##### Table of Contents



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, 2008
 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
(State or other jurisdiction of incorporation or organization)
    
    74-1191271
(IRS Employer Identification No.)2435 North Central Expressway 
Suite 700
Richardson, Texas
(Address of principal executive offices)
    
    75080
(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
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ
   DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



FURMANITE CORPORATION AND SUBSIDIARIES
 INDEX
 Item
    
    
    
    PageNumber
    
    
    
    NumberPART I1.
    
    Business
    
    31A.
    
    Risk Factors
    
    61B.
    
    Unresolved Staff Comments
    
    82.
    
    Properties
    
    93.
    
    Legal Proceedings
    
    94.
    
    Submission of Matters to a Vote of Security Holders
    
    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
    
    258.
    
    Financial Statements and Supplementary Data
    
    259.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    259a.
    
    Controls and Procedures
    
    259b.
    
    Other Information
    
    26PART III10.
    
    Directors, Executive Officers and Corporate Governance
    
    2711.
    
    Executive Compensation
    
    2712.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    2713.
    
    Certain Relationships, Related Transactions and Director Independence
    
    2714.
    
    Principal Accountant Fees and Services
    
    27PART IV15.
    
    Exhibits and Financial Statement Schedules
    
    28EX-10.1EX-10.2EX-10.3EX-10.12EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




---



##### Table of Contents



PART I
 
 Item 1. Business
 Company Overview
        3




---



##### Table of Contents



Business Segment Data and Geographical Information
  Operations
  Products and Services
    4




---



##### Table of Contents



Customers and Markets
    Safety, Environmental and Other Regulatory Matters
  5




---



##### Table of Contents



Employees
  
 Item 1A. Risk Factors
  Weakness in the industries Furmanite serves could adversely affect demand for our services.
  6




---



##### Table of Contents



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.
 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 limit 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.
  7




---



##### Table of Contents



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, may negatively impact the Companys business.
  The
government services provided by Xtria are affected by levels of expenditures of federal,
state and local governments.
  
 Item 1B. Unresolved Staff Comments
  8




---



##### Table of Contents



Item 2. Properties
   
 Item 3. Legal Proceedings
      9




---



##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  10




---



##### Table of Contents



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
    
    Low2008:First Quarter
    
    $
    11.80
    
    
    $
    8.18Second Quarter
    
    $
    9.54
    
    
    $
    7.50Third Quarter
    
    $
    12.57
    
    
    $
    7.40Fourth Quarter
    
    $
    10.46
    
    
    $
    4.132007:First Quarter
    
    $
    6.24
    
    
    $
    4.68Second Quarter
    
    $
    7.99
    
    
    $
    5.36Third Quarter
    
    $
    9.46
    
    
    $
    6.70Fourth Quarter
    
    $
    13.00
    
    
    $
    8.45
   11




---



##### Table of Contents



Item 6. Selected Financial Data
  Year Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Income Statement Data:Revenues
    
    $
    320,942
    
    
    $
    290,287
    
    
    $
    246,388
    
    
    $
    153,881
    
    
    $
    145,687Total costs and expenses
    
    
    293,941
    
    
    
    269,640
    
    
    
    244,488
    
    
    
    154,772
    
    
    
    140,728Operating income (loss)
    
    $
    27,001
    
    
    $
    20,647
    
    
    $
    1,900
    
    
    $
    (891
    )
    
    $
    4,959Interest expense, net of interest
and other income
    
    
    (1,445
    )
    
    
    (2,233
    )
    
    
    (1,941
    )
    
    
    (380
    )
    
    
    (815
    )Income (loss) before income taxes
    
    $
    25,556
    
    
    $
    18,414
    
    
    $
    (41
    )
    
    $
    (1,271
    )
    
    $
    4,144Income tax expense
    
    
    (3,688
    )
    
    
    (5,919
    )
    
    
    (3,391
    )
    
    
    (2,995
    )
    
    
    (1,748
    )Net income (loss)
    
    $
    21,868
    
    
    $
    12,495
    
    
    $
    (3,432
    )
    
    $
    (4,266
    )
    
