Honeywell 2007 Annual Report Download - page 83

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
recorded as goodwill. This goodwill is non-deductible for tax purposes. This acquisition was accounted for by the
purchase method, and, accordingly, results of operations are included in the consolidated financial statements
from the date of acquisition. The results from the acquisition date through December 31, 2006 are included in the
Automation and Control Solutions segment and were not material to the consolidated financial statements.
During the year, the Company completed the sales of the First Technology Safety & Analysis business for $93
million and First Technology Automotive for $90 million which were accounted for as part of the purchase price
allocation.
In November 2005, the Company acquired the remaining 50 percent of UOP LLC giving Honeywell full
ownership of the entity. The aggregate value of the purchase price was approximately $825 million, including the
assumption of approximately $115 million of outstanding debt. The purchase price for the acquisition was
allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their
estimated fair values at the acquisition date. The Company has assigned $339 million to identifiable intangible
assets, predominantly existing technology, which is being amortized over 15 years on a straight-line basis and
trade names, which are not amortized. The excess of the purchase price over the estimated fair values of net
assets acquired approximating $336 million, was recorded as goodwill. This goodwill is non-deductible for tax
purposes. Following this acquisition, which is being accounted for by the purchase method, results of operations
have been included into the Specialty Materials segment. Prior to that date, UOP results for the 50 percent share
that the Company owned was included in equity income of affiliated companies.
On March 31, 2005, the Company purchased 100% of the issued and ordinary preference share capital of
NOVAR plc (NOVAR) for $1.7 billion, net of cash acquired, which represented $2.4 billion for consideration of all
outstanding shares and outstanding options to be exercised, net of the assumption of debt of $0.7 billion.
Transaction costs related to this acquisition were $49 million. In December 2005, we completed the sale of the
Security Printing business to M&F Worldwide Corp. for $800 million in cash. In February 2006, we completed the
sale of Indalex to an affiliate of private investment firm Sun Capital Partners, Inc. for approximately $425 million
in cash. The Indalex business was classified as held for sale in our December 31, 2005 Consolidated Balance
Sheet and both the Indalex and Security Printing businesses have been presented as discontinued operations in
our Statement of Operations for periods prior to the sale. Goodwill of approximately $1.3 billion was recognized
and we allocated $261 million to other intangible assets (contractual customer relationships, existing technology
and trademarks). These intangible assets are being amortized over their estimated useful lives which range from
5 to 15 years using straight-line and accelerated amortization methods. In addition, accrued liabilities included
$76 million of restructuring costs related to the integration of the NOVAR operations.
As of December 31, 2007, the purchase accounting for Dimensions International, Enraf Holding B.V., Hand
Held Products, Inc. and Maxon Corporation are still subject to final adjustment primarily for useful lives, amounts
allocated to intangible assets and goodwill, for certain pre-acquisition contingencies, and for settlement of post
closing purchase price adjustments.
In connection with all acquisitions in 2007, 2006 and 2005, the amounts recorded for transaction costs and
the costs of integrating the acquired businesses into Honeywell were not material.
The pro forma results for 2007, 2006 and 2005, assuming these acquisitions had been made at the
beginning of the year, would not be materially different from consolidated reported results.
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