| Schedule of Business Acquisitions, by Acquisition |
The Company reported transaction and integration expenses related to the EMC Acquisition of $18.5 million for the nine months ended September 30, 2016 and $1.8 million for the year ended December 31, 2015, as follows (amounts in thousands):
The following is a summary of the preliminary purchase price to the estimated fair values of the identifiable assets acquired and the liabilities at the EMC Acquisition date (dollars in thousands):
|
|
|
|
|
|
Amounts Recognized and Reported as of EMC Acquisition Date |
Cash and cash equivalents |
$ |
9,032 |
|
Restricted cash |
17,802 |
|
Other current assets |
58,220 |
|
Property, plant and equipment |
94,321 |
|
Equity method investments (a) |
102,719 |
|
Intangible assets (b) |
134,900 |
|
Other non-current assets |
1,074 |
|
Accounts payable and accrued liabilities |
(47,067 |
) |
Deferred revenue |
(6,652 |
) |
Debt, including current |
(370,845 |
) |
Deferred tax liabilities, net |
(74,082 |
) |
Deferred revenue, non-current |
(2,278 |
) |
Other non-current liabilities |
(22,170 |
) |
Estimated fair value of net assets acquired |
$ |
(105,026 |
) |
Consideration transferred |
166,493 |
|
Estimated goodwill |
$ |
271,519 |
|
|
|
(a) |
Represents 49% joint ventures in Wireless Maritime Services, LLC (“WMS Joint Venture”) and Santander Teleport (“Santander Joint Venture”).
|
|
|
(b) |
The intangible assets are comprised of the following (dollars in thousands): |
|
|
|
|
|
|
|
|
Weighted Average Useful Life (Years) |
|
Fair Value |
Completed technology |
6.0 |
|
$ |
21,800 |
|
Customer relationships |
19.0 |
|
19,100 |
|
Favorable vendor agreements |
9.0 |
|
91,800 |
|
Trademarks |
5.0 |
|
2,200 |
|
Total value of intangible assets |
|
|
$ |
134,900 |
|
The following table summarizes the fair value of the assets and liabilities assumed in the acquisitions (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Useful Life (Years) |
|
Amounts at December 31, 2015 (Preliminary) |
|
Adjustments |
|
Purchase Price Allocation, as Adjusted |
Goodwill |
|
|
$ |
41,093 |
|
|
$ |
(812 |
) |
|
$ |
40,281 |
|
Customer relationships |
7.6 |
|
14,000 |
|
|
— |
|
|
14,000 |
|
Developed technology |
5.7 |
|
21,900 |
|
|
— |
|
|
21,900 |
|
Trade name |
5.0 |
|
200 |
|
|
— |
|
|
200 |
|
Accounts receivable |
|
|
6,450 |
|
|
— |
|
|
6,450 |
|
Property and equipment |
|
|
1,783 |
|
|
— |
|
|
1,783 |
|
Deferred tax liability |
|
|
(11,047 |
) |
|
— |
|
|
(11,047 |
) |
Accrued expenses |
|
|
(4,379 |
) |
|
— |
|
|
(4,379 |
) |
Other liabilities assumed, net of assets acquired |
|
|
(1,669 |
) |
|
812 |
|
|
(857 |
) |
Total consideration transferred |
|
|
$ |
68,331 |
|
|
$ |
— |
|
|
$ |
68,331 |
|
The consideration for EMC Acquisition consisted of the following (in thousands, except share and per share and amounts as stated in footnotes to the table):
|
|
|
|
|
Cash consideration paid to seller (a) |
$ |
100,658 |
|
5,466,886 Company common shares multiplied by the $8.03 closing share price per share of on July 27, 2016, less a 7.5% discount for restrictions on transferability (b) |
40,607 |
|
Deferred consideration |
25,000 |
|
Settlement of pre-existing relationship |
228 |
|
Estimated consideration |
$ |
166,493 |
|
|
|
(a) |
The cash consideration includes: (i) the minimum cash payment of $30.0 million; (ii) the change of control restructuring bonus plan payout of $4.5 million; (iii) a payment of $1.0 million that was due in 2016 for deferred purchase price for a prior EMC acquisition; (iv) seller’s transaction expenses of $5.8 million; (v) the indemnity escrow amount of approximately $2.7 million; (vi) the adjustment escrow amount of $1.5 million and (vii) $55.1 million to redeem shares held by the preferred stock shareholders.
|
The change of control restructuring bonus plan allowed a group of employees to be eligible for bonuses if they achieved certain metrics under certain EMC bonus plans and if there was a change in control. As a result of the EMC Acquisition, this amount was paid by GEE to EMC, which was then paid to the employees. As the payment was made concurrently with the EMC Acquisition, the cash paid for these bonuses was included in the consideration and was not assumed as a liability.
|
|
(b) |
A discount was applied to the GEE shares issued in connection with the EMC Acquisition as the shares issued were not registered with the U.S. Securities and Exchange Commission. Although a registration statement for these shares is now effective, the shares are subject to sale restrictions under the registration statement during blackout periods until such time the restriction is lifted or lapses. |
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