Annual report pursuant to section 13 and 15(d)

BUSINESS ACQUISITION (Tables)

v2.4.0.8
BUSINESS ACQUISITION (Tables)
 12 Months Ended
Dec. 31, 2012
BUSINESS ACQUISITION [Abstract]  
Preliminary purchase price allocation
The following table summarizes the final purchase price allocation of the fair values of the assets acquired and liabilities assumed as of December 31, 2012:

(Amounts in thousands)
  
 
 
      
Current assets
  
$
21,354
  
Property, plant and equipment
    
2,135
  
Intangible assets
    
4,429
  
Goodwill
    
13,016
  
Total assets acquired
    
40,934
  
Current liabilities
    
(15,803
)
Customer contracts
    
(6,015
)
Non-current liabilities
    
(2,091
)
Total liabilities acquired
    
(23,909
)
Non-controlling interest
    
(370
)
Total consideration
  
$
16,655
  
Preliminary components of tangible assets acquired
The following table summarizes the preliminary components of tangible assets acquired:

      
Weighted
 
      
Average
 
  
Preliminary
  
Estimated
(Amounts in thousands)
  
Fair Value
  
Useful Life
 
      
Vehicles
  
$
583
  
5.0 years
Lab equipment
    
1,235
  
7.0 years
Office furniture and equipment
    
317
  
4.0 years
Total tangible assets
  
$
2,135
  
 

Change in Accounting Estimate [Line Items]  
Recast Balance Sheet
The following table summarizes the line items that were recast and restated from the Company's previously reported December 31, 2011 Consolidated Balance Sheets (in thousands) resulting from the impact of the final purchase price allocation, including the effect of the restatement as discussed in "Note 1A – Restatement of Consolidated Financial Statements":

 
 
 
 
 
Effect of
 
 
 
As Recast for
 
 
 
 
 
 
 
 
 
 
 
 
Purchase Price
 
 
 
Purchase Price
 
 
 
 
 
 
 
 
 
December 31,
 
 
Accounting
 
 
 
Accounting
 
 
Effect of
 
 
 
 
 
 
2011 (1)
 
 
Finalization
 
 
 
Finalization
 
 
Restatement (12)
 
 
As Restated (2)
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable, net of allowance for doubtful accounts
 
$
19,106
 
 
$
(2,258
)
(3)
 
$
16,848
 
 
$
-
 
 
$
16,848
 
Unbilled receivables - current
 
$
9,871
 
 
$
(239
)
(3)
 
$
9,632
 
 
$
-
 
 
$
9,632
 
Prepaid and other assets
 
$
4,604
 
 
$
57
 
(9)
 
$
4,661
 
 
$
-
 
 
$
4,661
 
Deferrred tax assets - current
 
$
2,426
 
 
$
1,427
 
(4)
 
$
3,853
 
 
$
(488
)
 
$
3,365
 
Goodwill
 
$
27,063
 
 
$
2,123
 
(7)
 
$
29,186
 
 
$
-
 
 
$
29,186
 
Other intangible assets - net
 
$
4,258
 
 
$
259
 
(8)
 
$
4,517
 
 
$
-
 
 
$
4,517
 
Deferred tax asset, net of liabilities
 
$
1,295
 
 
$
140
 
(4)
 
$
1,435
 
 
$
(1,435
)
 
$
-
 
Other assets
 
$
1,595
 
 
$
(35
)
(9)
 
$
1,560
 
 
$
-
 
 
$
1,560
 
Total change
 
 
 
 
 
$
1,474
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$
13,117
 
 
$
196
 
(10)
 
$
13,313
 
 
$
-
 
 
$
13,313
 
Accrued expenses
 
$
9,533
 
 
$
(99
)
(10)
 
$
9,434
 
 
$
-
 
 
$
9,434
 
Billing in excess of costs and estimated earnings
 
$
3,226
 
 
$
2,832
 
(5)
 
$
6,058
 
 
$
-
 
 
$
6,058
 
Current portionof long-term debt
 
$
3,936
 
 
$
(415
)
(6)
 
