Black & Decker 2015 Annual Report Download - page 80

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ACTUAL AND PRO-FORMA IMPACT FROM ACQUISITIONS
As noted above, the Company completed two small acquisitions in 2015 which did not have a significant impact on the
Company's Consolidated Statements of Operations for the year ended January 2, 2016. The Company did not complete any
acquisitions during 2014.
During 2013, the Company completed the acquisitions of Infastech, GQ and four smaller acquisitions. The following table
presents supplemental pro-forma information for continuing operations for the year ended December 28, 2013 as if those
acquisitions had occurred on January 2, 2012. This pro-forma information includes acquisition-related charges. The pro-forma
consolidated results are not necessarily indicative of what the Company’s consolidated net sales and net earnings would have
been had the Company completed these acquisitions on January 2, 2012. In addition, the pro-forma consolidated results do not
reflect the actual or expected realization of any cost savings associated with the acquisitions.
(Millions of Dollars, except per share amounts) Year-to-Date 2013
Net sales ......................................................................................................................................................... $ 11,001.5
Net earnings attributable to common shareowners ........................................................................................ 550.9
Diluted earnings per share-continuing operations.......................................................................................... 3.47
The 2013 pro-forma results were calculated by combining the results of Stanley Black & Decker with the stand-alone results of
the 2013 acquisitions for their respective pre-acquisition periods. The following adjustments were made to account for certain
costs which would have been incurred during these pre-acquisition periods:
• Elimination of the historical pre-acquisition intangible asset amortization expense and the addition of intangible asset
amortization expense related to intangibles valued as part of the purchase price allocation that would have been
incurred from December 31, 2012 to December 28, 2013.
• 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) Tools & Storage Security Industrial Total
Balance January 3, 2015 ................................................. $ 3,445.7 $ 2,398.0 $ 1,431.8 $ 7,275.5
Acquisition adjustments.................................................. — 11.8 — 11.8
Foreign currency translation and other ........................... (102.3)(92.6)(8.1)(203.0)
Balance January 2, 2016............................................... $ 3,343.4 $ 2,317.2 $ 1,423.7 $ 7,084.3
As discussed previously, in the first quarter of 2015 the Company combined the CDIY business with certain complementary
elements of the IAR and Healthcare business (formerly part of the Industrial and Security segments, respectively) to form one
Tools & Storage business. As a result, the Company reclassed $569 million of goodwill to the Tools & Storage segment as of
January 3, 2015 to reflect the change in organizational structure. There was no impact to the consolidated financial statements
of the Company as a result of this change.
As required by the Company's policy, goodwill and indefinite-lived trade names were tested for impairment in the third quarter
of 2015. The Company assessed the fair value of its reporting units based on a discounted cash flow valuation model. 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. Based on the results of the testing in the third quarter of 2015, the Company
determined that the fair values of each of its reporting units and indefinite-lived trade names exceeded their respective carrying
amounts.
During the fourth quarter of 2015, in connection with its quarterly forecasting cycle, the Company updated the forecasted
operating results for each of its businesses based on the most recent financial results and best estimates of future operations.
The updated forecasts reflected an expected decline in near-term revenue growth and profitability for the Infrastructure