-over-year decrease was primarily driven by reduced~~ negative impacts of foreign currency and ~~lower amortization expense, partially offset~~a one-time environmental remediation charge of $17 million recorded in the first quarter of 2017 relating to a legacy Black & Decker site.

Loss (Gain) on Sales of Businesses: During the three months ended September 30, 2017, the Company reported a $3.2 million loss relating to the sale of a business in the Industrial segment. During the nine months ended September 30, 2017, the Company reported a $265.1 million gain primarily relating to the sale of the majority of the mechanical security businesses, as previously discussed.

Pension settlement: Pension settlement of $12.8 million for the nine months ended September 30, 2017 reflects losses previously reported in Accumulated other comprehensive loss related to a non-U.S. pension plan for which the Company settled its obligation by ~~acquisition-related costs.~~purchasing an annuity and making lump sum payments to participants.

Interest, net: Net interest expense was $46.9 million in the third quarter of 2017 compared to $45.1 million in the third quarter of ~~2016 compared to $41.6 million in the third quarter of 2015.~~2016. On a year-to-date basis, net interest expense was $135.9 million in 2017 compared to $128.8 million in ~~2016 compared to $125.5 million in 2015.~~2016. The year-over-year increase in ~~each period was~~both periods is primarily due to ~~amortization~~the termination of ~~debt issuance costs, partially offset by an increase~~interest rate swaps in ~~interest income as a result of higher average cash balances in 2016.~~June 2016 hedging the Company's fixed rate debt.

Income Taxes: The Company recognized income tax expense of $79.8 million and $239.8 million for the three and nine months ended September 30, 2017, respectively, resulting in effective tax rates of 22.5% and 20.2%, respectively. The effective tax rates differ from the U.S. statutory tax rate during these periods primarily due to a portion of the Company’s earnings being realized in lower-taxed foreign jurisdictions, the utilization of U.S. tax attributes during the first quarter of 2017 due to the divestiture of the mechanical security businesses, the favorable settlement of certain income tax audits during the second quarter of 2017, and the acceleration of certain tax credits resulting in a tax benefit during the third quarter of 2017. Non-deductible transaction costs and other acquisition-related restructuring items partially offset the net tax benefits mentioned above for the three and nine months ended September 30, 2017. Excluding the impact of the divestitures and acquisition-related charges, the effective tax rates were 23.0% and 23.7% for the three and nine months ended September 30, 2017, respectively.

The Company recognized income tax expense of $78.7 million and $234.7 million for the three and nine months ended October 1, 2016, respectively, resulting in effective tax rates of 24.0% and 24.9%, respectively. The effective tax rates differ from the U.S. statutory tax rate during these periods primarily due to a portion of the Company’s earnings being realized in lower-taxed foreign jurisdictions, the finalization of audit settlements during the first quarter of 2016, adjustments to tax positions relating to undistributed foreign earnings during the second and third quarters of 2016, and adjustments relating to the filing of certain U.S. and foreign corporate income tax returns during the third quarter of 2016.

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 doubtful accounts (aside from corporate overhead expense), and segment profit as a percentage of net sales to assess the profitability of each segment. Segment profit excludes the corporate overhead expense element of SG&A, other, net (inclusive of intangible asset amortization expense), restructuring charges, ~~interest income, interest expense,~~gains or losses on sales of businesses, pension settlement and income ~~tax expense.~~taxes. Corporate overhead is comprised of world headquarters facility expense, cost for the executive management team and the expense pertaining to certain centralized functions that benefit the entire Company but are not directly attributable to the businesses, such as legal and corporate finance functions. Refer to Note O, Restructuring Charges, for the amount of net restructuring charges attributable to each segment. The Company's operations are classified into three reportable business segments, which also represent its operating segments: Tools & Storage, Security and Industrial.

Tools & Storage:


	Third Quarter						Year-to-Date						Third Quarter						Year-to-Date
(Millions of Dollars)	2016			2015			2016			2015			2017			2016			2017			2016
Net sales	$	1,896.9		$	1,838.2		$	5,535.4		$	5,309.8		$	2,318.2		$	1,896.9		$	6,432.2		$	5,535.4
Segment profit	$	330.0		$	307.8		$	954.5		$	866.2		$	396.6		$	330.0		$	1,058.2		$	954.5
% of Net sales	17.4		%	16.7		%	17.2		%	16.3		%	17.1		%	17.4		%	16.5		%	17.2		%

Tools & Storage net sales increased ~~$58.7~~$421.3 million, or 3%22%, in the third quarter of ~~2016~~2017 compared to the third quarter of ~~2015. Volume and price increased 4% and 1%, respectively, and~~2016. Organic sales were ~~partially offset by a 2% decrease~~strong across all regions primarily due to ~~foreign currency pressures. Organic~~organic growth ~~was solid with~~of 16% in emerging markets, 9% in North America, ~~+4%~~ and ~~Europe +11%, while growth within the~~5% in Europe. Within emerging markets, ~~was modestly positive. Strong~~all regions generated mid-teen organic growth from the continued success of mid-price-point product releases, higher e-commerce volumes, and two country specific distribution model changes. North America share gains were fueled by strong commercial execution ~~supported by market leading product~~along with market-leading innovation, including ~~the launch of~~expanded adoption and new product launches within the DEWALT ~~FLEXVOLT~~ ™ ~~battery system, continued to drive share gains in North America overcoming both challenging comparables and persistent pressure within the industrial channels. Above-market~~FlexVolt system. Europe delivered another quarter of above-market organic growth ~~in Europe continued as~~enabled by new ~~products, targeted growth investments~~product innovation and ~~an expanded retail footprint fueled share gains across the region. An intense focus on~~successful commercial ~~execution targeted at mid-price-point product releases and regional pricing actions~~actions. Acquisition sales, primarily from Newell Tools, contributed 13% to ~~slightly positive organic~~overall sales growth in the ~~emerging markets, despite~~third quarter of 2017 and foreign currency increased sales by 1%, while the sale of a ~~high level~~business in the first quarter of ~~volatility and economic challenges within~~2017 resulted in a ~~number~~1% decrease. The impact of ~~regions.~~price was relatively neutral compared to the third quarter of 2016.

