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ACQUISITIONS
12 Months Ended
Sep. 30, 2011
ACQUISITIONS 
ACQUISITIONS

2. ACQUISITIONS

Fiscal 2011

During fiscal 2011, the Company, through its wholly-owned subsidiary, acquired the convenience store distribution assets of L.P. Shanks Company Inc. ("LPS"). LPS was a wholesale distributor to convenience stores in Tennessee, Kentucky, Georgia, Virginia, West Virginia, and North Carolina with annual sales of approximately $200 million. In exchange for certain accounts receivable, inventory, property and equipment, and customer lists of LPS, the Company paid $13.4 million in cash, issued a $2.6 million note payable due to the seller due in quarterly installments over three years and bearing interest at 4% annually, and will also pay a total of $0.5 million over five years in annual installments related to a non-competition agreement with the seller. The Company also entered into warehouse leases with the seller and assumed certain operating leases in conjunction with the transaction. No significant liabilities were assumed in connection with the transaction and the costs incurred to effectuate the acquisition were expensed as incurred. The transaction was funded through the Company's existing credit facility and the issuance of a note payable to the seller. The acquisition expands the Company's strategic footprint in the Southeastern portion of the United States and enhances our ability to service customers in that region.

The following table summarizes the consideration paid for the acquired assets and their related acquisition date fair values. The fair value of the assets acquired have been measured in accordance with Accounting Standards Codification ("ASC") 805 "Business Combinations." In valuing identifiable intangible assets, the Company has estimated the fair value using the discounted cash flows methodology. The acquired assets are reported as a component of our Wholesale Segment.

Total Consideration
  Amount
(in millions) 		 

Cash

   $ 13.4  

Note payable

     2.6  

Non-competition agreement

     0.4  
       

Total fair value of consideration transferred

   $ 16.4  
       

Recognized amounts of identifiable net assets acquired

 
   Amount
(in millions) 		  Weighted
Average
Amortization
Period		  

Accounts Receivable

   $ 8.9     —  

Inventory

     4.6     —  

Property and equipment

     1.8     5 years  

Identifiable intangible assets:

              
 

Non-competition agreement

     0.5     5 years  
 

Customer relationships

     0.5     8 years  

Liabilities

     (0.1 )      
             

Total identifiable net assets

     16.2        

Goodwill

     0.2        
             

Total identifiable net assets and goodwill

   $ 16.4        
             

Goodwill totaling approximately $0.2 million arose from the acquisition and primarily represents synergies and economies of scale expected to be generated through reductions in selling, general, and administrative expenses. This goodwill has been assigned to the Company's Wholesale Segment and is expected to be deductible for tax purposes. No significant measurement adjustments related to this transaction were recorded during fiscal 2011.

The following table sets forth the unaudited actual revenue and earnings included in the Company's statement of operations related to the acquisition and the pro forma revenue and earnings of the combined entity if the acquisition had occurred as of the beginning of the Company's prior fiscal year. These pro forma amounts do not purport to be indicative of the actual results that would have been obtained had the acquisition occurred at that time.

 
   Twelve Months Ended
September 		 
(In millions)
  2011   2010  

Revenue—Actual Results

   $ 1,041.6   $ 1,010.5  

Revenue—Supplemental pro forma results

   $ 1,175.4   $ 1,210.2  

Net Income—Actual Results

   $ 8.1   $ 9.0  

Net Income—Supplemental pro forma results

   $ 7.9   $ 8.9  

Fiscal 2010

During fiscal 2010, the Company acquired the convenience store distribution assets of Discount Distributors from its parent Harps Food Stores, Inc. ("Harps"). Discount Distributors was a wholesale distributor to convenience stores in Arkansas, Oklahoma, and Missouri with annual sales of approximately $59.6 million. The Company paid $3.1 million cash, issued a $0.5 million note payable due in quarterly installments over two years, and could pay an additional $1.0 million in contingent consideration for certain property and equipment, inventory, and customer lists of Discount Distributors. The contingent consideration was based on achieving a predetermined two-year revenue target. This transaction was funded through the Company's existing credit facility and no significant liabilities were assumed in connection with the transaction. The costs incurred to effectuate the acquisition were not significant and were expensed as incurred. The acquisition expanded the Company's strategic footprint in the southern portion of the United States and enhanced our ability to service customers in that region.

The following table summarizes the consideration paid for the acquired assets and their related acquisition date fair values. The fair value of the assets acquired have been measured in accordance with ASC 805 "Business Combinations." In valuing identifiable intangible assets, the Company has estimated the fair value using the discounted cash flows methodology. The acquired assets are reported as a component of our Wholesale Segment.

Total Consideration
  Amount
(in millions) 		 

Cash

   $ 3.1  

Note payable

     0.5  

Fair value of contingent consideration

     0.4  
       

Fair value of consideration transferred

   $ 4.0  
       

Recognized amounts of identifiable assets acquired

 
   Amount
(in millions) 		  Weighted
Average
Amortization
Period		  

Inventory

   $ 2.0     —  

Property and equipment

     0.1     5 years  

Identifiable intangible assets:

              
 

Customer relationships

     1.6     8 years  
             

Total identifiable net assets

     3.7        

Goodwill

     0.3        
             

Total identifiable assets and goodwill

   $ 4.0        
             

The Company has estimated that the undiscounted payments required under the contingent consideration arrangement was approximately $0.7 million ($0.4 million fair value). Goodwill totaling approximately $0.3 million arose from the acquisition and primarily represents synergies and economies of scale generated through reductions in selling, general, and administrative expenses. This goodwill has been assigned to the Company's Wholesale Segment and is deductible for tax purposes. No measurement adjustments related to this transaction were recorded during either fiscal 2011 or fiscal 2010. Because the acquisition was consummated during the first quarter of fiscal 2010, there were no are differences between actual and pro forma revenue and earnings.