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Acquisitions | 9 Months Ended
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Jun. 30, 2013
Business Combinations [Abstract] |
Acquisitions | Acquisitions Spectrum Brands’ Acquisition of Stanley Black & Decker’s Hardware and Home Improvement Business On December 17, 2012, Spectrum Brands completed the cash acquisition of the HHI Business from Stanley Black & Decker. A portion of the HHI Business, consisting of the purchase of certain assets of TLM Taiwan closed on April 8, 2013. The following table summarizes the preliminary consideration paid for the HHI Business:
Negotiated sales price, excluding TLM Taiwan |  | $ | 1,300.0 |
Working capital and other adjustments at December 17, 2012 close |  | (10.7 | )
Final working capital adjustment |  | (7.7 | )
Final purchase price, excluding TLM Taiwan |  | 1,281.6 |
Negotiated sales price, TLM Taiwan |  | 100.0 |
Working capital and other adjustments at April 8, 2013 close |  | (6.5 | )
Total HHI Business purchase price |  | $ | 1,375.1 |
The HHI Business is a major manufacturer and supplier of residential locksets, residential builders' hardware and faucets with a portfolio of recognized brand names, including Kwikset, Weiser, Baldwin, National Hardware, Stanley, FANAL and Pfister, as well as patented technologies such as the SmartKey, a re-keyable lockset technology, and Smart Code Home Connect. Customers of the HHI Business include retailers, non-retail distributors and homebuilders. Headquartered in Lake Forest, California, the HHI Business has a global sales force and operates manufacturing and distribution facilities in the U.S., Canada, Mexico and Asia. The results of HHI Business operations since December 17, 2012, excluding TLM Taiwan, are included in the Company's Condensed Consolidated Statements of Operations. The results of TLM Taiwan operations since April 8, 2013 are included in the Company's Condensed Consolidated Statements of Operations. Preliminary Valuation of Assets and Liabilities The preliminary fair values of net tangible and intangible assets acquired and liabilities assumed in connection with the purchase of the HHI Business, excluding TLM Taiwan, have been recognized in the Condensed Consolidated Balance Sheets based upon their preliminary values at December 17, 2012. The preliminary fair values of the net tangible and intangible assets acquired and liabilities assumed in connection with the TLM Taiwan purchase have been recognized in the Condensed Consolidated Balance Sheets based upon their preliminary values at April 8, 2013. The excess of the purchase price over the preliminary fair values of the net tangible and intangible assets was recorded as goodwill, and includes value associated with greater product diversity, stronger relationships with core retail partners, cross-selling opportunities in all channels and a new platform for potential future global growth using the Spectrum Brands' existing international infrastructure, most notably in Europe. The majority of goodwill recorded is not expected to be deductible for income tax purposes. The preliminary fair values recorded were based upon a preliminary valuation and the estimates and assumptions used in such valuation are subject to change, which could be significant, within the measurement period (up to one year from the acquisition date). The primary areas of the preliminary valuation that are not yet finalized relate to the fair values of certain tangible assets and liabilities acquired, certain legal matters, amounts for income taxes including deferred tax accounts, amounts for uncertain tax positions, and net operating loss carryforwards inclusive of associated limitations and valuation allowance, the determination of identifiable intangible assets and the final amount of residual goodwill. Additionally, finalized fair values associated with deferred tax accounts could have a material effect on Spectrum Brands' estimated reversal of its consolidated U.S. valuation allowances recognized during the measurement period. See Note 14, Income Taxes, for further information. Spectrum Brands expects to continue to obtain information to assist it in determining the fair values of the net assets acquired at the acquisition date during the measurement period. The preliminary valuation of the assets acquired and liabilities assumed for the HHI Business, including a reconciliation to the preliminary valuation reported as of December 30, 2012, is as follows:
| HHI Business Preliminary Valuation |  | TLM Taiwan Preliminary Valuation |  |  |  | Preliminary Valuation
| December 30, 2012 |  | June 30, 2013 |  | Adjustments/reclassifications |  | June 30, 2013
Cash | $ | 17.4 |  |  | $ | 0.8 |  |  | $ | 5.8 |  |  | $ | 24.0 |
Accounts receivable | 104.6 |  |  | — |  |  | 4.4 |  |  | 109.0 |
Inventory | 207.2 |  |  | 1.1 |  |  | (2.4 | ) |  | 205.9 |
Prepaid expenses and other | 13.3 |  |  | 2.1 |  |  | (4.2 | ) |  | 11.2 |
Property, plant and equipment | 104.5 |  |  | 36.8 |  |  | (5.1 | ) |  | 136.2 |
Intangible assets | 470.0 |  |  | 17.1 |  |  | — |  |  | 487.1 |