On a year-to-date basis, net sales increased ~~$225.6~~ $896.8 million, or 4%16%, in the first nine months of ~~2016~~2017 compared to the first nine months of ~~2015.~~2016. Organic sales increased 7%8% primarily due to organic growth of 7%9% in North America, ~~10%~~6% in Europe, and 4% 7%

in emerging ~~markets,~~markets. Acquisition sales, primarily from Newell Tools, contributed 9% to overall sales growth in the first nine months of 2017, while ~~negative impacts from foreign currency decreased net sales by 3%.~~the sale of a business in the first quarter of 2017 resulted in a 1% decrease.

Segment profit for the third quarter of ~~2016~~2017 was $396.6 million, or 17.1% of net sales, compared to $330.0 million, or 17.4% of net sales, ~~compared~~in the corresponding 2016 period. Excluding acquisition-related charges of $16.8 million, segment profit amounted to ~~$307.8 million, or 16.7%~~17.8% of net sales in the third quarter of ~~2015. The increase~~2017, compared to 17.4% of net sales in the ~~segment profit rate was mainly due to~~third quarter of 2016, as benefits of volume leverage ~~price,~~and productivity ~~cost management and lower commodity prices, which~~ more than offset ~~currency~~growth investments and ~~growth investments.~~commodity inflation.

Year-to-date segment profit for the Tools & Storage segment was $1.058 billion, or 16.5% of net sales, in 2017 compared to $954.5 million, or 17.2% of net sales, in the corresponding 2016 period. Excluding acquisition-related charges of $68.2 million, segment profit amounted to 17.5% of net sales in the first nine months of 2017 compared to ~~$866.2~~17.2% of net sales in the first nine months of 2016, as volume leverage and productivity more than offset growth investments, currency and commodity inflation.

Security:



	Third Quarter						Year-to-Date
(Millions of Dollars)	2017			2016			2017			2016
Net sales	$	476.8		$	522.7		$	1,429.0		$	1,564.6
Segment profit	$	54.0		$	71.4		$	156.8		$	199.3
% of Net sales	11.3		%	13.7		%	11.0		%	12.7		%

Security net sales decreased $45.9 million, or ~~16.3%~~9%, in the third quarter of 2017 compared to the third quarter of 2016 as small bolt-on commercial electronic security acquisitions of 3% and a 2% increase from foreign currency were more than offset by a 14% reduction resulting from the sale of the majority of the mechanical security businesses. Europe delivered organic growth of 1% as strength within the U.K. and the Nordics was partially offset by anticipated ongoing weakness in France. North America organic sales declined by 1% as growth within healthcare was more than offset by lower commercial electronic security installations due to customer-directed project delays and a modest impact from the recent hurricanes in Texas and the Southeastern U.S.

On a year-to-date basis, net sales decreased $135.6 million, or 9%, in the first nine months of 2017 compared to the first nine months of 2016, as 1% organic growth and small bolt-on commercial electronic security acquisitions of 2% were more than offset by an 11% reduction resulting from the sale of the majority of the mechanical security businesses and a 1% decrease from foreign currency.

Security segment profit for the third quarter of 2017 was $54.0 million, or 11.3% of net sales, compared to $71.4 million, or 13.7% of net sales, in the corresponding ~~2015~~2016 period. The year-over-year change in the segment profit rate reflects an approximate 100 basis point decline related to the sale of the majority of the Company's mechanical security businesses, as well as impacts from the aforementioned project delays and funding modest growth investments.

Year-to-date segment profit for the first nine months of 2017 was $156.8 million, or 11.0% of net sales, compared to $199.3 million, or 12.7% of net sales, in the corresponding 2016 period. The year-over-year change in the segment profit rate reflects an approximate 135 basis point decline related to the sale of the majority of the Company's mechanical security businesses, as well as the other factors that impacted the third quarter of 2017 as discussed above.

Industrial:



	Third Quarter						Year-to-Date
(Millions of Dollars)	2017			2016			2017			2016
Net sales	$	503.6		$	462.4		$	1,472.5		$	1,386.5
Segment profit	$	93.8		$	80.4		$	276.5		$	235.2
% of Net sales	18.6		%	17.4		%	18.8		%	17.0		%

Industrial net sales increased $41.2 million, or 9%, in the third quarter of 2017 compared to the third quarter of 2016, due to an 8% increase in volume and a 1% increase from foreign currency. Engineered Fastening organic revenues increased 6% due to strong automotive system shipments and volume growth within general industrial markets. Infrastructure organic revenues were up 15% on increased Hydraulic Tools volumes from successful commercial actions and improved market conditions, as well as higher Oil & Gas volumes from North American onshore pipeline project extensions and increased global inspection activity.

On a year-to-date basis, net sales increased $86.0 million, or 6%, in the first nine months of 2017 compared to the first nine months of 2016, due to a 7% increase in volumes, partially offset by a 1% decrease from foreign currency. Engineered Fastening organic revenues increased 6% and Infrastructure organic revenues were up 12% primarily due to the same factors that impacted the third quarter of 2017 as discussed above.

Industrial segment profit for the third quarter of 2017 was $93.8 million, or 18.6% of net sales, compared to $80.4 million, or 17.4% of net sales, in the corresponding 2016 period, primarily due to volume leverage, productivity gains and cost control.

