10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2014

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from to

Commission File Number 001-05083

FURMANITE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	74-1191271
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
10370 Richmond Avenue Suite 600 Houston, Texas	77042
(Address of principal executive offices)	(Zip Code)

(713) 634-7777

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x  Yes    o  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  x  Yes    o  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  x

There were 37,637,743 shares of the registrant’s common stock outstanding as of July 29, 2014.

FURMANITE CORPORATION AND SUBSIDIARIES

INDEX

	Page Number
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	3
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2014 (unaudited) and December 31, 2013	4
Consolidated Statements of Income for the Three and Six Months Ended June 30, 2014 and 2013 (unaudited)	5
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2014 and 2013 (unaudited)	6
Consolidated Statement of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2014 (unaudited) and for the Year Ended December 31, 2013	7
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013 (unaudited)	8
Notes to Consolidated Financial Statements (unaudited)	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
Item 4. Controls and Procedures	34
PART II. Other Information
Item 1. Legal Proceedings	35
Item 1A. Risk Factors	35
Item 5. Other Information	35
Item 6. Exhibits	37
Signature	39

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) may contain forward-looking statements within the meaning of sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included in this Report, including, but not limited to, statements regarding the Company’s future financial position, business strategy, budgets, projected costs, savings and plans, and objectives of management for future operations, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. The Company bases its forward-looking statements on reasonable beliefs and assumptions, current expectations, estimates and projections about itself and its industry. The Company cautions that these statements are not guarantees of future performance and involve certain risks and uncertainties that cannot be predicted, including, without limitation, the risks described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013. In addition, the Company based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate and actual results may differ materially from those expressed or implied by the forward-looking statements. One is cautioned not to place undue reliance on such statements, which speak only as of the date of this Report. Unless otherwise required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, or otherwise.

3

PART I — FINANCIAL INFORMATION

ITEM 1.Financial Statements

FURMANITE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	June 30, 2014			December 31, 2013
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	37,777		$	33,240
Accounts receivable, trade (net of allowance for doubtful accounts of $969 and $1,014 as of June 30, 2014 and December 31, 2013, respectively)	116,727			106,853
Inventories:
Raw materials and supplies	25,482			25,202
Work-in-process	11,989			10,010
Finished goods	169			231
Deferred tax assets, current	8,807			8,665
Prepaid expenses and other current assets	10,708			12,494
Total current assets	211,659			196,695
Property and equipment	114,361			110,221
Less: accumulated depreciation and amortization	(60,026		)	(54,874		)
Property and equipment, net	54,335			55,347
Goodwill	15,524			15,524
Deferred tax assets, non-current	4,221			4,321
Intangible and other assets, net	11,749			13,280
Total assets	$	297,488		$	285,167
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	1,668		$	2,111
Accounts payable	23,187			20,895
Accrued expenses and other current liabilities	42,210			38,312
Income taxes payable	1,428			1,205
Total current liabilities	68,493			62,523
Long-term debt, non-current	62,728			63,196
Net pension liability	17,395			17,905
Other liabilities	7,931			8,047
Commitments and contingencies (Note 12)
Stockholders’ equity:
Series B Preferred Stock, unlimited shares authorized, none issued and outstanding	—			—
Common stock, no par value; 60,000,000 shares authorized; 41,636,706 and 41,557,238 shares issued as of June 30, 2014 and December 31, 2013, respectively	4,821			4,811
Additional paid-in capital	136,575			135,881
Retained earnings	31,952			26,429
Accumulated other comprehensive loss	(14,394		)	(15,612		)
Treasury stock, at cost (4,008,963 shares)	(18,013		)	(18,013		)
Total stockholders’ equity	140,941			133,496
Total liabilities and stockholders’ equity	$	297,488		$	285,167

The accompanying notes are an integral part of these consolidated financial statements.

4

FURMANITE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2014			2013			2014			2013
Revenues	$	146,242		$	108,376		$	271,183		$	197,414
Costs and expenses:
Operating costs (exclusive of depreciation and amortization)	109,172			71,697			203,874			134,428
Depreciation and amortization expense	2,988			2,679			5,977			5,508
Selling, general and administrative expense	25,778			22,376			50,510			41,776
Total costs and expenses	137,938			96,752			260,361			181,712
Operating income	8,304			11,624			10,822			15,702
Interest income and other income (expense), net	(439		)	(181		)	(604		)	148
Interest expense	(445		)	(278		)	(894		)	(556		)
Income before income taxes	7,420			11,165			9,324			15,294
Income tax expense	(2,913		)	(4,404		)	(3,801		)	(5,969		)
Net income	$	4,507		$	6,761		$	5,523		$	9,325
Earnings per common share:
Basic	$	0.12		$	0.18		$	0.15		$	0.25
Diluted	$	0.12		$	0.18		$	0.15		$	0.25
Weighted-average number of common and common equivalent shares used in computing earnings per common share:
Basic	37,617			37,402			37,593			37,372
Diluted	37,836			37,552			37,832			37,521

The accompanying notes are an integral part of these consolidated financial statements.

5

FURMANITE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2014			2013			2014			2013
Net income	$	4,507		$	6,761		$	5,523		$	9,325
Other comprehensive income (loss) before tax:
Defined benefit pension plans:
Prior service cost arising during period	—			—			—			(23		)
Net gain (loss) arising during period	(406		)	325			(425		)	2,099
Less: Amortization of prior service credit included in net periodic pension cost	—			(23		)	—			(47		)
Defined benefit pension plans, net	(406		)	302			(425		)	2,029
Cash flow hedges:
Gain (loss) on interest rate swap	(197		)	503			(232		)	503
Less: Reclassification of realized loss on interest rate swap included in interest expense	40			—			40			—
Cash flow hedges, net	(157		)	503			(192		)	503
Foreign currency translation adjustments	1,047			(1,273		)	1,667			(3,543		)
Total other comprehensive income (loss) before tax	484			(468		)	1,050			(1,011		)
Income tax benefit (expense) related to components of other comprehensive income (loss)	150			(274		)	168			(689		)
Other comprehensive income (loss), net of tax	634			(742		)	1,218			(1,700		)
Comprehensive income	$	5,141		$	6,019		$	6,741		$	7,625

The accompanying notes are an integral part of these consolidated financial statements.

6

FURMANITE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

Six Months Ended June 30, 2014 (Unaudited) and Year Ended December 31, 2013

(in thousands, except share data)

	Common Shares		Common		Additional Paid-In		Retained		Accumulated Other Comprehensive			Treasury			Total
	Issued	Treasury	Stock		Capital		Earnings		Loss			Stock
Balances at January 1, 2013	41,329,538	4,008,963	$	4,783	$	134,521	$	12,402	$	(14,614	)	$	(18,013	)	$	119,079
Net income	—	—	—		—		14,027		—			—			14,027
Stock-based compensation, stock option exercises and vesting of restricted stock	227,700	—	28		1,360		—		—			—			1,388
Change in pension net actuarial loss and prior service credit, net of tax	—	—	—		—		—		(97		)	—			(97		)
Unrealized gain on interest rate swap, net of tax	—	—	—		—		—		132			—			132
Foreign currency translation adjustment	—	—	—		—		—		(1,033		)	—			(1,033		)
Balances at December 31, 2013	41,557,238	4,008,963	$	4,811	$	135,881	$	26,429	$	(15,612	)	$	(18,013	)	$	133,496
Net income	—	—	—		—		5,523		—			—			5,523
Stock-based compensation, stock option exercises and vesting of restricted stock	79,468	—	10		694		—		—			—			704
Change in pension net actuarial loss, net of tax	—	—	—		—		—		(334		)	—			(334		)
Unrealized loss on interest rate swap, net of tax	—	—	—		—		—		(115		)	—			(115		)
Foreign currency translation adjustment	—	—	—		—		—		1,667			—			1,667
Balances at June 30, 2014	41,636,706	4,008,963	$	4,821	$	136,575	$	31,952	$	(14,394	)	$	(18,013	)	$	140,941

The accompanying notes are an integral part of these consolidated financial statements.

7

FURMANITE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Six Months Ended   June 30,
	2014			2013
Operating activities:
Net income	$	5,523		$	9,325
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization	5,977			5,508
Provision for doubtful accounts	3			38
Stock-based compensation expense	886			624
Deferred income taxes	69			4,048
Other, net	(733		)	163
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	(9,541		)	(16,252		)
Inventories	(2,177		)	(3,759		)
Prepaid expenses and other current assets	2,508			706
Accounts payable	2,518			(593		)
Accrued expenses and other current liabilities	4,108			2,531
Income taxes payable	(451		)	226
Other, net	136			(65		)
Net cash provided by operating activities	8,826			2,500
Investing activities:
Capital expenditures	(3,477		)	(6,818		)
Acquisition of businesses	—			(905		)
Proceeds from sale of assets	3			30
Net cash used in investing activities	(3,474		)	(7,693		)
Financing activities:
Payments on debt	(912		)	(2,227		)
Issuance of common stock	32			154
Other	(214		)	(61		)
Net cash used in financing activities	(1,094		)	(2,134		)
Effect of exchange rate changes on cash	279			(1,170		)
Increase (decrease) in cash and cash equivalents	4,537			(8,497		)
Cash and cash equivalents at beginning of period	33,240			33,185
Cash and cash equivalents at end of period	$	37,777		$	24,688
Supplemental cash flow information:
Cash paid for interest	$	693		$	473
Cash paid for income taxes, net of refunds received	$	3,465		$	1,740
Non-cash investing and financing activities:
Issuance of notes payable related to acquisition of businesses	$	—		$	2,801

The accompanying notes are an integral part of these consolidated financial statements.

8

FURMANITE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

(Unaudited)

1. General and Summary of Significant Accounting Policies

General

The consolidated interim financial statements include the accounts of Furmanite Corporation (the “Parent Company”) and its subsidiaries (collectively, the “Company” or “Furmanite”). All intercompany transactions and balances have been eliminated in consolidation. These unaudited consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnote disclosures required by U.S. GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting only of normal recurring adjustments) and accruals, necessary for a fair presentation of the financial statements, have been made. Interim results of operations are not necessarily indicative of the results that may be expected for the full year.

Revenue Recognition

Revenues are recorded in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, Revenue Recognition, when realized or realizable, and earned.

Revenues are recognized using the completed-contract method, when persuasive evidence of an arrangement exists, services to customers have been rendered or products have been delivered, the selling price is fixed or determinable and collectability is reasonably assured. Revenues are recorded net of sales tax. Substantially all projects are short term in nature; however, the Company occasionally enters into contracts that are longer in duration that represent multiple element arrangements, which include a combination of services and products. The Company separates deliverables into units of accounting based on whether the deliverables have standalone value to the customer. The arrangement consideration is allocated to the separate units of accounting based on each unit’s relative selling price generally determined using vendor specific objective evidence. Revenues are recognized for the separate units of accounting when services to customers have been rendered or products have been delivered and risk of ownership has passed to the customer. The Company provides limited warranties to customers, depending upon the service performed. Warranty claim costs were not material during either of the three or six months ended June 30, 2014 or 2013.

Inventories

Inventories are valued at the lower of cost or market. Cost is determined using the weighted average cost method. Inventory quantities on hand are reviewed regularly based on related service levels and functionality, and carrying cost is reduced to net realizable value for inventories in which their cost exceeds their utility, due to physical deterioration, obsolescence, changes in price levels or other causes. The cost of inventories consumed or products sold is included in operating costs.

Operating Costs

Operating costs include direct and indirect labor along with related fringe benefits, materials, freight, travel, engineering, vehicles, equipment rental and restructuring charges, and are expensed when the associated revenue is recognized or as incurred. Direct costs related to projects for which the earnings process has not been completed and therefore not qualifying for revenue recognition are recorded as work-in-process inventory.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include payroll and related fringe benefits, marketing, travel, rent, information technology, insurance, professional fees and restructuring charges, and are expensed as incurred.

9

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes, which requires an asset and liability approach for the financial accounting and reporting of income taxes. Under this method, deferred income taxes are recognized for the expected future tax consequences of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. These balances are measured using the enacted tax rates expected to apply in the year(s) in which these temporary differences are expected to reverse. The effect on deferred income taxes of a change in tax rates is recognized as an income tax expense or benefit in the period when the change is enacted.

Based on consideration of all available evidence regarding their utilization, net deferred tax assets are recorded to the extent that it is more likely than not that they will be realized. Where, based on the weight of all available evidence, it is more likely than not that some amount of a deferred tax asset will not be realized, a valuation allowance is established for that amount that, in management’s judgment, is sufficient to reduce the deferred tax asset to an amount that is more likely than not to be realized. In concluding whether a valuation allowance on domestic federal, state or foreign income taxes is required, the Company considers all relevant factors, including the history of operating income and losses, future taxable income and the nature of the deferred tax assets.

Income tax expense differs from the expected tax at statutory rates due primarily to changes in valuation allowances for certain deferred tax assets and different tax rates in the various foreign jurisdictions. Additionally, the aggregate tax expense is not always consistent when comparing periods due to the changing mix of income (loss) before income taxes within the countries in which the Company operates. Interim period income tax expense or benefit is computed at the estimated annual effective income tax rate, unless adjusted for specific discrete items as required.

The tax benefit from uncertain tax positions is recognized only if it is more likely than not that the tax position will be sustained on examination by the applicable taxing authorities, based on the technical merits of the position. The tax benefit recognized is based on the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with the taxing authority. Uncertain tax positions in certain foreign jurisdictions would not impact the effective foreign tax rate where unrecognized non-current tax benefits are offset by fully reserved net operating loss carryforwards. The Company recognizes interest expense on underpayments of income taxes and accrued penalties related to unrecognized non-current tax benefits as part of the income tax provision.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers(Topic 606), which provides for a single five-step model to be applied in determining the amount and timing of the recognition of revenue related to contracts with customers. The new guidance also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the guidance. There is no option for early adoption. The provisions of the new guidance are effective for annual reporting periods beginning after December 15, 2016, including interim periods within those reporting periods. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

2. Acquisition

On August 30, 2013, Furmanite America, Inc. (“Furmanite America”), a wholly owned subsidiary of the Parent Company, completed the acquisition of certain assets and the assumption of certain liabilities, all of which relate to operations in the Americas, of the Engineering and Construction segment of ENGlobal Corporation (“ENGlobal”) for a total consideration of approximately $18.8 million. In conjunction with the closing of the transaction, the Company’s Furmanite Technical Solutions division was formed, which is included within the Company’s Engineering & Project Solutions segment. Assets purchased and liabilities assumed by Furmanite America include working capital assets and liabilities, property and equipment, intangible assets and lease obligations. The purchase was made pursuant to an Asset Purchase Agreement (“APA”) dated July 15, 2013, with an amendment to the APA reducing the purchase price for the changes in the estimated net working capital balance and $0.5 million, and finalizing the terms and conditions of the transaction. On August 30, 2013, Furmanite America made a cash payment of approximately $15.8 million for the estimated acquired net working capital, net of reserves. The working capital payment is subject to adjustment, which was initially to be determined within 90 days from the close of the transaction, for any changes based upon the final balance sheet, however, by mutual agreement of the parties, the determination date has been extended. In addition, Furmanite America entered into a four-year 4% interest per annum promissory note with ENGlobal in the principal amount of $3.0 million. In connection with the acquisition, the Company borrowed $20.0 million on its existing revolving credit facility, principally to fund the purchase of the acquired working capital, with the remaining funds to be available to cover any transitional short-term cash flow needs.

10

3. Earnings Per Share

Basic earnings per share (“EPS”) are calculated as net income divided by the weighted-average number of shares of common stock outstanding during the period, which includes restricted stock. Restricted shares of the Company’s common stock have full voting rights and participate equally with common stock in dividends declared, if any, and undistributed earnings. As participating securities, the shares of restricted stock are included in the calculation of basic EPS using the two-class method. For the periods presented, the amount of earnings allocated to the participating securities was not material. Diluted earnings per share assumes issuance of the net incremental shares from stock options and restricted stock units when dilutive. The weighted-average common shares outstanding used to calculate diluted earnings per share reflect the dilutive effect of common stock equivalents including options to purchase shares of common stock and restricted stock units, using the treasury stock method.

Basic and diluted weighted-average common shares outstanding and earnings per share include the following (in thousands, except per share data):

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2014		2013		2014		2013
Net income	$	4,507	$	6,761	$	5,523	$	9,325
Basic weighted-average common shares outstanding	37,617		37,402		37,593		37,372
Dilutive effect of common stock equivalents	219		150		239		149
Diluted weighted-average common shares outstanding	37,836		37,552		37,832		37,521
Earnings per share:
Basic	$	0.12	$	0.18	$	0.15	$	0.25
Dilutive	$	0.12	$	0.18	$	0.15	$	0.25
Stock options and restricted stock units excluded from diluted weighted-average common shares outstanding because their inclusion would have an anti-dilutive effect:	463		1,126		287		1,010

4. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

	June 30, 2014		December 31, 2013
Compensation and benefits	$	28,975	$	26,557
Customer deposits	2,175		1,370
Value added tax payable	1,970		1,622
Estimated potential uninsured liability claims	1,934		1,934
Leases	1,730		1,478
Taxes other than income	1,549		1,621
Professional, audit and legal fees	1,140		1,451
Other employee related expenses	398		373
Interest	276		141
Other	2,063		1,765
	$	42,210	$	38,312

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5. Restructuring

The Company committed to certain cost reduction initiatives during 2010 and 2012, including planned workforce reductions and restructuring of certain functions. The Company took these specific actions in order to more strategically align the Company’s operating, selling, general and administrative costs relative to revenues.

2010 Cost Reduction Initiative

The Company committed to a cost reduction initiative in 2010 (the “2010 Cost Reduction Initiative”), primarily related to the restructuring of certain functions within the Company’s EMEA operations (which include operations in Europe, the Middle East and Africa) in order to improve the operational and administrative efficiency of its EMEA operations. The Company had substantially completed the 2010 Cost Reduction Initiative at the end of 2012, with total costs incurred since its inception of approximately $3.9 million. As of June 30, 2014, future cash payments of approximately $0.4 million are expected in connection with this initiative, all of which are expected to be paid in 2014. The Company incurred a reduction in restructuring costs of $0.1 million during the three and six months ended June 30, 2014 related to this initiative. There were no restructuring costs incurred during the three or six months ended June 30, 2013 related to this initiative.

2012 Cost Reduction Initiative

In 2012, the Company committed to another cost reduction initiative (the “2012 Cost Reduction Initiative”) related to further restructuring of its European operations within EMEA. This restructuring initiative included additional workforce reductions throughout the Company’s operating, selling, general and administrative functions. The Company has taken these specific actions in order to further reduce administrative and overhead expenses and streamline its European operations’ structure for improved operational efficiencies in the wake of the continued challenging economic conditions in the region. The Company had substantially completed the 2012 Cost Reduction Initiative at the end of 2012, with total restructuring costs incurred since inception of approximately $3.3 million, which primarily related to one-time termination benefits. Future cash payments in connection with this initiative are expected to be insignificant. There were no restructuring costs incurred for either the three or six months ended June 30, 2014 or 2013 related to this initiative.

Estimated and actual expenses including severance, lease cancellations, and other restructuring costs, in connection with these initiatives, have been recognized in accordance with FASB ASC 420-10, Exit or Disposal Cost Obligations, and FASB ASC 712-10, Nonretirement Postemployment Benefits.

The activity related to reserves associated with the remaining cost reduction initiatives for the six months ended June 30, 2014, is as follows (in thousands):

	Reserve at December 31, 2013		Charges (Adjustments)			Cash (payments) refunds		Foreign  currency adjustments		Reserve at June 30, 2014
2010 Cost Reduction Initiative
Severance and benefit costs	$	330	$	(55	)	$	53	$	3	$	331
Lease termination costs	24		—			—		1		25
Other restructuring costs	1		—			—		—		1
2012 Cost Reduction Initiative
Severance and benefit costs	2		—			—		—		2
Lease termination costs	34		—			—		—		34
Other restructuring costs	—		—			—		—		—
Total	$	391	$	(55	)	$	53	$	4	$	393

Total workforce reductions related to the 2010 and 2012 Cost Reduction Initiatives included terminations of 138 employees, all of which are related to the EMEA region of the Company’s Technical Services segment.

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6. Long-Term Debt

Long-term debt consists of the following (in thousands):

	June 30, 2014			December 31, 2013
Borrowings under the revolving credit facility (the “Credit Agreement”)	$	59,300		$	59,300
Capital leases	17			23
Notes payable	4,896			5,801
Other debt	183			183
Total long-term debt	64,396			65,307
Less: current portion of long-term debt	(1,668		)	(2,111		)
Total long-term debt, non-current	$	62,728		$	63,196

Credit Facilities

On March 5, 2012, certain foreign subsidiaries (the “foreign subsidiary designated borrowers”) of Furmanite Worldwide, Inc. (“FWI”), a wholly owned subsidiary of the Company, and FWI entered into a credit agreement with a banking syndicate led by JPMorgan Chase Bank, N.A., as Administrative Agent (the “Credit Agreement”). The Credit Agreement matures on February 28, 2017. On August 27, 2013, FWI and the foreign subsidiary designated borrowers entered into an Amendment (the “Amendment”) to the Credit Agreement. The Amendment includes several modifications, including increasing the revolving credit facility from $75.0 million to $100.0 million and increasing the portion of the amount available for swing line loans to FWI from $7.5 million to $10.0 million. A portion of the amount available under the Credit Agreement (not in excess of $20.0 million) is available for the issuance of letters of credit. The loans outstanding to the foreign subsidiary designated borrowers under the Credit Agreement may not exceed $50.0 million in the aggregate.

At both June 30, 2014 and December 31, 2013, $59.3 million was outstanding under the Credit Agreement. Borrowings under the Credit Agreement bear interest at variable rates (based on the prime rate, federal funds rate or Eurocurrency rate, at the option of the borrower, including a margin above such rates, and subject to an adjustment based on a calculated Funded Debt to Adjusted EBITDA ratio (the “Leverage Ratio” as defined in the Credit Agreement)), which was 1.9% at June 30, 2014. On April 30, 2013, the Company entered into a forward-dated interest rate swap to mitigate the risk of changes in the variable interest rate. The effect of the swap is to fix the interest rate at 0.75% plus the margin and Leverage Ratio adjustment, as described above, beginning April 29, 2014 through February 28, 2017 on $39.3 million of the outstanding amount under the Credit Agreement. See Note 10 for further information regarding the interest rate swap. The Credit Agreement contains a commitment fee, which ranges from 0.25% to 0.30% based on the Leverage Ratio (0.25% at June 30, 2014), and is based on the unused portion of the amount available under the Credit Agreement. Adjusted EBITDA is net income (loss) plus interest, income taxes, depreciation and amortization, and other non-cash expenses minus income tax credits and non-cash items increasing net income (loss) as defined in the Credit Agreement. All obligations under the Credit Agreement are guaranteed by FWI and certain of its subsidiaries under a guaranty and collateral agreement, and are secured by a first priority lien on FWI and certain of its subsidiaries’ assets (which approximated $212.1 million as of June 30, 2014). The Parent Company has granted a security interest in its stock of FWI as collateral security for the lenders under the Credit Agreement, but is not a party to the Credit Agreement.

The Credit Agreement includes financial covenants, which require that the Company maintain: (i) a Leverage Ratio of no more than 2.75 to 1.00 as of the last day of each fiscal quarter, measured on a trailing four-quarters basis, (ii) a fixed charge coverage ratio of at least 1.25 to 1.00, defined as Adjusted EBITDA minus capital expenditures / interest plus cash taxes plus scheduled payments of debt plus Restricted Payments made (i.e., all dividends, distributions and other payments in respect of capital stock, sinking funds or similar deposits on account thereof or other returns of capital, redemption or repurchases of equity interests, and any payments to the Parent Company or its subsidiaries (other than FWI and its subsidiaries)), and (iii) a minimum asset coverage of at least 1.50 to 1.00, defined as cash plus net accounts receivable plus net inventory plus net property, plant and equipment of FWI and its material subsidiaries that are subject to a first priority perfected lien in favor of the Administrative Agent and the Lenders / Funded Debt. FWI is also subject to certain other compliance provisions including, but not limited to, restrictions on indebtedness, guarantees, dividends and other contingent obligations and transactions. Events of default under the Credit Agreement include customary events, such as change of control, breach of covenants or breach of representations and warranties. At June 30, 2014, FWI was in compliance with all covenants under the Credit Agreement.

Considering the outstanding borrowings of $59.3 million, and $2.0 million related to outstanding letters of credit, the unused borrowing capacity under the Credit Agreement was $38.7 million at June 30, 2014.

13

Notes Payable and Other Debt

On August 30, 2013, in connection with the acquisition of assets of the ENGlobal’s Engineering & Construction segment, the Company issued a $3.0 million promissory note, which bears interest at 4.0% per annum and will be paid in four equal annual installments of $0.8 million beginning September 1, 2014, with the final payment due on September 1, 2017.

On February 28, 2013, in connection with an asset purchase, the Company issued a $0.9 million note payable, which was paid at maturity on March 1, 2014.

On January 1, 2013, in connection with an asset purchase, the Company issued a $1.9 million promissory note, which bears interest at 5.0% per annum and is due in four equal annual installments of $0.5 million beginning January 1, 2014, with the final installment payment due on January 1, 2017.

In 2012, the Company incurred $1.4 million of debt in connection with an asset purchase. As of June 30, 2014 and December 31, 2013, $0.2 million remained outstanding, which is payable in installments of approximately $0.1 million due in both 2014 and 2015.

On February 23, 2011, in connection with the acquisition of Self Leveling Machines, Inc. and certain assets of Self Levelling Machines Pty. Ltd., the Company issued $5.1 million ($2.9 million denominated in U.S. dollars and $2.2 million denominated in Australian dollars) of notes payable (the “SLM Notes”), payable in installments through February 23, 2013. All obligations under the SLM Notes were secured by a first priority lien on the assets acquired in the acquisition. Upon full settlement of the SLM Notes in February 2013 and resultant release of the lien by the sellers’ equity holders, the acquired assets became assets secured under the Credit Agreement. The SLM Notes bore interest at a fixed rate of 2.5% per annum.

7. Retirement Plans

Two of the Company’s foreign subsidiaries have defined benefit pension plans, one plan covering certain of its United Kingdom employees (the “U.K. Plan”) and the other covering certain of its Norwegian employees (the “Norwegian Plan”). As the Norwegian Plan represents less than three percent of both the Company’s total pension plan liabilities and total pension plan assets, only the schedule of net periodic pension cost includes combined amounts from the two plans, while assumption and narrative information relates solely to the U.K. Plan.

Net periodic pension cost for the U.K. and Norwegian Plans includes the following components (in thousands):

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2014			2013			2014			2013
Service cost	$	79		$	216		$	157		$	438
Interest cost	1,037			849			2,057			1,716
Expected return on plan assets	(1,115		)	(868		)	(2,213		)	(1,754		)
Amortization of prior service credit	—			(23		)	—			(47		)
Amortization of net actuarial loss	127			328			252			664
Net periodic pension cost	$	128		$	502		$	253		$	1,017

The expected long-term rate of return on invested assets is determined based on the weighted average of expected returns on asset investment categories as follows: 6.2% overall, 7.6% for equities and 4.1% for bonds. The Company expects to contribute $1.7 million to the pension plan for 2014, of which $0.9 millionhas been contributed through June 30, 2014.

8. Stock-Based Compensation

The Company has equity compensation plans and agreements for officers, directors and key employees which allow for the issuance of stock options, restricted stock, restricted stock units and stock appreciation rights. For the three and six months ended June 30, 2014, the total compensation cost charged against income and included in selling, general and administrative expenses for stock-based compensation arrangements was $0.6 million and $0.9 million , respectively, and $0.4 million and $0.6 million for the three and six months ended June 30, 2013, respectively.

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During the first quarter of 2014, the Company granted an aggregate of 24,000 shares of restricted stock awards to its outside directors at a grant date fair value of $11.58 per share, while 20,000 shares of restricted stock awards granted previously to the outside directors vested. Additionally, the vesting of 44,364 restricted stock units previously granted to employees resulted in the issuance of 32,386 shares of common stock, net of 11,978 shares that were withheld for tax obligations of the grantees, as allowed under the plan. During the second quarter of 2014, the Company granted to certain employees an aggregate of 214,418 restricted stock units and options to purchase an aggregate of 133,866 shares of its common stock with a weighted-average grant date fair value of $10.85 and $6.24 per share, respectively. Of the total restricted stock units granted, 65,381 are subject to forfeiture unless certain performance objectives are achieved.

During the first quarter of 2013, the Company granted 30,000 shares of restricted stock awards to its outside directors at a grant date fair value of $6.05 per share, while 40,000 shares of restricted stock awards granted previously to the outside directors vested. Additionally, during the first quarter of 2013 the Company granted 35,000 stock options to an employee at a grant date fair value of $3.51 per share. Also during the first quarter of 2013, the vesting of 46,403 restricted stock units previously granted to employees resulted in the issuance of 36,391 shares of common stock, net of 10,012 shares that were withheld for tax obligations of the grantees, as allowed under the plan. During the second quarter of 2013, the Company granted to certain employees an aggregate of 459,032 restricted stock units and options to purchase an aggregate of 344,900 shares of its common stock with a grant date fair market value of $6.89 and $3.93 per share, respectively. The restricted stock units are subject to forfeiture unless certain performance objectives are achieved.

The aggregate fair value of restricted stock and restricted stock units vested during the six months ended June 30, 2014 and 2013 was $0.7 million and $0.5 million, respectively. No restricted stock or restricted stock units vested during the three months ended June 30, 2014 or 2013.

The Company uses authorized but unissued shares of common stock for stock option exercises and restricted stock issuances pursuant to the Company’s share-based compensation plan and treasury stock for issuances outside of the plan. As of June 30, 2014, the total unrecognized compensation expense related to stock options and restricted stock awards was $2.6 million and $4.8 million, respectively.

9. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss in the equity section of the consolidated balance sheets includes the following (in thousands):

	June 30, 2014			December 31, 2013
Defined benefit pension items	$	(21,949	)	$	(21,524	)
Less: deferred tax benefit	4,665			4,574
Net of tax	(17,284		)	(16,950		)
Interest rate swap	28			220
Less: deferred tax liability	(11		)	(88		)
Net of tax	17			132
Foreign currency translation adjustment	2,873			1,206
Total accumulated other comprehensive loss	$	(14,394	)	$	(15,612	)

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Changes in accumulated other comprehensive loss by component in the consolidated statements of comprehensive income include the following for the three and six months ended June 30, 2014 and 2013 (in thousands):

	Defined Benefit Pension Items			Interest Rate Swap			Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Loss
Three Months Ended June 30, 2014
Beginning balance, net	$	(16,965	)	$	111		$	1,826		$	(15,028	)
Other comprehensive income (loss) before reclassifications1	(419		)	(118		)	1,047			510
Amounts reclassified from accumulated other comprehensive loss2 3	100			24			—			124
Net other comprehensive income (loss)	(319		)	(94		)	1,047			634
Ending balance, net	$	(17,284	)	$	17		$	2,873		$	(14,394	)
Three Months Ended June 30, 2013
Beginning balance, net	$	(15,541	)	$	—		$	(31	)	$	(15,572	)
Other comprehensive income (loss) before reclassifications1	(3		)	302			(1,273		)	(974		)
Amounts reclassified from accumulated other comprehensive loss23	232			—			—			232
Net other comprehensive income (loss)	229			302			(1,273		)	(742		)
Ending balance, net	$	(15,312	)	$	302		$	(1,304	)	$	(16,314	)
Six months ended June 30, 2014
Beginning balance, net	$	(16,950	)	$	132		$	1,206		$	(15,612	)
Other comprehensive loss before reclassifications1	(533		)	(139		)	1,667			995
Amounts reclassified from accumulated other comprehensive loss23	199			24			—			223
Net other comprehensive income (loss)	(334		)	(115		)	1,667			1,218
Ending balance, net	$	(17,284	)	$	17		$	2,873		$	(14,394	)
Six months ended June 30, 2013
Beginning balance, net	$	(16,853	)	$	—		$	2,239		$	(14,614	)
Other comprehensive income (loss) before reclassifications1	1,072			302			(3,543		)	(2,169		)
Amounts reclassified from accumulated other comprehensive loss23	469			—			—			469
Net other comprehensive income (loss)	1,541			302			(3,543		)	(1,700		)
Ending balance, net	$	(15,312	)	$	302		$	(1,304	)	$	(16,314	)

____________________________

1 Net of tax expense (benefit) for the defined benefit pension plans of $(0.1) million for each of the three and six months ended June 30, 2014 and $0.3 million for six months ended June 30, 2013. Tax expense for the defined benefit pension plans was insignificant for the three months ended June 30, 2013. Net of tax expense (benefit) for the interest rate swap of $(0.1) million for each of the three and six months ended June 30, 2014 and $0.2 million for each of the three and six months ended June 30, 2013.

2 Net of tax expense for the defined benefit pension plans, which was insignificant for the three months ended June 30, 2014, $0.1 million for the six months ended June 30, 2014 and $0.1 million and $0.2 million for the three and six months ended June 30, 2013, respectively. Net of tax expense for the interest rate swap, which was insignificant for the three and six months ended June 30, 2014.

3 Reclassification adjustments out of accumulated other comprehensive loss for amortization of actuarial losses and prior service credits are included in the computation of net periodic pension cost. See Note 7 for additional details. Reclassification adjustments out of accumulated other comprehensive loss for the interest rate swap are included in interest expense. See Note 10 for additional details.

10. Derivative Instruments and Hedging Activities

The Company manages economic risk, including interest rate, liquidity and credit risks primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments. The Company does not enter into derivative instruments for speculative purposes.

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On April 30, 2013, the Company entered into a forward-dated interest rate swap to hedge interest rate risk with respect to $39.3 million of borrowings under its Credit Agreement. The Company’s objective in using the interest rate derivative is to manage exposure to interest rate movements and add stability to interest expense. Upon inception, the interest rate swap was designated as a cash flow hedge and involves the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying notional amount.

The following table summarizes the terms of the interest rate swap outstanding at June 30, 2014 (in thousands).

Type	Effective Date	Maturity Date	Fixed Rate		Floating Rate	Notional Amount
Interest rate swap	April 29, 2014	February 28, 2017	0.75	%	1 Month LIBOR	$	39,300

The table below presents the fair value of the Company’s derivative financial instrument as well as its classification on the consolidated balance sheets as of June 30, 2014 and December 31, 2013 (in thousands).

		Asset Derivative Instruments			Liability Derivative Instruments
		June 30, 2014			June 30, 2014
	Classification	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate swap	Current	Prepaid expenses and other current assets	$	—	Accrued expenses and other current liabilities	$	—
Interest rate swap	Non-current	Intangible and other assets, net	28		Other liabilities	—
Total			$	28		$	—

		Asset Derivative Instruments			Liability Derivative Instruments
		December 31, 2013			December 31, 2013
	Classification	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate swap	Current	Prepaid expenses and other current assets	$	—	Accrued expenses and other current liabilities	$	—
Interest rate swap	Non-current	Intangible and other assets, net	220		Other liabilities	—
Total			$	220		$	—

See Note 14 for additional information on the fair value of the Company’s interest rate swap.

The Company has concluded that the hedging relationship for the interest rate swap is highly effective. The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivative is recognized directly in earnings and included in interest income and other income (expense) on the consolidated statements of income.

Amounts reported in other comprehensive income related to derivatives are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. At June 30, 2014, the Company estimates that approximately $0.2 million will be reclassified from accumulated other comprehensive loss as an increase to interest expense over the next twelve months.

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The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of comprehensive income (in thousands).

	Three Months Ended   June 30,					Six Months Ended   June 30,
	2014			2013		2014			2013
Amount of income (loss) recognized in other comprehensive income (loss) for the interest rate swap, net of tax (effective portion)	$	(118	)	$	302	$	(139	)	$	302
Amount of loss reclassified from accumulated other comprehensive loss into interest expense for the interest rate swap, net of tax (effective portion)	(24		)	—		(24		)	—
Amount of loss reclassified from accumulated other comprehensive loss into interest income and other income (expense) for the interest rate swap, net of tax (ineffective portion)	—			—		—			—

Derivative financial agreements expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. The Company believes it minimizes the credit risk by transacting with major credit-worthy financial institutions.

11. Income Taxes

For the six months ended June 30, 2014 and 2013, the Company recorded income tax expense of $3.8 million and $6.0 million, respectively. For the three months ended June 30, 2014 and 2013, the Company recorded income tax expense of $2.9 million and $4.4 million, respectively. For these periods, income tax expense reflects the Company’s estimated annual effective income tax rate considering the statutory rates in the countries in which the Company operates, adjusted for excludable items, and the effects of valuation allowance changes for certain foreign entities.

Income tax expense as a percentage of income before income taxes was 40.8% and 39.0% for the six months ended June 30, 2014 and 2013, respectively, and 39.3% and 39.4% for the three months ended June 30, 2014 and 2013, respectively. The difference in income tax rates between periods is primarily attributable to changes in the mix of income before income taxes between countries whose income taxes are offset by a full valuation allowance and those that are not, and differing statutory tax rates in the countries in which the Company incurs tax liabilities.

Unrecognized Tax Benefits

A reconciliation of the change in the unrecognized tax benefits for the six months ended June 30, 2014 is as follows (in thousands):

Balance at December 31, 2013	$	1,139
Additions based on tax positions	105
Reductions due to lapses of statutes of limitations	—
Balance at June 30, 2014	$	1,244

Unrecognized tax benefits at June 30, 2014 and December 31, 2013 of $1.2 million and $1.1 million, respectively, for uncertain tax positions, primarily related to transfer pricing, are included in other liabilities on the consolidated balance sheets and would impact the effective tax rate for certain foreign jurisdictions if recognized.

The Company incurred no significant interest or penalties for the three or six months ended June 30, 2014 or 2013 related to underpayments of income taxes or uncertain tax positions.

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12. Commitments and Contingencies

The operations of the Company are subject to federal, state and local laws and regulations in the U.S. and various foreign jurisdictions relating to protection of the environment. Although the Company believes its operations are currently in compliance with applicable environmental regulations, there can be no assurance that costs and liabilities will not be incurred by the Company. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and enforcement policies thereunder, and claims for damages to property or persons resulting from operations of the Company, could result in costs and liabilities to the Company. The Company has recorded, in other liabilities, an undiscounted accrual for environmental liabilities related to the remediation of site contamination for properties in the U.S. in the amount of $0.9 million as of both June 30, 2014 and December 31, 2013. While there is a reasonable possibility due to the inherent nature of environmental liabilities that a loss exceeding amounts already recognized could occur, the Company does not believe such amounts would be material to its financial statements.