Other long-term assets | 3.1 |  |  | 0.1 |  |  | — |  |  | 3.2 |
Total assets acquired | 920.1 |  |  | 58.0 |  |  | (1.5 | ) |  | 976.6 |
Accounts payable | 130.1 |  |  | — |  |  | 8.0 |  |  | 138.1 |
Deferred tax liability - current | 7.1 |  |  | — |  |  | — |  |  | 7.1 |
Accrued liabilities | 37.5 |  |  | 0.2 |  |  | 0.1 |  |  | 37.8 |
Deferred tax liability - long-term | 104.7 |  |  | 1.9 |  |  | 11.2 |  |  | 117.8 |
Other long-term liabilities | 11.2 |  |  | 8.1 |  |  | (2.2 | ) |  | 17.1 |
Total liabilities assumed | 290.6 |  |  | 10.2 |  |  | 17.1 |  |  | 317.9 |
Total identifiable net assets | 629.5 |  |  | 47.8 |  |  | (18.6 | ) |  | 658.7 |
Non-controlling interests | (2.2 | ) |  | — |  |  | (2.2 | ) |  | (4.4 | )
Goodwill | 662.1 |  |  | 45.6 |  |  | 13.1 |  |  | 720.8 |
Total net assets acquired | $ | 1,289.4 |  |  | $ | 93.4 |  |  | $ | (7.7 | ) |  | $ | 1,375.1 |
Since the preliminary valuation on December 30, 2012, Spectrum Brands recorded $45.6 of 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 $13.1. The preliminary goodwill increased $11.2 as a result of recording certain state and foreign valuation allowances against deferred tax assets, a decrease of $5.1 resulting from a reduction in certain property, plant and equipment asset values and a $2.4 decrease from a reduction in inventory asset values. The changes in estimates were the result of additional accounting information provided by Stanley Black & Decker during the period. Spectrum Brands believes that the information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but it 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. Spectrum Brands 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 Spectrum Brands 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, Spectrum Brands has preliminarily determined that certain pre-acquisition contingencies are probable in nature and estimable as of the acquisition date. Accordingly, Spectrum Brands has recorded its best estimates for these contingencies as part of the preliminary valuation of the assets and liabilities acquired for the HHI Business. Spectrum Brands 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 Condensed Consolidated Statements of Operations. Preliminary Valuation Adjustments Spectrum Brands performed a preliminary valuation of the assets and liabilities of the HHI Business, excluding TLM Taiwan, at December 17, 2012. Significant adjustments as a result of the valuation and the bases for their determination are summarized as follows:
• | Inventories - An adjustment of $31.0 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, net - An adjustment of $4.0 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 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 $487.1. A summary of the significant key inputs is as follows:
• | Spectrum Brands valued customer relationships using the income approach, specifically the multi-period excess earnings method. In determining the fair value of the customer relationships, the multi-period excess earnings approach values the intangible asset at the present value of the incremental after-tax cash flows attributable only to the customer relationship after deducting contributory asset charges. The incremental after-tax cash flows attributable to the subject intangible asset are then discounted to their present value. Only expected sales from current customers were used, which included an expected growth rate of 3%. Spectrum Brands assumed a customer retention rate of approximately 95%, which was supported by historical retention rates. Income taxes were estimated at 17% - 35% and amounts were discounted using a rate of 12%. The customer relationships were valued at $90.0 under this approach and will be amortized over 20 years.
• | Spectrum Brands valued indefinite lived trade names and trademarks using the income approach, specifically the relief from royalty method. Under this method, the asset value was determined by estimating the hypothetical royalties that would have to be paid if the trade name was not owned. Royalty rates were selected based on consideration of several factors, including prior transactions of the HHI Business, related trademarks and trade names, other similar trademark licensing and transaction agreements and the relative profitability and perceived contribution of the trademarks and trade names. Royalty rates used in the determination of the fair values of trade names and trademarks ranged from 3.0% - 5.0% of expected net sales related to the respective trade names and trademarks. Spectrum Brands anticipates using the majority of the trade names and trademarks for an indefinite period as demonstrated by the sustained use of each subject trademark. In estimating the fair value of the trademarks and trade names, net sales for significant trade names and trademarks were estimated to grow at a rate of 2.5% - 5.0% annually with a terminal year growth rate of 2.5%. Income taxes were estimated at 35.0% and amounts were discounted using a rate of 12.0%. Trade name and trademarks were valued at $330.0 under this approach.