Year-to-date segment profit for the Industrial segment was $276.5 million, or 18.8% of net sales, compared to $235.2 million, or 17.0% of net sales, in the corresponding 2016 period. The increase in the segment profit rate was primarily due to ~~volume leverage, price, productivity, cost management, and lower commodity prices, which more than offset currency and growth investments.~~

~~Security:~~

Third Quarter Year-to-Date
(Millions of Dollars) 2016 2015 2016 2015
Net sales $ 522.7
$ 512.0
$ 1,564.6
$ 1,554.9
Segment profit $ 71.4
$ 60.8
$ 199.3
$ 170.8
% of Net sales 13.7 % 11.9 % 12.7 % 11.0 %

Security net sales increased $10.7 million, or 2%, in the third quarter of 2016 compared to the third quarter of 2015. Price, volume and small bolt-on electronic acquisitions each increased 1% and were partially offset by a 1% decline due to foreign currency. Europe continued its momentum posting 1% organic growth on higher installation revenues across much of the region, while North America also posted 1% organic growth on higher commercial electronic security and automatic door revenues. Security’s organic growth was also bolstered by double-digit growth within the emerging markets on easing comparables.

On a year-to-date basis, net sales increased $9.7 million in the first nine months of 2016 compared to the first nine months of 2015, as strong organic growth in Europe and the emerging markets was partially offset by organic declines in North America within the commercial electronic security business and a 1% decrease due to foreign currency.

Security segment profit for the third quarter of 2016 was $71.4 million, or 13.7% of net sales, compared to $60.8 million, or 11.9% of net sales, in the third quarter of 2015. The increase in the segment profit rate was due to intensified profitability rigor surrounding new commercial opportunities, improved field productivity and SG&A cost control.

~~Year-to-date s~~egment profit for the Security segment was $199.3 million, or 12.7% of net sales, in 2016 compared to $170.8 million, or 11.0% of net sales, in the corresponding 2015 period. The year-over-year increase in the segment profit rate was mainly driven by improved operating performance in both North America and Europe.

~~Industrial:~~

Third Quarter Year-to-Date
(Millions of Dollars) 2016 2015 2016 2015
Net sales $ 462.4
$ 479.3
$ 1,386.5
$ 1,461.7
Segment profit $ 80.4
$ 85.4
$ 235.2
$ 254.4
% of Net sales 17.4 % 17.8 % 17.0 % 17.4 %

Industrial net sales decreased $16.9 million, or 4%, in the third quarter of 2016 compared to the third quarter of 2015, due to declines in volume and price of 3% and 1%, respectively. Engineered Fastening organic revenues declined 6% due primarily to weaker electronics volumes attributable to a major customer (organic revenues were slightly positive excluding this impact), as well as pressured industrial volumes, more than offsetting higher automotive growth. Infrastructure organic revenues increased 5% as higher Oil & Gas on-shore project activity more than offset lower Hydraulic Tools volumes. Organic growth for the Industrial segment as a whole was approximately 1% excluding the impact of the aforementioned electronics volume declines within Engineered Fastening.

On a year-to-date basis, net sales decreased $75.2 million, or 5%, in the first nine months of 2016 compared to the first nine months of 2015, due to a 4% decline in volume and a 1% decline from foreign currency pressures. Engineered Fastening organic revenues declined 5% due primarily to lower electronics and industrial volumes, while Infrastructure declined 3% organically as positive growth in Oil & Gas was more than offset by the impact of a difficult scrap steel market on Hydraulic Tools volumes.

Industrial segment profit for the third quarter of 2016 was $80.4 million, or 17.4% of net sales, compared to $85.4 million, or 17.8% of net sales, in the third quarter of 2015, as lower volumes and currency more than offset productivity gains and cost control actions.

~~Year-to-date~~ segment profit for the Industrial segment was $235.2 million, or 17.0% of net sales, in 2016 compared to $254.4 million, or 17.4% of net sales, in the corresponding 2015 period. The year-over-year decrease in the rate was primarily driven by the same factors that impacted the third quarter of 2017 as discussed above.

RESTRUCTURING ACTIVITIES

A summary of the restructuring reserve activity from ~~January 2,~~December 31, 2016 to ~~October 1, 2016~~September 30, 2017 is as follows:


(Millions of Dollars)	January 2, 2016		Net Additions		Usage			Currency		October 1, 2016		December 31, 2016		Net Additions		Usage			Currency		September 30, 2017
Severance and related costs	$	44.3	$	18.1	$	(39.7	)	$	0.4	$	23.1	$	21.4	$	34.4	$	(32.8	)	$	2.1	$	25.1
Facility closures and asset impairments	14.4		9.2		(19.1		)	—		4.5		14.2		8.5		(16.1		)	0.3		6.9
Total	$	58.7	$	27.3	$	(58.8	)	$	0.4	$	27.6	$	35.6	$	42.9	$	(48.9	)	$	2.4	$	32.0

For the nine months ended ~~October 1, 2016,~~September 30, 2017, the Company recognized net restructuring charges of ~~$27.3~~$42.9 million. This amount reflects ~~$18.1~~$34.4 million of net severance charges associated with the reduction of approximately ~~872 employees. The Company also recognized $4.8~~1,463 employees and $8.5 million of facility closure ~~costs~~ and ~~$4.4 million of asset impairments.~~ other restructuring costs.

The Company expects these restructuring actions to result in annual net cost savings of approximately ~~$31~~$34 million by the end of ~~2017.~~2018.

The majority of the ~~$27.6~~$32.0 million of reserves remaining as of ~~October 1, 2016~~September 30, 2017 is expected to be utilized within the next 12 months.

The anticipated annual net cost savings of approximately ~~$31~~$34 million ~~relating to~~by the ~~2016 restructuring actions include: $7~~end of 2018 includes: $12 million ~~pertaining to~~in the Tools &and Storage segment; ~~$10~~$14 million ~~relating to~~in the Security segment; ~~$12~~$7 million ~~pertaining to~~in the Industrial ~~segment;~~segment and $2$1 million ~~pertaining to~~in Corporate.

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. ~~The Company's cash flows are presented on a consolidated basis and include cash flows from discontinued operations in the first nine months of 2015.~~

Operating Activities: Cash flows provided by operations were ~~$246.7~~$356.9 million in the third quarter of ~~2016~~2017 compared to ~~$239.0~~$246.7 million in the ~~third quarter~~corresponding period of ~~2015.~~2016. The year-over-year ~~improvement~~change was primarily driven by higher earnings, as the Company's strong operational performance more than offset ~~currency headwinds~~higher growth investments and ~~growth investments.~~divestiture and acquisition-related payments in the third quarter of 2017.