Furmanite America, a subsidiary of the Company, is involved in disputes with a customer, INEOS USA LLC, which claims that the subsidiary failed to provide it with satisfactory services at the customer’s facilities. On April 17, 2009, the customer initiated legal action against the subsidiary in the Common Pleas Court of Allen County, Ohio (the “Court”), alleging that the subsidiary and one of its former employees, who performed data services at one of the customer’s facilities, breached its contract with the customer and failed to provide the customer with adequate and timely information to support the subsidiary’s work at the customer’s facility. In March 2014, the customer’s claims against the former employee were dismissed and the Court granted partial summary judgment in favor of Furmanite America. The customer’s complaint seeks damages in an amount that the subsidiary believes represents the total proposed civil penalty, plus the cost of unspecified supplemental environmental projects requested by the regulatory agency to reduce air emissions at the customer’s facility, and also seeks unspecified punitive damages.

While the Company cannot make an assessment of the eventual outcome of all matters or determine the extent, if any, of any potential uninsured liability or damage, accruals of $1.9 million, which include the Furmanite America litigation, were recorded in accrued expenses and other current liabilities as of both June 30, 2014 and December 31, 2013. While there is a reasonable possibility that a loss exceeding amounts already recognized could occur, the Company does not believe such amounts would be material to its financial statements.

The Company has other contingent liabilities resulting from litigation, claims and commitments incident to the ordinary course of business. Management believes, after consulting with counsel, that the ultimate resolution of such contingencies will not have a material adverse effect on the financial position, results of operations or liquidity of the Company.

13. Business Segment Data and Geographical Information

An operating segment is defined as a component of an enterprise about which separate financial information is available that is evaluated regularly by the chief decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Previously, for financial reporting purposes, the Company reported three segments based on the Company’s three geographical areas: the Americas, EMEA and Asia-Pacific. As a result of a business acquisition in 2013, the Company has determined that, for financial reporting purposes, it now operates in two segments that are based on its service and product offerings: 1) Technical Services and 2) Engineering & Project Solutions. Segment results for prior periods have been restated to conform to the current-period presentation.

Included in its Technical Services segment are the specialized technical services the Company provides to a global customer base that includes petroleum refineries, chemical plants, pipelines, offshore drilling and production platforms, steel mills, food and beverage processing facilities, power generation and other flow-process industries. Included in its Engineering & Project Solutions segment are professional engineering, construction management and plant asset management services. These services are provided to customers such as refining and petrochemical operators as well as maintenance, and engineering and construction contractors serving the downstream and midstream oil and gas markets, primarily in the Americas.

The Company evaluates performance based on the operating income (loss) from each segment, which excludes interest income and other income (expense), interest expense and income tax expense (benefit), which are not allocated to the segments. The accounting policies of the reportable segments are the same as those described in Note 1. Intersegment revenues are recorded at cost plus a profit margin. All transactions and balances between segments are eliminated in consolidation.

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The following is a summary of the financial information of the Company’s reportable segments as of and for the three and six months ended June 30, 2014 and 2013 reconciled to the amounts reported in the consolidated financial statements (in thousands):

	Technical Services		Engineering & Project Solutions			Corporate			Reconciling Items			Total
Three months ended June 30, 2014:
Revenues from external customers1	$	106,289	$	39,953		$	—		$	—		$	146,242
Intersegment revenues2	—		46			—			(46		)	—
Operating income (loss)34	$	14,284	$	(590	)	$	(5,390	)	$	—		$	8,304
Three months ended June 30, 2013:
Revenues from external customers1	$	103,914	$	4,462		$	—		$	—		$	108,376
Intersegment revenues2	—		—			—			—			—
Operating income (loss)34	$	17,693	$	(9	)	$	(6,060	)	$	—		$	11,624
Six months ended June 30, 2014
Revenues from external customers1	$	194,039	$	77,144		$	—		$	—		$	271,183
Intersegment revenues2	—		117			—			(117		)	—
Operating income (loss)34	$	21,949	$	(1,347	)	$	(9,780	)	$	—		$	10,822
Six months ended June 30, 2013:
Revenues from external customers1	$	187,707	$	9,707		$	—		$	—		$	197,414
Intersegment revenues2	—		—			—			—			—
Operating income (loss)34	$	26,336	$	34		$	(10,668	)	$	—		$	15,702

____________________________

1 Included in the Technical Services and Engineering & Project Solutions segments are total United States revenues of $102.3 million and $191.0 million for the three and six months ended June 30, 2014, respectively, and $72.2 million and $131.6 million for the three and six months ended June 30, 2013, respectively . Included in the Technical Services segment above are United Kingdom revenues of $19.2 million and $36.9 million for the three and six months ended June 30, 2014, respectively, and $14.7 million and $26.9 million for the three and six months ended June 30, 2013, respectively.

2 Reconciling items represent eliminations or reversals of transactions between reportable segments.

3 Corporate represents certain corporate overhead costs, including executive management, strategic planning, treasury, legal, human resources, information technology, accounting and risk management, which are not allocated to reportable segments.

4 The Engineering & Project Solutions segment includes nil and approximately $0.2 million of direct costs associated with the integration of the Furmanite Technical Solutions division for the three and six months ended June 30, 2014, respectively.

The following geographical area information includes total long-lived assets (which consist of all non-current assets, other than goodwill, indefinite-lived intangible assets and deferred tax assets) based on physical location (in thousands):

	June 30, 2014		December 31, 2013
Total long-lived assets
United States	$	48,855	$	51,646
United Kingdom	5,719		5,172
All other	8,929		9,228
Total long-lived assets	$	63,503	$	66,046

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14. Fair Value of Financial Instruments and Credit Risk

Fair value is defined under FASB ASC 820, Fair Value Measurement (“ASC 820”), as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of the observable inputs and minimize the use of unobservable inputs. The standard established a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

• Level 1 — Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets.

• Level 2 — Quoted prices for similar assets and liabilities in active markets; quoted prices included for identical or similar assets and liabilities that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. These are typically obtained from readily-available pricing sources for comparable instruments.

• Level 3 — Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

The following table presents the Company’s fair value hierarchy for its financial instruments that required disclosure of their fair values on a recurring basis as of June 30, 2014 and December 31, 2013 (in thousands).

	Fair Value		Level 1		Level 2		Level 3
June 30, 2014
Interest rate swap asset	$	28	$	—	$	28	$	—
December 31, 2013
Interest rate swap asset	$	220	$	—	$	220	$	—

The estimated fair value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the relatively short period to maturity of these instruments. The interest rate swap asset is recorded at fair value on a recurring basis based on models using inputs, such as interest rate yield curves, LIBOR swap curves and OIS curves, observable for substantially the full term of the contract. See Note 10 for additional information on the Company’s interest rate swap. The estimated fair value of all debt as of June 30, 2014 and December 31, 2013 approximated the carrying value. These fair values were estimated based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements, when quoted market prices were not available. The estimated fair values of the Company’s financial instruments are not necessarily indicative of the amounts that would be realized in a current market exchange.

There were no transfers between levels of the fair value hierarchy during the three or six months ended June 30, 2014 or 2013.

The Company provides services to a domestic and international client base that includes petroleum refineries, chemical plants, offshore energy production platforms, steel mills, nuclear and conventional power stations, pulp and paper mills, food and beverage processing plants, other flow process facilities. The Company does not believe that it has a significant concentration of credit risk at June 30, 2014, as the Company’s accounts receivable are generated from these business industries with customers located throughout the Americas, EMEA and Asia-Pacific.

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FURMANITE CORPORATION AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the unaudited consolidated financial statements and notes thereto of Furmanite Corporation included in Item 1 of this Quarterly Report on Form 10-Q.

Business Overview

Furmanite Corporation, (the “Parent Company”), together with its subsidiaries (collectively the “Company” or “Furmanite”) was incorporated in 1953. The Parent Company’s common stock, no par value, trades under the ticker symbol “FRM” on the New York Stock Exchange.

The Company conducts its principal business through a wholly owned subsidiary of the Parent Company, Furmanite Worldwide, Inc., and its domestic and international subsidiaries and affiliates under two operating segments: 1) Technical Services and 2) Engineering & Project Solutions. Previously, for financial reporting purposes, the Company reported three segments based on the Company’s three geographical areas: the Americas, EMEA and Asia-Pacific. As a result of a business acquisition in 2013, the Company has determined that, for financial reporting purposes, it now operates in two segments that are based on its service and product offerings. Technical Services provides specialized technical services, which include on-line, off-line and other services. Within these technical services, on-line services include leak sealing, hot tapping, line stopping, line isolation, composite repair, valve testing and certain non-destructive testing and inspection services, while off-line services include on-site machining, heat treatment, bolting, valve repair and other non-destructive testing and inspection services. Other services include smart shim services, concrete repair, engineering services, valves and other products and manufacturing. These services and products are provided primarily to electric power generating plants, the petroleum industry, which include refineries and offshore drilling rigs (including subsea), chemical plants and other process industries in the Americas (which includes operations in North America, South America and Latin America), EMEA (which includes operations in Europe, the Middle East and Africa) and Asia-Pacific. The Engineering & Project Solutions segment, which includes the Company’s Furmanite Technical Solutions (“FTS”) division, provides project planning, professional engineering, downstream non-destructive testing and inspection, construction management, mechanical integrity, field support, quality assurance, and plant asset management services, as well as certain other inspection and project management services. These services are provided to refining and petrochemical operators as well as maintenance, and engineering and construction contractors serving the downstream and midstream oil and gas markets, substantially all of which are in the Americas.

Financial Overview

Consolidated revenues increased $37.8 million, or 34.9%, to $146.2 million for the three months ended June 30, 2014 and increased $73.8 million, or 37.4%, to $271.2 million for the six months ended June 30, 2014, compared to the prior year periods. The higher revenues were attributable to a combination of increases from the Company’s new Engineering & Project Solutions segment, which was formed following two acquisitions in the prior year, resulting in the creation of the new FTS division in August 2013, as well as increases in off-line services in both the EMEA and Asia-Pacific regions of the Technical Services segment, including higher on-site machining, bolting, heat treatment and valve repair service revenues. These increases were partially offset by lower Technical Services revenues in the Americas, primarily within off-line services, partly attributable to the impacts of severe winter weather in the current year. The operating results for the three and six months ended June 30, 2014 were impacted by higher selling, general and administrative costs, reflecting the effects of the acquisition, integration and transitional effects of the new Engineering & Project Solutions segment as well as additional personnel and related costs associated with the buildout of the Company’s strategic global organizational structure. These impacts were partially offset by the improved performance in both the EMEA and Asia-Pacific regions of the Technical Services segment, which reflect the completion of certain large projects during the three and six months ended June 30, 2014. The net effect of these factors resulted in a decrease in operating income of $3.3 million and $4.9 million for the three and six months ended June 30, 2014, respectively, compared to the same periods in 2013.

Net income for the three and six months ended June 30, 2014 of $4.5 million and $5.5 million, respectively, represented a decrease of $2.3 million and $3.8 million, respectively, compared to the three and six months ended June 30, 2013. The Company’s diluted earnings per share for the three and six months ended June 30, 2014 were $0.12 and $0.15, respectively, compared to $0.18 and $0.25 for the three and six months ended June 30, 2013, respectively.

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Results of Operations

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2014			2013			2014			2013
	(in thousands, except per share data)
Revenues	$	146,242		$	108,376		$	271,183		$	197,414
Costs and expenses:
Operating costs (exclusive of depreciation and amortization)	109,172			71,697			203,874			134,428
Depreciation and amortization expense	2,988			2,679			5,977			5,508
Selling, general and administrative expense	25,778			22,376			50,510			41,776
Total costs and expenses	137,938			96,752			260,361			181,712
Operating income	8,304			11,624			10,822			15,702
Interest income and other income (expense), net	(439		)	(181		)	(604		)	148
Interest expense	(445		)	(278		)	(894		)	(556		)
Income before income taxes	7,420			11,165			9,324			15,294
Income tax expense	(2,913		)	(4,404		)	(3,801		)	(5,969		)
Net income	$	4,507		$	6,761		$	5,523		$	9,325
Earnings per common share:
Basic	$	0.12		$	0.18		$	0.15		$	0.25
Diluted	$	0.12		$	0.18		$	0.15		$	0.25
Additional Revenue Information:
	Three Months Ended   June 30,						Six Months Ended   June 30,
	2014			2013			2014			2013
	(in thousands)
Technical Services:
On-line services	$	37,238		$	38,212		$	71,615		$	69,565
Off-line services	54,506			53,889			98,035			94,220
Other services	14,545			11,813			24,389			23,922
Total Technical Services	106,289			103,914			$	194,039		$	187,707
Engineering & Project Solutions	39,953			4,462			$	77,144		$	9,707
Total revenues	$	146,242		$	108,376		$	271,183		$	197,414
Additional Operating Income (Loss) Information:
	Three Months Ended   June 30,						Six Months Ended   June 30,
	2014			2013			2014			2013
	(in thousands)
Technical Services:
Americas	$	7,619		$	13,416		$	11,496		$	20,625
EMEA	4,213			3,002			7,650			3,801
Asia-Pacific	2,452			1,275			2,803			1,910
Total Technical Services	14,284			17,693			21,949			26,336
Engineering & Project Solutions1	(590		)	(9		)	(1,347		)	34
Corporate	(5,390		)	(6,060		)	(9,780		)	(10,668		)
Total operating income	$	8,304		$	11,624		$	10,822		$	15,702

____________________________

1 Includes nil and approximately $0.2 million of direct costs associated with the integration of the Furmanite Technical Solutions division for the three and six months ended June 30, 2014, respectively.

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Business Segment and Geographical Information

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2014			2013			2014			2013
	(in thousands)
Revenues:
Technical Services
Americas	$	63,327		$	69,885		$	116,173		$	125,400
EMEA	30,219			24,694			57,443			44,999
Asia-Pacific	12,743			9,335			20,423			17,308
Total Technical Services	106,289			103,914			194,039			187,707
Engineering & Project Solutions1	39,953			4,462			77,144			9,707
Total revenues	146,242			108,376			271,183			197,414
Costs and expenses:
Operating costs (exclusive of depreciation and amortization)
Technical Services
Americas	42,206			44,735			78,092			82,650
EMEA	20,858			16,650			39,518			31,163
Asia-Pacific	8,753			6,108			14,306			11,564
Total Technical Services	71,817			67,493			131,916			125,377
Technical Services operating costs as percentage of revenue	67.6		%	65.0		%	68.0		%	66.8		%
Engineering & Project Solutions1	37,355			4,204			71,958			9,051
Total operating costs (exclusive of depreciation and amortization)	109,172			71,697			203,874			134,428
Operating costs as a percentage of revenue	74.7		%	66.2		%	75.2		%	68.1		%
Depreciation and amortization expense
Technical Services
Americas	1,635			1,590			3,307			3,202
EMEA	439			444			880			979
Asia-Pacific	266			331			536			679
Total Technical Services	2,340			2,365			4,723			4,860
Engineering & Project Solutions	475			150			964			300
Corporate	173			164			290			348
Total depreciation and amortization expense	2,988			2,679			5,977			5,508
Depreciation and amortization expense as a percentage of revenue	2.0		%	2.5		%	2.2		%	2.8		%
Selling, general and administrative expense
Technical Services
Americas	11,867			10,144			23,278			18,923
EMEA	4,709			4,598			9,395			9,056
Asia-Pacific	1,272			1,621			2,778			3,155
Total Technical Services	17,848			16,363			35,451			31,134
Engineering & Project Solutions2	2,713			117			5,569			322
Corporate	5,217			5,896			9,490			10,320
Total selling general and administrative expense	25,778			22,376			50,510			41,776
Selling, general and administrative expense as a percentage of revenue	17.6		%	20.6		%	18.6		%	21.2		%
Total costs and expenses	$	137,938		$	96,752		$	260,361		$	181,712

____________________________

1 Substantially all of the operations of the Engineering & Project Solutions segment are conducted in the Americas.

2 Includes nil and approximately $0.2 million of direct costs associated with the integration of the Furmanite Technical Solutions division for the three and six months ended June 30, 2014, respectively.

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Geographical areas, based on physical location, are the Americas, EMEA and Asia-Pacific. The following discussion and analysis, as it relates to segment and geographic information, excludes intercompany transactions and any allocation of headquarter costs.

Revenues

For the six months ended June 30, 2014, consolidated revenues increased by $73.8 million, or 37.4%, to $271.2 million, compared to $197.4 million for the six months ended June 30, 2013. The increase in revenues resulted from a combination of higher revenues in the new Engineering & Project Solutions segment, which increased $67.4 million during the six months ended June 30, 2014, as well as higher Technical Services revenues, which increased $6.3 million compared to the same period in 2013. Within Technical Services, changes related to foreign currency exchange rates favorably impacted revenues by $1.4 million, of which $3.0 million was related to favorable impacts in EMEA, partially offset by $1.4 million and $0.2 million of unfavorable impacts in Asia-Pacific and the Americas, respectively. Excluding the foreign currency exchange rate impact, revenues within Technical Services increased by $4.9 million, or 2.6%, for the six months ended June 30, 2014 compared to the same period in 2013. This $4.9 million increase in revenues consisted of increases of $9.5 million and $4.5 million in EMEA and Asia-Pacific, respectively, but was partially offset by a decrease of $9.1 million in the Americas. The increase in Technical Service revenues in EMEA was a result of volume increases in both off-line services and on-line services, which increased approximately 35% and 14%, respectively, compared to the same period in 2013, attributable to certain large projects that were completed during the six months ended June 30, 2014. The increase in off-line services was primarily related to volume increases in on-site machining, which represented approximately 44% of the increase in off-line services, as well as volume increases in heat treatment and valve repair. Within on-line services in EMEA, the increase in revenues was primarily attributable to volume increases in leak sealing, which represented approximately 54% of the increase in on-line services, as well as increases in composite repair and other on-line services. The higher revenues in Asia-Pacific were primarily attributable to volume increases within off-line services, which increased approximately 54% compared to the same period in 2013 and were primarily related to certain large projects that were completed during the six months ended June 30, 2014. These increases in off-line services primarily related to volume increases in bolting, which represented approximately 76% of the increase in off-line services, as well as higher on-site machining and valve repair service revenues. Increases in off-line services in Asia-Pacific were partially offset by lower revenues within on-line services, which primarily consisted of volume decreases in hot tapping services. In the Americas, the decrease in Technical Services revenues was primarily attributable to decreases within off-line services and, to a lesser extent, other products and manufacturing services as well as on-line services, reflecting the impacts of severe winter weather during the six months ended June 30, 2014 that resulted in delays or postponement of certain work. In addition, several large projects were completed in the first half of 2013, which did not recur in the first half of 2014. The lower revenues from off-line services were primarily attributable to volume decreases in heat treatment, bolting and on-site machining revenues, partially offset by moderate increases in certain valve repair revenues. Within on-line services, volume increases in certain non-destructive testing and inspection services were more than offset by volume decreases in hot tapping, leak sealing and other on-line services.

Revenues from the Engineering & Project Solutions segment, substantially all of which relate to the Americas, were $77.1 million during the six months ended June 30, 2014, compared to $9.7 million for the same period in 2013. The increase in revenues is a result of an acquisition in August 2013, which resulted in the formation of the new FTS division and added in-plant and in-office engineering services to this segment. The 2013 revenues in this segment primarily reflect process management inspection services that were added in early 2013 as a result of an acquisition.

For the three months ended June 30, 2014, consolidated revenues increased by $37.8 million, or 34.9%, to $146.2 million, compared to $108.4 million for the three months ended June 30, 2013. The increase in revenues resulted from a combination of higher revenues in the new Engineering & Project Solutions segment, which increased $35.5 million during the three months ended June 30, 2014, as well as higher Technical Services revenues, which increased $2.3 million compared to the same period in 2013. Within Technical Services, changes related to foreign currency exchange rates favorably impacted revenues by $1.3 million, of which $1.9 million was related to favorable impacts in EMEA, partially offset by $0.5 million and $0.1 million of unfavorable impacts in Asia-Pacific and the Americas, respectively. Excluding the foreign currency exchange rate impact, revenues within Technical Services increased by $1.0 million for the three months ended June 30, 2014 compared to the same period in 2013. This $1.0 million increase in revenues consisted of increases of $3.9 million and $3.6 million in Asia-Pacific and EMEA, respectively, but was largely offset by a decrease of $6.5 million in the Americas. The increase in revenues in Asia-Pacific was primarily attributable to volume increases within off-line services, which increased approximately 70% compared to the same period in 2013 and were primarily attributable to certain large projects that were completed during the three months ended June 30, 2014. These increases in off-line services primarily related to volume increases in bolting, which represented approximately 78% of the increase in off-line services, as well as higher on-site machining revenues. Total revenues from on-line services in Asia-Pacific were comparable to the same period in 2013, as volume decreases in leak sealing services were essentially offset by increases in composite repair and other on-line services. In EMEA, the increase in Technical Service revenues for the three months ended June 30, 2014 was a result of volume increases in off-line services, which increased approximately 31% compared to the same period in 2013, partially

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offset by lower revenues from on-line services. The increase in off-line services was primarily related to volume increases in on-site machining, which represented approximately 70% of the increase in off-line services, as well as volume increases in heat treatment and bolting services. Within on-line services in EMEA, the decrease in revenues was primarily attributable to volume decreases in leak sealing and line stopping services, partially offset by volume increases in composite repair and other on-line services. In the Americas, the decrease in Technical Services revenues for the three months ended June 30, 2014 was primarily attributable to decreases within off-line services and, to a lesser extent, on-line services, partially offset by higher revenues from other products and manufacturing services. Further, several large projects were completed in the the three months ended June 30, 2013, which did not recur in the three months ended June 30, 2014. The decrease in off-line services was primarily attributable to volume decreases in heat treatment services, with the balance of the decrease primarily attributable to lower bolting service revenues. Within on-line services, volume increases in certain non-destructive testing and inspection services were more than offset by volume decreases in leak sealing, hot tapping, line stopping and other on-line services.

Revenues from the Engineering & Project Solutions segment were $40.0 million during the six months ended June 30, 2014, compared to $4.5 million for the same period in 2013. The increase in revenues is a result of an acquisition in August 2013, which resulted in the formation of the new FTS division and added in-plant and in-office engineering services to this segment. The 2013 revenues in this segment primarily reflect process management inspection services that were added in early 2013 as a result of an acquisition.

Operating Costs (exclusive of depreciation and amortization)

For the six months ended June 30, 2014, operating costs increased $69.4 million, or 51.6%, to $203.9 million, compared to $134.4 million for the six months ended June 30, 2013. The increase was attributable to higher operating costs from the Engineering & Project Solutions segment of $62.9 million, reflecting the addition of the FTS division, as well as higher Technical Services operating costs of $6.5 million. Within Technical Services, changes related to foreign currency exchange rates unfavorably impacted costs by $0.8 million, of which $2.0 million was related to unfavorable impacts from EMEA, partially offset by favorable impacts of $1.0 million and $0.2 million in Asia-Pacific and the Americas, respectively. Excluding the foreign currency exchange rate impact, operating costs within Technical Services increased $5.7 million, or 4.5%, for the six months ended June 30, 2014, compared to the same period in 2013. This change consisted of increases of $6.4 million and $3.7 million in EMEA and Asia-Pacific, respectively, partially offset by a decrease of $4.4 million in the Americas. Of the increase in operating costs in EMEA and Asia-Pacific, approximately 60% and 74%, respectively, related to higher labor and travel costs, with the remainder primarily attributable to higher materials and equipment leasing costs, consistent with the higher revenues. The decrease in operating costs in the Americas was primarily related to lower labor and materials costs, associated with the lower revenues.Operating costs for Engineering & Project Solutions, which increased by $62.9 million for the six months ended June 30, 2014, consisted primarily of labor and related expenses.

For the three months ended June 30, 2014, operating costs increased $37.5 million, or 52.3%, to $109.2 million, compared to $71.7 million for the three months ended June 30, 2013. The increase was attributable to higher operating costs from the Engineering & Project Solutions segment of $33.2 million, reflecting the addition of the FTS division, as well as higher Technical Services operating costs of $4.3 million. Within Technical Services, changes related to foreign currency exchange rates unfavorably impacted costs by $0.9 million, of which $1.3 million was related to unfavorable impacts from EMEA , partially offset by favorable impacts of $0.3 million and $0.1 million in Asia-Pacific and the Americas, respectively. Excluding the foreign currency exchange rate impact, operating costs within Technical Services increased $3.4 million, or 5.0%, for the three months ended June 30, 2014, compared to the same period in 2013. This change consisted of increases of $3.0 million and $2.9 million in Asia-Pacific and EMEA, respectively, partially offset by a decrease of $2.5 million in the Americas. In Asia-Pacific, approximately 80% of the increase in operating costs was attributable to higher labor and travel costs with the balance of the increase due to higher materials and equipment leasing expenses, attributable to the higher revenues.Of the increase in operating costs in EMEA, approximately 56% related to higher labor and travel costs, with the remainder primarily attributable to higher materials and equipment leasing costs, consistent with the higher revenues. The decrease in operating costs in the Americas was primarily related to lower materials and labor costs, associated with the lower revenues.Operating costs for Engineering & Project Solutions, which increased by $33.2 million for the six months ended June 30, 2014, consisted primarily of labor and related expenses.

For the Technical Services segment, operating costs as a percentage of revenue increased to 68.0% from 66.8% for the six months ended June 30, 2014 and 2013, respectively and increased to 67.6% from 65.0% for the three months ended June 30, 2014 and 2013, respectively. The percentage of operating costs to revenue for the three and six months ended June 30, 2014 was higher for this segment compared to the same period in 2013 primarily due to the lower revenues and change in service mix, as well as less efficient utilization of labor in the Americas and lower margins on certain projects in Asia-Pacific. These decreases were partially offset by the effect of higher revenues and improved utilization of labor in EMEA due to certain large projects completed in the three and six months ended June 30, 2014. For the Engineering & Project Solutions segment, operating costs as a percentage of revenues were 93.3% for the six months ended June 30, 2014 compared to 93.2% in the same period in 2013 and were 93.5% for the three months ended June 30, 2014 compared to 94.2% for the same period in 2013. The types of services provided by the

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Engineering & Project Solutions segment typically result in higher operating costs as a percentage of revenues than the Company’s Technical Services segment due to various factors, which the Company expects will continue for the foreseeable future. As a result, overall operating costs as a percentage of revenue increased to 75.2% from 68.1% for the six months ended June 30, 2014 and 2013, respectively, and increased to 74.7% from 66.2% for the three months ended June 30, 2014 and 2013, respectively. As 2014 will reflect the first full year of the FTS division’s operating results, the Company expects that the relationship of overall operating costs to revenues will not be comparable to the prior year percentages, but rather the Technical Services segment’s results will reflect better comparability to 2013 performance.

Depreciation and Amortization

For the three and six months ended June 30, 2014, depreciation and amortization expense increased $0.3 million and $0.5 million, respectively, when compared to the same periods in 2013, as a result of an increase in the average balance of depreciable property and equipment associated with $3.7 million of acquisition-related long-term and intangible assets combined with capital expenditures of approximately $9.9 million placed in service over the twelve-month period ended June 30, 2014. Changes related to foreign currency exchange rates had an insignificant impact on depreciation and amortization expense for the three and six months ended June 30, 2014. Depreciation and amortization expense associated with acquisition-related assets acquired in the twelve-month period ended June 30, 2014 was $0.2 million and $0.5 million for the three and six months ended June 30, 2014, respectively.

Selling, General and Administrative

For the six months ended June 30, 2014, selling, general and administrative expenses increased $8.7 million, or 20.9%, to $50.5 million, compared to $41.8 million for the six months ended June 30, 2013. This increase consisted of $5.2 million related to the Engineering & Project Solutions segment and $4.3 million related to the Technical Services segment, partially offset by decreases of $0.8 million associated with corporate-related (“Corporate”) expenses, which are not allocated to the segments. Within Technical Services, changes related to foreign currency exchange rates unfavorably impacted costs by $0.2 million, of which $0.5 million was related to unfavorable impacts in EMEA, partially offset by favorable impacts in Asia-Pacific of $0.3 million. Excluding the foreign currency exchange rate impact, the increase in selling, general and administrative costs within Technical Services consisted of increases of $4.3 million in the Americas, partially offset by decreases of $0.1 million each in EMEA and Asia-Pacific. Of the increase in selling, general and administrative expense in the Americas, approximately 58% was related to personnel and related costs associated with the buildout of the Company’s strategic global organizational structure with the remainder of the increase primarily attributable to higher professional fees and insurance costs. Selling, general and administrative expenses related to Corporate were down by $0.8 million during the six months ended June 30, 2014 compared with the same period in 2013, reflecting reductions in compensation-related expenses, partially offset by increases in rent and miscellaneous expenses. For the Engineering & Project Solutions segment, increases in selling, general and administrative costs for the six months ended June 30, 2014 were attributable to the August 2013 acquisition and primarily consisted of personnel and related costs and rent expense as well as approximately $0.2 million of certain direct costs associated with the integration of the FTS division.

For the three months ended June 30, 2014, selling, general and administrative expenses increased $3.4 million, or 15.2%, to $25.8 million, compared to $22.4 million for the three months ended June 30, 2013. This increase consisted of $2.6 million related to the Engineering & Project Solutions segment and $1.5 million related to the Technical Services segment, partially offset by decreases of $0.7 million related to Corporate. Within Technical Services, changes related to foreign currency exchange rates unfavorably impacted costs by $0.2 million, of which $0.3 million was related to unfavorable impacts in EMEA, partially offset by favorable impacts in Asia-Pacific of $0.1 million. Excluding the foreign currency exchange rate impact, the increase in selling, general and administrative costs within Technical Services consisted of increases of $1.7 million in the Americas, partially offset by decreases of $0.2 million each in Asia-Pacific and EMEA, respectively. Of the increase in selling, general and administrative expense in the Americas, approximately 50% was related to personnel and related costs associated with the buildout of the Company’s strategic global organizational structure with the remainder of the increase primarily attributable to higher professional fees and insurance costs . Selling, general and administrative expenses related to Corporate were down by $0.7 million during the six months ended June 30, 2014 compared with the same period in 2013, primarily reflecting reductions in compensation-related expenses. For the Engineering & Project Solutions segment, increases in selling, general and administrative costs for the three months ended June 30, 2014 were attributable to the August 2013 acquisition and primarily consisted of personnel and related costs and rent expense.

Selling, general and administrative costs as a percentage of revenues decreased to 17.6% and 18.6% for the three and six months ended June 30, 2014, respectively, compared to 20.6% and 21.2% for the three and six months ended June 30, 2013, respectively, principally as a result of the increased leverage on higher revenue levels, particularly those associated with the Engineering & Project Solutions segment as well as the EMEA and Asia-Pacific regions within Technical Services.

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Other Income

Interest Income and Other Income (Expense), Net

For the three and six months ended June 30, 2014, interest income and other income (expense) changed unfavorably by $0.3 million and $0.8 million, respectively, when compared to the same periods in 2013 and was primarily related to fluctuations within foreign currency exchange gains and losses.

Interest Expense

For the three and six months ended June 30, 2014, consolidated interest expense increased by $0.2 million and $0.3 million, respectively compared to the same periods in 2013 primarily due to higher average outstanding debt related to an additional borrowing on the revolving credit facility in August 2013.

Income Taxes

For the three and six months ended June 30, 2014, the Company recorded income tax expense of $2.9 million and $3.8 million, respectively, compared to $4.4 million and $6.0 million for the three and six months ended June 30, 2013, respectively. For the three and six months ended June 30, 2014 and 2013, the income tax expense reflects the Company’s estimated annual effective income tax rate considering the statutory rates in the countries in which the Company operates, adjusted for excludable items, and the effects of valuation allowance changes for certain foreign entities.

Income tax expense as a percentage of income before income taxes was 39.3% and 40.8% for the three and six months ended June 30, 2014, respectively, compared to 39.4% and 39.0% for the three and six months ended June 30, 2013, respectively. The difference in income tax rates between periods is primarily attributable to changes in the mix of income before income taxes between countries whose income taxes are offset by a full valuation allowance and those that are not, and differing statutory tax rates in the countries in which the Company incurs tax liabilities.

Liquidity and Capital Resources

The Company’s liquidity and capital resources requirements include the funding of working capital needs, the funding of capital investments and the financing of internal growth.

Net cash provided by operating activities for the six months ended June 30, 2014increased to $8.8 million from $2.5 million for the six months ended June 30, 2013. The increase in net cash provided by operating activities resulted from lower cash usage for working capital requirements, partially offset by a decrease in net income and non-cash items in the current-year period, when compared to the prior year. Changes in working capital, primarily associated with accounts receivable and accounts payable, decreased cash flows by approximately $2.9 million for the six months ended June 30, 2014 compared to $17.2 million for the same period in 2013.

Net cash used in investing activities decreased to $3.5 million for the six months ended June 30, 2014 from $7.7 million for the six months ended June 30, 2013 primarily due to a decrease in capital expenditures during the six months ended June 30, 2014 and no other investing activity cash outflows in the current-year period, whereas the prior-year period included acquisition-related investing cash outflows of $0.9 million. Capital expenditures decreased to $3.5 million for the six months ended June 30, 2014 from $6.8 million for the six months ended June 30, 2013.

Consolidated capital expenditures for the calendar year 2014 were initially budgeted at approximately $20.0 million; however, based on current projections, the Company does not expect capital expenditures to exceed $17.0 million. Such expenditures, however, will depend on many factors beyond the Company’s control, including, without limitation, demand for services as well as domestic and foreign government regulations. No assurance can be given that required capital expenditures will not exceed anticipated amounts during 2014 or thereafter. Capital expenditures during the year are expected to be funded from existing cash and anticipated cash flows from operations.

Net cash used in financing activities was $1.1 million for the six months ended June 30, 2014 compared with $2.1 million for the six months ended June 30, 2013 and primarily reflected principal payments on acquisition-related notes payable in both periods. During the six months ended June 30, 2014, the Company made $0.9 million of principal payments compared with $2.2 million in the same period in 2013.

Although the worldwide economy, including markets in which the Company operates, has shown some signs of improvement, recovery and growth has been slow and continues to be impacted by uncertainty. As such, the Company believes that the risks to its business and its customers continue to remain heightened. Additionally, political unrest, changes in monetary policy, including the effects of higher interest rates, have the potential to curb economic growth and/or cause further instability, which could adversely impact the Company’s performance. Lower levels of liquidity and capital adequacy affecting lenders, increases in defaults and

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bankruptcies by customers and suppliers, and volatility in credit and equity markets, as observed in recent years, could continue to have a negative impact on the Company’s business, operating results, cash flows or financial condition in a number of ways, including reductions in revenues and profits, increased bad debts and financial instability of suppliers and insurers.

On March 5, 2012, certain foreign subsidiaries (the “foreign subsidiary designated borrowers”) of Furmanite Worldwide, Inc. (“FWI”), a wholly owned subsidiary of the Company, and FWI entered into a credit agreement with a banking syndicate led by JPMorgan Chase Bank, N.A., as Administrative Agent (the “Credit Agreement”). The Credit Agreement matures on February 28, 2017. On August 27, 2013, FWI and the foreign subsidiary designated borrowers entered into an Amendment (the “Amendment”) to the Credit Agreement. The Amendment includes several modifications, including increasing the revolving credit facility from $75.0 million to $100.0 million and increasing the portion of the amount available for swing line loans to FWI from $7.5 million to $10.0 million. A portion of the amount available under the Credit Agreement (not in excess of $20.0 million) is available for the issuance of letters of credit. The loans outstanding to the foreign subsidiary designated borrowers under the Credit Agreement may not exceed $50.0 million in the aggregate.

At both June 30, 2014 and December 31, 2013, $59.3 million was outstanding under the Credit Agreement. Borrowings under the Credit Agreement bear interest at variable rates (based on the prime rate, federal funds rate or Eurocurrency rate, at the option of the borrower, including a margin above such rates, and subject to an adjustment based on a calculated Funded Debt to Adjusted EBITDA ratio (the “Leverage Ratio” as defined in the Credit Agreement)), which was 1.9% at June 30, 2014. On April 30, 2013, the Company entered into a forward-dated interest rate swap to mitigate the risk of changes in the variable interest rate. The effect of the swap is to fix the interest rate at 0.75% plus the margin and Leverage Ratio adjustment, as described above, beginning April 29, 2014 through February 28, 2017 on $39.3 million of the outstanding amount under the Credit Agreement. See Note 10 to the Company’s consolidated financial statements for further information regarding the interest rate swap. The Credit Agreement contains a commitment fee, which ranges from 0.25% to 0.30% based on the Leverage Ratio (0.25% at June 30, 2014), and is based on the unused portion of the amount available under the Credit Agreement. Adjusted EBITDA is net income (loss) plus interest, income taxes, depreciation and amortization, and other non-cash expenses minus income tax credits and non-cash items increasing net income (loss) as defined in the Credit Agreement. All obligations under the Credit Agreement are guaranteed by FWI and certain of its subsidiaries under a guaranty and collateral agreement, and are secured by a first priority lien on FWI and certain of its subsidiaries’ assets (which approximated $212.1 million as of June 30, 2014). The Parent Company has granted a security interest in its stock of FWI as collateral security for the lenders under the Credit Agreement, but is not a party to the Credit Agreement.

The Credit Agreement includes financial covenants, which require that the Company maintain: (i) a Leverage Ratio of no more than 2.75 to 1.00 as of the last day of each fiscal quarter, measured on a trailing four-quarters basis, (ii) a fixed charge coverage ratio of at least 1.25 to 1.00, defined as Adjusted EBITDA minus capital expenditures / interest plus cash taxes plus scheduled payments of debt plus Restricted Payments made (i.e. all dividends, distributions and other payments in respect of capital stock, sinking funds or similar deposits on account thereof or other returns of capital, redemption or repurchases of equity interests, and any payments to the Parent Company or its subsidiaries (other than FWI and its subsidiaries)), and (iii) a minimum asset coverage of at least 1.50 to 1.00, defined as cash plus net accounts receivable plus net inventory plus net property, plant and equipment of FWI and its material subsidiaries that are subject to a first priority perfected lien in favor of the Administrative Agent and the Lenders / Funded Debt. FWI is also subject to certain other compliance provisions including, but not limited to, restrictions on indebtedness, guarantees, dividends and other contingent obligations and transactions. Events of default under the Credit Agreement include customary events, such as change of control, breach of covenants or breach of representations and warranties. At June 30, 2014, FWI was in compliance with all covenants under the Credit Agreement.

Considering the outstanding borrowings of $59.3 million, and $2.0 million related to outstanding letters of credit, the unused borrowing capacity under the Credit Agreement was $38.7 million at June 30, 2014.

On August 30, 2013, in connection with the acquisition of the assets of ENGlobal’s Engineering & Construction segment, the Company issued a $3.0 million promissory note, which bears interest at 4.0% per annum and will be paid in four equal annual installments of $0.8 million beginning September 1, 2014, with the final payment due on September 1, 2017.