• | Spectrum Brands valued a definite lived trade name using the income approach, specifically the relief from royalty method. Under this method, the asset value was determined by estimating the hypothetical royalties that would have to be paid if the trade name was not owned. Royalty rates were selected based on consideration of several factors, including prior transactions of the HHI Business, related trademarks and trade names, other similar trademark licensing and transaction agreements and the relative profitability and perceived contribution of the trademarks and trade names. The royalty rate used in the determination of the fair values of trade name was 3.5% of expected net sales related to the respective trade name. Spectrum Brands assumed an 8 year useful life of the trade name. In estimating the fair value of the trade name, net sales for the trade name were estimated to grow at a rate of 2.5% - 5.0% annually. Income taxes were estimated at 17% - 35.0% and amounts were discounted using a rate of 12.0%. The trade name was valued at $4.1 under this approach.
• | Spectrum Brands valued a trade name license agreement using the income approach, specifically the relief from royalty method. Under this method, the asset value was determined by estimating the hypothetical royalties that would have to be paid if the trade name was not owned. Royalty rates were selected based on consideration of several factors, including prior transactions of the HHI Business, related trademarks and trade names, other similar trademark licensing and transaction agreements and the relative profitability and perceived contribution of the trademarks and trade names. The royalty rate used in the determination of the fair value of the trade name license agreement was 4.0% of expected net sales related to the respective trade name. In estimating the fair value of the trade name license agreement, net sales were estimated to grow at a rate of 2.5% - 5.0% annually. Spectrum Brands assumed a 5 year useful life of the trade name license agreement. Income taxes were estimated at 35.0% and amounts were discounted using a rate of 12.0%. The trade name license agreement was valued at $12.0 under this approach.
• | Spectrum Brands valued technology using the income approach, specifically the relief from royalty method. Under this method, the asset value was determined by estimating the hypothetical royalties that would have to be paid if the technology was not owned. Royalty rates were selected based on consideration of several factors, including prior transactions of the HHI Business, related licensing agreements and the importance of the technology and profit levels, among other considerations. Royalty rates used in the determination of the fair values of technologies ranged from 4.0% - 5.0% of expected net sales related to the respective technology. Spectrum Brands anticipates using these technologies through the legal life of the underlying patent and therefore the expected life of these technologies was equal to the remaining legal life of the underlying patents which was 10 years. In estimating the fair value of the technologies, net sales were estimated to grow at a rate of 2.5% - 31.0% annually. Income taxes were estimated at 35.0% and amounts were discounted using the rate of 12.0%. The technology assets were valued at $51.0 under this approach.
• | Deferred tax liabilities, net - An adjustment of $125.0 was recorded to adjust deferred taxes for the preliminary fair value adjustments made in accounting for the purchase.
