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Acquisitions and Dispositions | 12 Months Ended
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Dec. 31, 2021
Business Combinations [Abstract] |
Acquisitions and Dispositions | 4. Acquisitions and Dispositions Flo Technologies In 2018 our Plumbing segment entered into a strategic partnership with, and acquired non-controlling equity interests in, Flo Technologies, Inc. (“Flo”), a U.S. manufacturer of comprehensive water monitoring and shut-off systems with leak detection technologies. In January 2020, we entered into an agreement to acquire 100% of the outstanding shares of Flo in a multi-phase transaction which was completed in January 2022. As part of this agreement, we acquired additional shares for $44.2 million in cash, including direct transactions costs, and entered into a forward contract to purchase all remaining shares of Flo at a future date in exchange for an additional $7.9 million in cash, which is included in other assets in our consolidated balance sheet. In April 2020, we acquired additional shares of Flo under a separate option agreement which resulted in a non-cash gain of $4.4 million on the forward contract as included within other income for the year-ended December 31, 2020. As of December 31, 2020, we owned approximately 80% of Flo’s outstanding shares. Starting in the first quarter of 2020, we applied the equity method of accounting to our investment in Flo as the minority stockholders had substantive participating rights which precluded consolidation in our results of operations and statements of financial position and cash flows. Immediately prior to applying the equity method of accounting, we recognized a non-cash gain of $6.6 million within other income during the year-ended December 31, 2020 related to the remeasurement of our previously existing investment in Flo. The carrying value of our investment as of December 31, 2020 was $76.2 million. The minority shareholders' substantive participating rights expired on January 1, 2021, at which time we obtained control of and began consolidating Flo in our results of operations and statements of financial positions and cash flows. Immediately prior to consolidating Flo, we recognized a non-cash loss of $4.5 million within other expense for the year-ended December 31, 2021, related to the remeasurement of our previously existing investment in Flo. The fair value allocated to assets acquired and liabilities assumed as of January 1, 2021 was $87.8 million, net of cash acquired of $9.7 million, which includes $65.3 million of goodwill. Goodwill includes expected sales and cost synergies and is not expected to be deductible for income tax purposes. During the fourth quarter of 2021, we recorded a mark-to-market expense of $2.2 million related to the remaining shares held by the minority shareholders. Flo's net sales and operating income for the year-ended December 31, 2021 were not material to the Company. Larson Manufacturing In December 2020, we acquired 100% of the outstanding equity of Larson, the North American market leading brand of storm, screen and security doors. Larson also sells related outdoor living products including retractable screens and porch windows. The acquisition of Larson is aligned with our strategic focus on the fast-growing outdoor living space. The Company completed the acquisition for a total purchase price of approximately $717.5 million, net of cash acquired. We financed the transaction with borrowings under our existing credit facilities. The financial results of Larson were included in the Company’s December 31, 2021 and 2020 consolidated balance sheets and the Company's consolidated statements of income and statements of cash flow beginning January 2021. Larson's net sales, operating income and cash flows from the date of acquisition to December 31, 2020 were not material to the Company. The results of operations are included in the Outdoors & Security segment. We incurred $4.5 million of Larson acquisition-related transaction costs in the year ended December 31, 2020. The goodwill deductible for income tax purposes is approximately $290 million. The following table summarizes the final allocation of the purchase price to the fair value of assets acquired and liabilities assumed as of the date of the acquisition.
(In millions) |
Accounts receivable |  | $ | 42.3 |
Inventories |  |  | 49.8 |
Property, plant and equipment |  |  | 66.6 |
Goodwill |  |  | 307.0 |
Identifiable intangible assets |  |  | 313.0 |
Operating lease assets |  |  | 6.2 |
Other assets |  |  | 3.7 |
Total assets |  |  | 788.6 |
Accounts payable |  |  | 6.6 |
Other current liabilities and accruals |  |  | 32.1 |
Other non-current liabilities |  |  | 32.4 |
Net assets acquired(a) |  | $ | 717.5 |
(a) Net assets exclude $0.4 million of cash transferred to the Company as the result of the Larson acquisition. Goodwill includes expected sales and cost synergies. The goodwill will be included in our Outdoors & Security segment. Identifiable intangible assets consist of a finite-lived customer relationships asset of $168.0 million, an indefinite-lived tradename of $111.0 million and a finite-lived proprietary technology asset of $34.0 million. The useful life of the customer relationship intangible asset is estimated to be 13 years. The Larson tradename has been assigned an indefinite life as we currently anticipate that this tradename will contribute cash flows to the Company indefinitely. The useful life of the proprietary technology intangible asset is estimated to be 7 years. Customer and contractual relationships and proprietary technology are amortized on a straight-line basis over their useful lives. The following unaudited pro forma summary presents consolidated financial information as if Larson had been acquired on January 1, 2019. The unaudited pro forma financial information is based on historical results of operations and financial position of the Company and Larson. The pro forma results include: • estimated amortization of finite-lived intangible asset, including customer relationships and proprietary technology, • the estimated cost of the inventory adjustment to fair value, • interest expense associated with debt that would have been incurred in connection with the acquisition, • the reclassification of Larson transaction costs from 2020 to the first quarter of 2019, and • the removal of certain transactions recorded in the historical financial statements of Larson related to assets and activities which were retained by the seller, and • adjustments to conform accounting policies. The unaudited pro forma financial information does not necessarily represent the results that would have occurred had the acquisition occurred on January 1, 2019. In addition, the unaudited pro forma information should not be deemed to be indicative of future results.
(In millions) |  |  | 2020 |  |  |  | 2019 |
Net sales |  | $ | 6,493.2 |  |  | $ | 6,100.4 |
Net income |  | $ | 592.5 |  |  | $ | 410.8 |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: 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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