Year-to-date cash flows provided by operations were ~~$650.0~~$467.8 million in the first nine months of ~~2016~~2017 compared to ~~$354.1~~$650.0 million in the corresponding period of ~~2015.~~2016. The year-over-year ~~improvement~~change was ~~mainly~~primarily driven by higher ~~earnings and improved~~cash outflows from working capital ~~cash flows due~~(accounts receivable, inventory, accounts payable and deferred revenue) to ~~higher inventory liquidation, primarily~~support outsized organic growth in the Tools & Storage ~~segment.~~segment, partially offset by higher earnings excluding acquisition-related costs.

Free Cash Flow: Free cash flow, as defined in the ~~following~~ table below, was $265.9 million in the third quarter of 2017 compared to $168.6 million in the third quarter of ~~2016 compared to $170.5 million in the third quarter of 2015.~~2016. Free cash flow on a year-to-date basis was $189.9 million in 2017, compared to $428.3 million in ~~2016 compared~~2016. The change in the year-to-date free cash flow was primarily due to ~~$174.0 million~~increased working capital to support growth in ~~2015.~~the Tools & Storage segment and higher planned capital expenditures. Management considers free cash flow an important indicator of its liquidity, as well as its ability to fund future growth and provide a dividend to shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common stock and business acquisitions, among other items.


	Third Quarter						Year-to-Date						Third Quarter						Year-to-Date
(Millions of Dollars)	2016			2015			2016			2015			2017			2016			2017			2016
Net cash provided by operating activities	$	246.7		$	239.0		$	650.0		$	354.1		$	356.9		$	246.7		$	467.8		$	650.0
Less: capital expenditures	(78.1		)	(68.5		)	(221.7		)	(180.1		)
Less: capital and software expenditures													(91.0		)	(78.1		)	(277.9		)	(221.7		)
Free cash flow	$	168.6		$	170.5		$	428.3		$	174.0		$	265.9		$	168.6		$	189.9		$	428.3

Based on its potential to generate cash flow from operations on an annual basis and its credit position at ~~October 1, 2016~~September 30, 2017, the Company continues to believe over the ~~long term~~long-term it has the financial flexibility to deploy capital to its shareowners’ advantage through a combination of acquisitions, dividends and potential future share repurchases.

Investing Activities: Cash flows used in investing activities ~~were~~totaled $273.5 million in the third quarter of 2017 primarily due to business acquisitions of $152.0 million, capital and software expenditures of $91.0 million and $27.9 million of cash payments from net investment hedge settlements. Cash flows used in investing activities totaled $61.3 million in the third quarter of 2016, which mainly consisted of capital and software expenditures of $78.1 million and business acquisitions of $38.3 million, which were partially offset by cash proceeds from net investment hedge settlements of $57.8 million. Cash flows used in investing activities totaled $48.7 million in the third quarter of 2015 primarily due to capital and software expenditures of $68.5 million and small bolt-on electronic security acquisitions of $17.1 million, which were partially offset by cash proceeds from net investment hedge settlements of $48.3 million.

Year-to-date cash flows used in investing activities ~~were~~totaled $2.144 billion in 2017 primarily due to business acquisitions of $2.582 billion, mainly related to the Newell Tools and Craftsman brand acquisitions, and capital and software expenditures of $277.9 million, partially offset by net cash proceeds from sales of businesses of $745.3 million. Cash flows used in investing activities totaled $225.0 million in the first nine months of 2016, which mainly consisted of capital and software expenditures of $221.7 million and business acquisitions of $59.3 million, which were partially offset by cash proceeds from net investment hedge settlements of $63.3 million. Cash flows used in investing activities totaled $103.2 million in 2015 primarily due to capital and software expenditures of $180.1 million and small bolt-on electronic security acquisitions of $17.5 million, which were partially offset by cash proceeds from net investment hedge settlements of $112.2 million.

Financing Activities: Cash flows used in financing activities totaled ~~$325.4~~$161.9 million in the third quarter of 2017 mainly due to $94.7 million of cash dividend payments. Cash flows used in financing activities in the third quarter of 2016 were $325.4 million primarily due to $255.9 million inof net repayments of short-term borrowings under the Company's commercial paper program and $84.5 million of cash dividend payments.

Year-to-date cash flows provided by financing activities totaled $945.9 million in 2017 mainly due to $727.5 million in proceeds from the issuance of equity units and $499.2 million of net short-term borrowings under the Company's commercial paper program primarily to fund acquisitions, partially offset by $267.9 million of cash dividend payments. Cash flows used in financing activities in ~~the third quarter of 2015 were $250.2 million due to $192.1 million of share repurchases and $79.7 million of cash payments for dividends.~~

~~Year-to-date cash flows used in financing activities~~2016 were $446.8 million ~~in 2016~~ primarily due to repurchases of approximately 3.8 million common ~~stock of~~shares for $362.7 million and ~~cash dividend payments of~~ $243.9 million of cash dividends payments, partially offset by $92.4 million of net proceeds ~~of $92.4 million~~ from short-term borrowings under the Company's commercial paper program, $51.3 million from issuances of common stock, and $27.0 million relating to the termination of interest rate swaps. Cash flows used in financing activities in 2015 were $373.4 million resulting primarily from repurchases of common stock of $640.1 million and cash dividend payments of $239.2 million, partially offset by net proceeds from short-term borrowings of $450.8 million and cash proceeds from the issuances of common stock of $84.0 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 F2, Moody's P-2). There have been no changes to any of the ratings during the third quarter of ~~2016.~~2017. Failure to maintain strong investment grade 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 committed credit facilities.

