ACQUISITIONS AND DISPOSALS

We account for acquisitions using the acquisition method of accounting. The results of operations of the acquisitions have been included in our consolidated results from their respective dates of acquisition. We allocate the purchase price of each acquisition to the tangible assets, liabilities, and identifiable intangible assets acquired based on their estimated fair values. Acquisitions may include contingent consideration, the fair value of which is estimated on the acquisition date as the present value of the expected contingent payments, determined using weighted probabilities of possible payments. The fair values assigned to identifiable intangible assets acquired were determined primarily by using an income approach which was based on assumptions and estimates made by management. Significant assumptions utilized in the income approach were based on company specific information and projections which are not observable in the market and are thus considered Level 3 measurements as defined by authoritative guidance. The excess of the purchase price over the fair value of the identified assets and liabilities has been recorded as goodwill.

The costs related to all acquisitions have been expensed as incurred and are included in “Acquisition related expenses and restructuring charges” in the Condensed Consolidated Statements of Income. Acquisition-related costs of $3,854 were expensed in the nine months ended March 31, 2013 (none of which were incurred in the three months ended March 31, 2013), and $407 and $6,182 were expensed in the three and nine months ended March 31, 2012, respectively. The expenses incurred in the first nine months of fiscal 2013 primarily relate to the acquisitions of the assets and business of the BluePrint^® brand and the brands from Premier Foods plc, each of which is discussed further below.

Fiscal 2013

On December 21, 2012, we acquired the assets and business of Zoe SakoutisLLC, d/b/a BluePrint Cleanse (“BluePrint”), a nationally recognized leader in the raw juice category based in New York City, for $15,205 in cash (which remains subject to a working capital settlement) and 174,267 shares of the Company’s common stock valued at $9,525. Additionally, contingent consideration of up to a maximum of approximately $83,400 is payable based upon the achievement of specified operating results during the two annual periods ending December 31, 2013 and 2014. The Company recorded $6,112 as the fair value of the contingent consideration at the acquisition date. The BluePrint^®brand, which is part of our United States operating segment, expanded our product offerings into a new category. The acquisition was funded with existing cash balances and borrowings under our Credit Agreement. The net sales and income before income taxes from continuing operations attributable to BluePrint were not significant in the three and nine months ended March 31, 2013.

On November 1, 2012, we completed the disposal of our sandwich business, including the Daily Bread^TM brand name, in the United Kingdom. The disposal transaction resulted in an exchange of businesses, whereby the Company acquired the fresh prepared fruit products business of Superior Food Limited in the United Kingdom in exchange for the Company’s sandwich business and a cash payment of £1,000 (approximately $1,600 at the transaction date exchange rate). Refer to Note 5, Discontinued Operations, for additional information.

On October 27, 2012, we completed the acquisition of a portfolio of market-leading packaged grocery brands including Hartley’s^®, Sun-Pat^®, Gale’s^®, Robertson’s^® and Frank Cooper’s^®, together with the manufacturing facility in Cambridgeshire, United Kingdom (the “UK Ambient Grocery Brands”) from Premier Foods plc. The product offerings acquired include jams, fruit spreads and jelly, peanut butter, honey and marmalade products. Consideration in the transaction consisted of £170,000 in cash (approximately $273,717 at the transaction date exchange rate) funded with borrowings under our Credit Agreement and 836,426 shares of the Company’s common stock valued at $48,061, and is subject to a working capital adjustment. The acquisition expanded our product offerings in the United Kingdom into ambient grocery which we expect will help position the expanded business as a top food and beverage supplier in the United Kingdom. Since the date of acquisition, net sales of $53,613 and $101,809 and income before income taxes from continuing operations of $5,538 and $13,413 were included in the Condensed Consolidated Statement of Income for the three and nine months ended March 31, 2013, respectively. These results for the UK Ambient Grocery Brands since the date of acquisition on October 27, 2012 do not include all of the selling, general and administrative expenses required to properly support the future operations of the acquired business as these brands were acquired without such functions and the build of the required infrastructure and integration are ongoing.

