Business Combinations

8 Months Ended

Sep. 12, 2015

Business Combinations [Abstract]

Business Combinations

BUSINESS COMBINATIONS

On October 16, 2014, the Company purchased the outstanding stock of FCC Environmental LLC, a Delaware limited liability company, and International Petroleum Corp. of Delaware, a Delaware corporation (together "FCC Environmental"), pursuant to a Stock Purchase Agreement entered into with Dédalo Patrimonial S.L.U., a sociedad limitadad unipersonal formed under the laws of Spain ("Seller"). Prior to the purchase, FCC Environmental was an environmental services provider and collector of used oil in the United States and operated 34 facilities mostly in the eastern half of the United States. The purchase price for FCC Environmental was set at $90.0 million subject to certain adjustments, including, without limitation, a working capital adjustment and indemnification rights and obligations. Based on the initial working capital calculations, the Company initially paid $88.8 million. The Company is in the process of determining the final purchase price, which is based on the final working capital calculations and must be agreed upon by the Seller and the Company. The outcome of the calculation of the working capital adjustment may significantly impact the purchase price and purchase price allocation. The results of FCC Environmental are consolidated into both of the Company's operating segments subsequent to the closing date.

The Company is continuing to evaluate the purchase price allocations. Preliminary purchase price allocations are tentative and subject to revision as the Company finalizes appraisals and other analyses. Measurement period adjustments reflect new information obtained about facts and circumstances that existed as of the acquisition date. Final determination of the fair values may result in further adjustments to the values presented. The Company believes that the preliminary allocations provide a reasonable basis for estimating the fair values of assets acquired and liabilities assumed based on the information available. The FCC Environmental purchase price allocation is preliminary as the Company is still in the process of obtaining information to finalize the purchase price, net cash paid, and estimated fair values of the assets and liabilities presented below.

The Company expects to finalize the purchase price allocation no later than one year from the purchase date.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed, net of cash acquired, related to the acquisition (in thousands):

	FCC Environmental
Accounts receivable	$	20,430
Inventory	7,899
Other current assets	6,683
Deferred taxes	1,748
Property, plant, & equipment (a)(c)	49,752
Equipment at customers	420
Intangible assets	9,808
Goodwill(b)(c)	13,168
Accounts payable	(12,453		)
Accrued salaries, wages, and benefits	(2,039		)
Taxes payable	(2,209		)
Other current liabilities	(1,378		)
Capital lease obligations (a)	(5,918		)
Net cash paid	$	85,911

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^(a) Subsequent to the closing date, the Company modified the leases acquired from FCC Environmental, resulting in the classification of the leases as Operating leases under the new lease terms. The change in lease terms decreased both Property, plant, & equipment and Capital lease obligations by $5.9 million.

^(b) Goodwill recognized from the acquisition of FCC Environmental represents the excess of the fair value of the net assets acquired over the purchase price, and is based upon the Company's expectations of synergies from combining the operations of FCC Environmental and the Company, and the value of intangible assets that are not separately recognized, such as the assembled workforce. Goodwill of $7.1 million and $6.1 million were assigned to the Environmental Services and Oil Business segments, respectively. All goodwill is expected to be deductible for income tax purposes.

^(c) The Company has retrospectively adjusted amounts that were recognized at the acquisition date to reflect new information about the facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. These adjustments are related to the Company's valuation of accounts receivable, other current assets, property, plant and equipment, and goodwill acquired. Such adjustments resulted in a net decrease of $1.6 million in accounts receivable, a net decrease of $0.1 million in other current assets, a net decrease of $2.0 million in property, plant and equipment and a net increase of $3.6 million in goodwill. The Company's balance sheet as of January 3, 2015 has been retrospectively restated to reflect these adjustments.

Unaudited Pro Forma Financial Information

The pro forma financial information in the table below presents the combined results of the Company as if the FCC Environmental acquisition that occurred in fiscal 2014 had occurred December 29, 2013 (in thousands, except per share data). The pro forma information is shown for illustrative purposes only and is not necessarily indicative of future results of operations of the Company or results of operations of the Company that would have actually occurred had the transactions been in effect for the period presented.

	Third Quarter Ended,		First Three Quarters Ended,
	September 6, 2014		September 6, 2014
Total revenues	$	107,256	$	321,163
Net income (loss)	588		(2,191		)
Income (loss) per share
Basic	$	0.03	$	(0.12	)
Diluted	0.03		(0.12		)