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Acquisitions | 9 Months Ended
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Sep. 28, 2019
Notes To Financial Statements [Abstract] |
Acquisitions | ACQUISITIONS AND INVESTMENTS 2019 INVESTMENTS On January 2, 2019, the Company acquired a 20 percent interest in MTD Holdings Inc. ("MTD"), a privately held global manufacturer of outdoor power equipment, for $234 million in cash. With annual revenue of approximately $2.4 billion, MTD manufactures and distributes gas-powered lawn tractors, zero turn mowers, walk behind mowers, snow throwers, trimmers, chain saws, utility vehicles and other outdoor power equipment. Under the terms of the agreement, the Company has the option to acquire the remaining 80 percent of MTD beginning on July 1, 2021 and ending on January 2, 2029. In the event the option is exercised, the companies have agreed to a valuation multiple based on MTD’s 2018 EBITDA, with an equitable sharing arrangement for future EBITDA growth. The Company is applying the equity method of accounting to the MTD investment. During 2019, the Company made additional immaterial investments that are not accounted for under the equity method. The Company acquired less than a 20 percent interest in each investment and does not have the ability to significantly influence any of the investees. 2019 ACQUISITIONS IES Attachments On March 8, 2019, the Company acquired IES Attachments for $653.5 million, net of cash acquired. IES Attachments is a manufacturer of high quality, performance-driven heavy equipment attachment tools for off-highway applications. The acquisition further diversifies the Company's presence in the industrial markets, expands its portfolio of attachment solutions and provides a meaningful platform for continued growth. The results of IES Attachments subsequent to the date of acquisition are included in the Company's Industrial segment. The IES Attachments acquisition is being accounted for as a business combination using the acquisition method of accounting, which requires, among other things, certain assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date. The estimated acquisition date value of identifiable net assets acquired, which includes $81.0 million of working capital, $87.1 million of deferred tax liabilities, and $328.0 million of intangible assets, is $341.3 million. The related goodwill is $312.2 million. The amount allocated to intangible assets includes $304.0 million for customer relationships. The weighted-average useful life assigned to the intangible assets is 14 years. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected cost synergies of the combined business, assembled workforce, and the going concern nature of IES Attachments. It is estimated that $2.4 million of goodwill, relating to the pre-acquisition historical tax basis of goodwill, will be deductible for tax purposes. The acquisition accounting for IES Attachments is preliminary in certain respects. During the measurement period, the Company expects to record adjustments relating to the finalization of intangible assets valuations, property, plant and equipment valuations, working capital accounts, various opening balance sheet contingencies, and various income tax matters, amongst others. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The Company’s judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results from operations. The Company will complete its acquisition accounting as soon as reasonably possible within the measurement period. Other 2019 Acquisitions During 2019, the Company completed four smaller acquisitions for $35.2 million, net of cash acquired. The estimated acquisition date value of the identifiable net assets acquired, which includes $6.1 million of working capital and $5.9 million of customer relationships, is $17.0 million. The related goodwill is $18.2 million. The useful life assigned to the customer relationships is 10 years. The results of these acquisitions subsequent to the dates of acquisition are included in the Company's Industrial and Security segments. The acquisition accounting for these acquisitions is preliminary in certain respects. During the measurement period, the Company expects to record adjustments relating to working capital accounts, various opening balance sheet contingencies and various income tax matters, amongst others. These adjustments are not expected to have a material impact on the Company’s consolidated financial statements. 2018 ACQUISITIONS Nelson Fasteners Systems On April 2, 2018, the Company acquired Nelson for $424.2 million, net of cash acquired. Nelson is complementary to the Company's product offerings, enhances its presence in the general industrial end markets, and expands its portfolio of highly-engineered fastening solutions. The results of Nelson are included in the Industrial segment. The Nelson acquisition was accounted for as a business combination using the acquisition method of accounting. The acquisition date value of identifiable net assets acquired, which included $64.2 million of working capital and $167.0 million of intangible assets, was $211.8 million. The related goodwill was $216.9 million. The amount allocated to intangible assets included $149.0 million for customer relationships. The useful lives assigned to the intangible assets ranged from 12 to 15 years. Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the expected cost synergies of the combined business, assembled workforce, and the going concern nature of Nelson. Goodwill is not expected to be deductible for tax purposes. The acquisition accounting for Nelson is complete. The measurement period adjustments recorded in 2019 did not have a material impact to the Company's Condensed Consolidated Financial Statements. Other 2018 Acquisitions During 2018, the Company completed six smaller acquisitions for a total purchase price of $104.5 million, net of cash acquired. The estimated acquisition date value of the identifiable net assets acquired, which includes $13.4 million of working capital and $35.5 million of intangible assets, is $38.1 million. The related goodwill is $66.4 million. The amount allocated to intangible assets includes $32.0 million for customer relationships. The useful lives assigned to intangible assets range from 10 to 14 years. The acquisition accounting for these acquisitions is substantially complete with the exception of certain minor items and will be completed within the measurement period. These adjustments are not expected to have a material impact on the Company’s consolidated financial statements. ACTUAL AND PRO-FORMA IMPACT OF THE ACQUISTIONS Actual Impact from Acquisitions The net sales and net earnings (loss) from 2019 acquisitions included in the Company's Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 28, 2019 are shown in the table below. The net earnings (loss) includes amortization relating to intangible assets recorded upon acquisition, inventory step-up charges, transaction costs, and other integration-related costs.