On February 28, 2013, in connection with an asset purchase, the Company issued a $0.9 million note payable, which was paid at maturity on March 1, 2014.

On January 1, 2013, in connection with an asset purchase, the Company issued a $1.9 million promissory note, which bears interest at 5.0% per annum and is due in four equal annual installments of $0.5 million beginning January 1, 2014, with the final installment payment due on January 1, 2017.

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In 2012, the Company incurred $1.4 million of debt in connection with an asset purchase. As of June 30, 2014 and December 31, 2013, $0.2 million remained outstanding, which is payable in installments of approximately $0.1 million due in both 2014 and 2015.

On February 23, 2011, in connection with the acquisition of Self Leveling Machines, Inc. and certain assets of Self Levelling Machines Pty. Ltd., the Company issued $5.1 million ($2.9 million denominated in U.S. dollars and $2.2 million denominated in Australian dollars) of notes payable (the “SLM Notes”), payable in installments through February 23, 2013. All obligations under the SLM Notes were secured by a first priority lien on the assets acquired in the acquisition. Upon full settlement of the SLM Notes in February 2013 and resultant release of the lien by the sellers’ equity holders, the acquired assets became assets secured under the Credit Agreement. The SLM Notes bore interest at a fixed rate of 2.5% per annum.

The Company committed to cost reduction initiatives during 2010 and 2012 in order to more strategically align the Company’s operating, selling, general and administrative costs relative to revenues. As of June 30, 2014, the costs incurred since the inception of these two cost reduction initiatives totaled approximately $7.2 million. During the six months ended June 30, 2014, the Company incurred a reduction in restructuring costs of $0.1 million, but made no significant payments related to the initiatives. As of June 30, 2014, the remaining reserve associated with these initiatives totaled $0.4 million, all of which are expected to require cash payments and are expected to be paid in 2014. Total workforce reductions for the 2010 and 2012 cost reduction initiatives included terminations of 138 employees in the Company’s EMEA region of its Technical Services segment.

The Company does not anticipate paying any dividends as it believes investing earnings back into the Company will provide a better long-term return to stockholders in increased per share value. The Company believes that funds generated from operations, together with existing cash and available credit under the Credit Agreement, will be sufficient to finance current operations, planned capital expenditure requirements and internal growth for the next twelve months.

Critical Accounting Policies and Estimates

The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant policies are presented in the Notes to the Consolidated Financial Statements and under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Critical accounting policies are those that are most important to the portrayal of the Company’s financial position and results of operations. These policies require management’s most difficult, subjective or complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. The Company’s critical accounting policies and estimates, for which no significant changes have occurred in the six months ended June 30, 2014, include revenue recognition, allowance for doubtful accounts, goodwill, intangible and long-lived assets, stock-based compensation, income taxes, defined benefit pension plans, contingencies, and exit or disposal obligations. Critical accounting policies are discussed regularly, at least quarterly, with the Audit Committee of the Company’s Board of Directors.

Revenue Recognition

Revenues are recorded in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, Revenue Recognition, when realized or realizable, and earned.

Revenues are recognized using the completed-contract method, when persuasive evidence of an arrangement exists, services to customers have been rendered or products have been delivered, the selling price is fixed or determinable and collectability is reasonably assured. Revenues are recorded net of sales tax. Substantially all projects are short term in nature; however, the Company occasionally enters into contracts that are longer in duration that represent multiple element arrangements, which include a combination of services and products. The Company separates deliverables into units of accounting based on whether the deliverables have standalone value to the customer. The arrangement consideration is allocated to the separate units of accounting based on each unit’s relative selling price generally determined using vendor specific objective evidence. Revenues are recognized for the separate units of accounting when services to customers have been rendered or products have been delivered and risk of ownership has passed to the customer. The Company provides limited warranties to customers, depending upon the service performed. Warranty claim costs were not material during either of the three or six months ended June 30, 2014 or 2013.

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Allowance for Doubtful Accounts

Credit is extended to customers based on evaluation of the customer’s financial condition and generally collateral is not required. Accounts receivable outstanding longer than contractual payment terms are considered past due. The Company regularly evaluates and adjusts accounts receivable as doubtful based on a combination of write-off history, aging analysis and information available on specific accounts. The Company writes off accounts receivable when they become uncollectible. Any payments subsequently received on such receivables are credited to the allowance in the period the payment is received.

Long-Lived Assets

Goodwill and Intangible Assets

The Company accounts for goodwill and other intangible assets in accordance with the provisions of FASB ASC 350, Intangibles — Goodwill and Other. Under FASB ASC 350, intangible assets with lives restricted by contractual, legal or other means are amortized over their useful lives. Finite-lived intangible assets are reviewed for impairment in accordance with the provisions of FASB ASC 360, Property, Plant, and Equipment.

Goodwill and other intangible assets not subject to amortization are tested for impairment annually (in the fourth quarter of each calendar year), or more frequently if events or changes in circumstances indicate that the assets might be impaired. Examples of such events or circumstances include a significant adverse change in legal factors or in the business climate, an adverse action or assessment by a regulator, or a loss of key personnel.

As of December 31, 2013, the Company’s fair value substantially exceeded its carrying value in each of its two reporting units, therefore no impairment was indicated. Additionally, no changes in circumstances have occurred in the six months ended June 30, 2014 that would warrant an additional impairment test in the current period. At each of June 30, 2014 and December 31, 2013, goodwill totaled $15.5 million. All goodwill is associated with the Technical Services operating segment.

Property, Plant and Equipment

The Company accounts for property, plant and equipment in accordance with the provisions of FASB ASC 360, Property, Plant, and Equipment. Under FASB ASC 360, the Company reviews property, plant and equipment for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Factors that may affect recoverability include changes in planned use of equipment, closing of facilities and discontinuance of service lines. Property and equipment to be held and used is reviewed at least annually for possible impairment. The Company’s impairment review is based on an estimate of the undiscounted cash flow at the lowest level for which identifiable cash flows exist. Impairment occurs when the carrying value of the assets exceeds the estimated future undiscounted cash flows generated by the asset and the impairment is viewed as other than temporary. When impairment is indicated, an impairment charge is recorded for the difference between the carrying value of the asset and its fair market value. Depending on the asset, fair market value may be determined either by use of a discounted cash flow model or by reference to estimated selling values of assets in similar condition. No impairment of property, plant and equipment occurred during the three or six months ended June 30, 2014 or 2013.

Stock-Based Compensation

All stock-based compensation is recognized as an expense in the consolidated financial statements and such costs are measured at the fair value of the award at the date of grant. The fair value of stock-based payment awards on the date of grant as determined by the Black-Scholes model is affected by the Company’s stock price on the date of the grant as well as other assumptions. Assumptions utilized in the fair value calculations include the expected stock price volatility over the term of the awards (estimated using the historical volatility of the Company’s stock price), the risk free interest rate (based on the U.S. Treasury Note rate over the expected term of the option), the dividend yield (assumed to be zero, as the Company has not paid, nor anticipates paying in the foreseeable future, any cash dividends), and employee stock option exercise behavior and forfeiture assumptions (based on historical experience and other relevant factors). For performance-based awards, the Company must also make assumptions regarding the likelihood of achieving performance targets.

Income Taxes

Deferred tax assets and liabilities result from temporary differences between the U.S. GAAP and tax treatment of certain income and expense items. The Company must assess and make estimates regarding the likelihood that the deferred tax assets will be recovered. To the extent that it is determined the deferred tax assets will not be recovered, a valuation allowance is established for such assets. In making such a determination, the Company must take into account positive and negative evidence including projections of future taxable income and assessments of potential tax planning strategies.

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The Company recognizes the tax benefit from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the applicable taxing authorities, based on the technical merits of the position. The tax benefit recognized is based on the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with the taxing authority. Uncertain tax positions in certain foreign jurisdictions would not impact the effective foreign tax rate because unrecognized non-current tax benefits are offset by the foreign net operating loss carryforwards, which are fully reserved. The Company recognizes interest expense on underpayments of income taxes and accrued penalties related to unrecognized non-current tax benefits as part of the income tax provision.

Defined Benefit Pension Plans

Pension benefit costs and liabilities are dependent on assumptions used in calculating such amounts. The primary assumptions include factors such as discount rates, expected investment return on plan assets, mortality rates and retirement rates. These rates are reviewed annually and adjusted to reflect current conditions. These rates are determined based on reference to yields. The compensation increase rate is based on historical experience. The expected return on plan assets is derived from detailed periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks (standard deviations) and correlations of returns among the asset classes that comprise the plans’ asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return. Mortality and retirement rates are based on actual and anticipated plan experience. In accordance with U.S. GAAP, actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense and the recorded obligation in future periods. While the Company believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect the pension obligation and future expense.

Contingencies

Environmental

Liabilities are recorded when site restoration or environmental remediation and cleanup obligations are either known or considered probable and can be reasonably estimated. Recoveries of environmental costs through insurance, indemnification arrangements or other sources are recognized when such recoveries become certain.

The Company capitalizes environmental costs only if the costs are recoverable and the costs extend the life, increase the capacity, or improve the safety or efficiency of property owned by the Company as compared with the condition of that property when originally constructed or acquired, or if the costs mitigate or prevent environmental contamination that has yet to occur and that otherwise may result from future operations or activities and the costs improve the property compared with its condition when constructed or acquired. All other environmental costs are expensed.

Other

The Company establishes a liability for all other loss contingencies when information indicates that it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated.

Exit or Disposal Obligations

In 2010 and 2012, the Company committed to cost reduction initiatives, including planned workforce reductions and restructuring of certain functions. The Company has taken these specific actions in order to more strategically align its operating, selling, general and administrative costs to its revenues. The Company has recorded expenses related to these cost reduction initiatives for severance, lease cancellations, and other restructuring costs in accordance with FASB ASC 420-10, Exit or Disposal Cost Obligations and FASB ASC 712-10, Nonretirement Postemployment Benefits.

Under FASB ASC 420-10, costs associated with restructuring activities are generally recognized when they are incurred. In the case of leases, the expense is estimated and accrued when the property is vacated. In addition, post-employment benefits accrued for workforce reductions related to restructuring activities are accounted for under FASB ASC 712-10. A liability for post-employment benefits is generally recorded when payment is probable, the amount is reasonably estimable, and the obligation relates to rights that have vested or accumulated. The Company continually evaluates the adequacy of the remaining liabilities under its restructuring initiatives. Although the Company believes that these estimates accurately reflect the costs of its restructuring plans, actual results may differ, thereby requiring the Company to record additional provisions or reverse a portion of such provisions.

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Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers(Topic 606), which provides for a single five-step model to be applied in determining the amount and timing of the recognition of revenue related to contracts with customers. The new guidance also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the guidance. There is no option for early adoption. The provisions of the new guidance are effective for annual reporting periods beginning after December 15, 2016, including interim periods within those reporting periods. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

Off-Balance Sheet Arrangements

The Company was not a party to any off-balance sheet arrangements at June 30, 2014 or December 31, 2013, or for the three and six months ended June 30, 2014 or 2013.

Inflation and Changing Prices

The Company does not operate or conduct business in hyper-inflationary countries nor enter into long-term supply contracts that may impact margins due to inflation. Changes in prices of goods and services are reflected on proposals, bids or quotes submitted to customers.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s principal market risk exposures (i.e., the risk of loss arising from the adverse changes in market rates and prices) are to changes in interest rates on the Company’s debt and investment portfolios and fluctuations in foreign currency.

The Company centrally manages its debt, considering investment opportunities and risks, tax consequences and overall financing strategies. Based on the amount of variable rate debt, $59.3 million at June 30, 2014, an increase in interest rates by one hundred basis points would increase annual interest expense by approximately $0.6 million. On April 30, 2013, the Company entered into a forward-dated interest rate swap to mitigate the risk of change in the variable interest rate on $39.3 million of the outstanding debt beginning April 29, 2014 through February 28, 2017. For more information on this swap, see Note 10 to the Company’s consolidated financial statements.

A significant portion of the Company’s business is exposed to fluctuations in the value of the U.S. dollar as compared to foreign currencies as a result of the foreign operations of the Company in Australia, Bahrain, Belgium, Canada, China, Denmark, France, Germany, Malaysia, The Netherlands, New Zealand, Nigeria, Norway, Singapore, Sweden and the United Kingdom. Foreign currency exchange rate changes, primarily the British Pound, relative to the U.S. dollar resulted in a favorable impact on the Company’s U.S. dollar reported revenues for the three and six months ended June 30, 2014 when compared to the three and six months ended June 30, 2013. The revenue impact was somewhat mitigated by similar exchange effects on operating costs, thereby reducing the exchange rate effect on operating income. The Company does not currently use foreign currency rate hedges.

Based on the six months ended June 30, 2014, foreign currency-based revenues and operating income of $80.2 million and $10.3 million, respectively, a ten percent depreciation in all applicable foreign currencies would result in a decrease in revenues of $7.3 million and a reduction in operating income of $0.9 million.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s principal executive officer and principal financial officer, has evaluated, as required by Rules 13a-15(e) and 15(a)-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of June 30, 2014. Based on that evaluation, the principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2014 to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2014, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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FURMANITE CORPORATION AND SUBSIDIARIES

PART II — Other Information

Item 1. Legal Proceedings

Furmanite America, Inc., a subsidiary of the Company, is involved in disputes with a customer, INEOS USA LLC, which claims that the subsidiary failed to provide it with satisfactory services at the customer’s facilities. On April 17, 2009, the customer initiated legal action against the subsidiary in the Common Pleas Court of Allen County, Ohio (the “Court”), alleging that the subsidiary and one of its former employees, who performed data services at one of the customer’s facilities, breached its contract with the customer and failed to provide the customer with adequate and timely information to support the subsidiary’s work at the customer’s facility. In March 2014, the customer’s claims against the former employee were dismissed and the Court granted a partial summary judgment in favor of Furmanite America, Inc. The customer’s complaint seeks damages in an amount that the subsidiary believes represents the total proposed civil penalty, plus the cost of unspecified supplemental environmental projects requested by the regulatory agency to reduce air emissions at the customer’s facility, and also seeks unspecified punitive damages. The subsidiary believes that it provided the customer with adequate and timely information to support the subsidiary’s work at the customer’s facilities and will vigorously defend against the remainder of the customer’s claim.

The Company has other contingent liabilities resulting from litigation, claims and commitments incident to the ordinary course of business.

While the Company cannot make an assessment of the eventual outcome of all matters or determine the extent, if any, of any potential uninsured liability or damage, accruals of $1.9 million, which include the Furmanite America, Inc. litigation, were recorded in accrued expenses and other current liabilities as of both June 30, 2014 and December 31, 2013. While there is a reasonable possibility that a loss exceeding amounts already recognized could occur, the Company does not believe such amounts would be material to its financial statements.

Management believes, after consulting with counsel, that the ultimate resolution of such contingencies will not have a material adverse effect on the financial position, results of operations or liquidity of the Company.

Item 1A. Risk Factors

During the three and six months ended June 30, 2014, there were no material changes to the risk factors reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Item 5. Other Information

(a)    As previously disclosed, Charles R. Cox has notified the Company of his intent to retire as Chief Executive Officer effective December 31, 2014. On July 30, 2014, the Company and Mr. Cox entered into an agreement associated with his planned retirement (the “Agreement”). In exchange for his satisfaction of the obligations set forth in the Agreement, upon separation of his employment:

• Mr. Cox will receive cash payments totaling $820,000, to be paid by the Company pursuant to the payment schedule set forth in the Agreement. However, in the event Mr. Cox becomes entitled to payments under a separate change in control agreement with the Company, Mr. Cox will not be entitled to receive these cash payments;

• Mr. Cox will become fully vested in all of his currently outstanding unvested stock options and outstanding unvested restricted stock units. Additionally, Mr. Cox will generally have one year from his separation date to exercise all outstanding stock options; and

• Mr. Cox will be eligible to receive compensation under the Company’s 2014 incentive compensation program, but such compensation remains contingent upon the outcome of the previously established performance conditions related to the Company’s 2014 financial performance. Such compensation will be prorated in the event Mr. Cox separates from the Company prior to December 31, 2014 in accordance with the Agreement.

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The Agreement includes an employment commitment and also addresses certain releases, waivers, non-disparagement and confidentiality provisions agreed to by the Company and Mr. Cox. The Agreement is subject to a seven-day revocation period by Mr. Cox, which ends August 6, 2014.

The foregoing is qualified in its entirety by reference to the Agreement, which is filed as Exhibit 10.4 tothis Quarterly Report on Form 10-Q and incorporated by reference herein.

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Item 6. Exhibits

3.1	Restated Certificate of Incorporation of the Registrant, dated September 26, 1979, incorporated by reference herein to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-16.
3.2	Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant, dated April 30, 1981, incorporated by reference herein to Exhibit 3.2 to the Registrant’s Form 10-K for the year ended December 31, 1981.
3.3	Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant, dated May 28, 1985, incorporated by reference herein to Exhibit 4.1 to the Registrant’s Form 10-Q for the quarter ended June 30, 1985.
3.4	Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant, dated September 17, 1985, incorporated by reference herein to Exhibit 4.1 to the Registrant’s Form 10-Q for the quarter ended September 30, 1985.
3.5	Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant, dated July 10, 1990, incorporated by reference herein to Exhibit 3.5 to the Registrant’s Form 10-K for the year ended December 31, 1990.
3.6	Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant, dated September 21, 1990, incorporated by reference herein to Exhibit 3.5 to the Registrant’s Form 10-Q for the quarter ended September 30, 1990.
3.7	Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant, dated August 8, 2001, incorporated by reference herein to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on August 22, 2001.
3.8*	By-laws of the Registrant, as amended and restated May 27, 2014.
4.1	Certificate of Designation, Preferences and Rights related to the Registrant’s Series B Junior Participating Preferred Stock, filed as Exhibit 4.2 to the Registrant’s 10-K for the year ended December 31, 2008, which exhibit is incorporated herein by reference.
4.2	Rights Agreement, dated as of April 15, 2008, between the Registrant and The Bank of New York Trust Company, N.A., a national banking association, as Rights Agent, which includes as exhibits, the Form of Rights Certificate and the Summary of Rights to Purchase Stock, filed as Exhibit 4.1 to the Registrant’s Form 8-A/A filed on April 18, 2008, which exhibit is incorporated herein by reference.
4.3	Letters to stockholders of the Registrant, dated April 19, 2008 (incorporated by reference herein to Exhibit 4.2 to the Registrant’s Form 8-A/A filed on April 18, 2008).
10.1*	Form of Furmanite Corporation Long-Term Incentive Agreement.
10.2*	Change in Control Agreement between the Company and Charles R. Cox, dated May 27, 2014.
10.3*	Change in Control Agreement between the Company and Robert S. Muff, dated May 27, 2014.
10.4*	Agreement between the Company and Charles R. Cox, dated July 30, 2014.
31.1*	Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated as of July 31, 2014.
31.2*	Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated as of July 31, 2014.
32.1**	Certification of Chief Executive Officer, Pursuant to Section 906(a) of the Sarbanes-Oxley Act of 2002, dated as of July 31, 2014.
32.2**	Certification of Chief Financial Officer, Pursuant to Section 906(a) of the Sarbanes-Oxley Act of 2002, dated as of July 31, 2014.

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101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.DEF*	XBRL Taxonomy Definition Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

____________________________

* Filed herewith.

** Furnished herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FURMANITE CORPORATION

(Registrant)

/s/ ROBERT S. MUFF

Robert S. Muff

Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: July 31, 2014

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EX-3.8

EXHIBIT 3.8

FURMANITE CORPORATIONBYLAWS(Amended and Restated – May 27, 2014)

Article I

Stockholders

Section 1. Place of Holding Meetings: All meetings of the stockholders shall be held at the principal office of the Corporation outside of the State of Delaware, or at such other place within or without the State of Delaware as shall be specified or fixed in the notices or waivers of notice thereof.

Section 2. Quorum; Adjournment of Meetings: The presence in person or by proxy of stockholders entitled to cast a majority in number of votes shall be necessary to constitute a quorum at all meetings of the stockholders unless otherwise provided by law or by the certificate of incorporation. If less than a quorum shall be in attendance at the time for which the meeting shall have been called, the meeting may, after the lapse of at least half an hour, be adjourned from time to time by vote of the stockholders holding a majority of the issued and outstanding shares of the capital stock of the Corporation entitled to vote who are present in person or by proxy at such meeting, for a period not exceeding one month for any one adjournment, without any notice or call other than by announcement at the meeting of the time and place of the holding of the adjourned meeting, until a quorum shall attend. Any meeting or adjournment thereof at which a quorum is present may also be adjourned by a like majority vote, for such time without notice or call, or upon such notice or call as may be determined by such majority vote. At any adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted if the meeting had been held as originally called.

Section 3. Annual Meetings; Election of Directors: The annual meeting of stockholders for the election of directors -and the transaction of general business shall be held at ten o’clock (10:00) in the forenoon on the fourth Monday in April in each year, or on such other date and time as may be appropriately selected by the Board of Directors. If this date shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day not a legal holiday. At each annual meeting the stockholders shall elect a board of directors, and they may transact any other business within the powers of the Corporation as may come before the meeting without special notice of such business.

Section 4. Special Meetings: Special Meetings of the stockholders for any purpose or purposes may be called at any time in the interval between regular meetings by the Chairman of the Board, Chief Executive Officer or President, or by a majority of the board of directors, or by a majority of the executive committee.

Section 5. Notice of Stockholders Meetings: A written or printed notice, stating the place, day and hour of the meeting, and, in case of a special meeting, the business proposed to be transacted thereat, shall be given by the Secretary to each stockholder entitled to vote thereat by delivering

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such notice to him personally, electronically or by mailing it postage prepaid and addressed to him at his address as it appears upon the books of the Corporation, at least ten (10) days prior to the meeting. No business shall be transacted at any special meeting except that referred to in the notice.

Section 6. Voting; Elections; Inspectors; Votes by Ballot: At all meetings of stockholders, every stockholder of record of any class entitled to vote thereat shall have one vote for each share of full paid and nonassessable stock standing in his name on the books of the Corporation on the date for the determination of stockholders entitled to vote at such meeting, either in person or by proxy appointed by instrument in writing subscribed by such stockholder or his duly authorized attorney. All elections shall be had and all questions decided by a majority vote of the votes cast at a duly constituted meeting, except as otherwise provided for in these bylaws or in the certificate of incorporation or by some specific statutory provision superseding the restrictions and limitations contained in the bylaws or the certificate of incorporation.

At any election of directors, the chairman of the meeting may, and upon the request of the holders of ten percent (l0%) of the stock present and entitled to vote at such election shall, appoint two inspectors of election who shall subscribe an oath or affirmation to execute faithfully the duties of inspectors at such election with strict impartiality and according to the best of their ability and shall canvass the votes and make and sign a certificate of the result thereof. No candidate for the office of director shall be appointed as such inspector.

The chairman of the meeting may cause a vote by ballot to be taken upon any election or matter, and such vote by ballot shall be taken upon the request of the holders of ten percent (l0%) of the stock present and entitled to vote on such election or matter.

Section 7. Conduct of Stockholders’ Meetings: The meetings of the stockholders shall be presided over by the Chairman of the Board, or if he is not present, by the Chief Executive Officer, or if he is not present by the President, or if he is not present, by a Vice President or if neither the Chairman of the Board, Chief Executive Officer, President nor a Vice President is present, by a chairman elected at the meeting.

The Secretary of the Corporation, if present, shall act as secretary of such meetings, or if he is not present, an Assistant Secretary shall so act; if neither the Secretary nor an Assistant Secretary is present, then a secretary shall be appointed by the chairman of the meeting. The order of business shall be as follows:

(a) calling of meeting to order

(b) election of a chairman and the appointment of a secretary, if necessary

(c) presentation of proof of the due calling of the meeting

(d) presentation and examination of proxies

(e) reading and settlement of the minutes of the previous meeting

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(f) the election of directors, if an annual meeting or a meeting called for that purpose

(h) unfinished business

(i) new business

(j) adjournment.

Section 8. Validity of Proxies; Ballots; Etc.: At every meeting of the stockholders, all proxies shall be received and taken in charge of and all ballots shall be received and canvassed by the secretary of the meeting who shall decide all questions touching the qualification of voters, the validity of the proxies, and the acceptance or rejection of votes, unless inspectors of election shall have been appointed by the chairman of the meeting, in which event such inspectors of election shall decide all such questions.

Section 9. Discretionary Power to Vote Proxies: An instrument in writing subscribed by a stockholder and appointing a proxy may confer upon such proxy discretionary power to vote on any matter that may come before an annual meeting of the stockholders of the Corporation unless, with respect to a particular matter, (i) the Corporation receives notice by certified mail, return receipt requested, addressed to the Corporation’s Secretary, not later than 120 days preceding the anniversary date of the mailing of the proxy statement for the previous year’s annual meeting of stockholders, that the matter will be presented at the annual meeting and (ii) the Corporation fails to include in its proxy statement for the annual meeting advice on the nature of the matter and how the corporation intends to exercise its discretion to vote on the matter.

Article IIDirectors

Section 1. Election of Directors; Terms of Office: At all meetings of the stockholders for the election of directors at which a quorum is present, the persons receiving the greatest number of votes shall be the directors. Each director of the Corporation shall hold office until the next annual meeting of the stockholders and thereafter until his successor shall have been duly elected and shall have qualified, or until he shall resign or be removed in accordance with the provisions of these bylaws.

Section 2. First Meeting: The newly elected directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or the time and place of such meeting may be fixed by consent in writing of all the directors.

Section 3. Regular Meetings: Regular meetings of the board of directors may be held without notice at such places and times as may be fixed from time to time by resolution of the board.

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Section 4. Special Meetings; How Called; Notice: Special meetings of the board of directors may be called by the Chairman of the Board, Chief Executive Officer, President or, on the written request of any two directors, by the Secretary, in each case on at least twenty-four (24) hours written or printed or telegraphic, cable, electronic or wireless notice to each director. Such notice or any waiver thereof pursuant to Section 2 of Article VIII hereof, need not state the purpose or purposes of such meeting, except as may otherwise be required by law, by the certificate of incorporation or in these bylaws.

Section 5. Place of Meeting; Order of Business The directors may hold their meetings, have one or more offices, and keep the books of the corporation, outside the State of Delaware, at any office or offices of the corporation, or at any other place, as they may from time to time by resolution determine. At all meetings of the board of directors business shall be transacted in such order as shall from time to time be determined by resolution of the board.

Section 6. Number and Quorum: The business and property of the corporation shall be conducted and managed by a board consisting of four (4) directors, none of whom need be a stockholder of the corporation. The number of directors constituting the board shall in no case be decreased below the number then in office except in connection with the removal of a director under the provisions of Section 9 of this Article II. A majority of the directors shall constitute a quorum for the transaction of business.

Section 7. Increase or Decrease of Number of Directors: Any time or from time to time at a special meeting called for the purpose, the board of directors may increase the number of directors of the corporation or decrease the number of directors and at any such meeting at which the board is increased, or at any subsequent special meeting called for the purpose and held prior to the next annual election, the board, by the vote of a majority of the board then in office, may fill the vacancies created by any such increase in the number of directors. The additional directors so chosen shall hold office until the next annual election and until their successors are elected and shall qualify.

Section 8. Resignations: Any director or member of the committee may resign at any time. Such resignation shall be made in writing or electronically and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the Chairman of the Board, Chief Executive Officer, President or Secretary. The acceptance of a resignation shall not be necessary to make it effective.

Section 9: Removal of Directors: At a special meeting of the stockholders called and held for such purpose; any director may; by a vote of a majority of all of the shares of stock outstanding and entitled to vote, be removed from office and another be appointed in the place of the person so removed, to serve for the remainder of his term.

Section 10: Filling of Vacancies: Subject to the provisions of Sections 7 and 9 of this Article, if the office of any director, member of the executive committee, or other office becomes vacant, a majority of the directors in office; if more than a quorum, or if less than a quorum, then the directors in office, may appoint any qualified person to fill such vacancy, who shall hold office for the un-expired term and until his successor shall be duly chosen and shall qualify.

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Section 11. Powers of Directors: The board of directors shall exercise all of the powers of the Corporation subject to the restrictions imposed by law by the certificate of incorporation, or by these bylaws. The directors shall act only as a board and the individual directors shall have no power as such.

Section 12. Compensation of Directors: The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

Section 13. Approval or Ratification of Acts or Contracts by Stockholders: The board of directors in its discretion may submit any act or contract for approval or ratification at any annual meeting of the stockholders, or at any special meeting of the stockholders called for the purpose of considering any such act or contract, and any act or contract that shall be approved or be ratified by the vote of the stockholders holding a majority of the issued and outstanding shares of the capital stock of the Corporation entitled to vote and present in person or by proxy at such meeting (provided that a quorum be present), shall be as valid and as binding upon the Corporation and upon all the stockholders as if it has been approved or ratified by every stockholder of the Corporation.

Section 14. Chairman of the Board: The board of directors may at its discretion elect a Chairman of the Board from among the directors. The Chairman of the Board may be removed from that capacity by a majority vote of the board of directors. The Chairman of the Board shall preside at all meetings of the board of directors and of the stockholders of the Corporation. The Chairman of the Board shall perform all other duties normally incident to the position of chairman of the board or as may be prescribed by the board of directors or these bylaws. The Chairman of the Board shall not, by virtue of that position alone, be deemed an officer of the Corporation.

Article IIICommittees

Section 1. Executive Committee; Designation: The board of directors, by a resolution passed by a majority of the whole board, may designate two or more of its members to constitute an executive committee, each member of which, unless otherwise determined by the board, shall continue to be a member thereof until the expiration of his term of office as a director.

Section 2. Powers: During the intervals between the meetings of the board of directors, the executive committee shall have, and may exercise, all the powers of the board of directors in the management of the business and affairs of the Corporation, in such manner as the executive committee shall deem best for the interests of the Corporation, in all cases in which specific directions shall not have been given by the board of directors.

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All action by the executive committee shall be reported to the board of directors at its next meeting succeeding such action, and shall be subject to revision or alteration by the board of directors; provided that no rights or acts of third parties shall be affected by any such revision or alteration.

Section 3. Procedure; Meetings; Quorum: The executive committee shall choose its own chairman and secretary, shall fix its own rules of procedure, and shall meet at such times and at such place or places as may be provided by such rules, or by resolution of the executive committee or of the board of directors. At every meeting of the executive committee the presence of a majority of all the members thereof shall be necessary to constitute a quorum and the affirmative vote of a majority of the members present shall be necessary for the adoption by it of any resolution.

Section 4. Other Committees: The board of directors, by resolution passed by a majority of the whole board, may designate members of the board to constitute other committees, which shall in each case consist of such number of directors, not less than two, and shall have and may exercise such powers as the board may determine and specify in the respective resolutions appointing them. A majority of all the members of any such committee may determine its action and fix the time and place of its meetings, unless the board of directors shall otherwise provide. The board of directors shall have power at any time to change the number, subject as aforesaid, and members of any such committee, to fill vacancies, and to discharge any such committee.

Article IVOfficers

Section 1. Officers: The officers of the Corporation shall be a Chief Executive Officer, a President, one or more Vice Presidents, a Treasurer and a Secretary, all of whom shall be elected by the board of directors.

The board of directors or the executive committee may appoint one or more Assistant Treasurers, one or more Assistant Secretaries, and such other officers as they, or either of them, may deem necessary, who shall have such authority and shall perform such duties as from time to time may be prescribed by the board of directors or the executive committee. Any two offices, except those of President and Secretary, may be held by the same person.

Section 2. President: The President shall have day-to-day supervision of the business affairs and property of the Corporation, and of its officers and agents, subject, however, to the control of the Chief Executive Officer. He may agree upon, execute and deliver all authorized bonds, notes, contracts, agreements or other obligations or instruments in the name of the Corporation.

Section 3. Chief Executive Officer: The Chief Executive Officer shall have general supervision over the business affairs and property of the Corporation, and of its officers and agents, subject, however, to the control of the board of directors and of the executive committee. The Chief Executive Officer shall have such other powers and duties as designated in these bylaws and as from time to time may be assigned to him by the board of directors. He may agree upon, execute and deliver all authorized bonds, notes, contracts, agreements or other obligations or instruments in the name of the Corporation, and, with the Treasurer or an Assistant Treasurer or the Secretary or an Assistant

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Secretary, may execute and deliver all certificates for shares of capital stock of the Corporation and any warrants evidencing the right to subscribe to shares of the capital stock of the Corporation.

Section 4. Vice Presidents: At the request of the President, or in his absence or disability or failure to act, a Vice President shall have and perform all the duties of the President, and, when so acting, shall have all the powers of and be subject to all restrictions upon the President. Any Vice President (unless otherwise provided by resolutions of the board of directors or executive committee) may execute and deliver all authorized bonds, notes, contracts, agreements or other obligations or instruments in the name of the Corporation, and with the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, may sign all certificates for shares of capital stock of the Corporation and any warrants evidencing the right to subscribe to shares of capital stock of the Corporation. Each Vice President shall have such other powers and shall perform such other duties as may be assigned to him by the board of directors, the executive committee or by the President.

Section 5. Treasurer: The Treasurer shall have the custody of all funds, securities, evidences of indebtedness and other valuable documents of the Corporation; he shall receive and give or cause to be given, receipts and acceptances for moneys paid in on account of the Corporation, and shall pay out of the funds on hand all just debts of the Corporation of whatever nature upon maturity of the same; he shall enter or cause to be entered in the books of the Corporation to be kept for that purpose full and accurate accounts of all moneys received and paid out on account of the Corporation and whenever required by the board of directors, the executive committee or the President, he shall render a statement of his cash accounts; he may sign with the President or a Vice President any or all certificates for shares of the capital stock of the Corporation and any warrants evidencing the right to subscribe to shares of the capital stock of the Corporation; and in general he shall perform all of the other duties incident to the office of Treasurer and such other duties as may be assigned to him by the board of directors, the executive committee or the President.

Section 6. Assistant Treasurer: At the request of the Treasurer, in his absence or disability or failure to act, an Assistant Treasurer shall perform all the duties of the Treasurer, and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Treasurer. The Assistant Treasurers shall perform such other duties as from time to time may be assigned to them by the President, the Treasurer, the board of directors or the executive committee.

Section 7. The Secretary: The Secretary shall be sworn to the faithful discharge of his duties; shall keep or cause to be kept in books provided for the purpose the minutes of all meetings of the stockholders, of the board of directors and of the executive committee; shall see that all notices are duly given in accordance with the provisions of these bylaws and as required by law; shall be custodian of the records and of the seal of the Corporation; shall keep a register of the post office address of each stockholder, and make all proper changes in such register, retaining and filing his authority for all such entries; may sign with the President or a Vice President any and all certificates for shares of the capital stock of the Corporation and any warrants evidencing the right to subscribe to shares of the capital stock of the Corporation; shall see that the books, reports, statements, certificates and all other documents and records required by law are properly kept and filed; and in general the Secretary shall perform all duties incident to the office of Secretary and such other duties as may, from time to time, be assigned to him by the board of directors, the executive committee,

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or the President.

Section 8. Assistant Secretaries: At the request of the Secretary or in his absence or disability or fai1ure to act; an Assistant Secretary shall perform all the duties of the Secretary and, when so acting, shall have all the powers of, and be subject to, all the restrictions upon the Secretary. The Assistant Secretaries shall perform such other duties as from time to time may be assigned to them by the President, the Secretary, the board of directors or the executive committee.

Section 9. Salaries: The salaries or other compensation of the officers shall be fixed from time to time by the board of directors and no officer shall be prevented from receiving such salary or other compensation by reason of the fact that he is also a director of the Corporation.

Section 10. Removal of Officers: Any officer may be removed, either with or without cause, by the vote of a majority of the whole board of directors at a special meeting called for the purpose or at any regular meeting of the board, provided the notice for such meeting shall specify that the matter of any such proposed removal will be considered at the meeting.

Article VCapital Stock

Section 1. Certificates of Stock: Secretary shall cause to be issued one or more certificates under the seal to each stockholder of the Corporation and signed by the Chairman of the Board, Chief Executive Officer, President or a Vice President and the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, certifying the number of shares (and, if the stock of the Corporation shall be divided into classes, the class or classes of such shares) owned by such stockholder in the Corporation; provided, however, that if any certificate shall be signed by a transfer agent, or by a transfer clerk and registrar, appointed by the board of directors for the purpose, the signatures of the officers of the Corporation on the certificate may be facsimile. The stock record books and the blank stock certificate books shall be kept by the Secretary, or at the Office of such transfer agent or transfer agents as the board of directors or the executive committee may from time to time by resolution determine. In case any officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates shall cease to be such officer or officers, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers.

Section 2. Transfer of Shares: The shares of stock of the Corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the Corporation by the delivery thereof to the Secretary or the transfer agent for said shares of stock or to such other person as the board of directors may designate by whom such old certificates shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer.

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Section 3. Record Date: In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect to any change conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty or less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.

Section 4. Dividends: The directors may declare dividends from the surplus or net profits of the Corporation as and when they deem expedient. Before declaring any dividend there may be reserved out of surplus or net profits such sum or sums as the directors from time to time in their discretion think proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends, or for such other purposes as the directors shall think conducive to the interest of the Corporation.

Section 5. Lost or Destroyed Certificates: The board of directors or the executive committee may determine the conditions upon which a new certificate of stock may be issued in place of a certificate which is alleged to have been lost or destroyed; and may, in their discretion, require the owner of such certificate or his legal representative to give bond, with sufficient surety, to indemnify the Corporation and each transfer agent against any and all losses or claims which may arise by reason of the issue of a new certificate in the place of the one so lost or destroyed.

Article VICorporate Seal

The board of directors shall provide a corporate seal, which shall be in the form of a circle, shall include the name of the Corporation and year of its incorporation and shall otherwise be in such form as shall be approved by the board of directors.

Article VIIContracts, Notes, Checks, Etc.

Section 1. Execution of Contracts: The board of directors or executive committee may authorize any officer or officers, agent or agents, in the name and on behalf of the Corporation, to enter into any contract or execute and deliver any instrument, and such authority may be general or confined to specific instances; and unless so authorized by the board of directors or the executive committee or expressly authorized by these bylaws, no officer or agent or employee shall have any power or authority to bind the Corporation by any contract or other undertaking or to render it liable for the payment of money or to subject it to any other obligation.

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Section 2. Execution of Notes, Checks, Etc.: All notes, bonds or other certificates or evidence of indebtedness of the Corporation, and all checks, drafts, notes and other orders for the payment of money out of the funds of the Corporation shall be signed on behalf of the Corporation in such manner as shall from time to time be determined by resolution of the board of directors or the executive committee.

Article VIIIMiscellaneous Provisions

Section 1. Fiscal Year: The fiscal year of the Corporation shall be the calendar year.