Shaser On November 8, 2012, Spectrum Brands completed the cash acquisition of an approximately 56% interest in Shaser Biosciences, Inc. ("Shaser"). Shaser is a global technology leader in developing energy-based, aesthetic dermatological technology for home use devices. This acquisition was not significant individually. The following table summarizes the preliminary consideration paid for Shaser:
|  | November 8, 2012
Negotiated sales price |  | $ | 50.0 |
Preliminary working capital adjustment |  | (0.4 | )
Preliminary purchase price |  | $ | 49.6 |
The purchase agreement provides Spectrum Brands with an option, exercisable solely at Spectrum Brands' discretion, to acquire the remaining 44% interest of Shaser (the "Call Option"). The Call Option is exercisable any time between January 1, 2017 and March 31, 2017 at a price equal to the higher of 1.0x trailing revenues or 7.0x adjusted trailing earnings before interest taxes depreciation and amortization ("EBITDA"), as defined, for calendar year ended December 31, 2016. Spectrum Brands paid approximately half of the negotiated sales price to the seller at closing. The remaining purchase consideration was paid on April 2, 2013. The results of Shaser's operations since November 8, 2012 are included in the Company's Condensed Consolidated Statements of Operations. Preliminary Valuation of Assets and Liabilities The assets acquired and liabilities assumed in the Shaser acquisition have been measured at their fair values at November 8, 2012 as set forth below. The excess of the purchase price over the fair values of the net tangible assets and identifiable intangible assets was recorded as goodwill, which includes value associated with the assembled workforce including an experienced research team, and is not expected to be deductible for income tax purposes. The preliminary fair values recorded were determined based upon a preliminary valuation and the estimates and assumptions used in such valuation are subject to change, which could be significant, within the measurement period (up to one year from the acquisition date). The primary areas of acquisition accounting that are not yet finalized relate to amounts for income taxes including deferred tax accounts, uncertain tax positions and net operating loss carryforwards inclusive of associated limitations and valuation allowances, certain legal matters and residual goodwill. The preliminary fair values recorded for the assets acquired and liabilities assumed for Shaser are as follows:
| Preliminary Valuation |  |  |  | Preliminary Valuation
| December 30, 2012 |  | Adjustments/reclassifications |  | June 30, 2013
Cash | $ | 0.9 |  |  | $ | — |  |  | $ | 0.9 |
Intangible asset | 35.5 |  |  | (2.7 | ) |  | 32.8 |
Other assets | 2.7 |  |  | — |  |  | 2.7 |
Total assets acquired | 39.1 |  |  | (2.7 | ) |  | 36.4 |
Total liabilities assumed | 14.4 |  |  | (1.0 | ) |  | 13.4 |
Total identifiable net assets | 24.7 |  |  | (1.7 | ) |  | 23.0 |
Non-controlling interest | (39.0 | ) |  | — |  |  | (39.0 | )
Goodwill | 63.9 |  |  | 1.7 |  |  | 65.6 |
Total identifiable net assets | $ | 49.6 |  |  | $ | — |  |  | $ | 49.6 |
During the nine month period ended June 30, 2013, Spectrum Brands recorded adjustments to the preliminary valuation of assets and liabilities resulting in a net increase to goodwill of $1.7. Goodwill increased as a result further information received to support a key valuation factor that impacted the valuation of the technology asset acquired. This revised information was provided by Shaser during the period. Spectrum Brands believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but it is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to further change. Spectrum Brands expects to complete the purchase accounting process as soon as practicable but in any event, no later than one year from the acquisition date. Preliminary Pre-Acquisition Contingencies Assumed Spectrum Brands evaluated and continues to evaluate pre-acquisition contingencies relating to Shaser that existed as of the acquisition date. Based on the evaluation to date, Specrum Brands has preliminarily determined that certain pre-acquisition contingencies are probable in nature and estimable as of the acquisition date. Accordingly, Spectrum Brands has preliminarily recorded its best estimates for these contingencies as part of the preliminary accounting for Shaser. Spectrum Brands continues to gather information relating to all pre-acquisition contingencies that it has assumed from Shaser. 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 Spectrum Brands' results of operations. Preliminary Valuation Adjustments Spectrum Brands performed a preliminary valuation of the acquired proprietary technology assets, the non-controlling interest and the Call Option related to Shaser at November 8, 2012. A summary of the significant key inputs is as follows:
• | Spectrum Brands valued the technology assets using the income approach, specifically the relief from royalty method. Under this method, the asset value was determined by estimating the hypothetical royalties that would have to be paid if the technology was not owned. Royalty rates were selected based on consideration of several factors, including prior transactions of Shaser, related licensing agreements and the importance of the technology and profit levels, among other considerations. The royalty rate used in the determination of the fair value of the technology asset was 10.5% of expected net sales related to the technology. Spectrum Brands anticipates using the technology through the legal life of the underlying patent and therefore the expected life of the technology was equal to the remaining legal life of the underlying patent which was 13 years. In estimating the fair value of the technology, net sales were estimated to grow at a long-term rate of 3.0% annually. Income taxes were estimated at 35.0% and amounts were discounted using the rate of 11.0%. The technology asset was valued at approximately $32.8 under this approach.
• | Spectrum Brands 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 Spectrum Brands management, with net sales estimated to grow at a terminal growth rate of 3.0% annually, income taxes estimated at 35.0%, and amounts discounted using a rate of 12.0%, (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 $39.0 under this approach.
• | Spectrum Brands, 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, Spectrum Brands 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.
