Rayovac 2011 Annual Report Download - page 133

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SPECTRUM BRANDS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(In thousands, except per share amounts)
$42,957, of which approximately $39,014 related to an increase in the valuation allowance against U.S. net deferred
tax assets, and approximately $3,942 related to an increase in the valuation allowance against foreign net deferred
tax assets. During Fiscal 2011, the Company determined that a valuation allowance is required against deferred tax
assets related to net operating losses in Brazil, and thus recorded a $25,877 charge to increase the valuation
allowance. The Company also removed net operating losses and the corresponding valuation allowances in those
reorganizations where the net operating losses could not be carried over to a new entity.
The total amount of unrecognized tax benefits on the Successor Company’s Consolidated Statements of
Financial Position at September 30, 2011 and September 30, 2010 are $9,013 and $12,808, respectively. If
recognized in the future, the entire amount of unrecognized tax benefits will affect the effective tax rate. The
Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The
Successor Company as of September 30, 2011 and September 30, 2010 had approximately $4,682 and $5,860,
respectively, of accrued interest and penalties related to uncertain tax positions. The impact related to interest and
penalties on the Consolidated Statement of Operations for Fiscal 2011 was a net decrease to income tax expense
of $(1,422). 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. 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. 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, 2011, certain of the Company’s legal entities are undergoing income 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 Company for
Fiscal 2011, Fiscal 2010, and Fiscal 2009:
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
Gross increase – tax positions in prior period ......................... 1,658
Gross decrease – tax positions in prior period ......................... (823)
Gross increase – tax positions in current period ....................... 596
Settlements .................................................... (1,850)
Lapse of statutes of limitations .................................... (3,376)
Unrecognized tax benefits at September 30, 2011 (Successor Company) ........ $ 9,013
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