Quarterly report pursuant to Section 13 or 15(d)

Business combinations

v2.4.1.9
Business combinations
 6 Months Ended
Mar. 31, 2015
Business combinations  
Business combinations

 

4. Business combinations

 

Acentia

 

On April 1, 2015 (the “acquisition date”), we acquired 100% of the ownership interests of Acentia, LLC (“Acentia”) for an estimated cash consideration of $294 million. The final cash consideration will be subject to adjustment based upon calculation of the working capital on the acquisition date, as well as certain other adjustments.

 

Acentia provides system modernization, software development, program management and other information technology services and solutions to the United States Federal Government. We acquired Acentia, among other reasons, to expand our ability to provide complementary business services and offerings across government markets. The acquired assets and liabilities will be integrated into our Health Services Segment.

 

As the acquisition occurred after March 31, 2015, no assets, liabilities, results of operations or cash flows related to Acentia are included in these financial statements. We are in the process of allocating the acquisition price to the fair value of the assets and liabilities of Acentia at the acquisition date. In itial estimates of this allocation are shown below but may be subject to change as we complete our assessment of the acquisition date balance sheet.

 

(Amounts in thousands)

 

Preliminary Purchase
Price Accounting

 

Estimated purchase consideration, net of cash acquired

 

$
294,005 

 

Billed and unbilled receivables

 

$
35,087 

 

Other assets

 
3,635 

 

Property and equipment

 
1,619 

 

Intangible assets — customer relationships

 
69,900 

 

Total identifiable assets acquired

 
110,241 

 

Accounts payable and other liabilities

 
30,676 

 

Deferred revenue

 
251 

 

Total liabilities assumed

 
30,927 

 

Net identifiable assets acquired

 
79,314 

 

Goodwill

 
214,691 

 

Net assets acquired

 

$
294,005 

 

 

The excess of the acquisition date consideration over the estimated fair value of the net assets acquired will be recorded as goodwill. We consider the goodwill to represent the value of the assembled workforce of Acentia, as well as the enhanced knowledge and capabilities resulting from this business combination. Approximately 70% of the goodwill balance is anticipated to be deductible for tax purposes.

 

The intangible assets acquired represent customer relationships. These are expected to be amortized on a straight-line basis over 14 years.

 

The following table presents certain results for the Company for the three and six months ended March 31, 2015 and 2014 as though the acquisition of Acentia had occurred on October 1, 2013. The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the results of the Company if the acquisition had taken place on that date. The pro forma results presented below include amortization charges for acquired intangible assets, adjustments to interest expense incurred and exclude related acquisition expenses.

 

 

 

Unaudited pro forma results

 

 

 

Three Months
Ended March 31,

 

Six Months
Ended March 31,

 

(Amounts in thousands, except per share amounts)

 

2015

 

2014

 

2015

 

2014

 

Revenue

 

$
533,408 

 

$
491,720 

 

$
1,052,390 

 

$
951,669 

 

Net income

 
40,984 

 
43,783 

 
86,668 

 
79,314 

 

Basic earnings per share attributable to MAXIMUS

 
0.62 

 
0.64 

 
1.30 

 
1.17 

 

Diluted earnings per share attributable to MAXIMUS

 
0.61 

 
0.63 

 
1.28 

 
1.14 

 

 

Remploy

 

On April 7, 2015 (the “Remploy acquisition date”), we acquired 70% of the ownership interests of Remploy (2015) Limited, whose assets had previously operated under the “Remploy” tradename. The remaining 30% is held in a trust for the benefit of the employees. The acquisition consideration was $3.0 million (£2.0 million). The purchase agreement stipulates that the net assets of Remploy are to be zero on the Remploy acquisition date as calculated using United Kingdom accounting principles.

 

Remploy provides services to the United Kingdom government, particularly in supporting employment opportunities for the disabled. We acquired Remploy to complement our welfare-to-work services in the United Kingdom. The acquired assets and liabilities will be integrated into our Human Services Segment.

 

No financial results related to Remploy are included in our statement of operations for the three and six months ended March 31, 2015. The results of Remploy for periods prior to the Remploy acquisition date would not have had a significant effect on our financial results.