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Acquisitions | 6 Months Ended
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Jun. 30, 2011
Acquisitions [Abstract] |
Acquisitions |
(3) | Acquisitions
(a) Acquisition of Fisk Electric Company On January 3, 2011, the Company completed the acquisition of Fisk Electric Company (“Fisk”), a privately held electrical construction company based in Houston, Texas. Under the terms of the transaction, the Company acquired 100% of Fisk's stock for total consideration of approximately $109.2 million, which includes $105 million in cash paid at closing and additional consideration that may become payable under the terms of the agreement based upon Fisk's operating results over the next three years. The transaction was financed using proceeds from the offering of senior unsecured notes which was completed in October 2010 (see Note 10). Fisk covers many of the major commercial and industrial electrical construction markets in southwestern and southeastern United States locations with the ability to cover other attractive markets nationwide. Fisk's expertise in the design development of electrical and technology systems for major projects spans a broad variety of project types including: commercial office buildings, sports arenas, hospitals, research laboratories, hospitality and casinos, convention centers, and industrial facilities. Fisk had approximately $190 million of backlog as of the date of acquisition. Fisk was acquired because the Company believes that it is a strong strategic fit enabling the Company to expand its nationwide electrical construction capabilities and to realize significant synergies and opportunities in support of the Company's non-residential building and civil operations. The acquisition was effective as of January 1, 2011 for accounting purposes and, accordingly, Fisk's financial results are included in the Company's consolidated results of operations and financial position beginning January 1, 2011. Fisk's operating results were not material to the Company's consolidated results for the three and six month periods ended June 30, 2011. Fisk's operating results are included in the Company's Building segment. (b) Anderson Companies On April 1, 2011, the Company acquired 100% ownership of Anderson Companies (“Anderson”), the privately held parent company of Roy Anderson Corporation, Harrell Contracting Group, LLC and Brice Building Company, LLC. Under the terms of the transaction, the Company acquired 100% of Anderson's stock for total consideration of approximately $67.4 million, which includes $61.9 million in cash and additional consideration that may become payable under the terms of the agreement based upon Anderson's operating results over the next three years. The transaction was financed using proceeds from the offering of senior unsecured notes which was completed in October 2010 (see Note 10). Anderson provides general contracting, design-build, preconstruction, and construction management services to its public and private clients throughout the southeastern United States and has expertise in gaming, hospitality, commercial, government, health care, industrial and educational facilities. Headquartered in Gulfport, Mississippi, Anderson has offices in Birmingham, Alabama; Jackson, Mississippi; New Orleans, Louisiana; and Pensacola, Florida. Anderson had approximately $475 million of backlog as of the date of acquisition. Anderson was acquired because the Company believes that it is a strong strategic fit for the Company's building business and strengthens the Company's position in the southeastern United States. The acquisition was effective as of April 1, 2011 for accounting purposes and, accordingly, Anderson's financial results are included in the Company's consolidated results of operations and financial position beginning April 1, 2011. Anderson's operating results were not material to the Company's consolidated results for the three and six month periods ended June 30, 2011. Anderson's operating results are included in the Company's Building segment. (c) Frontier-Kemper Constructors, Inc. On June 1, 2011, the Company acquired 100% ownership of Frontier-Kemper Constructors, Inc. (“Frontier-Kemper”), a privately held Indiana-based corporation. Under the terms of the transaction, the Company acquired 100% of Frontier-Kemper's stock for a purchase price of approximately $61.7 million in cash, subject to a post-closing adjustment based on the net worth of Frontier-Kemper at closing. In addition, the Company assumed approximately $52 million of debt, of which approximately $35 million was paid off at closing. The transaction was financed using proceeds from the offering of senior unsecured notes which was completed in October 2010 (see Note 10). Headquartered in Evansville, Indiana, Frontier-Kemper builds tunnels for highways, railroads, subways, rapid transit systems as well as shafts and other facilities for water supply and wastewater transport. It also develops and equips mines with innovative hoisting, elevator and vertical conveyance systems for the mining industry. Frontier-Kemper had approximately $300 million of backlog as of the date of acquisition. Frontier-Kemper was acquired because the Company believes that it is a strong strategic fit for the Company's civil business, bolstering the Company's tunneling business in the United States and expanding the Company's geographic reach into Canada. The acquisition was effective as of June 1, 2011 for accounting purposes and, accordingly, Frontier-Kemper's financial results are included in the Company's consolidated results of operations and financial position beginning June 1, 2011. Frontier-Kemper's operating results were not material to the Company's consolidated results for the three and six month periods ended June 30, 2011. Frontier-Kemper's operating results are included in the Company's Civil segment. (d) Information regarding acquisitions that are material in the aggregate The operating results generated by each of these three newly acquired businesses were not material individually to the Company's consolidated results for the three and six month periods ended June 30, 2011. However, on an aggregate basis, the operating results of these three newly acquired businesses collectively did have a material impact on the Company's consolidated results for the three and six month periods ended June 30, 2011. In accordance with the accounting guidance on business combinations, the following disclosures provide information on an aggregate basis with respect to the three newly acquired businesses. The aggregate total purchase consideration related to the acquisitions consisted of the following:
|  | Amount |
(In thousands) |  |  |
Cash consideration |  | $ | 228,626 |
Fair value of contingent consideration |  |  | 9,700 |
Total purchase price consideration |  | $ | 238,326 |
The following table summarizes the aggregate preliminary estimates of the fair values of identifiable assets acquired and liabilities assumed in the acquisitions and the resulting Goodwill as of the acquisition dates. The Company has not yet completed the final allocation of the purchase price to the tangible and Intangible Assets for these acquisitions. The Company is in the process of finalizing the valuations of Property and Equipment of Anderson and Frontier-Kemper, as well as the allocation of identifiable Intangible Assets for Frontier-Kemper. Pending the outcome of further analysis, the preliminary purchase price allocation could change.