$
3,521
 
 
$
-
 
 
$
3,521
 
Long-term debt, less current portion
 
$
15,007
 
 
$
(812
)
(6)
 
$
14,195
 
 
$
-
 
 
$
14,195
 
Accumulated deficit
 
$
(9,505
)
 
$
(228
)
(11)
 
$
(9,733
)
 
$
(6,011
)
 
$
(15,744
)
Total change
 
 
 
 
 
$
1,474
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1) As previously presented in the 2011 consolidated financial statement in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

(2) As presented in the accompanying consolidated financial statements contained herein within this Form 10-K/A – Amendment No. 1.

(3) Represents additional allowance for doubtful accounts of approximately $2,213,000 recorded as a result of uncollected receivables from three major customers, reversal of $45,000 in uncollectible accounts receivables and reversal of unbilled receivables related to conditions that existed at the time of our acquisition.

(4) Represents book to tax timing differences resulting from allowance for doubtful accounts and change in fair value of contracts as noted in footnote (3) and (5).

(5) Represents change in fair value of two loss contracts due to change in estimated cost to complete to meet contract terms that existed as of acquisition date.

(6) Resulted from termination on February 13, 2013 of the remaining portion (approximately $1,460,000) of a $2,500,000 Note ("October Note") entered on October 31, 2011. The termination of the October Note resulted from settlement of certain claims made by the Company against TNC primarily from the breach of representation regarding the cost to complete a certain contract that existed at acquisition. A New Note in the amount of $230,000 was issued to TNC in placement of the October Note that was cancelled (see above for further discussion of the October and New Notes).

(7) Reflects additional goodwill recorded since initial acquisition date in finalizing the final purchase price allocation related to acquired assets and liabilities under this business combination.

(8) Reflects change in fair value of acquired contracts based on change in estimated cash flow related to approval of certain request for equitable adjustments submitted prior to acquisition.

(9) Represents tax true-up and write-off of bid deposit that existed as of the acquisition date.

(10) Represents expenses and unrecorded vendor invoices for services rendered prior to acquisition.

(11) Represents change in amortization of fair value of contracts due to change in estimated cost to complete to meet contract terms that existed as of acquisition date and the related tax effect.
 
(12) Reflects effect of restatement as discussed in "Note 1A – Restatement of Consolidated Financial Statements" in this Form 10-K/A – Amendment No. 1.
Recast Statement of Operations
The following table summarizes the line items that were recast and restated from the Company's previously reported December 31, 2011 Consolidated Statements of Operations (in thousands) resulting from the final purchase price allocation, including the effect of the restatement as discussed in "Note 1A – Restatement of Consolidated Financial Statements":

 
 
 
 
 
Effect of
 
 
As Recast for
 
 
 
 
 
 
 
 
 
 
 
 
Purchase Price
 
 
Purchase Price
 
 
 
 
 
 
 
 
 
December 31,
 
 
Accounting
 
 
Accounting
 
 
Effect of
 
 
As
 
 
 
2011 (1)
 
 
Finalization (3)
 
 
Finalization
 
 
Restatement (4)
 
 
Restated (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
 
$
118,610
 
 
$
(513
)
 
$
118,097
 
 
$
-
 
 
$
118,097
 
Cost of goods sold
 
$
89,822
 
 
$
(145
)
 
$
89,677
 
 
$
-
 
 
$
89,677
 
Gross profit
 
$
28,788
 
 
$
(368
)
 
$
28,420
 
 
$
-
 
 
$
28,420
 
Income from continuing operations before income taxes
 
$
10,845
 
 
$
(368
)
 
$
10,477
 
 
$
-
 
 
$
10,477
 
Income tax (benefit) expense
 
$
(955
)
 
$
(140
)
 
$
(1,095
)
 
$
5,173
 
 
$
4,078
 
Income from continuing operations
 
$
11,800
 
 
$
(228
)
 
$
11,572
 
 
$
(5,173
)
 
