BUSINESS COMBINATIONS

12 Months Ended

Dec. 31, 2014

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

NOTE 4. BUSINESS COMBINATIONS

EQ Holdings, Inc.

On June 17, 2014, the Company acquired 100% of the outstanding shares of EQ Holdings, Inc. and its wholly-owned subsidiaries (collectively "EQ"). EQ is a fully integrated environmental services company providing waste treatment and disposal, wastewater treatment, remediation, recycling, industrial cleaning and maintenance, transportation, total waste management, technical services, and emergency response services to a variety of industries and customers in North America. The total purchase price was $460.9 million, net of cash acquired, and was funded through a combination of cash on hand and borrowings under a new $415.0 million term loan.

We have recognized the assets and liabilities of EQ based on our preliminary estimates of their acquisition date fair values. The preliminary purchase price allocations are subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed. Any adjustments to the purchase price allocations are made as soon as practicable but no later than one year from the acquisition date. The following table summarizes the consideration paid for EQ and the preliminary fair value estimates of assets acquired and liabilities assumed recognized at the acquisition date, with purchase price allocation adjustments since the preliminary purchase price allocation as previously disclosed as of September 30, 2014:

	Purchase Price Allocation
$s in thousands	September 30, 2014			Adjustments			December 31, 2014
Current assets	$	113,199		$	(1,217	)	$	111,982
Property and equipment		103,532			(1,989	)		101,543
Identifiable intangible assets		250,900			1,974			252,874
Current liabilities		(57,438	)		(147	)		(57,585	)
Other liabilities		(131,159	)		(8,172	)		(139,331	)
Total identifiable net assets		279,034			(9,551	)		269,483
Goodwill		192,633			4,530			197,163
Total purchase price	$	471,667		$	(5,021	)	$	466,646

Purchase price allocation adjustments relate primarily to a post-closing purchase price adjustment based on working capital requirements and the receipt of additional information regarding the fair values of property and equipment, intangible assets, accounts payable and accrued expenses, closure and post-closure obligations, deferred income taxes and residual goodwill.

Goodwill of $197.2 million arising from the acquisition is the result of several factors. EQ has an assembled workforce that serves the U.S. industrial market utilizing state-of-the-art technology to treat a wide range of industrial and hazardous waste. The acquisition of EQ increases our geographic base providing a coast-to-coast presence and an expanded service platform to better serve key North American hazardous waste markets. In addition, the acquisition of EQ provides us with an opportunity to compete for additional waste clean-up project work; expand penetration with national accounts; improve and enhance transportation, logistics, and service offerings with existing customers and attract new customers. $132.1 million of the goodwill recognized was allocated to reporting units in our Environmental Services segment and $65.1 million of the goodwill recognized was allocated to reporting units in our Field & Industrial Services segment. None of the goodwill recognized is expected to be deductible for income tax purposes.

The preliminary fair value of identifiable intangible assets related to the acquisition of EQ by major intangible asset class and corresponding weighted average amortization period are as follows:

$s in thousands	Fair Value		Weighted Average Amortization Period (Years)
Customer relationships	$	98,400		15
Permits and licenses		89,600		45
Permits and licenses, nonamortizing		49,000		—
Tradename		5,481		3
Customer backlog		4,600		10
Developed software		3,443		9
Non-compete agreements		900		1
Internet domain and website		869		19
Database		581		15
Total identifiable intangible assets	$	252,874

The following unaudited pro forma financial information presents the combined results of operations as if EQ had been combined with us at the beginning of each of the periods presented. The pro forma financial information includes the accounting effects of the business combination, including the amortization of intangible assets, depreciation of property, plant and equipment, and interest expense. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented, nor should it be taken as indication of our future consolidated results of operations.

$s in thousands, except per share amounts	2014		2013
	(unaudited)
Pro forma combined:
Revenue	$	615,264	$	539,760
Net income	$	37,347	$	29,606
Earnings per share
Basic	$	1.73	$	1.59
Diluted	$	1.72	$	1.59

The amounts of revenue and operating income from EQ included in the Company's consolidated statements of operations for the year ended December 31, 2014 were $228.2 million and $18.5 million, respectively. Acquisition-related costs of $6.4 million are included in Selling, general and administrative expenses in the Company's consolidated statements of operations for the year ended December 31, 2014.

Dynecol, Inc.

On May 31, 2012, the Company acquired 100% of the outstanding shares of Dynecol, Inc. ("Dynecol"), a chemical and industrial byproducts treatment and reuse facility located in Detroit, Michigan. The total purchase price was $10.8 million in cash.

Consideration paid for Dynecol and the fair value of assets acquired and liabilities assumed at the acquisition date was as follows:

$s in thousands	2012
Current assets	$	2,214
Property and equipment		6,552
Identifiable intangible assets		1,940
Current liabilities		(1,268	)
Total identifiable net assets		9,438
Goodwill		1,327
Total purchase price	$	10,765

Goodwill of $1.3 million arising from the acquisition is the result of several factors. Dynecol has a talented assembled workforce of approximately 40 employees principally serving the Mid-Western and Eastern United States and Ontario, Canada industrial markets for nearly 40 years. The acquisition strengthens our presence in key midwestern and Eastern United States and certain Canadian markets. In addition, Dynecol provides us with an opportunity to win more Event Business (as defined below) work; increase services to existing customers including national accounts; expand our transportation and logistics services; and attract new customers. Management also believes that the acquisition produces synergies in combination with our Stablex facility. All of the goodwill recognized was assigned to our Environmental Services segment and is expected to be deductible for income tax purposes over a fifteen-year amortization period.

The following unaudited pro forma financial information presents the combined results of operations as if Dynecol had been combined with us beginning on January 1, 2011. The pro forma financial information includes the accounting impact of the business combination, including the amortization of intangible assets, depreciation of property, plant and equipment and interest expense. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the period presented, nor should it be taken as an indication of our future consolidated results of operations.

$s in thousands, except per share amounts	2012
	(unaudited)
Pro forma combined:
Revenue	$	174,639
Net income	$	25,513
Earnings per share
Basic	$	1.40
Diluted	$	1.40

The amounts of revenue and operating loss from Dynecol included in the Company's consolidated statements of operations for the year ended December 31, 2012 were $6.7 million and $161,000, respectively. Acquisition-related costs of $348,000 were included in Selling, general and administrative expenses in the Company's consolidated statement of operations for the year ended December 31, 2012.