|  | Amount |  | Weighted Average Useful Life
(in thousands) |  |  |  |
Identifiable assets acquired and liabilities assumed: |  |  |  |
Cash and Cash Equivalents |  | $ | 105,128 |  |
Accounts Receivable |  |  | 192,629 |  |
Other Assets |  |  | 70,771 |  |
Property and Equipment |  |  | 54,077 |  |
Identifiable Intangible Assets: |  |  |  |  |
Customer relationships |  |  | 4,900 |  | 11 years
Contract backlog |  |  | 4,600 |  | 1.5 years
Trade name |  |  | 22,100 |  |
Goodwill |  |  | 69,157 |  |
Total assets acquired |  |  | 523,362 |  |
Current liabilities |  |  | 224,644 |  |
Net deferred tax liabilities |  |  | 12,329 |  |
Long-term Liabilities |  |  | 48,063 |  |
Total purchase price |  | $ | 238,326 |  |
Intangible assets – Of the total purchase price, $31.6 million has been allocated to customer relationships, contract backlog and trade names. The fair value of these assets will be amortized based on the period over which the economic benefits of the Intangible Assets are expected to be realized. During the period from the acquisition dates through June 30, 2011, the Company recorded $1.5 million of amortization of Intangible Assets related to these acquisitions. Goodwill – Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and Intangible Assets. The factors that contributed to the recognition of Goodwill included talented management teams in place and established market positions that contribute to future cash flow generation. These acquisitions generated $69.2 million of Goodwill, of which $63.3 million is allocated to the Company's Building segment and $5.9 million is allocated to the Company's Civil segment. Approximately $63.3 million of Goodwill acquired is expected to be deductible for tax purposes. The Company recognized $0.7 million and $1.1 million of acquisition related expenses, respectively, for the three and six month periods ended June 30, 2011, which are included in General and Administrative Expenses in the Consolidated Condensed Statements of Operations. These expenses included legal fees, bank fees, consultation fees, travel expenses, and other miscellaneous direct and incremental administrative expenses associated with the acquisitions. Collectively, the amount of revenues and income from construction operations recorded in 2011 related to these three acquisitions is as follows:
| Revenues |  | Income from Construction Operations |
(in thousands) |  |
Three months ended June 30, 2011 |  | $ | 184,494 |  |  | $ | 3,865 |
Six months ended June 30, 2011 |  | $ | 253,859 |  |  | $ | 6,181 |
Unaudited pro forma results of operations The following pro forma financial information presents the results of the Company assuming the acquisitions of Fisk, Anderson and Frontier-Kemper all took place on January 1, 2010.
Pro Forma (unaudited) |  | Three Months Ended |
|  | June 30, 2011 |  |  | June 30, 2010 |
(in thousands, except per share data) |  |  |
Revenues |  | $ | 858,255 |  |  | $ | 1,089,557 |
Income from Construction Operations |  | $ | 42,094 |  |  | $ | 60,858 |
Net Income |  | $ | 22,664 |  |  | $ | 34,123 |
Basic earnings per common share |  | $ | 0.48 |  |  | $ | 0.70 |
Diluted earnings per common share |  | $ | 0.47 |  |  | $ | 0.69 |
Pro Forma (unaudited) |  | Six Months Ended |
|  | June 30, 2011 |  |  | June 30, 2010 |
(in thousands, except per share data) |  |  |
Revenues |  | $ | 1,600,435 |  |  | $ | 2,091,948 |
Income from Construction Operations |  | $ | 68,691 |  |  | $ | 98,489 |
Net Income |  | $ | 33,743 |  |  | $ | 55,246 |
Basic earnings per common share |  | $ | 0.72 |  |  | $ | 1.13 |
Diluted earnings per common share |  | $ | 0.70 |  |  | $ | 1.12 |
The pro forma results have been prepared for comparative purposes only and include certain adjustments such as (i) interest expense on acquisition debt; (ii) adjustments to depreciation expense resulting from the adjustment of fixed asset bases to fair value at acquisition; (iii) additional amortization expense related to identifiable intangible assets arising from the acquisitions; (iv) elimination of acquisition related expenses incurred; and (v) to reflect a statutory income tax rate on the pretax income of Fisk, Anderson and Frontier-Kemper, as well as on the applicable pro forma adjustments made. The pro forma results are not necessarily indicative either of the results of operations that actually would have resulted had the acquisitions been in effect on January 1, 2010 or of future results.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + Details
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