2. Acquisition
Houston Service Center
On June 29, 2012, Furmanite America, Inc., a wholly owned subsidiary of the Company, entered into and consummated an Asset Purchase Agreement to acquire certain assets, including inventory, equipment and intangible assets, all of which relate to operations in the Americas, of the Houston Service Center (“HSC”) of MCC Holdings, Inc., a wholly owned subsidiary of Crane Energy Flow Solutions, for total cash consideration of $9.3 million. HSC provides valve and actuator repair, maintenance and testing services to customers in the refining, petrochemical and power industries. In connection with the acquisition, the Company borrowed an additional $9.3 million from its existing revolving credit facility.
The following amounts represent the final determination of the fair value of the assets acquired and liabilities assumed (in thousands):
|
Fair value of net assets acquired |
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|
Inventory |
$ | 680 | ||
|
Property and equipment |
2,799 | |||
|
Goodwill 1 |
900 | |||
|
Intangible assets 2 |
4,924 | |||
|
Accrued expenses |
(41 | ) | ||
|
|
|
|||
|
Fair value of net assets acquired |
$ | 9,262 | ||
|
|
|
| 1 |
Goodwill, which relates to the Americas, consists of intangible assets that do not qualify for separate recognition and is not deductible for tax purposes. |
| 2 |
Intangible assets are primarily comprised of backlog, customer contracts, favorable lease terms and non-compete arrangements. |
Self Leveling Machines, Inc. and Self Levelling Machines Pty. Ltd.
On February 23, 2011, Furmanite Worldwide, Inc. (“FWI”), a wholly owned subsidiary of the Parent Company, entered into a Stock Purchase Agreement to acquire 100% of the outstanding stock of Self Leveling Machines, Inc. and a subsidiary of FWI entered into an Asset Purchase Agreement to acquire substantially all of the material operating and intangible assets of Self Levelling Machines Pty. Ltd. (collectively, “SLM”) for total consideration of $8.9 million, net of cash acquired of $1.2 million, of which approximately $4.7 million relates to the Americas and the balances relates to Asia-Pacific. SLM provides large scale on-site machining, which includes engineering, fabrication and execution of highly-specialized machining solutions for large-scale equipment or operations.
In connection with the SLM acquisition, on February 23, 2011, FWI entered into a consent and waiver agreement under its credit agreement. See Note 8, “Long-Term Debt,” to these consolidated financial statements for additional information as it relates to the credit agreement. FWI funded the cost of the acquisition with $5.0 million in cash and by issuing notes payable (the “Notes”) to the sellers’ equity holders for $5.1 million.
The following amounts represent the final determination of the fair value of the assets acquired and liabilities assumed (in thousands):
|
Fair value of net assets acquired |
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|
Cash |
$ | 1,185 | ||
|
Accounts receivable |
224 | |||
|
Prepaid expenses and other current assets |
46 | |||
|
Property and equipment |
5,124 | |||
|
Goodwill 1 |
1,476 | |||
|
Intangible and other assets 2 |
3,785 | |||
|
Accrued expenses and other current liabilities |
(100 | ) | ||
|
Deferred tax liabilities |
(1,690 | ) | ||
|
|
|
|||
|
Fair value of net assets acquired |
$ | 10,050 | ||
|
|
|
| 1 |
Goodwill, which relates to the Americas, consists of intangible assets that do not qualify for separate recognition and is not deductible for tax purposes. |
| 2 |
Intangible assets are primarily comprised of trademarks, patents, and non-compete arrangements. Other assets consist of acquired interests in equity and cost method investments. |
The HSC and SLM acquisitions were not material to the Company’s financial position or results of operations, therefore, HSC and SLM’s pro forma results would not have a material impact on the Company’s results had the acquisition occurred at the beginning of the current or previous year.