E-Z-GO 2014 Annual Report Download - page 58

Note 2. Business Acquisitions, Goodwill and Intangible Assets
2014 Beechcraft Acquisition
On March 14, 2014, we acquired Beechcraft for an aggregate cash payment of $1.5 billion that included a repayment of a portion
of Beechcraft’s working capital credit facility at closing. The acquisition of Beechcraft and the formation of the Textron Aviation
segment provide increased scale and complementary product offerings, allowing us to strengthen our position across the aviation
industry and enhance our ability to support our customers. We financed a portion of the purchase price with the issuance of $600
million in senior notes on January 30, 2014 and by drawing $500 million under the five-year term loan agreement entered into on
January 24, 2014. The balance was paid from cash on hand.
The consideration paid for this business was allocated on a preliminary basis to the assets acquired and liabilities assumed based
on their estimated fair values at the acquisition date. As of January 3, 2015, the valuation process is substantially complete,
however, due to the size and breadth of this acquisition, additional time is necessary to complete the valuation of certain liabilities
and the related income tax impact. We will finalize the purchase accounting within the one-year measurement period allowed
under generally accepted accounting principles. Our allocation of the purchase price as of January 3, 2015 is presented below.
(In millions)
Accounts receivable
$ 129
Inventories
775
Other current assets
175
Property, plant and equipment
261
Intangible assets
581
Goodwill
228
Other assets
172
Accounts payable
(143)
Accrued liabilities
(294)
Other liabilities
(406)
Total net assets acquired
$ 1,478
Goodwill of $228 million was primarily related to expected synergies from combining operations and the value of the existing
workforce. Intangible assets of $581 million included unpatented technology related to original equipment manufactured parts and
designs and customer relationships valued at $373 million and trade names valued at $208 million. The unpatented technology
and customer relationships assets have a life of 15 years, resulting in amortization expense in the range of approximately $17
million to $31 million annually. Substantially all of the trade names have an indefinite life and therefore are not subject to
amortization. We acquired tax-deductible goodwill of approximately $260 million in this transaction.
In connection with the integration of Beechcraft, we initiated a restructuring program in our Textron Aviation segment in the first
quarter of 2014 to align the Cessna and Beechcraft businesses, reduce operating redundancies and maximize efficiencies. During
2014, we recorded charges of $41 million related to these restructuring activities that were included in the Acquisition and
restructuring costs line on the Consolidated Statements of Operations. In addition, we incurred transaction costs of $11 million in
2014 related to the acquisition that were also included in the Acquisition and restructuring costs line. We expect to incur additional
restructuring costs in 2015, but do not expect these costs to be material.
Other Acquisitions
During 2014, we made aggregate cash payments of $149 million for seven acquisitions within our Industrial and Systems
Segments, including Tug Technologies Corporation, a manufacturer of ground support equipment in the aviation industry.
We made aggregate cash payments of $196 million in 2013 for acquisitions of four businesses within our Textron Systems and
Industrial segments and two service centers in our Textron Aviation segment.
Actual and Pro-Forma Impact from 2014 Acquisitions
The operating results for the 2014 acquisitions are included in the Consolidated Statement of Operations since their respective
closing dates. From the closing dates through January 3, 2015, revenues related to these acquisitions totaled $1.6 billion. The cost
structures of the Beechcraft and Cessna businesses have been significantly integrated since the acquisition of Beechcraft; therefore,
it is not possible to separately report earnings for this acquisition. The earnings related to the other 2014 acquisitions were not
significant for this period.
52 Textron Inc. Annual Report • 2014