Rayovac 2011 Annual Report Download - page 151

SPECTRUM BRANDS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(In thousands, except per share amounts)
(1) Number of shares calculated based upon conversion formula, as defined in the Merger Agreement, using
balances as of June 16, 2010.
(2) The fair value of 271 shares of unvested restricted stock units as they relate to post combination services
will be recorded as operating expense over the remaining service period and were assumed to have no fair
value for the purchase price.
Purchase Price Allocation
The total purchase price for Russell Hobbs was allocated to the net tangible and intangible assets based upon
their fair values at June 16, 2010 as set forth below. The excess of the purchase price over the net tangible assets
and intangible assets was recorded as goodwill. The measurement period for the Merger has closed, during which
no adjustments were made to the preliminary purchase price allocation. The final purchase price allocation for
Russell Hobbs is as follows:
Current assets ............................................................. $307,809
Property, plant and equipment ................................................ 15,150
Intangible assets ........................................................... 363,327
Goodwill(A) .............................................................. 120,079
Other assets .............................................................. 15,752
Total assets acquired ....................................................... $822,117
Current liabilities .......................................................... 142,046
Total debt ................................................................ 18,970
Long-term liabilities ........................................................ 63,522
Total liabilities assumed ..................................................... $224,538
Net assets acquired ......................................................... $597,579
(A) Consists of $25,426 of tax deductible Goodwill.
Pre-Acquisition Contingencies Assumed
The Company has evaluated pre-acquisition contingencies relating to Russell Hobbs that existed as of the
acquisition date. Based on the evaluation, the Company has determined that certain pre-acquisition contingencies
are probable in nature and estimable as of the acquisition date. Accordingly, the Company has recorded its best
estimates for these contingencies as part of the purchase price allocation for Russell Hobbs. As the measurement
period has closed, adjustments to pre-acquisition contingency amounts are reflected in the Company’s results of
operations.
ASC 805 requires, among other things, that most assets acquired and liabilities assumed be recognized at
their fair values as of the acquisition date. Accordingly, the Company performed a valuation of the assets and
liabilities of Russell Hobbs at June 16, 2010. Significant adjustments as a result of the purchase price allocation
are summarized as follows:
• Inventories—An adjustment of $1,721 was recorded to adjust inventory to fair value. Finished goods
were valued at estimated selling prices less the sum of costs of disposal and a reasonable profit
allowance for the selling effort.
• Deferred tax liabilities, net—An adjustment of $43,086 was recorded to adjust deferred taxes for the
fair value allocations made in accounting for the purchase.
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