$
6,399
 
Net income
 
$
14,086
 
 
$
(228
)
 
$
13,858
 
 
$
(5,768
)
 
$
8,090
 
Net income attributable to Perma-Fix Environmental Services, Inc. common stockholders
 
$
14,064
 
 
$
(228
)
 
$
13,836
 
 
$
(5,768
)
 
$
8,068
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share attributable to Perma-Fix Environmental Services, Inc. stockholders - basic:
 
$
1.27
 
 
 
 
 
 
$
1.25
 
 
 
 
 
 
$
.73
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share attributable to Perma-Fix Environmental Services, Inc. stockholders - diluted:
 
$
1.27
 
 
 
 
 
 
$
1.25
 
 
 
 
 
 
$
.73
 

(1) As previously presented in the 2011 consolidated financial statement in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

(2) As presented in the accompanying consolidated financial statements contained herein within this Form 10-K/A – Amendment No. 1.

(3)  Represents change in amortization of fair value of contracts due to change in estimated cost to complete to meet contract terms that existed as of acquisition date and the related tax effect.

(4) Reflects effect of restatement as discussed in "Note 1A – Restatement of Consolidated Financial Statements" in this Form 10-K/A – Amendment No. 1.

Recast Statement of Cash Flows
The following table summarizes the line items that were recast and restated from the Company's previously reported December 31, 2011 Consolidated Statements of Cash Flows (in thousands) resulting from the final purchase price allocation, including the effect of the restatement as discussed in "Note 1A – Restatement of Consolidated Financial Statements":

 
 
 
 
 
Effect of
 
 
As Recast for
 
 
 
 
 
 
 
 
 
 
 
 
Purchase Price
 
 
Purchase Price
 
 
 
 
 
 
 
 
 
December 31,
 
 
Accounting
 
 
Accounting
 
 
Effect of
 
 
As
 
 
 
2011 (1)
 
 
Finalization (3)
 
 
Finalization
 
 
Restatement (4)
 
 
Restated (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
 
$
14,086
 
 
$
(228
)
 
$
13,858
 
 
$
(5,768
)
 
$
8,090
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustment to reconcile net income from continuing operations to cash provided by operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization to fair value of customer contracts
 
$
(775
)
 
$
513
 
 
$
(262
)
 
$
-
 
 
$
(262
)
Depreciation and amortization
 
$
4,961
 
 
$
(145
)
 
$
4,816
 
 
$
-
 
 
$
4,816
 
Deferred tax benefit
 
$
(3,090
)
 
$
(140
)
 
$
(3,230
)
 
$
5,173
 
 
$
1,943
 
Accounts payable and accrued expenses
 
$
148
 
 
$
(144
)
 
$
4
 
 
$
-
 
 
$
4
 

(1) As previously presented in the 2011 consolidated financial statement in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

(2) As presented in the accompanying consolidated financial statements contained herein within this Form 10-K/A.

(3) Represents change in amortization of fair value of contracts due to change in estimated cost to complete to meet contract terms that existed as of acquisition date and the related tax effect.

(4) Reflects effect of restatement as discussed in "Note 1A – Restatement of Consolidated Financial Statements" in this Form 10-K/A – Amendment No. 1.
Pro Forma Information
The following unaudited pro forma financial information presents the combined results of operations of SEC and Perma-Fix as though the acquisition had occurred as of the beginning of the period presented below, which is January 1, 2011. The pro forma financial information does not necessarily represent the results of operations that would have occurred had SEC and Perma-Fix been a single company during the period presented, nor does management believe that the pro forma financial information presented is necessarily representative of future operating results.

 
  
Year Ended
  
 
  
December 31, 2011
  
(Amount in thousands, except per share data)
  
(Unaudited)
  
 
      
Revenue
  
$
193,000
  
Net loss from continuing operations
  
$
(773
)
Net loss per share from continuing operations - basic
  
$
(.07
)
Net loss per share from continuing operations - diluted
  
$
(.07
)