Rayovac 2013 Annual Report Download - page 141

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SPECTRUM BRANDS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(Amounts in thousands, except per share figures)
• The Company valued the non-controlling interest in Shaser, a private company, by applying both
income and market approaches. Under these methods, the non-controlling value was determined by
using a discounted cash flow method, a guideline companies method, and a recent transaction
approach. In estimating the fair value of the non-controlling interest, key assumptions include (i) cash
flow projections based on market participant data and estimates by Company management, with Net
sales estimated to grow at a terminal growth rate of 3% annually, income taxes estimated at 35%, and
amounts discounted using a rate of 17%, (ii) financial multiples of companies deemed to be similar to
Shaser, and (iii) adjustments because of lack of control or lack of marketability that market participants
would consider when estimating the fair value of the non-controlling interest in Shaser. The non-
controlling interest was valued at $39,000 under this approach.
• The Company, in connection with valuing the non-controlling interest in Shaser, also valued the Call
Option. In addition to the valuation methods and key assumptions discussed above, the Company
compared the forecasted revenue and EBITDA multiples, as defined, associated with the Call Option to
current guideline companies. The Call Option was determined to have an immaterial value under this
approach.
(16) NEW ACCOUNTING PRONOUNCEMENTS
Presentation of Comprehensive Income
In June 2011, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance which
requires entities to present net income and other comprehensive income in either a single continuous statement or
in two separate, but consecutive, statements of net income and other comprehensive income. The guidance
requiring disclosure of the income statement location where gains and losses reclassified out of comprehensive
income are included was deferred in December 2011. In November 2012, the FASB clarified its position on the
reclassification disclosures, allowing disclosure of reclassification adjustments on the face of the comprehensive
income statement or in the notes to the financial statements. The accounting guidance requiring a comprehensive
income statement is now effective for the Company. The Company has implemented all required disclosures.
Presentation of Unrecognized Tax Benefit
In July 2013, the FASB issued new accounting guidance which requires entities to present unrecognized tax
benefits as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax
credit carryforward, except to the extent the net operating loss carryforwards or tax credit carryforwards are not
available to be used at the reporting date to settle additional income taxes, and the entity does not intend to use
them for this purpose. The new accounting guidance is consistent with how the Company has historically
accounted for unrecognized tax benefits in its Consolidated Statements of Financial Position, and therefore, the
Company does not expect the adoption of this guidance to have a significant impact on its consolidated financial
statements.
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