Note 3 - Acquisitions

3 Months Ended

Mar. 31, 2013

Business Combination Disclosure [Text Block]

3.    Acquisitions

On January 31, 2013, the Company acquired a 20% membership interest in a sports event company for a cash price of $1.0 million  with an option to invest another $2.0 million over the next two years. Pursuant to an operating agreement, the Company has the ability to control the operations of this company. In accordance with applicable accounting rules, the Company determined that this company was a variable interest entity (“VIE”) and that the Company was the primary beneficiary. Accordingly, the Company consolidated this company effective January 31, 2013. Therefore, this investment was accounted for as a business combination and the total cash consideration of $1.0 million has been allocated on a preliminary basis to the net assets acquired based on their respective estimated fair values at January 31, 2013 as follows:

	Amount
	(in thousands)
Cash	$	840
Property and equipment		70
Other assets		2
Accounts payable		(71	)
Accrued liabilties and other current liabilities		(952	)
Long-term liabilities		(53	)
		(164	)
Non-controlling interest		(4,000	)
Goodwill		5,164
Net assets acquired	$	1,000

The $5.2 million of goodwill arises from the growth potential the Company sees for the investment, along with expected synergies with the Company’s current sports-related businesses, and is expected to be deductible for tax purposes. The acquisition-related costs for this purchase included in “Selling, general and administrative” expenses in the Condensed Statements of Operations were $30,240 for the three-month period ended March 31, 2013.

The carrying amounts and classifications of assets and liabilities included in the Company’s March 31, 2013 Condensed Balance Sheet for this consolidated VIE are as follows:

	Amount
	(in thousands)
Current assets	$	526
Long-term assets	$	5,341
Current liabilities	$	1,209
Long-term liabilities	$	53

The sports-event company’s results of operations are included in the accompanying financial statements since the acquisition date, January 31, 2013. The Company is in the process of completing its assessment of the fair value of net assets acquired from this acquisition. Therefore, the fair values presented are provisional pending completion of the final valuation of the net assets.

The Company is not including pro forma information for Steel Sports companies for the periods prior to their acquisition because they were not material to the Company’s results of operations and earnings per share. The following pro forma financial information presents the combined fiscal 2012 period results of the Company and its Steel Energy companies, as if all acquisitions had occurred at the beginning of the fiscal 2012 period. Such pro forma results are not necessarily indicative of what would have actually occurred had the acquisitions been in effect for the entire period. The pro forma fiscal 2012 period financial results are as follows:

	Amount
	(in thousands)
Net revenues	$	30,148
Income from continuing operations, net of taxes	$	2,987
Income (loss) from discontinued operations, net of taxes	$	(2,348	)
Net income attributable to Steel Excel Inc.	$	1,219

There is no pro forma information for the fiscal 2013 period as all companies are already included in the condensed financial statements as presented.