Stanley Black & Decker, Inc.

Corporate governance · Internal controls and risk management

The Company is committed to managing widespread operations and enforcing internal controls, policies and procedures designed to deter prohibited practices under U.S. and foreign anti-bribery, anti-corruption, and anti-money laundering regulations and sanctions, such as the U.S. Foreign Corrupt Practices Act of 1977 and the UK Bribery Act of 2010.

Reputation and brand · Product recalls and public safety

The Consumer Product Safety Commission or other applicable regulatory bodies have required and may require in the future, or the Company has voluntarily instituted and may in the future voluntarily institute, the recall, repair or replacement of the Company's products if those products are found not to be in compliance with applicable standards or regulations. Any recall, repair, replacement or other corrective action could increase the Company's costs and adversely impact its reputation.

Human capital and workforce · Talent acquisition and retention

The Company competes for labor, particularly in its manufacturing facilities, which can drive higher labor costs and adversely impact its ability to efficiently operate. Any failure to attract and retain employees at the Company's manufacturing facilities or in other parts of the Company's operations may adversely affect its business and ability to meet customer demand.

Human capital and workforce · Key personnel dependence and succession

The Company's business success depends, in part, on the contributions and abilities of key executives and management personnel. The failure to recruit, retain, develop, engage, and motivate qualified management, sales and other personnel and successfully execute organizational change and management transitions at leadership levels could adversely impact the Company's reputation, business, results of operations and financial condition.

Supply chain and procurement · Geographic concentration of suppliers

The Company sources materials from South Korea, China, Taiwan and Israel, among other countries, and any future tensions or conflicts in such regions could cause material disruptions in the Company's supply chain. For certain products, such as components requiring rare earth minerals sourced from China and components requiring cobalt, the Company and its suppliers may rely on one or very few suppliers or suppliers concentrated in certain regions.

Supply chain and procurement · Supplier financial distress and capability

As a result of inflationary or deflationary economic conditions, changes in tariffs or trade policies or otherwise, the Company believes it is possible that a limited number of suppliers may either cease operations or require additional financial assistance from the Company in order to fulfill their obligations.

Tax and financial reporting · Tax compliance and changes in tax law

Significant judgment is required in determining the Company's worldwide income tax provision. Changes in tax laws, regulations, or interpretations and applications of such laws and regulations, including the implementation of global minimum tax rules by the various taxing jurisdictions applicable to multi-national corporations, could have a material impact on the Company's worldwide income tax provision, cash tax liability, and effective tax rate.

Industry regulation · Regulatory compliance and changes

The Company is subject to income taxation in the U.S. and numerous foreign jurisdictions. The Company is routinely audited by income tax authorities in various jurisdictions, and while management believes the recorded tax estimates are reasonable, the ultimate outcome of any audit could differ materially from amounts reflected in the Company's income tax accruals.

Legal and litigation · Litigation and legal proceedings

The Company is exposed to and becomes involved in various legal proceedings, claims, disputes and investigations arising out of the conduct of its business. Any legal proceedings, claims, disputes or investigations, whether with or without merit, can be time consuming and expensive to defend and can divert management's attention and resources.

Legal and litigation · Product liability and warranty claims

The Company manufactures products and performs various services that create exposure to product and professional liability claims and litigation. The failure of the Company's products and services to be properly manufactured, configured, installed, designed or delivered, resulting in personal injuries, property damage or business interruption could subject the Company to claims for damages.

Innovation and product development · Product development and randd investment risks

The Company's competitive advantage is due in part to its ability to develop and introduce new products in a timely manner at favorable margins. The uncertainties associated with developing and introducing new products, such as market demand, the unavailability of raw materials necessary for production, and costs of development and production, may impede the successful development and introduction of new products on a consistent or timely basis.

Customer and revenue · Changing customer preferences and behavior

Changes in customer or end-user preferences or loyalties for the Company's products, related to any such significant customer could have a material adverse impact on the Company's results of operations and cash flows. Unanticipated inventory adjustments by these customers could have a negative impact on the Company's net sales.

Market position and competition · Pricing pressure and margin compression

The Company may have to reduce prices on its products and services, or make other concessions, to stay competitive. Price reductions taken by the Company in response to customer and competitive pressures could negatively impact its business. The Company's major customers have strong bargaining power with suppliers, which limits the Company's ability to recover cost increases through higher selling prices.

Credit and liquidity · Debt service and covenant compliance

The instruments and agreements governing certain of the Company's current indebtedness contain requirements or restrictive covenants that include a maintenance of a specified financial ratio. The Company has an interest coverage covenant that must be maintained to permit continued access to its committed credit facilities. Failure to maintain these ratios could adversely affect further access to liquidity.

Market and investment · Investment portfolio performance

If the investments in employee benefit plans do not perform as expected, the Company may have to contribute additional amounts to these plans, which would otherwise be available to cover operating expenses or other business purposes. There can be no assurance that the value of the defined benefit plan assets, or the investment returns on those plan assets, will be sufficient in the future.

International and currency · Foreign exchange and currency exposure

The Company manufactures and sells its products in many countries throughout the world. As a result, there is exposure to foreign currency risk. The Company's predominant currency exposures are related to the Euro, Canadian Dollar, British Pound, Australian Dollar, Brazilian Real, Chinese Renminbi and the Taiwan Dollar. If the U.S. dollar strengthens relative to local currencies, the Company's earnings could be negatively impacted.

Credit and liquidity · Access to capital and financing

Tight capital and credit markets or the failure to maintain credit ratings could adversely affect the Company by limiting the Company's ability to borrow or otherwise access liquidity. Market conditions could make it more difficult for the Company to borrow or otherwise obtain the cash required for significant new corporate initiatives.

Digital transformation and innovation · Technology obsolescence and evolution

The pace of technological change continues to accelerate and the Company's ability to react effectively to such change may present significant competitive risks. The Company's future growth rate depends upon its ability to identify and evolve with emerging technological and broader industry trends, including artificial intelligence, machine learning and robotics.

Digital transformation and innovation · Artificial intelligence and automation

The Company's future growth rate depends upon its ability to identify and evolve with emerging technological and broader industry trends in its target end-markets, including, but not limited to, artificial intelligence machine learning and robotics. The Company may not adequately meet these demands or develop and adapt to the applicable new technologies focused on electrification.

Cybersecurity and data protection · Data breaches and cyber attacks

Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact the Company's reputation, operating results, and financial condition. The Company's information systems and data may be vulnerable to cybersecurity threats and incidents which can include uncoordinated individual attempts to gain unauthorized access to information technology systems, sophisticated and targeted measures known as advanced persistent threats, and breaches due to human error or malfeasance.