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Acquisitions

The following tables summarize the purchase prices and purchase price allocations for the acquisitions completed during the years ended December 31, 2013, 2012 and 2011. 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 $7,046,000 which was paid in cash at closing and was subsequently reduced by a working capital adjustment of $18,000 received from the sellers. In addition, the purchase agreement requires up to an additional $4,675,000 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. We recorded intangible assets as a result of the acquisition, including $2,801,000 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 $6,734,000 which was paid in cash at closing. In addition, the purchase agreement requires up to an additional $989,000 of consideration, contingent 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 $1,715,000 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 $505,000 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 $1,417,000, of which $1,100,000 was paid in cash at closing and $317,000 was paid during the fourth quarter of 2012 subsequent to the finalization of a working capital calculation pursuant to the purchase agreement. In addition, the purchase agreement requires up to an additional $3,700,000 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 the first twelve-month period following completion of the acquisition as the earnings target was not achieved. A maximum of $1,600,000 would be payable subsequent to the second twelve-month period following completion of the acquisition if the earnings target is achieved. We recorded amortizable intangible assets as a result of the acquisition, which included $325,000 of customer-related intangible assets which are being amortized over an estimated useful life of five years and $118,000 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 $775,000 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 $10,762,000 in cash at closing and was subsequently reduced by a $233,000 working capital adjustment received from the sellers in the first quarter of 2013. We recorded $3,280,000 of amortizable intangible assets as a result of the acquisition, which includes $1,761,000 of customer-related intangible assets which are being amortized over five years, $1,238,000 of intellectual property related to training course content which is being amortized over five years, $191,000 related to the acquired tradename which is being amortized over two years, and $90,000 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.

2011 Acquisitions	(Dollars in thousands)
Acquired company	Communication Consulting		Ultra Training		RWD		Beneast Training

Acquisition date		2/1/2011		4/1/2011		4/15/2011		8/1/2011

Cash purchase price	$	1,505	$	3,420	$	25,760	$	6,771
Fair value of contingent consideration		112		—		—		—
Total purchase price	$	1,617	$	3,420	$	25,760	$	6,771

Purchase price allocation:
Cash	$	—	$	347	$	81	$	2,236
Accounts receivable		—		340		13,667		375
Other assets		—		188		2,261		104
Property, plant and equipment		16		42		573		192
Intangible assets		390		1,412		3,726		2,706
Goodwill		1,211		2,336		13,059		3,790
Total assets		1,617		4,665		33,367		9,403

Accounts payable and accrued expenses		—		878		6,299		1,956
Billings in excess of costs and estimated earnings on uncompleted contracts		—		—		1,308		—
Deferred tax liability		—		367		—		676
Total liabilities		—		1,245		7,607		2,632

Net assets acquired	$	1,617	$	3,420	$	25,760	$	6,771

Communication Consulting

On February 1, 2011, through our wholly-owned subsidiaries in Hong Kong and Shanghai, we acquired the training business and certain related assets of Cathay/Communication Consulting Limited (“Communication Consulting”), a Hong Kong-based training and consulting company with offices in Shanghai and Beijing, China, and Haryana (New Delhi) in India. Communication Consulting designs and delivers customized training solutions and specializes in the areas of leadership, communication skills, sales and customer service training. The purchase price allocation includes $390,000 of intangible assets, which consists of $230,000 for intellectual property and $160,000 for customer-related intangible assets, both of which are being amortized over five years from the acquisition date. All of the goodwill recorded for financial statement purposes will be deductible for tax purposes. The acquired Communication Consulting business is included in the Learning Solutions segment and the results of its operations have been included in the consolidated financial statements since February 1, 2011. The pro-forma impact of the acquisition is not material to our results of operations.

Ultra Training Ltd.

On April 1, 2011, we acquired Ultra Training Ltd., an independent skills training provider located in the United Kingdom. The purchase price allocation includes $1,412,000 of customer-related intangible assets which are being amortized over five years from the acquisition date. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. Ultra Training Ltd. is included in the Learning Solutions segment and its results of operations have been included in the consolidated financial statements since April 1, 2011. The pro-forma impact of the acquisition is not material to our results of operations.

