Business Acquisition

12 Months Ended

Sep. 30, 2013

Business Acquisitions [Abstract]

Business Acquisitions

3. Business Acquisitions

On March 21, 2011, MWI Co. purchased substantially all of the assets of Nelson Laboratories Limited Partnership (“Nelson”) for $7,000 in cash. Nelson was a distributor of animal health products to over 1,100 veterinary practices, primarily in the Midwestern United States. This acquisition allows us to better serve our customers in this region. An intangible asset representing customer relationships acquired in the acquisition has an estimated useful life of 10 years. The amount recorded in goodwill is deductible for tax purposes over 15 years.

On October 31, 2011, MWI Co. purchased substantially all of the assets of Micro Beef Technologies, Ltd. (“Micro”) for $60,878, including $53,400 in cash and 94,359 shares of common stock valued at $7,158, which is the fair value of the common stock as of the date of acquisition and a working capital adjustment of $320. The $53,400 paid in cash as consideration of Micro was funded with borrowings under our Credit Agreement (as defined in Note 7) as then in effect. Micro is a value-added distributor to the production animal market, including the distribution of micro feed ingredients, pharmaceuticals, vaccines, parasiticides, supplies and other animal health products. Micro also is a leading innovator of proprietary, computerized management systems for the production animal market. We incurred $1,104 of direct acquisition-related and integration expenses.  The intangible assets acquired in the acquisition include technology, customer relationships, trade name and covenant not to compete. The useful life of the amortizing intangible assets ranges from 5 years to 17 years. Trade name is a non-amortizing intangible asset. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The goodwill recorded as part of the acquisition of Micro includes the expected synergies that we believed would result from this acquisition.  The amount recorded in goodwill is deductible for tax purposes over 15 years. The fair values assigned to the tangible and intangible assets acquired and liabilities assumed are based on management's estimates and assumptions as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques.

On December 31, 2012, MWI Co. purchased substantially all of the assets of Prescription Containers, Inc. (“PCI Animal Health”), for a net purchase price of $17,107, after consideration of post-closing adjustments.  PCI Animal Health was a distributor of companion animal health products to veterinary practices, primarily in the Northeastern United States.  The intangible asset acquired in the acquisition is for customer relationships and has a useful life of 10 years.  The amount recorded in goodwill is expected to be deductible for tax purposes over 15 years. The fair values assigned to the tangible and intangible assets acquired and liabilities assumed are based on management's estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. We adjusted those valuations during the nine months ended September 30, 2013 as a result of further review of these estimates and assumptions. The fair value assigned to the purchased intangible related to customer relationships decreased by $1,190 with a corresponding adjustment to the carrying value of goodwill. The related impact on amortization recognized from that date is insignificant to the consolidated statements of income.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of each acquisition, which may be adjusted during the measurement period as defined in Accounting Standards Codification (“ASC”) 805. These purchase price allocations are based on a combination of valuations and analyses.

	2013		2012		2011
Cash	$	-	$	1	$	-
Receivables		3,585		22,374		4,041
Inventories		1,928		27,701		3,594
Other current assets		-		105		-
Property and equipment		-		8,882		1,900
Investments		-		199		-
Goodwill		9,327		12,473		1,823
Intangibles		4,780		15,760		140
Total assets acquired		19,620		87,495		11,498
Accounts payable		2,513		25,026		4,498
Accrued expenses		-		1,591		-
Other liabilities				-		-
Total liabilities assumed		2,513		26,617		4,498
Net assets acquired	$	17,107	$	60,878	$	7,000

The following table presents information for Micro that is included in our consolidated statements of income from the acquisition date of October 31, 2011 through the fiscal year ended September 30, 2012:

Micro's operations included in MWI's results
		Fiscal year ended September 30, 2012
Revenues	$	246,624
Net Income	$	4,089

The following table presents supplemental pro forma information for the Company as if the acquisition of Micro had occurred on October 1, 2010 for the periods ended September 30, 2012 and 2011 (unaudited):

	Unaudited Pro Forma Consolidated Results
	Fiscal year ended September 30,
	2012		2011
Revenues	$	2,097,076	$	1,793,672
Net Income	$	53,571	$	45,769

The unaudited pro forma consolidated results are not necessarily indicative of what our consolidated results of operations would have been had we completed the acquisition on October 1, 2010.  Additionally, the unaudited pro forma consolidated results do not purport to project the future results of operations of the combined company.