    $
    2,396Earnings (loss) per common share:Basic
    
    $
    0.60
    
    
    $
    0.35
    
    
    $
    (0.10
    )
    
    $
    (0.13
    )
    
    $
    0.07Diluted
    
    $
    0.59
    
    
    $
    0.35
    
    
    $
    (0.10
    )
    
    $
    (0.13
    )
    
    $
    0.07
 December 31,Balance Sheet Data:
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004Cash and cash equivalents
    
    $
    30,793
    
    
    $
    31,570
    
    
    $
    23,937
    
    
    $
    21,526
    
    
    $
    21,598Working capital
    
    
    83,826
    
    
    
    76,917
    
    
    
    69,226
    
    
    
    57,154
    
    
    
    47,075Total assets
    
    
    173,278
    
    
    
    172,053
    
    
    
    156,500
    
    
    
    136,478
    
    
    
    111,920Long-term debt, less current portion
    
    
    35,363
    
    
    
    43,185
    
    
    
    48,721
    
    
    
    31,739
    
    
    
    17,498Stockholders equity
    
    
    91,317
    
    
    
    78,336
    
    
    
    60,605
    
    
    
    51,304
    
    
    
    55,890
 12




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Business Overview
       Financial Overview
  13




---



##### Table of Contents



Results of Operations
 Years Ended December 31,2008
    
    
    2007
    
    
    2006(in thousands, except per share data)Revenues
    
    $
    320,942
    
    
    $
    290,287
    
    
    $
    246,388Costs and expenses:Operating costs (exclusive of depreciation and amortization)
    
    
    207,748
    
    
    
    187,055
    
    
    
    160,755Depreciation and amortization
    
    
    5,784
    
    
    
    4,772
    
    
    
    3,692Selling, general and administrative
    
    
    80,409
    
    
    
    77,813
    
    
    
    79,120Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    654Provision for lease termination costs
    
    
    
    
    
    
    
    
    
    
    267Total costs and expenses
    
    
    293,941
    
    
    
    269,640
    
    
    
    244,488Operating income
    
    
    27,001
    
    
    
    20,647
    
    
    
    1,900Interest and other income, net
    
    
    260
    
    
    
    1,041
    
    
    
    866Interest expense
    
    
    (1,705
    )
    
    
    (3,274
    )
    
    
    (2,807
    )Income (loss) before income taxes
    
    
    25,556
    
    
    
    18,414
    
    
    
    (41
    )Income tax expense
    
    
    (3,688
    )
    
    
    (5,919
    )
    
    
    (3,391
    )Net income (loss)
    
    $
    21,868
    
    
    $
    12,495
    
    
    $
    (3,432
    )Earnings (loss) per share:Basic
    
    $
    0.60
    
    
    $
    0.35
    
    
    $
    (0.10
    )Diluted
    
    $
    0.59
    
    
    $
    0.35
    
    
    $
    (0.10
    )
 Revenues
   14




---



##### Table of Contents



Operating Costs
   Depreciation and Amortization
   Selling, General and Administrative
  15




---



##### Table of Contents



Interest Expense
   Income Taxes
 Accounting for Income Taxes
   16




---



##### Table of Contents



Liquidity and Capital Resources
         17




---



##### Table of Contents



18




---



##### Table of Contents



Contractual Obligations
  LessThan 1
    
    
    
    
    
    
    
    
    
    
    After 5Total
    
    
    Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    YearsDebt:$50.0 million facility
    
    $
    27,590
    
    
    $
    
    
    
    $
    27,590
    
    
    $
    
    
    
    $
    $15.0 million facility secured by
letter of credit under $50 million
facility
    
    
    7,500
    
    
    
    
    
    
    
    7,500
    
    
    
    
    
    
    
    Capital leases
    
    
    609
    
    
    
    336
    
    
    
    273
    
    
    
    
    
    
    
    Debt subtotal
    
    
    35,699
    
    
    
    336
    
    
    
    35,363
    
    
    
    
    
    
    
    Interest on debt
    
    
    2,375
    
    
    
    1,193
    
    
    
    1,182
    
    
    
    
    
    
    
