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LEEVAC TRANSACTION | 12 Months Ended
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Dec. 31, 2016
Business Combinations [Abstract] |
LEEVAC TRANSACTION | LEEVAC TRANSACTION On January 1, 2016, we acquired substantially all of the assets and assumed certain specified liabilities of LEEVAC Shipyards, L.L.C. and its affiliates (“LEEVAC”). The purchase price for the acquisition was $20.0 million, subject to a working capital adjustment whereby we received a dollar-for-dollar reduction for the assumption of certain net liabilities of LEEVAC and settlement payments applied from sureties on certain ongoing fabrication projects that were assigned to us in the transaction. After taking into account these adjustments, we received approximately $1.6 million in cash at closing. During the fourth quarter, we finalized our working capital true-up with the seller and received $1.4 million for additional working capital resulting in an adjustment to the initial purchase price accounting values as further discussed below. Included in our consolidated balance sheet as of December 31, 2016 are assets of $52.2 million and liabilities of $54.0 million from the operations and assets acquired in the LEEVAC transaction. The results of LEEVAC are included in our consolidated statements of operations for the year ended December 31, 2016. Revenue and net (loss) income included in our results of operations and attributable to the assets and operations acquired in the LEEVAC transaction were $75.6 million and $(1.8) million for the year ended December 31, 2016, respectively. Included in revenue was $5.2 million in non-cash amortization of deferred revenue related to the values assigned to the contracts acquired in the LEEVAC transaction. The facilities acquired in the LEEVAC transaction are leased and operated under lease and sublease agreements as follows:
• | Jennings Shipyard - Our Jennings Shipyard is an 180-acre complex five miles east of Jennings, Louisiana, on the west bank of the Mermentau River approximately 25 miles north of the Intracoastal waterway that we lease from a third party. The Jennings Shipyard includes over 100,000 square feet of covered fabrication area including a panel line, pipe shop and 3,000 feet of water frontage with two launch ways and four covered construction bays. The lease, including exercisable renewal options, extends through January 2045.
• | Lake Charles Shipyard - Our Lake Charles Shipyard is a 10-acre complex 17 miles from the Gulf of Mexico on the Calcasieu River near Lake Charles, Louisiana, that we sublease from a third party. The Lake Charles Shipyard includes 1,100 feet of bulkhead water frontage with a water depth of 40 feet located one mile from the Gulf Intracoastal Waterway and is located near multiple petrochemical plants. The sublease, including exercisable renewal options (subject to sublessor renewals), extends through July 2038.
• | Prospect Shipyard - We lease a 35-acre complex 26 miles from the Gulf of Mexico near Houma, Louisiana, from the former owner of LEEVAC Shipyards, currently the Senior Vice President of our Shipyards division. Payment terms are approximately $67,000 per month. The lease expires 90 days following the completion of either of the two vessels currently under construction at the facility, but no later than August 31, 2017. We expect to move the machinery and equipment at this shipyard to our remaining Shipyard division facilities prior to or at expiration of the lease.
Strategically, the LEEVAC transaction expands our marine fabrication and repair and maintenance presence in the Gulf South market. We acquired approximately $121.2 million of newbuild construction backlog inclusive of approximately $9.2 million of purchase price fair value allocated to four, newbuild construction projects to be delivered in 2017 and 2018 for two customers. Additionally, we hired 380 employees representing substantially all of the former LEEVAC employees. We finalized our working capital true-up with the seller during the fourth quarter of 2016, which resulted in an additional receipt of cash of $1.4 million. We have recorded adjustments to the initial purchase price accounting values based upon the actual working capital values that we presented. Our working capital true-up resulted from a $2.1 million reduction in the seller payment owed for prepaid contracts and a $3.6 million decrease in the actual value of working capital (primarily accounts receivable and accounts payable) that we received. We also recorded an adjustment of $2.1 million to the purchase price valuation allocated to machinery and equipment. The tables below present the total cash received as reported in our consolidated statements of cash flows, the amounts received from the seller and the corresponding fair values assigned to the assets and liabilities acquired from LEEVAC which includes the effect of the working capital true-up and our updated valuation of machinery and equipment.
