Acquisitions

On April 1, 2014, we completed the acquisition of Effective People and Effective Learning (the "Effective Companies"), providers of human capital management (HCM) solutions, including sales and support of the full SAP SuccessFactors Business Education (BizX) Platform, eLearning and blended learning solutions, as well as recruitment and employee development services. The Effective Companies are headquartered in Copenhagen, Denmark. The upfront purchase price was $9.0 million which was paid in cash at closing. In addition, the purchase agreement requires up to an additional $5.7 million of consideration, contingent upon the achievement of certain earnings targets during the two twelve-month periods following completion of the acquisition. We recorded intangible assets as a result of the acquisition in the amount of $1.6 million which are being amortized over four years from the acquisition date. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired Effective Companies business is included in the Learning Solutions segment and the results of its operations have been included in the consolidated financial statements since April 1, 2014. The pro-forma impact of the acquisition is not material to our results of operations. The acquired Effective Companies business is included in our Denmark subsidiary and its functional currency is the Danish Kroner. The purchase price allocation above was translated into U.S. dollars based on the exchange rate in effect on the date of acquisition.

The following table summarizes the purchase price and purchase price allocation for the acquisition (dollars in thousands).



Cash purchase price	$	9,000
Fair value of contingent consideration	5,345
Working capital adjustment	4
Total purchase price	$	14,349

Purchase price allocation:
Cash	$	334
Accounts receivable	1,378
Prepaid expenses and other assets	496
Property, plant and equipment	80
Amortizable intangible assets	1,613
Goodwill	12,556
Total assets	16,457

Accounts payable and accrued expenses	582
Billings in excess of costs and estimated earnings on uncompleted contracts	940
Deferred tax liability	586
Total liabilities	2,108

Net assets acquired	$	14,349

The following tables summarize the purchase prices and purchase price allocations for the acquisitions completed during the years ended December 31, 2013 and 2012. A description of the acquired businesses during each year is summarized below each table.



2013 Acquisitions	(Dollars in thousands)
Acquired company	Prospero		Lorien

Acquisition date	5/31/2013		6/12/2013

Cash purchase price	$	7,028	$	6,734
Fair value of contingent consideration	3,670		573
Total purchase price	$	10,698	$	7,307

Purchase price allocation:
Cash	$	—	$	23
Accounts receivable	—		1,856
Other assets	7		1,553
Property, plant and equipment	51		116
Intangible assets	2,801		1,715
Goodwill	8,112		5,494
Total assets	10,971		10,757

Accounts payable and accrued expenses	40		1,975
Billings in excess of costs and estimated earnings on uncompleted contracts	233		1,132
Deferred tax liability	—		343
Total liabilities	273		3,450

Net assets acquired	$	10,698	$	7,307

Prospero

On May 31, 2013, we completed the acquisition of Prospero Learning Solutions (“Prospero”), a Canada-based provider of custom learning and content development solutions. The upfront purchase price for Prospero was $7.0 million which was paid in cash at closing. In addition, the purchase agreement requires up to an additional $4.7 million of consideration, contingent upon the achievement of certain earnings targets during the two twelve-month periods following completion of the acquisition, as defined in the purchase agreement. No contingent consideration was payable with respect to the first twelve-month period following completion of the acquisition as the earnings target was not achieved. We recorded intangible assets as a result of the acquisition, including $2.8 million of customer-related intangible assets which are being amortized over five years subsequent to the acquisition date. The acquired Prospero business is included in the Learning Solutions segment and the results of its operations have been included in the consolidated financial statements since June 1, 2013. We expect that a portion of the goodwill recorded for financial statement purposes will be deductible for tax purposes. The pro-forma impact of the acquisition is not material to our results of operations. The acquired Prospero business is included in our Canadian subsidiary and its functional currency is the Canadian Dollar. The purchase price allocation above was translated into U.S. dollars based on the exchange rate in effect on the date of acquisition.

