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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 1-5083
 
 FURMANITE CORPORATION
  Delaware
    
    74-1191271(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification No.)2435 North Central ExpresswaySuite 700Richardson, Texas
    
    75080(Address of principal executive offices)
    
    (zip code)
 (972) 699-4000
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, Without Par Value
    
    New York Stock Exchange
 None
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



FURMANITE CORPORATION AND SUBSIDIARIES
 INDEX
 Item
    
    
    
    PageNumber
    
    
    
    NumberCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
    
    
    3PART I1.
    
    Business
    
    
    41A.
    
    Risk Factors
    
    
    71B.
    
    Unresolved Staff Comments
    
    
    92.
    
    Properties
    
    
    93.
    
    Legal Proceedings
    
    
    94.
    
    Reserved
    
    
    10PART II5.
    
    Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    116.
    
    Selected Financial Data
    
    
    127.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    137a.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    288.
    
    Financial Statements and Supplementary Data
    
    
    289.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    289a.
    
    Controls and Procedures
    
    
    289b.
    
    Other Information
    
    
    29PART III10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    3011.
    
    Executive Compensation
    
    
    3012.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    3013.
    
    Certain Relationships, Related Transactions and Director Independence
    
    
    3014.
    
    Principal Accountant Fees and Services
    
    
    30PART IV15.
    
    Exhibits and Financial Statement Schedules
    
    
    31EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
  3




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PART I
 
 Item 1.
    
    Business
 Company Overview
      4




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Business Segment Data and Geographical Information
  Operations
  Products and Services
    5




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Customers and Markets
    Safety, Environmental and Other Regulatory Matters
   6




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Employees
  
 Item 1A.
    
    Risk Factors
  Weakness in the industries Furmanite serves could adversely affect demand for our services.
  Political conditions in foreign countries in which Furmanite operates could adversely affect the
financial condition, results of operations or cash flow of the Company.
  
    
    risks of economic instability;
    
    potential adverse changes in taxation policies;
    
    disruptions from labor and political disturbances;
    
    adverse changes in tariffs or import or export restrictions;
    
    war or insurrections; and
    
    other adverse changes in the laws or regulations of the host country.
 
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The Company may be adversely affected by fluctuations in foreign currency exchange rates and
foreign exchange restrictions.
  The competitive position of Furmanite depends in part on the ability to protect its intellectual
property.
  Furmanites products and services are offered in highly competitive markets, which limits the
profit margins and the ability to increase market shares.
  If the Company loses any key personnel, the ability to manage the business and continue the growth
of the Company could be negatively impacted.
  The Company is exposed to customer credit risks.
  Changes in the general economy, including the global financial crisis that began to accelerate in
late 2008 and continued through 2009, may negatively impact the Companys business.
  8




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Climate change legislation or regulations restricting emissions of greenhouse gases could result
in reduced demand for the Companys services and products.
  
 Item 1B.
    
    Unresolved Staff Comments
  
 Item 2.
    
    Properties
   
 Item 3.
    
    Legal Proceedings
   9




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Item 4.
    
    Reserved
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PART II
 
 Item 5. Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
   Years Ended December 31,
    
    High
    
    Low2009:First Quarter
    
    $
    6.02
    
    
    $
    2.35Second Quarter
    
    $
    5.07
    
    
    $
    2.99Third Quarter
    
    $
    5.00
    
    
    $
    3.56Fourth Quarter
    
    $
    4.36
    
    
    $
    2.912008:First Quarter
    
    $
    11.80
    
    
    $
    8.18Second Quarter
    
    $
    9.54
    
    
    $
    7.50Third Quarter
    
    $
    12.57
    
    
    $
    7.40Fourth Quarter
    
    $
    10.46
    
    
    $
    4.13
   11




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Item 6.
    
    Selected Financial Data
  Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Statements of Operations Data:Revenues
    
    $
    275,940
    
    
    $
    320,942
    
    
    $
    290,287
    
    
    $
    246,388
    
    
    $
    153,881Total costs and expenses
    
    
    274,406
    
    
    
    293,941
    
    
    
    269,640
    
    
    
    244,488
    
    
    
    154,772Operating income (loss) 1
    
    
    1,534
    
    
    
    27,001
    
    
    
    20,647
    
    
    
    1,900
    
    
    
    (891
    )Interest expense, net of interest and other income
    
    
    (945
    )
    
    
    (1,445
    )
    
    
    (2,233
    )
    
    
    (1,941
    )
    
    
    (380
    )Income (loss) before income taxes
    
    
    589
    
    
    
    25,556
    
    
    
    18,414
    
    
    
    (41
    )
    
    
    (1,271
    )Income tax expense
    
    
    (3,419
    )
    
    
    (3,688
    )
    
    
    (5,919
    )
    
    
    (3,391
    )
    
    
    (2,995
    )Net (loss) income 2
    
    $
    (2,830
    )
    
    $
    21,868
    
    
    $
    12,495
    
    
    $
    (3,432
    )
    
    $
    (4,266
    )Earnings (loss) per share:Basic
    
    $
    (0.08
    )
    
    $
    0.60
    
    
    $
    0.35
    
    
    $
    (0.10
    )
    
    $
    (0.13
    )Diluted
    
    $
    (0.08
    )
    
    $
    0.59
    
    
    $
    0.35
    
    
    $
    (0.10
    )
    
    $
    (0.13
    )
 
 1
    
    Operating income for the year ended December 31, 2009 includes restructuring
charges of $1.1 million2
    
    Net loss for the year ended December 31, 2009 includes restructuring charges of $0.9
million December 31,2009
    
    2008
    
    2007
    
    2006
    
    2005Balance Sheet Data:Cash and cash equivalents
    
    $
    36,117
    
    
    $
    30,793
    
    
    $
    31,570
    
    
    $
    23,937
    
    
    $
    21,526Working capital
    
    
    79,611
    
    
    
    83,826
    
    
    
    76,917
    
    
    
    69,226
    
    
    
    57,154Total assets
    
    
    174,989
    
    
    
    173,278
    
    
    
    172,053
    
    
    
    156,500
    
    
    
    136,478Long-term debt, less current portion
    
    
    30,139
    
    
    
    35,363
    
    
    
    43,185
    
    
    
    48,721
    
    
    
    31,739Stockholders equity
    
    
    85,330
    
    
    
    91,317
    
    
    
    78,336
    
    
    
    60,605
    
    
    
    51,304
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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Business Overview
     Financial Overview
  13




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Results of Operations
 Years Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands, except per share data)Revenues
    
    $
    275,940
    
    
    $
    320,942
    
    
    $
    290,287Costs and expenses:Operating costs (exclusive of depreciation and amortization)
    
    
    187,269
    
    
    
    207,748
    
    
    
    187,055Depreciation and amortization expense
    
    
    5,995
    
    
    
    5,784
    
    
    
    4,772Selling, general and administrative expense
    
    
    81,142
    
    
    
    80,409
    
    
    
    77,813Total costs and expenses
    
    
    274,406
    
    
    
    293,941
    
    
    
    269,640Operating income
    
    
    1,534
    
    
    
    27,001
    
    
    
    20,647Interest income and other income (expense), net
    
    
    434
    
    
    
    260
    
    
    
    1,041Interest expense
    
    
    (1,379
    )
    
    
    (1,705
    )
    
    
    (3,274
    )Income before income taxes
    
    
    589
    
    
    
    25,556
    
    
    
    18,414Income tax expense
    
    
    (3,419
    )
    
    
    (3,688
    )
    
    
    (5,919
    )Net (loss) income
    
    $
    (2,830
    )
    
    $
    21,868
    
    
    $
    12,495Earnings (loss) per share:Basic
    
    $
    (0.08
    )
    
    $
    0.60
    
    
    $
    0.35Diluted
    
    $
    (0.08
    )
    
    $
    0.59
    
    
    $
    0.35
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Geographical information
 Years Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)Revenue:United States
    
    $
    121,642
    
    
    $
    147,045
    
    
    $
    128,316Europe
    
    
    119,211
    
    
    
