Rayovac 2006 Annual Report Download - page 107

SPECTRUM BRANDS | 2006 ANNUAL REPORT 95
As of February 7, 2005
Current assets $ 401,000
Property, plant, and equipment 91,000
Intangible assets 500,000
Goodwill 780,000
Other assets 61,000
Total assets acquired 1,833,000
Current liabilities 149,000
Short-term debt 14,000
Long-term liabilities 166,000
Total liabilities assumed 329,000
Net assets acquired $1,504,000
Less: Cash acquired (14,000)
Payments for acquisitions $1,490,000
Approximately $433,000 of the total goodwill acquired in this
transaction is expected to be deductible in the determination of
income taxes. See also Note 6, Intangible Assets, for additional infor-
mation on the intangible assets acquired in the United acquisition.
Acquisition of Microlite
On May 28, 2004, the Company completed the acquisition of
90.1% of the outstanding capital stock, including all voting stock,
of Microlite, a Brazilian battery company, from VARTA AG of
Germany and Tabriza Brasil Empreendimentos Ltda. of Brazil.
Microlite manufactures and sells both alkaline and zinc carbon bat-
teries as well as battery-operated lighting products. Microlite has
operated as an independent company since 1982. The acquisition
of Microlite consolidates the Company’s rights to the Rayovac
brand name globally. The fi nancial results of the Microlite acquisi-
tion are reported as part of the Latin America business segment.
The total cash paid at closing for Microlite was approximately
$30,000, including approximately $21,100 in purchase price,
approximately $7,000 of contingent consideration paid in
advance, and approximately $1,900 of acquisition related
expenditures, plus approximately $8,000 of assumed debt.
Tabriza earned the contingent consideration paid in advance
plus additional contingent consideration of approximately
$9,000 based upon Microlite’s attainment of certain earnings
targets through June 30, 2005. Tabriza is obligated to transfer
Microlite’s remaining outstanding capital stock to the Company
after receipt of the contingent consideration. During 2005, the
Company completed the valuation of the Microlite trade name.
As a result, approximately $21,685 (using exchange rates in
effect as of September 30, 2004) was assigned to the value of
this trade name in Brazil with a corresponding reduction to
goodwill. The following table summarizes the fair value of the
assets acquired and liabilities assumed as of the date of the
acquisition using the exchange rates in effect as of that date.
As of May 28, 2004
Current assets $ 8,000
Property, plant, and equipment 18,000
Intangible assets –
Goodwill 54,000
Other assets 21,000
Total assets acquired 101,000
Current liabilities 18,000
Short-term debt 9,000
Long-term liabilities 44,000
Total liabilities assumed 71,000
Net assets acquired $30,000
Less: Cash acquired (200)
Payments for acquisitions $29,800
Included in long-term liabilities assumed in connection with
the acquisition of Microlite is a provision for “presumed” credits
applied to the Brazilian excise tax on Manufactured Products, or
“IPI taxes.” Although a previous ruling by the Brazilian Federal
Supreme Court has been issued in favor of a specifi c Brazilian
taxpayer with similar tax credits, the legality and constitutional-
ity of the IPI “presumed” credits is currently being revisited by
the Brazilian Federal Supreme Court. It is not certain when a
fi nal and defi nitive ruling will be issued. At September 30, 2006,
these amounts totaled approximately $39,017 and are included
in other long-term liabilities in the Consolidated Balance Sheets,
however, ultimate resolution of this matter by the Brazilian
Supreme Court could result in a liability less than or in excess of
amounts accrued.
None of the goodwill acquired in this transaction is deduct-
ible for tax purposes. See also Note 6, Intangible Assets, for addi-
tional information on the intangible assets acquired in the
Microlite acquisition.
Acquisition of Ningbo
On March 31, 2004, the Company acquired an 85% equity
interest in Ningbo. In July 2005, the Company purchased the
remaining 15% equity interest for approximately $2,900.
Ningbo, founded in 1995, produces alkaline and zinc carbon bat-
teries for retail, OEM, and private label customers. The fi nancial
results of the Ningbo acquisition are reported as part of the
Europe/ROW business segment.
The aggregate purchase price for the 85% interest in Ningbo
was approximately $17,000, which includes approximately $600
of direct acquisition related expenditures, plus approximately
$14,000 of assumed debt. Cash acquired totaled approximately
$5,500. The following table summarizes the fair value of the assets
acquired and liabilities assumed as of the date of the acquisition.
2006 Form 10-K Annual Report
Spectrum Brands, Inc.