On August 20, 2012, we completed the sale of our private-label chilled ready meals business in the United Kingdom (the “CRM business”). Total consideration received was £9,641 (approximately $15,132 at the transaction date exchange rate), which remains subject to a final working capital adjustment with the purchaser. We recognized a preliminary loss on disposal of $3,616 ($4,200 after-tax, which includes the write-off of certain deferred tax assets) during the nine months ended March 31, 2013, which is included within “Loss from discontinued operations, net of tax” in the Condensed Consolidated Statements of Income. Refer to Note 5, Discontinued Operations, for additional information.

The following table summarizes the components of the preliminary purchase price allocations for the fiscal 2013 acquisitions:



	UK Ambient Grocery Brands			BluePrint			Total
Purchase price:
Cash paid	$	273,717		$	15,205		$	288,922
Equity issued	48,061			9,525			57,586
Fair value of contingent consideration	—			6,112			6,112
	$	321,778		$	30,842		$	352,620
Allocation:
Current assets	$	29,001		$	2,714		$	31,715
Property, plant and equipment	39,150			3,173			42,323
Identifiable intangible assets	96,533			14,850			111,383
Assumed liabilities	(1,798		)	(2,298		)	(4,096		)
Deferred income taxes	(22,203		)	—			(22,203		)
Goodwill	181,095			12,403			193,498
	$	321,778		$	30,842		$	352,620

The purchase price allocations are based upon preliminary valuations, and the Company’s estimates and assumptions are subject to change within the measurement period as valuations are finalized. Any change in the estimated fair value of the net assets, prior to the finalization of the more detailed analyses, but not to exceed one year from the dates of acquisition, will change the amount of the purchase price allocations.

The fair values assigned to identifiable intangible assets acquired were based on assumptions and estimates made by management. Preliminary identifiable intangible assets acquired consisted of customer relationships valued at $36,988 with a weighted average estimated useful life of 18.7 years, a non-compete arrangement valued at $550 with an estimated life of three years, and trade names valued at $73,845 with indefinite lives. The goodwill represents the future economic benefits expected to arise that could not be individually identified and separately recognized, including use of our existing infrastructure to expand sales of the acquired business’ products. The goodwill recorded as a result of the acquisition of the UK Ambient Grocery Brands is not expected to be deductible for tax purposes.

Fiscal 2012

On April 27, 2012, we acquired Cully & Sully Limited (“Cully & Sully”), a marketer of branded natural chilled soups, savory pies and hot pots in Ireland, for €10,460 in cash, net (approximately $13,835 at the transaction date exchange rate), and contingent consideration of up to €4,500 (approximately $5,952 at the transaction date exchange rate) based upon the achievement of specified operating results during the period through June 30, 2014. The acquisition, which is part of our United Kingdom operating segment, provided us entry into the Irish marketplace and complements our existing United Kingdom product offerings. The acquisition was funded with existing cash balances.

On October 25, 2011, we acquired the Daniels Group (“Daniels”) in the United Kingdom, for £146,532 in cash, net (approximately $233,822 at the transaction date exchange rate), and up to £13,000 (approximately $20,500 at the transaction date exchange rate) of contingent consideration based upon the achievement of specified operating results during the twelve month periods ended March 31, 2012 and March 31, 2013. The transaction date fair value of the contingent consideration ($15,637) was subsequently reversed with a corresponding reduction of expense in the fourth quarter of fiscal 2012. The acquisition was funded with borrowings under our revolving credit facility. Daniels is a leading marketer and manufacturer of natural chilled foods, including three leading brands – The New Covent Garden Soup Co.^®, Johnson’s Juice Co.^® and Farmhouse Fare^®. Daniels also offers fresh prepared fruit products and, at the time of acquisition, offered chilled ready meals. During the third quarter of fiscal 2012, the Company decided to sell the Daniels private label chilled ready meals operations. Refer to Note 5, Discontinued Operations, for additional information. Daniels’ product offerings are sold at all major supermarkets and select foodservice outlets throughout the United Kingdom. We believe the acquisition of Daniels helped extend our presence into one of the fastest-growing food categories in the United Kingdom and provides an ongoing platform for the growth of our combined operations. We also believe the acquisition provides us with the scale in our international operations to allow us to introduce some of our existing brands in the marketplace in a more meaningful way.