Section 2. Notice and Waiver of Notice: The term notice as used in these bylaws shall not mean personal notice unless expressly so stated; any notice so required shall be deemed to be sufficient if given electronically or by depositing the same in a post office box in a sealed postpaid wrapper addressed to the person entitled thereto at his last known post office address, and such notice shall be deemed to have been given on the day of such mailing. Any notice required to be given under these bylaws may be waived by the person entitled thereto.

Section 3. Voting upon Stocks: Unless otherwise ordered by the board of directors or by the executive committee, the Chairman of the Board, Chief Executive Officer or the President shall have full power and authority on behalf of the Corporation to attend and to act and to vote at any meetings of stockholders of any corporation in which the Corporation may hold stock, and at any such meeting shall possess, and may exercise any and all the rights and powers incident to the ownership of such stock, and which as the owner thereof, the Corporation might have possessed and exercised if present. The board of directors’ or the executive committee, by resolution, from time to time may confer like powers upon any other person or persons, which powers may be general or confined to specific instances.

Section 4. Indemnification of Officers and Directors:

(a) To the full extent permitted by applicable law (whether as in effect at the time of adoption of this Section or as such laws may be amended from time to time), the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the Corporation, against expenses (including attorney fees) judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding. Such indemnification may, in the discretion of the board of directors, include advances of his expenses in advance of final disposition of such action, suit or proceeding, subject to the provisions of any applicable statute.

(b) The indemnification provided by this Section shall not be deemed exclusive of any other rights to which a person seeking indemnification may be entitled under any law, bylaws, agreement, vote of stockholders or disinterested directors or otherwise and shall inure to the benefit of the heirs, executors and administrators of such person.

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Section 5. Venue for Derivative Suits. Any derivative action or proceeding by or in the name of the Corporation shall be brought only in the Chancery Court of the State of Delaware.

ARTICLE IXAmendments

The board of directors shall have full power to alter, amend or repeal these bylaws or any provision thereof, or to make new bylaws, at any regular meeting as part of the general business of such meeting, or at a special meeting called for the purpose. Bylaws made, altered or amended by the board of directors may be altered, amended or repealed by the stockholders.

Dated: May 27, 2014

/s/ William F. Fry

William F. Fry

Secretary of Furmanite Corporation

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EX-10.1

EXHIBIT 10.1

FURMANITE CORPORATION

LONG-TERM INCENTIVE AGREEMENT

This sets forth the terms of the Long-Term Incentive Agreement (“Agreement”) made this ____ day of ____, 20___ (“Effective Date”), between Furmanite Corporation, a Delaware corporation (“Company”), and _____________(“Grantee”).

WITNESSETH:

WHEREAS, the shareholders of the Company previously approved, and the Company continues to maintain, the Furmanite Corporation 1994 Stock Incentive Plan, as amended and restated as of May 9, 2013 (“Plan”);

WHEREAS, for purposes of this Agreement, all defined terms, as indicated by the capitalization of the first letter of such term, shall have the meanings specified in the Plan to the extent not specified in this Agreement;

WHEREAS, the above-named Grantee is an employee of the Company or a subsidiary of the Company (a “Business Relationship”); and

WHEREAS, pursuant and subject to the terms of the Plan, and in accordance with the terms of this Agreement, the Company wishes for the Grantee to have a proprietary interest in the Company’s financial success by granting the Grantee:

(a)the option to purchase ________ shares of the Company’s Common Stock (the “Option Shares”);

(b)________ Restricted Share Units of the Company’s Common Stock (the “RSUs”); and

(c)________ Performance-based Restricted Share Units of the Company’s Common Stock (the “PSUs”).

NOW, THEREFORE, for good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1. GRANTS

1.1.Grant of Option. Subject to the terms and conditions of the Plan and the terms and conditions set forth in this Agreement, the Company hereby grants to the Grantee the option to purchase all or any part of the Option Shares. The price at which the Option Shares may be acquired is ______ per share, which equals or exceeds the Fair Market Value per share of Stock on the Effective Date. The option granted pursuant to this Agreement is a Nonqualified Option.

1.2.Grant of RSUs. Subject to the terms and conditions of the Plan and the terms and conditions set forth in this Agreement, the Company hereby grants to the Grantee _______ RSUs

1.3.Grant of PSUs. Subject to the terms and conditions of the Plan and the terms and conditions set forth in this Agreement, the Company hereby grants to the Grantee _______ PSUs.

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ARTICLE 2. VESTING; DURATION; AND EXERCISE

2.1     Vesting of the Option Shares and RSUs.

(a)    If the Grantee maintains a continuous Business Relationship with the Company through ________ ____, 20___ then the Grantee shall vest in 33.33 percent of the Option Shares and 33.33 percent of the RSUs.

(b)    If the Grantee maintains a continuous Business Relationship with the Company through ________ ____, 20___ then the Grantee shall vest in an additional 33.33 percent of the Option Shares and 33.33 percent of the RSUs.

(c)    If the Grantee maintains a continuous Business Relationship with the Company through ________ ____, 20___ then the Grantee shall vest in the remaining 33.34 percent of the Option Shares and 33.34 percent of the RSUs.

(d)    To the extent the Grantee does not maintain a Business Relationship for the requisite period in accordance with (a) – (c) of this section above, or as detailed below, whereby any or all of the granted Option Shares and RSUs are not vested, all of Grantee’s rights with respect to such unvested Option Shares and RSUs shall be forfeited on the date of termination of the Business Relationship of the Grantee with the Company.

(e)    Upon vesting of the RSUs, the Grantee will receive one share of the Company’s Common Stock for each RSU vested. No partial shares will be issued. Upon vesting of the Option Shares, the Grantee will receive the option to purchase one share of the Company’s Common Stock for each Option Shares vested. No partial options will be issues

(f)    For purposes of this Agreement, a Business Relationship with the Company shall include a Business Relationship with an affiliate or subsidiary of the Company (i.e., any business organization controlling, controlled by, or under common control with, the Company).

2.1.1    Duration and Exercise of Option. To the extent the right to purchase Option Shares becomes vested pursuant to this Agreement, the duration of the right to purchase shall be governed by the terms of the Plan; provided that the Grantee’s right to purchase Option Shares shall expire no later than the tenth anniversary of the Effective Date. Similarly, the manner in which any vested right to purchase Option Shares is exercised shall be governed by the terms of the Plan.

2.2    Vesting of the PSUs.

(a)     If the Grantee maintains a continuous Business Relationship with the Company through the third anniversary of the Effective Date, and if the Company’s combined final, audited operating income for the Company’s fiscal years ending December 31, 20___, December 31, 20___ and December 31, 20___ (the “Performance Measure”) is at least $____________, then the Grantee shall vest pro-rata the amount the Performance Measure exceeds $____________ as compared to $____________, up to a maximum of 100 percent.

(b)    To the extent the Grantee does not maintain a Business Relationship through the third anniversary of the Effective Date, or as detailed below, the PSUs shall be forfeited as of the date of termination.

2.3     Holding Requirement. Upon each vesting of the RSUs and PSUs, Forty percent (40%) of the vested RSUs and PSUs shall be held in escrow by the Company as Restricted Shares.  While the Restricted Shares are held in escrow, the Grantee shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”), any of the Restricted Shares, or any interest therein.  The Restricted Shares

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shall be released from the escrow to (or on behalf of) the Grantee upon the earliest of: (i) the first anniversary of the date of termination of the Business Relationship of the Grantee with the Company, (ii) the Grantee’s death, or (iii) the closing of a Change of Control. Simultaneously with execution of this Agreement, the Grantee shall execute the Stock Power attached hereto as Exhibit A.  Upon receipt of the Stock Power by the Company for the Restricted Shares the Company shall issue and hold in escrow one or more certificates in the name of the Grantee for the Restricted Shares, subject to the restrictive legend described in Section 4.7, and subject to the other terms and conditions of this Agreement.  As an alternative to issuing physical certificates, the Company may record ownership of the Restricted Shares, and the applicable restrictions, in book form (or in any other form of un-certificated ownership).

2.4    Market “Stand-Off” Agreement. The Grantee hereby agrees that, during the period of duration (not to exceed one hundred eighty (180) days) specified by the Company and an underwriter of Common Stock or other securities of the Company, following the effective date of a registration statement of the Company filed under the Act, such Grantee shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by the Grantee at any time during such period except shares included in such registration; provided, however, that all officers and directors of the Company enter into similar agreements. The market “stand-off” agreement established pursuant to this Section 2.3 shall have perpetual duration.

2.5    Transfers. All grants herein are non-transferrable. Any attempted transfer of the grants will result in forfeiture without consideration.

ARTICLE 3. FORFEITURE AND RETURN OF SHARES

3.1    Termination for Cause. If the Business Relationship between the Grantee and the Company is terminated under the circumstances described in section 10.3 of the Plan, this Agreement shall immediately terminate and Grantee’s rights with respect to all of the grants, or stock acquired therefrom, whether or not the Grantee has vested shall be immediately forfeited without consideration.

3.2    Return of Shares. If the Company’s Board of Directors determines that the PSUs considered vested and that such vesting was based on materially inaccurate financial information or any other materially inaccurate performance criteria, then the Company’s Board of Directors may, in its discretion (a) treat any or all of such Restricted Shares derived from the PSUs that are held in the escrow described in this Agreement as no longer vested and immediately forfeited, (b) require the Grantee to return any or all of such Restricted Shares derived from the PSUs that have been released to the Grantee from the escrow described in this Agreement, and/or (c) require the Grantee to repay to the Company the cash equivalent of any or all of such PSUs that have been released to the Grantee from the escrow described in this Agreement and previously disposed of by the Grantee. Grantee agrees to return such PSUs (or to make such repayment) within 10 business days of the Board of Directors’ demand. In the case of a repayment of the cash equivalent, the amount to be repaid to the Company shall equal the value of the applicable PSUs, determined as the average of the closing prices for the Company’s Common Stock on the five trading days that immediately precede the date of the Board of Directors’ demand.

3.3     Restrictive Covenants. This Agreement is made subject to and in reliance of Grantee’s execution and compliance with the Company’s Proprietary Information Inventions and Non-Solicitation (PIINS) Agreement.

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ARTICLE 4. MISCELLANEOUS

4.1    Restricted Stock Units and Performance-based Restricted Stock Units. RSUs are restricted stock units subject to the time vesting requirements herein and are not restricted stock and have no voting rights. PSUs are restricted stock units subject to the performance vesting requirements herein and are not restricted stock and have no voting rights.

4.2     Adjustments for Stock Splits, Stock Dividends, etc. If there is any stock split-up, stock dividend, stock distribution or other reclassification of the Common Stock of the Company, any and all new, substituted or additional securities to which the Grantee is entitled by reason of his or her ownership of the Option Shares, RSUs, or PSUs shall be immediately subject to the provisions of this Agreement in the same manner and to the same extent as the original equity.

4.2    Withholding Taxes. The Grantee acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Grantee any federal, state or local taxes of any kind required by law to be withheld with respect to the grant, vesting and exercise of the rights granted pursuant to this Agreement.     

(a)     If the Grantee exercises the right to purchase Option Shares, the Company may require at the time of such exercise an additional payment for withholding tax purposes based on and the fair market value of such Option Shares as of the acquisition date.

4.3    No Rights to Business Relationship. Nothing contained in this Agreement shall be construed as giving the Grantee any right to continue his or her Business Relationship with the Company.

4.4    Waiver. From time to time the Company may waive its rights hereunder either generally or with respect to one or more specific transfers which have been proposed, attempted or made. All action to be taken by the Company hereunder shall be taken by vote of a majority of its disinterested members of the Board of Directors then in office.

4.5    Acknowledgments by Grantee. The Grantee acknowledges that the Grantee has been advised, and that the Grantee understands, that:

(a)    the grant of the right to purchase Option Shares, the RSUs, the PSUs and the issuance of any shares pursuant to this Agreement may be subject to, or may become subject to, applicable reporting, disclosure and holding period restrictions imposed by Rule 144 under the Securities Act of 1933 (“Rule 144”) and Section 16 of the Securities Exchange Act of 1934 (“Section 16”); and

(b)    shares acquired could be subject to Section 16(a) reporting requirements as well as the short swing trading prohibition contained in Section 16(b) which precludes any profit taking with respect to any stock transactions which occur within any six-month period.

4.6    Special Circumstances. In the event Grantee dies, becomes disabled or incapacitated, the RSU and Option Share grants herein shall immediately vest. In such case, the right to exercise the Option Shares shall expire one year following the death, disability or incapacitation but in no case longer than the term of the stock options listed in 2.1.1. To the extent PSUs are still outstanding on the death, disability/incapacitation, the PSUs shall remain open for the periods of vesting herein and shall only vest to the extent the performance measures are satisfied in 2.2 (a).

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4.7    Restrictive Legends. All certificates representing Restricted Shares shall have affixed thereto legends in substantially the following form:

“The shares of stock represented by this certificate are subject to restrictions on transfer set forth in a certain Restricted Stock Agreement between the corporation and the registered owner of this certificate (or his predecessor in interest), and such Agreement is available for inspection without charge at the office of the Secretary of the Corporation.”

4.8    Notices. All notices to a party hereto shall be in writing and shall be deemed to have been adequately given if delivered in person or if given by registered or certified mail, postage prepaid:

If to the Company:	Furmanite Corporation
	10370 Richmond Avenue
	Suite 600
	Houston, TX 77042
	Attn:
If to the Grantee:

or to such other address as any party may from time to time designate for itself by notice in writing given to the other parties hereto.

4.9    Amendments. This Agreement may be amended or modified in whole or in part only by an instrument in writing signed by the Company and the Grantee.

4.10    Successors and Assigns; Assignment. This Agreement shall be binding upon the parties hereto and their heirs, representatives, successors and assigns. The Company may assign its rights hereunder either generally or from time to time.

4.11    Entire Agreement. This Agreement is entered into pursuant to and subject to the terms of the Plan, the applicable terms of which are incorporated herein by reference. This Agreement, Exhibits to this Agreement and applicable terms of the Plan constitute the entire agreement between the parties, and all premises, representations, understandings, warranties and agreements with reference to the subject matter hereof have been expressed herein or in the documents incorporated herein by reference.

4.12    Applicable Law; Severability. This Agreement shall be governed by and construed and enforced in accordance with Texas law. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited by or invalid under any such law, that provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or nullifying the remainder of that provision or any other provisions of this Agreement.

4.13    Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed in original but all of which together shall constitute one and the same instrument.

4.14    Effect of Heading. Any table of contents, title of any article or section heading herein contained is for convenience or reference only and shall not affect the meaning of construction of any of the provisions hereof.

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IN WITNESS WHEREOF, the Grantee has hereunto set his hand and the Company has authorized this Agreement to be signed by a duly authorized officer, to be effective as of the Effective Date.

FURMANITE CORPORATION
By:
	Name:
	Title:
		, Grantee

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EXHIBIT A

IRREVOCABLE STOCK POWER

FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer to

     _______ shares of the common stock of Furmanite Corporation represented by Certificate(s) No(s). _____________________ inclusive, standing in the name of the undersigned on the books of said Company.

The undersigned does hereby irrevocably constitute and appoint__________________________ attorney to transfer the said stock, as the case may be, on the books of said Company, with full power of substitution in the premises.

Dated:	(x)
	PERSON EXECUTING THIS POWER SIGN HERE

IMPORTANT - READ CAREFULLY
The signature(s) to this Power must correspond with the name(s) as written upon the face of the certificate(s) in every particular without alternation or enlargement or any change whatever.
	IMPRINT SIGNATURE MEDALLION HERE

EX-10.2

EXHIBIT 10.2

CHANGE IN CONTROL AGREEMENT

THIS AGREEMENT is entered into by and between Furmanite Corporation, a Delaware corporation (the “Company”), and Charles R. Cox (the “Executive”) effective as of May 27, 2014.

WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and

WHEREAS, the Company recognizes that, as is the case with many publicly-held corporations, the possibility of a change in control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and

WHEREAS, the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control;

WHEREAS, the Company and the Executive desire to enter into the Change in Control Agreement to comply with section 409A of the Internal Revenue Code of 1986, as amended;

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

1.Definitions and Interpretation Rules.

1.1Defined Terms. For purposes of this Agreement, the following terms shall have the meanings indicated below:

“Accrued Obligations” means the sum of (i) the Executive’s Base Compensation through the Executive’s Employment Termination Date for periods through but not following his Separation From Service, and (ii) any accrued vacation pay, in each case to the extent not theretofore paid by the Company and not theretofore deferred by the Executive.

“Additional Obligations” means the Executive’s Base Compensation for periods following his Separation From Service to the extent not theretofore paid by the Company and not theretofore deferred by the Executive.

“Affiliate” means any entity which is a member of (i) the same controlled group of corporations within the meaning of section 414(b) of the Code with the Company, (ii) a trade or business (whether or not incorporated) which is under common control (within the meaning of section 414(c) of the Code) with the Company or (iii) an affiliated service group (within the meaning of section 414(m) of the Code) with the Company.

“Assets” means assets of any kind owned by the Company, including but not limited to securities of the Company’ direct and indirect subsidiaries and Affiliates.

“the Company” means Furmanite Corporation, a Delaware corporation, and any successor by merger or otherwise.

“Base Compensation” means the Executive’s base salary or wages (as defined in section 3401(a) of the Code for purposes of federal income tax withholding) from the Company, modified by including any portion thereof that such Executive could have received in cash in lieu of any elective deferrals made by the Executive (other than deferrals of bonuses) pursuant to a qualified cash or deferred arrangement described in section 401(k) of the Code and any elective contributions under a cafeteria plan described in section 125 of the Code, and modified further by excluding any bonus, incentive compensation (including but not limited to equity-based compensation), commissions, expense reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation (other than elective deferrals by the Executive under a qualified cash or deferred arrangement described in section 401(k) of the Code that are expressly included in “Base Compensation” under the foregoing provisions of this definition), welfare benefits as defined in ERISA, overtime pay, special performance compensation amounts and severance compensation.

“Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to those terms in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

“Board” means the Board of Directors of the Company or other governing body of the Company or its direct or indirect parent.

“Cause” means (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Executive by the Board (or by a delegate appointed by the Board), which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or any of its Affiliates, monetarily or otherwise, (iii) the conviction of the Executive for a felony, (iv) the entering by the Executive of a plea of guilty or nolo contendre to a felony charge or crime involving moral turpitude, or (v) the material breach by the Executive of any code of conduct established by the Company. For purposes of Sections (i) and (ii) of this definition, (A) no act, or failure to act, on the Executive’s part shall be deemed “willful” if done, or omitted to be done, by the Executive in good faith and with reasonable belief that the act, or failure to act, was in the best interest of the Company and (B) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Company establishes to the Board by clear and convincing evidence that Cause exists.

“Change in Control” means the occurrence of any of the following events:

(a)    the individuals who are IncumbentDirectors cease for any reason to constitute a majority of the members of the Board;

(b)    the consummation of a Merger of the Company or an Affiliate of the Company with

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another Entity, unless the individuals and Entities who were the Beneficial Owners of the Voting Securities of the Company outstanding immediately prior to such Merger own, directly or indirectly, at least 50 percent of the combined voting power of the Voting Securities of any of the Company, the surviving Entity or the parent of the surviving Entity outstanding immediately after such Merger;

(c)    any Person, other than a Specified Owner, becomes a Beneficial Owner, directly or indirectly, of securities of the Company representing 30 percent or more of the combined voting power of the Company’s then outstanding Voting Securities;

(d)    a sale, transfer, lease or other disposition of all or substantially all of the Company’s Assets is consummated (an “Asset Sale”), unless:

(1)    the individuals and Entities who were the Beneficial Owners of the Voting Securities of the Company immediately prior to such Asset Sale own, directly or indirectly, 50 percent or more of the combined voting power of the Voting Securities of the Entity that acquires such Assets in such Asset Sale or its parent immediately after such Asset Sale in substantially the same proportions as their ownership of the Company’s Voting Securities immediately prior to such Asset Sale; or

(2)    the individuals who comprise the Board immediately prior to such Asset Sale constitute a majority of the board of directors or other governing body of either the Entity that acquired such Assets in such Asset Sale or its parent (or a majority plus one member where such board or other governing body is comprised of an odd number of directors); or

(e)    The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.

“Code” means the Internal Revenue Code of 1986, as amended, or any successor act.

“Committee” means, prior to a Change in Control or a Potential Change in Control, the Compensation Committee of the Board. After a Change in Control or a Potential Change in Control, “Committee” means (i) the individuals (not fewer than three (3) in number) who, on the date six months prior to the Change in Control or Potential Change in Control constitute the Compensation Committee of the Board, plus, (ii) in the event that fewer than three (3) individuals are available from the group specified in clause (i) above for any reason, such individuals as may be appointed by the individual or individuals so available (including for this purpose any individual or individuals previously so appointed under this clause (ii)); provided, however, that the maximum number of individuals constituting the Committee after a Change in Control or Potential Change in Control shall not exceed five (5).

“Company” means the Company. In the event that the Executive’s employer is a subsidiary of the Company, the term “Company” shall include the Executive’s employer where appropriate and the Company will cause the Executive’s employer to take any actions necessary to satisfy the obligations of the Company under this Agreement.

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“Disability” means the Executive’s incapacity due to physical or mental illness that has caused the Executive to be absent from full-time performance of his duties with the Company for a period of six (6) consecutive months.

“Effective Date” means the date identified in the introduction of this Agreement.

“Employee” means an individual who is employed in the services of the Company on the Company’s active payroll.

“Employment Termination Date” means the date as of which the Executive incurs a Termination of Employment determined in accordance with the provisions of Section 5.2.

“Entity” means any corporation, partnership, association, joint-stock company, limited liability company, trust, unincorporated organization or other business entity.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor act.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor act.

“Excise Tax” means the excise tax imposed by section 4999 of the Code or any similar tax payable under any United States federal, state, or local statute.

“Executive” means the Employee identified in the introduction of this Agreement.

“Expiration Date” shall have the meaning specified in Section 2.

“Good Reason” for termination by the Executive of his employment means the occurrence (without the Executive’s express written consent) after any Change in Control, or prior to a Change in Control under the circumstances described in clauses (b) and (c) of the second paragraph of the definition of Termination of Employment (treating all references to “Change in Control” in paragraphs (a) through (f) below as references to a “Potential Change in Control”), of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (a), (e), (f) or (g) below, such act or failure to act is corrected prior to the effective date of the Executive’s termination for Good Reason:

(a)    the assignment to the Executive of any duties or responsibilities which are substantially diminished as compared to the Executive’s duties and responsibilities immediately prior to a Change in Control or a material change in the Executive’s reporting responsibilities, titles or offices as an Employee and as in effect immediately prior to the Change in Control;

(b)    a reduction by the Company in the Executive’s annual Base Compensation as in effect on the date hereof or as the same may be increased from time to time;

(c)    the relocation of the Executive’s principal place of employment to a location outside of a 50-mile radius from the Executive’s principal place of employment immediately prior to the

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Change in Control or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s business travel obligations immediately prior to a Change in Control;

(d)    the failure by the Company to pay to the Executive any portion of the Executive’s current compensation or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

(e)    the failure by the Company to continue in effect any compensation plan in which the Executive participates immediately prior to the Change in Control which is material to the Executive’s total compensation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive’s participation relative to other the Company executives, as existed immediately prior to the Change in Control;

(f)    the failure by the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company’s pension, savings, life insurance, medical, health and accident, or disability plans in which the Executive was participating immediately prior to the Change in Control, the taking of any other action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit or Perquisite enjoyed by the Executive at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy in effect immediately prior to the time of the Change in Control; or

(g)    any purported termination of the Executive’s employment which is not effected pursuant to a notice of termination satisfying the requirements of Section 5.1.

The Executive shall have the right to terminate his employment for Good Reason even if he becomes incapacitated due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of any rights with respect to, any act or failure to act constituting Good Reason hereunder.

For purposes of any determination regarding the existence of Good Reason, any claim by the Executive that Good Reason exists shall be presumed to be correct unless the Company establishes to the Committee by clear and convincing evidence that Good Reason does not exist. The Committee’s determination regarding the existence of Good Reason shall be conclusive and binding upon all parties unless the Committee’s determination is arbitrary and capricious.

“Gross-Up Payment” means the additional amount paid to the Executive pursuant to Section 3.3.

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“Highest Base Compensation” means the Executive’s annualized Base Compensation in effect immediately prior to (a) a Change in Control, (b) the first event or circumstance constituting Good Reason, or (c) the Executive’s Termination of Employment, whichever is greatest.

“Incumbent Director” means –

(a)    a member of the Board on the Effective Date; or

(b)    an individual-

(1)    who becomes a member of the Board after the Effective Date;

(2)    whose appointment or election by the Board or nomination for election by the Company’ stockholders is approved or recommended by a vote of at least two-thirds of the then serving Incumbent Directors (as defined herein); and

(3)    whose initial assumption of service on the Board is not in connection with an actual or threatened election contest.

“IRS” means the Internal Revenue Service.

“Merger” means a merger, consolidation or similar transaction.

“Pension Plan” means the Company’s 401(k) plan, as amended from time to time.

“Perquisites” means benefits such as any supplemental life insurance; financial consulting; and office equipment for use in the home (e.g., cellular telephones, personal digital assistance, home computers and office accessories similar to the office accessories available to the Executive in his employment office and monthly Internet connection fees) that may be provided by the Company from time to time.

“Person” shall have the meaning ascribed to the term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof, except that the term shall not include (a) the Company or any of its Affiliates, (b) a trustee or other fiduciary holding Company securities under an employee benefit plan of the Company or any of its Affiliates, (c) an underwriter temporarily holding securities pursuant to an offering of those securities or (d) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

“Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(a)    the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(b)    the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

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(c)    any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15 percent or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates); or

(d)    the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

“Section 409A” means section 409A of the Code and the final regulations issued thereunder by the IRS and the Department of Treasury.

“Section 409A Disability” shall mean the inability of the Executive to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. The Executive shall also be treated as having a “Section 409A Disability” if he is, by reason of a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.

“Separation From Service” shall have the meaning ascribed to that term under Section 409A.

“Specified Employee” shall have the meaning ascribed to that term under Section 409A.

“Specified Owner” means any of the following:

(a)    the Company;

(b)    an Affiliate of the Company;

(c)    an employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate of the Company;

(d)    a Person that becomes a Beneficial Owner of the Company’s outstanding Voting Securities representing 30 percent or more of the combined voting power of the Company’s then outstanding Voting Securities as a result of the acquisition of securities directly from the Company and/or its Affiliates; or

(e)    a Person that becomes a Beneficial Owner of the Company’s outstanding Voting Securities representing 30 percent or more of the combined voting power of the Company’s then outstanding Voting Securities as a result of a Merger if the individuals and Entities who were the Beneficial Owners of the Voting Securities of the Company outstanding immediately prior to such Merger own, directly or indirectly, at least 50 percent of the combined voting power of the Voting Securities of any of the Company, the surviving Entity or the parent of the surviving Entity outstanding immediately after such Merger in substantially the same proportions as their ownership of the Voting Securities of the Company outstanding immediately prior to such Merger.

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“Termination of Employment” means the termination of the Executive’s employment relationship with the Company (a) by the Company without Cause after a Change in Control occurs, or (b) by the Executive for Good Reason after a Change in Control occurs, or (c) resignation by the Executive within 30 days of a Change in Control.

For purposes of this definition, the Executive’s employment shall be deemed to have been terminated after a Change in Control, if (a) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company, the consummation of which would constitute a Change in Control; (b) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of a Person who has entered into an agreement with the Company, the consummation of which would constitute a Change in Control; (c) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with a Change in Control; (d) resignation by the Executive within 30 days of a Change in Control; or (e) in accordance with section 2.2. For purposes of any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and convincing evidence that such position is not correct.

“Termination of Employment” does not include (a) a termination of employment due to the Executive’s death or Disability, or (b) a termination of employment by the Company with Cause.

“Voting Securities” means the outstanding securities entitled to vote generally in the election of directors or other governing body.

1.2Number and Gender. As used in this Agreement, unless the context otherwise expressly requires to the contrary, references to the singular include the plural, and vice versa; references to the masculine include the feminine and neuter; references to “including” mean “including (without limitation)”; and references to Sections and clauses mean the sections and clauses of this Agreement.

2.Term of Agreement.

2.1The “Term” of this Agreement shall commence on the Effective Date and end on the earlier of (a) the Executive’s Termination of Employment or (b) the date the Executive is no longer an Employee of the Company or (c) six (6) months following the date of a Change in Control (such last day being the “Expiration Date”).

2.2Notwithstanding 2.1 above, should a Change in Control occur within ninety (90) days following cessation of the Executive’s employment relationship with the Company for any reason, except for Cause, then Executive shall be entitled to the benefits and compensation contained herein as if Executive had been employed at the time of the Change in Control and had tendered his resignation within thirty (30) days of a Change in Control in accordance with the definition of

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Termination of Employment. In such event, for all items in Compensation listed below, including the Executive’s Highest Base Compensation, shall be calculated as of the date of Executive’s cessation of employment.

3.Compensation.

3.1Equity Based Compensation. Upon the occurrence of a Change in Control, all options to acquire shares of the Company stock, all shares of restricted Company stock, all other equity or phantom equity incentives and any awards the value of which is determined by reference to or based upon the value of the Company stock, held by the Executive under any plan of the Company shall become immediately vested, exercisable and nonforfeitable and all conditions thereof (including, but not limited to, any required holding periods) shall be deemed to have been satisfied, subject to the terms and conditions of such plans or agreements.

3.2Benefits Following Termination of Employment. If the Executive incurs a Termination of Employment during the Term of this Agreement, the Company shall provide the Executive the benefits described below.

(a)Severance Payment Based Upon Base Compensation. The Company will pay the Executive a cash severance benefit equal to 2.99 times the Executive’s Highest Base Compensation. The Executive’s severance payment under this paragraph (a) will be paid in accordance with the provisions of Section 4.

(b)Pension Plan. In addition to the retirement benefits to which the Executive is entitled under the Pension Plan, the Company shall pay the Executive a single sum cash payment in an amount equal to the undiscounted value of the employer contributions the Company would have made to the Pension Plan (including but not limited to matching and base contributions) on behalf of the Executive had the Executive continued in the employ of the Company for a period of three years after the Employment Termination Date, assuming for this purpose that (i) the Executive’s earned compensation per year during that three year period of time is the Executive’s Highest Base Compensation; and (ii) contribution, deferral, credit and accrual percentages made under the Pension Plan, by and on behalf of the Executive during the three year period, are the same percentages in effect on the date of the Change in Control or the Executive’s Employment Termination Date, whichever is more favorable for the Executive. The payment required under this paragraph (b) will be made in accordance with the provisions of Section 4.

(c)Accident and Health Insurance Benefits. For three years following the Executive’s Employment Termination Date (the “Continuation Period”), the Company shall arrange to provide the Executive and his dependents accident and health insurance benefits, in each case, substantially similar to those provided to the Executive and his dependents immediately prior to the Employment Termination Date or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater cost to the Executive than the cost to the Executive immediately prior to such date or occurrence; provided, however, that with respect to any of such plans, programs, practices or policies requiring employee contributions, the Executive shall continue to pay the employee contributions for same. If the dental, accident, health insurance or other benefits

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specified in this Section 3.2(c) are taxable to the Executive, the following provisions shall apply to the reimbursement or provision of such benefits. The Executive shall be eligible for reimbursement for covered welfare expenses, or for the provision of such benefits on an in-kind basis, during the period commencing on the Executive’s Employment Termination Date and ending on the third anniversary of such date. The amount of such welfare benefit expenses eligible for reimbursement or the in-kind benefits provided under this Section 3.2(c), during the Executive’s taxable year will not affect the expenses eligible for reimbursement, or the in-kind benefits to be provided, in any other taxable year (with the exception of applicable lifetime maximums applicable to medical expenses or medical benefits described in Section 105(b) of the Code). The Executive’s right to reimbursement or direct provision of benefits under this Section 3.2(c) is not subject to liquidation or exchange for another benefit. To the extent that the benefits provided to the Executive pursuant to this Section 3.2(c) are taxable to the Executive and not otherwise exempt from Section 409A, any amounts to which the Executive would otherwise be entitled under this Section 3.2(c) during the first six months following the date of the Executive’s Separation From Service shall be accumulated and paid to the Executive on the date that is six months following the date of his Separation From Service.

(d)Perquisites. The Executive shall be entitled to a single sum cash payment which shall be an amount equal to the sum of (1) the cost of the Executive’s Perquisites in effect prior to his Termination of Employment for the remainder of the calendar year in which the Employment Termination Date occurs; plus (2) the cost of the Executive’s Perquisites in effect prior to his Termination of Employment for an additional three years. The payment required under this paragraph (d) will be made in accordance with the provisions of Section 4.

(e)Retiree Medical. If the Executive would have become entitled to benefits under the Company’s post-retirement health care insurance plans, as in effect immediately prior to the Employment Termination Date or, if more favorable to the Executive as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, had the Executive’s employment terminated at any time during the period of thirty-six (36) months after the Employment Termination Date, the Company shall provide such post-retirement health care insurance benefits to the Executive and the Executive’s dependents commencing on the later of (i)  the date on which such coverage would have first become available and (ii) the date on which the applicable benefits described in Section 3.2(c) terminate. Except for any reimbursements under the applicable group health plan that are subject to a limitation on reimbursements during a specified period, the amount of expenses eligible for reimbursement under this Section 3.2(e), or in-kind benefits provided, during the Executive’s taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year of the Executive. The Executive’s right to reimbursement or in-kind benefits pursuant to this Section 3.2(e) shall not be subject to liquidation or exchange for another benefit. To the extent that the benefits provided to the Executive pursuant to this Section 3.2(e) are taxable to the Executive and are not otherwise exempt from Section 409A, any amounts to which the Executive would otherwise be entitled under this Section 3.2(e) during the first six months following the date of the Executive’s Separation From Service shall be accumulated and paid to the Executive on the date that is six months following the date of his Separation From Service.

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(f)Interest Amount. If the Executive is a Specified Employee, the Company shall pay to the Executive, on the date that is six (6) months following the Executive’s Separation From Service, an amount equal to the amount of interest that would be earned on the amounts specified in Sections 3.2(a), 3.2(b), and 3.2(d) and, to the extent subject to a mandatory six-month delay in payment, the amounts specified in Sections 3.2(c), 3.2(e), 3.3 and 3.4, for the period commencing on the date of the Executive’s Separation From Service until the date of payment of such amounts, calculated using an interest rate equal to the six month London Interbank Offered Rate in effect on the date of the Executive’s Separation From Service plus two percentage points (the “Interest Amount”).

3.3Gross-Up Payments. The Executive will reasonably cooperate with the Company in good faith to achieve a mutually acceptable methodology for minimizing the Excise Tax.

Should the Executive and the Company fail to agree on a mutually acceptable methodology for minimizing the Excise Tax, the following provisions of this Section 3.3 will apply. If any payments or benefits received or to be received by the Executive (whether pursuant to the terms of this Agreement, or any other plan or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (such payments or benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “Total Payments”) will be subject to the Excise Tax, the Company shall pay the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive after the deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment shall be equal to the Total Payments. The purpose of this Section is to place the Executive in the same economic position such Executive would have been in had no Excise Tax been imposed with respect to the Total Payments.

(a)For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as “parachute payments” (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel (the “Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the “Auditor”), such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all “excess parachute payments” within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of the Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code) in excess of the “base amount” (within the meaning of section 280G(b)(3) of the Code) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.

(b)For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local

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income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Employment Termination Date (or if there is no Employment Termination Date, then the date on which the Gross-Up Payment is calculated for purposes of this Section), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

(c) In the event that the Excise Tax is determined to exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the payment of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to such excess) within five (5) business days following the time that the amount of such excess is finally determined and in any event no later than the payment deadline specified below in this Section 3.3. The Executive and the Company shall each reasonably cooperate with the other relative to any administrative or judicial proceedings concerning the existence or amount of liability for the Excise Tax.

(d)The parties intend and agree that the five (5) business day deadline specified above in this Section 3.3 is not to be extended as a result of the following sentence which is included solely for the purpose of complying with Section 409A. The Company shall make a payment to reimburse the Executive in an amount equal to all federal, state and local taxes imposed upon the Executive that are described in this Section 3.3, including the amount of additional taxes imposed upon the Executive due to the Company’s payment of the initial taxes on such amounts, by the end of the Executive’s taxable year next following the Executive’s taxable year in which the Executive remits the related taxes to the taxing authority. Notwithstanding any provision of this Agreement to the contrary, any amounts to which the Executive would otherwise be entitled under this Section 3.3 during the first six months following the date of the Executive’s Separation From Service shall be accumulated and paid to the Executive on the date that is six months following the date of his Separation From Service.

3.4Legal Fees. the Company shall pay, on a fully grossed up, after tax basis, all legal fees and expenses incurred by the Executive (i) in disputing in good faith any issue relating to the Executive’s termination of employment, (ii) in seeking in good faith to obtain or enforce any benefit or right provided under this Agreement in accordance with Section 9.5, or (iii) in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit under this Agreement. Such payments under this Section 3.4 shall be made within ten (10) business days after the delivery of the Executive’s written request for the payment accompanied by such evidence of fees and expenses incurred as the Company may reasonably require. The parties intend and agree that the foregoing ten (10) business day deadline is not to be extended as a result of the following sentence which is included solely for the purpose of complying with Section 409A. The Company shall make a payment to reimburse the Executive in an amount equal to all legal fees and expenses incurred due to a tax audit or litigation relating to the application of section 4999 of the Code to any payment or benefit under this Agreement by the end of the Executive’s taxable year following the Executive’s taxable year in which the taxes that are the subject of the audit or litigation are remitted to the taxing authority, or where as a result of such audit or litigation no taxes are remitted, by the end of the Executive’s taxable year following the Executive’s taxable year in which the audit is completed or there is a final and nonappealable

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settlement or other resolution of the litigation. The legal fees or expenses that are subject to reimbursement pursuant to this Section 3.4 shall not be limited as a result of when the fees or expenses are incurred. The amount of legal fees or expenses that is eligible for reimbursement pursuant to this Section 3.4 during a given taxable year of the Executive shall not affect the amount of expenses eligible for reimbursement in any other taxable year of the Executive. The right to reimbursement pursuant to this Section 3.4 is not subject to liquidation or exchange for another benefit. Notwithstanding any provision of this Agreement to the contrary, any amount to which the Executive would otherwise be entitled under this Section 3.4 during the first six months following the date of the Executive’s Separation From Service shall be accumulated and paid to the Executive on the date that is six months following the date of his Separation From Service.

4.Time of Benefits Payments. The Company shall pay the Executive any cash benefits described in paragraphs (a), (b), (d) and (f) of Section 3.2 in a single sum cash payment in good funds immediately available by wire transfer to the Executive on the date of the Executive’s Separation From Service if he is not a Specified Employee or on the date that is six months following the date of his Separation From Service if he is a Specified Employee, or in the case of 2.2 above, within fifteen (15) days of the Change in Control.