(Millions of Dollars) | Third Quarter 2019 |  | Year-to-Date 2019
Net sales | $ | 89.2 |  |  | $ | 218.4 |
Net earnings (loss) attributable to common shareowners | $ | 2.5 |  |  | $ | (5.5 | )
Pro-forma Impact from Acquisitions The following table presents supplemental pro-forma information as if the 2019 acquisitions had occurred on December 31, 2017 and the 2018 acquisitions had occurred on January 1, 2017. 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 the acquisitions on the aforementioned dates. In addition, the pro-forma consolidated results do not purport to project the future results of the Company.
|  | Third Quarter |  | Year-to-Date
(Millions of Dollars, except per share amounts) |  | 2019 |  | 2018 |  | 2019 |  | 2018
Net sales |  | $ | 3,633.8 |  |  | $ | 3,589.8 |  |  | $ | 10,807.3 |  |  | $ | 10,715.7 |
Net earnings attributable to common shareowners |  | $ | 232.6 |  |  | $ | 254.5 |  |  | $ | 778.2 |  |  | $ | 724.7 |
Diluted earnings per share |  | $ | 1.54 |  |  | $ | 1.69 |  |  | $ | 5.18 |  |  | $ | 4.76 |
2019 Pro-forma Results The 2019 pro-forma results were calculated by combining the results of Stanley Black & Decker with the stand-alone results of the 2019 acquisitions for their respective pre-acquisition periods. Accordingly the following adjustments were made:
• | 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 acquisition accounting that would have been incurred from December 30, 2018 to the acquisition dates.
• | Additional depreciation expense for the property, plant, and equipment fair value adjustments that would have been incurred from December 30, 2018 to the acquisition date of IES Attachments.
• | Because the 2019 acquisitions were assumed to occur on December 31, 2017, there were no acquisition-related costs or inventory step-up charges factored into the 2019 pro-forma period, as such expenses would have occurred in the first year following the assumed acquisition date.
2018 Pro-forma Results The 2018 pro-forma results were calculated by combining the results of Stanley Black & Decker with the stand-alone results of the 2018 and 2019 acquisitions for their respective pre-acquisition periods. Accordingly the following adjustments were made:
• | 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 acquisition accounting that would have been incurred from December 31, 2017 to the acquisition dates for the 2018 acquisitions and from December 31, 2017 to September 29, 2018 for the 2019 acquisitions.
• | Depreciation expense for the property, plant, and equipment fair value adjustments that would have been incurred from December 31, 2017 to the acquisition date of Nelson and from December 31, 2017 to September 29, 2018 for IES Attachments.
• | Additional expense for acquisition-related costs and inventory step-up charges relating to the 2019 acquisitions, as such expenses would have been incurred from December 31, 2017 to September 29, 2018.
• Because the 2018 acquisitions were assumed to occur on January 1, 2017, there were no acquisition-related costs or inventory step-up charges factored into the 2018 pro-forma period, as such expenses would have occurred in the first year following the assumed acquisition date.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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