Acquisitions and Disposition

EdgeRock Technologies, LLC Acquisition

On October 6, 2015, the Company acquired EdgeRock Technologies, LLC, a provider of ERP and other specialist IT staffing, including business intelligence and data analytics, for cash consideration of $33.4 million, including a working capital adjustment that was paid in 2016, plus up to an additional $4.0 million of cash contingent on EdgeRock's operating performance for the twelve months ending October 31, 2016. The acquisition is intended to expand the Company into more specialized areas of IT staffing, enabling CDI to better meet growing demand from existing and new customers for specialized and experienced technology talent.

The following table summarizes the components of total purchase consideration:



Initial cash consideration, net of cash acquired	$	31,294
Working capital adjustment	2,108
Estimated contingent earnout	833
Total purchase consideration	$	34,235

The acquisition was accounted for as a business combination. The following table summarizes the allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed as of October 6, 2015:



Accounts receivable	$	10,870
Other current assets	455
Property and equipment	363
Goodwill	16,445
Other intangible assets:
Trademark	1,340
Customer relationships	6,220
Backlog	2,670
Other non-current assets	13
Total assets	$	38,376
Current liabilities	4,141
Total liabilities	$	4,141
Total purchase consideration	$	34,235

Goodwill is calculated as the excess of the purchase price over the net assets acquired. The Company expects the goodwill balance to be deductible for tax purposes over a period of 15 years. Goodwill is primarily attributed to growth and efficiency opportunities and the assembled workforce.

Other intangible assets reflected above were determined to meet the criterion for recognition apart from tangible assets acquired and liabilities assumed. The fair values of the other intangible assets were estimated based on various valuation techniques including the use of discounted cash flow analyses, which incorporate methods such as relief-from-royalty and multi-period excess earnings valuation approaches, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. These valuation inputs included estimates and assumptions about forecasted future cash flows, long-term revenue growth rates, royalty rates and discount rates. The other intangible assets were determined to have finite lives. The fair value of the EdgeRock trademark was determined using a discounted cash flow model that incorporates the relief from royalty method and will be amortized on a straight line basis over 10 years. The fair value of the customer relationships was determined using a discounted cash flow model that incorporates the excess earnings method and will be amortized on a straight line basis over approximately 5 years. The fair value of the backlog was determined using a discounted cash flow model that incorporates the excess earnings method and will be amortized on an accelerated basis over approximately 1 year. The Company recognized $2.1 million in expense during 2015 for the amortization of these acquired other intangible assets.

The results of EdgeRock have been included within the PSS segment from the acquisition date. Included in the consolidated statement of operations for the year ended December 31, 2015 was revenue of $10.2 million and net loss before tax of $1.2 million from EdgeRock.

The following table presents unaudited consolidated pro forma results as if the acquisition of EdgeRock had occurred as of January 1, 2014 for the indicated periods:



	Year ended December 31,
	2015			2014
Revenue	$	1,020,271		$	1,166,822
Income (loss) before income taxes	$	(21,846	)	$	4,262
Earnings (loss) per common share:
Basic	$	(1.64	)	$	0.13
Diluted	$	(1.64	)	$	0.13

The unaudited pro forma financial information reflect the acquisition of EdgeRock by the application of pro forma adjustments to CDI's historical financial statements as if the acquisition had occurred on January 1, 2014. The unaudited pro forma financial information should not be considered indicative of actual results that would have been achieved had the EdgeRock Acquisition actually been consummated on the date indicated and does not purport to be indicative of the Company's future financial position or results of operations. These pro forma results include the impact of amortizing certain purchase accounting adjustments such as intangible assets and the impact of the acquisition on interest and income tax expense. No adjustments have been reflected in the pro forma financial information for anticipated growth and efficiency opportunities. There were no material nonrecurring pro forma adjustments directly attributable to the acquisition included within the unaudited pro forma financial information.

Ship Shape Acquisition

On October 5, 2015, the Company completed the acquisition of a recruitment business that provides temporary recruitment services to the construction industry from London-based Ship Shape Resources for total consideration of $0.9 million, including contingent consideration of $0.3 million that is based on the estimated gross profit during the twelve month period following the acquisition. As a result of the acquisition, the Company recorded a $1.2 million customer relationship intangible asset that will be amortized on a straight line basis over approximately 4.5 years. The results of Ship Shape have been included in the consolidated financial statements from October 5, 2015, and are reported within the PSS segment. The Ship Shape acquisition was not material to the Company's financial position or results of operations reported as of and for the year ended December 31, 2015.

CDI-Pycopsa Disposition

On March 20, 2015, the Company completed the sale of its 67% interest in CDI-Pycopsa Ingeniería y Construcción, S. de R.L. de C.V. (CDI-Pycopsa), a Mexico-based engineering design company in the GETS reporting segment. CDI-Pycopsa does not meet the criteria to be reported as a discontinued operation under ASU 2014-08, which was adopted by the Company on January 1, 2015. Accordingly, CDI-Pycopsa's results are reflected in the consolidated statements of operations within continuing operations. Excluding the $0.3 million loss on disposition, CDI-Pycopsa's pretax results attributable to CDI were not material for the years ended December 31, 2015 and 2014, respectively. For the year ended December 31, 2015, the Company received $0.4 million of proceeds related to the sale.