Cash and cash equivalents totaled ~~$421~~$483 million as of ~~October 1, 2016,~~September 30, 2017, comprised of ~~$52~~$70 million in the U.S. and ~~$369~~$413 million in foreign jurisdictions. As of ~~January 2,~~December 31, 2016, cash and cash equivalents totaled ~~$465 million, comprised of $131 million in the U.S. and $334 million~~$1.132 billion, which was predominantly held in foreign jurisdictions. Concurrent with the Black & Decker merger, the Company made a determination to repatriate certain legacy Black & Decker foreign earnings, on which U.S. income taxes had not previously been provided. As

a result of this repatriation decision, the Company has recorded approximately ~~$290~~$269 million and ~~$320~~$261 million of associated deferred tax liabilities at ~~October 1, 2016~~September 30, 2017 and ~~January 2,~~December 31, 2016, respectively. Current plans and liquidity requirements do not demonstrate a need to repatriate other foreign earnings. Accordingly, all other undistributed foreign earnings of the Company are considered to be permanently reinvested, or will be remitted substantially free of additional tax, consistent with the Company’s overall growth strategy internationally, including acquisitions and long-term financial objectives. No provision has been made for taxes that might be payable upon remittance of these undistributed foreign earnings. However, should management determine at a later point to repatriate additional foreign earnings, the Company would be required to accrue and pay taxes at that time.

In May 2017, the Company issued 7,500,000 Equity Units with a total notional value of $750.0 million ("$750 million Equity Units"). Each unit has a stated amount of $100 and initially consists of a three-year forward stock purchase contract for the purchase of a variable number of shares of common stock, on May 15, 2020, for a price of $100, and a 10% beneficial ownership interest in one share of 0% Series C Cumulative Perpetual Convertible Preferred Stock, without par, with a liquidation preference of $1,000 per share ("Series C Preferred Stock"). The Company received approximately $727.5 million in cash proceeds from the $750 million Equity Units, net of underwriting costs and commissions, before offering expenses, and issued 750,000 shares of Series C Preferred Stock, recording $750.0 million in preferred stock. The proceeds were used for general corporate purposes, including repayment of short-term borrowings. The Company also used $25.1 million of the proceeds to enter into capped call transactions utilized to hedge potential economic dilution.

In January 2017, the Company amended its existing $2.0 billion commercial paper program to increase the maximum amount of notes authorized to be issued to $3.0 billion and to include Euro denominated borrowings in addition to U.S. Dollars. As of September 30, 2017, the Company had $573 million of borrowings outstanding against the Company’s $3.0 billion commercial paper program, of which $471 million in Euro denominated commercial paper was designated as a Net Investment Hedge as described in more detail in Note I, Financial Instruments. At December 31, 2016, the Company had no commercial paper borrowings outstanding.

In January 2017, the Company executed a 364-day $1.3 billion committed credit facility (the "2017 Credit Agreement"). The 2017 Credit Agreement consists of a $1.3 billion revolving credit loan and a sub-limit of an amount equal to the Euro equivalent of $400 million for swing line advances. Borrowings under the 2017 Credit Agreement may be made in U.S. Dollars or Euros, pursuant to the terms of the agreement, and bear interest at a floating rate dependent on the denomination of the borrowing. Repayments must be made by January 17, 2018 or upon an earlier termination of the 2017 Credit Agreement at the election of the Company. The 2017 Credit Agreement serves as a liquidity back-stop for the Company’s $3.0 billion U.S. Dollar and Euro commercial paper program, also authorized and amended in January 2017, as discussed above. As of September 30, 2017, the Company had not drawn on this commitment.

The Company has a five-year $1.75 billion committed credit facility (the “Credit Agreement”). Borrowings under the Credit Agreement may include U.S. Dollars up to the $1.75 billion commitment or in Euro or Pounds Sterling subject to a foreign currency sub-limit of $400.0 million and bear interest at a floating rate dependent upon the denomination of the borrowing. Repayments must be made on December 18, 2020 or upon an earlier termination date of the Credit Agreement, at the election of the Company. The Credit Agreement is designated to be a liquidity back-stop for the Company's ~~$2.0~~$3.0 billion commercial paper program. As of ~~October 1,~~September 30, 2017 and December 31, 2016, the Company has not drawn on this commitment. ~~In addition, the Company has short-term lines of credit that are primarily uncommitted, with numerous banks, which are reviewed annually for renewal.~~

In March 2015, the Company entered into a forward share purchase contract ~~on its~~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,~~contract. In November 2016, the Company amended the settlement date to ~~the financial institution counterparty not later than March 2017,~~April 2019, or earlier at the Company’s option, for the 3,645,510 shares purchased. In October 2014, the Company entered into a forward share purchase contract on its common stock that obligates the Company to pay $150.0 million, plus an additional amount related to the forward component of the contract, to the financial institution counterparty not later than October 2016, or earlier at the Company’s option, for the 1,603,822 shares purchased.

On February 10, 2015, the Company net-share settled 9.1 million of the 12.2 million capped call options on its common stock and received 911,077 shares using an average reference price of $96.46 per common share. Additionally, the Company purchased 3,381,162 shares directly from the counterparties participating in the net-share settlement of the capped call options for $326.1 million, equating to an average price of $96.46 per share. In February 2016, the Company net-share settled the remaining 3.1 million capped call options on its common stock and received 293,142 shares using an average reference price of $94.34 per common share. Additionally, the Company purchased 1,316,858 shares directly from the counterparty participating in the net-share settlement for $124.2 million. The Company also repurchased 2,446,287 shares of common stock in February 2016 for $230.9 million, equating to an average price of $94.34.

On December 3, 2013, the Company issued $400.0 million 5.75% fixed-to-floating rate junior subordinated debentures maturing December 15, 2053 (“2053 Junior Subordinated Debentures”) that bear interest at a fixed rate of 5.75% per annum, up to, but excluding December 15, 2018. From and including December 15, 2018, the 2053 Junior Subordinated Debentures will bear interest at an annual rate equal to three-month LIBOR plus 4.304%. The debentures subordination and long tenor provides significant credit protection measures for senior creditors and as a result, the debentures were awarded a 50% equity credit by S&P and Fitch, and 25% equity credit by Moody's. The net proceeds of $392.0 million from the offering were primarily used to repay commercial paper borrowings.

