Rayovac 2015 Annual Report Download - page 120
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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
including an experienced research team. The calculation of the purchase price and purchase price allocation is as
follows:
Purchase Price
(in millions)
Cash consideration .............................. $115.7
Purchase Price
Allocation
(in millions)
Inventories .................................... $ 16.3
Prepaid expenses and other current assets ............ 2.9
Property, plant and equipment, net .................. 58.3
Goodwill ...................................... 4.0
Intangible assets ................................ 39.6
Accounts payable and accrued liabilities ............. (2.7)
Other long term liabilities ......................... (2.7)
Net assets acquired .............................. $115.7
The purchase price allocation resulted in goodwill of $4.0 million which is not deductible for tax purposes.
Goodwill was allocated to the Global Pet Supplies segment. The values allocated to intangible assets and the
weighted average useful lives are as follows:
Carrying
Amount
Weighted Average
Useful Life (Years)
(in millions)
Tradenames ................................ $25.5 Indefinite
Technology ................................ 3.6 8
Customer relationships ....................... 10.5 15
Total intangibles acquired ..................... $39.6
The fair values were determined based upon a valuation and the estimates and assumptions used in such
valuation are subject to change, which could be significant, within the measurement period (up to one year from
the December 31, 2014 acquisition date). The Company performed a valuation of the acquired inventories,
property, plant and equipment, tradenames, technology and customer relationships. The following is a summary
of significant inputs to the valuation:
• Inventories—The replacement cost approach was applied to estimate the fair value of the raw materials
inventory. Work-in-process and finished goods inventory were valued at estimated selling price less the
sum of costs of disposal and a reasonable profit on the value added in the completion and disposal
effort.
• Property, plant and equipment—The market approach was used to estimate the fair value of land. The
direct cost approach was used to estimate the fair value of property, plant and equipment.
• Tradenames—The Company valued indefinite-lived trade names using an income approach, the relief
from royalty method. Under this method, the asset value was determined by estimating the hypothetical
royalties that would have to be paid if the trade names were not owned. Royalty rates were selected
106