Rayovac 2013 Annual Report Download - page 136

Download and view the complete annual report

Please find page 136 of the 2013 Rayovac annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 154

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154

SPECTRUM BRANDS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(Amounts in thousands, except per share figures)
Since the preliminary valuation on December 30, 2012, the Company recorded $45,649 to goodwill related
to the acquisition of TLM Taiwan on April 8, 2013, and recorded adjustments to the preliminary valuation of
assets and liabilities, excluding TLM Taiwan, resulting in a net increase to goodwill of $10,088. The preliminary
goodwill increased $9,791 as a result of recording certain state and foreign valuation allowances against deferred
tax assets, $2,861 resulting from a reduction in certain property, plant and equipment asset values and $7,022
from changes in working capital and other asset and liability accounts based on new information obtained by the
Company. The preliminary goodwill decreased $7,669 as a result of the final working capital adjustment related
to the December 17, 2012 close and $2,000 as a result of new information related to intangible assets which
increased their value. The changes in estimates were the result of additional accounting information provided by
Stanley Black & Decker during the period, as well as items identified by management. The Company believes
that the information gathered to date provides a reasonable basis for estimating the fair values of assets acquired
and liabilities assumed, but the Company is waiting for additional information necessary to finalize those fair
values. Thus, the provisional measurements of fair value set forth above are subject to change further. The
Company expects to complete the purchase accounting process as soon as practicable but no later than one year
from the acquisition date.
Preliminary Pre-Acquisition Contingencies Assumed
The Company has evaluated and continues to evaluate pre-acquisition contingencies relating to the HHI
Business that existed as of the acquisition date. Based on the evaluation to date, the Company has preliminarily
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 preliminary
valuation of the assets and liabilities acquired for the HHI Business. The Company continues to gather
information relating to all pre-acquisition contingencies that it has assumed from the HHI Business. Any changes
to the pre-acquisition contingency amounts recorded during the measurement period will be included in the final
valuation and related amounts recognized. Subsequent to the end of the measurement period, any adjustments to
pre-acquisition contingency amounts will be reflected in the Company’s results of operations.
Preliminary Valuation Adjustments
The Company performed a preliminary valuation of the assets and liabilities of the HHI Business, excluding
TLM Taiwan, on December 17, 2012. The Company performed a preliminary valuation of the assets and
liabilities of TLM Taiwan on April 8, 2013. Significant adjustments as a result of the preliminary valuation and
the bases for their determination are summarized as follows:
• Inventories- An adjustment of $31,000 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.
• Property, plant and equipment- An adjustment of $10,007 was recorded to adjust the net book value of
property, plant and equipment to fair value giving consideration to the highest and best use of the
assets. The valuation of the Company’s property, plant and equipment was based on the cost approach.
• Certain indefinite-lived intangible assets were valued using a relief from royalty methodology.
Customer relationships and certain definite-lived intangible assets were valued using a multi-period
excess earnings method. The total fair value of indefinite and definite lived intangibles was $489,100.
A summary of the significant key inputs is as follows:
• The Company valued customer relationships using the income approach, specifically the multi-
period excess earnings method. In determining the fair value of the customer relationships, the
126