EXCO/HGI JV The EXCO/HGI JV was formed on February 14, 2013 through transactions between subsidiaries of EXCO and HGI, resulting in the formation of the General Partner and the Partnership. Under the terms of the respective agreements, the EXCO/HGI JV acquired certain oil and natural gas assets from EXCO for $725.0 of total consideration, subject to certain customary closing adjustments of $30.5, or a net purchase price of $694.5. Immediately after the closing and the consummation of the transactions, the ownership in the Partnership was 73.5% by HGI and 24.5% by EXCO and 2% by the General Partner. In addition, HGI and EXCO each own a 50% member interest in the General Partner and each have equal representation on the General Partner's board of directors. The ownership of the Partnership and General Partnership translates into an economic ownership of the EXCO/HGI JV of 74.5%. At the closing, HGI contributed approximately $349.8 in cash (reflecting the effect of closing adjustments and the economic benefits related to the July 1, 2012 effective date) to the EXCO/HGI JV and EXCO contributed $694.5 of net assets in exchange for cash of $574.8, and retained an interest in the joint venture of $119.1. The payment to EXCO was funded through a combination of cash from HGI's contribution, and borrowings under the EXCO/HGI JV Credit Agreement. On March 5, 2013, the EXCO/HGI JV acquired certain of the shallow Cotton Valley assets from an affiliate of BG Group for $130.9, after customary preliminary purchase price adjustments. This acquisition includes oil and natural gas assets in the Danville, Waskom and Holly fields in East Texas and North Louisiana. The assets acquired by the EXCO/HGI JV represented an incremental working interest in certain properties previously owned by the EXCO/HGI JV. The acquisition was funded with borrowings from the EXCO/HGI JV Credit Agreement. The EXCO/HGI JV accounted for the acquisitions in accordance with ASC 805-10, Business Combinations. The following table presents a summary of the fair value of assets acquired and liabilities assumed as part of the acquisition:
| EXCO's Contributed Assets February 14, 2013 |  | BG Cotton Valley Assets March 5, 2013
| EXCO/HGI JV |  | HGI's Proportionate Interest |  | EXCO/HGI JV |  | HGI's Proportionate Interest
Assets acquired: |  |  |  |  |  |  |
Cash | $ | 0.1 |  |  | $ | 0.1 |  |  | $ | — |  |  | $ | — |
Oil and natural gas properties |  |  |  |  |  |  |
Unproved oil and natural gas properties | 65.1 |  |  | 48.5 |  |  | 7.2 |  |  | 5.4 |
Proved developed and undeveloped oil and natural gas properties | 632.2 |  |  | 471.0 |  |  | 131.2 |  |  | 97.7 |
Total oil and natural gas properties | 697.3 |  |  | 519.5 |  |  | 138.4 |  |  | 103.1 |
Gas Gathering and other assets | 32.7 |  |  | 24.5 |  |  | — |  |  | — |
Liabilities assumed: |  |  |  |  |  |  |
Accounts payable and other current liabilities | (10.8 | ) |  | (8.0 | ) |  | — |  |  | — |
Other liabilities | (24.8 | ) |  | (18.5 | ) |  | (7.5 | ) |  | (5.6 | )
Total purchase price | $ | 694.5 |  |  | $ | 517.6 |  |  | $ | 130.9 |  |  | $ | 97.5 |
The EXCO/HGI JV performed a valuation of the assets acquired and liabilities assumed at February 14 and March 5, 2013. A summary of the key inputs are as follows: Oil and Natural Gas Properties - HGI's proportionate share of the fair value allocated to oil and natural gas properties was $519.5 and $103.1, for the EXCO/HGI JV and the BG Cotton Valley acquisitions, respectively. The fair value of oil and natural gas properties was determined based on a discounted cash flow model of the estimated reserves. The estimated quantities of reserves utilized assumptions based on the partnership's internal geological, engineering data and financial data. The EXCO/HGI JV utilized NYMEX forward strip prices to value the reserves for a period of five years and then held prices flat thereafter. The EXCO/HGI JV then applied various discount rates depending on the classification of reserves and other risk characteristics. Gas Gathering Assets - HGI's proportionate share of the fair value allocated to gas gathering assets was $21.5. The fair value of these assets was determined based on a market approach using other recent transactions involving gathering and processing assets. The EBITDA multiple based on these market transactions was applied to the projected EBITDA of the gas gathering assets in order to calculate the fair value. Asset Retirement