Honeywell 2010 Annual Report Download - page 67

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
Accounts and other receivables $ 118
Inventories 167
Other current assets 8
Property, plant and equipment 106
Intangible assets 619
Other assets and deferred charges 4
Accounts payable (63)
Accrued liabilities (104)
Deferred income taxes (214)
Long-term debt (326)
Other long-term liabilities (64)
Net assets acquired 251
Goodwill 898
Purchase price $ 1,149
We have assigned $619 million to intangible assets, predominantly customer relationships, trade names, and technology. These intangible assets are
being amortized over their estimated lives which range from 3 to 20 years using straight line and accelerated amortization methods. Included in this amount, a
value of approximately $203 million has been assigned to trade names intangibles determined to have indefinite lives. The excess of the purchase price over
the estimated fair values of net assets acquired is approximately $898 million and was recorded as goodwill. This goodwill arises primarily from the
avoidance of the time and costs which would be required (and the associated risks that would be encountered) to develop a business with a product offering
and customer base comparable to Sperian and the expected cost synergies that will be realized through the consolidation of the acquired business into our
Automations and Controls Solutions segment. These cost synergies are expected to be realized principally in the areas of selling, general and administrative
expenses, material sourcing and manufacturing. This goodwill is non-deductible for tax purposes. The results from the acquisition date through December 31,
2010 are included in the Automation and Control Solutions segment and were not material to the consolidated financial statements. As of December 31, 2010,
the purchase accounting for Sperian is subject to final adjustment primarily for useful lives of intangible assets, amounts allocated to intangible assets and
goodwill, for certain pre-acquisition contingencies, and for settlement of post-closing purchase price adjustments.
In August 2009, the Company completed the acquisition of the RMG Group (RMG Regel + Messtechnik GmbH), a natural gas measuring and control
products, services and integrated solutions company, for a purchase price of approximately $416 million, net of cash acquired. 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 $174 million to identifiable intangible assets, predominantly customer relationships, existing technology and
trademarks. These intangible assets are being amortized over their estimated lives which range from 1 to 15 years using straight-line and accelerated
amortization methods. The excess of the purchase price over the estimated fair values of net assets acquired (approximating $225 million), was recorded as
goodwill. This goodwill is non-deductible for tax purposes. This acquisition was accounted for by the acquisition 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, 2009
are included in the Automation and Control Solutions segment and were not material to the consolidated financial statements.
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 $1,221 million 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.
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