On December 3, 2013, the Company issued 3,450,000 Equity Units (the “Equity Units”), each with a stated value of $100 which are initially comprised of a 1/10, or 10%, undivided beneficial ownership in a $1,000 principal amount 2.25% junior subordinated note due 2018 and a forward common stock purchase contract (the “Equity Purchase Contract”). Each Equity Purchase Contract obligates the holders to purchase on November 17, 2016 approximately 3.5 to 4.3 million common shares. The subordination of the notes in the Equity Units combined with the Equity Purchase Contracts resulted in the Equity Units being awarded a 100% equity credit by S&P, and 50% equity credit by Moody's. The Company received $334.7 million in cash proceeds from the Equity Units, net of underwriting discounts and commission, before offering expenses, and recorded $345.0 million in long-term debt. The proceeds were used primarily to repay commercial paper borrowings. Upon settlement of the Equity Purchase Contracts on November 17, 2016, the Company expects to receive additional cash proceeds of $345.0 million.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.

OTHER MATTERS

Critical Accounting Estimates: There have been no significant changes in the Company’s critical accounting estimates during the third quarter of ~~2016.~~ 2017.

In the third quarter of 2017, the Company performed its annual goodwill impairment testing and determined that the fair values of each of its reporting units exceeded their respective carrying amounts. For the Infrastructure reporting unit, the Company determined that the fair value, which was estimated using a discounted cash flow valuation model, exceeded its carrying amount by 18%. The key assumptions applied to the cash flow projections included a 9% discount rate, near-term revenue

growth rates over the next five years, which represented a cumulative annual growth rate of approximately 7%, and a 3% perpetual growth rate. These assumptions contemplated business, market and overall economic conditions. Management continues to be confident in the long-term viability and success of the Infrastructure reporting unit and is encouraged by its strong organic growth and operational performance in the first nine months of 2017. The reporting unit continues to invest in organic growth initiatives, which includes solid progress being made with respect to Breakthrough Innovation projects under the SFS 2.0 operating system, and remains confident in the long-term growth prospects of the markets and geographies served.

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 2,~~December 31, 2016 for a discussion of the Company’s critical accounting estimates.

~~CEO Transition:~~ Effective July 31, 2016, John F. Lundgren retired as CEO after more than 12 years with the Company. John Lundgren will continue as Chairman of the Board until the end of the year and serve as Special Advisor to the Company through April 30, 2017. James M. Loree, formerly the President and Chief Operating Officer, succeeded John Lundgren as President and CEO on August 1, 2016 and joined the Board at that time.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no significant change in the Company’s exposure to market risk during the third quarter of ~~2016.~~2017. Refer to the “Market Risk” 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 2,~~December 31, 2016 for further discussion.

ITEM 4. CONTROLS AND PROCEDURES

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

its disclosure controls and procedures (as defined under Rule 13a-15(e) of the Exchange Act). Based upon that evaluation, the Company’s President and Chief Executive Officer and its ~~Senior~~Executive Vice President and Chief Financial Officer have concluded that, as of ~~October 1, 2016,~~September 30, 2017, the Company’s disclosure controls and procedures are effective. There has been no change in the Company’s internal control over financial reporting that occurred during the third quarter of ~~2016~~2017 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. In March 2017, the Company acquired Newell Tools for approximately $1.84 billion. Management's assessment of, and conclusion on, the effectiveness of internal control over financial reporting excludes the internal controls of Newell Tools. As part of the ongoing integration activities, the Company will complete an assessment of existing controls and incorporate its controls and procedures into Newell Tools.

CAUTIONARY STATEMENT

Under the Private Securities Litigation Reform Act of 1995

Statements in this Quarterly Report on Form 10-Q that are not historical, including but not limited to those regarding the Company’s ability to: (i) generate greater than 20% of annual revenues from emerging ~~markets;~~markets over time; (ii) achieve its vision of doubling the size of the Company to $22 billion in revenue by 2022 while expanding its margin rate; (iii) achieve full year ~~2016 diluted~~2017 EPS of approximately ~~$6.40 to $6.50; (iii)~~$8.20 - $8.30 ( $7.33 - $7.43 excluding acquisition-related charges and net gain on sales of businesses); (iv) achieve free cash flow conversion, defined as free cash flow divided by net income (excluding the net gain on the sales of businesses), of approximately 100% for ~~2016; (iv) complete,~~2017; and ~~achieve approximately $80 to $90 million in annual cost synergies by year three after, the Newell Tools transaction;~~ (v) achieve accretion to diluted earnings per share of $0.15 in the first year after completing the Newell Tools transaction increasing to approximately $0.50 per share by year three, excluding acquisition-related charges; and (vi) over ~~the long term,~~time, return approximately 50% of free cash flow to shareholders through a strong and growing dividend, as well as opportunistically repurchasing its shares, with the remaining free cash flow (approximately 50%) deployed toward ~~acquisitions;~~acquisitions, (collectively, the “Results”) are “forward-looking statements” and subject to risk and uncertainty.

The Company’s ability to deliver the Results as described above is based on current expectations and involves inherent risks and uncertainties, including factors listed below and other factors that could delay, divert, or change any of them, and could cause actual outcomes and results to differ materially from current expectations. In addition to the risks, uncertainties and other factors discussed in this Quarterly Report, the risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied in the forward-looking statements include, without limitation, those set forth under Item 1A Risk Factors of the Company’s Annual Report on Form 10-K and any material changes thereto set forth in any subsequent Quarterly Reports on Form 10-Q, or those contained in the Company’s other filings with the Securities and Exchange Commission, and those set forth below.