    Total debt and interest
    
    
    38,074
    
    
    
    1,529
    
    
    
    36,545
    
    
    
    
    
    
    
    Other contractual commitments:Operating leases
    
    
    23,667
    
    
    
    7,626
    
    
    
    10,328
    
    
    
    3,864
    
    
    
    1,849Pension plan contributions
    
    
    9,240
    
    
    
    924
    
    
    
    1,848
    
    
    
    1,848
    
    
    
    4,620Total other contractual commitments
    
    
    32,907
    
    
    
    8,550
    
    
    
    12,176
    
    
    
    5,712
    
    
    
    6,469Total
    
    $
    70,981
    
    
    $
    10,079
    
    
    $
    48,721
    
    
    $
    5,712
    
    
    $
    6,469
  Accounting for Uncertainty in Income Taxes-an interpretation of
FASB Statement No. 109
 Critical Accounting Policies and Estimates
   19




---



##### Table of Contents



Allowance for Doubtful Accounts
  Goodwill and Intangible Assets
 Goodwill and Other Intangible Assets
 Revenue Recognition
 Revenue Recognition in Financial Statements Revenue Recognition
   20




---



##### Table of Contents



Revenue Arrangements with Multiple Deliverables
 Stock-Based Compensation
  Income Taxes
    21




---



##### Table of Contents



Defined Benefit Pension Plan
  Contingencies
 Environmental
   Other
  New Accounting Pronouncements
 Fair Value Measurement (SFAS No. 157) Effective Date of FASB Statement No. 157 Determining the Fair
Value of a Financial Asset When the Market for That Asset Is Not Active
 22




---



##### Table of Contents



Employers Accounting for Defined Benefit Pension
and Other Post Retirement Plans  an amendment of FASB Statements No. 87, 88, 106, and
132(R)(SFAS No. 158)
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115 (SFAS No. 159)
 Business Combinations (SFAS No.
141)
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangible Assets
 Hierarchy of Generally Accepted Accounting Principles
 Employers Disclosures about Postretirement
Benefit Plan Assets Employers Disclosures about Pensions and Other Postretirement Benefits,
 23




---



##### Table of Contents



Off-Balance Sheet Transactions
  Inflation and Changing Prices
  24




---



##### Table of Contents



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
 Managements Annual Report on Internal Control over Financial Reporting
  25




---



##### Table of Contents



Internal Control  Integrated Framework
  Changes in Internal Controls Over Financial Reporting
  
 Item 9b. Other Information
  26




---



##### Table of Contents



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
  27




---



##### Table of Contents



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, 2008 and 2007
    
    F-3Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006
    
    F-4Consolidated Statements of Changes in Stockholders Equity for the years ended December
31, 2008, 2007 and 2006
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006
    
    F-6Consolidated
Statements of Comprehensive Income (Loss) for the years ended December 31, 2008,
2007 and 2006
    
    F-7Notes to Consolidated Financial Statements
    
    F-8(2) Schedules:None
  28




---



##### Table of Contents



(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, 2009.10.2*±
    
    Amended and Restated Change in
Control Agreement effective January 1, 2009.10.3*±
    
    Amended and Restated Change in
Control Agreement effective January 1, 2009.10.6*
    
    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.
 29




---



##### Table of Contents



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*
    
    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.10.9*
    
    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.10.10*
    
    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.10.11*
    
    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.10.12±
    
    Form of Indemnification Agreement.10.13
    
    Amended and Restated Loan Agreement between Furmanite PLC, Bank of Scotland and certain other
Lenders, dated May 1, 1991, as amended, filed as Exhibit 10.8 of the exhibits to the
Registrants Form 10-K for the year ended December 31, 1994; Exhibit 10.12 of the exhibits to
the Registrants Form 10-K for the year ended December 31, 1996; Exhibit 10.12 of the
Registrants Form 10-K for the year ended December 31, 1997; and, Exhibit 10.13 of the
Registrants Form 10-K for the year ended December 31, 1999, which exhibits are hereby
incorporated by reference.10.14
    