5.Termination Procedures And Compensation During Dispute.

5.1Notice of Termination. After a Change in Control and during the Term of this Agreement, any purported termination of the Executive’s employment by the Company shall be communicated by the Company by a written Notice of Termination to the Executive in accordance with Section 9.8. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. No purported termination of the Executive’s employment by the Company after a Change in Control and during the Term of this Agreement shall be effective unless the Company complies with the procedures set forth in this Section.

5.2Employment Termination Date. “Employment Termination Date,” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term of this Agreement, shall mean (i) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively,

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from the date such Notice of Termination is given). “Employment Termination Date,” with respect to the resignation by the Executive concurrent with a Change in Control, shall mean the date of the Change in Control.

5.3Dispute Concerning Termination. If within fifteen (15) days after any Notice of Termination is given, or, if later, prior to the Employment Termination Date (as determined without regard to this Section), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Employment Termination Date shall be extended until the earlier of (i) the date on which the Term of this Agreement ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided, however, that the Employment Termination Date shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence.

5.4Compensation During Dispute. If a purported termination of employment occurs following a Change in Control and during the Term of this Agreement and the Employment Termination Date is extended in accordance with Section 5.3, the Company shall pay the Executive the full Base Compensation in effect when the notice giving rise to the dispute was given. The Company shall pay any such compensation to the Executive at the applicable times specified in Section 9.7. To the extent legally permissible, the Company shall also continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given or those plans in which the Executive was participating immediately prior to the first occurrence of an event or circumstance giving rise to the Notice of Termination, if more favorable to the Executive, until the Employment Termination Date, as determined in accordance with Section 5.3. Amounts paid under this Section are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts due under this Agreement.

6.Withholding. Subject to the provisions of Section 3.3, the Company may withhold from any benefits paid under this Agreement all income, employment, and other taxes required to be withheld under applicable law.

7.Death of the Executive. If the Executive dies after his Employment Termination Date but before the Executive receives full payment of the benefits to which he is entitled, any unpaid benefits will be paid to the Executive’s surviving spouse, or if the Executive does not have a surviving spouse, to the Executive’s estate.

8.Amendment. This Agreement may not be amended except pursuant to a written instrument that is authorized by the Committee and agreed to in writing and signed by the Executive.

9.Miscellaneous.

9.1Agreement Not an Employment Contract. This Agreement is not an employment contract between the Company and Executive and gives Executive no right to retain his employment.

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This Agreement is not intended to interfere with the rights of the Company to terminate the Executive’s employment at any time with or without notice and with or without cause or to interfere with the Executive’s right to terminate his employment at any time.

In the event that a third party begins a tender or exchange offer, initiates a proxy contest or takes other steps to effect a Change in Control of the Company, the Executive agrees that the Executive will not voluntarily leave the employ of the Company and will perform the services of the Executive’s office until the third party has abandoned or terminated efforts to effect a Change in Control or until a Change in Control has occurred. In the event such Change in Control is supported and endorsed by the Board, the Executive agrees to assist, for a period of ninety (90) days from the date of Change in Control, in the orderly transition of management of the Company, provided the Company shall pay any reasonable expenses the Executive incurs in connection with such assistance.

If the Executive’s employment with the Company should terminate for any reason prior to the occurrence of the Change in Control events described herein, this Agreement shall terminate and the Company will have no further obligation to the Executive hereunder.

9.2Alienation Prohibited. No benefits hereunder shall be subject to anticipation or assignment by the Executive, to attachment by, interference with, or control of any creditor of the Executive, or to being taken or reached by any legal or equitable process in satisfaction of any debt or liability of the Executive prior to its actual receipt by the Executive. Any attempted conveyance, transfer, assignment, mortgage, pledge, or encumbrance of the benefits hereunder prior to payment thereof shall be void.

9.3Severability. Each provision of this Agreement may be severed. If any provision is determined to be invalid or unenforceable, that determination shall not affect the validity or enforceability of any other provision.

9.4Binding Effect. This Agreement shall be binding upon any successor of the Company. Further, the Board shall not authorize a Change in Control that is a Merger or an Asset Sale transaction unless the purchaser or the Company’s successor agrees to take such actions as are necessary to cause the Executive to be paid or provided all benefits due under the terms of this Agreement as in effect immediately prior to the Change in Control.

9.5Settlement of Disputes Concerning Benefits Under this Agreement; Arbitration. All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Committee and shall be in writing. Any denial by the Committee of a claim for benefits under this Agreement shall be delivered to the Executive in writing within thirty (30) days after written notice of the claim is provided to the Company in accordance with Section 9.8 and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Committee shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Committee a decision of the Committee within sixty (60) days after notification by the Committee that the Executive’s claim has been denied. Any further dispute or controversy arising out of or relating to this Agreement, including without limitation, any and all disputes, claims (whether in tort, contract, statutory or

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otherwise) or disagreements concerning the interpretation or application of the provisions of this Agreement shall be resolved by arbitration in accordance with the rules of the American Arbitration Association (the “AAA”) then in effect. No arbitration proceeding relating to this Agreement may be initiated by either the Company or the Executive unless the claims review and appeals procedures specified in this Section 9.5 have been exhausted. Within ten (10) business days of the initiation of arbitration hereunder, the Company and the Executive will each separately designate an arbitrator, and within twenty (20) business days of selection, the appointed arbitrators will appoint a neutral arbitrator from the AAA Panel of Commercial Arbitrators. The arbitrators shall issue their written decision (including a statement of finding of facts) within thirty (30) days from the date of the close of the arbitration hearing. The decision of the arbitrators selected hereunder will be final and binding on both parties. This arbitration provision is expressly made pursuant to and shall be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-16 (or replacement or successor statute). Pursuant to Section 9 of the Federal Arbitration Act, the Company and the Executive agree that a judgment of the United States District Court for the District in which the headquarters of the Company is located at the time of initiation of arbitration hereunder may be entered upon the award made pursuant to the arbitration.

9.6No Mitigation. The Company agrees that if the Executive’s employment with the Company terminates during the Term of this Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to this Agreement. Further, except as expressly provided otherwise herein, the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

9.7Other Amounts Due. Except as expressly provided otherwise herein, the payments and benefits provided for in this Agreement are in addition to and not in lieu of amounts and benefits that are earned by the Executive prior to his Termination of Employment. The Company shall pay to the Executive the Accrued Obligations on the Executive’s Employment Termination Date. If the Executive’s Separation From Service is not due to his death or his incurring a Section 409A Disability, the Company shall pay to the Executive the Additional Obligations on the date of his Separation From Service if he is not a Specified Employee or on the date that is six months following the date of his Separation From Service if he is a Specified Employee. If the Executive’s termination of employment with the Company occurs by reason of the death of the Executive, the Company shall pay to the person or estate specified in Section 7 the Additional Obligations on the date that is 30 days following the date of the death of the Executive. If the Executive’s termination of employment with the Company occurs by reason of the Executive incurring a Section 409A Disability, the Company shall pay to the Executive the Additional Obligations on the date that is 30 days following the date of the Executive’s incurring a Section 409A Disability. Further the Executive shall be entitled to any other amounts or benefits due the Executive in accordance with any contract, plan, program or policy of the Company or any of its Affiliates, other than any severance benefit program or policy. Amounts that the Executive is entitled to receive under any plan, program, contract or policy of the Company or any of its Affiliates at or subsequent to the Executive’s Termination of Employment, other than any severance benefit program or policy, shall be payable

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or otherwise provided in accordance with such plan, program, contract or policy, except as expressly modified herein.

9.8Notices. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be given in person or by United States registered mail, return receipt requested (with evidence of receipt by the party to whom the notice is given), postage prepaid, addressed, if to the Executive, to the address listed on the signature page of this Agreement and, if to the Company, to 10370 Richmond Ave. Suite 600 Houston, Texas 77042; Attention: Legal, or to such other address as either party may have furnished to the other in writing in accordance herewith. For purposes of this agreement notice to a party shall be effective only upon actual receipt of the notice by the party with written evidence of receipt by the party to whom the notice is given.

9.9Disputed Payments and Refusals to Pay. If the Company fails to make a payment under this Agreement in whole or in part as of the payment date specified in this Agreement, either intentionally or unintentionally, other than with the express or implied consent of the Executive, the Company shall owe the Executive interest on the delayed payment at the applicable Federal rate provided for in section 7872(f)(2)(A) of the Code if the Executive (i) accepts the portion (if any) of the payment that the Company is willing to make (unless such acceptance will result in a relinquishment of the claim to all or part of the remaining amount) and (ii) makes prompt and reasonable good faith efforts to collect the remaining portion of the payment. Any such interest payments shall become due and payable effective as of the applicable payment date(s) specified in this Agreement with respect to the delinquent payments.

9.10Funding. The Executive shall have no right, title, or interest whatsoever in or to any assets of the Company or any investments which the Company may make to aid it in meeting its obligations under this Agreement. The Executive’s right to receive payments under this Agreement shall be no greater than the right of an unsecured general creditor of the Company. Immediately prior to a Change in Control, the Company shall create an irrevocable grantor trust (the “Rabbi Trust”) which shall be subject to the claims of creditors of the Company. In the event that the Executive is a Specified Employee at the time he incurs a Separation From Service or at the time the Company determines that it is reasonably likely that the Executive will incur a Separation From Service in connection with a Change in Control, then immediately upon the Executive’s Separation From Service or, if earlier, the date on which the Company makes a determination that the Executive is reasonably likely to incur a Separation From Service in connection with a Change in Control, the Company shall transfer to the Rabbi Trust cash sufficient (on an undiscounted basis) to pay the cash amounts specified in Sections 3.2(a), 3.2(b), 3.2(d) and 3.2(f), and the estimated amount of the Gross-Up Payment to be made under Section 3.3. The cash amounts specified in Sections 3.2(a), 3.2(b), 3.2(d) and 3.2(f), and the Gross-Up Payment shall be paid from the Rabbi Trust on the dates specified in Sections 3.3 and 4 herein, provided that the Company shall remain liable to pay any such amounts which for any reason are not paid from the Rabbi Trust. The trustee of the Rabbi Trust shall be a bank or trust company selected by the Company prior to the Change in Control.

9.11Governing Law. All provisions of this Agreement shall be construed in accordance with the laws of Texas, except to the extent preempted by federal law and except to the extent that the conflicts of laws provisions of the State of Texas would require the application of the relevant

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law of another jurisdiction, in which event the relevant law of the State of Texas will nonetheless apply, with venue for litigation being in Dallas, Texas.

9.12Compliance With Section 409A. It is intended that this Agreement shall comply with Section 409A. The provisions of this Agreement shall be interpreted and administered in a manner that complies with Section 409A.

9.13Entire Agreement.This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date above first written.

FURMANITE CORPORATION
By:	/s/ William F. Fry
Name:	William F. Fry
Date:	May 27, 2014
Title:	General Counsel
EXECUTIVE
By:	/s/ Charles R. Cox
Address:	10370 Richmond Ave. Suite 600
	Houston, Texas 77042

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EX-10.3

EXHIBIT 10.3

CHANGE IN CONTROL AGREEMENT

THIS AGREEMENT is entered into by and between Furmanite Corporation, a Delaware corporation (the “Company”), and Robert S. Muff (the “Executive”) effective as of May 27, 2014.

WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and

WHEREAS, the Company recognizes that, as is the case with many publicly-held corporations, the possibility of a change in control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and

WHEREAS, the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control;

WHEREAS, the Company and the Executive desire to enter into the Change in Control Agreement to comply with section 409A of the Internal Revenue Code of 1986, as amended;

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

1.Definitions and Interpretation Rules.

1.1Defined Terms. For purposes of this Agreement, the following terms shall have the meanings indicated below:

“Accrued Obligations” means the sum of (i) the Executive’s Base Compensation through the Executive’s Employment Termination Date for periods through but not following his Separation From Service, and (ii) any accrued vacation pay, in each case to the extent not theretofore paid by the Company and not theretofore deferred by the Executive.

“Additional Obligations” means the Executive’s Base Compensation for periods following his Separation From Service to the extent not theretofore paid by the Company and not theretofore deferred by the Executive.

“Affiliate” means any entity which is a member of (i) the same controlled group of corporations within the meaning of section 414(b) of the Code with the Company, (ii) a trade or business (whether or not incorporated) which is under common control (within the meaning of section 414(c) of the Code) with the Company or (iii) an affiliated service group (within the meaning of section 414(m) of the Code) with the Company.

“Assets” means assets of any kind owned by the Company, including but not limited to securities of the Company’ direct and indirect subsidiaries and Affiliates.

“the Company” means Furmanite Corporation, a Delaware corporation, and any successor by merger or otherwise.

“Base Compensation” means the Executive’s base salary or wages (as defined in section 3401(a) of the Code for purposes of federal income tax withholding) from the Company, modified by including any portion thereof that such Executive could have received in cash in lieu of any elective deferrals made by the Executive (other than deferrals of bonuses) pursuant to a qualified cash or deferred arrangement described in section 401(k) of the Code and any elective contributions under a cafeteria plan described in section 125 of the Code, and modified further by excluding any bonus, incentive compensation (including but not limited to equity-based compensation), commissions, expense reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation (other than elective deferrals by the Executive under a qualified cash or deferred arrangement described in section 401(k) of the Code that are expressly included in “Base Compensation” under the foregoing provisions of this definition), welfare benefits as defined in ERISA, overtime pay, special performance compensation amounts and severance compensation.

“Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to those terms in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

“Board” means the Board of Directors of the Company or other governing body of the Company or its direct or indirect parent.

“Cause” means (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Executive by the Board (or by a delegate appointed by the Board), which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or any of its Affiliates, monetarily or otherwise, (iii) the conviction of the Executive for a felony, (iv) the entering by the Executive of a plea of guilty or nolo contendre to a felony charge or crime involving moral turpitude, or (v) the material breach by the Executive of any code of conduct established by the Company. For purposes of Sections (i) and (ii) of this definition, (A) no act, or failure to act, on the Executive’s part shall be deemed “willful” if done, or omitted to be done, by the Executive in good faith and with reasonable belief that the act, or failure to act, was in the best interest of the Company and (B) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Company establishes to the Board by clear and convincing evidence that Cause exists.

“Change in Control” means the occurrence of any of the following events:

(a)    the individuals who are IncumbentDirectors cease for any reason to constitute a majority of the members of the Board;

(b)    the consummation of a Merger of the Company or an Affiliate of the Company with

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another Entity, unless the individuals and Entities who were the Beneficial Owners of the Voting Securities of the Company outstanding immediately prior to such Merger own, directly or indirectly, at least 50 percent of the combined voting power of the Voting Securities of any of the Company, the surviving Entity or the parent of the surviving Entity outstanding immediately after such Merger;

(c)    any Person, other than a Specified Owner, becomes a Beneficial Owner, directly or indirectly, of securities of the Company representing 30 percent or more of the combined voting power of the Company’s then outstanding Voting Securities;

(d)    a sale, transfer, lease or other disposition of all or substantially all of the Company’s Assets is consummated (an “Asset Sale”), unless:

(1)    the individuals and Entities who were the Beneficial Owners of the Voting Securities of the Company immediately prior to such Asset Sale own, directly or indirectly, 50 percent or more of the combined voting power of the Voting Securities of the Entity that acquires such Assets in such Asset Sale or its parent immediately after such Asset Sale in substantially the same proportions as their ownership of the Company’s Voting Securities immediately prior to such Asset Sale; or

(2)    the individuals who comprise the Board immediately prior to such Asset Sale constitute a majority of the board of directors or other governing body of either the Entity that acquired such Assets in such Asset Sale or its parent (or a majority plus one member where such board or other governing body is comprised of an odd number of directors); or

(e)    The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.

“Code” means the Internal Revenue Code of 1986, as amended, or any successor act.

“Committee” means, prior to a Change in Control or a Potential Change in Control, the Compensation Committee of the Board. After a Change in Control or a Potential Change in Control, “Committee” means (i) the individuals (not fewer than three (3) in number) who, on the date six months prior to the Change in Control or Potential Change in Control constitute the Compensation Committee of the Board, plus, (ii) in the event that fewer than three (3) individuals are available from the group specified in clause (i) above for any reason, such individuals as may be appointed by the individual or individuals so available (including for this purpose any individual or individuals previously so appointed under this clause (ii)); provided, however, that the maximum number of individuals constituting the Committee after a Change in Control or Potential Change in Control shall not exceed five (5).

“Company” means the Company. In the event that the Executive’s employer is a subsidiary of the Company, the term “Company” shall include the Executive’s employer where appropriate and the Company will cause the Executive’s employer to take any actions necessary to satisfy the obligations of the Company under this Agreement.

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“Disability” means the Executive’s incapacity due to physical or mental illness that has caused the Executive to be absent from full-time performance of his duties with the Company for a period of six (6) consecutive months.

“Effective Date” means the date identified in the introduction of this Agreement.

“Employee” means an individual who is employed in the services of the Company on the Company’s active payroll.

“Employment Termination Date” means the date as of which the Executive incurs a Termination of Employment determined in accordance with the provisions of Section 5.2.

“Entity” means any corporation, partnership, association, joint-stock company, limited liability company, trust, unincorporated organization or other business entity.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor act.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor act.

“Excise Tax” means the excise tax imposed by section 4999 of the Code or any similar tax payable under any United States federal, state, or local statute.

“Executive” means the Employee identified in the introduction of this Agreement.

“Expiration Date” shall have the meaning specified in Section 2.

“Good Reason” for termination by the Executive of his employment means the occurrence (without the Executive’s express written consent) after any Change in Control, or prior to a Change in Control under the circumstances described in clauses (b) and (c) of the second paragraph of the definition of Termination of Employment (treating all references to “Change in Control” in paragraphs (a) through (f) below as references to a “Potential Change in Control”), of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (a), (e), (f) or (g) below, such act or failure to act is corrected prior to the effective date of the Executive’s termination for Good Reason:

(a)    the assignment to the Executive of any duties or responsibilities which are substantially diminished as compared to the Executive’s duties and responsibilities immediately prior to a Change in Control or a material change in the Executive’s reporting responsibilities, titles or offices as an Employee and as in effect immediately prior to the Change in Control;

(b)    a reduction by the Company in the Executive’s annual Base Compensation as in effect on the date hereof or as the same may be increased from time to time;

(c)    the relocation of the Executive’s principal place of employment to a location outside of a 50-mile radius from the Executive’s principal place of employment immediately prior to the

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Change in Control or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s business travel obligations immediately prior to a Change in Control;

(d)    the failure by the Company to pay to the Executive any portion of the Executive’s current compensation or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due;

(e)    the failure by the Company to continue in effect any compensation plan in which the Executive participates immediately prior to the Change in Control which is material to the Executive’s total compensation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive’s participation relative to other the Company executives, as existed immediately prior to the Change in Control;

(f)    the failure by the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company’s pension, savings, life insurance, medical, health and accident, or disability plans in which the Executive was participating immediately prior to the Change in Control, the taking of any other action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit or Perquisite enjoyed by the Executive at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy in effect immediately prior to the time of the Change in Control; or

(g)    any purported termination of the Executive’s employment which is not effected pursuant to a notice of termination satisfying the requirements of Section 5.1.

The Executive shall have the right to terminate his employment for Good Reason even if he becomes incapacitated due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of any rights with respect to, any act or failure to act constituting Good Reason hereunder.

For purposes of any determination regarding the existence of Good Reason, any claim by the Executive that Good Reason exists shall be presumed to be correct unless the Company establishes to the Committee by clear and convincing evidence that Good Reason does not exist. The Committee’s determination regarding the existence of Good Reason shall be conclusive and binding upon all parties unless the Committee’s determination is arbitrary and capricious.

“Gross-Up Payment” means the additional amount paid to the Executive pursuant to Section 3.3.

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“Highest Base Compensation” means the Executive’s annualized Base Compensation in effect immediately prior to (a) a Change in Control, (b) the first event or circumstance constituting Good Reason, or (c) the Executive’s Termination of Employment, whichever is greatest.

“Incumbent Director” means –

(a)    a member of the Board on the Effective Date; or

(b)    an individual-

(1)    who becomes a member of the Board after the Effective Date;

(2)    whose appointment or election by the Board or nomination for election by the Company’ stockholders is approved or recommended by a vote of at least two-thirds of the then serving Incumbent Directors (as defined herein); and

(3)    whose initial assumption of service on the Board is not in connection with an actual or threatened election contest.

“IRS” means the Internal Revenue Service.

“Merger” means a merger, consolidation or similar transaction.

“Pension Plan” means the Company’s 401(k) plan, as amended from time to time.

“Perquisites” means benefits such as any supplemental life insurance; financial consulting; and office equipment for use in the home (e.g., cellular telephones, personal digital assistance, home computers and office accessories similar to the office accessories available to the Executive in his employment office and monthly Internet connection fees) that may be provided by the Company from time to time.

“Person” shall have the meaning ascribed to the term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof, except that the term shall not include (a) the Company or any of its Affiliates, (b) a trustee or other fiduciary holding Company securities under an employee benefit plan of the Company or any of its Affiliates, (c) an underwriter temporarily holding securities pursuant to an offering of those securities or (d) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

“Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(a)    the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(b)    the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

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(c)    any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15 percent or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates); or

(d)    the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

“Section 409A” means section 409A of the Code and the final regulations issued thereunder by the IRS and the Department of Treasury.

“Section 409A Disability” shall mean the inability of the Executive to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. The Executive shall also be treated as having a “Section 409A Disability” if he is, by reason of a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.

“Separation From Service” shall have the meaning ascribed to that term under Section 409A.

“Specified Employee” shall have the meaning ascribed to that term under Section 409A.

“Specified Owner” means any of the following:

(a)    the Company;

(b)    an Affiliate of the Company;

(c)    an employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate of the Company;

(d)    a Person that becomes a Beneficial Owner of the Company’s outstanding Voting Securities representing 30 percent or more of the combined voting power of the Company’s then outstanding Voting Securities as a result of the acquisition of securities directly from the Company and/or its Affiliates; or

(e)    a Person that becomes a Beneficial Owner of the Company’s outstanding Voting Securities representing 30 percent or more of the combined voting power of the Company’s then outstanding Voting Securities as a result of a Merger if the individuals and Entities who were the Beneficial Owners of the Voting Securities of the Company outstanding immediately prior to such Merger own, directly or indirectly, at least 50 percent of the combined voting power of the Voting Securities of any of the Company, the surviving Entity or the parent of the surviving Entity outstanding immediately after such Merger in substantially the same proportions as their ownership of the Voting Securities of the Company outstanding immediately prior to such Merger.

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“Termination of Employment” means the termination of the Executive’s employment relationship with the Company (a) by the Company without Cause after a Change in Control occurs, or (b) by the Executive for Good Reason after a Change in Control occurs, or (c) resignation by the Executive within 30 days of a Change in Control.

For purposes of this definition, the Executive’s employment shall be deemed to have been terminated after a Change in Control, if (a) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company, the consummation of which would constitute a Change in Control; (b) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of a Person who has entered into an agreement with the Company, the consummation of which would constitute a Change in Control; (c) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with a Change in Control; (d) resignation by the Executive within 30 days of a Change in Control; or (e) in accordance with section 2.2. For purposes of any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and convincing evidence that such position is not correct.

“Termination of Employment” does not include (a) a termination of employment due to the Executive’s death or Disability, or (b) a termination of employment by the Company with Cause.

“Voting Securities” means the outstanding securities entitled to vote generally in the election of directors or other governing body.

1.2Number and Gender. As used in this Agreement, unless the context otherwise expressly requires to the contrary, references to the singular include the plural, and vice versa; references to the masculine include the feminine and neuter; references to “including” mean “including (without limitation)”; and references to Sections and clauses mean the sections and clauses of this Agreement.

2.Term of Agreement.

2.1The “Term” of this Agreement shall commence on the Effective Date and end on the earlier of (a) the Executive’s Termination of Employment or (b) the date the Executive is no longer an Employee of the Company or (c) six (6) months following the date of a Change in Control (such last day being the “Expiration Date”).

2.2Notwithstanding 2.1 above, should a Change in Control occur within ninety (90) days following cessation of the Executive’s employment relationship with the Company for any reason, except for Cause, then Executive shall be entitled to the benefits and compensation contained herein as if Executive had been employed at the time of the Change in Control and had tendered his resignation within thirty (30) days of a Change in Control in accordance with the definition of

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Termination of Employment. In such event, for all items in Compensation listed below, including the Executive’s Highest Base Compensation, shall be calculated as of the date of Executive’s cessation of employment.

3.Compensation.

3.1Equity Based Compensation. Upon the occurrence of a Change in Control, all options to acquire shares of the Company stock, all shares of restricted Company stock, all other equity or phantom equity incentives and any awards the value of which is determined by reference to or based upon the value of the Company stock, held by the Executive under any plan of the Company shall become immediately vested, exercisable and nonforfeitable and all conditions thereof (including, but not limited to, any required holding periods) shall be deemed to have been satisfied, subject to the terms and conditions of such plans or agreements.

3.2Benefits Following Termination of Employment. If the Executive incurs a Termination of Employment during the Term of this Agreement, the Company shall provide the Executive the benefits described below.

(a)Severance Payment Based Upon Base Compensation. The Company will pay the Executive a cash severance benefit equal to 2.99 times the Executive’s Highest Base Compensation. The Executive’s severance payment under this paragraph (a) will be paid in accordance with the provisions of Section 4.

(b)Pension Plan. In addition to the retirement benefits to which the Executive is entitled under the Pension Plan, the Company shall pay the Executive a single sum cash payment in an amount equal to the undiscounted value of the employer contributions the Company would have made to the Pension Plan (including but not limited to matching and base contributions) on behalf of the Executive had the Executive continued in the employ of the Company for a period of three years after the Employment Termination Date, assuming for this purpose that (i) the Executive’s earned compensation per year during that three year period of time is the Executive’s Highest Base Compensation; and (ii) contribution, deferral, credit and accrual percentages made under the Pension Plan, by and on behalf of the Executive during the three year period, are the same percentages in effect on the date of the Change in Control or the Executive’s Employment Termination Date, whichever is more favorable for the Executive. The payment required under this paragraph (b) will be made in accordance with the provisions of Section 4.

(c)Accident and Health Insurance Benefits. For three years following the Executive’s Employment Termination Date (the “Continuation Period”), the Company shall arrange to provide the Executive and his dependents accident and health insurance benefits, in each case, substantially similar to those provided to the Executive and his dependents immediately prior to the Employment Termination Date or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater cost to the Executive than the cost to the Executive immediately prior to such date or occurrence; provided, however, that with respect to any of such plans, programs, practices or policies requiring employee contributions, the Executive shall continue to pay the employee contributions for same. If the dental, accident, health insurance or other benefits

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specified in this Section 3.2(c) are taxable to the Executive, the following provisions shall apply to the reimbursement or provision of such benefits. The Executive shall be eligible for reimbursement for covered welfare expenses, or for the provision of such benefits on an in-kind basis, during the period commencing on the Executive’s Employment Termination Date and ending on the third anniversary of such date. The amount of such welfare benefit expenses eligible for reimbursement or the in-kind benefits provided under this Section 3.2(c), during the Executive’s taxable year will not affect the expenses eligible for reimbursement, or the in-kind benefits to be provided, in any other taxable year (with the exception of applicable lifetime maximums applicable to medical expenses or medical benefits described in Section 105(b) of the Code). The Executive’s right to reimbursement or direct provision of benefits under this Section 3.2(c) is not subject to liquidation or exchange for another benefit. To the extent that the benefits provided to the Executive pursuant to this Section 3.2(c) are taxable to the Executive and not otherwise exempt from Section 409A, any amounts to which the Executive would otherwise be entitled under this Section 3.2(c) during the first six months following the date of the Executive’s Separation From Service shall be accumulated and paid to the Executive on the date that is six months following the date of his Separation From Service.

(d)Perquisites. The Executive shall be entitled to a single sum cash payment which shall be an amount equal to the sum of (1) the cost of the Executive’s Perquisites in effect prior to his Termination of Employment for the remainder of the calendar year in which the Employment Termination Date occurs; plus (2) the cost of the Executive’s Perquisites in effect prior to his Termination of Employment for an additional three years. The payment required under this paragraph (d) will be made in accordance with the provisions of Section 4.

(e)Retiree Medical. If the Executive would have become entitled to benefits under the Company’s post-retirement health care insurance plans, as in effect immediately prior to the Employment Termination Date or, if more favorable to the Executive as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, had the Executive’s employment terminated at any time during the period of thirty-six (36) months after the Employment Termination Date, the Company shall provide such post-retirement health care insurance benefits to the Executive and the Executive’s dependents commencing on the later of (i)  the date on which such coverage would have first become available and (ii) the date on which the applicable benefits described in Section 3.2(c) terminate. Except for any reimbursements under the applicable group health plan that are subject to a limitation on reimbursements during a specified period, the amount of expenses eligible for reimbursement under this Section 3.2(e), or in-kind benefits provided, during the Executive’s taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year of the Executive. The Executive’s right to reimbursement or in-kind benefits pursuant to this Section 3.2(e) shall not be subject to liquidation or exchange for another benefit. To the extent that the benefits provided to the Executive pursuant to this Section 3.2(e) are taxable to the Executive and are not otherwise exempt from Section 409A, any amounts to which the Executive would otherwise be entitled under this Section 3.2(e) during the first six months following the date of the Executive’s Separation From Service shall be accumulated and paid to the Executive on the date that is six months following the date of his Separation From Service.

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(f)Interest Amount. If the Executive is a Specified Employee, the Company shall pay to the Executive, on the date that is six (6) months following the Executive’s Separation From Service, an amount equal to the amount of interest that would be earned on the amounts specified in Sections 3.2(a), 3.2(b), and 3.2(d) and, to the extent subject to a mandatory six-month delay in payment, the amounts specified in Sections 3.2(c), 3.2(e), 3.3 and 3.4, for the period commencing on the date of the Executive’s Separation From Service until the date of payment of such amounts, calculated using an interest rate equal to the six month London Interbank Offered Rate in effect on the date of the Executive’s Separation From Service plus two percentage points (the “Interest Amount”).

3.3Gross-Up Payments. The Executive will reasonably cooperate with the Company in good faith to achieve a mutually acceptable methodology for minimizing the Excise Tax.

Should the Executive and the Company fail to agree on a mutually acceptable methodology for minimizing the Excise Tax, the following provisions of this Section 3.3 will apply. If any payments or benefits received or to be received by the Executive (whether pursuant to the terms of this Agreement, or any other plan or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (such payments or benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “Total Payments”) will be subject to the Excise Tax, the Company shall pay the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive after the deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment shall be equal to the Total Payments. The purpose of this Section is to place the Executive in the same economic position such Executive would have been in had no Excise Tax been imposed with respect to the Total Payments.

(a)For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as “parachute payments” (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel (the “Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the “Auditor”), such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all “excess parachute payments” within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of the Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code) in excess of the “base amount” (within the meaning of section 280G(b)(3) of the Code) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.

(b)For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local

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income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Employment Termination Date (or if there is no Employment Termination Date, then the date on which the Gross-Up Payment is calculated for purposes of this Section), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

(c) In the event that the Excise Tax is determined to exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the payment of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to such excess) within five (5) business days following the time that the amount of such excess is finally determined and in any event no later than the payment deadline specified below in this Section 3.3. The Executive and the Company shall each reasonably cooperate with the other relative to any administrative or judicial proceedings concerning the existence or amount of liability for the Excise Tax.

(d)The parties intend and agree that the five (5) business day deadline specified above in this Section 3.3 is not to be extended as a result of the following sentence which is included solely for the purpose of complying with Section 409A. The Company shall make a payment to reimburse the Executive in an amount equal to all federal, state and local taxes imposed upon the Executive that are described in this Section 3.3, including the amount of additional taxes imposed upon the Executive due to the Company’s payment of the initial taxes on such amounts, by the end of the Executive’s taxable year next following the Executive’s taxable year in which the Executive remits the related taxes to the taxing authority. Notwithstanding any provision of this Agreement to the contrary, any amounts to which the Executive would otherwise be entitled under this Section 3.3 during the first six months following the date of the Executive’s Separation From Service shall be accumulated and paid to the Executive on the date that is six months following the date of his Separation From Service.

3.4Legal Fees. the Company shall pay, on a fully grossed up, after tax basis, all legal fees and expenses incurred by the Executive (i) in disputing in good faith any issue relating to the Executive’s termination of employment, (ii) in seeking in good faith to obtain or enforce any benefit or right provided under this Agreement in accordance with Section 9.5, or (iii) in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit under this Agreement. Such payments under this Section 3.4 shall be made within ten (10) business days after the delivery of the Executive’s written request for the payment accompanied by such evidence of fees and expenses incurred as the Company may reasonably require. The parties intend and agree that the foregoing ten (10) business day deadline is not to be extended as a result of the following sentence which is included solely for the purpose of complying with Section 409A. The Company shall make a payment to reimburse the Executive in an amount equal to all legal fees and expenses incurred due to a tax audit or litigation relating to the application of section 4999 of the Code to any payment or benefit under this Agreement by the end of the Executive’s taxable year following the Executive’s taxable year in which the taxes that are the subject of the audit or litigation are remitted to the taxing authority, or where as a result of such audit or litigation no taxes are remitted, by the end of the Executive’s taxable year following the Executive’s taxable year in which the audit is completed or there is a final and nonappealable

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settlement or other resolution of the litigation. The legal fees or expenses that are subject to reimbursement pursuant to this Section 3.4 shall not be limited as a result of when the fees or expenses are incurred. The amount of legal fees or expenses that is eligible for reimbursement pursuant to this Section 3.4 during a given taxable year of the Executive shall not affect the amount of expenses eligible for reimbursement in any other taxable year of the Executive. The right to reimbursement pursuant to this Section 3.4 is not subject to liquidation or exchange for another benefit. Notwithstanding any provision of this Agreement to the contrary, any amount to which the Executive would otherwise be entitled under this Section 3.4 during the first six months following the date of the Executive’s Separation From Service shall be accumulated and paid to the Executive on the date that is six months following the date of his Separation From Service.

4.Time of Benefits Payments. The Company shall pay the Executive any cash benefits described in paragraphs (a), (b), (d) and (f) of Section 3.2 in a single sum cash payment in good funds immediately available by wire transfer to the Executive on the date of the Executive’s Separation From Service if he is not a Specified Employee or on the date that is six months following the date of his Separation From Service if he is a Specified Employee, or in the case of 2.2 above, within fifteen (15) days of the Change in Control.

5.Termination Procedures And Compensation During Dispute.

5.1Notice of Termination. After a Change in Control and during the Term of this Agreement, any purported termination of the Executive’s employment by the Company shall be communicated by the Company by a written Notice of Termination to the Executive in accordance with Section 9.8. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. No purported termination of the Executive’s employment by the Company after a Change in Control and during the Term of this Agreement shall be effective unless the Company complies with the procedures set forth in this Section.

5.2Employment Termination Date. “Employment Termination Date,” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term of this Agreement, shall mean (i) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively,

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from the date such Notice of Termination is given). “Employment Termination Date,” with respect to the resignation by the Executive concurrent with a Change in Control, shall mean the date of the Change in Control.

5.3Dispute Concerning Termination. If within fifteen (15) days after any Notice of Termination is given, or, if later, prior to the Employment Termination Date (as determined without regard to this Section), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Employment Termination Date shall be extended until the earlier of (i) the date on which the Term of this Agreement ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided, however, that the Employment Termination Date shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence.

5.4Compensation During Dispute. If a purported termination of employment occurs following a Change in Control and during the Term of this Agreement and the Employment Termination Date is extended in accordance with Section 5.3, the Company shall pay the Executive the full Base Compensation in effect when the notice giving rise to the dispute was given. The Company shall pay any such compensation to the Executive at the applicable times specified in Section 9.7. To the extent legally permissible, the Company shall also continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given or those plans in which the Executive was participating immediately prior to the first occurrence of an event or circumstance giving rise to the Notice of Termination, if more favorable to the Executive, until the Employment Termination Date, as determined in accordance with Section 5.3. Amounts paid under this Section are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts due under this Agreement.

6.Withholding. Subject to the provisions of Section 3.3, the Company may withhold from any benefits paid under this Agreement all income, employment, and other taxes required to be withheld under applicable law.

7.Death of the Executive. If the Executive dies after his Employment Termination Date but before the Executive receives full payment of the benefits to which he is entitled, any unpaid benefits will be paid to the Executive’s surviving spouse, or if the Executive does not have a surviving spouse, to the Executive’s estate.

8.Amendment. This Agreement may not be amended except pursuant to a written instrument that is authorized by the Committee and agreed to in writing and signed by the Executive.

9.Miscellaneous.

9.1Agreement Not an Employment Contract. This Agreement is not an employment contract between the Company and Executive and gives Executive no right to retain his employment.

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This Agreement is not intended to interfere with the rights of the Company to terminate the Executive’s employment at any time with or without notice and with or without cause or to interfere with the Executive’s right to terminate his employment at any time.

In the event that a third party begins a tender or exchange offer, initiates a proxy contest or takes other steps to effect a Change in Control of the Company, the Executive agrees that the Executive will not voluntarily leave the employ of the Company and will perform the services of the Executive’s office until the third party has abandoned or terminated efforts to effect a Change in Control or until a Change in Control has occurred. In the event such Change in Control is supported and endorsed by the Board, the Executive agrees to assist, for a period of ninety (90) days from the date of Change in Control, in the orderly transition of management of the Company, provided the Company shall pay any reasonable expenses the Executive incurs in connection with such assistance.

If the Executive’s employment with the Company should terminate for any reason prior to the occurrence of the Change in Control events described herein, this Agreement shall terminate and the Company will have no further obligation to the Executive hereunder.

9.2Alienation Prohibited. No benefits hereunder shall be subject to anticipation or assignment by the Executive, to attachment by, interference with, or control of any creditor of the Executive, or to being taken or reached by any legal or equitable process in satisfaction of any debt or liability of the Executive prior to its actual receipt by the Executive. Any attempted conveyance, transfer, assignment, mortgage, pledge, or encumbrance of the benefits hereunder prior to payment thereof shall be void.

9.3Severability. Each provision of this Agreement may be severed. If any provision is determined to be invalid or unenforceable, that determination shall not affect the validity or enforceability of any other provision.

9.4Binding Effect. This Agreement shall be binding upon any successor of the Company. Further, the Board shall not authorize a Change in Control that is a Merger or an Asset Sale transaction unless the purchaser or the Company’s successor agrees to take such actions as are necessary to cause the Executive to be paid or provided all benefits due under the terms of this Agreement as in effect immediately prior to the Change in Control.