The Company’s ability to deliver the Results is dependent, or based, upon: (i) the Company’s ability to ~~deliver organic growth~~invest in product, brand and commercialization of ~~approximately 4%~~the Craftsman brand in previously underpenetrated channels, enhance innovation and ~~generate savings from incremental productivity and cost actions of approximately $0.60 - $0.65 of EPS for 2016;~~add manufacturing jobs in the U.S. to support growth; (ii) the Company’s ability to ~~deliver sufficient working capital turns expansion to achieve free cash flow conversion of approximately 100% in 2016;~~successfully integrate Newell Tools while remaining focused on its diversified industrial portfolio strategy; (iii) the Company’s ability to ~~keep the impact to EPS of restructuring charges~~deliver overall organic growth approaching 6% in ~~2016 to approximately $0.25 and with respect to years one and two following the completion of the Newell Tools acquisition,~~2017; (iv) the Company’s ability to limit the impact of higher charges included in “Other, net” in 2017; (v) core (non-M&A) restructuring ~~and other deal related costs to~~charges being approximately ~~$125 to $140 million and non-cash inventory step-up charges to approximately $40 million; (iv) foreign currency exchange headwinds being at approximately $150~~$50 million in ~~2016; (v)~~2017 (inclusive of the ~~Company’s ability to achieve a~~1Q 2017 pension settlement of approximately $13 million), and 2017 tax rate being relatively consistent with the ~~2015 tax rate;~~2016 levels; (vi) ~~the Company’s ability to keep the impact to EPS of incremental costs associated with the new D~~E~~WALT FLEXVOLT ™ product launch to approximately $0.05; (vii)~~ the successful identification, completion and integration of, and realization of cost and revenue synergies associated with, acquisitions, ~~including the Newell Tools acquisition,~~ as well as integration of existing businesses and formation of new business platforms; ~~(viii)~~(vii) the continued acceptance of technologies used in the Company’s products and services (including ~~the new~~ DEWALT ~~FLEXVOLT ™~~FlexVolt™ product); ~~(ix)~~(viii) the Company’s ability to manage existing Sonitrol franchisee and Mac Tools relationships; ~~(x)~~(ix) the Company’s ability to minimize costs associated with any sale or discontinuance of a business or product line, including any severance, restructuring, legal or other costs; ~~(xi)~~(x) the proceeds realized with respect to any business or product line disposals; ~~(xii)~~(xi) the extent of any asset impairments with respect to any businesses or product lines that are sold or discontinued; ~~(xiii)~~(xii) the success of the Company’s efforts to manage freight costs, steel and other commodity costs as well as capital expenditures; ~~(xiv)~~(xiii) the Company’s ability to sustain or increase prices in order to, among other things, offset or mitigate the impact of steel, freight, energy, non-ferrous commodity and other commodity costs and any inflation increases and/or currency impacts; ~~(xv)~~(xiv) the Company’s ability to generate free cash flow and maintain a strong debt to capital ratio; ~~(xvi)~~(xv) the Company’s ability to identify and effectively execute productivity improvements and cost reductions, while minimizing any associated restructuring charges; ~~(xvii)~~(xvi) the Company’s ability to obtain favorable settlement of tax audits; ~~(xviii)~~(xvii) the ability of the Company to generate earnings sufficient to realize future income tax benefits during periods when temporary differences become deductible, including realizing tax credit carry forward amounts within the allowable carry forward periods; ~~(ix)~~(xviii) the continued ability of the Company to access credit markets under satisfactory terms; ~~(xx)~~(xix) the Company’s ability to negotiate satisfactory price and payment terms under which the Company buys and sells goods, services, materials and products; ~~(xxi)~~(xx) the Company’s ability to successfully develop, market and achieve sales from new products and services; and ~~(xxii)~~(xxi) the availability of cash to repurchase shares when conditions are right.

The Company’s ability to deliver the Results is also dependent upon: (i) the success of the Company’s marketing and sales efforts, including the ability to develop and market new and innovative products at the right price points in both existing and new markets; (ii) the ability of the Company to maintain or improve production rates in the Company’s manufacturing facilities, respond to significant changes in product demand and fulfill demand for new and existing products; (iii) the Company’s ability to continue improvements in working capital through effective management of accounts receivable and inventory levels; (iv) the ability to continue successfully managing and defending claims and litigation; (v) the success of the Company’s efforts to mitigate any adverse earnings impact resulting from, ~~increases generated by,~~ for example, increases in the cost of energy or significant Chinese Renminbi, Canadian Dollar, Euro, British Pound, Brazilian Real, or other currency fluctuations; (vi) the geographic distribution of the Company’s earnings; (vii) the commitment to and success of the Stanley Fulfillment System; and (viii) successful implementation with expected results of cost reduction programs.

The Company’s ability to achieve the Results will also be affected by external factors. These external factors include: challenging global geopolitical and macroeconomic environment, possibly including impact from "Brexit" or other similar actions by other EU member states; the economic environment of emerging markets, particularly Latin America, Russia, China and Turkey; pricing pressure and other changes within competitive markets; the continued consolidation of customers particularly in consumer channels; inventory management pressures on the Company’s customers; the impact the tightened credit markets may have on the Company or its customers or suppliers; the extent to which the Company has to write off accounts receivable or assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers; increasing competition; changes in laws, regulations and policies that affect the Company, including, but not limited to trade, monetary, tax and fiscal policies and laws; the timing and extent of any inflation or deflation; the impact of poor weather conditions on sales; currency exchange fluctuations; the impact of dollar/foreign currency exchange and interest rates on the competitiveness of products and the Company’s debt program; the strength of the U.S. and European economies;the ~~extent to which~~impact from demand changes within world-wide markets associated with homebuilding and ~~remodeling stabilize and rebound;~~remodeling; the impact of events that cause or may cause disruption in the Company’s supply, manufacturing, distribution and sales networks such as war, terrorist activities, and political ~~unrest;~~unrest including, hostilities on the Korean Peninsula; and recessionary or expansive trends in the economies of the world in which the Company operates. The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date hereof.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors as disclosed in the Company’s Form 10-K for the year ended ~~January 2,~~December 31, 2016 filed with the Securities and Exchange Commission on February ~~19, 2016.~~15, 2017.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table provides information about the Company’s purchases of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act during the three months ended ~~October 1, 2016:~~September 30, 2017:

