Honeywell 2008 Annual Report Download - page 84

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
Note 2—Acquisitions and Divestitures
We acquired businesses for an aggregate cost of $2,181, $1,190, and $979 million in 2008, 2007 and 2006,
respectively. All of our acquisitions were accounted for under the purchase method of accounting, and
accordingly, the assets and liabilities of the acquired businesses were recorded at their estimated fair values at
the dates of acquisition. Significant acquisitions made in these years are discussed below.
In May 2008, the Company completed the acquisition of Safety Products Holding, Inc, which through its
subsidiary Norcross Safety Products L.L.C. (Norcross) is a leading manufacturer of personal protective
equipment. The purchase price, net of cash acquired, was approximately $1.2 billion and was allocated to
tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at
the acquisition date.
The following table summarizes the estimated fair values of the assets and liabilities acquired as of the
acquisition date.
Accounts and other receivables $ 102
Inventories 118
Other current assets 28
Property, plant and equipment 65
Intangible assets 708
Other assets and deferred charges 3
Accounts payable (27)
Accrued liabilities (74)
Deferred income taxes (274)
Other long-term liabilities (26)
Net assets acquired 623
Goodwill 598
Purchase price $ 1,221
The Company has assigned $708 million to intangible assets, predominantly customer relationships, trade
names, and technology. These intangibles assets are being amortized over their estimated lives using straight
line and accelerated amortization methods. The value assigned to the trade names of approximately $264 million
is classified as an indefinite lived intangible. The excess of the purchase price over the estimated fair values of
net assets acquired (approximately $598 million) was 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, 2008 are included in the Automation and Control Solutions segment and were not
material to the consolidated financial statements.
In July 2008, the Company completed the sale of its Consumables Solutions business to B/E Aerospace (B/
E) for $1.05 billion, consisting of approximately $901 million in cash and six million shares of B/E common stock.
In connection with the completion of the sale, the Company and B/E entered into, among other things, exclusive
supply and license agreements and a stockholder agreement. Because of the extent of the Company's cash
flows associated with the supply and license agreements, the Consumables Solutions business is not classified
as discontinued operations. The provisions of the license and supply agreements were determined to be at-
market. As such, we have not allocated any portion of the proceeds to these agreements. The pre-tax gain of
$623 million is classified as Other (Income)/Expense in our Statement of Operations. The gain on sale was
approximately $417 million net of tax. The sale of the Consumables Solutions business, within the Aerospace
segment, is consistent with the Company's strategic focus on core product areas utilizing advanced technologies.
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