    141,716
    
    
    
    130,724Asia-Pacific
    
    
    35,087
    
    
    
    32,181
    
    
    
    31,247Total Revenue
    
    
    275,940
    
    
    
    320,942
    
    
    
    290,287Costs and expenses:Operating costs (exclusive of depreciation and amortization)United States
    
    
    82,703
    
    
    
    97,274
    
    
    
    86,313Europe
    
    
    84,048
    
    
    
    91,525
    
    
    
    83,276Asia-Pacific
    
    
    20,518
    
    
    
    18,949
    
    
    
    17,466Total operating costs (exclusive of depreciation and amoritization)
    
    
    187,269
    
    
    
    207,748
    
    
    
    187,055Depreciation and amortization expenseUnited States, including corporate
    
    
    3,278
    
    
    
    3,348
    
    
    
    2,583Europe
    
    
    1,661
    
    
    
    1,544
    
    
    
    1,495Asia-Pacific
    
    
    1,056
    
    
    
    892
    
    
    
    694Total depreciation and amortization expense
    
    
    5,995
    
    
    
    5,784
    
    
    
    4,772Selling, general and administrative expenseUnited States, including corporate
    
    
    45,838
    
    
    
    45,758
    
    
    
    44,762Europe
    
    
    28,608
    
    
    
    27,957
    
    
    
    26,962Asia-Pacific
    
    
    6,696
    
    
    
    6,694
    
    
    
    6,089Total selling general and administrative expense
    
    
    81,142
    
    
    
    80,409
    
    
    
    77,813Total costs and expenses
    
    $
    274,406
    
    
    $
    293,941
    
    
    $
    269,640
  Revenues
   15




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Operating Costs (exclusive of depreciation and amortization)
    16




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Depreciation and Amortization Expense
   Selling, General and Administrative Expense
    17




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Interest Expense
   Income Taxes
 Income Taxes
    18




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Liquidity and Capital Resources
      19




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20




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Contractual Obligations
  Less Than 1
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    Year
    
    
    1 - 3 Years
    
    
    3 - 5 Years
    
    
    5 YearsDebt:Borrowings under existing revolving credit facility
    
    $
    30,000
    
    
    $
    
    
    
    $
    
    
    
    $
    30,000
    
    
    $
    Capital leases
    
    
    313
    
    
    
    174
    
    
    
    111
    
    
    
    28
    
    
    
    Debt subtotal
    
    
    30,313
    
    
    
    174
    
    
    
    111
    
    
    
    30,028
    
    
    
    Interest on debt
    
    
    3,012
    
    
    
    759
    
    
    
    1,503
    
    
    
    750
    
    

    
    Total debt and interest
    
    
    33,325
    
    
    
    933
    
    
    
    1,614
    
    
    
    30,778
    
    
    
    Other contractual commitments:Operating leases
    
    
    24,149
    
    
    
    7,473
    
    
    
    9,929
    
    
    
    3,514
    
    
    
    3,233Pension plan contributions
    
    
    11,350
    
    
    
    1,135
    
    
    
    2,270
    
    
    
    2,270
    
    
    
    5,675Purchase obligations
    
    
    10,000
    
    
    
    500
    
    
    
    4,000
    
    
    
    5,500
    
    
    
    Other obligations1
    
    
    690
    
    
    
    690
    
    
    
    
    
    
    
    
    
    
    
    Total other contractual commitments
    
    
    46,189
    
    
    
    9,798
    
    
    
    16,199
    
    
    
    11,284
    
    
    
    8,908Total
    
    $
    79,514
    
    
    $
    10,731
    
    
    $
    17,813
    
    
    $
    42,062
    
    
    $
    8,908
 
 1
    
    Accrued restructuring costs  Accounting for Uncertainty in
Income Taxes-an interpretation of FASB Statement No. 109
 Critical Accounting Policies and Estimates
 FASB Accounting Standards Codification Generally Accepted Accounting
Principles
  22




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Revenue Recognition
 Revenue Recognition in Financial Statements Revenue Recognition
   Allowance for Doubtful Accounts
  Goodwill, Intangible and Long-Lived Assets
 Goodwill and
Other Intangible Assets
  23




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2009Fiscal Year:2010
    
    $
    1952011
    
    
    1942012
    
    
    1942013
    
    
    1942014
    
    
    119Thereafter
    
    
    122Total
    
    $
    1,018
  Accounting for the Impairment or Disposal of Long-Lived Assets
 24




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Stock-Based Compensation
  Income Taxes
 Accounting
for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109
   Defined Benefit Pension Plan
  25




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Contingencies
 Environmental
   Other
  Restructuring Accrual
  Exit or Disposal
Cost Obligations. Nonretirement Postemployment Benefits.
 New Accounting Pronouncements
 FASB
Accounting Standards Codification FASB
Accounting Standards Codification
 26




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Accounting Standards Codification
 Employers Disclosures about Postretirement Benefit Plan Assets Employers Disclosures about Pensions and Other
Postretirement Benefits,
 Revenue
RecognitionMultiple Deliverable Revenue Arrangements Revenue Arrangements with Multiple Deliverables
 Off-Balance Sheet Transactions
  Inflation and Changing Prices
  27




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Item 7a. Quantitative and Qualitative Disclosures About Market Risk
 i.e.
    
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9a. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
 et seq
 28




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Managements Annual Report on Internal Control over Financial Reporting
   Internal Control  Integrated Framework
  Changes in Internal Controls Over Financial Reporting
  
 Item 9b. Other Information
  29




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PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  
 Item 13. Certain Relationships, Related Transactions and Director Independence
  
 Item 14. Principal Accountant Fees and Services
  30




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PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 BeginningPage(a) Financial Statements and Schedules(1) Index to Consolidated Financial StatementsReport of Independent Registered Public Accounting Firm Regarding Internal Control over Financial Reporting
    
    
    F-1Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets at December 31, 2009 and 2008
    
    
    F-3Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    
    F-4Consolidated Statements of Changes in Stockholders Equity for the years ended December 31, 2009, 2008 and 2007
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
    
    
    F-6Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2009, 2008 and 2007
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8(2) Schedules:None
  31




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(b) Exhibits
  2.1
    
    Asset Purchase Agreement, dated December 31, 2005, among Flowserve
US Inc., IPSCO (UK) Limited, Flowserve Repair & Services B.V.,
Flowserve Management Company, Flowserve Belgium N.V., Furmanite US
GSG LLC, Furmanite GSG Limited, Furmanite GSG BVBA, Furmanite
Worldwide, Inc. and Furmanite GSG B.V., incorporated by reference
herein to Exhibit 2.1 to the Registrants Form 8-K filed on January
6, 2006.3.1
    
    Restated Certificate of Incorporation of the Registrant, dated
September 26, 1979, incorporated by reference herein to Exhibit 3.1
to the Registrants Registration Statement on Form S-16.3.2
    
    Certificate of Amendment to the Restated Certificate of
Incorporation of the Registrant, dated April 30, 1981, incorporated
by reference herein to Exhibit 3.2 to the Registrants Form 10-K
for the year ended December 31, 1981.3.3
    
    Certificate of Amendment to the Restated Certificate of
Incorporation of the Registrant, dated May 28, 1985, incorporated
by reference herein to Exhibit 4.1 to the Registrants Form 10-Q
for the quarter ended June 30, 1985.3.4
    
    Certificate of Amendment to the Restated Certificate of
Incorporation of the Registrant, dated September 17, 1985,
incorporated by reference herein to Exhibit 4.1 to the Registrants
Form 10-Q for the quarter ended September 30, 1985.3.5
    
    Certificate of Amendment to the Restated Certificate of
Incorporation of the Registrant, dated July 10, 1990, incorporated
by reference herein to Exhibit 3.5 to the Registrants Form 10-K
for the year ended December 31, 1990.3.6
    
    Certificate of Amendment to the Restated Certificate of
Incorporation of the Registrant, dated September 21, 1990,
incorporated by reference herein to Exhibit 3.5 to the Registrants
Form 10-Q for the quarter ended September 30, 1990.3.7
    