On October 5, 2011 we acquired the assets and business of the Europe’s Best^® brand of frozen fruit and vegetable products through our wholly-owned Hain Celestial Canada subsidiary for $9,513 in cash. The Europe’s Best product line includes premium frozen fruit and vegetable products distributed in Canada. The acquisition provided us entry into a new category and complements our existing product offerings.

The following table summarizes the components of the purchase price allocations for the fiscal 2012 acquisitions:



	Daniels			Europe’s Best			Cully & Sully			Total
Purchase price:
Cash paid	$	233,822		$	9,513		$	13,835		$	257,170
Fair value of contingent consideration	15,637			—			3,363			19,000
	$	249,459		$	9,513		$	17,198		$	276,170
Allocation:
Current assets	$	55,639		$	7,157		$	1,549		$	64,345
Property, plant and equipment	46,799			—			35			46,834
Identifiable intangible assets	103,529			2,706			11,693			117,928
Other non-current assets, net	1,108			—			—			1,108
Assumed liabilities	(46,431		)	(184		)	(1,342		)	(47,957		)
Deferred income taxes	(27,942		)	(166		)	(1,462		)	(29,570		)
Goodwill	116,757			—			6,725			123,482
	$	249,459		$	9,513		$	17,198		$	276,170

The fair values assigned to identifiable intangible assets acquired were based on assumptions and estimates made by management. Identifiable intangible assets acquired consisted of customer relationships valued at $59,602 with a weighted average estimated useful life of 11.0 years, a non-compete arrangement valued at $820 with an estimated useful life of three years, and trade names valued at $57,506 with indefinite lives. The goodwill represents the future economic benefits expected to arise that could not be individually identified and separately recognized, including use of our existing infrastructure to expand sales of the acquired business’ products. The goodwill recorded as a result of the Daniels and Cully & Sully acquisitions is not deductible for tax purposes.

Unaudited Proforma Results of Continuing Operations

The following table provides unaudited pro forma results of continuing operations for the nine months ended March 31, 2013 and the three and nine months ended March 31, 2012, as if all of the above acquisitions had been completed at the beginning of fiscal year 2012. Pro forma results of continuing operations are not provided for the three months ended March 31, 2013 as there were no acquisitions completed during such period. The following pro forma combined results of continuing operations have been provided for illustrative purposes only, and do not purport to be indicative of the actual results that would have been achieved by the Company for the periods presented or that will be achieved by the combined company in the future. The pro forma information has been adjusted to give effect to items that are directly attributable to the transactions and are expected to have a continuing impact on the combined results. The adjustments include amortization expense associated with acquired identifiable intangible assets, interest expense associated with bank borrowings to fund the acquisitions and elimination of transactions costs incurred that are directly related to the transactions and do not have a continuing impact on operating results from continuing operations.



	Nine Months Ended March 31,				Three Months Ended March 31,
	2013		2012		2012
Net sales from continuing operations	$	1,365,737	$	1,282,936	$	441,501
Income from continuing operations	$	108,796	$	81,355	$	29,525
Net income per common share from continuing operations - diluted	$	2.28	$	1.74	$	0.63

This information has not been adjusted to reflect any changes in the operations of the businesses subsequent to their acquisition by us. Changes in operations of the acquired businesses include, but are not limited to, discontinuation of products, integration of systems and personnel, changes in trade practices, application of our credit policies, changes in manufacturing processes or locations, and changes in marketing and advertising programs. Had any of these changes been implemented by the former managements of the businesses acquired prior to acquisition by us, the net sales and net income information might have been materially different than the actual results achieved and from the pro forma information provided. In management’s opinion, these unaudited pro forma results of operations are not intended to represent or to be indicative of the actual results that would have occurred had the acquisitions been consummated at the beginning of the periods presented or of future operations of the combined companies under our management.