Rayovac 2015 Annual Report Download - page 123

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SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
which are estimated using annual expected growth rates of 2.5% to 7.1%. The Company assumed a
customer retention rate of approximately 90%, which was supported by historical retention rates.
Income taxes were estimated at 38% and amounts were discounted using a rate of 20%.
The Tell Manufacturing acquisition was not considered individually significant to the consolidated results of
the Company and therefore pro forma results are not presented.
Liquid Fence
On January 2, 2014, the Company completed the acquisition of Liquid Fence, a producer of animal
repellents. The results of Liquid Fence’s operations since January 2, 2014 are included in the Company’s
Consolidated Statements of Operations and as part of the Home and Garden segment for the years ended
September 30, 2015 and 2014.
The Company has recorded an allocation of the purchase price to the Company’s tangible and identifiable
intangible assets acquired and liabilities assumed based on their fair values as of the January 2, 2014 acquisition
date. The excess of the purchase price over the fair value of the net tangible assets and identifiable intangible
assets was recorded as goodwill, which includes value associated with the assembled workforce, including an
experienced research team. The calculation of the purchase price and purchase price allocation is as follows:
Purchase Price
(in millions)
Cash consideration .............................. $24.8
Promissory note ................................ 9.5
Contingent consideration ......................... 1.5
Total purchase price ............................. $35.8
Purchase Price
Allocation
(in millions)
Cash ......................................... $ 0.1
Accounts receivable ............................. 1.1
Inventories .................................... 2.1
Property, plant and equipment, net .................. 0.1
Goodwill ...................................... 7.1
Intangible assets ................................ 26.9
Accounts payable and accrued liabilities ............. (1.6)
Total assets acquired ............................. $35.8
The purchase price included a promissory note to sellers and contingent consideration related to additional
payments that may be made to the selling company subsequent to the acquisition date. The promissory note was
due in four semi-annual installments over 24 months from the close of the transaction, and was paid in full during
the year ended September 30, 2015. The contingent consideration is calculated based upon the probability
weighted present value of expected payments based upon the achievement of specific revenue milestones through
both January 1, 2015 and January 1, 2016. A contingent liability of $1.5 million was also recognized for the
projected payments. The purchase price allocation resulted in goodwill of $7.1 million which is deductible for tax
109