Mergers and Acquisitions

9 Months Ended

Jul. 03, 2011

Mergers and Acquisitions

Mergers and Acquisitions

3.             Mergers and Acquisitions

On October 4, 2010, we acquired all of the outstanding capital stock of BPR, Inc. (“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 Engineering and Consulting Services (“ECS”) segment. The estimated fair value of the purchase price was approximately $186 million, of which the initial payment of $157 million was financed with borrowings under our revolving credit facility and available cash resources. In addition, the former owners may receive over a two-year period from the acquisition date contingent earn-out payments up to an aggregate maximum of Canadian dollars (“CAD”) $40 million (equivalent to U.S. $41.7 million as of July 3, 2011) upon achievement of specified financial objectives. The estimated fair value of the contingent earn-out payments resulted in a discounted liability of $31.2 million, of which $15.5 million is reflected in “Contingent earn-out liabilities” and $15.7 million is included in “Other long-term liabilities” on our condensed consolidated balance sheet as of July 3, 2011. The contingent earn-out 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 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

BPR was acquired at the beginning of fiscal 2011 and its results are included in 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.

In the second quarter of fiscal 2011, we acquired substantially all of the assets of a Canadian firm that enhances our service offerings in water treatment and tailings management for oil sand producers, which are included in our ECS segment.  During the first nine months of fiscal 2010, we acquired three companies that enhanced our service offerings and expanded our geographic presence in the ECS and Remediation and Construction Management segments.  The purchase price for two of these acquisitions consisted of cash payments.  The purchase price for the remaining two acquisitions consisted of an initial cash payment and contingent earn-out payments based upon achievement of specified financial objectives.  The estimated fair values of the contingent considerations were recorded as liabilities on our condensed consolidated balance sheets.  No pro forma results are presented for the respective interim periods as the effect of these acquisitions was not considered material, individually or in aggregate, to our consolidated financial statements.

Subsequent Event.  In the fourth quarter of fiscal 2011, we acquired substantially all of the assets of a mining engineering company located in Western Australia, using available cash resources.  This acquisition enhances our technical expertise in the mining and minerals processing sector, expands our service offerings in Australia and serves as a gateway to new markets across Asia and Africa.