    Certificate of Amendment to the Restated Certificate of
Incorporation of the Registrant, dated August 8, 2001, incorporated
by reference herein Exhibit 3.1 to the Registrants Current Report
on Form 8-K filed on August 22, 2001.3.8
    
    By-laws of the Registrant, as amended and restated June 14, 2007,
filed as Exhibit 3.8 to the Registrants 10-K for the year then
ended December 31, 2007, which exhibit is hereby incorporated by
reference.4.1
    
    Certificate of Designation, Preferences and Rights related to the
Registrants Series B Junior Participating Preferred Stock, filed
as Exhibit 4.2 to the Registrants 10-K for the year ended December
31, 2008, which exhibit is incorporated herein by reference.4.2
    
    Rights Agreement, dated as of April 15, 2008, between the
Registrant and The Bank of New York Trust Company, N.A., a national
banking association, as Rights Agent, which includes as exhibits,
the Form of Rights Certificate and the Summary of Rights to
Purchase Stock, filed as Exhibit 4.1 to the Registrants Form 8-A/A
filed on April 18, 2008, which exhibit is incorporated herein by
reference.4.3
    
    Letters to stockholders of the Registrant, dated April 19, 2008
(incorporated by reference herein to Exhibit 4.2 to the
Registrants Form 8-A/8 filed on April 18, 2008).10.1*
    
    Amended and Restated Change in Control Agreement effective January
1, 2009, filed as Exhibit 10.1 of the exhibits to the Registrants
Form 10-K for the year ended December 31, 2008, which exhibit is
hereby incorporated by reference.10.2*
    
    Amended and Restated Change in Control Agreement effective January
1, 2009, filed as Exhibit 10.2 of the exhibits to the Registrants
Form 10-K for the year ended December 31, 2008, which exhibit is
hereby
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incorporated by reference.10.3*
    
    Amended and Restated Change in Control Agreement effective January
1, 2009, filed as Exhibit 10.3 of the exhibits to the Registrants
Form 10-K for the year ended December 31, 2008, which exhibit is
hereby incorporated by reference.10.6*
    
    Furmanite Corporation (formerly Xanser Corporation and formerly
Kaneb Services, Inc.) Savings Investment Plan, as amended, filed as
Exhibit 4.10 of the exhibits to the Registrants Registration
Statement on Form S-8 (Form S-8) (S.E.C. File No. 033-41295) as
Exhibit 4.1 to the exhibits of the Registrants Form S-8 (S.E.C.
File No. 333-14067), and as Exhibit 4.9 to the exhibits of the
Registrants Form S-8 (S.E.C. File No. 333-83968), which exhibits
are hereby incorporated by reference.10.7*
    
    Furmanite Corporation (formerly Xanser Corporation and formerly
Kaneb Services, Inc.) 1994 Stock Incentive Plan as Amended, as
Exhibit 10.1 to the Registrants Current Report on Form 8-K filed
on August 22, 2001, and as Exhibit 10.1 to the exhibits of the
Registrants Form 10-Q for the period ended June 30, 2003, which
exhibits are hereby incorporated by reference.10.8*
    
    Furmanite Corporation 1994 Stock Incentive Plan as amended and
restated March 4, 2009, as Appendix A to Schedule 14A filed on
April 7, 2009, and as Exhibit 99.1 to the exhibits of the
Registrants Form S-8 filed on June 1, 2009, which Appendix A and
exhibits are hereby incorporated by reference.10.9*
    
    Kaneb Services, Inc. $1.63 Director Stock Options, filed as Exhibit
4.12 to the exhibits of the Registrants Form S-8 (S.E.C. File No.
033-58981), which exhibit is hereby incorporated by reference.10.10*
    
    Kaneb Services, Inc. Directors Stock Options I, filed as Exhibit
4.6 to the exhibits of the Registrants Form S-8 (S.E.C. File No.
333-14069), which exhibit is hereby incorporated by reference.10.11*
    
    Kaneb Services, Inc. 1996 Directors Stock Incentive Plan, as
amended, filed as Exhibit 4.6 to the exhibits of the Registrants
Form S-8 (S.E.C. File No. 333-14071) and as Exhibit 4.1 to the
exhibits of the Registrants Form S-8 (S.E.C. File No. 333-22109),
and as supplemented, filed as Exhibit 4.2 to the Exhibits of the
Registrants Form S-8 (S.E.C. File No. 333-60195), which exhibits
are hereby incorporated by reference.10.12*
    
    Kaneb Services, Inc. 1994 Stock Option Agreements, filed as
Exhibits 10.1, 10.2, 10.3 and 10.4 to the exhibits of the
Registrants Form S-8 (S.E.C. File No. 333-34496), which exhibits
are hereby incorporated by reference.10.13
    
    Form of Indemnification Agreement filed as Exhibit 10.12 of the
exhibits to the Registrants Form 10-K for the year ended December
31, 2008, which exhibit is hereby incorporated by reference.10.14
    
    Credit Agreement, dated July 31, 2009, among Furmanite Worldwide,
Inc. and certain subsidiaries, as Borrowers, Bank of America, N.A.
as Administrative Agent, Compass Bank as Syndication Agent and the
Lenders party thereto, incorporated by reference herein to Exhibit
10.1 to the Registrants Current Report on Form 8-K filed on August
7, 2009.10.15
    
    Guaranty and Collateral Agreement, dated July 31, 2009, among
Furmanite Worldwide, Inc. and each of the other grantors (as
defined therein) in favor of Bank of America, N.A. as
Administrative Agent incorporated by reference herein to Exhibit
10.2 to the Registrants Current Report on Form 8-K filed on August
7, 2009.21.1 ±
    
    List of subsidiaries of the Registrant.23.1 ±
    
    Consent of Grant Thornton LLP.31.1 ±
    
    Certification of Chief Executive Officer, Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002, dated as of March 12, 2010.31.2 ±
    
    Certification of Principal Financial Officer, Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002, dated as of March 12, 201032.1 ±
    
    Certification of Chief Executive Officer, Pursuant to Section
906(a) of the Sarbanes-Oxley Act of 2002,
 33




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##### Table of Contents



dated as of March 12,
2010.32.2 ±
    
    Certification of Principal Financial Officer, Pursuant to Section
906(a) of the Sarbanes-Oxley Act of 2002, dated as of March 12,
2010.
 
 *
    
    Denotes management contracts.±
    
    Filed herewith. 34




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal
ControlIntegrated Framework
    Internal ControlIntegrated Framework
   
 F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Internal ControlIntegrated
Framework
  
 F-2




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share data)
 December 31,
    
    
    December 31,2009
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    36,117
    
    
    $
    30,793Accounts receivable, trade (net of allowance for doubtful accounts of $1,617 and $
4,627
as of December 31, 2009 and 2008, respectively)
    
    
    52,021
    
    
    
    64,879Receivable from businesses distributed to common stockholders
    
    
    1,443
    
    
    
    1,443Inventories
    
    
    26,827
    
    
    
    24,868Prepaid expenses and other current assets
    
    
    7,642
    
    
    
    5,744Total current assets
    
    
    124,050
    
    
    
    127,727Property and equipment
    
    
    66,909
    
    
    
    58,119Less accumulated depreciation and amortization
    
    
    (36,741
    )
    
    
    (28,841
    )Property and equipment, net
    
    
    30,168
    
    
    
    29,278Goodwill
    
    
    13,148
    
    
    
    13,148Deferred tax assets
    
    
    3,707
    
    
    
    948Intangible and other assets
    
    
    3,916
    
    
    
    2,177Total assets
    
    $
    174,989
    
    
    $
    173,278Liabilities and Stockholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    174
    
    
    $
    336Accounts payable
    
    
    17,077
    
    
    
    17,990Accrued expenses and other current liabilities
    
    
    25,599
    
    
    
    25,086Income taxes payable
    
    
    1,589
    
    
    
    489Total current liabilities
    
    
    44,439
    
    
    
