UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
(Amendment No. 1)
(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, 2012
OR
¨ 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 001-34867
UNITEK GLOBAL SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 75-2233445 |
(State or Other Jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) |
1777 Sentry Parkway West, Gwynedd Hall, Suite 302
Blue Bell, Pennsylvania 19422
(Address of Principal Executive Offices)
(267) 464-1700
(Registrant’s Telephone Number, Including Area Code)
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. Yes x 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). Yes x 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 ¨ | Accelerated filer x |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) | Smaller reporting company ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
On August 6, 2012, 18,668,200 shares of the registrant’s common stock, $0.00002 par value per share, were outstanding.
EXPLANATORY NOTE
The sole purpose of this Amendment No. 1 to UniTek Global Services, Inc.’s Quarterly Report on Form 10-Q (the “Form 10-Q”) for the quarterly period ended June 30, 2012, as filed with the Securities and Exchange Commission on August 8, 2012, is to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 provides the financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).
This Amendment No. 1 speaks as of the original filing date of the Form 10–Q, does not reflect events that may have occurred after the filing of the Form 10-Q and does not modify or update disclosures made in the original Form 10-Q.
Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
Item 6. Exhibits
(a) Exhibits
*31.1 | Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
*31.2 | Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
*32.1 | Certification of our Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
**101.INS | XBRL Instance Document | |
**101.SCH | XBRL Taxonomy Extension Schema | |
**101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
**101.LAB | XBRL Taxonomy Extension Label Linkbase | |
**101.PRE | XBRL Taxonomy Extension Presentation Linkbase | |
**101.DEF | XBRL Taxonomy Extension Definition Linkbase |
* Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 (File No. 001-34867), as filed with the Securities and Exchange Commission on August 8, 2012.
** Furnished herewith.
SIGNATURES
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.
UNITEK GLOBAL SERVICES, INC. | ||
Date: August 24, 2012 | By: | /s/ Ronald J. Lejman |
Ronald J. Lejman | ||
Chief Financial Officer and Treasurer | ||
(Principal Financial Officer) |
Business Combinations - Acquisition of Pinnacle - Amortizable Intangible Assets Acquired (Detail) (Pinnacle, USD $)
In Thousands, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2012
|
Apr. 03, 2011
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Acquired Finite-Lived Intangible Assets [Line Items] | ||
Estimated fair value | $ 28,686 | |
Weighted-average amortization period | 9 years 8 months 12 days | |
Customer relationships and backlog
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Acquired Finite-Lived Intangible Assets [Line Items] | ||
Estimated fair value | 23,530 | |
Weighted-average amortization period | 10 years 6 months | |
Non-compete agreements
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Acquired Finite-Lived Intangible Assets [Line Items] | ||
Estimated fair value | 388 | |
Weighted-average amortization period | 2 years | |
Technology and Trade Names
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Acquired Finite-Lived Intangible Assets [Line Items] | ||
Estimated fair value | $ 4,768 | |
Weighted-average amortization period | 6 years 6 months |
Future Maturities of Long-Term Debt (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
|
---|---|
Long Term Debt Maturities Repayments Of Principal [Line Items] | |
2012 | $ 900 |
2013 | 1,200 |
2014 | 1,200 |
2015 | 1,200 |
2016 | 29,310 |
Thereafter | 113,300 |
Total | $ 147,110 |
Goodwill and Intangible Assets - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2012
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Jul. 02, 2011
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Jun. 30, 2012
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Jul. 02, 2011
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Dec. 31, 2011
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Finite-Lived Intangible Assets [Line Items] | |||||
Accumulated impairment losses | $ 32.4 | $ 32.4 | $ 32.4 | ||
Amortization expense | $ 2.6 | $ 3.3 | $ 5.1 | $ 6.1 |
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (Fair Value, Measurements, Recurring, USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Assets | ||
Cash and cash equivalents | $ 95 | |
Deferred compensation plan assets | 716 | 551 |
Total | 716 | 646 |
Liabilities | ||
Contingent consideration | 84 | 26,958 |
Interest rate swap | 112 | 133 |
Total | 196 | 27,091 |
Quoted Prices in Active Markets (Level 1)
|
||
Assets | ||
Cash and cash equivalents | 95 | |
Deferred compensation plan assets | 716 | 551 |
Total | 716 | 646 |
Significant Other Observable Inputs (Level 2)
|
||
Liabilities | ||
Interest rate swap | 112 | 133 |
Total | 112 | 133 |
Significant Unobservable Inputs (Level 3)
|
||
Liabilities | ||
Contingent consideration | 84 | 26,958 |
Total | $ 84 | $ 26,958 |
Concentration of Credit Risk - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2012