|  |  | As Originally Reported |  | Adjustment from Working Capital True-up |  | Valuation Adjustment |  | Fair Value
Assets: |  |  |  |  |  |  |  |
| Accounts receivable |  | $ | 3,544 |  |  | $ | (1,882 | ) |  | $ | — |  |  | $ | 1,662 |
| Inventory |  | 4,938 |  |  | 724 |  |  | — |  |  | 5,662 |
| Prepaid expenses and other assets |  | — |  |  | 57 |  |  | — |  |  | 57 |
| Machinery and equipment |  | 23,056 |  |  | — |  |  | 2,118 |  |  | 25,174 |
| Intangible assets (leasehold interests) |  | 2,123 |  |  | — |  |  | — |  |  | 2,123 |
Liabilities: |  |  |  |  |  |  |  | — |
| Accounts payable and accrued expenses |  | 6,003 |  |  | 2,464 |  |  | — |  |  | 8,467 |
| Deferred revenue and below market contracts |  | 29,246 |  |  | — |  |  | — |  |  | 29,246 |
Net cash received from seller |  | $ | 1,588 |  |  | $ | 3,565 |  |  | $ | (2,118 | ) |  | $ | 3,035 |
|  |  | As Originally Reported |  | Adjustment from Working Capital True-up |  | Adjusted
Consideration received upon acquisition of LEEVAC: |  |  |  |  |  |
| Seller payment for prepaid contracts (1) |  | $ | 16,942 |  |  | $ | (2,118 | ) |  | $ | 14,824 |
| Surety payments related to assigned contracts (2) |  | 7,125 |  |  | — |  |  | 7,125 |
Sub-total |  | 24,067 |  |  | (2,118 | ) |  | 21,949 |
Less: |  |  |  |  |  |
| Working capital assumed |  | 2,479 |  |  | (3,565 | ) |  | (1,086 | )
| Net cash due to the Company |  | 1,588 |  |  | 1,447 |  |  | 3,035 |
Sub-total |  | 4,067 |  |  | (2,118 | ) |  | 1,949 |
Purchase price |  | $ | 20,000 |  |  | $ | — |  |  | $ | 20,000 |
__________
(1) | Payment from seller for customer payments received in advance of progress on contracts assigned to us concurrent with the closing of the LEEVAC transaction.
(2) | Payments from sureties in connection with the release of further obligations related to contracts assigned to us concurrent with the closing of the LEEVAC transaction.
Pro Forma Results of Acquisitions The results of the LEEVAC Transaction are fully incorporated in our financial statements for the year ended December 31, 2016 as the transaction occurred on January 1, 2016. The table below presents our pro forma results of operations for the year ended December 31, 2015 assuming that we acquired substantially all of the assets and certain specified liabilities of LEEVAC on January 1, 2015 (in thousands):
Year Ended December 31, 2015 |  | Pro forma adjustments |  |  |
|  | Historical results |  | LEEVAC |  | Adjustments |  |  | Pro forma results
Revenue |  | $ | 306,120 |  |  | $ | 87,239 |  |  | $ | — |  |  |  | $ | 393,359 |
Net income (loss) |  | $ | (25,364 | ) |  | $ | (4,655 | ) |  | $ | 3,738 |  | (1) |  | $ | (26,281 | )
______________ (1) Adjustments to historical results are as follows:
|  | Year Ended December 31, 2015
Effect of purchase price depreciation |  | $ | 1,217 |
Elimination of interest expense |  | 2,038 |
Income taxes |  | 483 |
Total |  | $ | 3,738 |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1497-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1490-128463 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1392-128463 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1486-128463 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4845-128472 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1524-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4922-128472 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4934-128472 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4926-128472 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=73530397&loc=SL65897772-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1383-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479 + Details
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