Lorien

On June 12, 2013, we completed the acquisition of Lorien Engineering Solutions (“Lorien”), a United Kingdom-based provider of engineering design and project management services with specific expertise in the food and beverage, manufacturing and life sciences industries. The upfront purchase price for Lorien was $6.7 million which was paid in cash at closing. In addition, we paid $1.0 million of contingent consideration in 2014 based upon the achievement of certain earnings targets during the first twelve months following completion of the acquisition, as defined in the purchase agreement. We recorded intangible assets as a result of the acquisition, including $1.7 million of customer-related intangible assets which are being amortized over five years subsequent to the acquisition date. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired Lorien business is included in the Learning Solutions segment and the results of its operations have been included in the consolidated financial statements since June 12, 2013. The pro-forma impact of the acquisition is not material to our results of operations. The acquired Lorien business is included in our United Kingdom subsidiary and its functional currency is the British Pound Sterling. The purchase price allocation above was translated into U.S. dollars based on the exchange rate in effect on the date of acquisition.



2012 Acquisitions	(Dollars in thousands)
Acquired company	Information Horizons		Asentus		Rovsing Dynamics		Blessing White

Acquisition date	5/1/2012		6/29/2012		9/17/2012		10/1/2012

Cash purchase price	$	531	$	1,417	$	720	$	10,529
Fair value of contingent consideration	—		765		—		—
Total purchase price	$	531	$	2,182	$	720	$	10,529

Purchase price allocation:
Cash	$	—	$	396	$	20	$	830
Accounts receivable	—		1,970		—		2,796
Other assets	—		411		898		527
Property, plant and equipment	26		46		5		76
Intangible assets	505		443		775		3,280
Goodwill	—		1,957		458		6,070
Total assets	531		5,223		2,156		13,579

Accounts payable and accrued expenses	—		2,708		428		1,456
Billings in excess of costs and estimated earnings on uncompleted contracts	—		247		1,008		282
Deferred tax liability	—		86		—		1,312
Total liabilities	—		3,041		1,436		3,050

Net assets acquired	$	531	$	2,182	$	720	$	10,529

Information Horizons

Effective May 1, 2012, we entered into an Asset Purchase Agreement with Information Horizons Limited (“Information Horizons”), an independent skills training provider located in the United Kingdom, to acquire its government funded training services business. The purchase price primarily consisted of a customer-related intangible asset of $0.5 million which is being amortized over an estimated useful life of three years subsequent to the acquisition date. Information Horizons is included in the Learning Solutions segment and the results of its operations have been included in the consolidated financial statements since May 1, 2012. The pro-forma impact of the acquisition is not material to our results of operations.

Asentus

On June 29, 2012, through our wholly-owned subsidiaries in Canada and Europe, we acquired the business and operations of Asentus Consulting Group Ltd. and Asentus Europe B.V. (collectively, “Asentus”). Asentus is an international provider of IT technical training content, and live and virtual training event services, with offices in Vancouver, Canada, The Netherlands, Germany and France. The total purchase price for both companies was $1.4 million which was paid in cash. In addition, the purchase agreement requires up to an additional $3.7 million of consideration, contingent upon the achievement of certain earnings targets, as defined in the purchase agreement, during two successive twelve-month periods following the closing. No contingent consideration was payable with respect to both twelve-month periods following completion of the acquisition as the earnings targets were not achieved. We recorded amortizable intangible assets as a result of the acquisition, which included $0.3 million of customer-related intangible assets which are being amortized over an estimated useful life of five years and $0.1 million of intellectual property which is being amortized over an estimated useful life of three years. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired Asentus business is included in the Learning Solutions segment and the results of its operations have been included in the consolidated financial statements since July 1, 2012. The pro-forma impact of the acquisition is not material to our results of operations.