    43,901Long-term debt, non-current
    
    
    30,139
    
    
    
    35,363Net pension liability
    
    
    12,358
    
    
    
    661Other liabilities
    
    
    2,723
    
    
    
    2,036Commitments and contingencies (Note 11)Stockholders equity:Series B Preferred Stock, unlimited shares authorized, none outstanding
    
    
    
    
    
    
    Common stock, no par value; 60,000,000 shares authorized; 40,682,815 and 40,612,815 shares
issued as of December 31, 2009 and 2008, respectively
    
    
    4,723
    
    
    
    4,715Additional paid-in capital
    
    
    132,106
    
    
    
    131,418Accumulated deficit
    
    
    (21,859
    )
    
    
    (19,029
    )Accumulated other comprehensive loss
    
    
    (11,627
    )
    
    
    (7,774
    )Treasury stock, at cost (4,008,963 shares as of December 31, 2009 and 2008)
    
    
    (18,013
    )
    
    
    (18,013
    )Total stockholders equity
    
    
    85,330
    
    
    
    91,317Total liabilities and stockholders equity
    
    $
    174,989
    
    
    $
    173,278
  F-3




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except share and per share data)
 Years Ended December 31,2009
    
    
    2008
    
    
    2007Revenues
    
    $
    275,940
    
    
    $
    320,942
    
    
    $
    290,287Costs and expenses:Operating costs (exclusive of depreciation and amortization)
    
    
    187,269
    
    
    
    207,748
    
    
    
    187,055Depreciation and amortization expense
    
    
    5,995
    
    
    
    5,784
    
    
    
    4,772Selling, general and administrative expense
    
    
    81,142
    
    
    
    80,409
    
    
    
    77,813Total costs and expenses
    
    
    274,406
    
    
    
    293,941
    
    
    
    269,640Operating income
    
    
    1,534
    
    
    
    27,001
    
    
    
    20,647Interest income and other income (expense), net
    
    
    434
    
    
    
    260
    
    
    
    1,041Interest expense
    
    
    (1,379
    )
    
    
    (1,705
    )
    
    
    (3,274
    )Income before income taxes
    
    
    589
    
    
    
    25,556
    
    
    
    18,414Income tax expense
    
    
    (3,419
    )
    
    
    (3,688
    )
    
    
    (5,919
    )Net (loss) income
    
    $
    (2,830
    )
    
    $
    21,868
    
    
    $
    12,495Earnings (loss) per common share:Basic
    
    $
    (0.08
    )
    
    $
    0.60
    
    
    $
    0.35Diluted
    
    $
    (0.08
    )
    
    $
    0.59
    
    
    $
    0.35Weighted-average number of common and common equivalent shares used
in computing net (loss) income per common share:Basic
    
    
    36,632
    
    
    
    36,426
    
    
    
    35,514Diluted
    
    
    36,632
    
    
    
    36,951
    
    
    
    36,052
  F-4




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 (in thousands, except share data)
 AccumulatedAdditional
    
    
    
    
    
    OtherCommon Shares
    
    Common
    
    Paid-In
    
    Accumulated
    
    Comprehensive
    
    TreasuryIssued
    
    Treasury
    
    Stock
    
    Capital
    
    Deficit
    
    Income (Loss)
    
    Stock
    
    TotalBalances at January 1, 2007
    
    
    39,258,025
    
    
    
    4,076,963
    
    
    $
    4,558
    
    
    $
    124,884
    
    
    $
    (53,438
    )
    
    $
    2,921
    
    
    $
    (18,320
    )
    
    $
    60,605Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,495
    
    
    
    
    
    
    
    
    
    
    
    12,495Stock-based compensation and stock
option exercises
    
    
    139,139
    
    
    
    (28,000
    )
    
    
    15
    
    
    
    589
    
    
    
    
    
    
    
    
    
    
    
    126
    
    
    
    730Conversion of convertible debentures to
common stock
    
    
    562,628
    
    
    
    
    
    
    
    70
    
    
    
    2,890
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,960Change in pension net actuarial loss and
prior service credit, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,247
    )
    
    
    
    
    
    
    (1,247
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,793
    
    
    
    
    
    
    
    2,793Balances at December 31, 2007
    
    
    39,959,792
    
    
    
    4,048,963
    
    
    
    4,643
    
    
    
    128,363
    
    
    
    (40,943
    )
    
    
    4,467
    
    
    
    (18,194
    )
    
    
    78,336Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,868
    
    
    
    
    
    
    
    
    
    
    
    21,868Stock-based compensation and stock
option exercises
    
    
    294,679
    
    
    
    (40,000
    )
    
    
    29
    
    
    
    1,214
    
    
    
    
    
    
    
    
    
    
    
    181
    
    
    
    1,424Conversion of convertible debentures to
common stock
    
    
    358,344
    
    
    
    
    
    
    
    43
    
    
    
    1,841
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,884Change in pension net actuarial loss and
prior service credit, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (986
    )
    
    
    
    
    
    
    (986
    )Adjustment for FASB ASC 715
(FASB Statement No. 158 )
measurement date change, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    (10
    )
    
    
    
    
    
    
    36Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,245
    )
    
    
    
    
    
    
    (11,245
    )Balances at December 31, 2008
    
    
    40,612,815
    
    
    
    4,008,963
    
    
    
    4,715
    
    
    
    131,418
    
    
    
    (19,029
    )
    
    
    (7,774
    )
    
    
    (18,013
    )
    
    
    91,317Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,830
    )
    
    
    
    
    
    
    
    
    
    
    (2,830
    )Stock-based compensation and stock
option exercises
    
    
    70,000
    
    
    
    
    
    
    
    8
    
    
    
    688
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    696Change in pension net actuarial loss and
prior service credit, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,918
    )
    
    
    
    
    
    
    (8,918
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,065
    
    
    
    
    
    
    
    5,065Balances at December 31, 2009
    
    
    40,682,815
    
    
    
    4,008,963
    
    
    $
    4,723
    
    
    $
    132,106
    
    
    $
    (21,859
    )
    
    $
    (11,627
    )
    
    $
    (18,013
    )
    
    $
    85,330
  F-5




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Years Ended December 31,2009
    
    
    2008
    
    
    2007Operating activities:Net (loss) income
    
    $
    (2,830
    )
    
    $
    21,868
    
    
    $
    12,495Reconciliation of net income (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    5,995
    
    
    
    5,807
    
    
    
    4,772Provision for doubtful accounts
    
    
    498
    
    
    
    909
    
    
    
    917Stock-based compensation expense
    
    
    571
    
    
    
    497
    
    
    
    218Deferred income taxes
    
    
    (227
    )
    
    
    381
    
    
    
    79Other, net
    
    
    (313
    )
    
    
    (279
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    13,652
    
    
    
    (5,910
    )
    
    
    (3,941
    )Inventories
    
    
    (685
    )
    
    
    (1,638
    )
    
    
    (2,802
    )Prepaid expenses and other current assets
    
    
    (735
    )
    
    
    (533
    )
    
    
    (570
    )Accounts payable
    
    
    (902
    )
    
    
    1,073
    
    
    
    1,120Accrued expenses and other current liabilities
    
    
    320
    
    
    
    (1,640
    )
    
    
    3,916Income taxes payable
    
    
    2,187
    
    
    
    (3,899
    )
    
    
    961Other, net
    
    
    426
    
    
    
    (117
    )
    
    
    (511
    )Net cash provided by operating activities
    
    
    17,957
    
    
    
    16,519
    
    
    
    16,654Investing activities:Capital expenditures
    
    
    (6,541
    )
    
    
    (8,014
    )
    
    
    (8,097
    )Acquisition of assets
    
    
    (900
    )
    
    
    
    
    
    
    Proceeds from sale of assets
    
    
    447
    
    
    
    144
    
    
    
    Net cash used in investing activities
    
    
    (6,994
    )
    
    
    (7,870
    )
    
    
    (8,097
    )Financing activities:Payments on debt
    
    
    (40,435
    )
    
    
    (8,015
    )
    
