2. Acquisition

On October 2, 2012 (“Closing Date”), we completed our acquisition (the “Central Merger”) of 100% of the outstanding common shares of KCPC Holdings, Inc. (“KCPC”), which was the ultimate parent of Central Parking Corporation (“Central”) for 6,161,332 shares of our common stock and the assumption of $217,675 of Central’s debt net of cash acquired. Additionally, Central’s former stockholders will be entitled to receive cash consideration of $27,000, subject to adjustment, to be paid three years after closing to the extent it is not used to satisfy certain obligations that the Company has been indemnified for, by or from the former Central shareholders. The Company financed the acquisition through additional borrowings under the Senior Credit Facility (defined in Note 11).

Pursuant to the Central Merger agreement, we are entitled to indemnification from the former stockholders of KCPC if and to the extent Central’s combined net debt and the absolute value of Central’s working capital (as determined in accordance with the Merger Agreement) (the “Net Debt Working Capital”) exceeded $285,000 as of September 30, 2012. The Net Debt Working Capital was $300,546 as of September 30, 2012 and, accordingly, the Net Debt Working Capital exceeded $285,000 by $15,546. We have made a formal indemnity claim under the Merger Agreement relating to Net Debt Working Capital.

Central Net Debt Working Capital at September 30, 2012 as defined in the Merger Agreement	$	(300,546	)
Threshold	285,000
Excess over the threshold	(15,546		)
Cash consideration payable in three years	27,000
Cash consideration to be issued	$	11,454
Present value of cash consideration at the acquisition date	$	8,943

Accordingly, the fair value of the final consideration to acquire all of Central’s outstanding stock at the acquisition date is as follows:

Stock consideration	$	140,726
Present value of cash consideration to be issued	8,943
Total consideration transferred	$	149,669

The Company incurred certain acquisition and integration related costs associated with the transaction that were expensed as incurred and are reflected in the Condensed Consolidated Statements of Income. The Company recognized $1,893 and $9,210 of these costs in its Condensed Consolidated Statement of Income for the three and nine months ended September 30, 2013 in general and administrative expenses, respectively.

The acquisition has been accounted for using the acquisition method of accounting (in accordance with the provisions of ASC 805, Business Combinations) which requires, among other things, that most assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date.

The purchase price has been allocated based on the estimated fair value of net assets acquired and liabilities assumed at the date of the acquisition. We have previously reported our preliminary purchase price allocation. We have subsequently finalized the purchase price allocation, which resulted in revision to the previously reported preliminary amounts. The revisions to the purchase price allocation were applied retrospectively back to the date of the acquisition as reflected in the Company’s restated consolidated financial statements included in our Form 10K-A filed on November 18, 2013.

The following table summarizes the fair values of the assets acquired and liabilities assumed in the acquisition as previously reported based on the preliminary allocation and as finalized:

	Preliminary amounts (a)			Amounts as finalized
Net current liabilities	$	(28,041	)	$	(25,444	)
Leasehold improvements, equipment, land and construction in progress, net	24,154			24,781
Identified intangible assets:
Management contracts	81,000			81,000
Favorable lease contracts	51,650			80,235
Trade name / trademarks	14,900			9,100
Existing technology	34,000			34,000
Non-competition agreements	2,600			2,600
Other noncurrent assets	17,748			17,748
Net long-term deferred tax liability	(24,516		)	(22,528		)
Long-term debt	(237,223		)	(237,223		)
Unfavorable lease contracts	(69,316		)	(101,676		)
Other noncurrent liabilities	(19,523		)	(19,523		)
Net liabilities assumed	(152,567		)	(156,930		)
Goodwill	302,236			306,599
Total consideration transferred	$	149,669		$	149,669

(a) These amounts reflect the reclassification of net long-term deferred tax liabilities of $24,434 from net current liabilities to net long term deferred tax liability

The acquired management contracts are being amortized over a weighted average life of 16 years. The favorable and unfavorable lease contracts are being amortized over their contractual lives which results in a weighted average life of 10 and 7 years, respectively. The trade names and trademarks are being amortized over 4 years. The non-compete agreements are being amortized over 1 year. The existing technology is being amortized over 4.5 years. See Note 8 for further disclosure regarding the amortization of the intangible assets.

Goodwill is calculated as the excess of the consideration transferred over the fair value of net assets acquired. Goodwill is not amortized and is not deductible for tax purposes. Goodwill represents expected synergies with the Company’s existing operations, which include growth of new and existing customers, elimination of corporate overhead redundancies, and logistical improvements.

A single estimate of fair value results from a complex series of the Company’s judgments about future events and uncertainties and relies heavily on estimates and assumptions. The Company’s judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as assets lives, can materially impact the Company’s results of operations.