Quarterly report pursuant to Section 13 or 15(d)

Business combinations

v3.2.0.727
Business combinations
 9 Months Ended
Jun. 30, 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 $292.8 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 have been integrated into our Health Services Segment.

 

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. Initial 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

 

$
292,815 

 

 

 

 

 

 

Billed and unbilled receivables

 

$
35,060 

 

Other assets

 
5,151 

 

Property and equipment

 
1,619 

 

Intangible assets — customer relationships

 
69,900 

 

 

 

 

 

Total identifiable assets acquired

 
111,730 

 

 

 

 

 

Accounts payable and other liabilities

 
32,619 

 

Deferred revenue

 
251 

 

 

 

 

 

Total liabilities assumed

 
32,870 

 

 

 

 

 

Net identifiable assets acquired

 
78,860 

 

Goodwill

 
213,955 

 

 

 

 

 

Net assets acquired

 

$
292,815 

 

 

 

 

 

 

 

The excess of the acquisition date consideration over the estimated fair value of the net assets acquired was 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 will be amortized on a straight-line basis over 14 years.

 

During the three and nine months ended June 30, 2015, Acentia contributed $52.9 million and $4.3 million of revenue and operating income, respectively.

 

The following table presents certain results for the three and nine months ended June 30, 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 our results 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 June 30,

 

Nine Months
Ended June 30,

 

(Amounts in thousands, except per share amounts)

 

2015

 

2014

 

2015

 

2014

 

Revenue

 

$
572,301 

 

$
473,408 

 

$
1,624,664 

 

$
1,425,077 

 

Net income

 
43,896 

 
37,154 

 
130,260 

 
116,469 

 

Basic earnings per share attributable to MAXIMUS

 

$
0.66 

 

$
0.54 

 

$
1.96 

 

$
1.71 

 

Diluted earnings per share attributable to MAXIMUS

 

$
0.64 

 

$
0.53 

 

$
1.92 

 

$
1.68 

 

 

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 stipulated that the net assets of Remploy were 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 have been integrated into our Human Services Segment. We are still in the process of allocating values to Remploy’s acquired assets and liabilities.