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Business Combinations
 9 Months Ended
Jun. 30, 2012
Business Combinations [Abstract]  
Business Combinations

(2)        Business Combinations

 

            Acquisition of IZI Medical Products, LLC

 

            On November 14, 2011, Landauer acquired all of the outstanding equity interests of IZI Medical Products, LLC (“IZI”), a leading provider of high quality medical consumable accessories used in radiology, radiation therapy, and image guided surgery procedures, for $93,000 plus working capital and the assumption of liabilities.  The Company completed the acquisition of IZI as a platform to expand into the radiation oncology, radiology, and image guided surgery end markets.  The operating results of IZI are reported in the Medical Products reporting segment.

 

            A portion of the purchase price, in the amount of $26,941, was applied to repay the outstanding indebtedness of IZI and certain unpaid expenses incurred by IZI and other disclosed parties in connection with the transaction.  Landauer also deposited $9,300 of the purchase price into an escrow account, which will be held until January 2013 and applied to the settlement of the IZI seller’s indemnification obligations, if any, in connection with the transaction.  The Company funded the acquisition through borrowings under the new credit agreement with a syndicate of lenders led by BMO Harris and PNC Bank.

 

            The following table summarizes the $94,283 of consideration transferred to acquire IZI and the assets acquired and liabilities assumed based on their fair values as of the date of the acquisition.

 

 

            The excess of the consideration transferred over the fair value of the net tangible and intangible assets acquired resulted in goodwill of $64,069, which is attributable primarily to the earnings power of the future products and services expected to be produced by IZI, new customer expansion opportunities in adjacent markets that are expected to result from the business combination with Landauer, and the potential to acquire or merge with other businesses. The goodwill has been assigned to the Medical Products reporting segment.  For income tax purposes, the Company will deduct $64,641 of goodwill, which will be amortized over 15 years.  The Company acquired trademarks and tradenames in the amount of $2,000 which have indefinite lives, patents in the amount of $2,000 which are being amortized over 7 years, and $23,000 of customer relationships which are being amortized over 15 years.  For income tax purposes, the values of the trademarks and tradenames, patents and customer relationships will be amortized over 15 years.

 

            IZI’s revenues of $10,454 and net income of $2,719 were recognized in the Company’s consolidated financial statements for the period from November 14, 2011 to June 30, 2012.

 

            Unaudited Proforma Results

 

            The following unaudited proforma summary presents Landauer’s consolidated information as if IZI had been acquired on October 1, 2010.

 

 

 

 

 

 

 

 

Nine months ended June 30,

 

2012

 

2011

Proforma revenues

$

117,226

 

$

103,922

Proforma net income attributed to Landauer, Inc.

 

18,735

 

 

18,643

 

            The proforma results include adjustments to IZI’s accounting policies to align with those of Landauer.  Certain other adjustments to IZI’s results, together with the consequential tax effects, include: customer freight expense netted against customer freight revenues; increased costs to reflect the impact of the increase, upon acquisition, in finished goods fair value; additional amortization for intangible assets; elimination of management fees charged by IZI’s former majority shareholder; and elimination of IZI’s interest expense related to its pre-existing debt agreements.  The proforma adjustments also reflect: additional interest expense incurred in connection with debt financing of the acquisition compared to interest expense under its pre-existing debt agreements; amortization of debt issuance costs; and the income tax impact of these adjustments.  The unaudited proforma information is not necessarily indicative of the results of operations that would have been achieved if the acquisition had been effective as of the beginning of the periods presented.

 

            Other Acquisitions

 

            During the first nine months of fiscal 2012, the Company completed the acquisition of a medical physics practice in North Carolina, which was not material to the Company’s consolidated financial statements.  During the first nine months of fiscal 2011, the Company established an unconsolidated joint venture in Turkey and completed the acquisition of two diagnostics physics practices, none of which were individually, or in the aggregate, material to the Company's consolidated financial statements.