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Rawlings ends Tyco tax-sharing deal
Published September 30, 2002
Rawlings Sporting Goods Co. announced earlier this month that it is ending a tax-sharing pact with Tyco International Ltd.
Tyco is the successor to Rawlings' former parent company, Figgie International Inc.
The tax-share agreement began in 1994 when Figgie divested itself of Rawlings through a common stock public offering, a Rawlings news release said.
The tax-sharing agreement enabled Figgie to share in certain possible future tax benefits, which resulted in Rawlings recording a long-term liability, the release said.
Under the agreement to end the tax-share plan, Rawlings said it will pay Tyco $1 million to be relieved of its long-term tax-sharing liability. The company will make two $500,000 installments, one in November and another in May 2003.
Bill Lacy, Rawlings' chief financial officer, said the decision to end the tax-share agreement was made because the agreement "has been a thorn in both of our sides" and Rawlings just wanted to settle the agreement. The decision for Rawlings to end the agreement was not related to Tyco's recent problems, he said.
Rawlings expects that the elimination of the liability will add about $8.3 million, or $1 a share, to shareholder equity.
— Jennifer Lee