Obligations - HGI's proportionate share of the fair value allocated to asset retirement obligations was $18.5 and $5.6, respectively. These asset retirement obligations represent the present value of the estimated amount to be incurred to plug, abandon and remediate proved producing properties at the end of their productive lives, in accordance with applicable state laws. The fair value was determined based on a discounted cash flow model, which included assumptions of the estimated current abandonment costs, discount rate, inflation rate, and timing associated with the incurrence of these costs. The asset retirement obligations are primarily included in "Other liabilities" in the Condensed Consolidated Balance Sheets. FGL Acquisition Update On April 6, 2011, the Company acquired all of the outstanding shares of capital stock of FGL and certain intercompany loan agreements between the seller, as lender, and FGL, as borrower, for cash consideration of $350.0 (including $5.0 re-characterized as an expense), which amount could be reduced by up to $50.0 post closing (as discussed further below). Contingent Purchase Price Reduction As contemplated by the terms of the F&G Stock Purchase Agreement, Front Street Re, Ltd. ("Front Street"), a then recently formed Bermuda-based reinsurer and wholly-owned subsidiary of the Company sought to enter into a reinsurance agreement (the "Front Street Reinsurance Transaction") with FGL whereby Front Street would reinsure up to $3,000.0 of insurance obligations under annuity contracts of FGL, and Harbinger Capital Partners II LP ("HCP II"), an affiliate of the Principal Stockholders, would be appointed the investment manager of up to $1,000.0 of assets securing Front Street’s reinsurance obligations under the reinsurance agreement. These assets would be deposited in a reinsurance trust account for the benefit of FGL. The Front Street Reinsurance Transaction required the approval of the Maryland Insurance Administration (the "MIA"). The F&G Stock Purchase Agreement provides that, the seller may be required to pay up to $50.0 as a post-closing reduction in purchase price if, among other things, the Front Street Reinsurance Transaction is not approved by the MIA or is approved subject to certain restrictions or conditions. FGL received written notice, dated January 10, 2012, from the MIA, rejecting the Front Street Reinsurance Transaction, as proposed by the respective parties. HGI notified the seller of the failure of the MIA to approve the Front Street Reinsurance Transaction and sought the purchase price reduction.The seller refused, and HGI is pursuing all available options to recover the full purchase price reduction, including the commencement of litigation against the seller; however, the outcome of any such action is subject to risk and uncertainty and there can be no assurance that any or all of the $50.0 purchase price reduction will be obtained by HGI. Prior to the receipt of the written rejection notice from the MIA, management believed, based on the facts and circumstances at that time, that the likelihood was remote that the purchase price would be required to be reduced. Therefore a fair value of zero had been assigned to the contingent purchase price reduction as of the FGL Acquisition date and at each subsequent quarterly remeasurement date through January 1, 2012. Management now believes that it is near certain that the purchase price will be required to be reduced by the full $50.0 amount and has estimated a fair value of $41.0 for the contingent receivable as of June 30, 2013 (essentially unchanged from September 30, 2012 and July 1, 2012), reflecting appropriate discounts for potential litigation and regulatory action, length of time until expected payment is received and a credit insurance risk premium. Such $41.0 estimated fair value of the contingent receivable has been reflected in "Receivables, net" in the Condensed Consolidated Balance Sheets as of June 30, 2013. A corresponding credit to "Gain on contingent purchase price reduction" was recorded in earnings during Fiscal 2012. Supplemental Pro Forma Information The following table reflects the Company’s pro forma results as if the Hardware Acquisition and the acquisition of the Company's interest in the EXCO/HGI JV were completed on October 1, 2011 and the results of the HHI Business and the EXCO/HGI JV had been included in the full three and nine months ended June 30, 2013 and July 1, 2012.
