Rayovac 2010 Annual Report Download - page 113

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SPECTRUM BRANDS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
The recent transactions of companies in similar industries analysis identified transactions of similar
companies giving consideration to lines of business, business risk, scale and capitalization and leverage. The
analysis considered the business, financial and market environment for which the transactions took place,
circumstances surrounding the transaction including the financial position of the buyers and the perceived
synergies and benefits that the buyers could obtain from the transaction. This analysis involved the determination
of historical acquisition EBITDA multiples by examining public merger and acquisition transactions. A range of
valuation multiples was then identified and applied to historical EBITDA by segment to determine an estimate of
reorganization values. The multiple ranges used by segment were as follows: (i) Global Batteries and Personal
Care used a range of 6.5x-7.5x; (ii) Global Pet Supplies used a range of 9.5x-10.5x; and (iii) the Home and
Garden Business used a range of 8.0x-9.0x. These multiples were based on Fiscal 2009 estimated EBITDA
adjusted for certain non-recurring initiatives, as mentioned above.
Fresh-start adjustments reflect the allocation of fair value to the Successor Company’s long-lived assets and
the present value of liabilities to be paid as calculated by the Company.
In applying fresh-start reporting, the Company followed these principles:
• The reorganization value of the entity was allocated to the entity’s assets in conformity with the
procedures specified by SFAS No. 141, “Business Combinations” (“SFAS 141”). The reorganization
value exceeded the sum of the amounts assigned to assets and liabilities. This excess was recorded as
Successor Company goodwill as of August 30, 2009.
• Each liability existing as of the fresh-start reporting date, other than deferred taxes, has been stated at
the present value of the amounts to be paid, determined at appropriate risk adjusted interest rates.
• Deferred taxes were reported in conformity with applicable income tax accounting standards,
principally ASC Topic 740: “Income Taxes,” formerly SFAS No. 109, “Accounting for Income Taxes”
(“ASC 740”). Deferred tax assets and liabilities have been recognized for differences between the
assigned values and the tax basis of the recognized assets and liabilities.
• Adjustment of all of the property, plant and equipment assets to fair value and eliminating all of the
accumulated depreciation.
• Adjustment of the Company’s pension plans projected benefit obligation by recognition of all
previously unamortized actuarial gains and losses.
103