Customer
|
Dec. 31, 2011
Customer
|
|
Concentration Risk [Line Items] | ||
Accounts receivable and unbilled revenue | 104,748 | 91,533 |
Credit Concentration Risk
|
||
Concentration Risk [Line Items] | ||
Account receivable concentration, number of major customers | 5 | 5 |
Credit Concentration Risk | Accounts Receivable
|
||
Concentration Risk [Line Items] | ||
Accounts receivable and unbilled revenue | 58,100 | 47,600 |
Concentration risk percentage | 55.00% | 52.00% |
Segment Reporting (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2012
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Selected Segment Financial Information | The following table presents selected segment financial information for the three months ended June 30, 2012:
The following table presents selected segment financial information for the six months ended June 30, 2012:
|
Activity in Liabilities Classified within Level Three of Valuation Hierarchy (Detail) (Contingent Consideration, USD $)
In Thousands, unless otherwise specified |
6 Months Ended |
---|---|
Jun. 30, 2012
|
|
Contingent Consideration | |
Beginning Balance | $ 26,958 |
Acquisitions | 484 |
Changes in fair value | (724) |
Ending Balance | 84 |
Payments
|
|
Contingent Consideration | |
Settlements | (19,541) |
Reclassifications To Additional Paid In Capital [Member]
|
|
Contingent Consideration | |
Settlements | $ (7,093) |
Accounts Receivable and Unbilled Revenue, Net of Allowances (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2012
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Accounts Receivable and Unbilled Revenue Net of Allowances | The following table presents the components of accounts receivable and unbilled revenue, net of allowances:
|
Estimated Amortization Expense (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Six months ending December 31, 2012 | $ 4,698 | |
2013 | 4,413 | |
2014 | 3,518 | |
2015 | 3,370 | |
2016 | 2,665 | |
Thereafter | 11,329 | |
Amortizable intangible assets, net | $ 29,993 | $ 34,418 |
Business Combinations - 2012 Cable Acquisitions - Calculation of Preliminary Purchase Prices (Detail) (USD $)
In Thousands, unless otherwise specified |
Mar. 02, 2012
Cableview
|
Jan. 03, 2012
Streamline
|
---|---|---|
Business Acquisition [Line Items] | ||
Cash | $ 2,400 | $ 458 |
Fair value of contingent consideration | 484 | |
Total purchase price | $ 2,884 | $ 458 |
Business Combinations Acquisition of Pinnacle - Additional Information (Detail) (USD $)
|
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | ||||||||||||
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Jun. 30, 2012
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Jul. 02, 2011
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Jun. 30, 2012
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Jul. 02, 2011
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Jun. 30, 2012
Pinnacle
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Jul. 02, 2011
Pinnacle
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Jun. 30, 2012
Pinnacle
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Apr. 03, 2011
Pinnacle
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Jun. 30, 2012
Pinnacle
Earn Out Payment
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Mar. 31, 2012
Pinnacle
Earn Out Payment
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Mar. 30, 2012
Pinnacle
Earn Out Payment
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Dec. 31, 2011
Pinnacle
Earn Out Payment
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Apr. 30, 2011
Pinnacle
Scenario Original Contractual Terms
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Apr. 03, 2011
Pinnacle
Scenario Original Contractual Terms
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Apr. 03, 2011
Pinnacle
Scenario Original Contractual Terms
Maximum
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Apr. 30, 2011
Pinnacle
Scenario Original Contractual Terms
At Closing
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Apr. 30, 2011
Pinnacle
Scenario Original Contractual Terms
Held in Escrow
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Apr. 03, 2011
Pinnacle
Scenario Original Contractual Terms
Earn Out Payment
|
Apr. 03, 2011
Pinnacle
Scenario Original Contractual Terms
Earn Out Payment
Maximum
Installment
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Apr. 30, 2011
Pinnacle
Scenario Amended Contractual Terms
Earn Out Payment
Maximum
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Business Acquisition [Line Items] | ||||||||||||||||||||
Business acquisition, aggregate purchase price | $ 47,000,000 | $ 50,700,000 | ||||||||||||||||||
Business acquisition, aggregate purchase price | 20,700,000 | |||||||||||||||||||
Business acquisition, fair value of contingent consideration | 25,800,000 | 30,000,000 | ||||||||||||||||||
Business acquisition, cash | 12,700,000 | 19,500,000 | 2,400,000 | 12,700,000 | ||||||||||||||||
Business acquisition, shares | 8,500,000 | 8,000,000 | ||||||||||||||||||
Number of trading days used to determine weighted average of the closing prices | 20 days | 20 days | ||||||||||||||||||
Common stock, closing price per share | $ 9.14 | $ 3.65 | $ 3.37 | $ 8.65 | ||||||||||||||||
Business acquisition, common stock issued | 2,105,000 | 924,856 | 578,037 | 346,819 | 3,029,856 | |||||||||||||||
Number of earnout payments | 3 | |||||||||||||||||||
Earnout payments payable in cash | 60.00% | |||||||||||||||||||
Earnout payments payable in shares | 40.00% | |||||||||||||||||||