9.5Settlement of Disputes Concerning Benefits Under this Agreement; Arbitration. All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Committee and shall be in writing. Any denial by the Committee of a claim for benefits under this Agreement shall be delivered to the Executive in writing within thirty (30) days after written notice of the claim is provided to the Company in accordance with Section 9.8 and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Committee shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Committee a decision of the Committee within sixty (60) days after notification by the Committee that the Executive’s claim has been denied. Any further dispute or controversy arising out of or relating to this Agreement, including without limitation, any and all disputes, claims (whether in tort, contract, statutory or

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otherwise) or disagreements concerning the interpretation or application of the provisions of this Agreement shall be resolved by arbitration in accordance with the rules of the American Arbitration Association (the “AAA”) then in effect. No arbitration proceeding relating to this Agreement may be initiated by either the Company or the Executive unless the claims review and appeals procedures specified in this Section 9.5 have been exhausted. Within ten (10) business days of the initiation of arbitration hereunder, the Company and the Executive will each separately designate an arbitrator, and within twenty (20) business days of selection, the appointed arbitrators will appoint a neutral arbitrator from the AAA Panel of Commercial Arbitrators. The arbitrators shall issue their written decision (including a statement of finding of facts) within thirty (30) days from the date of the close of the arbitration hearing. The decision of the arbitrators selected hereunder will be final and binding on both parties. This arbitration provision is expressly made pursuant to and shall be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-16 (or replacement or successor statute). Pursuant to Section 9 of the Federal Arbitration Act, the Company and the Executive agree that a judgment of the United States District Court for the District in which the headquarters of the Company is located at the time of initiation of arbitration hereunder may be entered upon the award made pursuant to the arbitration.

9.6No Mitigation. The Company agrees that if the Executive’s employment with the Company terminates during the Term of this Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to this Agreement. Further, except as expressly provided otherwise herein, the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

9.7Other Amounts Due. Except as expressly provided otherwise herein, the payments and benefits provided for in this Agreement are in addition to and not in lieu of amounts and benefits that are earned by the Executive prior to his Termination of Employment. The Company shall pay to the Executive the Accrued Obligations on the Executive’s Employment Termination Date. If the Executive’s Separation From Service is not due to his death or his incurring a Section 409A Disability, the Company shall pay to the Executive the Additional Obligations on the date of his Separation From Service if he is not a Specified Employee or on the date that is six months following the date of his Separation From Service if he is a Specified Employee. If the Executive’s termination of employment with the Company occurs by reason of the death of the Executive, the Company shall pay to the person or estate specified in Section 7 the Additional Obligations on the date that is 30 days following the date of the death of the Executive. If the Executive’s termination of employment with the Company occurs by reason of the Executive incurring a Section 409A Disability, the Company shall pay to the Executive the Additional Obligations on the date that is 30 days following the date of the Executive’s incurring a Section 409A Disability. Further the Executive shall be entitled to any other amounts or benefits due the Executive in accordance with any contract, plan, program or policy of the Company or any of its Affiliates, other than any severance benefit program or policy. Amounts that the Executive is entitled to receive under any plan, program, contract or policy of the Company or any of its Affiliates at or subsequent to the Executive’s Termination of Employment, other than any severance benefit program or policy, shall be payable

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or otherwise provided in accordance with such plan, program, contract or policy, except as expressly modified herein.

9.8Notices. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be given in person or by United States registered mail, return receipt requested (with evidence of receipt by the party to whom the notice is given), postage prepaid, addressed, if to the Executive, to the address listed on the signature page of this Agreement and, if to the Company, to 10370 Richmond Ave. Suite 600 Houston, Texas 77042; Attention: Legal, or to such other address as either party may have furnished to the other in writing in accordance herewith. For purposes of this agreement notice to a party shall be effective only upon actual receipt of the notice by the party with written evidence of receipt by the party to whom the notice is given.

9.9Disputed Payments and Refusals to Pay. If the Company fails to make a payment under this Agreement in whole or in part as of the payment date specified in this Agreement, either intentionally or unintentionally, other than with the express or implied consent of the Executive, the Company shall owe the Executive interest on the delayed payment at the applicable Federal rate provided for in section 7872(f)(2)(A) of the Code if the Executive (i) accepts the portion (if any) of the payment that the Company is willing to make (unless such acceptance will result in a relinquishment of the claim to all or part of the remaining amount) and (ii) makes prompt and reasonable good faith efforts to collect the remaining portion of the payment. Any such interest payments shall become due and payable effective as of the applicable payment date(s) specified in this Agreement with respect to the delinquent payments.

9.10Funding. The Executive shall have no right, title, or interest whatsoever in or to any assets of the Company or any investments which the Company may make to aid it in meeting its obligations under this Agreement. The Executive’s right to receive payments under this Agreement shall be no greater than the right of an unsecured general creditor of the Company. Immediately prior to a Change in Control, the Company shall create an irrevocable grantor trust (the “Rabbi Trust”) which shall be subject to the claims of creditors of the Company. In the event that the Executive is a Specified Employee at the time he incurs a Separation From Service or at the time the Company determines that it is reasonably likely that the Executive will incur a Separation From Service in connection with a Change in Control, then immediately upon the Executive’s Separation From Service or, if earlier, the date on which the Company makes a determination that the Executive is reasonably likely to incur a Separation From Service in connection with a Change in Control, the Company shall transfer to the Rabbi Trust cash sufficient (on an undiscounted basis) to pay the cash amounts specified in Sections 3.2(a), 3.2(b), 3.2(d) and 3.2(f), and the estimated amount of the Gross-Up Payment to be made under Section 3.3. The cash amounts specified in Sections 3.2(a), 3.2(b), 3.2(d) and 3.2(f), and the Gross-Up Payment shall be paid from the Rabbi Trust on the dates specified in Sections 3.3 and 4 herein, provided that the Company shall remain liable to pay any such amounts which for any reason are not paid from the Rabbi Trust. The trustee of the Rabbi Trust shall be a bank or trust company selected by the Company prior to the Change in Control.

9.11Governing Law. All provisions of this Agreement shall be construed in accordance with the laws of Texas, except to the extent preempted by federal law and except to the extent that the conflicts of laws provisions of the State of Texas would require the application of the relevant

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law of another jurisdiction, in which event the relevant law of the State of Texas will nonetheless apply, with venue for litigation being in Dallas, Texas.

9.12Compliance With Section 409A. It is intended that this Agreement shall comply with Section 409A. The provisions of this Agreement shall be interpreted and administered in a manner that complies with Section 409A.

9.13Entire Agreement.This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date above first written.

FURMANITE CORPORATION
By:	/s/ William F. Fry
Name:	William F. Fry
Date:	May 27, 2014
Title:	General Counsel
EXECUTIVE
By:	/s/ Robert S. Muff
Address:	10370 Richmond Ave. Suite 600
	Houston, Texas 77042

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EX-10.4

EXHIBIT 10.4

AGREEMENT

This Agreement (“Agreement”), dated July 30, 2014 is made and entered into by and between Charles R. Cox (the “Employee”) and Furmanite Corporation (the “Company”):

WHEREAS, Employee has tendered his resignation as Chairman of the Board, and has indicated his intent to resign as Chief Executive Officer of the Company effective December 31, 2014 (the “Separation Date”).

WHEREAS, Employee and the Company (the “Parties”) wish to terminate the employment relationship between them on the terms set forth in this Agreement;

WHEREAS, the Company wishes to retain Employee as an employee to the Company on the terms set forth in this Agreement;

WHEREAS, the Parties wish to mutually release each other from certain claims on the terms set forth in this Agreement;

WHEREAS, both Parties have read and understand the terms and provisions of this Agreement and desire and intend to be bound by the terms and provisions of this Agreement.

NOW, THEREFORE, in consideration of the covenants and mutual promises and agreements contained in this Agreement and other valuable consideration, the sufficiency of which is acknowledged, the Parties agree as follows:

1. Amendment of Prior Agreements. This Agreement is intended to amend multiple agreements with Employee including the 2012 Long Term Equity Reward agreement, the 2013 Long Term Equity Reward agreement, the 2014 Long Term Incentive award, the 2014 Incentive Compensation Plan agreement, and other previous equity and option grants to Employee to the extent noted herein. In the event of conflict with such other agreements this Agreement shall govern.

2. Release and Waiver Agreement. The Parties acknowledge and understand that this Agreement is a release and waiver contract and that this document is legally binding. Each Party understands that by signing this Agreement, he or it has read and understood each provision and is agreeing to all of the provisions set forth in this Agreement.

3. Cessation Of Employment. Employee’s retirement was approved by Company to be effective December 31, 2014 and at such time Employee will resign from all positions as an officer, and manager that he held with the Company and any subsidiary or affiliate of the Company, including but not limited to his positions as Chief Executive Officer of the Company.

4. Compensation. In exchange for the promises and covenants of Employee contained in this Agreement and subject to the provisions contained in this Agreement, as compensation, the Company covenants and agrees to:

(a) Options. On the Separation Date, the Company shall (i) accelerate the vesting of all outstanding unvested stock options previously granted by the Company to Employee (the “Unvested Options”) with such accelerated vesting to be effective on the Separation Date, (ii) extend the period of exercisability of the following stock options previously granted by the Company to Employee to the earlier of December 31, 2015 or 1 year from the Separation Date:

Page 1 of 7

Grant Date	Exercise Price per Share ($)	Number of Options
3/10/2010	3.85	100,000
6/28/2012	4.63	34,195
5/09/2013	6.89	29,198
5/13/2014	10.85	21,830
		185,223

The Parties acknowledge that Employee also has the following vested options outstanding that were granted to Employee in his role as a director prior to his appointment to CEO. The Parties acknowledge that Employee will have until August 18, 2015 to exercise these options:

Grant Date	Exercise Price per Share ($)	Options
8/19/2005	2.38	20,000

However, in no event will Employee be permitted to exercise the Unvested Options before the expiration of seven days after Employee signs this Agreement without revocation (the “Effective Date”).

The Parties agree the stock option tables above represent a complete and accurate listing of all the Employee’s outstanding stock options and that no other stock options are or will be subject to this Agreement.

(b) Restricted Stock Units. On or before the Separation Date, the Company shall accelerate the vesting of all outstanding unvested restricted stock unit awards previously granted by the Company to Employee so that effective on the Separation Date all substantial risk of forfeiture restrictions applicable to the restricted stock unit awards shall lapse and Employee shall be entitled to receive shares of the Company’s common stock related to the restricted stock unit awards as follows:

Grant Date	Restricted Stock Units
6/14/2011	10,054
3/2/2012	8,345
6/28/2012	8,261
5/9/2013	25,907
5/13/2014	25,070
	77,637

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The Parties agree that the restricted stock units table above represents a complete and accurate listing of all the Employee’s outstanding unvested restricted stock units and that no other restricted stock units are or will be subject to this Agreement.

(c) Deferred Compensation. The Company shall pay Employee $820,000 in accordance with Exhibit A commencing six months from the Separation Date.

(d) ICP. Employee is a participant in the Company’s 2014 Incentive Compensation Plan (“ICP Plan”) and has a target award of $288,000, subject to the terms and conditions of the ICP Plan. Provided the performance measures are achieved and in accordance with the terms and conditions of the ICP Plan, Employee shall be entitled to compensation earned under and as provided by the ICP Plan, even though Employee will not have continued employment through the payment date of the award as required under the terms of the ICP Plan. Any compensation earned under this section 4(d) is to be paid to Employee on or before March 15, 2015. To the extent the Separation Date occurs prior to December 31, 2014, Employee’s compensation under the ICP shall be prorated. In such event, the award shall be calculated by taking Employee’s actual days of service for the 2014 calendar year divided by 365 multiplied by Employee’s award earned under the ICP Plan.

(e) Vacation. The Company shall pay Employee for all earned but unused vacation he is entitled to as of the Separation Date, to be paid to him within fourteen (14) business days after the Separation Date.

The Company’s payment of the compensation described in clauses (a), (b), (c), (d) and (e) of this Section 4 is subject to applicable federal, state and local taxes and withholding. Employee shall have no right to any further payments or benefits, however calculated or paid, including bonuses, commissions, or incentive compensation.

5. Consultation With Attorney, Review Period and Revocation Period. (a) Employee is advised, and acknowledges that he has been advised, to consult with an attorney before executing this Agreement concerning the meaning, import, and legal significance of this Agreement. Employee acknowledges that he has read this Agreement, as signified by his signature hereto, and is voluntarily executing the same after advice of counsel for the purposes and consideration expressed in this Agreement.

(b) Employee acknowledges that he has been provided with a period of at least 21 days within which to consider, review, and reflect on the terms of this Agreement. In the event that he executes this Agreement prior to the expiration of the 21-day period, he hereby waives the balance of said period.

(c) Employee has seven days in which he may revoke this Agreement after he signs it. This Agreement shall not be effective until the expiration of seven days after Employee signs it without revocation. Any amounts payable under this Agreement shall be paid no sooner than the expiration of seven days after Employee signs it. Any revocation of this Agreement must be delivered to the Company, Attention: Legal, at 10370 Richmond Ave. Suite 600, Houston, Texas 77042, before the expiration of seven days after Employee signs this Agreement.

6. Releases. In exchange for the promises and covenants contained inthis Agreement, the Parties covenant and agree as follows:

(a) Release and Waiver by Employee. For and in consideration of the compensation described in Section 4, as well as the covenants and promises contained in this Agreement, the receipt and sufficiency of which are acknowledged, Employee on behalf of himself and his family, assigns, representatives, agents, heirs and attorney, if any, fully, finally, and forever releases, acquits and discharges the Company, along with its former and present parents, subsidiaries, and affiliates, and its and their respective predecessors, successors and assigns, if any, as well as its and their respective former and present officers, administrators, directors, shareholders, general or limited partners, representatives, agents, employees and attorneys, if any, jointly and severally (collectively, the “Released Parties”), from any and all claims,

Page 3 of 7

demands, actions, liabilities, obligations and causes of action of whatever kind or character, whether known or unknown, that Employee or anyone on his behalf or for his benefit has or might claim to have against the Released Parties for any and all injuries, harm, damages (actual and punitive), penalties, costs, losses, expenses, attorney’s fees and liability or other detriment, if any, whatsoever and whenever incurred or suffered by Employee arising out of, relating to, or in connection with any transaction, occurrence or omission that transpired before the execution of this Agreement, including, without limitation:

(i) any claim under federal, state, or local law that provides civil remedies for the enforcement of rights arising out of the employment relationship, including, without limitation, discrimination and retaliation claims, such as claims or causes of action under Title VII of the Civil Rights Act of 1964 as amended, 42 U.S.C. § 2000 et seq.; The Civil Rights Act of 1866, as amended, 42 U.S.C. § 1981; The Civil Rights Act of 1991. as amended, 42 U.S.C. § 198; Age Discrimination in Employment Act, as amended, 29 U.S.C. § 621 et seq.; Americans With Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; Fair Labor Standards Act, as amended, 29 U.S.C. § 201, et seq.; Employee Retirement Income Security Act, as amended, 29 U.S.C. 1000 et seq.; Family and Medical Leave Act, as amended, 29 U.S.C. § 2601, et seq.; the Texas Commission on Human Rights Act, as amended, Texas Labor Code § 21.001, et seq.; or any other statute prohibiting discrimination or retaliation in employment under any federal, state, or local law; and (ii) except as set forth in Section 4. Compensation claims for unpaid or withheld wages, relocation allowances or benefits, other benefits, commissions, stock options, bonuses or profit-sharing, wrongful discharge, breach of contract, breach of fiduciary duty, promissory estoppel, fraud, breach of any implied covenants, assault, battery, negligence, defamation, invasion of privacy, slander, intentional infliction of emotional distress, or any other contract, tort, or statutory claim; provided that nothing in this Agreement shall be construed as a release by Employee of any (i) salary earned through the Separation Date, (ii) outstanding expense reimbursement claims as of the Separation Date in accordance with the Company’s policies, (iii) rights under the Company’s 401(k) Plan earned through the Separation Date, (iv) rights under the Company’s medical and dental insurance plan to which Employee is entitled through the Separation Date, (v) rights of Employee to indemnification and advance of expenses pursuant to the Company’s bylaws and pursuant to the indemnification assurance agreement between the Parties (the “Indemnification Documents”), (vi) rights of the Employee under any insurance policies maintained by the Company and (vii) rights of Employee under this Agreement;

Employee covenants and agrees that he will not initiate, or cause to be initiated, any action or cause of action against the Company or any of the other Released Parties in the future asserting any claim covered by the release contained in this Agreement. Employee further agrees to indemnify the Company and all other Released Parties for (i) any additional sum of money that any of them may be compelled to pay Employee as a result of a claim covered by this release, and (ii) any of the associated legal fees, costs and expenses of the Company or any other Released Party on account of Employee bringing or allowing to be brought on his behalf any legal action based directly or indirectly on the claims covered by the release. For and in consideration of the compensation described in Section 4, as well as the covenants and promises contained in this Agreement, Employee agrees to execute and deliver to Company the Post Separation Waiver included below within 7 days of the Separation Date.

(b) Release and Waiver by the Company. The Company covenants and agrees that it will not initiate, or cause to be initiated, any action or cause of action against Employee asserting a claim associated with Employee’s duties and responsibilities as an employee of the Company, if acting within the scope of his employment and not illegally. The Company further agrees to indemnify Employee for any sum of money that Employee may be compelled to pay, together with associated legal fees, costs and expenses, as a result of any action or claim brought by the Company or any Released Party that the Company has agreed not to initiate pursuant to the immediately preceding sentence. Notwithstanding the foregoing, nothing in this Agreement shall be construed as a release by the Company of any (i) rights of the Company under the Furmanite Corporation Proprietary Information, Inventions and Non-Solicitation Agreement between Employee and the Company (the “Proprietary Information Agreement”) and (ii) rights of the Company under this Agreement. The Company shall pay Employee the indemnification and reimbursement amounts described in this Section 6(b) within ten business days after the delivery of Employee’s written request for the payment accompanied by such evidence of costs and expenses as the Company may reasonably require. The parties intend and agree that such ten business day deadline is not to be extended as a result of the following sentence which is included solely for the purpose of complying with Section 409A. The Company shall pay Employee the indemnification and reimbursement amount described in this Section 6(b) by the last day of the Employee’s taxable year following the taxable year in which Employee incurred such costs and expenses. The costs and expenses that are subject to reimbursement pursuant to this Section 6(b) shall not be limited as a result of when the costs and expenses are incurred. The amount of costs and

Page 4 of 7

expenses eligible for reimbursement pursuant to this Section 6(b) during a given taxable year of Employee shall not affect the amount of costs and expenses eligible for reimbursement in any other taxable year of Employee. The right to reimbursement pursuant to this Section 6(b) is not subject to liquidation or exchange for another benefit.

(c) The Parties acknowledge and agree that although Section 6(b) prohibits Employee from filing a lawsuit concerning claims covered by the release, it does not prohibit Employee from lodging a complaint with or participating in a proceeding before any governmental agency or challenging whether this Agreement was entered into on a knowing and voluntary basis.

(d) Employee acknowledges and agrees that the payment of monies under this Agreement includes monies to which Employee was not previously otherwise entitled and, further, that the payment of monies under this Agreement constitutes fair and adequate consideration for the execution of this Agreement.

7. Nondisparagement; Cooperation. Each Party agrees to refrain from engaging in any conduct, verbal or otherwise, that would disparage or harm the reputation of the other. Such conduct shall include, but not be limited to, any negative statements made verbally or in writing by Employee about the Company or any of the Released Parties, or by the Company or any of the Released Parties about Employee. Employee agrees to cooperate with the Company and its advisors in connection with business matters in which the Employee was involved or any claims, investigations, administrative proceedings or lawsuits which relate to his employment with the Company and of which the Employee has knowledge. Any request for cooperation will be upon reasonable advance notice. The Company shall pay Employee’s reasonable out of pocket expenses in connection with such cooperation.

8. Property and Confidential Information.(a) Employee acknowledges that the Company has furnished, and may continue to furnish, him with information (the “Confidential Information”) that is secret, non-public or otherwise confidential, including without limitation: the Company’s technical and business information, whether patentable or not, which is of a confidential, trade secret, or proprietary character, and which was either developed by the Company, with others or by others; lists of customers; identity of customers; identity of prospective customers; contract terms; bidding information and strategies; pricing methods or information; computer software; computer software methods and documentation; hardware; the Company’s methods of operation; the procedures, forms and techniques used in servicing the Company’s customers; claims or potential claims by or against the Company or any other Released Party, strategies and future plans, and corporate governance matters. In consideration of receiving and retaining payments or benefits under this Agreement, Employee shall not disclose to anyone, including without limitation, any person, firm, corporation or other entity, or publish, or use for any purpose, any Confidential Information, except as explicitly authorized in writing by the Company. Employee agrees that if it appears that Employee will be compelled by law or judicial process to disclose any Confidential Information to avoid potential liability, Employee will notify the Company in writing immediately upon Employee’s receipt of a subpoena or other legal process and will cooperate with the Company to minimize publication of the subject Confidential Information. The agreements contained in the foregoing two sentences shall terminate on the third anniversary of the Effective Date.

(b) Notwithstanding the provisions of Section 8(a), Employee is authorized to use the Confidential Information as necessary for the performance of services for the Company. Employee will promptly return to the Company all originals and copies of all documents and information in any form relating to the business of the Company or any of the other Released Parties by the earlier of the Separation Date or December 31, 2014.

9. Choice Of Law And Venue. The Parties agree that the Agreement shall be performed in Harris County, Texas and that the laws of the State of Texas shall govern the enforceability, interpretation and legal effect of this Agreement. The Parties also agree that venue of any action to enforce the provisions of this Agreement, or any document executed in connection with this Agreement, shall be in Harris County, Texas.

10. Change In Control Agreement. The parties acknowledge a separate Change In Control Agreement with Employee dated May 27, 2014 (the “Change In Control Agreement”). To the extent compensation is received by Employee under the Change In Control Agreement, Employee shall not be entitled to any of the Deferred Compensation listed in 4(c), above.

Page 5 of 7

11. Entire Agreement. This Agreement constitutes the entire understanding and agreement of the Parties, and supersedes all prior understandings and agreements, if any, among or between the Parties with respect to the subject matter of this Agreement. There are no representations, agreements, arrangements or understandings, oral or written, concerning the subject matter of this Agreement between the Parties that are not fully expressed or incorporated by reference in this Agreement. Notwithstanding the foregoing two sentences of this Section 9, any existing agreements between Employee and the Company or any of its subsidiaries or affiliates with respect to proprietary information, inventions, non-competition or non-solicitation, including without limitation the Proprietary Information Agreement, shall remain in full force and effect.

12. Continuity of Employment. For and in consideration of the compensation described in Section 4, as well as the covenants and promises contained in this Agreement, Employee agrees to continue his employment with Company through December 31, 2014. In the event Employee is determined, by the sole and exclusive judgment of the Board of Directors, to be unable to adequately perform his duties, for reasons beyond his reasonable control, prior to December 31, 2014, the Separation Date shall be deemed to be the date when such determination is made and Employee shall still be entitled to the compensation described in Section 4 contained herein.

13. Amendments. Any modification of this Agreement or additional obligation assumed by either Party in connection with this Agreement shall be binding only if evidenced in writing signed by each Party. This Agreement cannot be changed or terminated orally, but may be changed only through a written document executed by both Parties.

14. Severability. If any term of this Agreement shall be determined by a court of competent jurisdiction to be illegal, invalid, unconscionable or unenforceable, the remaining provisions will remain effective and legally binding, and the illegal, invalid, unconscionable or unenforceable term shall be deemed not to be a part of this Agreement.

15. Binding Effect. This Agreement and the terms, covenants, conditions, provision , obligations, undertakings, rights and benefits of this Agreement shall be binding on, and shall inure to the benefit of, the Parties and their respective heirs, executors, administrators, representatives, officers, directors, shareholders, predecessors, successors, parents, subsidiaries, affiliated entities, spouses, agents, attorneys, servants, Employees, principals, partners, whether limited or general, and assigns, if any. In the event of Employee’s death, prior to the Separation Date, Employee’s Separation Date shall be deemed the date of death, and the compensation contained in section 4 shall be payable to Employee’s estate in accordance with the payment terms in section 4. Each of the Parties represents and warrants that he or it has the authority to act on his or its behalf and to bind him or it to this Agreement.

16. Disputes Relating to Agreement. If any action at law or in equity, including without limitation an action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the party prevailing in the action shall recover from the adverse party his or its actual damages and reasonable costs and expenses, including without limitation reasonable attorneys’ fees incurred in connection with the action. In the event of the violation or threatened violation of any of the covenants or promises in this Agreement, the non-breaching party shall be entitled to injunctive relief, both preliminary and final, enjoining and restraining the violation or threatened violation, which injunctive relief shall be in addition to all other remedies available to the non-breaching party, at law or in equity.

[Intentionally left blank]

Page 6 of 7

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date above first written.

FURMANITE CORPORATION
By:	/s/ Joseph E. Milliron
Name:	Joseph E. Milliron
Date:	July 30, 2014
Title:	President & COO
EMPLOYEE, CHARLES R. COX
	/s/ Charles R. Cox
Date:	July 30, 2014

POST SEPARATION WAIVER

For and in consideration of the compensation described in Section 4 of the Agreement attached, Charles R. Cox (“Employee”) affirms the language indicated in Section 6(a), above for all matters through the date listed below.

EMPLOYEE, CHARLES R. COX
Date:	(must be dated after Employee’s separation)

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Exhibit A

The following payment schedule sets forth the payments to be made in accordance with Section 4(c) of the agreement between Charles R. Cox and Furmanite Corporation dated July 30, 2014 (“Agreement”).

As noted in Section 4 of the Agreement, the payments below are subject to applicable federal, state and local taxes and withholding.

July 2, 2015	$ 136,666.67	October 7, 2016	$ 10,512.82
July 17, 2015	10,512.82	October 21, 2016	10,512.82
July 31, 2015	10,512.82	November 4, 2016	10,512.82
August 14, 2015	10,512.82	November 18, 2016	10,512.82
August 28, 2015	10,512.82	December 2, 2016	10,512.82
September 11, 2015	10,512.82	December 16, 2016	10,512.82
September 25, 2015	10,512.82	December 30, 2016	10,512.82
October 9, 2015	10,512.82	January 13, 2017	10,512.82
October 23, 2015	10,512.82	January 27, 2017	10,512.82
November 6, 2015	10,512.82	February 10, 2017	10,512.82
November 20, 2015	10,512.82	February 24, 2017	10,512.82
December 4, 2015	10,512.82	March 10, 2017	10,512.82
December 18, 2015	10,512.82	March 24, 2017	10,512.82
December 31, 2015	10,512.82	April 7, 2017	10,512.82
January 15, 2016	10,512.82	April 21, 2017	10,512.82
January 29, 2016	10,512.82	May 5, 2017	10,512.82
February 12, 2016	10,512.82	May 19, 2017	10,512.82
February 26, 2016	10,512.82	June 2, 2017	10,512.82
March 11, 2016	10,512.82	June 16, 2017	10,512.82
March 24, 2016	10,512.82	June 30, 2017	10,512.82
April 8, 2016	10,512.82	July 14, 2017	10,512.82
April 22, 2016	10,512.82	July 28, 2017	10,512.82
May 6, 2016	10,512.82	August 11, 2017	10,512.82
May 20, 2016	10,512.82	August 25, 2017	10,512.82
June 3, 2016	10,512.82	September 8, 2017	10,512.82
June 17, 2016	10,512.82	September 22, 2017	10,512.82
July 1, 2016	10,512.82	October 6, 2017	10,512.82
July 15, 2016	10,512.82	October 20, 2017	10,512.82
July 29, 2016	10,512.82	November 3, 2017	10,512.82
August 12, 2016	10,512.82	November 17, 2017	10,512.82
August 26, 2016	10,512.82	December 1, 2017	10,512.83
September 9, 2016	10,512.82	December 15, 2017	10,512.83
September 23, 2016	10,512.82	December 29, 2017	10,512.83
		Total	$ 820,000.00

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles R. Cox, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Furmanite Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 31, 2014

/s/ CHARLES R. COX

Charles R. Cox

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert S. Muff, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Furmanite Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 31, 2014

/s/ ROBERT S. MUFF

Robert S. Muff

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 906(A) OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, being the Chief Executive Officer of Furmanite Corporation (the “Company”), hereby certifies that, to his knowledge, the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014, filed with the United States Securities and Exchange Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ CHARLES R. COX

Charles R. Cox

Chief Executive Officer

This written statement is being furnished to the Securities and Exchange Commission as an exhibit to such Form 10-Q. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: July 31, 2014

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 906(A) OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, being the Chief Financial Officer of Furmanite Corporation (the “Company”), hereby certifies that, to his knowledge, the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014, filed with the United States Securities and Exchange Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ ROBERT S. MUFF

Robert S. Muff

Chief Financial Officer

(Principal Financial and Accounting Officer)

This written statement is being furnished to the Securities and Exchange Commission as an exhibit to such Form 10-Q. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: July 31, 2014

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Long-Term Debt - (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Total long-term debt	$ 64,396	$ 65,307
Less: current portion of long-term debt	(1,668)	(2,111)
Total long-term debt, non-current	62,728	63,196
Borrowings under the revolving credit facility (the “Credit Agreement”)
Debt Instrument [Line Items]
Total long-term debt	59,300	59,300
Capital leases
Debt Instrument [Line Items]
Total long-term debt	17	23
Notes payable
Debt Instrument [Line Items]
Total long-term debt	4,896	5,801
Other debt
Debt Instrument [Line Items]
Total long-term debt	$ 183	$ 183

XML

Business Segment Data and Geographical Information - Additional Information (Details)	6 Months Ended
	Jun. 30, 2014 Segment	Jun. 30, 2013 Segment
Segment Reporting [Abstract]
Number of segments in which the Company operates	2	3
Number of geographical areas comprised by segments	3

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Derivative Instruments and Hedging Activities - Summary of Interest Rate Swap Outstanding (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Fixed Rate	0.75%
Interest Rate Swap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Effective Date	Apr. 29, 2014
Maturity Date	Feb. 28, 2017
Fixed Rate	0.75%
Floating Rate	1 Month LIBOR
Notional Amount	$ 39,300

XML

Business Segment Data and Geographical Information - Summary of the Financial Information of Segment Reported (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 146,242		$ 108,376		$ 271,183		$ 197,414
Operating income (loss)	8,304		11,624		10,822		15,702
Operating Segment
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	146,242	[1]	108,376	[1]	271,183	[1]	197,414	[1]
Operating income (loss)	8,304	[2],[3]	11,624	[2],[3]	10,822	[2],[3]	15,702	[2],[3]
Intersegment Eliminations
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	0	[4]	0	[4]	0	[4]	0	[4]
Technical Services | Operating Segment
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	106,289	[1]	103,914	[1]	194,039	[1]	187,707	[1]
Operating income (loss)	14,284	[2],[3]	17,693	[2],[3]	21,949	[2],[3]	26,336	[2],[3]
Technical Services | Intersegment Eliminations
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	0	[4]	0	[4]	0	[4]	0	[4]
Engineering & Project Solutions | Operating Segment
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	39,953	[1]	4,462	[1]	77,144	[1]	9,707	[1]
Operating income (loss)	(590)	[2],[3]	(9)	[2],[3]	(1,347)	[2],[3]	34	[2],[3]
Engineering & Project Solutions | Intersegment Eliminations
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	46	[4]	0	[4]	117	[4]	0	[4]
Corporate | Operating Segment
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	0	[1]	0	[1]	0	[1]	0	[1]
Operating income (loss)	(5,390)	[2],[3]	(6,060)	[2],[3]	(9,780)	[2],[3]	(10,668)	[2],[3]
Corporate | Intersegment Eliminations
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	0	[4]	0	[4]	0	[4]	0	[4]
Reconciling Items | Operating Segment
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	0	[1]	0	[1]	0	[1]	0	[1]
Operating income (loss)	0	[2],[3]	0	[2],[3]	0	[2],[3]	0	[2],[3]
Reconciling Items | Intersegment Eliminations
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ (46)	[4]	$ 0	[4]	$ (117)	[4]	$ 0	[4]

[1] Included in the Technical Services and Engineering & Project Solutions segments are total United States revenues of $102.3 million and $191.0 million for the three and six months ended June 30, 2014, respectively, and $72.2 million and $131.6 million for the three and six months ended June 30, 2013, respectively . Included in the Technical Services segment above are United Kingdom revenues of $19.2 million and $36.9 million for the three and six months ended June 30, 2014, respectively, and $14.7 million and $26.9 million for the three and six months ended June 30, 2013, respectively.

[2] Corporate represents certain corporate overhead costs, including executive management, strategic planning, treasury, legal, human resources, information technology, accounting and risk management, which are not allocated to reportable segments.

[3] The Engineering & Project Solutions segment includes nil and approximately $0.2 million of direct costs associated with the integration of the Furmanite Technical Solutions division for the three and six months ended June 30, 2014, respectively.

[4] Reconciling items represent eliminations or reversals of transactions between reportable segments.

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Accumulated Other Comprehensive Loss - Changes in Accumulated Other Comprehensive Income (Loss) (Parenthetical) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Defined Benefit Pension Items
Accumulated Other Comprehensive Income (Loss) [Line Items]
Tax expense (benefit) for defined benefit pension plans, other comprehensive income (loss) before reclassifications	$ (0.1)		$ (0.1)	$ 0.3
Interest Rate Swap
Accumulated Other Comprehensive Income (Loss) [Line Items]
Tax expense (benefit) for interest rate swap, other comprehensive income (loss) before reclassifications	(0.1)	0.2	(0.1)	0.2
Reclassification out of Accumulated Other Comprehensive Income | Defined Benefit Pension Items
Accumulated Other Comprehensive Income (Loss) [Line Items]
Tax expense (benefit) for defined benefit pension plans, other comprehensive income (loss) reclassification adjustment		$ 0.1	$ 0.1	$ 0.2

XML

General and Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2014
Accounting Policies [Abstract]
Income Tax Examination, Likelihood of Unfavorable Settlement	greater than 50 percent

XML

Business Segment Data and Geographical Information - Long-Lived Assets and Total Assets Based on Physical Location (Details) (Reportable Geographical Components, USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Geographic Area Information [Line Items]
Total long-lived assets	$ 63,503	$ 66,046
United States
Geographic Area Information [Line Items]
Total long-lived assets	48,855	51,646
United Kingdom
Geographic Area Information [Line Items]
Total long-lived assets	5,719	5,172
All other
Geographic Area Information [Line Items]
Total long-lived assets	$ 8,929	$ 9,228

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Restructuring (Tables)

6 Months Ended

Jun. 30, 2014

Restructuring and Related Activities [Abstract]

Summary of Activity Related to Reserves Associated with Remaining Cost Reduction Initiative

The activity related to reserves associated with the remaining cost reduction initiatives for the six months ended June 30, 2014, is as follows (in thousands):

	Reserve at December 31, 2013		Charges (Adjustments)			Cash (payments) refunds		Foreign  currency adjustments		Reserve at June 30, 2014
2010 Cost Reduction Initiative
Severance and benefit costs	$	330	$	(55	)	$	53	$	3	$	331
Lease termination costs	24		—			—		1		25
Other restructuring costs	1		—			—		—		1
2012 Cost Reduction Initiative
Severance and benefit costs	2		—			—		—		2
Lease termination costs	34		—			—		—		34
Other restructuring costs	—		—			—		—		—
Total	$	391	$	(55	)	$	53	$	4	$	393

XML

Derivative Instruments and Hedging Activities - Summary of Derivative Financial Instruments, Effects on Consolidated Statements of Comprehensive Income (Details) (Interest Rate Swap, USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of income (loss) recognized in other comprehensive income (loss) for the interest rate swap, net of tax (effective portion)	$ (118)	$ 302	$ (139)	$ 302
AOCI Income Effective Portion | Reclassification out of Accumulated Other Comprehensive Income
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of loss reclassified from accumulated other comprehensive loss into interest expense for the interest rate swap, net of tax (effective portion)	(24)	0	(24)	0
AOCI Income Ineffective Portion | Reclassification out of Accumulated Other Comprehensive Income
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of loss reclassified from accumulated other comprehensive loss into interest income and other income (expense) for the interest rate swap, net of tax (ineffective portion)	$ 0	$ 0	$ 0	$ 0

XML

Retirement Plans - Additional Information (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended			12 Months Ended
	Jun. 30, 2014 CompensationPlan Subsidiary	Jun. 30, 2014 Equity	Jun. 30, 2014 Bonds	Dec. 31, 2014 Forecast
Defined Benefit Plan Disclosure [Line Items]
Number of foreign subsidiaries having defined benefit pension plans	2
Norwegian Plan description	Norwegian Plan represents less than three percent of both the Company’s total pension plan liabilities and total pension plan assets
Norwegian Plan, percentage of company's total pension plan liabilities	3.00%
Norwegian Plan, percentage of company's total pension plan assets	3.00%
Number of retirement plans	2
Expected long-term rate of return	6.20%	7.60%	4.10%
Current contribution level	$ 0.9			$ 1.7

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Restructuring - Additional Information (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Restructuring Cost and Reserve [Line Items]
Total restructuring costs (adjustments)			$ (55,000)
Number of employees terminated			138
2010 Cost Reduction Initiative
Restructuring Cost and Reserve [Line Items]
Total restructuring cost incurred to date			3,900,000
Expected future cash payments			400,000
Total restructuring costs (adjustments)	(100,000)	0	(100,000)	0
2012 Cost Reduction Initiative
Restructuring Cost and Reserve [Line Items]
Total restructuring cost incurred to date			3,300,000
Total restructuring costs (adjustments)	$ 0	$ 0	$ 0	$ 0

XML

Income Taxes - Summary of Reconciliation of Change in Unrecognized Tax Benefits (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Income Tax Disclosure [Abstract]
Balance at December 31, 2013	$ 1,139
Additions based on tax positions	105
Reductions due to lapses of statutes of limitations	0
Balance at June 30, 2014	$ 1,244

XML

Derivative Instruments and Hedging Activities - Additional Information (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Reclassification out of Accumulated Other Comprehensive Income
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Loss to be reclassified to interest expense over next twelve months	$ 0.2
Borrowings under the revolving credit facility (the “Credit Agreement”)
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Borrowings outstanding for which interest rate hedging is in place	$ 39.3

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Acquisition

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

Acquisition

Acquisition

On August 30, 2013, Furmanite America, Inc. (“Furmanite America”), a wholly owned subsidiary of the Parent Company, completed the acquisition of certain assets and the assumption of certain liabilities, all of which relate to operations in the Americas, of the Engineering and Construction segment of ENGlobal Corporation (“ENGlobal”) for a total consideration of approximately $18.8 million. In conjunction with the closing of the transaction, the Company’s Furmanite Technical Solutions division was formed, which is included within the Company’s Engineering & Project Solutions segment. Assets purchased and liabilities assumed by Furmanite America include working capital assets and liabilities, property and equipment, intangible assets and lease obligations. The purchase was made pursuant to an Asset Purchase Agreement (“APA”) dated July 15, 2013, with an amendment to the APA reducing the purchase price for the changes in the estimated net working capital balance and $0.5 million, and finalizing the terms and conditions of the transaction. On August 30, 2013, Furmanite America made a cash payment of approximately $15.8 million for the estimated acquired net working capital, net of reserves. The working capital payment is subject to adjustment, which was initially to be determined within 90 days from the close of the transaction, for any changes based upon the final balance sheet, however, by mutual agreement of the parties, the determination date has been extended. In addition, Furmanite America entered into a four-year 4% interest per annum promissory note with ENGlobal in the principal amount of $3.0 million. In connection with the acquisition, the Company borrowed $20.0 million on its existing revolving credit facility, principally to fund the purchase of the acquired working capital, with the remaining funds to be available to cover any transitional short-term cash flow needs.

