Rayovac 2010 Annual Report Download - page 152

SPECTRUM BRANDS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
tax positions in income tax expense. The Successor Company as of September 30, 2009 and September 30, 2010
had approximately $3,021 and $5,860, respectively, of accrued interest and penalties related to uncertain tax
positions. The impact related to interest and penalties on the Consolidated Statements of Operations for the
period from October 1, 2008 through August 30, 2009 (Predecessor Company) and the period from August 31,
2009 through September 30, 2009 (Successor Company) was not material. The impact related to interest and
penalties on the Consolidated Statement of Operations for Fiscal 2010 was a net increase to income tax expense
of $1,527. In connection with the Merger, the Company recorded additional unrecognized tax benefits of
approximately $3,299 as part of purchase accounting.
As of September 30, 2010, certain of the Company’s Canadian, German, and Hong Kong legal entities are
undergoing 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 of the Predecessor
Company for the period from October 1, 2008 through August 30, 2009 and the Successor Company for the
period from August 31, 2009 through September 30, 2009 and Fiscal 2010:
Unrecognized tax benefits at September 30, 2008 (Predecessor Company) ...... $ 6,755
Gross increase – tax positions in prior period ......................... 26
Gross decrease – tax positions in prior period ......................... (11)
Gross increase – tax positions in current period ....................... 1,673
Lapse of statutes of limitations .................................... (807)
Unrecognized tax benefits at August 30, 2009 (Predecessor Company) ......... $ 7,636
Gross decrease – tax positions in prior period ......................... (15)
Gross increase – tax positions in current period ....................... 174
Lapse of statutes of limitations .................................... (30)
Unrecognized tax benefits at September 30, 2009 (Successor Company) ........ $ 7,765
Russell Hobbs acquired unrecognized tax benefits ..................... 3,251
Gross decrease – tax positions in prior period ......................... (904)
Gross increase – tax positions in current period ....................... 3,390
Lapse of statutes of limitations .................................... (694)
Unrecognized tax benefits at September 30, 2010 (Successor Company) ........ $12,808
The Company files income tax returns in the U.S. federal jurisdiction and various state, local and foreign
jurisdictions and is subject to ongoing examination by the various taxing authorities. The Company’s major
taxing jurisdictions are the U.S., United Kingdom, and Germany. In the U.S., federal tax filings for years prior to
and including the Company’s fiscal year ended September 30, 2006 are closed. However, the federal net
operating loss carryforwards from the Company’s fiscal years ended September 30, 2006 and prior are subject to
Internal Revenue Service (“IRS”) examination until the year that such net operating loss carryforwards are
utilized and those years are closed for audit. The Company’s fiscal years ended September 30, 2007, 2008 and
2009 remain open to examination by the IRS. Filings in various U.S. state and local jurisdictions are also subject
to audit and to date no significant audit matters have arisen.
In the U.S., federal tax filings for years prior to and including Russell Hobbs year ended June 30, 2008 are
closed. However, the federal net operating loss carryforward for Russell Hobbs fiscal year ended June 30, 2008 is
subject to examination by the IRS until the year that such net operating losses are utilized and those years are
closed for audit.
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