Honeywell 2011 Annual Report Download - page 67

In June 2011, the FASB issued amendments to disclosure requirements for presentation of comprehensive income. This guidance, effective
retrospectively for the interim and annual periods beginning on or after December 15, 2011 (early adoption is permitted), requires presentation of total
comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of
comprehensive income or in two separate but consecutive statements. In December 2011, the FASB issued an amendment to defer the presentation on the face
of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other
comprehensive income for annual and interim financial statements. The implementation of the two aforementioned amendments is not expected to have a
material impact on our consolidated financial position and results of operations.
In September 2011, the FASB issued amendments to the goodwill impairment guidance which provides an option for companies to use a qualitative
approach to test goodwill for impairment if certain conditions are met. The amendments are effective for annual and interim goodwill impairment tests
performed for fiscal years beginning after December 15, 2011 (early adoption is permitted). The implementation of amended accounting guidance is not
expected to have a material impact on our consolidated financial position and results of operations.
Note 2. Acquisitions and Divestitures
Acquisitions – We acquired businesses for an aggregate cost of $973, $1,303, and $468 million in 2011 2010 and 2009, respectively. For all of our
acquisitions 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 December 2011, the Company acquired King's Safetywear Limited (KSW), a leading international provider of branded safety footwear. The
aggregate value, net of cash acquired, was approximately $331 million (including the assumption of debt of $33 million) and was allocated to tangible and
identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. On a preliminary basis, the Company
has assigned approximately $178 million to identifiable intangible assets, predominantly trademarks, technology, and customer relationships. The definite
lived intangible assets are being amortized over their estimated lives, using straight-line and accelerated amortization methods. The value assigned to
trademarks of approximately $91 million is classified as indefinite lived intangibles. The excess of the purchase price over the estimated fair values of net
assets acquired (approximately $163 million), 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 enhance our product offerings to key target markets and serve as entry into new and
profitable segments, and the expected cost synergies that will be realized through the consolidation of the acquired business into our Automation and Control
Solutions segment. Their 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, 2011 are included in the Automation and Control Solutions segment and were not material
to the consolidated financial statements. As of December 31, 2011, the purchase accounting for KSW is subject to final adjustment primarily for the valuation
of inventory, property, plant and equipment, useful lives of intangible assets, amounts allocated to intangible assets and goodwill, tax balances, and for certain
pre-acquisition contingencies.
In August 2011, the Company acquired 100 percent of the issued and outstanding shares of EMS Technologies, Inc. (EMS), a leading provider of
connectivity solutions for mobile networking, rugged mobile computers and satellite communications. EMS had reported 2010 revenues of approximately
$355 million.
The aggregate value, net of cash acquired, was approximately $513 million and was allocated to tangible and identifiable intangible assets acquired and
liabilities assumed based on their estimated fair values at the acquisition date. On a preliminary basis, the Company has assigned approximately $119 million
to identifiable intangible assets, of which approximately $89 million and approximately $30 million were recorded within the Aerospace and Automation and
Control segments, respectively. The intangible assets are predominantly customer relationships, existing technology and trademarks. These intangible assets
are being amortized over their estimated lives, using straight-line and accelerated amortization methods. The excess of the purchase price over the estimated
fair values of net assets acquired (approximating $326 million), was recorded as goodwill. This goodwill arises primarily from the avoidance of the time and
costs which would be required (and the
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