    
    (713
    )Proceeds from issuance of debt
    
    
    35,049
    
    
    
    
    
    
    
    Debt issuance costs
    
    
    (658
    )
    
    
    
    
    
    
    Issuance of common stock
    
    
    125
    
    
    
    438
    
    
    
    512Payments on 8.75% convertible subordinated debentures
    
    
    
    
    
    
    (155
    )
    
    
    Bank overdrafts
    
    
    
    
    
    
    
    
    
    
    (1,553
    )Net cash used in financing activities
    
    
    (5,919
    )
    
    
    (7,732
    )
    
    
    (1,754
    )Effect of exchange rate changes on cash
    
    
    280
    
    
    
    (1,694
    )
    
    
    830Increase (decrease) in cash and cash equivalents
    
    
    5,324
    
    
    
    (777
    )
    
    
    7,633Cash and cash equivalents at beginning of year
    
    
    30,793
    
    
    
    31,570
    
    
    
    23,937Cash and cash equivalents at end of year
    
    $
    36,117
    
    
    $
    30,793
    
    
    $
    31,570Non-cash financing activities:Conversion of 8.75% convertible debentures to common stock
    
    $
    
    
    
    $
    1,884
    
    
    $
    2,960Settlement of accrued bonuses in common stock
    
    $
    
    
    
    $
    488
    
    
    $
    Supplemental cash flow information:Cash paid for interest
    
    $
    1,400
    
    
    $
    1,883
    
    
    $
    3,202Cash paid for income taxes, net of refunds received
    
    $
    846
    
    
    $
    4,837
    
    
    $
    5,416
  F-6




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 (in thousands)
 Years Ended December 31,2009
    
    
    2008
    
    
    2007Net (loss) income
    
    $
    (2,830
    )
    
    $
    21,868
    
    
    $
    12,495Other comprehensive (loss) income:Change in pension net actuarial loss and prior service credit, net of tax
    
    
    (8,918
    )
    
    
    (986
    )
    
    
    (1,247
    )Foreign currency translation adjustments
    
    
    5,065
    
    
    
    (11,245
    )
    
    
    2,793Total other comprehensive (loss) income
    
    
    (3,853
    )
    
    
    (12,231
    )
    
    
    1,546Comprehensive (loss) income
    
    $
    (6,683
    )
    
    $
    9,637
    
    
    $
    14,041
  F-7




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
 1. Description of Business and Summary of Significant Accounting Policies
 Description of Business
    F-8




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
  Cash and Cash Equivalents
  Accounts Receivable
   2009
    
    
    2008
    
    
    2007Allowance for doubtful accounts receivable at beginning of year
    
    $
    4,627
    
    
    $
    4,011
    
    
    $
    3,341Provisions for doubtful accounts
    
    
    498
    
    
    
    909
    
    
    
    917Currency adjustments
    
    
    46
    
    
    
    (91
    )
    
    
    55Write-offs, net of recoveries
    
    
    (3,554
    )
    
    
    (202
    )
    
    
    (302
    )Allowance for doubtful accounts receivable at end of year
    
    $
    1,617
    
    
    $
    4,627
    
    
    $
    4,011
 Inventories
  Property and Equipment
  F-9




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
 Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived Assets
 Goodwill and Intangible Assets
 Goodwill and Other Intangible Assets
    F-10




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
   2009Fiscal Year:2010
    
    $
    1952011
    
    
    1942012
    
    
    1942013
    
    
    1942014
    
    
    119Thereafter
    
    
    122Total
    
    $
    1,018
  Revenue Recognition
 Revenue Recognition in Financial Statements Revenue Recognition
   Foreign Currency Translation
  Stock-Based Compensation
  F-11




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
  Income Taxes
 Accounting
for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109,
  Defined Benefit Pension Plan
  Contingencies
 Environmental
   F-12




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
  Other
  Restructuring Accrual
  Exit or Disposal
Cost Obligations. Nonretirement Postemployment Benefits.
 New Accounting Pronouncements
 FASB Accounting Standards Codification FASB Accounting Standards Codification Accounting Standards Codification
 Employers Disclosures about Postretirement Benefit Plan Assets Employers Disclosures about Pensions and Other
Postretirement Benefits,
 F-13




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
 Revenue
RecognitionMultiple Deliverable Revenue Arrangements Revenue Arrangements with Multiple Deliverables
 Use of Estimates
  2. Earnings (Loss) Per Share
   2009
    
    
    2008
    
    
    2007Net (loss) income
    
    $
    (2,830
    )
    
    $
    21,868
    
    
    $
    12,495Basic weighted-average common shares outstanding
    
    
    36,632
    
    
    
    36,426
    
    
    
    35,514Dilutive effect of common stock equivalents
    
    
    
    
    
    
    525
    
    
    
    538Diluted weighted-average common shares outstanding
    
    
    36,632
    
    
    
    36,951
    
    
    
    36,052Earnings (loss) per share:Basic
    
    $
    (0.08
    )
    
    $
    0.60
    
    
    $
    0.35Diluted
    
    $
    (0.08
    )
    
    $
    0.59
    
    
    $
    0.35Stock options excluded from diluted weighted-average common shares
outstanding because their inclusion would have an anti-dilutive effect:
    
    
    648
    
    
    
    118
    
    
    
    55
  F-14




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
 3. Inventories
  2009
    
    
    2008Raw materials and supplies
    
    $
    18,226
    
    
    $
    14,690Work-in-process
    
    
    8,231
    
    
    
    9,929Finished goods
    
    
    370
    
    
    
    249Total inventories
    
    $
    26,827
    
    
    $
    24,868
 4. Property and Equipment
  2009
    
    
    2008Land
    
    $
    1,305
    
    
    $
    1,305Buildings
    
    
    4,940
    
    
    
    4,630Machinery and equipment
    
    
    47,214
    
    
    
    37,196Furniture and fixtures
    
    
    7,100
    
    
    
    6,797Vehicles
    
    
    2,803
    
    
    
    3,001Construction in progress
    
    
    1,328
    
    
    
    1,884Other
    
    
    2,219
    
    
    
    3,306Total property and equipment
    
    
    66,909
    
    
    
    58,119Less accumulated depreciation and amortization
    
    
    (36,741
    )
    
    
    (28,841
    )Net property and equipment
    
    $
    30,168
    
    
    $
    29,278
   2009
    
    
    2008Vehicles
    
    $
    1,638
    
    
    $
    4,583Equipment
    
    
    
    
    
    
    63Total capital leases
    
    
    1,638
    
    
    
    4,646Less accumulated depreciation and amortization
    
    
    (1,344
    )
    
    
    (4,107
    )Net equipment acquired under capital leases
    
    $
    294
    
    
    $
    539
 F-15




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
 5. Accrued Expenses and Other Current Liabilities
  2009
    
    
    2008Compensation and benefits1
    
    $
    11,085
    
    
    $
    9,505Estimated potential uninsured liabiltiy claims
    
    
    3,405
    
    
    
    2,394Value added tax payable
    
    
    1,612
    
    
    
    2,007Taxes other than income
    
    
    1,393
    
    
    
    1,810Professional, audit and legal fees
    
    
    879
    
    
    
    1,521Rent
    
    
    600
    
    
    
    388Other employee related expenses
    
    
    539
    
    
    
    982Payments due on purchased assets
    
    
    350
    
    
    
    Interest
    
    
    42
    
    
    
    136Other
    
    
    5,694
    
    
    
    6,343$
    25,599
    
    
    $
    25,086
 
 1
    
    Includes restructuring accruals of $0.7 million 6. Long-Term Debt
  2009
    
    
    2008Borrowings under existing revolving credit facility (the existing credit agreement)
    
    $
    30,000
    
    
    $
    Borrowings under
$50.0 million revolving bank facility (the $50.0 million facility)
    
    
    
    
    
    
    27,590Borrowings secured by a letter of credit under
$50.0 million facility (the $15.0 million facility)
    
    
    
    
    
    
    7,500Capital leases
    
    
    313
    
    
    