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Stock-Based Compensation (Details) (USD $)	3 Months Ended		6 Months Ended		3 Months Ended							6 Months Ended		3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Restricted Stock Units (RSUs)	Mar. 31, 2014 Restricted Stock Units (RSUs)	Mar. 31, 2013 Restricted Stock Units (RSUs)	Jun. 30, 2014 Performance-Based Restricted Stock Units	Jun. 30, 2013 Performance-Based Restricted Stock Units	Jun. 30, 2014 Selling, General and Administrative Expenses	Jun. 30, 2013 Selling, General and Administrative Expenses	Jun. 30, 2014 Selling, General and Administrative Expenses	Jun. 30, 2013 Selling, General and Administrative Expenses	Mar. 31, 2014 Directors Restricted Stock	Mar. 31, 2013 Directors Restricted Stock	Mar. 31, 2013 Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense			$ 886,000	$ 624,000						$ 600,000	$ 400,000	$ 900,000	$ 600,000
Company granted number of shares/units					214,418			65,381	459,032					24,000	30,000
Company granted option to purchase number of shares of common stock	133,866	344,900														35,000
Company granted options, grant date fair value	$ 6.24	$ 3.93														$ 3.51
Restricted stock and stock units, vested in period						44,364	46,403							20,000	40,000
Restricted stock and stock units, vested in period, fair value	0	0	700,000	500,000
Net shares issued in period as a result of vesting						32,386	36,391
Shares withheld for employee tax obligations						11,978	10,012
Total unrecognized compensation expense related to stock options	2,600,000		2,600,000
Total unrecognized compensation expenses related to restricted stock awards	$ 4,800,000		$ 4,800,000
Restricted stock awards grant date fair value per share					$ 10.85				$ 6.89					$ 11.58	$ 6.05

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Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Interest Rate Swap Outstanding

The following table summarizes the terms of the interest rate swap outstanding at June 30, 2014 (in thousands).

Type	Effective Date	Maturity Date	Fixed Rate		Floating Rate	Notional Amount
Interest rate swap	April 29, 2014	February 28, 2017	0.75	%	1 Month LIBOR	$	39,300

Schedule of Fair Value of Derivative Financial Instruments in Consolidated Balance Sheets

The table below presents the fair value of the Company’s derivative financial instrument as well as its classification on the consolidated balance sheets as of June 30, 2014 and December 31, 2013 (in thousands).

		Asset Derivative Instruments			Liability Derivative Instruments
		June 30, 2014			June 30, 2014
	Classification	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate swap	Current	Prepaid expenses and other current assets	$	—	Accrued expenses and other current liabilities	$	—
Interest rate swap	Non-current	Intangible and other assets, net	28		Other liabilities	—
Total			$	28		$	—

		Asset Derivative Instruments			Liability Derivative Instruments
		December 31, 2013			December 31, 2013
	Classification	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate swap	Current	Prepaid expenses and other current assets	$	—	Accrued expenses and other current liabilities	$	—
Interest rate swap	Non-current	Intangible and other assets, net	220		Other liabilities	—
Total			$	220		$	—

Schedule of Derivative Financial Instruments, Effect on Consolidated Statements of Comprehensive Income

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of comprehensive income (in thousands).

	Three Months Ended   June 30,					Six Months Ended   June 30,
	2014			2013		2014			2013
Amount of income (loss) recognized in other comprehensive income (loss) for the interest rate swap, net of tax (effective portion)	$	(118	)	$	302	$	(139	)	$	302
Amount of loss reclassified from accumulated other comprehensive loss into interest expense for the interest rate swap, net of tax (effective portion)	(24		)	—		(24		)	—
Amount of loss reclassified from accumulated other comprehensive loss into interest income and other income (expense) for the interest rate swap, net of tax (ineffective portion)	—			—		—			—

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2014

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Summary of Accumulated Other Comprehensive Loss in Equity

Accumulated other comprehensive loss in the equity section of the consolidated balance sheets includes the following (in thousands):

	June 30, 2014			December 31, 2013
Defined benefit pension items	$	(21,949	)	$	(21,524	)
Less: deferred tax benefit	4,665			4,574
Net of tax	(17,284		)	(16,950		)
Interest rate swap	28			220
Less: deferred tax liability	(11		)	(88		)
Net of tax	17			132
Foreign currency translation adjustment	2,873			1,206
Total accumulated other comprehensive loss	$	(14,394	)	$	(15,612	)

Changes in Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component in the consolidated statements of comprehensive income include the following for the three and six months ended June 30, 2014 and 2013 (in thousands):

	Defined Benefit Pension Items			Interest Rate Swap			Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Loss
Three Months Ended June 30, 2014
Beginning balance, net	$	(16,965	)	$	111		$	1,826		$	(15,028	)
Other comprehensive income (loss) before reclassifications1	(419		)	(118		)	1,047			510
Amounts reclassified from accumulated other comprehensive loss2 3	100			24			—			124
Net other comprehensive income (loss)	(319		)	(94		)	1,047			634
Ending balance, net	$	(17,284	)	$	17		$	2,873		$	(14,394	)
Three Months Ended June 30, 2013
Beginning balance, net	$	(15,541	)	$	—		$	(31	)	$	(15,572	)
Other comprehensive income (loss) before reclassifications1	(3		)	302			(1,273		)	(974		)
Amounts reclassified from accumulated other comprehensive loss23	232			—			—			232
Net other comprehensive income (loss)	229			302			(1,273		)	(742		)
Ending balance, net	$	(15,312	)	$	302		$	(1,304	)	$	(16,314	)
Six months ended June 30, 2014
Beginning balance, net	$	(16,950	)	$	132		$	1,206		$	(15,612	)
Other comprehensive loss before reclassifications1	(533		)	(139		)	1,667			995
Amounts reclassified from accumulated other comprehensive loss23	199			24			—			223
Net other comprehensive income (loss)	(334		)	(115		)	1,667			1,218
Ending balance, net	$	(17,284	)	$	17		$	2,873		$	(14,394	)
Six months ended June 30, 2013
Beginning balance, net	$	(16,853	)	$	—		$	2,239		$	(14,614	)
Other comprehensive income (loss) before reclassifications1	1,072			302			(3,543		)	(2,169		)
Amounts reclassified from accumulated other comprehensive loss23	469			—			—			469
Net other comprehensive income (loss)	1,541			302			(3,543		)	(1,700		)
Ending balance, net	$	(15,312	)	$	302		$	(1,304	)	$	(16,314	)

____________________________

1 Net of tax expense (benefit) for the defined benefit pension plans of $(0.1) million for each of the three and six months ended June 30, 2014 and $0.3 million for six months ended June 30, 2013. Tax expense for the defined benefit pension plans was insignificant for the three months ended June 30, 2013. Net of tax expense (benefit) for the interest rate swap of $(0.1) million for each of the three and six months ended June 30, 2014 and $0.2 million for each of the three and six months ended June 30, 2013.

2 Net of tax expense for the defined benefit pension plans, which was insignificant for the three months ended June 30, 2014, $0.1 million for the six months ended June 30, 2014 and $0.1 million and $0.2 million for the three and six months ended June 30, 2013, respectively. Net of tax expense for the interest rate swap, which was insignificant for the three and six months ended June 30, 2014.

3 Reclassification adjustments out of accumulated other comprehensive loss for amortization of actuarial losses and prior service credits are included in the computation of net periodic pension cost. See Note 7 for additional details. Reclassification adjustments out of accumulated other comprehensive loss for the interest rate swap are included in interest expense. See Note 10 for additional details.

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Business Segment Data and Geographical Information - Summary of the Financial Information of Segment Reported (Parenthetical) (Details) (USD $)	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 146,242,000		$ 108,376,000		$ 271,183,000		$ 197,414,000
Operating Segment
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	146,242,000	[1]	108,376,000	[1]	271,183,000	[1]	197,414,000	[1]
Operating Segment | Technical Services
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	106,289,000	[1]	103,914,000	[1]	194,039,000	[1]	187,707,000	[1]
Operating Segment | Engineering & Project Solutions
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	39,953,000	[1]	4,462,000	[1]	77,144,000	[1]	9,707,000	[1]
Direct integration-related expenses	0				200,000
Reportable Geographical Components | United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	102,300,000	[1]	72,200,000	[1]	191,000,000	[1]	131,600,000	[1]
Reportable Geographical Components | United Kingdom
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 19,200,000	[1]	$ 14,700,000	[1]	$ 36,900,000	[1]	$ 26,900,000	[1]

[1] Included in the Technical Services and Engineering & Project Solutions segments are total United States revenues of $102.3 million and $191.0 million for the three and six months ended June 30, 2014, respectively, and $72.2 million and $131.6 million for the three and six months ended June 30, 2013, respectively . Included in the Technical Services segment above are United Kingdom revenues of $19.2 million and $36.9 million for the three and six months ended June 30, 2014, respectively, and $14.7 million and $26.9 million for the three and six months ended June 30, 2013, respectively.

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Accumulated Other Comprehensive Loss - Summary of Accumulated Other Comprehensive Loss in Equity (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Net actuarial loss and prior service credit	$ (21,949)		$ (21,524)
Less: deferred tax benefit	4,665		4,574
Net of tax	(17,284)		(16,950)
Interest rate swap	28		220
Less: deferred tax liability	(11)		(88)
Net of tax	17		132
Foreign currency translation adjustment	2,873		1,206
Total accumulated other comprehensive loss	$ (14,394)	$ (15,028)	$ (15,612)	$ (16,314)	$ (15,572)	$ (14,614)

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Summary of Reconciliation of Change in Unrecognized Tax Benefits

A reconciliation of the change in the unrecognized tax benefits for the six months ended June 30, 2014 is as follows (in thousands):

Balance at December 31, 2013	$	1,139
Additions based on tax positions	105
Reductions due to lapses of statutes of limitations	—
Balance at June 30, 2014	$	1,244

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Business Segment Data and Geographical Information (Tables)

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Summary of the Financial Information of Segment Reported

The following is a summary of the financial information of the Company’s reportable segments as of and for the three and six months ended June 30, 2014 and 2013 reconciled to the amounts reported in the consolidated financial statements (in thousands):

	Technical Services		Engineering & Project Solutions			Corporate			Reconciling Items			Total
Three months ended June 30, 2014:
Revenues from external customers1	$	106,289	$	39,953		$	—		$	—		$	146,242
Intersegment revenues2	—		46			—			(46		)	—
Operating income (loss)34	$	14,284	$	(590	)	$	(5,390	)	$	—		$	8,304
Three months ended June 30, 2013:
Revenues from external customers1	$	103,914	$	4,462		$	—		$	—		$	108,376
Intersegment revenues2	—		—			—			—			—
Operating income (loss)34	$	17,693	$	(9	)	$	(6,060	)	$	—		$	11,624
Six months ended June 30, 2014
Revenues from external customers1	$	194,039	$	77,144		$	—		$	—		$	271,183
Intersegment revenues2	—		117			—			(117		)	—
Operating income (loss)34	$	21,949	$	(1,347	)	$	(9,780	)	$	—		$	10,822
Six months ended June 30, 2013:
Revenues from external customers1	$	187,707	$	9,707		$	—		$	—		$	197,414
Intersegment revenues2	—		—			—			—			—
Operating income (loss)34	$	26,336	$	34		$	(10,668	)	$	—		$	15,702

____________________________

1 Included in the Technical Services and Engineering & Project Solutions segments are total United States revenues of $102.3 million and $191.0 million for the three and six months ended June 30, 2014, respectively, and $72.2 million and $131.6 million for the three and six months ended June 30, 2013, respectively . Included in the Technical Services segment above are United Kingdom revenues of $19.2 million and $36.9 million for the three and six months ended June 30, 2014, respectively, and $14.7 million and $26.9 million for the three and six months ended June 30, 2013, respectively.

2 Reconciling items represent eliminations or reversals of transactions between reportable segments.

3 Corporate represents certain corporate overhead costs, including executive management, strategic planning, treasury, legal, human resources, information technology, accounting and risk management, which are not allocated to reportable segments.

4 The Engineering & Project Solutions segment includes nil and approximately $0.2 million of direct costs associated with the integration of the Furmanite Technical Solutions division for the three and six months ended June 30, 2014, respectively.

Schedule of Long-Lived Assets Based on Physical Location

The following geographical area information includes total long-lived assets (which consist of all non-current assets, other than goodwill, indefinite-lived intangible assets and deferred tax assets) based on physical location (in thousands):

	June 30, 2014		December 31, 2013
Total long-lived assets
United States	$	48,855	$	51,646
United Kingdom	5,719		5,172
All other	8,929		9,228
Total long-lived assets	$	63,503	$	66,046

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General and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

General and Summary of Significant Accounting Policies

General and Summary of Significant Accounting Policies

General

The consolidated interim financial statements include the accounts of Furmanite Corporation (the “Parent Company”) and its subsidiaries (collectively, the “Company” or “Furmanite”). All intercompany transactions and balances have been eliminated in consolidation. These unaudited consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnote disclosures required by U.S. GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting only of normal recurring adjustments) and accruals, necessary for a fair presentation of the financial statements, have been made. Interim results of operations are not necessarily indicative of the results that may be expected for the full year.

Revenue Recognition

Revenues are recorded in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, Revenue Recognition, when realized or realizable, and earned.

Revenues are recognized using the completed-contract method, when persuasive evidence of an arrangement exists, services to customers have been rendered or products have been delivered, the selling price is fixed or determinable and collectability is reasonably assured. Revenues are recorded net of sales tax. Substantially all projects are short term in nature; however, the Company occasionally enters into contracts that are longer in duration that represent multiple element arrangements, which include a combination of services and products. The Company separates deliverables into units of accounting based on whether the deliverables have standalone value to the customer. The arrangement consideration is allocated to the separate units of accounting based on each unit’s relative selling price generally determined using vendor specific objective evidence. Revenues are recognized for the separate units of accounting when services to customers have been rendered or products have been delivered and risk of ownership has passed to the customer. The Company provides limited warranties to customers, depending upon the service performed. Warranty claim costs were not material during either of the three or six months ended June 30, 2014 or 2013.

Inventories

Inventories are valued at the lower of cost or market. Cost is determined using the weighted average cost method. Inventory quantities on hand are reviewed regularly based on related service levels and functionality, and carrying cost is reduced to net realizable value for inventories in which their cost exceeds their utility, due to physical deterioration, obsolescence, changes in price levels or other causes. The cost of inventories consumed or products sold is included in operating costs.

Operating Costs

Operating costs include direct and indirect labor along with related fringe benefits, materials, freight, travel, engineering, vehicles, equipment rental and restructuring charges, and are expensed when the associated revenue is recognized or as incurred. Direct costs related to projects for which the earnings process has not been completed and therefore not qualifying for revenue recognition are recorded as work-in-process inventory.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include payroll and related fringe benefits, marketing, travel, rent, information technology, insurance, professional fees and restructuring charges, and are expensed as incurred.

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes, which requires an asset and liability approach for the financial accounting and reporting of income taxes. Under this method, deferred income taxes are recognized for the expected future tax consequences of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. These balances are measured using the enacted tax rates expected to apply in the year(s) in which these temporary differences are expected to reverse. The effect on deferred income taxes of a change in tax rates is recognized as an income tax expense or benefit in the period when the change is enacted.

Based on consideration of all available evidence regarding their utilization, net deferred tax assets are recorded to the extent that it is more likely than not that they will be realized. Where, based on the weight of all available evidence, it is more likely than not that some amount of a deferred tax asset will not be realized, a valuation allowance is established for that amount that, in management’s judgment, is sufficient to reduce the deferred tax asset to an amount that is more likely than not to be realized. In concluding whether a valuation allowance on domestic federal, state or foreign income taxes is required, the Company considers all relevant factors, including the history of operating income and losses, future taxable income and the nature of the deferred tax assets.

Income tax expense differs from the expected tax at statutory rates due primarily to changes in valuation allowances for certain deferred tax assets and different tax rates in the various foreign jurisdictions. Additionally, the aggregate tax expense is not always consistent when comparing periods due to the changing mix of income (loss) before income taxes within the countries in which the Company operates. Interim period income tax expense or benefit is computed at the estimated annual effective income tax rate, unless adjusted for specific discrete items as required.

The tax benefit from uncertain tax positions is recognized only if it is more likely than not that the tax position will be sustained on examination by the applicable taxing authorities, based on the technical merits of the position. The tax benefit recognized is based on the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with the taxing authority. Uncertain tax positions in certain foreign jurisdictions would not impact the effective foreign tax rate where unrecognized non-current tax benefits are offset by fully reserved net operating loss carryforwards. The Company recognizes interest expense on underpayments of income taxes and accrued penalties related to unrecognized non-current tax benefits as part of the income tax provision.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers(Topic 606), which provides for a single five-step model to be applied in determining the amount and timing of the recognition of revenue related to contracts with customers. The new guidance also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the guidance. There is no option for early adoption. The provisions of the new guidance are effective for annual reporting periods beginning after December 15, 2016, including interim periods within those reporting periods. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

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Fair Value of Financial Instruments and Credit Risk (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Summary of Carrying Amounts and Estimated Fair Values of Financial Instruments

The following table presents the Company’s fair value hierarchy for its financial instruments that required disclosure of their fair values on a recurring basis as of June 30, 2014 and December 31, 2013 (in thousands).

	Fair Value		Level 1		Level 2		Level 3
June 30, 2014
Interest rate swap asset	$	28	$	—	$	28	$	—
December 31, 2013
Interest rate swap asset	$	220	$	—	$	220	$	—

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Long-Term Debt - Additional Information (Details) (USD $)	6 Months Ended						6 Months Ended		1 Months Ended	6 Months Ended	1 Months Ended				12 Months Ended		1 Months Ended		3 Months Ended	6 Months Ended								1 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Notes payable	Dec. 31, 2013 Notes payable	Jun. 30, 2014 Other debt	Dec. 31, 2013 Other debt	Jun. 30, 2014 Minimum	Jun. 30, 2014 Maximum	Aug. 30, 2013 ENGlobal Engineering & Construction Notes payable	Jun. 30, 2014 ENGlobal Engineering & Construction Notes payable Installment	Feb. 28, 2013 February 2013 Asset Purchase Notes payable	Jan. 31, 2013 January 2013 Asset Purchase Notes payable Installment	Jun. 30, 2014 January 2013 Asset Purchase Notes payable	Dec. 31, 2013 2012 Asset Purchase Notes payable	Dec. 31, 2012 2012 Asset Purchase Other debt	Jun. 30, 2014 2012 Asset Purchase Other debt	Feb. 23, 2011 Self Leveling Machines Notes payable	Jun. 30, 2014 Self Leveling Machines Notes payable	Jun. 30, 2014 Borrowings under the revolving credit facility (the “Credit Agreement”)	Jun. 30, 2014 Borrowings under the revolving credit facility (the “Credit Agreement”)	Mar. 05, 2012 Borrowings under the revolving credit facility (the “Credit Agreement”)	Dec. 31, 2013 Borrowings under the revolving credit facility (the “Credit Agreement”)	Aug. 26, 2013 Borrowings under the revolving credit facility (the “Credit Agreement”)	Jun. 30, 2014 Borrowings under the revolving credit facility (the “Credit Agreement”) Foreign Subsidiary	Jun. 30, 2014 Letter of Credit	Jun. 30, 2014 Swing Line Loans	Aug. 26, 2013 Swing Line Loans	Feb. 23, 2011 U.S. Dollars Self Leveling Machines Notes payable	Feb. 23, 2011 Australian Dollars Self Leveling Machines Notes payable
Credit Facilities [Line Items]
Credit Agreement, issuance date																					Mar. 05, 2012
Debt maturity date											Mar. 01, 2014						Feb. 23, 2013			Feb. 28, 2017
Credit facility amendment date																			Aug. 27, 2013
Borrowings outstanding for which interest rate hedging is in place																			$ 39,300,000	$ 39,300,000
Revolving credit facility, maximum borrowing capacity																			100,000,000	100,000,000			75,000,000	50,000,000
Amount available for issuance of letters of credit																									20,000,000
Amount available for swing line loans to FWI																										10,000,000	7,500,000
Amount outstanding under credit agreements																			59,300,000	59,300,000		59,300,000			2,000,000
Interest rate basis																				prime rate, federal funds rate or Eurocurrency rate
Credit Agreement, variable interest rates	1.90%
Fixed Rate	0.75%
Credit Agreement, commitment fee	0.25%						0.25%	0.30%
FWI and certain of subsidiaries assets guaranteed under guarantee and collateral agreement	212,100,000
Credit Agreement, financial covenants, Leverage ratio								2.75
Credit Agreement, financial covenants, fixed charge coverage ratio							1.25
Credit Agreement, minimum asset coverage ratio							1.50
Credit Agreement, unused borrowing capacity	38,700,000
Notes payable issued for acquisition									3,000,000		900,000	1,900,000			1,400,000		5,100,000											2,900,000	2,200,000
Interest rate on note payable									4.00%	4.00%			5.00%					2.50%
Number of installments on promissory note										4		4
Installment payment amount									800,000			500,000			100,000
Long term debt outstanding	$ 64,396,000	$ 65,307,000	$ 4,896,000	$ 5,801,000	$ 183,000	$ 183,000								$ 200,000		$ 200,000

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Commitments and Contingencies (Details) (Uninsured Risk, USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Uninsured Risk
Loss Contingencies [Line Items]
Undiscounted reserve for environmental liabilities	$ 0.9	$ 0.9
Reserve for uninsured liability or damage	$ 1.9	$ 1.9

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 37,777	$ 33,240
Accounts receivable, trade (net of allowance for doubtful accounts of $969 and $1,014 as of June 30, 2014 and December 31, 2013, respectively)	116,727	106,853
Inventories:
Raw materials and supplies	25,482	25,202
Work-in-process	11,989	10,010
Finished goods	169	231
Deferred tax assets, current	8,807	8,665
Prepaid expenses and other current assets	10,708	12,494
Total current assets	211,659	196,695
Property and equipment	114,361	110,221
Less: accumulated depreciation and amortization	(60,026)	(54,874)
Property and equipment, net	54,335	55,347
Goodwill	15,524	15,524
Deferred tax assets, non-current	4,221	4,321
Intangible and other assets, net	11,749	13,280
Total assets	297,488	285,167
Current liabilities:
Current portion of long-term debt	1,668	2,111
Accounts payable	23,187	20,895
Accrued expenses and other current liabilities	42,210	38,312
Income taxes payable	1,428	1,205
Total current liabilities	68,493	62,523
Long-term debt, non-current	62,728	63,196
Net pension liability	17,395	17,905
Other liabilities	7,931	8,047
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock, no par value; 60,000,000 shares authorized; 41,636,706 and 41,557,238 shares issued as of June 30, 2014 and December 31, 2013, respectively	4,821	4,811
Additional paid-in capital	136,575	135,881
Retained earnings	31,952	26,429
Accumulated other comprehensive loss	(14,394)	(15,612)
Treasury stock, at cost (4,008,963 shares)	(18,013)	(18,013)
Total stockholders’ equity	140,941	133,496
Total liabilities and stockholders’ equity	297,488	285,167
Series B Preferred Stock
Stockholders’ equity:
Series B Preferred Stock, unlimited shares authorized, none issued and outstanding	$ 0	$ 0

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Accumulated Other Comprehensive Loss - Changes in Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance, net	$ (15,028)		$ (15,572)		$ (15,612)		$ (14,614)
Other comprehensive income (loss) before reclassifications	510	[1]	(974)	[1]	995	[1]	(2,169)	[1]
Amounts reclassified from accumulated other comprehensive loss	124	[2],[3]	232	[2],[3]	223	[2],[3]	469	[2],[3]
Net other comprehensive income (loss)	634		(742)		1,218		(1,700)
Ending balance, net	(14,394)		(16,314)		(14,394)		(16,314)
Defined Benefit Pension Items
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance, net	(16,965)		(15,541)		(16,950)		(16,853)
Other comprehensive income (loss) before reclassifications	(419)	[1]	(3)	[1]	(533)	[1]	1,072	[1]
Amounts reclassified from accumulated other comprehensive loss	100	[2],[3]	232	[2],[3]	199	[2],[3]	469	[2],[3]
Net other comprehensive income (loss)	(319)		229		(334)		1,541
Ending balance, net	(17,284)		(15,312)		(17,284)		(15,312)
Interest Rate Swap
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance, net	111		0		132		0
Other comprehensive income (loss) before reclassifications	(118)	[1]	302	[1]	(139)	[1]	302	[1]
Amounts reclassified from accumulated other comprehensive loss	24	[2],[3]	0	[2],[3]	24	[2],[3]	0	[2],[3]
Net other comprehensive income (loss)	(94)		302		(115)		302
Ending balance, net	17		302		17		302
Foreign Currency Translation Adjustment
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance, net	1,826		(31)		1,206		2,239
Other comprehensive income (loss) before reclassifications	1,047	[1]	(1,273)	[1]	1,667	[1]	(3,543)	[1]
Amounts reclassified from accumulated other comprehensive loss	0	[2],[3]	0	[2],[3]	0	[2],[3]	0	[2],[3]
Net other comprehensive income (loss)	1,047		(1,273)		1,667		(3,543)
Ending balance, net	$ 2,873		$ (1,304)		$ 2,873		$ (1,304)

[1] Net of tax expense (benefit) for the defined benefit pension plans of $(0.1) million for each of the three and six months ended June 30, 2014 and $0.3 million for six months ended June 30, 2013. Tax expense for the defined benefit pension plans was insignificant for the three months ended June 30, 2013. Net of tax expense (benefit) for the interest rate swap of $(0.1) million for each of the three and six months ended June 30, 2014 and $0.2 million for each of the three and six months ended June 30, 2013.

[2] Reclassification adjustments out of accumulated other comprehensive loss for amortization of actuarial losses and prior service credits are included in the computation of net periodic pension cost. See Note 7 for additional details. Reclassification adjustments out of accumulated other comprehensive loss for the interest rate swap are included in interest expense. See Note 10 for additional details.

[3] Net of tax expense for the defined benefit pension plans, which was insignificant for the three months ended June 30, 2014, $0.1 million for the six months ended June 30, 2014 and $0.1 million and $0.2 million for the three and six months ended June 30, 2013, respectively. Net of tax expense for the interest rate swap, which was insignificant for the three and six months ended June 30, 2014.

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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY (USD $) In Thousands, except Share data	Total	Common Stock	Treasury Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Beginning balance at Dec. 31, 2012	$ 119,079	$ 4,783	$ (18,013)	$ 134,521	$ 12,402	$ (14,614)
Beginning balance, shares at Dec. 31, 2012		41,329,538	4,008,963
Net income	14,027	0	0	0	14,027	0
Stock-based compensation and stock option exercises and vesting of restricted stock	1,388	28	0	1,360	0	0
Stock-based compensation and stock option exercises, vesting of restricted stock, shares		227,700	0
Change in pension net actuarial loss and prior service credit, net of tax	(97)	0	0	0	0	(97)
Unrealized gain (loss) on interest rate swap, net of tax	132	0	0	0	0	132
Foreign currency translation adjustment	(1,033)	0	0	0	0	(1,033)
Ending balance at Dec. 31, 2013	133,496	4,811	(18,013)	135,881	26,429	(15,612)
Ending balance, shares at Dec. 31, 2013		41,557,238	4,008,963
Net income	5,523	0	0	0	5,523	0
Stock-based compensation and stock option exercises and vesting of restricted stock	704	10	0	694	0	0
Stock-based compensation and stock option exercises, vesting of restricted stock, shares		79,468	0
Change in pension net actuarial loss and prior service credit, net of tax	(334)	0	0	0	0	(334)
Unrealized gain (loss) on interest rate swap, net of tax	(115)	0	0	0	0	(115)
Foreign currency translation adjustment	1,667	0	0	0	0	1,667
Ending balance at Jun. 30, 2014	$ 140,941	$ 4,821	$ (18,013)	$ 136,575	$ 31,952	$ (14,394)
Ending balance, shares at Jun. 30, 2014		41,636,706	4,008,963

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Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Schedule Of Earnings Per Share Basic And Diluted And Exclusion Of Anti Dilutive Securities [Line Items]
Net income	$ 4,507	$ 6,761	$ 5,523	$ 9,325	$ 14,027
Basic weighted-average common shares outstanding	37,617	37,402	37,593	37,372
Dilutive effect of common stock equivalents	219	150	239	149
Diluted weighted-average common shares outstanding	37,836	37,552	37,832	37,521
Earnings per share:
Basic (in dollars per share)	$ 0.12	$ 0.18	$ 0.15	$ 0.25
Diluted (in dollars per share)	$ 0.12	$ 0.18	$ 0.15	$ 0.25
Stock Options
Earnings per share:
Stock options and restricted stock units excluded from diluted weighted-average common shares outstanding because their inclusion would have an anti-dilutive effect:	463	1,126	287	1,010

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General and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

General

General

The consolidated interim financial statements include the accounts of Furmanite Corporation (the “Parent Company”) and its subsidiaries (collectively, the “Company” or “Furmanite”). All intercompany transactions and balances have been eliminated in consolidation. These unaudited consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnote disclosures required by U.S. GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting only of normal recurring adjustments) and accruals, necessary for a fair presentation of the financial statements, have been made. Interim results of operations are not necessarily indicative of the results that may be expected for the full year.

Revenue Recognition

Revenue Recognition

Revenues are recorded in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, Revenue Recognition, when realized or realizable, and earned.

Revenues are recognized using the completed-contract method, when persuasive evidence of an arrangement exists, services to customers have been rendered or products have been delivered, the selling price is fixed or determinable and collectability is reasonably assured. Revenues are recorded net of sales tax. Substantially all projects are short term in nature; however, the Company occasionally enters into contracts that are longer in duration that represent multiple element arrangements, which include a combination of services and products. The Company separates deliverables into units of accounting based on whether the deliverables have standalone value to the customer. The arrangement consideration is allocated to the separate units of accounting based on each unit’s relative selling price generally determined using vendor specific objective evidence. Revenues are recognized for the separate units of accounting when services to customers have been rendered or products have been delivered and risk of ownership has passed to the customer. The Company provides limited warranties to customers, depending upon the service performed. Warranty claim costs were not material during either of the three or six months ended June 30, 2014 or 2013.

Inventories

Inventories

Inventories are valued at the lower of cost or market. Cost is determined using the weighted average cost method. Inventory quantities on hand are reviewed regularly based on related service levels and functionality, and carrying cost is reduced to net realizable value for inventories in which their cost exceeds their utility, due to physical deterioration, obsolescence, changes in price levels or other causes. The cost of inventories consumed or products sold is included in operating costs.

Operating Costs

Operating Costs

Operating costs include direct and indirect labor along with related fringe benefits, materials, freight, travel, engineering, vehicles, equipment rental and restructuring charges, and are expensed when the associated revenue is recognized or as incurred. Direct costs related to projects for which the earnings process has not been completed and therefore not qualifying for revenue recognition are recorded as work-in-process inventory.

Selling, General and Administrative Expenses

Selling, General and Administrative Expenses

Selling, general and administrative expenses include payroll and related fringe benefits, marketing, travel, rent, information technology, insurance, professional fees and restructuring charges, and are expensed as incurred.

Income Taxes

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes, which requires an asset and liability approach for the financial accounting and reporting of income taxes. Under this method, deferred income taxes are recognized for the expected future tax consequences of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. These balances are measured using the enacted tax rates expected to apply in the year(s) in which these temporary differences are expected to reverse. The effect on deferred income taxes of a change in tax rates is recognized as an income tax expense or benefit in the period when the change is enacted.

Based on consideration of all available evidence regarding their utilization, net deferred tax assets are recorded to the extent that it is more likely than not that they will be realized. Where, based on the weight of all available evidence, it is more likely than not that some amount of a deferred tax asset will not be realized, a valuation allowance is established for that amount that, in management’s judgment, is sufficient to reduce the deferred tax asset to an amount that is more likely than not to be realized. In concluding whether a valuation allowance on domestic federal, state or foreign income taxes is required, the Company considers all relevant factors, including the history of operating income and losses, future taxable income and the nature of the deferred tax assets.

Income tax expense differs from the expected tax at statutory rates due primarily to changes in valuation allowances for certain deferred tax assets and different tax rates in the various foreign jurisdictions. Additionally, the aggregate tax expense is not always consistent when comparing periods due to the changing mix of income (loss) before income taxes within the countries in which the Company operates. Interim period income tax expense or benefit is computed at the estimated annual effective income tax rate, unless adjusted for specific discrete items as required.

The tax benefit from uncertain tax positions is recognized only if it is more likely than not that the tax position will be sustained on examination by the applicable taxing authorities, based on the technical merits of the position. The tax benefit recognized is based on the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with the taxing authority. Uncertain tax positions in certain foreign jurisdictions would not impact the effective foreign tax rate where unrecognized non-current tax benefits are offset by fully reserved net operating loss carryforwards. The Company recognizes interest expense on underpayments of income taxes and accrued penalties related to unrecognized non-current tax benefits as part of the income tax provision.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers(Topic 606), which provides for a single five-step model to be applied in determining the amount and timing of the recognition of revenue related to contracts with customers. The new guidance also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the guidance. There is no option for early adoption. The provisions of the new guidance are effective for annual reporting periods beginning after December 15, 2016, including interim periods within those reporting periods. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

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Accrued Expenses and Other Current Liabilities - Summary of Accrued Expenses and Other Current Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Payables and Accruals [Abstract]
Compensation and benefits	$ 28,975	$ 26,557
Customer deposits	2,175	1,370
Value added tax payable	1,970	1,622
Estimated potential uninsured liability claims	1,934	1,934
Leases	1,730	1,478
Taxes other than income	1,549	1,621
Professional, audit and legal fees	1,140	1,451
Other employee related expenses	398	373
Interest	276	141
Other	2,063	1,765
Total accrued expenses and other current liabilities	$ 42,210	$ 38,312

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Accrued Expenses and Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2014

Payables and Accruals [Abstract]

Summary of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

	June 30, 2014		December 31, 2013
Compensation and benefits	$	28,975	$	26,557
Customer deposits	2,175		1,370
Value added tax payable	1,970		1,622
Estimated potential uninsured liability claims	1,934		1,934
Leases	1,730		1,478
Taxes other than income	1,549		1,621
Professional, audit and legal fees	1,140		1,451
Other employee related expenses	398		373
Interest	276		141
Other	2,063		1,765
	$	42,210	$	38,312

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Operating activities:
Net income	$ 5,523	$ 9,325
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization	5,977	5,508
Provision for doubtful accounts	3	38
Stock-based compensation expense	886	624
Deferred income taxes	69	4,048
Other, net	(733)	163
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	(9,541)	(16,252)
Inventories	(2,177)	(3,759)
Prepaid expenses and other current assets	2,508	706
Accounts payable	2,518	(593)
Accrued expenses and other current liabilities	4,108	2,531
Income taxes payable	(451)	226
Other, net	136	(65)
Net cash provided by operating activities	8,826	2,500
Investing activities:
Capital expenditures	(3,477)	(6,818)
Acquisition of businesses	0	(905)
Proceeds from sale of assets	3	30
Net cash used in investing activities	(3,474)	(7,693)
Financing activities:
Payments on debt	(912)	(2,227)
Issuance of common stock	32	154
Other	(214)	(61)
Net cash used in financing activities	(1,094)	(2,134)
Effect of exchange rate changes on cash	279	(1,170)
Increase (decrease) in cash and cash equivalents	4,537	(8,497)
Cash and cash equivalents at beginning of period	33,240	33,185
Cash and cash equivalents at end of period	37,777	24,688
Supplemental cash flow information:
Cash paid for interest	693	473
Cash paid for income taxes, net of refunds received	3,465	1,740
Non-cash investing and financing activities:
Issuance of notes payable related to acquisition of businesses	$ 0	$ 2,801

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Allowance for Doubtful Accounts Receivable, Current	$ 969	$ 1,014
Common Stock, Par or Stated Value Per Share	$ 0	$ 0
Common Stock, Shares Authorized	60,000,000	60,000,000
Common Stock, Shares, Issued	41,636,706	41,557,238
Treasury Stock, Shares	4,008,963	4,008,963
Series B Preferred Stock
Preferred Stock, Shares Outstanding	0	0
Preferred Stock, Shares Issued	0	0

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Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

The Company manages economic risk, including interest rate, liquidity and credit risks primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments. The Company does not enter into derivative instruments for speculative purposes.

On April 30, 2013, the Company entered into a forward-dated interest rate swap to hedge interest rate risk with respect to $39.3 million of borrowings under its Credit Agreement. The Company’s objective in using the interest rate derivative is to manage exposure to interest rate movements and add stability to interest expense. Upon inception, the interest rate swap was designated as a cash flow hedge and involves the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying notional amount.

The following table summarizes the terms of the interest rate swap outstanding at June 30, 2014 (in thousands).

Type	Effective Date	Maturity Date	Fixed Rate		Floating Rate	Notional Amount
Interest rate swap	April 29, 2014	February 28, 2017	0.75	%	1 Month LIBOR	$	39,300

The table below presents the fair value of the Company’s derivative financial instrument as well as its classification on the consolidated balance sheets as of June 30, 2014 and December 31, 2013 (in thousands).

		Asset Derivative Instruments			Liability Derivative Instruments
		June 30, 2014			June 30, 2014
	Classification	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate swap	Current	Prepaid expenses and other current assets	$	—	Accrued expenses and other current liabilities	$	—
Interest rate swap	Non-current	Intangible and other assets, net	28		Other liabilities	—
Total			$	28		$	—

		Asset Derivative Instruments			Liability Derivative Instruments
		December 31, 2013			December 31, 2013
	Classification	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate swap	Current	Prepaid expenses and other current assets	$	—	Accrued expenses and other current liabilities	$	—
Interest rate swap	Non-current	Intangible and other assets, net	220		Other liabilities	—
Total			$	220		$	—

See Note 14 for additional information on the fair value of the Company’s interest rate swap.

The Company has concluded that the hedging relationship for the interest rate swap is highly effective. The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivative is recognized directly in earnings and included in interest income and other income (expense) on the consolidated statements of income.

