Business Combinations | 3 Months Ended |
Dec. 27, 2013 |
Business Combinations [Abstract] | ' |
Business Combinations | ' |
Business Combinations |
On December 13, 2013 the Company acquired all of the outstanding interests in Sinclair Knight Merz Management Pty Limited and Sinclair Knight Merz Holdings Limited (collectively, "SKM"), a provider that provides engineering, design, procurement, construction and project management, from the SKM shareholders ("Sellers"). The Company purchased SKM for approximately $1.2 billion in cash. The purchase price reflects an enterprise value of approximately $1.1 billion plus adjustments for cash, debt and other items. The agreement includes customary representations, warranties, and indemnities supported by an escrow account. |
The following supplemental information presents the financial results of SKM's operations included in the consolidated statements of earnings for the period from December 13, 2013 through December 27, 2013 (in thousands): |
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Revenues | $ | 25,655 | | | | | |
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Net loss attributable to Jacobs | $ | (12,755 | ) | | | | |
The Company has incurred approximately $16.5 million of expenses related to the SKM acquisition. Included in selling, general and administrative expense for the three month periods ended December 27, 2013 and December 28, 2012 is $9.1 million (including a $7.8 million stamp duty recorded as an expense) and $0.1 million, respectively, of acquisition-related costs. |
The following table presents the preliminary allocation of the purchase price (in thousands): |
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Assets: | | | | | |
Cash and cash equivalents | $ | 152,051 | | | | | |
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Receivables and other current assets | 323,276 | | | | | |
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Property and equipment, and other | 89,524 | | | | | |
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Intangible assets | 331,072 | | | | | |
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Total assets | 895,923 | | | | | |
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Liabilities: | | | | | |
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Current liabilities | 269,377 | | | | | |
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Deferred tax liability | 115,875 | | | | | |
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Long-term liabilities | 18,416 | | | | | |
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Total liabilities | 403,668 | | | | | |
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Net identifiable assets acquired | $ | 492,255 | | | | | |
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Goodwill | 727,419 | | | | | |
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Net assets acquired | $ | 1,219,674 | | | | | |
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The Company expects to collect substantially all of the acquired receivables of $304.6 million. |
Due to the size of the acquisition and the proximity of the closing date to the Company's quarter end, the Company continues to evaluate the fair value of the net assets acquired (both tangible and intangible). As a result, these amounts are subject to substantial change over the next year as the Company finalizes its evaluation. The preliminary useful lives of the intangible assets acquired from SKM range from 2 to 14 years. |
Some of the factors contributing to the recognition of goodwill include: (i) access to a large, highly-trained and stable workforce; (ii) the opportunity to expand our client base in Australia, Asia, South America and the U.K.; (iii) the opportunity to expand our presence in multiple industries, including: mining, infrastructure, buildings, water and energy; and (iv) the opportunity to achieve operating synergies. |
We expect that the goodwill recognized in this transaction will ultimately be deductible in the U.S. for income tax purposes. |
The following table presents the unaudited, pro forma consolidated results of operations (in millions) for the three month periods ended December 27, 2013 and December 28, 2012 as if the acquisition of SKM operations had occurred as of September 29, 2012. The period end dates of SKM are different from those of the Company and, accordingly, certain adjustments were made to conform SKM's period end dates to those of the Company. Management believes these adjustments make the comparative data more representative of what the combined results of operations would have been over the pro forma period. The pro forma results are not necessarily indicative of (i) the results of operations that would have occurred had the SKM operations actually been acquired at September 29, 2012; or (ii) future results of operations (in millions, except per share amounts): |
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| For the Three Months Ended |
| December 27, 2013 | | December 28, 2012 |
Revenues | $ | 3,319 | | | $ | 3,118 | |
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Net earnings attributable to Jacobs | 98 | | | 103 | |
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Basic earnings per share | $ | 0.76 | | | $ | 0.8 | |
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Diluted earnings per share | 0.74 | | | 0.79 | |
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The pro forma earnings for the three months ended December 27, 2013 were adjusted to exclude $17.2 million of acquisition-related costs incurred by both parties and include $18.2 million of acquisition-related costs (the difference being due to exchange rate impact) in the pro forma earnings for the three months ended December 28, 2012. For the three months ended December 27, 2013 and December 28, 2012, in addition to the amounts already recorded in the Consolidated Statements of Operations, the pro forma earnings were adjusted to include incremental interest expense of $0.8 million (for a total of $1.1 million) and $1.0 million, respectively. For the three months ended December 27, 2013 and December 28, 2012, the pro forma earnings were adjusted to include net incremental intangible amortization of $3.6 million (for a total of $4.5 million for the three month period) and $3.7 million (for a total of $4.5 million for the three month period) as if the acquisition occurred at the beginning of the quarter ended December 28, 2012, respectively. |
The pro forma earnings for the three months ended December 27, 2013 includes a loss from SKM of $24.0 million related to a settlement with certain SKM shareholders regarding provisions of their shareholding plan settled and paid prior to the close of the business combination. |
During the three months ended December 27, 2013, the Company also acquired FMHC Corporation, Stobbarts (Nuclear) Limited, Trompeter and affiliates, and MARMAC Field Services, Inc. The operations of these acquisitions were not material to the Company's results for the three months ended December 27, 2013. |