    609Total long-term debt
    
    
    30,313
    
    
    
    35,699Less current portion of long-term debt
    
    
    (174
    )
    
    
    (336
    )Total long-term debt, non-current
    
    $
    30,139
    
    
    $
    35,363
    F-16




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
      20092010
    
    $
    2011
    
    
    2012
    
    
    2013
    
    
    30,0002014
    
    
    Thereafter
    
    
    Total long-term debt
    
    $
    30,000Capital leases
    
    
    313Total long-term debt and capital lease
    
    $
    30,313
  F-17




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
 7. Retirement Plans
    Employers Accounting for Defined Benefit Pension
and Other Post Retirement Plans  an amendment of FASB Statements No. 87, 88, 106, and 132 (R)
   F-18




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
  2009
    
    
    2008
    
    
    2007Net periodic pension cost (benefit):Service cost
    
    
    673
    
    
    
    721
    
    
    
    805Interest cost
    
    
    3,272
    
    
    
    3,931
    
    
    
    3,942Expected return on plan assets
    
    
    (2,993
    )
    
    
    (5,044
    )
    
    
    (5,274
    )Amortization of prior service cost
    
    
    (95
    )
    
    
    (112
    )
    
    
    (122
    )Amortization of net actuarial loss
    
    
    180
    
    
    
    
    
    
    
    Net periodic pension cost (benefit)
    
    $
    1,037
    
    
    $
    (504
    )
    
    $
    (649
    )
  2009
    
    2008Discount rate
    
    
    5.7
    %
    
    
    6.7
    %Rate of compensation increase
    
    
    4.0
    %
    
    
    3.0
    %Inflation
    
    
    3.5
    %
    
    
    2.5
    %
  2009
    
    2008Discount rate
    
    
    6.7
    %
    
    
    5.8
    %Expected long-term return on plan assets
    
    
    6.2
    %
    
    
    7.4
    %Rate of compensation increase
    
    
    3.0
    %
    
    
    3.7
    %Inflation
    
    
    2.5
    %
    
    
    3.2
    %
   F-19




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
  2009
    
    
    2008Projected benefit obligation:Beginning of year
    
    $
    45,392
    
    
    $
    73,653Service cost
    
    
    673
    
    
    
    721Interest cost
    
    
    3,272
    
    
    
    3,931Participants contributions
    
    
    173
    
    
    
    256Actuarial loss (gain)
    
    
    16,554
    
    
    
    (8,370
    )Benefits paid
    
    
    (3,453
    )
    
    
    (2,354
    )Measurement date change
    
    
    
    
    
    
    (1,134
    )Foreign currency translation adjustment
    
    
    5,895
    
    
    
    (21,311
    )End of year
    
    
    68,506
    
    
    
    45,392Fair value of plan assets:Beginning of year
    
    
    44,729
    
    
    
    74,083Actual gain on plan assets
    
    
    7,924
    
    
    
    (6,468
    )Employer contributions
    
    
    1,200
    
    
    
    925Participants contributions
    
    
    173
    
    
    
    256Benefits paid
    
    
    (3,453
    )
    
    
    (2,354
    )Measurement date change
    
    
    
    
    
    
    (1,273
    )Foreign currency translation adjustment
    
    
    5,575
    
    
    
    (20,440
    )End of year
    
    
    56,148
    
    
    
    44,729Excess projected obligation under (over) fair value at end of year
    
    $
    (12,358
    )
    
    $
    (663
    )Amounts recognized in accumulated other comprehensive income:Net actuarial loss
    
    $
    18,573
    
    
    $
    6,218Prior service cost (credit)
    
    
    (671
    )
    
    
    (687
    )Net amount recognized in accumulated other comprehensive income
    
    $
    17,902
    
    
    $
    5,531
   F-20




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
  Quoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsAsset Category
    
    Total
    
    
    (Level 1)
    
    
    (Level 2) (a)
    
    
    (Level 3)Cash
    
    $
    316
    
    
    $
    316
    
    
    $
    
    
    
    $
    Money Market
    
    
    2,101
    
    
    
    2,101
    
    
    
    
    
    
    
    Equity securities:U.K. equity (b)
    
    
    15,801
    
    
    
    
    
    
    
    15,801
    
    
    
    U.S. equity index (c)
    
    
    4,376
    
    
    
    
    
    
    
    4,376
    
    
    
    European equity index (d)
    
    
    3,869
    
    
    
    
    
    
    
    3,869
    
    
    
    Pacific Rim equity index (e)
    
    
    2,027
    
    
    
    
    
    
    
    2,027
    
    
    
    Japanese equity index (f)
    
    
    1,955
    
    
    
    
    
    
    
    1,955
    
    
    
    Fixed income securities:Corporate bonds (g)
    
    
    11,726
    
    
    
    
    
    
    
    11,726
    
    
    
    U.K. government fixed income securities (h)
    
    
    7,346
    
    
    
    
    
    
    
    7,346
    
    
    
    U.K. government index-linked securities (i)
    
    
    5,631
    
    
    
    
    
    
    
    5,631
    
    
    
    Total
    
    $
    55,148
    
    
    $
    2,417
    
    
    $
    52,731
    
    
    $
    
 
 a)
    
    The net asset value of the commingled equity and fixed income funds are determined by
prices of the underlying securities, less the funds liabilities, and then divided by the
number of shares outstanding. As the funds are not traded in active markets, the commingled
funds are classified as Level 2 assets. The net asset value is corroborated by observable
market data (e.g., purchase or sale activities).b)
    
    This category includes investments in a diversified portfolio of between 70 to 80 companies
and aims to outperform the FTSE All-Share Index by 1.40% per annum over a rolling three year
periods by taking a select number of carefully controlled and regularly monitored positions
away from the index.c)
    
    This category includes investments in a variety of large, and small, U.S. companies and aims
to achieve a return that is consistent with the return of the FTSE All-World USA Index.d)
    
    This category includes investments in a variety of large, and small, European companies and
aims to achieve a return that is consistent with the return of the FTSE All-World Developed
Europe ex-U.K. Index.e)
    
    This category includes investments in a variety of large and small companies across the
Australian, Hong Kong, New Zealand and Singapore markets and aims to achieve a return that is
consistent with the return of the FTSE-All-World Developed Asia Pacific ex-Japan Index.f)
    
    This category includes investments in a variety of large, and small, Japanese companies and
aims to achieve a return that is consistent with the return of the FTSE All-World Japan Index.g)
    
    This category includes investment grade corporate bonds denominated in sterling and aims to
achieve a return consistent with the iBoxx £ Non-Gilts Over 15 Years Index. This index
consists of bonds with a maturity period of 15 years or longer.h)
    
    This category includes investments in U.K. government fixed income securities (gilts) that
have a maturity period of 15 years or longer and aims to achieve a return consistent with the
FTSE U.K. Gilts Over 15 Years Index. F-21




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
 i)
    
    This category includes investments in U.K. government index-linked securities (index-linked
gilts) that have a maturity period of 5 years or longer and aims to achieve a return
consistent with the FTSE UK Gilts Index-Linked Over 5 Years Index.
  
    
    optimize the long-term return on plan assets at an acceptable level of risk
    
    maintain a broad diversification across asset classes
    
    maintain careful control of the risk level within each asset class
   Asset Allocations
    
    Target Asset AllocationsFor the Years Ended December 31,2009
    
    2008
    
    2009
    
    2008Equity securities
    
    
    50.8
    %
    
    
    42.8
    %
    
    
    55.0
    %
    
    
    55.0
    %Debt securities
    
    
    44.8
    %
    
    
    49.7
    %
    
    
    45.0
    %
    
    
    45.0
    %Other
    
    
    4.4
    %
    
    
    7.5
    %
    
    
    0.0
    %
    
    
    0.0
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  2010
    
    $
    3,0002011
    
    
    3,0002012
    
    
    3,0002013
    
    
    3,0002014
    
    
    3,000Thereafter
    
    
    16,000Total
    
    $
    31,000
 8. Stockholders Equity
  Series B Preferred Stock
  F-22




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
  Stock Option Plans
     2009
    