    Second Amendment, dated as of December 31, 2005, to the Amended and Restated Loan Agreement
dated as of August 13, 2002 among Furmanite Limited, Furmanite Worldwide, Inc., the financial
institutions from time to time party thereto and Bank of Scotland, as Agent, filed as Exhibit
10.1 of the exhibits to the Registrants Current Report on Form 8-K filed on January 6, 2006,
which exhibit is hereby incorporated by reference.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 13, 2009.31.2 ±
    
    Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002, dated as of March 13, 2009.32.1 ±
    
    Certification of Chief Executive Officer, Pursuant to Section 906(a) of the Sarbanes-Oxley
Act of 2002, dated as of March 13, 2009.32.2 ±
    
    Certification of Chief Financial Officer, Pursuant to Section 906(a) of the Sarbanes-Oxley
Act of 2002, dated as of March 13, 2009.
 
 *
    
    Denotes management contracts.±
    
    Filed herewith. 30




---



##### 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
 
    Employers Accounting for Defined Benefit Pension and Other Postretirement Plans
 Internal ControlIntegrated
Framework
  
 F-2




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share data)
 December 31,2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    30,793
    
    
    $
    31,570Accounts receivable, trade (net of allowance for doubtful accounts of $4,627
in 2008 and $4,011 in 2007)
    
    
    64,879
    
    
    
    62,552Receivable from businesses distributed to common stockholders
    
    
    1,443
    
    
    
    1,443Inventories
    
    
    24,868
    
    
    
    24,213Prepaid and other current assets
    
    
    5,744
    
    
    
    5,616Total current assets
    
    
    127,727
    
    
    
    125,394Property and equipment
    
    
    58,119
    
    
    
    57,505Less accumulated depreciation and amortization
    
    
    28,841
    
    
    
    27,663Property and equipment, net
    
    
    29,278
    
    
    
    29,842Goodwill
    
    
    13,148
    
    
    
    13,148Net pension asset
    
    
    
    
    
    
    430Other assets
    
    
    3,125
    
    
    
    3,239Total assets
    
    $
    173,278
    
    
    $
    172,053Liabilities and Stockholders EquityCurrent liabilities:Current portion of long-term debt and capital leases
    
    $
    336
    
    
    $
    2,569Accounts payable
    
    
    17,990
    
    
    
    16,025Accrued expenses and other current liabilities
    
    
    25,086
    
    
    
    26,341Income tax payable
    
    
    489
    
    
    
    3,542Total current liabilities
    
    
    43,901
    
    
    
    48,477Long-term debt and capital leases, non-current
    
    
    35,363
    
    
    
    43,185Net pension liability
    
    
    661
    
    
    
    Other liabilities
    
    
    2,036
    
    
    
    2,055Commitments and contingenciesStockholders equity:Series B Preferred Stock, unlimited shares authorized, none outstanding
    
    
    
    
    
    
    Common stock, no par value; 60,000,000 shares authorized; 40,612,815 shares
issued in 2008 and 39,959,792 shares issued in 2007
    
    
    4,715
    
    
    
    4,643Additional paid-in capital
    
    
    131,418
    
    
    
    128,363Retained earnings (accumulated deficit)
    
    
    (19,029
    )
    
    
    (40,943
    )Accumulated other comprehensive income (loss)
    
    
    (7,774
    )
    
    
    4,467Treasury stock, at cost (4,008,963 shares in 2008 and 4,048,963 shares in 2007)
    
    
    (18,013
    )
    
    
    (18,194
    )Total stockholders equity
    
    
    91,317
    
    
    
    78,336Total liabilities and stockholders equity
    
    $
    173,278
    
    
    $
    172,053
  F-3




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except share and per share data)
 Years Ended December 31,2008
    
    
    2007
    
    
    2006Revenues
    
    $
    320,942
    
    
    $
    290,287
    
    
    $
    246,388Costs and expenses:Operating costs (exclusive of depreciation and amortization)
    
    
    207,748
    
    
    
    187,055
    
    
    
    160,755Depreciation and amortization
    
    
    5,784
    
    
    
    4,772
    
    
    
    3,692Selling, general and administrative
    
    
    80,409
    
    
    