RWD Technologies

On April 15, 2011, we completed the acquisition of certain assets of the consulting business of RWD Technologies, LLC, a Delaware limited liability company, and certain of its subsidiaries (collectively, “RWD”). RWD is a provider of human capital management and IT consulting services, business transformation and lean process improvement, end-user training, change management, knowledge management and operator effectiveness management solutions in industries such as manufacturing, energy, automotive, aerospace, healthcare, life sciences, consumer products, financial, telecommunications, services and higher education as well as the public sector. We paid $27,980,000 of cash at closing. The purchase price was subsequently reduced by a working capital adjustment of $2,220,000 received from the sellers in September 2011. The purchase price allocation includes $3,726,000 of intangible assets, which consists of $2,935,000 for customer-related intangible assets which are being amortized over 5.9 years and $791,000 related to the acquired tradename which was amortized over two years from the acquisition date. All of the goodwill recorded for financial statement purposes will be deductible for tax purposes. A portion of the acquired business is reported as a separate reportable segment named Performance Readiness Solutions (formerly RWD), and the other business units are included in the Professional & Technical Services and Sandy Training & Marketing segments. The results of RWD’s operations have been included in the consolidated financial statements since April 16, 2011.

Beneast Training Ltd.

On August 1, 2011, we acquired the share capital of TK Holdings Ltd and its subsidiary Beneast Training Ltd. (collectively, “Beneast”), an independent skills training provider located in the United Kingdom. The purchase price allocation includes $2,706,000 of customer-related intangible assets which are being amortized over five years from the acquisition date. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. Beneast is included in the Learning Solutions segment and its results of operations have been included in the consolidated financial statements since August 1, 2011. The pro-forma impact of the acquisition is not material to our results of operations.

Van Hee

On July 29, 2011, we entered into an Asset Purchase Agreement with Van Hee Transport Limited (“Van Hee”), an independent skills training provider located in the United Kingdom, to acquire a contract to provide government funded training services. The purchase price was $770,000 in cash at closing and was recorded as an intangible asset which is being amortized over an estimated useful life of three years subsequent to the acquisition date. Van Hee is included in the Learning Solutions segment and its results of operations have been included in the consolidated financial statements since August 1, 2011.

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, 2013 (dollars in thousands):

	Original range
	of potential	As of December 31, 2013
	undiscounted	Maximum contingent consideration due in
Acquisition:	payments	2014		2015		Total
Bath Consulting	$0 - $2,376	$	997	$	—	$	997
Asentus	$0 - $3,700		1,600		—		1,600
Prospero	$0 - $4,675		2,805		1,870		4,675
Lorien	$0 - $989		989		—		989
Total		$	6,391	$	1,870	$	8,261

Below is a summary of the changes in the recorded amount of contingent consideration liabilities from December 31, 2012 to December 31, 2013 for each acquisition (dollars in thousands):

					Change in
			2013		Fair Value of		Foreign
	Liability as of		Additions		Contingent		Currency		Liability as of
Acquisition:	Dec. 31, 2012		(Payments)		Consideration		Translation		Dec. 31, 2013
Milsom	$	302	$	(299)	$	—	$	(3)	$	—
Marton House		774		(759)		32		(47)		—
Bath Consulting		1,464		(676)		228		(19)		997
Asentus		544		-		(533)		(11)		—
Prospero		—		3,670		(1,727)		(102)		1,841
Lorien		—		573		324		62		959
Total	$	3,084	$	2,509	$	(1,676)	$	(120)	$	3,797

As of December 31, 2013 and 2012, contingent consideration included in accounts payable and accrued expenses on the consolidated balance totaled $2,405,000 and $2,540,000, respectively. As of December 31, 2013 and 2012, we also had accrued contingent consideration totaling $1,392,000 and $544,000, 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.