2016
(a)
Total
Number Of
Shares
Purchased

Average Price
Paid Per
Share

Total Number
Of Shares
Purchased As
Part Of A Publicly
Announced Program

(b) Maximum Number
Of Shares That
May Yet Be
Purchased Under
The Program
July 3 - August 6 5,010
$ 118.25
—
12,000,000
August 7 - September 3 —
—
—
12,000,000
September 4 - October 1 —
—
—
12,000,000
5,010
$ 118.25
—
12,000,000



2017	(a) Total Number Of Shares Purchased	Average Price Paid Per Share		Total Number Of Shares Purchased As Part Of A Publicly Announced Program	(b) Maximum Number Of Shares That May Yet Be Purchased Under The Program
July 2 - August 5	3,823	$	143.13	—	15,000,000
August 6 - September 2	—	—		—	15,000,000
September 3 - September 30	—	—		—	15,000,000
Total	3,823	$	143.13	—	15,000,000


(a)	The shares of common stock in this column were deemed surrendered to the Company by participants in various benefit plans of the Company to satisfy the participants’ taxes related to vesting or delivery of time-vesting restricted share units under those plans.

(b)

On July ~~23, 2014,~~20, 2017, the Board of Directors approved a new repurchase ofprogram for up to 2515.0 million shares of the ~~Company's~~Company’s common ~~stock.~~stock and terminated its previously approved repurchase program. As of ~~October 1, 2016,~~September 30, 2017, the ~~remaining~~ authorized shares available for repurchase ~~is 12.0~~under the new repurchase program totaled 15.0 million shares. ~~Furthermore,~~The currently authorized shares available for repurchase do not include approximately ~~5.2~~3.6 million shares ~~are~~ reserved and authorized for purchase ~~in connection with~~under the Company’s previously approved repurchase program relating to a forward share purchase ~~contracts~~contract entered into in ~~October 2014 and~~ March 2015, which obligate the Company to pay $150.0 million and $350.0 million, respectively, plus additional amounts related to the forward component of the contracts to the financial institution counterparties not later than October 2016 and March 2017, respectively, or earlier at the Company's option. For further detail on these transactions, refer2015. Refer to Note J, Equity Arrangements, of the Notes to (Unaudited) Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. for further discussion.

ITEM 6. EXHIBITS



~~(10.1~~ (3.1)	)	~~Stock~~Revised Amended and ~~Asset Purchase Agreement dated October 12, 2016 by and between Stanley Black & Decker, Inc. and Newell Brands Inc.~~Restated Bylaws of the Company (incorporated by reference to Exhibit ~~2.1 to~~3.1 on the Company’s Current Report on Form 8-K ~~dated~~filed on October ~~14, 2016)~~24, 2017).

~~(11~~ (11)	)	Statement re-computation of per share earnings (the information required to be presented in this exhibit appears in Note C to the Company’s (Unaudited) Condensed Consolidated Financial Statements set forth in this Quarterly Report on Form 10-Q).

(31)(i)(a)		Certification by President and Chief Executive Officer pursuant to Rule 13a-14(a).

(i)(b)		Certification by ~~Senior~~Executive Vice President and Chief Financial Officer pursuant to Rule 13a-14(a).

(32)(i)		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.

(ii)		Certification by ~~Senior~~Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~(101~~	)(101)	The following materials from Stanley Black & Decker Inc.'s Quarterly Report on Form 10-Q for the quarter ended ~~October 1, 2016,~~September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language);: (i) Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2017 and October 1, ~~2016 and October 3, 2015;~~2016; (ii) Condensed Consolidated Balance Sheets at ~~October 1, 2016~~September 30, 2017 and ~~January 2,~~December 31, 2016; (iii) Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2017 and October 1, ~~2016 and October 3, 2015;~~2016; and (iv) Notes to (Unaudited) Condensed Consolidated Financial Statements**.



**	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.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		STANLEY BLACK & DECKER, INC.

Date:	October ~~28, 2016~~25, 2017	By:	/s/ DONALD ALLAN, JR.
			Donald Allan, Jr.
			~~Senior~~Executive Vice President and Chief Financial Officer

3744




PART I — FINANCIAL INFORMATION	3
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2531
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3240
ITEM 4. CONTROLS AND PROCEDURES	3240
PART II — OTHER INFORMATION	3542
ITEM 1. LEGAL PROCEEDINGS	3542
ITEM 1A. RISK FACTORS	3542
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	3542
ITEM 6. EXHIBITS	3643
SIGNATURE	3744



Derivatives Not Designated as Hedging Instruments under ASC 815	Income Statement Classification	Third Quarter 2015 Amount of Gain (Loss) Recorded in Income on Derivative			Year-to-Date 2015 Amount of Gain (Loss) Recorded in Income on Derivative
Foreign Exchange Contracts	Other, net	$	(33.4	)	$	(12.7	)



(Millions of Dollars)	Currency translation adjustment and other			Unrealized (losses) gains on cash flow hedges, net of tax			Unrealized (losses) gains on net investment hedges, net of tax			Pension (losses) gains, net of tax			Total
Balance - January 3, 2015	$	(796.8	)	$	(50.9	)	$	(37.2	)	$	(385.3	)	$	(1,270.2	)
Other comprehensive (loss) income before reclassifications	$	(358.6	)	$	14.1		$	23.8		$	16.1		$	(304.6	)
Reclassification adjustments to earnings	—			(15.0		)	—			8.1			(6.9		)
Net other comprehensive (loss) income	$	(358.6	)	$	(0.9	)	$	23.8		$	24.2		$	(311.5	)
Balance - October 3, 2015	$	(1,155.4	)	$	(51.8	)	$	(13.4	)	$	(361.1	)	$	(1,581.7	)