    77,813
    
    
    
    79,120Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    654Provision for lease termination costs
    
    
    
    
    
    
    
    
    
    
    267Total costs and expenses
    
    
    293,941
    
    
    
    269,640
    
    
    
    244,488Operating income
    
    
    27,001
    
    
    
    20,647
    
    
    
    1,900Interest and other income, net
    
    
    260
    
    
    
    1,041
    
    
    
    866Interest expense
    
    
    (1,705
    )
    
    
    (3,274
    )
    
    
    (2,807
    )Income (loss) before income taxes
    
    
    25,556
    
    
    
    18,414
    
    
    
    (41
    )Income tax expense
    
    
    (3,688
    )
    
    
    (5,919
    )
    
    
    (3,391
    )Net income (loss)
    
    $
    21,868
    
    
    $
    12,495
    
    
    $
    (3,432
    )Earnings (loss) per common share:Basic
    
    $
    0.60
    
    
    $
    0.35
    
    
    $
    (0.10
    )Diluted
    
    $
    0.59
    
    
    $
    0.35
    
    
    $
    (0.10
    )Weighted-average number of common and common equivalent shares
used in computing net income per common share:Basic
    
    
    36,426
    
    
    
    35,514
    
    
    
    34,743Diluted
    
    
    36,951
    
    
    
    36,052
    
    
    
    34,743
  F-4




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 (in thousands, except share data)
 Retained
    
    AccumulatedAdditional
    
    Earnings
    
    OtherCommon Shares
    
    Common
    
    Paid-In
    
    (Accumulated
    
    Comprehensive
    
    TreasuryIssued
    
    Treasury
    
    Stock
    
    Capital
    
    Deficit)
    
    Income (Loss)
    
    Stock
    
    TotalBalances at January 1, 2006
    
    
    38,805,695
    
    
    
    4,398,012
    
    
    $
    4,507
    
    
    $
    124,481
    
    
    $
    (49,568
    )
    
    $
    (7,091
    )
    
    $
    (20,028
    )
    
    $
    52,301Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,432
    )
    
    
    
    
    
    
    
    
    
    
    (3,432
    )Stock based compensation and stock option exercises
    
    
    452,330
    
    
    
    (321,049
    )
    
    
    51
    
    
    
    403
    
    
    
    
    
    
    
    
    
    
    
    1,708
    
    
    
    2,162Minimum pension liability adjustment for
subsidiary, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,750
    
    
    
    
    
    
    
    2,750Adjustment to initially apply FASB Statement No.
158, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,129
    
    
    
    
    
    
    
    2,129Adjustment to previously provided tax exposures
related to business distributed to common
stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (438
    )
    
    
    
    
    
    
    
    
    
    
    (438
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,133
    
    
    
    
    
    
    
    5,133Balances at December 31, 2006
    
    
    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 Statement No. 158 measurement
date change, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    (10
    )
    
    
    
    
    
    
    36Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,245
    )
    
    
    
    
    
    
    (11,245
    )Balance at December 31, 2008
    
    
    40,612,815
    
    
    
    4,008,963
    
    
    $
    4,715
    
    
    $
    131,418
    
    
    $
    (19,029
    )
    
    $
    (7,774
    )
    
    $
    (18,013
    )
    
    $
    91,317
  F-5




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Years Ended December 31,2008
    
    
    2007
    
    
    2006Operating activities:Net income (loss)
    
    $
    21,868
    
    
    $
    12,495
    
    
    $
    (3,432
    )Reconciliation of net income (loss) to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    5,807
    
    
    
    4,772
    
    
    
    3,692Provision for doubtful accounts
    
    
    909
    
    
    
    917
    
    
    
    1,836Provision for lease termination costs
    
    
    
    
    
    
    
    
    
    
    267Deferred income taxes
    
    
    381
    
    
    
    79
    
    
    
    (473
    )Stock-based compensation expense
    
    
    497
    
    
    
    218
    
    
    
    1,155Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    654Other, net
    
    
    (279
    )
    
    
    
    
    
    
    Changes in operating assets and liabilities  net of business acquisition:Accounts receivable
    
