Black & Decker 2010 Annual Report Download - page 88

assessment will result in changes in the valuation of assets and liabilities acquired which is not expected to
have a material impact on the Company’s consolidated statement of operations, balance sheet or cash flows.
ACQUISITIONS
The Company completed thirty acquisitions during 2010, 2009, and 2008. These businesses were acquired
pursuant to the Company’s growth and portfolio repositioning strategy. The 2010 and 2009 acquisitions were
accounted for in accordance with ASC 805 while 2008 acquisitions were accounted for as purchases in
accordance with SFAS No. 141 “Business Combinations”. During 2010, the Company completed ten
acquisitions for an aggregate value of $547.3 million aside from the Merger. During 2009, the Company
completed six acquisitions for an aggregate value of $24.2 million. During 2008, the Company completed
fourteen acquisitions for an aggregate value of $572.4 million. The results of the acquired companies are
included in the Company’s consolidated operating results from the respective acquisition dates. All of the
acquisitions have resulted in the recognition of goodwill. Goodwill reflects the future earnings and cash flow
potential of the acquired business in excess of the fair values that are assigned to all other identifiable assets
and liabilities. Goodwill arises because the purchase price paid reflects numerous factors including the
strategic fit and expected synergies these targets bring to existing operations, the competitive nature of the
bidding process and the prevailing market value for comparable companies. ASC 805 requires all identifiable
assets and liabilities acquired to be reported at fair value and the excess is recorded as goodwill. The Company
obtains information during due diligence and from other sources which forms the basis for the initial allocation
of purchase price to the estimated fair value of assets and liabilities acquired. In the months following an
acquisition, intangible asset valuation reports, asset appraisals and other data are obtained in order for
management to finalize the fair values assigned to acquired assets and liabilities.
In November 2010 the Company purchased 70% of the outstanding shares of GMT for $44.2 million, net of
cash acquired. GMT is a leading commercial hardware manufacturer and distributor in China. The acquisition
of GMT provides the Company with a low cost manufacturing source and also serves as a platform for
international commercial hardware expansion. The Company has the option to purchase the remaining 30% of
GMT outstanding shares over the next five years. GMT is included in the Company’s Security segment.
In July 2010 the Company completed the acquisition of CRC-Evans Pipeline International (“CRC-Evans”) for
$451.6 million, net of cash acquired and subject to certain adjustments including an earn-out provision with
the previous CRC-Evans’ shareholders. The net assets acquired, including $181.2 million of other intangible
assets, are approximately $233.6 million and the related Goodwill is approximately $218.0 million. CRC-
Evans is a full line supplier of specialized tools, equipment and services used in the construction of large
diameter oil and natural gas transmission pipelines. CRC-Evans also sells and rents custom pipe handling and
joint welding and coating equipment used in the construction of large and small diameter pipelines. The
acquisition of CRC Evan’s diversifies the Company’s revenue base and provides the Company with a strategic
and profitable growth platform. CRC-Evans is included in the Company’s Industrial segment.
Under the earn-out provision, the total purchase price for CRC-Evans was contingent upon 2010 earnings
before interest, income taxes, depreciation and amortization and the earn-out performance period ended on
December 31, 2010. As of the acquisition date it was estimated that there would be no purchase price
adjustment occurring at the end of the performance period as the probability of a significant increase or
decrease in total consideration was been deemed to be equally unlikely. Accordingly, the Company did not
recognize an asset or liability relating to contingent consideration at the acquisition date. The performance
period ended in 2010 with no additional adjustment to purchase price required.
In March 2010, the Company completed the acquisition of Stanley Solutions de Sécurité (“SSDS”) (formerly
known as ADT France) for $8.0 million, net of cash acquired. SSDS is a leading provider of security services,
primarily for commercial businesses located in France. SSDS has been consolidated into the Company’s
Security segment. This acquisition added to the Company’s current business gives the Company the leading
market share in France and expands its security footprint in Europe.
During 2010, the Company also completed seven minor acquisitions, relating to the Company’s Industrial and
Security segments. The combined purchase price of these acquisitions was $43.5 million.
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