    2008
    
    2007Expected volatility
    
    47.7% to 47.9%
    
    41.2%
    
    34.3% to 36.2%Risk-free interest rate
    
    2.0% to 2.2%
    
    1.6%
    
    3.6% to 4.4%Expected dividends
    
    0%
    
    0%
    
    0%Expected term in years
    
    4
    
    5
    
    5
  F-23




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
  Weighted-
    
    AggregateAverage
    
    IntrinsicExercise
    
    ValueOptions
    
    Shares
    
    Price
    
    ($000s)Outstanding at January 1, 2007
    
    
    1,013,675
    
    
    $
    2.84Granted
    
    
    100,000
    
    
    $
    9.65Exercised
    
    
    (153,377
    )
    
    $
    2.37Forfeited
    
    
    (30,000
    )
    
    $
    4.65Outstanding at December 31, 2007
    
    
    930,298
    
    
    $
    3.59Granted
    
    
    284,000
    
    
    $
    5.07Exercised
    
    
    (218,515
    )
    
    $
    2.00Forfeited
    
    
    (35,000
    )
    
    $
    7.47Outstanding at December 31, 2008
    
    
    960,783
    
    
    $
    4.25Granted
    
    
    160,000
    
    
    $
    3.96Exercised
    
    
    (40,000
    )
    
    $
    3.14Forfeited or expired
    
    
    (128,500
    )
    
    $
    5.48Outstanding at December 31, 2009
    
    
    952,283
    
    
    $
    4.08
    
    
    
    461Exercisable at December 31, 2009
    
    
    551,583
    
    
    $
    3.48
    
    
    
    421
   Weighted-AverageGrant-DateOptions
    
    Fair ValueNonvested at December 31, 2008
    
    
    519,000
    
    
    $
    1.71Granted
    
    
    160,000
    
    
    $
    1.56Vested
    
    
    (153,800
    )
    
    $
    1.61Forfeited
    
    
    (124,500
    )
    
    $
    2.01Nonvested at December 31, 2009
    
    
    400,700
    
    
    $
    1.72
  F-24




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
  Average
    
    AverageOutstanding
    
    ExercisableAverage Exercise Price per
    
    Remaining
    
    RemainingRange of Exercise
    
    Options
    
    Outstanding
    
    Exercisable
    
    Contractual
    
    ContractualPrice
    
    Outstanding
    
    Exercisable
    
    Options
    
    Options
    
    Life (Years)
    
    Life (Years)$1.15  $2.29
    
    
    10,000
    
    
    
    10,000
    
    
    $
    1.59
    
    
    $
    1.59
    
    
    
    0.7
    
    
    
    0.7$2.30  $3.13
    
    
    195,783
    
    
    
    195,783
    
    
    $
    2.46
    
    
    $
    2.46
    
    
    
    4.3
    
    
    
    4.3$3.14  $11.80
    
    
    746,500
    
    
    
    345,800
    
    
    $
    4.54
    
    
    $
    4.11
    
    
    
    2.5
    
    
    
    1.6952,283
    
    
    
    551,583
    
    
    $
    4.08
    
    
    $
    3.48
    
    
    
    2.8
    
    
    
    2.5
  Restricted Stock Awards
   .
   Weighted-AverageWeighted-
    
    RemainingAverage
    
    ContractualGrant-Date
    
    TermRestricted Stock Awards
    
    Options
    
    Fair Value
    
    (Year)Nonvested at December 31, 2008
    
    
    160,000
    
    
    $
    7.19
    
    
    
    2.4Granted
    
    
    30,000
    
    
    $
    3.93Nonvested at December 31, 2009
    
    
    190,000
    
    
    $
    6.67
    
    
    
    1.7
  F-25




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
  9. Accumulated Other Comprehensive Loss
  2009
    
    
    2008Net actuarial loss and prior service credit
    
    $
    (17,902
    )
    
    $
    (5,531
    )Less: deferred tax benefit
    
    
    4,991
    
    
    
    1,548Net of tax
    
    
    (12,911
    )
    
    
    (3,983
    )Adjustment for FASB ASC 715 measurement date change, net of tax
    
    
    
    
    
    
    (10
    )Foreign currency translation adjustment
    
    
    1,284
    
    
    
    (3,781
    )Total accumulated other comprehensive loss
    
    $
    (11,627
    )
    
    $
    (7,774
    )
 10. Income Taxes
 Income Taxes
 Accounting for Uncertainty in
Income Taxes-an interpretation of FASB Statement No. 109
  2009
    
    
    2008
    
    
    2007Balance at beginning of year
    
    $
    974
    
    
    $
    997
    
    
    $
    877Additions based on tax positions
    
    
    210
    
    
    
    361
    
    
    
    385Reductions due to lapses of statutes of limitations
    
    
    (177
    )
    
    
    (384
    )
    
    
    (265
    )Balance at end of year
    
    $
    1,007
    
    
    $
    974
    
    
    $
    997
  F-26




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
  2009
    
    
    2008
    
    
    2007Domestic operations
    
    $
    (6,709
    )
    
    $
    13,891
    
    
    $
    404Foreign operations
    
    
    7,298
    
    
    
    11,665
    
    
    
    18,010Income before income taxes
    
    $
    589
    
    
    $
    25,556
    
    
    $
    18,414
  Federal
    
    
    Foreign
    
    
    State
    
    
    Total2009:Current
    
    $
    
    
    
    $
    3,460
    
    
    $
    186
    
    
    $
    3,646Deferred
    
    
    
    
    
    
    (227
    )
    
    
    
    
    
    
    (227
    )$
    
    
    
    $
    3,233
    
    
    $
    186
    
    
    $
    3,4192008:Current
    
    $
    73
    
    
    $
    2,724
    
    
    $
    510
    
    
    $
    3,307Deferred
    
    
    
    
    
    
    381
    
    
    
    
    
    
    
    381$
    73
    
    
    $
    3,105
    
    
    $
    510
    
    
    $
    3,6882007:Current
    
    $
    185
    
    
    $
    5,559
    
    
    $
    96
    
    
    $
    5,840Deferred
    
    
    
    
    
    
    79
    
    
    
    
    
    
    
    79$
    185
    
    
    $
    5,638
    
    
    $
    96
    
    
    $
    5,919
  2009
    
    
    2008
    
    
    2007Expected tax expense at the statutory federal rate
    
    $
    206
    
    
    $
    8,945
    
    
    $
    6,261Increase (decrease) in taxes resulting from:Change in valuation allowance
    
    
    3,119
    
    
    
    (5,105
    )
    
    
    (2,489
    )State income taxes, net
    
    
    186
    
    
    
    510
    
    
    
    516Foreign tax rate differences
    
    
    (822
    )
    
    
    (1,302
    )
    
    
    (586
    )Permanent differences
    
    
    322
    
    
    
    198
    
    
    
    2,572Resolution of state and foreign tax issues
    
    
    33
    
    
    
    61
    
    
    
    (67
    )Adjustment to net operating loss carryforwards
    
    
    
    
    
    
    
    
    
    
    (473
    )Other
    
    
    375
    
    
    
    381
    
    
    
    1853,419
    
    
    $
    3,688
    
    
    $
    5,919
    F-27




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
   2009
    
    
    2008Deferred tax assets:Federal net operating loss carryforwards
    
    $
    11,461
    
    
    $
    10,345Alternative minimum tax credit carryforwards
    
    
    2,787
    
    
    
    2,794State net operating loss carryforwards
    
    
    982
    
    
    
    887Accrued expenses
    
    
    2,176
    
    
    
    1,110Intangible assets
    
    
    547
    
    
    
    784Foreign subsidiaries, primarily NOLs, pension and accrued expenses
    
    
    9,284
    
    
    
    4,586Other
    
    
    671
    
    
    
    654Total gross deferred tax assets
    
    
    27,908
    
    
    
    21,160Deferred tax liabilities:Property and equipment, principally due to differences in depreciation
    
