Rayovac 2013 Annual Report Download - page 120

SPECTRUM BRANDS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(Amounts in thousands, except per share figures)
2013 totaled approximately $69,786, of which approximately $72,427 related to an increase in the valuation
allowance against U.S. net deferred tax assets, and approximately $2,641 related to a decrease in the valuation
allowance against foreign net deferred tax assets. As a result of the purchase of HHI, the Company reversed
$49,848 of U.S. valuation allowance during Fiscal 2013. The reversal was attributable to $49,848 of net deferred
tax liabilities recorded on the HHI acquisition date balance sheet that offset other U.S. net deferred tax assets. As
a result of the purchase of FURminator, the Company reversed $14,511 of U.S. valuation allowance during
Fiscal 2012. The reversal was attributable to $14,511 of net deferred tax liabilities recorded on the FURminator
acquisition date balance sheet that offset other U.S. net deferred tax assets. During Fiscal 2011, the Company
determined that a valuation allowance was required against deferred tax assets related to net operating losses in
Brazil, and thus recorded a $25,877 increase in the valuation allowance.
The total amount of unrecognized tax benefits on the Company’s Consolidated Statements of Financial
Position at September 30, 2013 and September 30, 2012 are $13,807 and $5,877, respectively. If recognized in
the future, $10,115 of unrecognized tax benefits will affect the effective tax rate, and $3,692 of unrecognized tax
benefits would create deferred tax assets against which the Company would have a full valuation allowance. The
Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of
September 30, 2013 and September 30, 2012 the Company had approximately $3,671 and $3,564, respectively,
of accrued interest and penalties related to uncertain tax positions. The impact related to interest and penalties on
the Consolidated Statement of Operations for Fiscal 2013 was a net increase to Income tax expense of $8. The
impact related to interest and penalties on the Consolidated Statement of Operations for Fiscal 2012 was a net
decrease to Income tax expense of $1,184. The impact related to interest and penalties on the Consolidated
Statement of Operations for Fiscal 2011 was a net decrease to Income tax expense of $1,422.
As of September 30, 2013, certain of the Company’s legal entities are undergoing income tax audits. The
Company cannot predict the ultimate outcome of the examinations; however, it is reasonably possible that during
the next 12 months some portion of previously unrecognized tax benefits could be recognized.
The following table summarizes the changes to the amount of unrecognized tax benefits for Fiscal 2013,
Fiscal 2012, and Fiscal 2011:
Unrecognized tax benefits at September 30, 2010 .......................... $12,808
Gross increase – tax positions in prior period ......................... 1,658
Gross decrease – tax positions in prior period ......................... (823)
Gross increase – tax positions in current period ....................... 596
Settlements .................................................... (1,850)
Lapse of statutes of limitations .................................... (3,376)
Unrecognized tax benefits at September 30, 2011 .......................... $ 9,013
Gross increase – tax positions in prior period ......................... 773
Gross decrease – tax positions in prior period ......................... (1,308)
Gross increase – tax positions in current period ....................... 776
Settlements .................................................... (1,737)
Lapse of statutes of limitations .................................... (1,640)
Unrecognized tax benefits at September 30, 2012 .......................... $ 5,877
Gross increase – tax positions in prior period ......................... 9,104
Gross decrease – tax positions in prior period ......................... (327)
Gross increase – tax positions in current period ....................... 516
Settlements .................................................... (15)
Lapse of statutes of limitations .................................... (1,348)
Unrecognized tax benefits at September 30, 2013 .......................... $13,807
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