Acquisition

6 Months Ended

Jun. 30, 2011

Acquisition [Abstract]

Acquisition

Note 4 — Acquisition

In April 2011, we completed the acquisition of the drilling fluids and engineering services business from Rheochem PLC, a publicly-traded Australian-based oil and gas company. The acquired business provides drilling fluids and related engineering services to the oil and gas exploration and geothermal industries with operations in Australia, New Zealand and India. Total cash paid at closing was AUD$24.5 million ($25.9 million), subject to a post-closing adjustment for working capital conveyed at closing. Additional consideration may also be payable based on financial results of the acquired business over a one year earn-out period, up to a maximum total consideration of AUD$45 million (approximately $48 million at the current exchange rate).

The transaction has been accounted for using the acquisition method of accounting and accordingly, assets acquired and liabilities assumed were recorded at their fair values as of the acquisition date. The excess of the total consideration, including projected additional consideration, was recorded as goodwill and includes the value of the access to markets in Asia Pacific and an assembled workforce. While the initial purchase price allocation has been completed, the allocation of the purchase price is subject to change for a period of one year following the acquisition. The following table summarizes the amounts recognized for assets acquired and liabilities assumed.

(In thousands)
Cash and cash equivalents	$	315
Receivables		3,316
Inventories		7,166
Prepaid expenses and other current assets		773
Property, plant and equipment, net		9,465
Goodwill		13,699
Customer relationships (18 year life)		8,533
Tradename (5 year life)		620
Other assets		510
Total assets acquired	$	44,397
Accounts payable	$	717
Accrued liabilities		14,673
Deferred tax liability		2,820
Other noncurrent liabilities		271
Total liabilities assumed	$	18,481
Total cash conveyed at closing	$	25,916

The accrued liabilities balance above includes $13.0 million reflecting anticipated payments to the seller under the terms of the agreement for working capital conveyed at closing and the anticipated additional consideration pursuant to the one year earn-out.

Our operating results include $0.6 million and $1.0 million of acquisition-related costs in the second quarter and first half of 2011, respectively. Proforma results of operation for the acquired business have not been presented as the effect of this acquisition is not material to our consolidated financial statements.