    
    (5,910
    )
    
    
    (3,941
    )
    
    
    (5,928
    )Inventories
    
    
    (1,638
    )
    
    
    (2,802
    )
    
    
    (4,121
    )Prepaid expenses and other current assets
    
    
    (533
    )
    
    
    (570
    )
    
    
    355Accounts payable
    
    
    1,073
    
    
    
    1,120
    
    
    
    233Accrued expenses
    
    
    (1,640
    )
    
    
    3,916
    
    
    
    485Income tax payable
    
    
    (3,899
    )
    
    
    961
    
    
    
    (4,123
    )Other, net
    
    
    (117
    )
    
    
    (511
    )
    
    
    3,033Net cash provided by (used in) operating activities
    
    
    16,519
    
    
    
    16,654
    
    
    
    (6,367
    )Investing activities:Capital expenditures
    
    
    (8,014
    )
    
    
    (8,097
    )
    
    
    (7,205
    )Acquisition, net of cash received
    
    
    
    
    
    
    
    
    
    
    (3,003
    )Proceeds from sale of assets
    
    
    144
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (7,870
    )
    
    
    (8,097
    )
    
    
    (10,208
    )Financing activities:Borrowings
    
    
    
    
    
    
    
    
    
    
    18,583Payments on debt
    
    
    (8,015
    )
    
    
    (713
    )
    
    
    (2,770
    )Issuance of common stock
    
    
    438
    
    
    
    512
    
    
    
    1,007Payments on 8.75% convertible subordinated debentures
    
    
    (155
    )
    
    
    
    
    
    
    Bank overdrafts
    
    
    
    
    
    
    (1,553
    )
    
    
    1,553Net cash provided by (used in) financing activities
    
    
    (7,732
    )
    
    
    (1,754
    )
    
    
    18,373Effect of exchange rate changes on cash
    
    
    (1,694
    )
    
    
    830
    
    
    
    613Increase (decrease) in cash and cash equivalents
    
    
    (777
    )
    
    
    7,633
    
    
    
    2,411Cash and cash equivalents at beginning of year
    
    
    31,570
    
    
    
    23,937
    
    
    
    21,526Cash and cash equivalents at end of year
    
    $
    30,793
    
    
    $
    31,570
    
    
    $
    23,937Supplemental cash flow information:Cash paid for interest
    
    $
    1,883
    
    
    $
    3,202
    
    
    $
    2,501Cash paid for income taxes
    
    $
    4,837
    
    
    $
    5,416
    
    
    $
    2,765
  F-6




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 (in thousands)
 Years Ended December 31,2008
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    21,868
    
    
    $
    12,495
    
    
    $
    (3,432
    )Other comprehensive income (loss):Minimum pension liability adjustment, net of tax
    
    
    
    
    
    
    
    
    
    
    2,750Change in pension net actuarial loss and prior service credit, net of tax
    
    
    (986
    )
    
    
    (1,247
    )
    
    
    Foreign currency translation adjustments
    
    
    (11,245
    )
    
    
    2,793
    
    
    
    5,133Total other
comprehensive income (loss)
    
    
    (12,231
    )
    
    
    1,546
    
    
    
    7,883Comprehensive income
    
    $
    9,637
    
    
    $
    14,041
    
    
    $
    4,451
  F-7




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
 1. Description of Business and Summary of Significant Accounting Policies
 Description of Business
    F-8




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
  Cash and Cash Equivalents
  Accounts Receivable
   Allowance for doubtful accounts receivable at January 1, 2006
    
    $
    1,493Provision for doubtful accounts
    
    
    1,836Currency adjustment
    
    
    54Write-offs, net of recoveries
    
    
    (42
    )Allowance for doubtful accounts receivable at December 31, 2006
    
    
    3,341Provision for doubtful accounts
    
    
    917Currency adjustment
    
    
    55Write-offs, net of recoveries
    
    
    (302
    )Allowance for doubtful accounts receivable at December 31, 2007
    
    
    4,011Provision for doubtful accounts
    
    
    909Currency adjustment
    
    
    (91
    )Write-offs, net of recoveries
    
    
    (202
    )Allowance for doubtful accounts receivable at December 31, 2008
    
    $
    4,627
 Inventories
  Property and Equipment
  F-9




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
  Accounting for the Impairment or Disposal of
Long-Lived Assets
 Goodwill and Intangible Assets
 Goodwill and Other Intangible Assets
 Revenue Recognition
 Revenue Recognition in Financial Statements Revenue Recognition
  F-10




