Rayovac 2004 Annual Report Download - page 98

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RAYOVAC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
The total cash paid for Microlite was approximately $30,000, which includes approximately $21,100 in
purchase price, acquisition related expenditures of approximately $1,900, plus approximately $8,000 of assumed
debt. Cash acquired and included in current assets below totaled approximately $200. Prepaid contingent
consideration totaling $7,000 (recorded in Prepaid expenses and other in the Consolidated Balance Sheet as of
September 30, 2004) is included in the $30,000 cash paid. This consideration will be earned by the seller,
Tabriza, upon the attainment by Microlite of certain earnings targets to be achieved through June 30, 2005. The
Company is currently finalizing the purchase price allocation, which may impact the Company’s estimates of the
net assets acquired in the transaction.
As of May 28, 2004
Current assets ............................................... $15,000
Property, plant, and equipment .................................. 18,000
Intangible assets ............................................. —
Goodwill ................................................... 43,000
Other assets ................................................. 4,000
Total assets acquired ...................................... 80,000
Current liabilities ............................................. 10,000
Short-term debt .............................................. 8,000
Long-term liabilities .......................................... 32,000
Total liabilities assumed ................................... 50,000
Net assets acquired ........................................... $30,000
Less: Cash acquired ....................................... (200)
Payments for acquisitions ...................................... $29,800
Of the $43,000 of goodwill, a portion is expected to be deductible for tax purposes. The amount deductible
is not available at the time of these filings and will be available upon the completion of a third-party valuation.
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 “IPI taxes”. Although a
previous ruling by the Brazilian Federal Supreme Court has been issued in favor of a specific Brazilian taxpayer
with similar tax credits, the legality and constitutionality of the IPI “presumed” credits is currently being
revisited by the Brazilian Federal Supreme Court and a final and definitive ruling is expected by early 2005.
The Company has fully provided for all IPI taxes that may be due in the event of an adverse ruling by the
Brazilian Federal Supreme Court. At September 30, 2004, these amounts totaled $26,164 and are included in
Other liabilities in the Consolidated Balance Sheets.
On March 31, 2004, the Company acquired an 85 percent equity interest in Ningbo. The remaining 15
percent equity interest will continue to be held by Ningbo Baowang Investment Company and the founder/
general manager of Ningbo. Ningbo, founded in 1995, produces alkaline and zinc carbon batteries for retail,
OEM, and private label customers.
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