Business Combinations

12 Months Ended

Jan. 31, 2016

Business Combinations

Business Combinations

2. BUSINESS COMBINATIONS

During 2013, the Company acquired the assets of Blue Dot Energy Services, LLC (“Blue Dot”) and Bulldog Frac Rentals, LLC (“Bulldog”) (the “2013 Acquisitions”), providers of parts distribution, rental equipment and on‑site services to the oil and gas industry, for a net purchase price of $114.0. The excess of the purchase price over the fair value of the identifiable assets acquired approximated $70.6, of which $33.2 was allocated to identified intangible assets, consisting of customer contracts and relationships and covenants not to compete, and $37.4 was included in goodwill. The useful life assigned to the customer contracts and relationships was 20 years, and the covenants not to compete were being amortized over their contractual periods of five years. The customer contracts and relationships and the covenants not to compete were both impaired and fully written off during the third quarter of 2015. See Note 4 for a discussion of the asset impairment charge.

In January 2014, the Company acquired the assets of the LT Energy Services group of companies ("LT"), an Eagle Ford Shale provider of rental equipment, for a net purchase price of approximately $102.5. In February 2014, the Company acquired the assets of Wildcat Wireline LLC ("Wildcat"), a provider of wireline services primarily in the Eagle Ford Shale and also in the Marcellus/Utica Shales, for a net purchase price of approximately $153.4. In April 2014, the Company acquired the assets of the Vision Oil Tools, LLC group of companies ("Vision"), a provider of technical services and associated rental equipment to the energy sector. Vision established a new geographical base of operations for the Company in the North Dakota (Williston/Bakken) and Rocky Mountain regions. The total purchase price was $175.7, which included a deferred payment of $35.0, which was paid during the first quarter of Fiscal 2015 based on the achievement of 2014 financial results. In April 2014, the Company acquired the assets of the Marcellus Gasfield Services group of companies ("MGS") engaged in manufacturing and rental of equipment in the Marcellus/Utica Shales for approximately $44.0. During June 2014, the Company acquired the assets of the Cornell Solutions group of companies ("Cornell"), which provides technical services and rental equipment to the energy sector in the Eagle Ford Shale and Permian Basin. The total purchase price was $128.2, which included a deferred payment of $56.0, which was paid during the first quarter of Fiscal 2015 based on the achievement of 2014 financial results. These acquisitions are referred to collectively as the "2014 Acquisitions".

For the 2014 Acquisitions, the excess of the purchase price over the fair value of the identifiable assets acquired approximated $431.3, of which $162.0 was allocated to identified intangible assets, consisting of customer contracts and relationships and covenants not to compete, and $269.3 was included in goodwill. The useful life assigned to the customer contracts and relationships was 20 years, and the covenants not to compete were being amortized over their contractual periods of five years. The customer contracts and relationships and the covenants not to compete were both impaired and fully written off during the third quarter of 2015. See Note 4 for a discussion of the asset impairment charge.

The 2014 and 2013 Acquisitions were accounted for as purchases under FASB ASC 805, Business Combinations (“ASC 805”). The assets purchased and liabilities assumed for the 2014 and 2013 Acquisitions have been reflected in the accompanying consolidated balance sheets as of January 31, 2016 and January 31, 2015, and the results of operations for the 2014 and 2013 Acquisitions are included in the accompanying consolidated and combined statements of earnings from the respective dates of acquisition.

The following table summarizes the current estimates of fair values of assets acquired and liabilities assumed in the 2014 and 2013 Acquisitions in accordance with ASC 805 as follows:

							Other
							2014		Total		Total
	Wildcat		Vision		Cornell		Acquisitions		2014		2013
Accounts receivable-trade	$	0.4	$	10.8	$	10.5	$	15.1	$	36.8	$	14.8
Inventories		1.3		—		—		0.4		1.7		3.9
Other current and non-current assets		—		2.4		—		0.1		2.5		0.2
Property and equipment		30.3		44.1		28.5		40.5		143.4		35.5
Goodwill		83.7		69.8		57.5		58.3		269.3		37.4
Identified intangibles		37.7		50.1		33.6		40.6		162.0		33.2
Accounts payable		—		(1.5)		(0.7)		(4.3)		(6.5)		(10.0)
Other current and non-current liabilities		—		(35.0)		(57.2)		(4.2)		(96.4)		(1.0)
Total consideration paid	$	153.4	$	140.7	$	72.2	$	146.5	$	512.8	$	114.0

The majority of the goodwill and other intangible assets related to the 2014 and 2013 Acquisitions is expected to be deductible for tax purposes.

The amount of 2013 Acquisitions and 2014 Acquisitions revenues and net earnings included in the Company’s results for the years ended December 31, 2014 and December 31, 2013 were $385.5 and $34.9 and $23.5 and $(1.1), respectively.

On a pro forma basis to give effect to the 2013 and 2014 Acquisitions as if they occurred on January 1, 2014, revenues and net earnings for the years ended December 31, 2014 and December 31, 2013 would have been as follows:

	UNAUDITED
	YEAR ENDED
	December 31, 2014		December 31, 2013
	Pro forma		Pro forma
Revenues	$	1,763.2	$	1,587.3
Net earnings(1)		100.5		178.8
Earnings per diluted share(1)		1.92		3.42

(1) 2014 includes $56.9 of non‑recurring costs and $67.3 of non-recurring exit taxes; 2013 includes $24.2 of non‑recurring costs.