4. ACQUISITIONS

Air Serv Acquisition

On November 1, 2012, the Company acquired all of the outstanding stock of Air Serv, for an aggregate purchase price of $158.7 million in cash, subject to certain closing adjustments (the “Air Serv Acquisition”). Approximately $11.9 million of the cash consideration was placed in an escrow account to satisfy any applicable indemnification claims, pursuant to the terms of the purchase agreement. The final consideration and purchase price allocation are subject to, among other items: an additional working capital adjustment; further analysis of tax accounts and insurance balances; and final valuation of identifiable intangible assets, plant and equipment, and capital leases.

Air Serv provides integrated facility solutions services for airlines and freight companies at airports primarily in the United States. The operations of Air Serv are included in the Other segment as of November 1, 2012, the acquisition date. Revenues and operating profit associated with Air Serv were $84.0 million and $2.0 million, respectively, for the three months ended January 31, 2013 and are included in the Company’s unaudited condensed consolidated statements of comprehensive income.

HHA Acquisition

On November 1, 2012, the Company acquired all of the outstanding stock of HHA for an aggregate purchase price of $34.3 million in cash (the “HHA Acquisition”). Approximately $2.0 million of the cash consideration was placed in an escrow account to satisfy any applicable indemnification claims, pursuant to the terms of the purchase agreement. The final consideration and purchase price allocation are subject to, among other items: an additional working capital adjustment; further analysis of tax accounts; and final valuation of identifiable intangible assets.

HHA provides facility solutions, including housekeeping, laundry, patient assist, plant maintenance, and food services to hospitals, healthcare systems, long-term care facilities, and retirement communities. The operations of HHA are included in the Building & Energy Solutions segment as of November 1, 2012, the acquisition date. Revenues and operating loss associated with HHA were $12.8 million and $0.1 million, respectively, for the three months ended January 31, 2013 and are included in the Company’s unaudited condensed consolidated statements of comprehensive income.

Calvert-Jones Acquisition

On November 1, 2012, the Company acquired substantially all of the assets and assumed certain liabilities of Calvert-Jones for a cash purchase price of $6.3 million in cash (the “Calvert-Jones Acquisition”). Approximately $0.7 million of the cash consideration was placed in an escrow account to satisfy any applicable indemnification claims, pursuant to the terms of the purchase agreement. The final consideration and purchase price allocation are subject to, among other items, an additional working capital adjustment and final valuation of identifiable intangible assets.

Calvert-Jones provides mechanical and energy efficient products and solutions in the Washington, D.C. area. The operations of Calvert-Jones are included in the Building & Energy Solutions segment as of November 1, 2012, the acquisition date. Revenues and operating profit associated with Calvert-Jones were $3.6 million and $0.1 million, respectively, for the three months ended January 31, 2013 and are included in the Company’s unaudited condensed consolidated statements of comprehensive income.

Unaudited Preliminary Allocation of Consideration Transferred to Acquire Air Serv, HHA, and Calvert-Jones:

The following table summarizes the preliminary allocation of consideration transferred to acquire Air Serv, HHA, and Calvert-Jones and the amounts of identified assets acquired and liabilities assumed at the acquisition date:


(in thousands)	Air Serv			HHA			Calvert-Jones
Purchase price:

Total cash consideration	$	158,747		$	34,323		$	6,250

Allocated to:
Cash and cash equivalents	$	10,702		$	832		$	—
Trade accounts receivable		52,838			3,175			1,479
Prepaid expenses and other		5,059			927			601
Property, plant and equipment		18,872			123			49
Other intangible assets		44,500			12,000			2,600
Goodwill		88,205			26,013			3,889
Other assets		—			468			—
Trade accounts payable		(4,604	)		(665	)		(1,200	)
Accrued liabilities		(24,457	)		(4,321	)		(864	)
Insurance claims		(8,901	)		—			—
Net deferred income tax liabilities		(17,212	)		(4,212	)		—
Other		(6,255	)		(17	)		(304	)

Net assets acquired	$	158,747		$	34,323		$	6,250

The amount allocated to goodwill for Air Serv and HHA is reflective of the Company’s identification of buyer specific synergies that the Company anticipates will be realized by, among other things, reducing duplicative positions and back office functions and by reducing professional fees and other services. Goodwill is also attributable to the projected long-term business growth through the Company’s expansion in its vertical market expertise in servicing the end-to-end needs of airlines, airport authorities, and healthcare service markets. None of the goodwill associated with the acquisitions of Air Serv and HHA will be amortizable for income tax purposes as the Company acquired all of the outstanding stock of these companies.

Goodwill for the Calvert-Jones Acquisition is attributable to the projected long-term business growth through the Company’s expansion of existing vertical and geographic market offerings in building and energy solutions. A significant portion of the goodwill associated with the Calvert-Jones Acquisition is expected to be amortizable for income tax purposes.

Other intangible assets primarily consist of customer contracts and relationships with a weighted average life of 15 years for Air Serv, 13 years for HHA, and 12 years for Calvert-Jones.

The preliminary estimated fair value of trade accounts receivable acquired for Air Serv reflects gross contractual amounts of $53.2 million, of which $0.4 million is expected to be uncollectable. The preliminary estimated fair value of trade accounts receivable acquired for HHA and Calvert-Jones approximates the contractual amounts.

We have incurred combined acquisition-related costs of $1.1 million, of which $0.3 million has been incurred in the current quarter. These expenses are included in selling, general and administrative expenses in the unaudited condensed consolidated statements of comprehensive income.

Assuming these acquisitions were made at November 1, 2011, the consolidated pro forma results would not be materially different from reported results.

TEGG and CurrentSAFE Acquisition

On May 1, 2012, we entered into an asset purchase agreement with TEGG Corporation (“TEGG”), CurrentSAFE Corporation (“CurrentSAFE”) (both privately held Delaware corporations), TEGG’s shareholder, and certain other parties pursuant to which we acquired substantially all of the assets and assumed certain liabilities of TEGG and CurrentSAFE and also acquired certain software technology from TEGG’s shareholder, for an aggregate purchase price of $5.5 million in cash, net of cash acquired. The purchase price reflects a $0.1 million working capital adjustment received in the fourth quarter of 2012. Approximately $0.5 million of the cash consideration was placed in an escrow account to satisfy any applicable indemnification claims, pursuant to the terms of the purchase agreement. The assets acquired represent the franchise operations of TEGG and CurrentSAFE, and through this acquisition the Company expanded its electrical services to include electrical preventive and predictive maintenance solutions. The acquired net assets and results from operations have been included in the Company’s Building & Energy Solutions segment since May 1, 2012, the date of acquisition. Assuming this acquisition was made at November 1, 2011, the consolidated pro forma results would not be materially different from reported results.