Mergers and Acquisitions

12 Months Ended

Oct. 02, 2011

Mergers and Acquisitions

Mergers and Acquisitions

4.     Mergers and Acquisitions

        In the second quarter of fiscal 2009, we acquired all of the outstanding shares of capital stock of Wardrop, a Canadian firm that specializes in resource management, energy and infrastructure design and is included in our ECS segment. This acquisition significantly expanded our worldwide presence with offices throughout Canada. The purchase price consisted of initial cash payments and the sellers may receive over a three-year period from the acquisition date contingent earn-out payments upon the achievement of specified financial objectives. At October 2, 2011, we had $88.2 million of goodwill related to the Wardrop acquisition, which represented the value paid for the assembled workforce, the international geographic presence, and engineering and consulting expertise.

        In fiscal 2009, we made other acquisitions in our ECS, TSS and RCM segments that enhanced our service offerings to broad-based clients, including USAID. The aggregate purchase price for fiscal 2009 acquisitions was approximately $121 million plus contingent earn-out payments of an aggregate maximum of approximately $44 million upon the achievement of certain financial objectives. One of these acquisitions resulted in an excess of $2.4 million of the fair value of identifiable assets acquired and liabilities assumed over the purchase price. Due to a contingent consideration agreement that would likely result in recognition of additional purchase price upon resolution, this amount was recognized as a liability in "Other current liabilities" on the consolidated balance sheet as of the date of acquisition.

        In fiscal 2010, we made other acquisitions that enhanced our service offerings and expanded our geographic presence in the ECS, TSS and RCM segments. The aggregate purchase price for 2010 acquisitions was approximately $102 million, of which $84.0 million was paid to the sellers and $17.6 million was the estimated fair value of contingent earn-out payments on acquisition with an aggregate maximum of $24.8 million upon the achievement of specified financial objectives.

        At the beginning of the first quarter of fiscal 2011, we acquired all of the outstanding capital stock of BPR, a Canadian scientific and engineering services firm that provides multidisciplinary consulting and engineering support for water, energy, industrial plants, buildings and infrastructure projects. This acquisition further expands our geographic presence in eastern Canada, and enables us to provide clients with additional services throughout Canada. BPR is part of our ECS segment. The estimated fair value of the purchase price was approximately $186 million, of which payments of $157.0 million were financed with borrowings under our credit facility and available cash resources and $28.7 million was the estimated fair value of contingent earn-out payments on acquisition with a maximum of $39.2 million upon the achievement of specified financial objectives over a two-year period from the acquisition date. The goodwill related to BPR acquisition represented the value paid for the assembled work force, the international geographic presence in eastern Canada, and engineering and consulting expertise. BPR's results are included with our consolidated results of operations for all of fiscal 2011. No pro forma results are presented for fiscal 2010 as the effect of the BPR acquisition was not considered material to our consolidated results of operations. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition:

		Amount
		(in thousands)
Current assets		$	77,698
Property and equipment			7,178
Goodwill			128,140
Intangible and other assets			36,988
Current liabilities			(42,481	)
Long-term deferred taxes			(9,622	)
Noncontrolling interests			(12,222	)
	Net assets acquired	$	185,679

        In fiscal 2011, we made other acquisitions that enhanced our service offerings and expanded our geographic presence in the ECS and TSS segments. The aggregate purchase price for these 2011 acquisitions was approximately $100 million, of which $68.7 million was paid to the sellers, $4.5 was accrued as part of "Other current liabilities" to be paid in the near future in accordance to certain provisions of the purchase agreements and $27.1 million was the estimated fair value of contingent earn-out obligations on acquisition with an aggregate maximum of $32.3 million upon the achievement of specified financial objectives. One acquisition included $5.0 million of restricted cash which is recorded as part of "Prepaid expenses and other current assets" on the consolidated balance at October 2, 2011 to settle contingent consideration payments under an earn-out arrangement.

        For acquisitions consummated after fiscal 2008, $44.3 million of contingent consideration was earned, of which $17.9 million was paid to the sellers and $26.4 million was accrued as part of "Contingent earn-out liabilities" on the consolidated balance sheet at October 2, 2011. The estimated fair value of remaining unearned contingent payments under earn-out arrangements for acquisitions consummated after fiscal 2009 resulted in a discounted liability of $48.7 million, of which $37.7 million is reflected in "Contingent earn-out liabilities" and $11.0 million is included in "Other long-term liabilities" on the consolidated balance sheet at October 2, 2011. In fiscal 2010, the estimated fair value of contingent payments under earn-out arrangements resulted in a discounted liability of $20.5 million, of which $10.5 million is reflected in "Contingent earn-out liabilities" and $10.0 million is reflected in "Other long term liabilities" on the consolidated balance sheet at October 3, 2010. Each contingent consideration is based on future operating income, and its fair value is estimated by management assessing the probability of the results being achieved in the future.

        The purchase price allocations related to the fiscal 2011 acquisitions excluding BPR are preliminary, and subject to adjustment based on the valuation and final determination of any net assets acquired. We do not believe that any adjustments will have a material effect on the consolidated results of operations.

        The results for each acquisition were included on the consolidated financial statements from the closing date of that acquisition. None of the acquisitions were considered material, individually or in the aggregate for the respective reporting periods. As a result, no pro forma information has been provided.