Quarterly report pursuant to Section 13 or 15(d)

PSI acquisition

v2.4.0.6
PSI acquisition
 3 Months Ended
Dec. 31, 2012
PSI acquisition  
PSI acquisition

4. PSI acquisition

 

On April 30, 2012 (the acquisition date), the Company acquired 100% of the share capital of PSI Services Holding, Inc. and its wholly-owned subsidiary, Policy Studies, Inc. (PSI). The final cash consideration of $63.4 million was agreed in the period ended December 31, 2012.

 

PSI supports clients in the administration of a number of health and human services programs exclusively within the United States. MAXIMUS acquired PSI, among other reasons, to strengthen its leadership in the administration of public health and human services programs. The acquired assets and business have been integrated into the Company’s Health Services and Human Services segments.

 

The assets and liabilities of PSI are recorded in the Company’s financial statements at their fair values as of the date of the acquisition. An initial valuation was performed at September 30, 2012 and this valuation has been updated through December 31, 2012 (below, in thousands):

 

 

 

Purchase Price Allocation

 

 

 

Updated through
September 30, 2012

 

Adjustments

 

Updated through
December 31, 2012

 

Accounts receivable and unbilled receivables

 

$

23,017

 

$

—

 

$

23,017

 

Other current assets

 

9,527

 

—

 

9,527

 

Deferred income taxes

 

1,931

 

198

 

2,129

 

Property and equipment

 

6,411

 

—

 

6,411

 

Other assets

 

1,332

 

—

 

1,332

 

Intangible assets

 

22,183

 

—

 

22,183

 

Total identifiable assets acquired

 

64,401

 

198

 

64,599

 

 

 

 

 

 

 

 

 

Accounts payable and other liabilities

 

20,666

 

—

 

20,666

 

Deferred revenue

 

19,696

 

79

 

19,775

 

Total liabilities assumed

 

40,362

 

79

 

40,441

 

 

 

 

 

 

 

 

 

Net identifiable assets acquired

 

24,039

 

119

 

24,158

 

Goodwill

 

39,161

 

129

 

39,290

 

Net assets acquired

 

$

63,200

 

$

248

 

$

63,448

 

 

The Company has completed its evaluation of the valuation of the assets and liabilities acquired. The identifiable assets acquired and liabilities assumed were recognized and measured as of the acquisition date based upon their estimated fair values. The excess of the acquisition date fair value of consideration over the estimated fair value of the net assets acquired was recorded as goodwill and allocated to the Company’s two segments, Health Services and Human Services, based upon the respective valuations of the businesses. The Company considers the goodwill to represent a number of potential strategic and financial benefits that are expected to be realized as a result of the acquisition, including, but not limited to bringing new capabilities to MAXIMUS and the assembled workforce. Goodwill is not expected to be deductible for tax purposes.

 

Included in the purchase price allocation are deferred taxes related to a net operating loss carryforward of $10.5 million.