Business Combinations

12 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Business Combinations

(3) Business Combinations

PACK Pharmaceuticals, LLC

On April 30, 2014, Rising Pharmaceuticals, Inc. (“Rising”), a wholly owned subsidiary of Aceto, acquired 100% of the issued and outstanding membership interests of PACK Pharmaceuticals, LLC (“PACK”). PACK, a national marketer and distributor of generic prescription and over-the-counter pharmaceutical products, had headquarters in Buffalo Grove, Illinois, a suburb of Chicago, Illinois. The Company believes that the acquisition of PACK by Rising has advanced Aceto’s strategy to expand further into the finished dosage pharmaceutical business. PACK and Rising have very similar business models including operating their businesses in collaboration with selected pharmaceutical development partners and with networks of finished dosage form manufacturing partners, focusing on niche products and selling generic prescription products and over-the-counter pharmaceutical products under their respective labels to leading wholesalers, chain drug stores, distributors and mass market merchandisers. The purchase price was approximately $91,596, which was comprised of the issuance of 260 shares of Aceto common stock, valued at $5,685, and a cash payment of approximately $85,911. The purchase agreement also provided for a three-year earn-out of up to $15,000 in cash based on the achievement of certain performance-based targets. As of June 30, 2015 and 2014, the Company accrued $783 and $3,797 respectively, related to this contingent consideration. In the fourth quarter of fiscal 2015, the Company reversed $3,468 of contingent consideration due to management’s evaluation and assessment of the performance-based targets. The $3,468 reversal is included in selling, general and administrative expenses in the accompanying Consolidated Statement of Income for the fiscal year ended June 30, 2015. Any necessary future adjustments to this amount will be recorded as an income statement charge at that time.

The acquisition was accounted for using the purchase method of accounting. The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of April 30, 2014:

Trade receivables	$	11,592
Other receivables		1,215
Inventory		7,711
Prepaid expenses and other current assets		239
Property and equipment, net		311
Goodwill		32,722
Intangible assets		52,540
Total assets acquired		106,330
Accounts payable		3,383
Accrued expenses		7,626
Contingent consideration		3,725
Net assets acquired	$	91,596

The fair value of the net assets acquired were determined using discounted cash flow analyses and estimates made by management. The purchase price was allocated to intangible assets as follows: approximately $32,722 to goodwill, which is nonamortizable under generally accepted accounting principles and is deductible for income tax purposes; approximately $38,280 of product rights, amortizable over a period of approximately eleven years; approximately $14,170 of customer relationships, amortizable over eleven years; and approximately $90 of trademarks, amortizable over a period of three years. Amortization of the acquired intangible assets is deductible for income tax purposes. Goodwill represents the excess of the purchase price paid over the fair value of the underlying net assets of the business acquired and was allocated to the Human Health Segment.

For the period from April 30, 2014 to June 30, 2014, PACK’s net sales and loss before income taxes was approximately $8,131 and ($454) respectively, which have been included in the consolidated statement of income for the year ended June 30, 2014. The following represents unaudited pro forma operating results as if the operations of PACK had been included in the Company’s consolidated statements of operations as of July 1, 2012:

	Year ended
	June 30,
		2014		2013
Net sales	$	551,744	$	538,058
Net income		29,704		20,140
Net income per common share	$	1.05	$	.74
Diluted net income per common share	$	1.03	$	.73

The pro forma financial information includes business combination accounting effects from the acquisition including amortization charges from acquired intangible assets of approximately $4,783 for both periods presented, increase in interest expense of approximately $3,414 for both periods presented associated with bank borrowings to fund the acquisition, reversal of acquisition related transaction costs of approximately $1,732 and tax related effects in both periods. The unaudited pro forma information as presented above is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2013.

Other

On December 10, 2013, the Company acquired all of the outstanding stock of a company in France which has been accounted for as a business combination. The impact of this business combination on the Company’s consolidated balance sheet as of June 30, 2014 and its consolidated statement of income for the year ended June 30, 2014 was not material.