2. Acquisition

Western Pacific Enterprises Ltd.

On October 28, 2016, the Company completed the acquisition of substantially all of the assets of Western Pacific Enterprises GP and of Western Pacific Enterprises Ltd., except for certain real estate owned by Western Pacific Enterprises Ltd., with the company continuing operations under the name Western Pacific Enterprises Ltd. (“WPE”), an electrical contracting firm in western Canada. With its main headquarters in Coquitlam, British Columbia, WPE provides a wide range of commercial and industrial electrical construction capabilities under the Company’s C&I segment. WPE also provides substation construction capabilities under the Company’s T&D segment. The total consideration paid was approximately $12.1 million, which was funded through borrowings from our line of credit. Total consideration paid included $2.2 million subject to potential net asset adjustments once finalized by the end of 2017 as stipulated in the purchase agreement. These net asset adjustments were approximately $0.8 million as of the October 28, 2016 closing date and as of September 30, 2017. The Company accounted for the net asset adjustments as a reduction to consideration paid which will be funded through the return of funds held in a $1.9 million escrow account, established at the time of purchase.

The purchase agreement also includes contingent consideration provisions for margin guarantee adjustments based upon performance subsequent to the acquisition on certain contracts. Changes in contingent consideration related to the margin guarantee adjustments on certain contracts of approximately $1.5 million was recorded in other expense and $0.2 million was recorded in other income for the three and nine months ended September 30, 2017, respectively. Future margin guarantee adjustments, if any, are expected to be recognized in the fourth quarter of 2017 and in 2018. In the event these margin guarantee adjustments exceed the amounts remaining in escrow, the Company is entitled under the WPE purchase agreement to recourse against the sellers. The Company may incur losses to the extent any amounts in excess of the escrow are not recovered from the sellers in the WPE acquisition. The Company could also be required to make compensation payments contingent on the successful achievement of certain performance targets and continued employment of certain key executives of WPE. These payments are recognized as compensation expense in the consolidated statement of operations as incurred. The Company has recognized approximately $0.3 million of compensation expense associated with these contingent payments since the WPE acquisition.

The results of operations for WPE are included in the Company’s consolidated statement of operations and the C&I segment from the date of acquisition. Costs of approximately $0.4 million related to the acquisition were included in selling, general and administrative expenses in the consolidated statement of operations for the year ended December 31, 2016.

The following table summarizes the allocation of the opening balance sheet from the date of acquisition through September 30, 2017:

(in thousands)	(as of acquisition date) October 28, 2016		Measurement Period Adjustments		Adjusted acquisition amounts as of September 30, 2017

Total consideration, net of net asset adjustments	$	11,283	$	—	$	11,283

Accounts receivable, net	$	20,249	$	—	$	20,249
Costs and estimated earnings in excess of billings on uncompleted contracts		1,610		—		1,610
Other current assets		8		—		8
Property and equipment		4,108		46		4,154
Intangible assets		—		501		501
Accounts payable		(10,125)		—		(10,125)
Billings in excess of costs and estimated earnings on uncompleted contracts		(3,020)		—		(3,020)
Other current liabilities		(2,294)		—		(2,294)
Net identifiable assets		10,536		547		11,083
Unallocated intangible assets		747		(747)		—
Goodwill	$	—	$	200	$	200

The Company has developed preliminary estimates of fair value of the assets acquired and liabilities assumed for the purposes of allocating the purchase price. Further adjustments are expected to the allocation as net asset adjustments are finalized. A portion of the goodwill is expected to be tax deductible per applicable Canadian Revenue Authority regulations. The Company expects to complete the purchase accounting in the fourth quarter of 2017.