Business Combinations

12 Months Ended

Sep. 30, 2014

Business Combinations

8) Business Combinations

During fiscal 2014, including the acquisition of Griffith Energy Services, Inc. (“Griffith”) discussed in more detail below, the Partnership acquired three heating oil dealers for an aggregate purchase price of approximately $98.5 million. The gross purchase price of all three heating oil dealers were allocated $53.7 million to intangible assets, $17.6 million to fixed assets and $27.2 million to working capital. Each acquired company’s operating results are included in the Partnership’s consolidated financial statements starting on its acquisition date. Customer lists, other intangibles and trade names are amortized on a straight-line basis over seven to twenty years.

During fiscal 2013, the Partnership acquired two heating oil dealers for an aggregate purchase price of approximately $1.4 million. The gross purchase price was allocated $1.3 million to intangible assets, $0.2 million to fixed assets and reduced by $0.1 million for working capital credits.

During fiscal 2012, the Partnership acquired seven heating oil and propane dealers for an aggregate purchase price of approximately $39.2 million. The gross purchase price was allocated $32.4 million to intangible assets, $8.0 million to fixed assets and reduced by $1.2 million for working capital credits.

On March 4, 2014 (the “Acquisition Date”), the Partnership completed the acquisition of Griffith of Columbia, Maryland, from Central Hudson Enterprises Corporation. The Partnership purchased 100% of the stock of Griffith for $97.7 million, consisting of $69.9 million paid for the long term assets and $27.8 million paid for working capital (net of $4.2 million of cash acquired). There was no long-term debt assumed in the acquisition. The business reason for this acquisition is that Griffith, being a 100-year-old brand that is broadly recognized as a premier fuel and service provider in its territories, is an excellent strategic fit for the Partnership. The Griffith acquisition adds scale to the Partnership and leverages our existing fixed cost base, providing access to approximately 50,000 residential and commercial accounts across the Mid-Atlantic region.

The following table summarizes the final fair values and purchase price allocation at the acquisition date, of the assets acquired and liabilities assumed related to the Griffith acquisition as of the Acquisition Date.

(in thousands)	As of Acquisition Date
Trade accounts receivable (a)	$	49,010
Inventories		5,143
Other current assets		2,984
Property and equipment		17,263
Customer lists, trade names and other intangibles		44,400
Other long term assets		1,778
Current liabilities		(31,096	)
Total net identifiable assets acquired	$	89,482
Total consideration	$	97,650
Less: Total net identifiable assets acquired		89,482
Goodwill	$	8,168

(a) The gross contractual receivable amount is $50.7 million, and the best estimate at the Acquisition Date of the contractual cash flows not expected to be collected is $1.7 million.

The total costs of $0.8 million related to this acquisition ($1.0 million for all three heating oil dealers acquired in fiscal 2014) are included in the Consolidated Statement of Operations under general and administrative expenses for the twelve months ended September 30, 2014.

All of the $8.2 million of goodwill relating to the Griffith acquisition is expected to be deductible for income tax purposes.

Included in our consolidated statement of operations from the Acquisition Date through September 30, 2014, are Griffith’s sales and net (loss) before income taxes of $139.1 million and $(3.0) million, respectively.

The following table provides unaudited pro forma results of operations as if the Griffith acquisition had occurred on October 1, 2012, the beginning of fiscal year 2013. The unaudited pro forma results were prepared using Griffith’s current and prior year financial information, reflecting certain adjustments related to the acquisition, such as the elimination of directly attributable acquisition expenses and changes to depreciation and amortization expenses. These pro forma adjustments do not include any potential synergies related to combining the businesses. Accordingly, such pro forma operating results were prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the acquisition been made as of October 1, 2012 or of results that may occur in the future.

	September 30,
(in thousands)	2014		2013
Total sales	$	2,132,430	$	2,040,271
Net income	$	40,903	$	31,557