Business acquisition, payments | 27,200,000 | |||||||||||||||||||
Business acquisition, equity issued | 7,700,000 | |||||||||||||||||||
Business acquisition, revenue contributed by acquiree | 15,200,000 | 6,400,000 | 29,000,000 | |||||||||||||||||
Business acquisition, operating income contributed by acquiree | 3,226,000 | 1,407,000 | (2,790,000) | (1,260,000) | 2,900,000 | 400,000 | 5,400,000 | |||||||||||||
Acquisition related costs from Pinnacle | 100,000 | |||||||||||||||||||
Goodwill from acquisition, none tax-deductible | $ 16,817,000 |
Long-Term Debt (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
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Dec. 31, 2011
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Debt Instrument [Line Items] | ||
Long term Loan | $ 143,850 | $ 112,217 |
Less current portion | 1,500 | 1,000 |
Long-term debt, net of current portion | 142,350 | 111,217 |
Revolving Loan
|
||
Debt Instrument [Line Items] | ||
Long term Loan | 28,110 | 15,663 |
Term Loan
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||
Debt Instrument [Line Items] | ||
Long term Loan | $ 115,740 | $ 96,554 |
Related-Party Transactions - Additional Information (Detail) (HM Capital, USD $)
In Millions, unless otherwise specified |
Jun. 30, 2012
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Nov. 16, 2010
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HM Capital
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Related Party Transaction [Line Items] | ||
Agreed termination fee for Monitoring and Oversight Agreement | $ 4.3 | |
Number of trading days used to determine average share price | 20 days |
Changes in Carrying Amount of Goodwill (Detail) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended |
---|---|
Jun. 30, 2012
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Goodwill [Line Items] | |
Beginning Balance | $ 163,797 |
Goodwill associated with acquisitions | 2,257 |
Other adjustments | (1) |
Ending balance | 166,053 |
Fulfillment
|
|
Goodwill [Line Items] | |
Beginning Balance | 105,308 |
Goodwill associated with acquisitions | 2,257 |
Other adjustments | (1) |
Ending balance | 107,564 |
Engineering and Construction
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|
Goodwill [Line Items] | |
Beginning Balance | 58,489 |
Goodwill associated with acquisitions | |
Other adjustments | |
Ending balance | $ 58,489 |
Business Combinations
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2012
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Business Combinations |
Acquisition of Pinnacle
Effective April 3, 2011, UniTek completed the acquisition of Pinnacle Wireless, Inc. (“Pinnacle”) pursuant to an Asset Purchase Agreement dated as of March 30, 2011, as amended on March 28, 2012 (the “Asset Purchase Agreement”). Pinnacle specializes in large-scale communications projects for transportation, public safety, entertainment, hospitality and enterprise-grade commercial real estate, which has expanded the Company’s presence in the two-way radio and wireless communications systems integration markets.
In accordance with the Asset Purchase Agreement, UniTek agreed to pay an aggregate purchase price of up to $50.7 million, subject to certain conditions and adjustments, consisting of a base purchase price of $20.7 million and earn-out payments of up to $30.0 million. The base purchase price of $20.7 million consisted of $12.7 million in cash and $8.0 million in shares of UniTek common stock. The number of shares of common stock was determined using the volume-weighted average of the closing prices of the common stock as quoted on the Nasdaq Global Market for the 20 days prior to March 31, 2011, which was $8.65 per share, resulting in the issuance of 924,856 shares of the Company’s common stock. Of the consideration paid in shares of the Company’s common stock, 578,037 shares were delivered at closing and 346,819 shares were placed into escrow, to be held until their release in accordance with the terms of the Asset Purchase Agreement.
The contingent consideration was in the form of earn-out payments based upon the achievement of incremental earnings before interest, taxes, depreciation and amortization (“EBITDA”) performance targets as defined in the Asset Purchase Agreement. Such payments were originally payable at up to three separate dates, 60% in cash and 40% in equity, but the Asset Purchase Agreement was subsequently amended on March 28, 2012 to limit the total number of shares issued (including those that had been issued in connection with the April 2011 closing of the acquisition) to 3,029,856, with the remainder of the earn-out payments payable in cash. The Company satisfied its obligations under the earn-out provision by making (i) an initial payment of $2.4 million in cash during the quarter ended December 31, 2011, and (ii) a second payment of $27.2 million during the quarter ended June 30, 2012, consisting of $19.5 million of cash and $7.7 million of equity. The number of shares of common stock issued in connection with the second earn-out payment was determined using the volume-weighted average of the closing prices of the common stock as quoted on the Nasdaq Global Market for the 20 days prior to March 31, 2012, which was $3.65 per share, resulting in the issuance of 2,105,000 shares of the Company’s common stock. The fair value of these shares was determined using the Company’s closing stock price on March 30, 2012 of $3.37 per share.
