2. ACQUISITIONS

In November 2015, Team and Furmanite Corporation (“Furmanite”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) under which we would acquire all the outstanding shares of Furmanite in a stock transaction initially valued at $335.0 million, including the assumption of debt. Under the terms of the Merger Agreement, Furmanite shareholders will receive 0.215 shares of Team common stock for each share of Furmanite common stock they own. We expect to complete the business combination in the first calendar quarter of 2016.

In July 2015, we acquired Qualspec for total cash consideration of $255.6 million, which could have been increased by $10.0 million depending upon the operating results of Qualspec through the end of calendar year 2015. Based on our current expectation of Qualspec results through the end of the calendar year, we no longer believe any additional amount will be payable and, accordingly, have reversed our initial contingent consideration obligation of $5.8 million to zero with a corresponding decrease to goodwill. Qualspec is a leading provider of non-destructive testing (“NDT”) services in the United States, with significant operations in the West Coast, Gulf Coast and Mid-Western areas of the country. The acquisition is expected to add about $180.0 million of annual revenue to our operations and nearly 1,000 new employees to our human capital resources. Qualspec results are included in the IHT segment. The purchase of Qualspec was financed through borrowings under our new banking credit facility. Our consolidated results include the activity of Qualspec beginning on the acquisition date of July 7, 2015.

The following table presents the preliminary purchase price allocation for Qualspec (in thousands):


	July 7, 2015
	(unaudited)
Cash and cash equivalents	$	3,981
Accounts receivable		20,445
Current deferred tax assets		279
Prepaid expenses		1,049
Plant, property and equipment		15,472
Intangible assets		74,700
Goodwill		145,440
Non-current deferred tax asset		3,459
Other assets		147

Total assets acquired	$	264,972

Accounts payable	$	2,892
Other accrued liabilities		6,448

Total liabilities assumed		9,340

Net assets acquired	$	255,632

The preliminary purchase price allocation shown above is based upon the fair values at acquisition date. Team is in the process of obtaining third-party valuations of certain items in property, plant and equipment and intangible assets, as well as valuing contingent consideration thus, the provisional measurements of contingent consideration, property, plant and equipment, intangible assets, goodwill and deferred tax asset are subject to change. The fair values recorded are “Level 3” measurements as defined in Note 10. The intangible assets recognized are being amortized over the life of one to fifteen years.

Our unaudited pro forma consolidated results of operations are shown below as if the acquisition of Qualspec had occurred at the beginning of fiscal years 2015 and 2016. These results are not necessarily indicative of the results which would actually have occurred if the purchase had taken place at the beginning of fiscal years 2015 or 2016, nor are they necessarily indicative of future results (in thousands, except per share data).


	Pro forma data Three Months Ended November 30,		Pro forma data Six Months Ended November 30,
	2014		2015		2014
	(unaudited)		(unaudited)		(unaudited)
Revenues	$	287,003	$	521,388	$	514,763
Net income	$	18,255	$	13,261	$	25,597
Earnings per share:
Basic	$	0.88	$	0.64	$	1.24
Diluted	$	0.84	$	0.62	$	1.17

In June 2015, we purchased an advanced valve leader located in Long Beach, California, with a portfolio of projects from various sectors including oil and gas refining, pipelines and power generation for a total consideration of $12.3 million, net of cash acquired of $0.1 million. The purchase price included net working capital of $3.0 million, $0.6 million in fixed assets and $8.8 million in intangibles that includes $2.5 million allocated to goodwill. The purchase price also included $1.8 million of contingent consideration. The contingent consideration is based upon the achievement of certain performance targets over a three year period for an additional amount of up to $4.0 million.

In August 2014, we purchased a valve repair company in the U.K. for total consideration of $3.1 million, net of cash acquired of $0.2 million, including estimated contingent consideration of $0.3 million. Our purchase price allocation resulted in $2.1 million being allocated to fixed assets and net working capital and $1.0 million being applied to goodwill and intangible assets.