Black & Decker 2014 Annual Report Download - page 36

22
In June 2012, the Company acquired AeroScout for $238.8 million, net of cash acquired. AeroScout is the market leader in
Real-Time Location Systems ("RTLS") for healthcare and certain industrial markets and has been integrated into the Security
and Industrial segments. This acquisition will be integral in enhancing the Company's technology offerings to many customers.
In May 2012, the Company acquired Powers Fasteners ("Powers") for $220.5 million, net of cash acquired. Powers is a
distributor of several complementary product groups, including mechanical anchors, adhesive anchoring systems and powered
forced-entry systems, mainly for commercial construction end customers. Powers has been integrated into the CDIY segment.
In January 2012, the Company acquired Lista North America ("Lista") for $89.7 million, net of cash acquired. Lista’s storage
and workbench solutions complement the Industrial & Automotive Repair division’s tool, storage, radio frequency
identification (“RFID”)-enabled systems, and specialty supply product and service offerings. Lista has been integrated into the
Company’s Industrial segment.
HHI and Tong Lung Residential Divestiture
In December 2012, the Company sold HHI to Spectrum for approximately $1.4 billion in cash. HHI is a provider of residential
locksets, residential builders hardware and plumbing products marketed under the Kwikset, Weiser, Baldwin, Stanley, National
and Pfister brands. The majority of the HHI business was part of the Company's Security segment, while the remainder was
part of the Company's CDIY segment. The divestiture of the HHI business is part of the continued diversification of the
Company's revenue streams and geographic footprint consistent with the Company's strategic framework.
The purchase and sale agreement stipulated that the sale occur in a First and Second Closing, for approximately $1.3 billion and
approximately $94 million, respectively. The First Closing, which excluded the residential portion of the Tong Lung business,
occurred on December 17, 2012. The Second Closing, relating to the residential portion of the Tong Lung business, occurred
on April 8, 2013. The operating results of HHI, as well as the residential portion of Tong Lung, have been reported as
discontinued operations in the Consolidated Financial Statements.
During 2013, the Company completed the 2012 income tax return filings which included the final calculations of the tax gain
on HHI sale which took place in 2012. As a result of these tax return filings, the Company recorded an income tax benefit of
approximately $19.1 million within discontinued operations related to finalization of the taxable gain on the HHI sale. Changes
to the original tax gain were driven primarily by the determination of the final purchase price allocation and the finalization of
the U.S. tax basis calculation, both of which were finalized during 2013.
The net proceeds from this divestiture were used to repurchase $850 million of the Company's common stock and for debt
reduction, to ensure the Company's leverage ratios remain in its target range.
Refer to Note E, Acquisitions, and Note T, Discontinued Operations, for further discussion of the Company's acquisitions and
divestitures.
Driving Further Profitable Growth Within Existing Platforms
While diversifying the business portfolio through expansion in the Company’s specified growth platforms is important,
management recognizes that the branded tool and storage product offerings in the CDIY and Industrial segment businesses are
important foundations of the Company that continue to provide strong cash flow and growth prospects. Management is
committed to growing these businesses through innovative product development, as evidenced by CDIY's success with
leveraging brushless motor technology on DEWALT cordless application, BLACK+DECKER AutoSense Drill Driver and
STANLEY TLM99 Laser Distance Measurer, which works in conjunction with the STANLEY Floor Plan smartphone app.
Brand support, continued investment in emerging markets and a sharp focus on global cost-competitiveness are all expected to
foster vitality over the long term. The Company’s IAR business within the Industrial segment continues to reap benefits from its
vertical integration of hand and power tools used for industrial and automotive repair purposes as well as advanced industrial
storage solutions.
Furthermore, the CDIY and IAR businesses have benefited greatly from the Company's powerful family of brands, global scale
and breadth of products across power and hand tools, storage and accessories. These businesses have also recently begun to
realize benefits from the Company's diverse channel access across the spectrum of construction, DIY, industrial and automotive
repair markets. As noted above, management believes that these businesses represent important foundations of the Company
that will continue to provide strong cash flow and future growth. As a result, the Company made the decision in the first quarter
of 2015 to combine the complementary elements of the CDIY and IAR businesses into one Tools and Storage business with
revenues totaling approximately $7 billion. The combination of these two businesses is consistent with the Company's strategy