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
  Revenue Arrangements with Multiple
Deliverables
 Foreign Currency Translation
  Stock-Based Compensation
 Share-based Payments,
 Contingencies
 Environmental
   F-11




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
 Other
  Income Taxes
 Accounting for Income Taxes
  New Accounting Pronouncements
 Fair
Value Measurement Effective Date of FASB Statement No. 157 Determining the
 F-12




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
 Fair Value of a Financial Asset When the Market for That Asset Is Not Active
 Employers Accounting for Defined Benefit Pension
and Other Post Retirement Plans  an amendment of FASB Statements No. 87, 88, 106, and 132 (R)
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 Business Combinations
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangible Assets
 Hierarchy of Generally Accepted Accounting Principles
 Employers Disclosures about Postretirement
Benefit Plan Assets Employers
 F-13




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
 Disclosures about Pensions and Other Postretirement Benefits,
 Use of Estimates
  2. Acquisition
  3. Earnings Per Share
  2008
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    21,868
    
    
    $
    12,495
    
    
    $
    (3,432
    )Basic weighted-average common shares outstanding
    
    
    36,426
    
    
    
    35,514
    
    
    
    34,743Dilutive effect of common stock equivalents
    
    
    525
    
    
    
    538
    
    
    
    Diluted weighted-average common shares outstanding
    
    $
    36,951
    
    
    $
    36,052
    
    
    $
    34,743Income (loss) per share:Basic
    
    $
    0.60
    
    
    $
    0.35
    
    
    $
    (0.10
    )Dilutive
    
    $
    0.59
    
    
    $
    0.35
    
    
    $
    (0.10
    )Stock options and restricted stock grants
excluded from diluted weighted-average common
shares outstanding because their inclusion would
have an anti-dilutive effect:
    
    
    118
    
    
    
    55
    
    
    
    1,014
  F-14




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
 4. Inventories
  2008
    
    
    2007Raw materials and supplies
    
    $
    14,690
    
    
    $
    13,770Work-in-process
    
    
    9,929
    
    
    
    8,100Finished goods
    
    
    249
    
    
    
    2,343Total inventories
    
    $
    24,868
    
    
    $
    24,213
 5. Property and Equipment
  2008
    
    
    2007Land
    
    $
    1,305
    
    
    $
    1,305Buildings
    
    
    4,630
    
    
    
    5,618Machinery and equipment
    
    
    37,196
    
    
    
    30,862Furniture and fixtures
    
    
    6,797
    
    
    
    7,567Vehicles
    
    
    3,001
    
    
    
    6,014Construction in progress
    
    
    1,884
    
    
    
    2,016Other
    
    
    3,306
    
    
    
    4,123Total property and equipment
    
    
    58,119
    
    
    
    57,505Less accumulated depreciation and amortization
    
    
    28,841
    
    
    
    27,663Net property and equipment
    
    $
    29,278
    
    
    $
    29,842
   2008
    
    
    2007Vehicles
    
    $
    4,583
    
    
    $
    4,684Equipment
    
    
    63
    
    
    
    362Total capital leases
    
    
    4,646
    
    
    
    5,046Less accumulated depreciation and amortization
    
    
    4,107
    
    
    
    3,927Net equipment acquired under capital leases
    
    $
    539
    
    
    $
    1,119
 6. Accrued Expenses
  2008
    
    
    2007Compensation and benefits
    
    $
    9,505
    
    
    $
    9,833Professional, audit and legal fees
    
    
    1,521
    
    
    
    1,802Value added tax payable
    
    
    2,007
    
    
    
    1,731Taxes other than income
    
    
    1,810
    
    
    
