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Goodwill and Intangibles | 6 Months Ended
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Apr. 01, 2012
Goodwill and Intangibles [Abstract] |
Goodwill and Intangibles | (6) Goodwill and Intangibles Consumer Products and Other A summary of the changes in the carrying amounts of goodwill and intangible assets of the Consumer Products Segment is as follows:
|  |  |  |  | Intangible Assets |
|  | Goodwill |  |  | Indefinite Lived |  |  | Amortizable |  |  | Total |
Balance at September 30, 2011 |  | $ | 610,338 |  |  | $ | 826,795 |  |  | $ | 857,114 |  |  | $ | 1,683,909 |
Business acquisitions (Note 14) |  |  | 85,875 |  |  |  | 22,000 |  |  |  | 82,118 |  |  |  | 104,118 |
Amortization during period |  |  | — |  |  |  | — |  |  |  | (30,449 | ) |  |  | (30,449 | )
Effect of translation |  |  | 557 |  |  |  | (1,472 | ) |  |  | (1,102 | ) |  |  | (2,574 | )
Balance at April 1, 2012 |  | $ | 696,770 |  |  | $ | 847,323 |  |  | $ | 907,681 |  |  | $ | 1,755,004 |
Intangible assets are recorded at cost or at fair value if acquired in a purchase business combination. Customer relationships, proprietary technology intangibles and certain trade names are amortized, using the straight-line method, over their estimated useful lives of approximately four to twenty years. Excess of cost over fair value of net assets acquired (goodwill) and indefinite lived trade name intangibles are not amortized. Goodwill and indefinite lived intangible assets are tested for impairment at least annually at Spectrum Brands’ August financial period end, and more frequently if an event or circumstance indicates that an impairment loss may have been incurred between annual impairment tests. Intangible assets subject to amortization include customer relationships, certain trade names and proprietary technology, which are summarized as follows:
|  | April 1, 2012 |  |  | September 30, 2011 |  |  |  |
|  | Cost |  |  | Accumulated Amortization |  |  | Net |  |  | Cost |  |  | Accumulated Amortization |  |  | Net |  |  | Amortizable Life |
Customer relationships |  | $ | 800,612 |  |  | $ | 93,011 |  |  | $ | 707,601 |  |  | $ | 738,937 |  |  | $ | 73,373 |  |  | $ | 665,564 |  |  |  | 15-20 years |
Trade names |  |  | 149,700 |  |  |  | 22,599 |  |  |  | 127,101 |  |  |  | 149,700 |  |  |  | 16,320 |  |  |  | 133,380 |  |  |  | 4-12 years |
Technology assets |  |  | 90,924 |  |  |  | 17,945 |  |  |  | 72,979 |  |  |  | 71,805 |  |  |  | 13,635 |  |  |  | 58,170 |  |  |  | 4-17 years |
|  | $ | 1,041,236 |  |  | $ | 133,555 |  |  | $ | 907,681 |  |  | $ | 960,442 |  |  | $ | 103,328 |  |  | $ | 857,114 |  |  |  |  |
Amortization expense for the three and six month periods ended April 1, 2012 and April 3, 2011 is as follows:
|  | Three Months |  |  | Six Months |
|  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011 |
Customer relationships |  | $ | 10,269 |  |  | $ | 9,526 |  |  | $ | 19,860 |  |  | $ | 19,058 |
Trade names |  |  | 3,140 |  |  |  | 3,140 |  |  |  | 6,279 |  |  |  | 6,279 |
Technology assets |  |  | 2,412 |  |  |  | 1,649 |  |  |  | 4,310 |  |  |  | 3,297 |
|  |  | $15,821 |  |  |  | $14,315 |  |  |  | $30,449 |  |  |  | $28,634 |
The Company estimates annual amortization expense of intangible assets of the Consumer Products segment for the next five fiscal years will approximate $63,000 per year. Insurance and Financial Services Intangible assets of the Company’s insurance segment include VOBA and DAC. Information regarding VOBA and DAC, including deferred sales inducements (“DSI”), is as follows:
|  | VOBA |  |  | DAC |  |  | Total |
Balance at September 30, 2011 |  | $ | 419,060 |  |  | $ | 38,107 |  |  | $ | 457,167 |
Deferrals |  |  | — |  |  |  | 97,237 |  |  |  | 97,237 |
Less: Components of amortization: |  |  |  |  |  |  |  |  |  |  |  |
Unlocking |  |  | (112 | ) |  |  | 590 |  |  |  | 478 |
Interest |  |  | 14,269 |  |  |  | 960 |  |  |  | 15,229 |
Periodic amortization |  |  | (91,680 | ) |  |  | (9,126 | ) |  |  | (100,806 | )
Add: Adjustment for change in unrealized investment losses (gains), net |  |  | (24,303 | ) |  |  | (6,367 | ) |  |  | (30,670 | )
Balance at April 1, 2012 |  | $ | 317,234 |  |  | $ | 121,401 |  |  | $ | 438,635 |
Amortization of VOBA and DAC is based on the amount of gross margins or profits recognized, including investment gains and losses. The adjustment for unrealized net investment gains represents the amount of VOBA and DAC that would have been amortized if such unrealized gains and losses had been recognized. This is referred to as the “shadow adjustments” as the additional amortization is reflected in other comprehensive income rather than the statement of operations. As of April 1, 2012 and September 30, 2011, the VOBA balance included cumulative adjustments for net unrealized investment gains of $(194,420) and $(170,117), respectively, and the DAC balances included cumulative adjustments for net unrealized investment gains of $(8,513) and $(2,146), respectively. The above DAC balances include $7,402 and $5,048 of DSI, net of shadow adjustments, as of April 1, 2012 and September 30, 2011, respectively. The weighted average amortization period for VOBA and DAC are approximately 5.0 and 6.0 years, respectively. Estimated amortization expense for VOBA and DAC in future fiscal periods is as follows:
|  | Estimated Amortization Expense |
For the fiscal periods ending September 30, |  | VOBA |  |  | DAC |
2012 |  | $ | 30,748 |  |  | $ | 7,537 |
2013 |  |  | 72,387 |  |  |  | 13,360 |
2014 |  |  | 67,381 |  |  |  | 14,755 |
2015 |  |  | 58,781 |  |  |  | 14,090 |
2016 |  |  | 52,067 |  |  |  | 13,205 |
Thereafter |  |  | 230,290 |  |  |  | 66,967 |

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- Definition The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6905597&loc=d3e13816-109267 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6905858&loc=d3e16265-109275 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 142 -Paragraph 42, 43, 44, 45, 46, 47 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6905858&loc=d3e16373-109275 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6905858&loc=d3e16323-109275 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6905597&loc=d3e13854-109267 + Details
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