Black & Decker 2014 Annual Report Download - page 81

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• Because the 2013 acquisitions were assumed to occur on January 2, 2012, there were no deal costs or inventory step-
up amortization factored into the 2013 pro-forma year, as such expenses would have occurred in the first year
following the acquisition.
F. GOODWILL AND INTANGIBLE ASSETS
GOODWILL — The changes in the carrying amount of goodwill by segment are as follows:
(Millions of Dollars) CDIY Industrial Security Total
Balance December 28, 2013 ........................................... $ 2,951.2 $ 2,026.0 $ 2,585.5 $ 7,562.7
Acquisition adjustments.................................................. 24.5 48.9 1.1 74.5
Foreign currency translation and other ........................... (99.0)(79.0)(183.7)(361.7)
Balance January 3, 2014............................................... $ 2,876.7 $ 1,995.9 $ 2,402.9 $ 7,275.5
As required by the Company's policy, goodwill and indefinite-lived trade names were tested for impairment in the third quarter
of 2014. The Company assessed the fair values of two of its reporting units utilizing a discounted cash flow valuation model as
had been done in previous years and determined that, for each of the two reporting units, the fair values exceeded the respective
carrying amounts. The key assumptions used were discount rates and perpetual growth rates applied to cash flow projections.
Also inherent in the discounted cash flow valuations were near-term revenue growth rates over the next five years. These
assumptions contemplated business, market and overall economic conditions. The fair values of indefinite-lived trade names
were also assessed using a discounted cash flow valuation model. The key assumptions used included discount rates, royalty
rates and perpetual growth rates applied to projected sales.
For the remaining four reporting units, the Company determined qualitatively that it was not more-likely-than-not that goodwill
was impaired, and thus, the two-step goodwill impairment test was not required. In making this determination, the Company
considered the significant excess of fair value over carrying amount as calculated in the most recent quantitative analysis
performed in conjunction with the 2012 annual impairment test, favorable results of the 2013 impairment test, positive 2014
industry performance versus prior year, analyst multiples and other positive qualitative information, all of which indicated that
it is more-likely-than-not that the fair values of the four reporting units were greater than the respective carrying amounts.
Based on this evaluation of internal and external qualitative factors, the Company concluded that the two-step goodwill
impairment test was not required for these four reporting units.
INTANGIBLE ASSETS — Intangible assets at January 3, 2015 and December 28, 2013 were as follows:
2014 2013
(Millions of Dollars)
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Amortized Intangible Assets — Definite lives
Patents and copyrights............................................ $ 52.8 $ (43.9)$ 56.3 $ (44.3)
Trade names ........................................................... 165.7 (89.6)168.5 (79.4)
Customer relationships........................................... 1,832.0 (893.1)1,947.2 (783.3)
Other intangible assets ........................................... 275.6 (140.3)281.0 (122.9)
Total............................................................................... $ 2,326.1 $ (1,166.9)$ 2,453.0 $ (1,029.9)
Total indefinite-lived trade names are $1,592.5 million at January 3, 2015 and $1,614.2 million at December 28, 2013. The
change in value is due to currency fluctuations.