Quarterly report pursuant to Section 13 or 15(d)

BUSINESS COMBINATIONS

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BUSINESS COMBINATIONS
 6 Months Ended
Jun. 30, 2015
Business Combinations [Abstract]  
BUSINESS COMBINATIONS

NOTE 8.      BUSINESS COMBINATIONS

 

The Company made 11 acquisitions during the six month period ended June 30, 2015.

 

Acquisition of Critter Control – The Company completed the acquisition of Critter Control on February 27, 2015. Critter Control was established by Kevin Clark in 1983 and is headquartered in Traverse City, Michigan. The business is 100% franchised with 115 franchises operating in 40 states and two Canadian provinces. It is the largest wildlife control company in the United States.

 

Acquisition of Allpest WA (“Allpest”) – The Company completed the acquisition of Allpest on February 17, 2014. This was the Company’s first acquisition outside of North America and placed the Company as the number one pest control provider in Western Australia.

 

Acquisition of Wilco Enterprises, Inc. (sole holder of PermaTreat Exterminating Company, Inc. d/b/a PermaTreat Pest Control, Inc.) (“PermaTreat”) – The Company completed the acquisition of PermaTreat effective August 1, 2014. PermaTreat is a leading pest control company located in Central and Northern Virginia and was founded in 1967. The Company issued 873,349 shares of its $1 par value common stock valued at $18.79 per share to Joseph R. Wilson and Jack Broome.

 

Total cash purchase price for the Company’s acquisitions for the six months ended June 30, 2015 was $30.8 million.

 

The preliminary values of major classes of assets acquired and liabilities assumed recorded at the date of acquisition, which will be adjusted during the valuation period, are included in the reconciliation of the total consideration as follows (in thousands):

 

Accounts receivable   $ 1,470  
Materials and supplies     57  
Equipment and property     845  
Goodwill     17,868  
Customer contracts     6,592  
Other intangible assets     5,239  
Current liabilities     (1,305 )
Other assets and liabilities, net     71  
Total cash purchase price   $ 30,837  

 

Goodwill from acquisitions represents the excess of the purchase price over the fair value of net assets of businesses acquired. The carrying amount of goodwill was $269.9 million and $255.6 million at June 30, 2015 and December 31, 2014, respectively. Goodwill generally changes due to the timing of acquisitions, finalization of allocation of purchase prices of previous acquisitions and foreign currency translations. The carrying amount of goodwill in foreign countries was $39.2 million at June 30, 2015 and $42.7 million at December 31, 2014.

 

The Company completed its most recent annual impairment analyses as of September 30, 2014. Based upon the results of these analyses, the Company has concluded that no impairment of its goodwill or other intangible assets was indicated.

 

The carrying amount of customer contracts and other intangible assets was $99.3 million and $33.0 million, respectively, at June 30, 2015, and $104.7 million and $28.8 million, respectively at December 31, 2014. The carrying amount of customer contracts and other intangible assets in foreign countries was $16.9 million and $4.7 million, respectively, at June 30, 2015, and $16.8 million and $4.1 million, respectively, at December 31, 2014.

 

Customer contracts and other amortizable intangible assets are amortized on a straight-line basis over their economic useful lives. The following table sets forth the components of intangible assets as of June 30, 2015 (in thousands):

 

    Carrying   Useful Life
Intangible Asset   Value   in Years
Customer contracts   $ 99,347        3 - 12.5  
Trademarks and tradenames     18,429        0 - 20  
Non-compete agreements     6,514        3 - 20  
Patents     3,447       15  
Other assets     2,276       10  
Internet domains     2,227        n/a  
Know how     155       10  
Total customer contracts and other intangible assets   $ 132,395