Amounts reported in other comprehensive income related to derivatives are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. At June 30, 2014, the Company estimates that approximately $0.2 million will be reclassified from accumulated other comprehensive loss as an increase to interest expense over the next twelve months.

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of comprehensive income (in thousands).

	Three Months Ended   June 30,					Six Months Ended   June 30,
	2014			2013		2014			2013
Amount of income (loss) recognized in other comprehensive income (loss) for the interest rate swap, net of tax (effective portion)	$	(118	)	$	302	$	(139	)	$	302
Amount of loss reclassified from accumulated other comprehensive loss into interest expense for the interest rate swap, net of tax (effective portion)	(24		)	—		(24		)	—
Amount of loss reclassified from accumulated other comprehensive loss into interest income and other income (expense) for the interest rate swap, net of tax (ineffective portion)	—			—		—			—

Derivative financial agreements expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. The Company believes it minimizes the credit risk by transacting with major credit-worthy financial institutions.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 29, 2014
Document Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Trading Symbol	FRM
Entity Registrant Name	FURMANITE CORP
Entity Central Index Key	0000054441
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		37,637,743

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Income Taxes

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the six months ended June 30, 2014 and 2013, the Company recorded income tax expense of $3.8 million and $6.0 million, respectively. For the three months ended June 30, 2014 and 2013, the Company recorded income tax expense of $2.9 million and $4.4 million, respectively. For these periods, income tax expense reflects the Company’s estimated annual effective income tax rate considering the statutory rates in the countries in which the Company operates, adjusted for excludable items, and the effects of valuation allowance changes for certain foreign entities.

Income tax expense as a percentage of income before income taxes was 40.8% and 39.0% for the six months ended June 30, 2014 and 2013, respectively, and 39.3% and 39.4% for the three months ended June 30, 2014 and 2013, respectively. The difference in income tax rates between periods is primarily attributable to changes in the mix of income before income taxes between countries whose income taxes are offset by a full valuation allowance and those that are not, and differing statutory tax rates in the countries in which the Company incurs tax liabilities.

Unrecognized Tax Benefits

A reconciliation of the change in the unrecognized tax benefits for the six months ended June 30, 2014 is as follows (in thousands):

Balance at December 31, 2013	$	1,139
Additions based on tax positions	105
Reductions due to lapses of statutes of limitations	—
Balance at June 30, 2014	$	1,244

Unrecognized tax benefits at June 30, 2014 and December 31, 2013 of $1.2 million and $1.1 million, respectively, for uncertain tax positions, primarily related to transfer pricing, are included in other liabilities on the consolidated balance sheets and would impact the effective tax rate for certain foreign jurisdictions if recognized.

The Company incurred no significant interest or penalties for the three or six months ended June 30, 2014 or 2013 related to underpayments of income taxes or uncertain tax positions.

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CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Statement [Abstract]
Revenues	$ 146,242	$ 108,376	$ 271,183	$ 197,414
Costs and expenses:
Operating costs (exclusive of depreciation and amortization)	109,172	71,697	203,874	134,428
Depreciation and amortization expense	2,988	2,679	5,977	5,508
Selling, general and administrative expense	25,778	22,376	50,510	41,776
Total costs and expenses	137,938	96,752	260,361	181,712
Operating income	8,304	11,624	10,822	15,702
Interest income and other income (expense), net	(439)	(181)	(604)	148
Interest expense	(445)	(278)	(894)	(556)
Income before income taxes	7,420	11,165	9,324	15,294
Income tax expense	(2,913)	(4,404)	(3,801)	(5,969)
Net income	$ 4,507	$ 6,761	$ 5,523	$ 9,325
Earnings per common share:
Basic (in dollars per share)	$ 0.12	$ 0.18	$ 0.15	$ 0.25
Diluted (in dollars per share)	$ 0.12	$ 0.18	$ 0.15	$ 0.25
Weighted-average number of common and common equivalent shares used in computing earnings per common share:
Basic (in shares)	37,617	37,402	37,593	37,372
Diluted (in shares)	37,836	37,552	37,832	37,521

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Restructuring

6 Months Ended

Jun. 30, 2014

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

The Company committed to certain cost reduction initiatives during 2010 and 2012, including planned workforce reductions and restructuring of certain functions. The Company took these specific actions in order to more strategically align the Company’s operating, selling, general and administrative costs relative to revenues.

2010 Cost Reduction Initiative

The Company committed to a cost reduction initiative in 2010 (the “2010 Cost Reduction Initiative”), primarily related to the restructuring of certain functions within the Company’s EMEA operations (which include operations in Europe, the Middle East and Africa) in order to improve the operational and administrative efficiency of its EMEA operations. The Company had substantially completed the 2010 Cost Reduction Initiative at the end of 2012, with total costs incurred since its inception of approximately $3.9 million. As of June 30, 2014, future cash payments of approximately $0.4 million are expected in connection with this initiative, all of which are expected to be paid in 2014. The Company incurred a reduction in restructuring costs of $0.1 million during the three and six months ended June 30, 2014 related to this initiative. There were no restructuring costs incurred during the three or six months ended June 30, 2013 related to this initiative.

2012 Cost Reduction Initiative

In 2012, the Company committed to another cost reduction initiative (the “2012 Cost Reduction Initiative”) related to further restructuring of its European operations within EMEA. This restructuring initiative included additional workforce reductions throughout the Company’s operating, selling, general and administrative functions. The Company has taken these specific actions in order to further reduce administrative and overhead expenses and streamline its European operations’ structure for improved operational efficiencies in the wake of the continued challenging economic conditions in the region. The Company had substantially completed the 2012 Cost Reduction Initiative at the end of 2012, with total restructuring costs incurred since inception of approximately $3.3 million, which primarily related to one-time termination benefits. Future cash payments in connection with this initiative are expected to be insignificant. There were no restructuring costs incurred for either the three or six months ended June 30, 2014 or 2013 related to this initiative.

Estimated and actual expenses including severance, lease cancellations, and other restructuring costs, in connection with these initiatives, have been recognized in accordance with FASB ASC 420-10, Exit or Disposal Cost Obligations, and FASB ASC 712-10, Nonretirement Postemployment Benefits.

The activity related to reserves associated with the remaining cost reduction initiatives for the six months ended June 30, 2014, is as follows (in thousands):

	Reserve at December 31, 2013		Charges (Adjustments)			Cash (payments) refunds		Foreign  currency adjustments		Reserve at June 30, 2014
2010 Cost Reduction Initiative
Severance and benefit costs	$	330	$	(55	)	$	53	$	3	$	331
Lease termination costs	24		—			—		1		25
Other restructuring costs	1		—			—		—		1
2012 Cost Reduction Initiative
Severance and benefit costs	2		—			—		—		2
Lease termination costs	34		—			—		—		34
Other restructuring costs	—		—			—		—		—
Total	$	391	$	(55	)	$	53	$	4	$	393

Total workforce reductions related to the 2010 and 2012 Cost Reduction Initiatives included terminations of 138 employees, all of which are related to the EMEA region of the Company’s Technical Services segment.

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Accrued Expenses and Other Current Liabilities

6 Months Ended

Jun. 30, 2014

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

	June 30, 2014		December 31, 2013
Compensation and benefits	$	28,975	$	26,557
Customer deposits	2,175		1,370
Value added tax payable	1,970		1,622
Estimated potential uninsured liability claims	1,934		1,934
Leases	1,730		1,478
Taxes other than income	1,549		1,621
Professional, audit and legal fees	1,140		1,451
Other employee related expenses	398		373
Interest	276		141
Other	2,063		1,765
	$	42,210	$	38,312

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Summary of Basic and Diluted Weighted-Average Common Shares Outstanding and Earnings (Loss) Per Share

Basic and diluted weighted-average common shares outstanding and earnings per share include the following (in thousands, except per share data):

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2014		2013		2014		2013
Net income	$	4,507	$	6,761	$	5,523	$	9,325
Basic weighted-average common shares outstanding	37,617		37,402		37,593		37,372
Dilutive effect of common stock equivalents	219		150		239		149
Diluted weighted-average common shares outstanding	37,836		37,552		37,832		37,521
Earnings per share:
Basic	$	0.12	$	0.18	$	0.15	$	0.25
Dilutive	$	0.12	$	0.18	$	0.15	$	0.25
Stock options and restricted stock units excluded from diluted weighted-average common shares outstanding because their inclusion would have an anti-dilutive effect:	463		1,126		287		1,010

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The operations of the Company are subject to federal, state and local laws and regulations in the U.S. and various foreign jurisdictions relating to protection of the environment. Although the Company believes its operations are currently in compliance with applicable environmental regulations, there can be no assurance that costs and liabilities will not be incurred by the Company. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and enforcement policies thereunder, and claims for damages to property or persons resulting from operations of the Company, could result in costs and liabilities to the Company. The Company has recorded, in other liabilities, an undiscounted accrual for environmental liabilities related to the remediation of site contamination for properties in the U.S. in the amount of $0.9 million as of both June 30, 2014 and December 31, 2013. While there is a reasonable possibility due to the inherent nature of environmental liabilities that a loss exceeding amounts already recognized could occur, the Company does not believe such amounts would be material to its financial statements.

Furmanite America, a subsidiary of the Company, is involved in disputes with a customer, INEOS USA LLC, which claims that the subsidiary failed to provide it with satisfactory services at the customer’s facilities. On April 17, 2009, the customer initiated legal action against the subsidiary in the Common Pleas Court of Allen County, Ohio (the “Court”), alleging that the subsidiary and one of its former employees, who performed data services at one of the customer’s facilities, breached its contract with the customer and failed to provide the customer with adequate and timely information to support the subsidiary’s work at the customer’s facility. In March 2014, the customer’s claims against the former employee were dismissed and the Court granted partial summary judgment in favor of Furmanite America. The customer’s complaint seeks damages in an amount that the subsidiary believes represents the total proposed civil penalty, plus the cost of unspecified supplemental environmental projects requested by the regulatory agency to reduce air emissions at the customer’s facility, and also seeks unspecified punitive damages.

While the Company cannot make an assessment of the eventual outcome of all matters or determine the extent, if any, of any potential uninsured liability or damage, accruals of $1.9 million, which include the Furmanite America litigation, were recorded in accrued expenses and other current liabilities as of both June 30, 2014 and December 31, 2013. While there is a reasonable possibility that a loss exceeding amounts already recognized could occur, the Company does not believe such amounts would be material to its financial statements.

The Company has other contingent liabilities resulting from litigation, claims and commitments incident to the ordinary course of business. Management believes, after consulting with counsel, that the ultimate resolution of such contingencies will not have a material adverse effect on the financial position, results of operations or liquidity of the Company.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The Company has equity compensation plans and agreements for officers, directors and key employees which allow for the issuance of stock options, restricted stock, restricted stock units and stock appreciation rights. For the three and six months ended June 30, 2014, the total compensation cost charged against income and included in selling, general and administrative expenses for stock-based compensation arrangements was $0.6 million and $0.9 million , respectively, and $0.4 million and $0.6 million for the three and six months ended June 30, 2013, respectively.

During the first quarter of 2014, the Company granted an aggregate of 24,000 shares of restricted stock awards to its outside directors at a grant date fair value of $11.58 per share, while 20,000 shares of restricted stock awards granted previously to the outside directors vested. Additionally, the vesting of 44,364 restricted stock units previously granted to employees resulted in the issuance of 32,386 shares of common stock, net of 11,978 shares that were withheld for tax obligations of the grantees, as allowed under the plan. During the second quarter of 2014, the Company granted to certain employees an aggregate of 214,418 restricted stock units and options to purchase an aggregate of 133,866 shares of its common stock with a weighted-average grant date fair value of $10.85 and $6.24 per share, respectively. Of the total restricted stock units granted, 65,381 are subject to forfeiture unless certain performance objectives are achieved.

During the first quarter of 2013, the Company granted 30,000 shares of restricted stock awards to its outside directors at a grant date fair value of $6.05 per share, while 40,000 shares of restricted stock awards granted previously to the outside directors vested. Additionally, during the first quarter of 2013 the Company granted 35,000 stock options to an employee at a grant date fair value of $3.51 per share. Also during the first quarter of 2013, the vesting of 46,403 restricted stock units previously granted to employees resulted in the issuance of 36,391 shares of common stock, net of 10,012 shares that were withheld for tax obligations of the grantees, as allowed under the plan. During the second quarter of 2013, the Company granted to certain employees an aggregate of 459,032 restricted stock units and options to purchase an aggregate of 344,900 shares of its common stock with a grant date fair market value of $6.89 and $3.93 per share, respectively. The restricted stock units are subject to forfeiture unless certain performance objectives are achieved.

The aggregate fair value of restricted stock and restricted stock units vested during the six months ended June 30, 2014 and 2013 was $0.7 million and $0.5 million, respectively. No restricted stock or restricted stock units vested during the three months ended June 30, 2014 or 2013.

The Company uses authorized but unissued shares of common stock for stock option exercises and restricted stock issuances pursuant to the Company’s share-based compensation plan and treasury stock for issuances outside of the plan. As of June 30, 2014, the total unrecognized compensation expense related to stock options and restricted stock awards was $2.6 million and $4.8 million, respectively.

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Long-Term Debt

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt consists of the following (in thousands):

	June 30, 2014			December 31, 2013
Borrowings under the revolving credit facility (the “Credit Agreement”)	$	59,300		$	59,300
Capital leases	17			23
Notes payable	4,896			5,801
Other debt	183			183
Total long-term debt	64,396			65,307
Less: current portion of long-term debt	(1,668		)	(2,111		)
Total long-term debt, non-current	$	62,728		$	63,196

Credit Facilities

On March 5, 2012, certain foreign subsidiaries (the “foreign subsidiary designated borrowers”) of Furmanite Worldwide, Inc. (“FWI”), a wholly owned subsidiary of the Company, and FWI entered into a credit agreement with a banking syndicate led by JPMorgan Chase Bank, N.A., as Administrative Agent (the “Credit Agreement”). The Credit Agreement matures on February 28, 2017. On August 27, 2013, FWI and the foreign subsidiary designated borrowers entered into an Amendment (the “Amendment”) to the Credit Agreement. The Amendment includes several modifications, including increasing the revolving credit facility from $75.0 million to $100.0 million and increasing the portion of the amount available for swing line loans to FWI from $7.5 million to $10.0 million. A portion of the amount available under the Credit Agreement (not in excess of $20.0 million) is available for the issuance of letters of credit. The loans outstanding to the foreign subsidiary designated borrowers under the Credit Agreement may not exceed $50.0 million in the aggregate.

At both June 30, 2014 and December 31, 2013, $59.3 million was outstanding under the Credit Agreement. Borrowings under the Credit Agreement bear interest at variable rates (based on the prime rate, federal funds rate or Eurocurrency rate, at the option of the borrower, including a margin above such rates, and subject to an adjustment based on a calculated Funded Debt to Adjusted EBITDA ratio (the “Leverage Ratio” as defined in the Credit Agreement)), which was 1.9% at June 30, 2014. On April 30, 2013, the Company entered into a forward-dated interest rate swap to mitigate the risk of changes in the variable interest rate. The effect of the swap is to fix the interest rate at 0.75% plus the margin and Leverage Ratio adjustment, as described above, beginning April 29, 2014 through February 28, 2017 on $39.3 million of the outstanding amount under the Credit Agreement. See Note 10 for further information regarding the interest rate swap. The Credit Agreement contains a commitment fee, which ranges from 0.25% to 0.30% based on the Leverage Ratio (0.25% at June 30, 2014), and is based on the unused portion of the amount available under the Credit Agreement. Adjusted EBITDA is net income (loss) plus interest, income taxes, depreciation and amortization, and other non-cash expenses minus income tax credits and non-cash items increasing net income (loss) as defined in the Credit Agreement. All obligations under the Credit Agreement are guaranteed by FWI and certain of its subsidiaries under a guaranty and collateral agreement, and are secured by a first priority lien on FWI and certain of its subsidiaries’ assets (which approximated $212.1 million as of June 30, 2014). The Parent Company has granted a security interest in its stock of FWI as collateral security for the lenders under the Credit Agreement, but is not a party to the Credit Agreement.

The Credit Agreement includes financial covenants, which require that the Company maintain: (i) a Leverage Ratio of no more than 2.75 to 1.00 as of the last day of each fiscal quarter, measured on a trailing four-quarters basis, (ii) a fixed charge coverage ratio of at least 1.25 to 1.00, defined as Adjusted EBITDA minus capital expenditures / interest plus cash taxes plus scheduled payments of debt plus Restricted Payments made (i.e., all dividends, distributions and other payments in respect of capital stock, sinking funds or similar deposits on account thereof or other returns of capital, redemption or repurchases of equity interests, and any payments to the Parent Company or its subsidiaries (other than FWI and its subsidiaries)), and (iii) a minimum asset coverage of at least 1.50 to 1.00, defined as cash plus net accounts receivable plus net inventory plus net property, plant and equipment of FWI and its material subsidiaries that are subject to a first priority perfected lien in favor of the Administrative Agent and the Lenders / Funded Debt. FWI is also subject to certain other compliance provisions including, but not limited to, restrictions on indebtedness, guarantees, dividends and other contingent obligations and transactions. Events of default under the Credit Agreement include customary events, such as change of control, breach of covenants or breach of representations and warranties. At June 30, 2014, FWI was in compliance with all covenants under the Credit Agreement.

Considering the outstanding borrowings of $59.3 million, and $2.0 million related to outstanding letters of credit, the unused borrowing capacity under the Credit Agreement was $38.7 million at June 30, 2014.

Notes Payable and Other Debt

On August 30, 2013, in connection with the acquisition of assets of the ENGlobal’s Engineering & Construction segment, the Company issued a $3.0 million promissory note, which bears interest at 4.0% per annum and will be paid in four equal annual installments of $0.8 million beginning September 1, 2014, with the final payment due on September 1, 2017.

On February 28, 2013, in connection with an asset purchase, the Company issued a $0.9 million note payable, which was paid at maturity on March 1, 2014.

On January 1, 2013, in connection with an asset purchase, the Company issued a $1.9 million promissory note, which bears interest at 5.0% per annum and is due in four equal annual installments of $0.5 million beginning January 1, 2014, with the final installment payment due on January 1, 2017.

In 2012, the Company incurred $1.4 million of debt in connection with an asset purchase. As of June 30, 2014 and December 31, 2013, $0.2 million remained outstanding, which is payable in installments of approximately $0.1 million due in both 2014 and 2015.

On February 23, 2011, in connection with the acquisition of Self Leveling Machines, Inc. and certain assets of Self Levelling Machines Pty. Ltd., the Company issued $5.1 million ($2.9 million denominated in U.S. dollars and $2.2 million denominated in Australian dollars) of notes payable (the “SLM Notes”), payable in installments through February 23, 2013. All obligations under the SLM Notes were secured by a first priority lien on the assets acquired in the acquisition. Upon full settlement of the SLM Notes in February 2013 and resultant release of the lien by the sellers’ equity holders, the acquired assets became assets secured under the Credit Agreement. The SLM Notes bore interest at a fixed rate of 2.5% per annum.

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Retirement Plans

6 Months Ended

Jun. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Retirement Plans

Retirement Plans

Two of the Company’s foreign subsidiaries have defined benefit pension plans, one plan covering certain of its United Kingdom employees (the “U.K. Plan”) and the other covering certain of its Norwegian employees (the “Norwegian Plan”). As the Norwegian Plan represents less than three percent of both the Company’s total pension plan liabilities and total pension plan assets, only the schedule of net periodic pension cost includes combined amounts from the two plans, while assumption and narrative information relates solely to the U.K. Plan.

Net periodic pension cost for the U.K. and Norwegian Plans includes the following components (in thousands):

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2014			2013			2014			2013
Service cost	$	79		$	216		$	157		$	438
Interest cost	1,037			849			2,057			1,716
Expected return on plan assets	(1,115		)	(868		)	(2,213		)	(1,754		)
Amortization of prior service credit	—			(23		)	—			(47		)
Amortization of net actuarial loss	127			328			252			664
Net periodic pension cost	$	128		$	502		$	253		$	1,017

The expected long-term rate of return on invested assets is determined based on the weighted average of expected returns on asset investment categories as follows: 6.2% overall, 7.6% for equities and 4.1% for bonds. The Company expects to contribute $1.7 million to the pension plan for 2014, of which $0.9 millionhas been contributed through June 30, 2014.

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Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2014

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss in the equity section of the consolidated balance sheets includes the following (in thousands):

	June 30, 2014			December 31, 2013
Defined benefit pension items	$	(21,949	)	$	(21,524	)
Less: deferred tax benefit	4,665			4,574
Net of tax	(17,284		)	(16,950		)
Interest rate swap	28			220
Less: deferred tax liability	(11		)	(88		)
Net of tax	17			132
Foreign currency translation adjustment	2,873			1,206
Total accumulated other comprehensive loss	$	(14,394	)	$	(15,612	)

Changes in accumulated other comprehensive loss by component in the consolidated statements of comprehensive income include the following for the three and six months ended June 30, 2014 and 2013 (in thousands):

	Defined Benefit Pension Items			Interest Rate Swap			Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Loss
Three Months Ended June 30, 2014
Beginning balance, net	$	(16,965	)	$	111		$	1,826		$	(15,028	)
Other comprehensive income (loss) before reclassifications1	(419		)	(118		)	1,047			510
Amounts reclassified from accumulated other comprehensive loss2 3	100			24			—			124
Net other comprehensive income (loss)	(319		)	(94		)	1,047			634
Ending balance, net	$	(17,284	)	$	17		$	2,873		$	(14,394	)
Three Months Ended June 30, 2013
Beginning balance, net	$	(15,541	)	$	—		$	(31	)	$	(15,572	)
Other comprehensive income (loss) before reclassifications1	(3		)	302			(1,273		)	(974		)
Amounts reclassified from accumulated other comprehensive loss23	232			—			—			232
Net other comprehensive income (loss)	229			302			(1,273		)	(742		)
Ending balance, net	$	(15,312	)	$	302		$	(1,304	)	$	(16,314	)
Six months ended June 30, 2014
Beginning balance, net	$	(16,950	)	$	132		$	1,206		$	(15,612	)
Other comprehensive loss before reclassifications1	(533		)	(139		)	1,667			995
Amounts reclassified from accumulated other comprehensive loss23	199			24			—			223
Net other comprehensive income (loss)	(334		)	(115		)	1,667			1,218
Ending balance, net	$	(17,284	)	$	17		$	2,873		$	(14,394	)
Six months ended June 30, 2013
Beginning balance, net	$	(16,853	)	$	—		$	2,239		$	(14,614	)
Other comprehensive income (loss) before reclassifications1	1,072			302			(3,543		)	(2,169		)
Amounts reclassified from accumulated other comprehensive loss23	469			—			—			469
Net other comprehensive income (loss)	1,541			302			(3,543		)	(1,700		)
Ending balance, net	$	(15,312	)	$	302		$	(1,304	)	$	(16,314	)

____________________________

1 Net of tax expense (benefit) for the defined benefit pension plans of $(0.1) million for each of the three and six months ended June 30, 2014 and $0.3 million for six months ended June 30, 2013. Tax expense for the defined benefit pension plans was insignificant for the three months ended June 30, 2013. Net of tax expense (benefit) for the interest rate swap of $(0.1) million for each of the three and six months ended June 30, 2014 and $0.2 million for each of the three and six months ended June 30, 2013.

2 Net of tax expense for the defined benefit pension plans, which was insignificant for the three months ended June 30, 2014, $0.1 million for the six months ended June 30, 2014 and $0.1 million and $0.2 million for the three and six months ended June 30, 2013, respectively. Net of tax expense for the interest rate swap, which was insignificant for the three and six months ended June 30, 2014.

3 Reclassification adjustments out of accumulated other comprehensive loss for amortization of actuarial losses and prior service credits are included in the computation of net periodic pension cost. See Note 7 for additional details. Reclassification adjustments out of accumulated other comprehensive loss for the interest rate swap are included in interest expense. See Note 10 for additional details.

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Acquisition - Additional Information (Details) (ENGlobal Engineering & Construction, USD $) In Millions, unless otherwise specified	1 Months Ended
	Aug. 30, 2013	Jun. 30, 2014
Business Acquisition [Line Items]
Total purchase consideration	$ 18.8
Purchase price reduction	0.5
Business acquisition, total cash consideration	15.8
Days after closing to determine final working capital	90 days
Notes payable
Business Acquisition [Line Items]
Promissory note, term	4 years
Interest rate on note payable	4.00%	4.00%
Notes payable issued for acquisition	3.0
Borrowings under the revolving credit facility (the “Credit Agreement”)
Business Acquisition [Line Items]
Additional borrowing under existing revolving credit facility	$ 20.0

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Income Taxes - Additional Information (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Income Tax Disclosure [Abstract]
Income tax expense	$ 2,913,000	$ 4,404,000	$ 3,801,000	$ 5,969,000
Income tax expense as a percentage of income before income taxes	39.30%	39.40%	40.80%	39.00%
Unrecognized tax benefits for uncertain tax positions	1,244,000		1,244,000		1,139,000
Interest or penalties	$ 0	$ 0	$ 0	$ 0

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Fair Value of Financial Instruments and Credit Risk

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments and Credit Risk

Fair Value of Financial Instruments and Credit Risk

Fair value is defined under FASB ASC 820, Fair Value Measurement (“ASC 820”), as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of the observable inputs and minimize the use of unobservable inputs. The standard established a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

• Level 1 — Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets.

• Level 2 — Quoted prices for similar assets and liabilities in active markets; quoted prices included for identical or similar assets and liabilities that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. These are typically obtained from readily-available pricing sources for comparable instruments.

• Level 3 — Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

The following table presents the Company’s fair value hierarchy for its financial instruments that required disclosure of their fair values on a recurring basis as of June 30, 2014 and December 31, 2013 (in thousands).

	Fair Value		Level 1		Level 2		Level 3
June 30, 2014
Interest rate swap asset	$	28	$	—	$	28	$	—
December 31, 2013
Interest rate swap asset	$	220	$	—	$	220	$	—

The estimated fair value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the relatively short period to maturity of these instruments. The interest rate swap asset is recorded at fair value on a recurring basis based on models using inputs, such as interest rate yield curves, LIBOR swap curves and OIS curves, observable for substantially the full term of the contract. See Note 10 for additional information on the Company’s interest rate swap. The estimated fair value of all debt as of June 30, 2014 and December 31, 2013 approximated the carrying value. These fair values were estimated based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements, when quoted market prices were not available. The estimated fair values of the Company’s financial instruments are not necessarily indicative of the amounts that would be realized in a current market exchange.

There were no transfers between levels of the fair value hierarchy during the three or six months ended June 30, 2014 or 2013.

The Company provides services to a domestic and international client base that includes petroleum refineries, chemical plants, offshore energy production platforms, steel mills, nuclear and conventional power stations, pulp and paper mills, food and beverage processing plants, other flow process facilities. The Company does not believe that it has a significant concentration of credit risk at June 30, 2014, as the Company’s accounts receivable are generated from these business industries with customers located throughout the Americas, EMEA and Asia-Pacific.

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Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Summary of Long-Term Debt

Long-term debt consists of the following (in thousands):

	June 30, 2014			December 31, 2013
Borrowings under the revolving credit facility (the “Credit Agreement”)	$	59,300		$	59,300
Capital leases	17			23
Notes payable	4,896			5,801
Other debt	183			183
Total long-term debt	64,396			65,307
Less: current portion of long-term debt	(1,668		)	(2,111		)
Total long-term debt, non-current	$	62,728		$	63,196

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Derivative Instruments and Hedging Activities - Schedule of Fair Value of Derivative Financial Instruments in Consolidated Balance Sheets (Details) (Derivatives designated as hedging instruments, Interest Rate Swap, USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Derivative Instruments, Gain (Loss) [Line Items]
Asset derivative instruments	$ 28	$ 220
Liability derivative instruments	0	0
Current Liability | Accrued expenses and other current liabilities
Derivative Instruments, Gain (Loss) [Line Items]
Liability derivative instruments	0	0
Non-current Liability | Other liabilities
Derivative Instruments, Gain (Loss) [Line Items]
Liability derivative instruments	0	0
Current Asset | Prepaid expenses and other current assets
Derivative Instruments, Gain (Loss) [Line Items]
Asset derivative instruments	0	0
Non-current Assets | Intangible and other assets, net
Derivative Instruments, Gain (Loss) [Line Items]
Asset derivative instruments	$ 28	$ 220

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Retirement Plans - Schedule of Net Periodic Pension Cost (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Compensation and Retirement Disclosure [Abstract]
Service cost	$ 79	$ 216	$ 157	$ 438
Interest cost	1,037	849	2,057	1,716
Expected return on plan assets	(1,115)	(868)	(2,213)	(1,754)
Amortization of prior service credit	0	(23)	0	(47)
Amortization of net actuarial loss	127	328	252	664
Net periodic pension cost	$ 128	$ 502	$ 253	$ 1,017

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Statement of Comprehensive Income [Abstract]
Net income	$ 4,507	$ 6,761	$ 5,523	$ 9,325
Defined benefit pension plans:
Prior service cost arising during period	0	0	0	(23)
Net gain (loss) arising during period	(406)	325	(425)	2,099
Less: Amortization of prior service credit included in net periodic pension cost	0	(23)	0	(47)
Defined benefit pension plans, net	(406)	302	(425)	2,029
Cash flow hedges:
Gain (loss) on interest rate swap	(197)	503	(232)	503
Less: Reclassification of realized loss on interest rate swap included in interest expense	40	0	40	0
Cash flow hedges, net	(157)	503	(192)	503
Foreign currency translation adjustments	1,047	(1,273)	1,667	(3,543)
Total other comprehensive income (loss) before tax	484	(468)	1,050	(1,011)
Income tax benefit (expense) related to components of other comprehensive income (loss)	150	(274)	168	(689)
Other comprehensive income (loss), net of tax	634	(742)	1,218	(1,700)
Comprehensive income	$ 5,141	$ 6,019	$ 6,741	$ 7,625

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Earnings Per Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

Earnings Per Share

Basic earnings per share (“EPS”) are calculated as net income divided by the weighted-average number of shares of common stock outstanding during the period, which includes restricted stock. Restricted shares of the Company’s common stock have full voting rights and participate equally with common stock in dividends declared, if any, and undistributed earnings. As participating securities, the shares of restricted stock are included in the calculation of basic EPS using the two-class method. For the periods presented, the amount of earnings allocated to the participating securities was not material. Diluted earnings per share assumes issuance of the net incremental shares from stock options and restricted stock units when dilutive. The weighted-average common shares outstanding used to calculate diluted earnings per share reflect the dilutive effect of common stock equivalents including options to purchase shares of common stock and restricted stock units, using the treasury stock method.

Basic and diluted weighted-average common shares outstanding and earnings per share include the following (in thousands, except per share data):

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2014		2013		2014		2013
Net income	$	4,507	$	6,761	$	5,523	$	9,325
Basic weighted-average common shares outstanding	37,617		37,402		37,593		37,372
Dilutive effect of common stock equivalents	219		150		239		149
Diluted weighted-average common shares outstanding	37,836		37,552		37,832		37,521
Earnings per share:
Basic	$	0.12	$	0.18	$	0.15	$	0.25
Dilutive	$	0.12	$	0.18	$	0.15	$	0.25
Stock options and restricted stock units excluded from diluted weighted-average common shares outstanding because their inclusion would have an anti-dilutive effect:	463		1,126		287		1,010

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Fair Value of Financial Instruments and Credit Risk (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fair Value
Estimated Fair Value Of Financial Instruments [Line Items]
Asset derivative instruments	$ 28	$ 220
Level 1
Estimated Fair Value Of Financial Instruments [Line Items]
Asset derivative instruments	0	0
Level 2
Estimated Fair Value Of Financial Instruments [Line Items]
Asset derivative instruments	28	220
Level 3
Estimated Fair Value Of Financial Instruments [Line Items]
Asset derivative instruments	$ 0	$ 0

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Retirement Plans (Tables)

6 Months Ended

Jun. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Schedule of Net Periodic Pension Cost

Net periodic pension cost for the U.K. and Norwegian Plans includes the following components (in thousands):

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2014			2013			2014			2013
Service cost	$	79		$	216		$	157		$	438
Interest cost	1,037			849			2,057			1,716
Expected return on plan assets	(1,115		)	(868		)	(2,213		)	(1,754		)
Amortization of prior service credit	—			(23		)	—			(47		)
Amortization of net actuarial loss	127			328			252			664
Net periodic pension cost	$	128		$	502		$	253		$	1,017

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Restructuring - Summary of Activity Related to Reserves Associated With Remaining Cost Reduction Initiative (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Restructuring Cost and Reserve [Line Items]
Reserve at December 31, 2013			$ 391
Charges (Adjustments)			(55)
Cash (payments) refunds			53
Foreign currency adjustments			4
Reserve at June 30, 2014	393		393
2010 Cost Reduction Initiative
Restructuring Cost and Reserve [Line Items]
Charges (Adjustments)	(100)	0	(100)	0
2010 Cost Reduction Initiative | Severance and benefit costs
Restructuring Cost and Reserve [Line Items]
Reserve at December 31, 2013			330
Charges (Adjustments)			(55)
Cash (payments) refunds			53
Foreign currency adjustments			3
Reserve at June 30, 2014	331		331
2010 Cost Reduction Initiative | Lease termination costs
Restructuring Cost and Reserve [Line Items]
Reserve at December 31, 2013			24
Charges (Adjustments)			0
Cash (payments) refunds			0
Foreign currency adjustments			1
Reserve at June 30, 2014	25		25
2010 Cost Reduction Initiative | Other restructuring costs
Restructuring Cost and Reserve [Line Items]
Reserve at December 31, 2013			1
Charges (Adjustments)			0
Cash (payments) refunds			0
Foreign currency adjustments			0
Reserve at June 30, 2014	1		1
2012 Cost Reduction Initiative
Restructuring Cost and Reserve [Line Items]
Charges (Adjustments)	0	0	0	0
2012 Cost Reduction Initiative | Severance and benefit costs
Restructuring Cost and Reserve [Line Items]
Reserve at December 31, 2013			2
Charges (Adjustments)			0
Cash (payments) refunds			0
Foreign currency adjustments			0
Reserve at June 30, 2014	2		2
2012 Cost Reduction Initiative | Lease termination costs
Restructuring Cost and Reserve [Line Items]
Reserve at December 31, 2013			34
Charges (Adjustments)			0
Cash (payments) refunds			0
Foreign currency adjustments			0
Reserve at June 30, 2014	34		34
2012 Cost Reduction Initiative | Other restructuring costs
Restructuring Cost and Reserve [Line Items]
Reserve at December 31, 2013			0
Charges (Adjustments)			0
Cash (payments) refunds			0
Foreign currency adjustments			0
Reserve at June 30, 2014	$ 0		$ 0

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Business Segment Data and Geographical Information

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Business Segment Data and Geographical Information

Business Segment Data and Geographical Information

An operating segment is defined as a component of an enterprise about which separate financial information is available that is evaluated regularly by the chief decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Previously, for financial reporting purposes, the Company reported three segments based on the Company’s three geographical areas: the Americas, EMEA and Asia-Pacific. As a result of a business acquisition in 2013, the Company has determined that, for financial reporting purposes, it now operates in two segments that are based on its service and product offerings: 1) Technical Services and 2) Engineering & Project Solutions. Segment results for prior periods have been restated to conform to the current-period presentation.

Included in its Technical Services segment are the specialized technical services the Company provides to a global customer base that includes petroleum refineries, chemical plants, pipelines, offshore drilling and production platforms, steel mills, food and beverage processing facilities, power generation and other flow-process industries. Included in its Engineering & Project Solutions segment are professional engineering, construction management and plant asset management services. These services are provided to customers such as refining and petrochemical operators as well as maintenance, and engineering and construction contractors serving the downstream and midstream oil and gas markets, primarily in the Americas.

The Company evaluates performance based on the operating income (loss) from each segment, which excludes interest income and other income (expense), interest expense and income tax expense (benefit), which are not allocated to the segments. The accounting policies of the reportable segments are the same as those described in Note 1. Intersegment revenues are recorded at cost plus a profit margin. All transactions and balances between segments are eliminated in consolidation.

The following is a summary of the financial information of the Company’s reportable segments as of and for the three and six months ended June 30, 2014 and 2013 reconciled to the amounts reported in the consolidated financial statements (in thousands):

	Technical Services		Engineering & Project Solutions			Corporate			Reconciling Items			Total
Three months ended June 30, 2014:
Revenues from external customers1	$	106,289	$	39,953		$	—		$	—		$	146,242
Intersegment revenues2	—		46			—			(46		)	—
Operating income (loss)34	$	14,284	$	(590	)	$	(5,390	)	$	—		$	8,304
Three months ended June 30, 2013:
Revenues from external customers1	$	103,914	$	4,462		$	—		$	—		$	108,376
Intersegment revenues2	—		—			—			—			—
Operating income (loss)34	$	17,693	$	(9	)	$	(6,060	)	$	—		$	11,624
Six months ended June 30, 2014
Revenues from external customers1	$	194,039	$	77,144		$	—		$	—		$	271,183
Intersegment revenues2	—		117			—			(117		)	—
Operating income (loss)34	$	21,949	$	(1,347	)	$	(9,780	)	$	—		$	10,822
Six months ended June 30, 2013:
Revenues from external customers1	$	187,707	$	9,707		$	—		$	—		$	197,414
Intersegment revenues2	—		—			—			—			—
Operating income (loss)34	$	26,336	$	34		$	(10,668	)	$	—		$	15,702

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1 Included in the Technical Services and Engineering & Project Solutions segments are total United States revenues of $102.3 million and $191.0 million for the three and six months ended June 30, 2014, respectively, and $72.2 million and $131.6 million for the three and six months ended June 30, 2013, respectively . Included in the Technical Services segment above are United Kingdom revenues of $19.2 million and $36.9 million for the three and six months ended June 30, 2014, respectively, and $14.7 million and $26.9 million for the three and six months ended June 30, 2013, respectively.

2 Reconciling items represent eliminations or reversals of transactions between reportable segments.

3 Corporate represents certain corporate overhead costs, including executive management, strategic planning, treasury, legal, human resources, information technology, accounting and risk management, which are not allocated to reportable segments.

4 The Engineering & Project Solutions segment includes nil and approximately $0.2 million of direct costs associated with the integration of the Furmanite Technical Solutions division for the three and six months ended June 30, 2014, respectively.

The following geographical area information includes total long-lived assets (which consist of all non-current assets, other than goodwill, indefinite-lived intangible assets and deferred tax assets) based on physical location (in thousands):

	June 30, 2014		December 31, 2013
Total long-lived assets
United States	$	48,855	$	51,646
United Kingdom	5,719		5,172
All other	8,929		9,228
Total long-lived assets	$	63,503	$	66,046