Rovsing Dynamics

On September 17, 2012, we entered into an Asset Purchase Agreement with Rovsing Dynamics A/S (“Rovsing”), located in Denmark, a provider of vibration condition monitoring hardware and software, and on that date acquired the business and certain operating assets. We recorded a technology-related intangible asset of $0.8 million related to proprietary software acquired which is being amortized over an estimated useful life of three years subsequent to the acquisition date. All of the goodwill recorded for financial statement purposes will be deductible for tax purposes. The acquired Rovsing business is included in the Energy Services segment and the results of its operations have been included in the consolidated financial statements since September 17, 2012. The pro-forma impact of the acquisition is not material to our results of operations.

BlessingWhite

On October 1, 2012, we completed the acquisition of BlessingWhite, a provider of leadership development and employee engagement solutions. The total purchase price was $10.8 million in cash at closing and was subsequently reduced by a $0.2 million working capital adjustment paid by the sellers. We recorded $3.3 million of amortizable intangible assets as a result of the acquisition, which includes $1.8 million of customer-related intangible assets which are being amortized over five years, $1.2 million of intellectual property related to training course content which is being amortized over five years, $0.2 million related to the acquired tradename which is being amortized over two years, and $0.1 million related to acquired technology which is being amortized over three years from the acquisition date. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. BlessingWhite is included in the Learning Solutions segment and the results of its operations have been included in the consolidated financial statements since October 1, 2012. The pro-forma impact of the acquisition is not material to our results of operations.

Contingent Consideration

ASC Topic 805 requires that contingent consideration be recognized at fair value on the acquisition date and be re-measured each reporting period with subsequent adjustments recognized in the consolidated statement of operations. We estimate the fair value of contingent consideration liabilities based on financial projections of the acquired companies and estimated probabilities of achievement and discount the liabilities to present value using a weighted-average cost of capital. Contingent consideration is valued using significant inputs that are not observable in the market which are defined as Level 3 inputs pursuant to fair value measurement accounting. We believe our estimates and assumptions are reasonable, however, there is significant judgment involved. At each reporting date, the contingent consideration obligation is revalued to estimated fair value, and changes in fair value subsequent to the acquisitions are reflected in income or expense in the consolidated statements of operations, and could cause a material impact to, and volatility in, our operating results. Changes in the fair value of contingent consideration obligations may result from changes in discount periods, changes in the timing and amount of revenue and/or earnings estimates and changes in probability assumptions with respect to the likelihood of achieving the various earn-out criteria.

Below is a summary of the potential contingent consideration we may be required to pay in connection with completed acquisitions as of December 31, 2014 (dollars in thousands):



	Original range of potential undiscounted	As of December 31, 2014 Maximum contingent consideration due in
Acquisition:	payments	2015		2016		Total
Prospero	$0 - $4,675	$	1,720	$	—	$	1,720
Effective Companies	$0 - $5,668	2,834		2,834		5,668
Total		$	4,554	$	2,834	$	7,388

Below is a summary of the changes in the recorded amount of contingent consideration liabilities from December 31, 2013 to December 31, 2014 for each acquisition (dollars in thousands):



	Liability as of		2014 Additions			Change in Fair Value of Contingent			Foreign Currency			Liability as of
Acquisition:	Dec. 31, 2013		(Payments)			Consideration			Translation			Dec. 31, 2014
Bath Consulting	$	997	$	(1,005	)	$	—		$	8		$	—
Prospero	1,841		—			(1,796		)	(45		)	—
Lorien	959		(1,015		)	31			25			—
Effective Companies	—		5,345			373			(635		)	5,083
Total	$	3,797	$	3,325		$	(1,392	)	$	(647	)	$	5,083

As of December 31, 2014 and 2013, contingent consideration included in accounts payable and accrued expenses on the consolidated balance totaled $2.7 million and $2.4 million, respectively. As of December 31, 2014 and 2013, we also had accrued contingent consideration totaling $2.4 million and $1.4 million, respectively, which is included in other long-term liabilities on the consolidated balance sheet and represents the portion of contingent consideration estimated to be payable greater than twelve months from the balance sheet date.