    
    (1,353
    )
    
    
    (1,483
    )Foreign deferred tax liabilities, primarily property and equipment
    
    
    (725
    )
    
    
    (768
    )Net deferred tax asset before valuation allowance
    
    
    25,830
    
    
    
    18,909Less valuation allowance
    
    
    (20,679
    )
    
    
    (17,560
    )Net deferred tax asset
    
    $
    5,151
    
    
    $
    1,349
  11. Commitments and Contingencies
   F-28




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
  Capital
    
    
    OperatingLeases
    
    
    Leases2010
    
    $
    183
    
    
    $
    7,4732011
    
    
    100
    
    
    
    6,1572012
    
    
    14
    
    
    
    3,7722013
    
    
    14
    
    
    
    2,2322014
    
    
    10
    
    
    
    1,282Thereafter
    
    
    4
    
    
    
    3,233Total minimum lease payments
    
    $
    325
    
    
    $
    24,149Less amounts representing interest
    
    
    (12
    )Present value of future minimum lease payments
    
    $
    313
      F-29




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
 12. Business Segment Data and Geographical Information
    United
    
    
    
    
    
    
    Asia-States
    
    
    Europe
    
    
    Pacific
    
    
    TotalYear ended December 31, 2009:Under pressure services
    
    $
    44,268
    
    
    $
    38,891
    
    
    $
    15,365
    
    
    $
    98,524Turnaround services
    
    
    57,073
    
    
    
    54,084
    
    
    
    16,120
    
    
    
    127,277Other services
    
    
    20,301
    
    
    
    26,236
    
    
    
    3,602
    
    
    
    50,139Total revenues
    
    $
    121,642
    
    
    $
    119,211
    
    
    $
    35,087
    
    
    $
    275,940Operating (loss) income 1
    
    $
    (10,177
    )
    
    $
    4,894
    
    
    $
    6,817
    
    
    $
    1,534Allocation of headquarter costs
    
    
    7,593
    
    
    
    (5,863
    )
    
    
    (1,730
    )
    
    
    Adjusted operating (loss) income
    
    $
    (2,584
    )
    
    $
    (969
    )
    
    $
    5,087
    
    
    $
    1,534Year ended December 31, 2008:Under pressure services
    
    $
    48,701
    
    
    $
    43,936
    
    
    $
    10,948
    
    
    $
    103,585Turnaround services
    
    
    74,703
    
    
    
    81,672
    
    
    
    17,976
    
    
    
    174,351Other services
    
    
    23,641
    
    
    
    16,108
    
    
    
    3,257
    
    
    
    43,006Total revenues
    
    $
    147,045
    
    
    $
    141,716
    
    
    $
    32,181
    
    
    $
    320,942Operating income
    
    $
    665
    
    
    $
    20,690
    
    
    $
    5,646
    
    
    $
    27,001Allocation of headquarter costs
    
    
    6,901
    
    
    
    (5,599
    )
    
    
    (1,302
    )
    
    
    Adjusted operating income
    
    $
    7,566
    
    
    $
    15,091
    
    
    $
    4,344
    
    
    $
    27,001Year ended December 31, 2007:Under pressure services
    
    $
    44,380
    
    
    $
    37,256
    
    
    $
    9,452
    
    
    $
    91,088Turnaround services
    
    
    61,934
    
    
    
    74,636
    
    
    
    19,531
    
    
    
    156,101Other services
    
    
    22,002
    
    
    
    18,832
    
    
    
    2,264
    
    
    
    43,098Total revenues
    
    $
    128,316
    
    
    $
    130,724
    
    
    $
    31,247
    
    
    $
    290,287Operating (loss) income
    
    $
    (5,342
    )
    
    $
    18,991
    
    
    $
    6,998
    
    
    $
    20,647Allocation of headquarter costs
    
    
    5,493
    
    
    
    (4,408
    )
    
    
    (1,085
    )
    
    
    Adjusted operating income
    
    $
    151
    
    
    $
    14,583
    
    
    $
    5,913
    
    
    $
    20,647
 
 1
    
    Includes restructuring charges of $1.1 million. F-30




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
   2009
    
    
    2008
    
    
    2007United States
    
    $
    17,050
    
    
    $
    17,298
    
    
    $
    16,566Europe
    
    
    11,248
    
    
    
    9,375
    
    
    
    10,550Asia-Pacific
    
    
    3,717
    
    
    
    2,898
    
    
    
    3,007$
    32,015
    
    
    $
    29,571
    
    
    $
    30,123
   13. Significant Customers
  14. Fair Value of Financial Instruments and Credit Risk
 Fair Value Measurements and Disclosures
 
    
    Level 1  Quoted prices in active markets for identical assets or liabilities. These
are typically obtained from real-time quotes for transactions in active exchange markets
involving identical assets.
    
    Level 2  Quoted prices for similar assets and liabilities in active markets; quoted
prices included for identical or similar assets and liabilities that are not active; and
model-derived valuations in which all significant inputs and significant value drivers are
observable in active markets. These are typically obtained from readily-available pricing
sources for comparable instruments.
    
    Level 3  Unobservable inputs, where there is little or no market activity for the
asset or liability. These inputs reflect the reporting entitys own assumptions about the
assumptions that market participants would use in pricing the asset or liability, based on
the best information available in the circumstances.
  F-31




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
   15. Quarterly Financial Data (Unaudited)
  Quarter EndedMarch 31,
    
    June 30,
    
    September 30,
    
    December 31,2009:Revenues
    
    $
    63,032
    
    
    $
    69,726
    
    
    $
    70,757
    
    
    $
    72,425Operating income (loss) 1
    
    $
    1,640
    
    
    $
    806
    
    
    $
    1,586
    
    
    $
    (2,498
    )Net income (loss) 2
    
    $
    880
    
    
    $
    231
    
    
    $
    203
    
    
    $
    (4,144
    )Earnings (loss) per common share:Basic
    
    $
    0.02
    
    
    $
    0.01
    
    
    $
    0.01
    
    
    $
    (0.12
    )Diluted
    
    $
    0.02
    
    
    $
    0.01
    
    
    $
    0.01
    
    
    $
    (0.12
    )2008:Revenues
    
    $
    73,387
    
    
    $
    90,185
    
    
    $
    75,883
    
    
    $
    81,487Operating income
    
    $
    5,225
    
    
    $
    10,508
    
    
    $
    6,560
    
    
    $
    4,708Net income
    
    $
    3,710
    
    
    $
    7,659
    
    
    $
    5,402
    
    
    $
    5,097Earnings per common share:Basic
    
    $
    0.10
    
    
    $
    0.21
    
    
    $
    0.15
    
    
    $
    0.14Diluted
    
    $
    0.10
    
    
    $
    0.21
    
    
    $
    0.15
    
    
    $
    0.14
 
 1
    
    Operating loss for fourth quarter of 2009 includes restructuring charges of $1.1
million2
    
    Net loss for fourth quarter of 2009 includes restructuring charges of $0.9 million 16. Restructuring
  Exit or Disposal
Cost Obligations Nonretirement Postemployment Benefits.
 F-32




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2009
  F-33




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SIGNATURES
 Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
 FURMANITE CORPORATIONBy:
    /s/ JOSEPH E. MILLIRONJOSEPH E. MILLIRONChief Operating Officer and President  Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and as of
the date indicated.
 Signature
    
    Title
    
    Date/s/ CHARLES R. COX
    
    Chief Executive Officer and
    
    March 12, 2010CHARLES R. COX
    
    Chairman (Principal Executive Officer)/s/ ROBERT S. MUFF
    
    Chief Accounting Officer (principal
    
    March 12, 2010ROBERT S. MUFF
    
    financial and Accounting Officer)/s/ SANGWOO AHN
    
    Director
    
    March 12, 2010SANGWOO AHN/s/ KEVIN R. JOST
    
    Director
    
    March 12, 2010KEVIN R. JOST/s/ HANS KESSLER
    
    Director
    
    March 12, 2010HANS KESSLER
 F-34