Acquisitions

Acquisition of Forrest City Grocery Company

On May 2, 2011, Core-Mark acquired Forrest City Grocery Company ("FCGC"), located in Forrest City, Arkansas, and FCGC thereafter became a subsidiary of Core-Mark. FCGC was a regional wholesale distributor servicing customers in Arkansas, Mississippi, Tennessee and the surrounding states. The acquisition provides Core-Mark with additional infrastructure and increases its market share in the southeastern U.S.

As of December 31, 2011 total consideration to acquire FCGC was approximately $53.0 million. The total consideration decreased by $1.3 million during the fourth quarter of 2011 due primarily to the identification of certain pre-acquisition tax liabilities which are recoverable from the escrow reserve. The acquisition was funded with a combination of cash on hand and borrowings under our $200 million revolving credit facility. The FCGC acquisition was accounted for as a business combination.

The following table summarizes the allocation of the consideration paid for the acquisition and the estimated fair values of assets acquired, liabilities assumed and recognized at the acquisition date based on the valuation (dollars in millions):



Cash	$	3.5
Accounts receivable	18.4
Other receivables	0.4
Inventory	13.0
Prepaid expenses	1.0
Property, plant and equipment	6.0
Intangible assets	18.4
Goodwill	11.6
Net deferred tax liabilities	(7.2		)
Other liabilities	(12.1		)
Total consideration	$	53.0

Intangible assets include $16.4 million for customer relationships which is being amortized over 15 years and $2.0 million for non-competition agreements, the majority of which is being amortized over five years. The estimated fair value of the intangible assets was determined using the income approach, which discounts expected future cash flows to present value.

The valuation includes $11.6 million of non-amortizing goodwill which represents the excess of the cash paid over the fair value of net assets acquired and liabilities assumed, net of deferred tax liabilities. The goodwill recognized is not expected to be deductible for tax purposes. The $7.2 million of net deferred tax liabilities resulting from the acquisition were related primarily to the difference between the book and tax bases of the intangible assets, whose estimated fair value was determined by the valuation.

The purchase price allocation presented herein is based on a valuation, however the purchase price is subject to adjustment under the agreement. In addition, there is a remaining escrow reserve of approximately $17 million for any post-closing liabilities. The escrow reserve, subject to adjustment, is available for claims through May 2015. While we do not expect any material changes

in the fair value of assets and liabilities, any changes in the purchase price or the estimated fair values may change the amount

allocable to goodwill.

Results of operations of FCGC have been included in Core-Mark’s consolidated statements of operations since the date of acquisition to December 31, 2011. In addition, we incurred $2.7 million of acquisition and integration costs related to FCGC which are included in our selling, general & administrative expenses for 2011.

We did not consider the FCGC acquisition to be a material business combination and therefore have not disclosed pro-forma results of operations for the acquired business as required for material business combinations.

Asset Acquisition of Finkle Distributors, Inc.

On August 2, 2010, we acquired substantially all of the assets of Finkle Distributors, Inc. (“FDI”), a regional convenience

wholesaler servicing customers in New York, Pennsylvania and the surrounding states, for cash consideration of approximately $36.0 million. The FDI operations were integrated into two of our existing distribution centers and have provided us opportunities to expand our market share.

The purchase price allocation of the acquired assets and liabilities assumed, based on their estimated fair values at the acquisition date, was as follows (dollars in millions):



Cash	$	0.1
Accounts receivable	21.1
Inventory	9.9
Prepaid expenses	0.3
Property, plant and equipment	2.4
Intangible assets	3.6
Liabilities	(1.4		)
Cash paid at closing	$	36.0
Contingent payments	1.0
Total consideration	$	37.0

Intangible assets include $2.0 million for customer relationships which will be amortized over ten years, $0.9 million of non-amortizing goodwill and $0.7 million for the non-competition agreement which will be amortized over five years. Goodwill is measured as the difference between the purchase price and the fair value of assets acquired and liabilities assumed. The intangible assets, including goodwill, are expected to be deductible for tax purposes. The contingent payments relate primarily to a non-competition agreement with a former owner and were recorded at the present value of contractual payments. A total of $0.4 million has been paid under the non-competition agreement as of December 31, 2011. The remaining amounts due under the agreement are payable in equal installments at the beginning of 2012, 2013 and 2014. Results of operations of FDI have been included in Core-Mark’s consolidated statements of operations since the date of acquisition to December 31, 2011.

We did not consider the FDI acquisition to be a material business combination and therefore have not disclosed pro-forma results of operations for the acquired business as required for material business combinations.