| Three months ended |  | Nine months ended
| June 30, 2013 |  | July 1, 2012 |  | June 30, 2013 |  | July 1, 2012
Revenues: |  |  |  |  |  |  |
Reported revenues | $ | 1,410.6 |  |  | $ | 1,012.2 |  |  | $ | 4,044.8 |  |  | $ | 3,283.9 |
HHI adjustment | — |  |  | 253.0 |  |  | 191.8 |  |  | 716.9 |
EXCO/HGI JV adjustment | — |  |  | 32.1 |  |  | 53.7 |  |  | 114.8 |
Pro forma revenues | $ | 1,410.6 |  |  | $ | 1,297.3 |  |  | $ | 4,290.3 |  |  | $ | 4,115.6 |
Net income: |  |  |  |  |  |  |
Reported net income | $ | 118.7 |  |  | $ | (110.1 | ) |  | $ | 136.3 |  |  | $ | (64.8 | )
HHI adjustment | — |  |  | 26.7 |  |  | 4.9 |  |  | 49.6 |
EXCO/HGI JV adjustment | — |  |  | (5.5 | ) |  | (0.5 | ) |  | (5.2 | )
Pro forma net income | $ | 118.7 |  |  | $ | (88.9 | ) |  | $ | 140.7 |  |  | $ | (20.4 | )
Basic net income (loss) per common share attributable to controlling interest: |  |  |  |  |  |  |
Reported net income (loss) per common share | $ | 0.45 |  |  | $ | (1.07 | ) |  | $ | 0.54 |  |  | $ | (0.93 | )
HHI adjustment | — |  |  | 0.19 |  |  | 0.04 |  |  | 0.36 |
EXCO/HGI JV adjustment | — |  |  | (0.04 | ) |  | — |  |  | (0.04 | )
Pro forma net income (loss) per common share | $ | 0.45 |  |  | $ | (0.92 | ) |  | $ | 0.58 |  |  | $ | (0.61 | )
Diluted net income (loss) per common share attributable to controlling interest: |  |  |  |  |  |  |
Reported diluted net income (loss) per common share | $ | 0.25 |  |  | $ | (1.07 | ) |  | $ | 0.30 |  |  | $ | (0.93 | )
HHI adjustment | — |  |  | 0.19 |  |  | 0.02 |  |  | 0.36 |
EXCO/HGI JV adjustment | — |  |  | (0.04 | ) |  | — |  |  | (0.04 | )
Pro forma diluted net income (loss) per common share | $ | 0.25 |  |  | $ | (0.92 | ) |  | $ | 0.32 |  |  | $ | (0.61 | )
Acquisition and Integration Related Charges Acquisition and integration related charges reflected in "Selling, acquisition, operating and general expenses" in the accompanying Condensed Consolidated Statements of Operations include, but are not limited to transaction costs such as banking, legal and accounting professional fees directly related to an acquisition or potential acquisition, termination and related costs for transitional and certain other employees, integration related professional fees and other post business combination related expenses. Such charges for the three and nine months ended June 30, 2013 relate primarily to the Hardware Acquisition and the EXCO/HGI JV acquisition, and for the three and nine months ended July 1, 2012 relate primarily to the Spectrum Brands merger with Russell Hobbs, Inc. (the "SB/RH Merger") and the acquisition of FURminator. The following table summarizes acquisition and integration related charges incurred by the Company for the three and nine months ended June 30, 2013 and July 1, 2012:
| Three months ended |  | Nine months ended
| June 30, 2013 |  | July 1, 2012 |  | June 30, 2013 |  | July 1, 2012
SB/RH Merger |  |  |  |  |  |  |
Integration costs | $ | 0.7 |  |  | $ | 1.6 |  |  | $ | 2.6 |  |  | $ | 6.8 |
Employee termination charges | (0.1 | ) |  | 0.8 |  |  | 0.2 |  |  | 3.3 |
Legal and professional fees | (0.1 | ) |  | 0.6 |  |  | — |  |  | 1.5 |
| 0.5 |  |  | 3.0 |  |  | 2.8 |  |  | 11.6 |
HHI Business |  |  |  |  |  |  |
Legal and professional fees | 4.7 |  |  | — |  |  | 25.7 |  |  | — |
Integration costs | 1.6 |  |  | — |  |  | 5.3 |  |  | — |
Employee termination charges | — |  |  | — |  |  | 0.1 |  |  | — |
| 6.3 |  |  | — |  |  | 31.1 |  |  | — |
EXCO/HGI JV | 0.1 |  |  | — |  |  | 9.2 |  |  | — |
FURminator | 0.4 |  |  | 1.7 |  |  | 1.6 |  |  | 6.3 |
BlackFlag | 0.1 |  |  | 0.1 |  |  | 0.1 |  |  | 1.9 |
Shaser | 0.1 |  |  | — |  |  | 4.5 |  |  | — |
Other | 1.1 |  |  | 0.7 |  |  | 3.2 |  |  | 3.1 |
Total acquisition and integration related charges | $ | 8.6 |  |  | $ | 5.5 |  |  | $ | 52.5 |  |  | $ | 22.9 |

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