Rayovac 2009 Annual Report Download - page 154

Table of Contents
Index to Financial Statements SPECTRUM BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
consideration of several factors including industry practices, the existence of licensing agreements (licensing in and licensing out), and
importance of the technology and profit levels, among other considerations. Royalty rates used in the determination of the fair values of
technologies ranged from 7%−8% of expected net sales related to the respective technology. The Company anticipates using these technologies
through the legal life of the underlying patent and therefore the expected life of these technologies was equal to the remaining legal life of the
underlying patents ranging from 8 to 17 years. In estimating the fair value of the technologies, nets sales were estimated to grow at a rate of
0%−14% annually. Income taxes were estimated at 35% and amounts were discounted using rates between 12%−13%. The technology assets
were valued at $63,500 under this approach.
(p) The fresh−start adjustment of $17,957 eliminates the debt issuance costs related to assumed debt, that is, the (senior secured term credit facility).
(q) The Predecessor Company’s accumulated deficit and accumulated other comprehensive income is eliminated in conjunction with the adoption of
fresh−start reporting. The Predecessor Company recognized a gain of $1,087,566 related to the fresh−start reporting adjustments as follows:
Gain on fresh−start
reporting
adjustments
Establishment of Successor Company’s goodwill $ 528,060
Elimination of Predecessor Company’s goodwill (238,905)
Establishment of Successor Company’s other intangible assets 1,459,500
Elimination of Predecessor Company’s other intangible assets (677,050)
Debt fair value adjustments 79,658
Elimination of debt issuance costs (17,957)
Property, plant and equipment fair value adjustment 34,699
Deferred tax adjustment (104,881)
Inventory fair value adjustment 48,762
Employee benefit obligations fair value adjustment (18,712)
Other fair value adjustments (5,608)
$ 1,087,566
(3) Significant Accounting Policies and Practices
(a) Principles of Consolidation and Fiscal Year End
The consolidated financial statements include the financial statements of Spectrum Brands, Inc. and its subsidiaries and are prepared in accordance with
GAAP. All intercompany transactions have been eliminated. The Company’s fiscal year ends September 30. References herein to Fiscal 2009, 2008 and
2007 refer to the fiscal years ended September 30, 2009, 2008 and 2007, respectively.
(b) Revenue Recognition
The Company recognizes revenue from product sales generally upon delivery to the customer or the shipping point in situations where the customer picks
up the product or where delivery terms so stipulate. This represents the point at which title and all risks and rewards of ownership of the product are passed,
provided that: there are
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