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Business Combinations
 9 Months Ended
Jun. 30, 2016
Business Combinations [Abstract]  
Business Combinations
Business Combinations:

Acquisition of Danya International, LLC

On May 3, 2016, the Company acquired 100% of the equity interests of Dayna International, LLC for a purchase price of $38.75 million. The acquisition was financed through a combination of:

•
borrowings of $30.0 million under the Company’s senior credit facility,
•
cash on hand of approximately $3.75 million,
•
670,242 restricted shares of DLH common stock, valued at $2.5 million based on the 20 day volume-weighted average price (VWAP) of DLH stock, or $3.73 per share, and
•
$2.5 million pursuant to a subordinated loan arrangement with the Company’s largest stockholder.

After giving effect to the issuance of the shares of common stock issued to Seller at closing, Seller beneficially owns approximately 6.5% of the Company’s outstanding shares.

The acquisition of Danya International is consistent with the Company’s growth strategy, which calls for the development of new customers and service offerings both organically and through mergers and acquisitions.

We have used the acquisition method of accounting for this transaction, whereby the assets acquired and liabilities assumed are recognized based upon their estimated fair values at the acquisition date.
 
The preliminary base purchase price for Danya was $38.75 million, with adjustments as necessary based on an estimated working capital excess (deficit) compared to the $3.5 million target prescribed in the acquisition agreement.

We are in the process of allocating the acquisition price to the fair value of the assets and liabilities of Danya at the acquisition date. Initial estimates of the purchase price and its allocation are shown below but may be subject to change as we complete our assessment of the acquisition date balance sheet. Based on the unaudited financial statements of Danya on May 3, 2016, we estimate total acquisition consideration and the preliminary allocation of fair value to the related assets and liabilities as follows:

(Amounts in thousands)
 
 
Preliminary base purchase price for Danya
 
$
38,750

Estimated working capital deficit
 
$
(310
)
Estimated purchase price, net of cash acquired
 
$
38,440

 
 
 
Estimated net assets acquired
 
 
Cash and cash equivalents
 
$
4,009

Accounts receivable
 
5,712

Other current assets
 
444

Total current assets
 
10,165

Accounts payable and accrued expenses
 
(5,543
)
Payroll liabilities
 
(1,432
)
Estimated net working capital surplus
 
3,190

Property and equipment, net
 
403

Other long term assets
 
81

Net identifiable assets acquired
 
3,674

Goodwill and other intangibles
 
34,766

Net assets acquired
 
$
38,440



During the three and nine months ended June 30, 2016, Danya contributed approximately $7.3 million of revenue and $0.9 million income from operations.
 
The following table presents certain results for the three and nine months ended June 30, 2016 and 2015 as though the acquisition of Danya had occurred on October 1, 2014. The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of our results if the acquisition had taken place on that date. The pro forma results presented below include amortization charges for acquired intangible assets and adjustments to interest expense incurred and exclude related acquisition expenses.

 
 
(in thousands)
 
(in thousands)
 
 
Three Months Ended
 
Nine Months Ended
 
 
June 30,
 
June 30,
Pro forma results
 
2016

 
2015

 
2016

 
2015

Revenue
 
$
30,411

 
$
26,828

 
$
92,164

 
$
83,359

Net income
 
$
1,416

 
$
415

 
$
2,618

 
$
657

 
 
 
 
 
 
 
 
 
Number of shares outstanding - basic
 
11,123

 
10,933

 
11,051

 
10,961

Number of shares outstanding - diluted
 
12,280

 
11,337

 
12,094

 
11,371

 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$0.13
 
$0.04
 
$0.24
 
$0.06
Diluted earnings per share
 
$0.12
 
$0.04
 
$0.22
 
$0.06