BUSINESS COMBINATION

3 Months Ended

Mar. 31, 2015

BUSINESS COMBINATION

BUSINESS COMBINATION

NOTE 2.BUSINESS COMBINATION

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 December 31, 2014:

	Purchase Price Allocation
$s in thousands	As Reported in Form 10-K			Adjustments			As Retrospectively Adjusted
Current assets	$	111,982		$	294		$	112,276
Property and equipment	101,543			—			101,543
Identifiable intangible assets	252,874			—			252,874
Current liabilities	(57,585		)	(727		)	(58,312		)
Other liabilities	(139,331		)	(3,674		)	(143,005		)
Total identifiable net assets	269,483			(4,107		)	265,376
Goodwill	197,163			4,107			201,270
Total purchase price	$	466,646		$	—		$	466,646

Purchase price allocation adjustments relate primarily to the receipt of additional information regarding the fair values of income taxes payable and receivable, deferred income taxes and residual goodwill.

Goodwill of $201.3 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. $134.9 million of the goodwill recognized was allocated to reporting units in our Environmental Services segment and $66.4 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 estimate of identifiable intangible assets by major intangible asset class and related 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.

	(unaudited)
	Three Months Ended
$s in thousands, except per share amounts	March 31, 2014
Pro forma combined:
Revenue	$	138,075
Net income	$	6,856
Earnings per share
Basic	$	0.32
Diluted	$	0.32

The amounts of revenue and operating income from EQ included in the Company’s consolidated statements of operations for the three months ended March 31, 2015 were $84.6 million and $3.5 million, respectively. Acquisition-related costs of $782,000 are included in Selling, general and administrative expenses in the Company’s consolidated statements of operations for the three months ended March 31, 2015.