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ACQUISITIONS AND INVESTMENTS | 3 Months Ended
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Apr. 02, 2022
Business Combinations [Abstract] |
ACQUISITIONS AND INVESTMENTS | ACQUISITIONS AND INVESTMENTS 2021 ACQUISITIONS MTD On December 1, 2021, the Company acquired the remaining 80 percent ownership stake in MTD, a privately held global manufacturer of outdoor power equipment, for $1.5 billion, net of cash acquired. The Company previously acquired a 20 percent interest in MTD in January 2019 for $234 million. T he Company’s pre-existing 20 percent equity investment in MTD was remeasured at fair value of $295.1 million as of the transaction date based on the purchase price for the remaining 80 percent ownership, which was calculated using an EBITDA-based formula. As a result, the Company recorded a $68.0 million gain on investment during the fourth quarter of 2021. MTD designs, manufactures and distributes lawn tractors, zero turn ride on mowers, walk behind mowers, snow blowers, residential robotic mowers, handheld outdoor power equipment and garden tools for both residential and professional consumers under well-known brands like Cub Cadet® and Troy-Bilt®. This combination will create a global leader in the outdoor category, with strong brands and growth opportunities. The results of MTD subsequent to the date of acquisition are included in the Company's Tools & Outdoor segment. The MTD 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 following table summarizes the estimated acquisition date value of identifiable net assets acquired and liabilities assumed:
(Millions of Dollars) |
Cash and cash equivalents | $ | 111.6 |
Accounts receivable, net | 276.4 |
Inventories, net | 900.7 |
Prepaid expenses and other assets | 97.7 |
Property, plant and equipment | 222.8 |
Trade names | 390.0 |
Customer relationships | 450.0 |
Other assets | 37.8 |
Accounts payable | (394.4) |
Accrued expenses | (258.7) |
Deferred revenue | (0.9) |
Long-term debt | (110.9) |
Deferred taxes | (195.6) |
Other liabilities | (68.4) |
Total identifiable net assets | $ | 1,458.1 |
Goodwill | 478.6 |
Total consideration | $ | 1,936.7 |
The weighted-average useful life assigned to the definite-lived intangible assets is 15 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 and assembled workforce. It is estimated that $0.6 million of goodwill will be deductible for tax purposes. The acquisition accounting for MTD is preliminary in certain respects. During the measurement period, the Company expects to record adjustments relating to the finalization of intangible assets, inventory and property, plant and equipment valuations, working capital accounts, and opening balance sheet contingencies, 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. Excel On November 12, 2021, the Company acquired Excel Industries ("Excel") for $373.6 million, net of cash acquired and an estimated working capital adjustment. Excel is a leading designer and manufacturer of premium commercial and residential turf-care equipment under the brands of Hustler Turf Equipment and BigDog Mower Co. The results of Excel subsequent to the date of acquisition are included in the Company's Tools & Outdoor segment. The Company believes this is a strategically important bolt-on acquisition as it builds an outdoor products leader. The Excel acquisition is being accounted for as a business combination, 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 value of identifiable net assets acquired, which includes $37.2 million of working capital, $48.7 million of deferred tax liabilities, and $203.5 million of intangible assets, is $200.4 million. The related goodwill is $173.2 million. The amount allocated to intangible assets includes $158.0 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 and assembled workforce. It is estimated that $0.6 million of goodwill will be deductible for tax purposes. The acquisition accounting for Excel is preliminary in certain respects. During the measurement period, the Company expects to record adjustments relating to the finalization of intangible and inventory valuations, working capital accounts, and opening balance sheet contingencies, 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. Other 2021 Acquisitions During 2021, the Company completed two other acquisitions for a total purchase price of $207.7 million, net of cash acquired. The estimated acquisition date value of the identifiable net assets acquired is $51.6 million and working capital is $36.7 million. The related goodwill is $156.1 million. The results of these acquisitions subsequent to the dates of acquisition are included in the Company's Tools & Outdoor segment. 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 and assembled workforce. It is estimated that $44.7 million of goodwill will be deductible for tax purposes. 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. ACTUAL AND PRO-FORMA IMPACT OF THE ACQUISITIONS Actual Impact from Acquisition The Company did not complete any acquisitions in the first quarter of 2022. As such, there was no impact from new acquisitions on the Company's Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended April 2, 2022. Pro-forma Impact from Acquisitions The following table presents supplemental pro-forma information as if the 2021 acquisitions had occurred on December 29, 2019. 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 date. In addition, the pro-forma consolidated results do not purport to project the future results of the Company.
(Millions of Dollars, except per share amounts) |  |  |  |  |  | First Quarter 2022 |  | First Quarter 2021
Net sales |  |  |  |  |  | $ | 4,448.0 |  |  | $ | 4,594.8 |
Net earnings from continuing operations attributable to common shareowners - Diluted |  |  |  |  |  | $ | 242.9 |  |  | $ | 475.8 |
Diluted earnings per share of common stock - Continuing operations |  |  |  |  |  | $ | 1.47 |  |  | $ | 2.90 |
2022 Pro-forma Results The 2022 pro-forma results were calculated by combining the actual results of Stanley Black & Decker for the three months ended April 2, 2022, inclusive of the results of MTD and Excel, with the following adjustment: •Because the 2021 acquisitions were assumed to occur on December 29, 2019, there were no acquisition-related costs or inventory step-up charges factored into the 2022 pro-forma period, as such expenses would have occurred in the first year following the assumed acquisition date. 2021 Pro-forma Results The 2021 pro-forma results were calculated by combining the results of Stanley Black & Decker with the stand-alone results of the 2021 acquisitions for their respective pre-acquisition period. Accordingly, the following adjustment was 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 January 2, 2021 to April 3, 2021. INVESTMENTS During 2022 and 2021, the Company made additional immaterial investments in new and emerging start-up companies focused on innovation, breakthrough products and advanced technologies. These investments, which are included in Other assets in the Condensed Consolidated Balance Sheets, do not qualify for equity method accounting as the Company acquired less than 20 percent interest in each investment and does not have the ability to significantly influence the operating or financial decisions of any of the investees.

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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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