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Acquisitions and Dispositions | 9 Months Ended
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Sep. 30, 2023
Business Combinations [Abstract] |
Acquisitions and Dispositions | 4. Acquisitions and Dispositions ASSA Businesses In June 2023, we acquired the ASSA Businesses. The Company completed the acquisition for a total purchase price of approximately $809.3 million, subject to post-closing adjustments, net of cash acquired of $16.3 million. We financed the transaction with cash on hand. As of the date of this filing, legal title to international operations in Vietnam has not yet transferred, but we expect a deferred closing, which will include a payment of approximately $23.4 million (which amount is already included in the overall purchase price but for which the cash payment has not yet been made). The results of the Emtek and Schaub Business are reported as part of the Water segment and the results of the Yale and August Business are reported as part of the Security segment. The following table summarizes the preliminary allocation of the ASSA Businesses purchase price to the fair value of assets acquired and liabilities assumed as of the date of the acquisition.
(In millions) |
Accounts receivable |  | $ | 35.8 |
Inventories |  |  | 107.2 |
Property, plant and equipment |  |  | 19.5 |
Goodwill |  |  | 264.0 |
Identifiable intangible assets |  |  | 442.0 |
Operating lease assets |  |  | 17.3 |
Other assets |  |  | 2.3 |
Total assets |  |  | 888.1 |
Accounts payable |  |  | 26.0 |
Other current liabilities and accruals |  |  | 37.5 |
Other non-current liabilities |  |  | 15.3 |
Net assets acquired(a) |  | $ | 809.3 |
(a) Net assets exclu de $16.3 mill ion of cash transferred to the Company as the result of the acquisition. We apply significant judgment in determining the estimates and assumptions used to determine the fair value of the identifiable intangible assets, including forecasted revenue growth rates, EBITDA margins, percentage of revenue attributable to the tradenames, contributory asset charges, customer attrition rate, market-participant discount rates and the assumed royalty rates. Any change in the acquisition date fair value of the acquired assets and liabilities will change the amount of the purchase price allocable to goodwill. Goodwill includes expected sales and cost synergies. The goodwill is included in our Security and Water segments. Substantially all of the tax goodwill is expected to be deductible for income tax purposes, subject to the finalization of the purchase price allocation. ASSA Businesses identifiable intangible assets consist of finite-lived customer relationship assets of $349.3 million, an indefinite-lived tradename of $75.0 million, a definite-lived tradename of $9.0 million and finite-lived proprietary technology assets of $8.7 million. The useful life of the customer relationship assets is estimated to be 17 years. The useful life of the definite-lived tradename is estimated to be 30 years. The useful life of the proprietary technology assets is estimated to be eight years. Customer relationships, tradenames and proprietary technology assets are amortized on a straight line basis over their useful lives. The following unaudited pro forma summary presents consolidated financial information as if the ASSA Businesses had been acquired on January 1, 2022. The unaudited pro forma financial information is based on historical results of operations and financial position of the Company and the ASSA Businesses. The pro forma results include: • estimated amortization of finite-lived intangible assets, including customer relationships and proprietary technology, • the estimated cost of the inventory adjustment to fair value, • the reclassification of ASSA Businesses transaction costs from 2023 to the first quarter of 2022, • the removal of certain transactions recorded in the historical financial statements of the ASSA Businesses 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, 2022. In addition, the unaudited pro forma information should not be deemed to be indicative of future results.
(In millions) |  | Thirty-Nine Weeks Ended September 30, 2023 |  |  | Thirteen Weeks Ended September 30, 2023 |  |  | Nine Months Ended September 30, 2022 |  |  | Three Months Ended September 30, 2022 |
Net sales |  | $ | 3,649.9 |  |  | $ | 1,261.2 |  |  | $ | 3,895.4 |  |  | $ | 1,296.3 |
Income from continuing operations, net of tax |  | $ | 361.9 |  |  | $ | 137.4 |  |  | $ | 420.6 |  |  | $ | 149.6 |
Cabinets On December 14, 2022, the Company completed the separation of MasterBrand, Inc., via a tax-free spin-off transaction (the “Separation”) to create an independent, publicly-traded company. Immediately following completion of the Separation, the Company changed its name from “Fortune Brands Home & Security, Inc.” to “Fortune Brands Innovations, Inc.” and its stock ticker changed from “FBHS” to “FBIN” to better reflect its focus on activities related to core brands and innovation. The condensed consolidated statements of income and consolidated balance sheets for all prior periods have been adjusted to reflect the presentation of MasterBrand as discontinued operations. For the nine months ended September 30, 2022, the condensed consolidated statement of cash flows includes net cash provided from operations related to discontinued operations of $211.9 million and net cash used in investing activities of $32.2 million. Depreciation, amortization and capital expenditures attributable to discontinued operations for the nine months ended September 30, 2022, were $32.5 million, $13.2 million and $32.2 million, respectively. Aqualisa In July 2022, we acquired 100% of the outstanding equity of Aqualisa for a purchase price of $156.0 million, net of cash acquired of $4.8 million. We financed the transaction using cash on hand and borrowings under our revolving credit facility. The results of Aqualisa are reported as part of the Water segment. We have not included pro forma financial information as the transaction is immaterial to our condensed consolidated statements of comprehensive income. The fair value allocated to assets acquired and liabilities assumed as of July 29, 2022, was $156.0 million, which include s $88.7 mi llion of goodwill. Goodwill includes expected sales and cost synergies and is not expected to be deductible for income tax purposes. Solar In January 2022, we acquired 100% of the outstanding equity of Solar for a purchase price of $61.6 million, net of cash acquired of $4.8 million. We financed the transaction using cash on hand and borrowings under our revolving credit facility. The results of Solar are reported as part of the Outdoors segment. We have not included pro forma financial information as the transaction is immaterial to our condensed consolidated statements of comprehensive income. The fair value allocated to assets acquired and liabilities assumed as of January 31, 2022, was $61.6 million, which includes $23.3 million of goodwill. Goodwill includes expected sales and cost synergies and is expected to be deductible for income tax purposes. Flo Technologies In 2018, our Water segment entered into a strategic partnership with, and acquired non-controlling equity interests in Flo Technologies ("Flo"). In January 2020, we entered into an agreement to acquire the remaining outstanding shares of Flo in a multi-phase transaction. As part of this agreement, we acquired a majority of Flo’s outstanding shares during 2020 and entered into a forward contract to purchase all remaining shares of Flo during the first quarter of 2022. On January 30, 2022, we made a final cash payment of $16.7 million to the legacy minority shareholders to acquire such shares which is reflected within Other financing, net in our consolidated statements of cash flows.

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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 -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent + Details
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