Acquisitions

Blackhawk

On November 1, 2016, we completed a transaction to acquire all outstanding shares in Blackhawk Group Holdings, Inc., the ultimate parent company of Blackhawk Specialty Tools LLC, ("Blackhawk") pursuant to the terms of a definitive merger agreement ("Merger Agreement") dated October 6, 2016. Blackhawk is a leading provider of well construction and well intervention services and products. In conjunction with the acquisition, FI Tools Holdings, LLC, our newly formed subsidiary, merged with and into Blackhawk with Blackhawk, surviving the Merger as our wholly-owned subsidiary. The merger consideration was comprised of a combination of $150.4 million of cash on hand and 12.8 million shares of our common stock ("Common Stock"), on a cash-free, debt-free basis, for total consideration of $294.6 million (based on our closing share price on October 31, 2016 of $11.25 and including working capital adjustments).

Accordingly, the results of Blackhawk's operations from November 1, 2016 are included in our consolidated financial statements. For the year ended December 31, 2016, Blackhawk contributed revenue of $10.0 million and operating losses of $7.4 million.

In accordance with accounting guidance for business combinations, the unaudited pro forma financial information presented below assumes the acquisition was completed January 1, 2015, the first day of the fiscal year 2015. This unaudited pro forma financial information does not necessarily represent what would have occurred if the transaction had taken place on the date presented and should not be taken as representative of our future consolidated results of operations. The unaudited pro forma financial information includes adjustments for amortization expense for identified intangible assets and depreciation expense based on the fair value and estimated lives of acquired property, plant and equipment. In addition, acquisition related costs are excluded from the unaudited pro forma financial information.

The following table shows our unaudited financial information for the years ended December 31, 2016 and 2015, respectively (in thousands, except per share amounts):



	Pro Forma (Unaudited)
	Year Ended December 31,
	2016			2015
Revenue	$	544,798		$	1,109,559
Net income (loss) applicable to common shares	$	(161,527	)	$	68,215
Income (loss) per common share:
Basic	$	(0.86	)	$	0.41
Diluted	$	(0.86	)	$	0.42

The Blackhawk acquisition was accounted for as a business combination. As described in Note 10 - Fair Value Measurements, the purchase price is allocated to the fair value of assets acquired and liabilities assumed based on a discounted cash flow model and goodwill is recognized for the excess consideration transferred over the fair value of the net assets. While we use our best estimates and assumptions as a part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the business combination date, our estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the purchase price allocation period, which is generally 1 year from the business combination date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. These adjustments will not result in an impact to our consolidated statements of operations.

The following table summarizes the fair values of the assets acquired and liabilities assumed as part of the Blackhawk acquisition as determined in accordance with business combination accounting guidance (in thousands):



	November 1, 2016
Current assets, excluding cash	$	23,626
Property, plant and equipment	45,091
Other long-term assets	3,139
Intangible assets	41,972
Assets acquired	$	113,828
Current liabilities assumed	11,132
Other long-term liabilities	542
Liabilities assumed	$	11,674
Fair value of net assets acquired	102,154
Total consideration transferred	294,563
Goodwill	$	192,409

The amount allocated to intangible assets was attributed to the following categories (in thousands):



	December 31, 2016		Estimated Useful Lives in Years
Intellectual property	$	9,741	1-10
Customer relationships	24,024		5
Trade Name/Trademark	8,207		3
	$	41,972

These intangible assets are amortized on a straight-line basis, which is presented in depreciation and amortization in our consolidated statements of operations.

The intention of this transaction was to augment our tubular services business by providing us the opportunity to diversify our offerings and emerge as a leader in a new business line and a significantly larger addressable market. In addition to what we believe is a line of well-regarded, market leading, technically differentiated specialty cementation tools, Blackhawk also provides well intervention products through its line of brute packers and related products, and is continuing its development of products for onshore and offshore applications. In conjunction with the merger, we created a fourth segment, Blackhawk, and have recorded goodwill of $192.4 million in that segment.

Timco

On April 1, 2015, Frank’s International, LLC, a Texas limited liability company (“Frank’s LLC”) and an indirect wholly-owned subsidiary of FICV completed a transaction, which was not a significant acquisition, to purchase all of the outstanding equity interests of Timco Services, Inc. ("Timco"), a Louisiana corporation with a strong presence in the Permian Basin and Eagle Ford Shale regions, in exchange for consideration consisting of (i) approximately $81.0 million inclusive of a tax reimbursement payment of $8.0 million as well as closing adjustments for normal operating activity and customary purchase price adjustments and (ii) contingent consideration of up to $20.0 million, payable in two separate payments of $10.0 million based upon exceeding certain targets of the United States land rotary rig count, as reported by Baker Hughes, over prescribed time periods. As of December 31, 2016, the contingent consideration had a fair value of approximately $7.0 thousand. Due to the low rig count, we were not obligated to make the first contingent consideration payment due on December 31, 2016. In addition, each party agreed to indemnify the other for breaches of representations and warranties, breaches of covenants and certain other matters, subject to certain exceptions.

The Timco acquisition was accounted for as a business combination in accordance with accounting guidance. The purchase price is allocated to the fair value of assets acquired and liabilities assumed based on a discounted cash flow model and goodwill is recognized for the excess consideration transferred over the fair value of the net assets. We recognized $4.9 million of goodwill. The goodwill was assigned to the U.S. Services segment and is deductible for tax purposes. The purchase price allocation was finalized during the fourth quarter of 2015.

In connection with the Timco acquisition, we acquired intangible assets in the amount of $7.9 million related to customer relationships, trade names and non-compete clauses. The intangible assets are amortized over their estimated useful lives. Amortization expense for the intangible assets for the Timco acquisition was $1.8 million and $1.4 million for the years ended December 31, 2016 and 2015, respectively.