The acquisition-date fair value of the consideration to acquire Pinnacle was $47.0 million, consisting of $12.7 million in cash (net of cash acquired), $8.5 million in equity and contingent consideration of $25.8 million representing the estimated fair value of the earn-out payments. The fair value of the equity was determined based upon the Company’s closing stock price on the last business day prior to April 3, 2011, which was $9.14 per share. The fair value of the contingent consideration was determined on the acquisition date and subsequently updated using a Monte Carlo simulation model applied to the Company’s estimate of Pinnacle’s expected EBITDA performance at each of the measurement dates. Changes in the fair value of the contingent consideration each period subsequent to the acquisition date were recognized in earnings.
The following table presents the allocation of the purchase price to the fair value of assets acquired and liabilities assumed as of the date of acquisition:
During the three and six months ended June 30, 2012, the acquisition of Pinnacle contributed revenue of approximately $15.2 million and $29.0 million, respectively, and operating income of approximately $2.9 million and $5.4 million, respectively. During the three months ended July 2, 2011, the acquisition of Pinnacle contributed revenue of approximately $6.4 million and operating income of $0.4 million. Acquisition related costs for the three months ended July 2, 2011 were $0.1 million, which were recorded as a component of selling, general and administrative expenses. The Company has recognized goodwill of $16.8 million, which is tax-deductible, arising from the acquisition representing the value of the existing workforce as well as expected synergies from the combination of operations. The goodwill associated with the acquisition of Pinnacle is included in the Engineering and Construction segment’s assets.
The following table presents amortizable intangible assets acquired as of the date of acquisition:
The following table presents pro forma revenue and loss from continuing operations as if the Pinnacle acquisition had occurred on January 1, 2011:
2012 Cable Acquisitions
On March 2, 2012, the Company acquired substantially all of the assets and assumed certain liabilities of Cableview Communications Inc. (“Cableview”), a company that provides cable television installation services, for a total purchase price of $2.9 million. The purchase price included $0.5 million of cash paid at closing, $1.9 million of cash paid during the quarter ended June 30, 2012 and $0.5 million for the fair value of contingent consideration in the form of earn-outs. The earn-outs are based on the achievement of certain revenue levels for the six- and 12-month periods subsequent to the acquisition date up to maximum amounts of $0.4 million and $1.4 million, respectively. The fair value of the contingent consideration was calculated based on the estimated probabilities of certain revenue levels being achieved. The acquisition expanded the Company’s cable installation geographic footprint and enhanced customer diversification. The intangible assets valued at approximately $0.5 million relate to a non-compete agreement which is being amortized over 12 months and customer contracts that are being amortized over 24 months. The amortization of intangible assets and goodwill will be deductible for tax purposes upon payment of all purchase consideration. The results of Cableview were included in the consolidated results of the Company effective March 2, 2012 and have been contributing approximately $3.5 million to revenue quarterly at margins consistent with the Company’s overall cable business.
On January 3, 2012, the Company acquired substantially all of the assets and assumed certain liabilities of Streamline Communications, Inc., (“Streamline”), a company that provides cable television installation services in the greater Dallas, Texas market, for a total purchase price of $0.5 million. The acquisition expands the Company’s existing cable installation presence in the Dallas area. The intangible asset valued at $0.2 million relates to customer contracts that are being amortized over 24 months. The amortization of intangible assets and goodwill is deductible for tax purposes. The results of Streamline were included in the consolidated results of the Company effective January 3, 2012 and have been contributing approximately $0.4 million to revenue quarterly at margins consistent with the Company’s overall cable business.
The following table presents the calculation of the preliminary purchase prices for these acquisitions:
The following table presents the allocation of the preliminary purchase price to the fair value of assets acquired and liabilities assumed at the date of acquisition:
The results of Cableview and Streamline were not material on a pro forma basis to the Company’s consolidated revenues or loss from continuing operations. |
Income Taxes - Additional Information (Detail) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2012
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Jul. 02, 2011
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Jun. 30, 2012
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Jul. 02, 2011
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Income Taxes [Line Items] | ||||
Income tax expense | $ 909,000 | $ 889,000 | $ 1,584,000 | $ 1,401,000 |
Income tax expense, current | 100,000 | 100,000 | 400,000 | 200,000 |
Income tax expense, deferred | $ 1,000,000 | $ 1,000,000 | $ 2,000,000 | $ 1,600,000 |