E-Z-GO 2006 Annual Report Download - page 68

Note 3. Business Acquisitions, Goodwill and Intangible Assets
Business Acquisitions
In 2006, we acquired three businesses for a total cost of $338 million in the Bell segment and $164 million in the Finance segment, all of which
were paid for in cash. These acquisitions include the following:
• Overwatch Systems (“Overwatch”), a developer and provider of intelligence analysis software tools for the defense industry, was acquired on
December 1.
• Innovative Survivability Technologies, Inc., a supplier of innovative defensive systems to military and homeland security customers, was
acquired on July 19.
• Electrolux Financial Corporation’s dealer inventory finance business, which provides consumer appliance and electronics dealers with whole-
sale inventory financing, was acquired on June 30.
The operating results of these businesses have been included in the consolidated financial statements since the date of each respective
acquisition. Pro forma information has not been included as the amounts are immaterial.
In connection with these acquisitions, we recorded $259 million of goodwill in the Bell segment and $112 million of identifiable intangible assets.
The intangible assets and the weighted-average amortization periods are as follows: $37 million in unpatented technology (nine years), $35 mil-
lion in customer agreements (15 years), $17 million in trademarks (nine years) and $23 million in other intangible assets (five to 10 years).
The purchase price for Overwatch is subject to adjustment based on actual working capital, cash and debt balances at the closing date. We have
allocated the purchase price of this business to the estimated fair value of the net tangible and intangible assets acquired, with any excess
recorded as goodwill. These estimates are preliminary as of the end of 2006 as we are awaiting the completion of the identification and valuation
of intangible assets acquired. We expect these analyzes to be completed during the first half of 2007, along with the finalization of the purchase
price.
CitationShares is our joint venture with TAG Aviation USA, Inc. (“TAG”) to sell fractional share interests in business jets and limited advance
purchase jet charter. On June 30, 2004, we acquired an additional 25% interest in CitationShares from TAG for cash and the assumption of debt
guarantees previously provided by TAG. As a result of this transaction, we owned 75% of CitationShares and consolidated its financial results
prospectively as of June 30, 2004. In 2006 and 2005, our ownership interest was 86% and 82% as a result of additional capital contributions of
$11 million and $26 million, respectively.
Additional cash consideration also may be payable to TAG based on CitationShares’ future operating results. TAG has the right to sell its remain-
ing interest to us in the years 2009 through 2011, and we have the right to purchase the remaining interest in 2010 or 2011 for an amount based
on a multiple of earnings.
Goodwill
The changes in the carrying amount of goodwill, by segment, are as follows:
(In millions) Bell Cessna Industrial Finance Total
Balance at January 3, 2004 $ 101 $ 306 $ 593 $ 169 $ 1,169
Acquisitions/dispositions — 16 (20) — (4)
Foreign currency translation — — 20 — 20
Other — — (14) — (14)
Balance at January 1, 2005 $ 101 $ 322 $ 579 $ 169 $ 1,171
Acquisitions 1 — 4 — 5
Foreign currency translation — — (22) — (22)
Other — — (6) — (6)
Balance at December 31, 2005 $ 102 $ 322 $ 555 $ 169 $ 1,148
Acquisitions 259———259
Foreign currency translation — — 21 — 21
Other — — (2) — (2)
Balance at December 30, 2006 $ 361 $ 322 $ 574 $ 169 $ 1,426
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Textron Inc.