    1,619Estimated potential uninsured liability claims
    
    
    2,394
    
    
    
    2,530Asset and equipment costs
    
    
    
    
    
    
    1,009Other employee related expenses
    
    
    982
    
    
    
    857Rent
    
    
    388
    
    
    
    544Interest
    
    
    136
    
    
    
    422Other
    
    
    6,343
    
    
    
    5,994$
    25,086
    
    
    $
    26,341
 F-15




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
 7. Long-Term Debt
  2008
    
    
    2007Borrowings under $50,000 revolving bank facility (the $50.0 million facility)
    
    $
    27,590
    
    
    $
    27,590Borrowings secured by a letter of credit under $50 million facility (the
$15.0 million facility)
    
    
    7,500
    
    
    
    15,0008.75% convertible subordinated debentures due January 2008
    
    
    
    
    
    
    2,040Capital leases
    
    
    609
    
    
    
    1,124Total
long-term debt and capital leases
    
    
    35,699
    
    
    
    45,754Less current
portion of long-term debt and capital leases
    
    
    336
    
    
    
    2,569Total
long-term debt and capital leases, non-current
    
    $
    35,363
    
    
    $
    43,185
     F-16




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
  2009
    
    $
    2010
    
    
    35,0902011
    
    
    2012
    
    
    2013
    
    
    Thereafter
    
    
    Total
long-term debt
    
    $
    35,090Capital
leases
    
    
    609Total
long-term debt and capital leases
    
    $
    35,699
 8. Retirement Plans
    
 F-17




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
  2008
    
    
    2007
    
    
    2006Net periodic pension cost:Service cost
    
    $
    721
    
    
    $
    805
    
    
    $
    638Interest cost
    
    
    3,931
    
    
    
    3,942
    
    
    
    3,828Expected return on plan assets
    
    
    (5,044
    )
    
    
    (5,274
    )
    
    
    (4,396
    )Amortization of prior service cost
    
    
    (112
    )
    
    
    (122
    )
    
    
    (113
    )Recognized net loss
    
    
    
    
    
    
    
    
    
    
    815Net periodic pension cost (benefit)
    
    $
    (504
    )
    
    $
    (649
    )
    
    $
    772
  2008
    
    2007Discount rate
    
    
    6.7
    %
    
    
    5.8
    %Rate of compensation increase
    
    
    3.0
    %
    
    
    3.7
    %Inflation
    
    
    2.5
    %
    
    
    3.2
    %
  2008
    
    2007Discount rate
    
    
    5.8
    %
    
    
    5.3
    %Expected long-term return on plan assets
    
    
    7.4
    %
    
    
    7.4
    %Rate of compensation increase
    
    
    3.7
    %
    
    
    3.5
    %Inflation
    
    
    3.2
    %
    
    
    3.0
    %
   F-18




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
  2008
    
    
    2007Projected benefit obligation:Beginning of year
    
    $
    73,653
    
    
    $
    72,713Service cost
    
    
    721
    
    
    
    805Interest cost
    
    
    3,931
    
    
    
    3,942Participants contributions
    
    
    256
    
    
    
    367Actuarial loss
    
    
    (8,370
    )
    
    
    (2,609
    )Benefits paid
    
    
    (2,354
    )
    
    
    (2,862
    )Measurement date change
    
    
    (1,134
    )
    
    
    Foreign currency translation adjustment and other
    
    
    (21,311
    )
    
    
    1,297End of year
    
    
    45,392
    
    
    
    73,653Fair value of plan assets:Beginning of year
    
    
    74,083
    
    
    
    69,671Actual gain on plan assets
    
    
    (6,468
    )
    
    
    4,426Employer contributions
    
    
    925
    
    
    
    1,218Participants contributions
    
    
    256
    
    
    
    367Benefits paid
    
    
    (2,354
    )
    
    
    (2,862
    )Measurement date change
    
    
    (1,273
    )
    
    
    Foreign currency translation adjustment and other
    
    
    (20,440
    )
    
    
    1,263End of year
    
    
    44,729
    
    
    
    74,083Excess projected obligation under (over) fair value at end of year
    
    $
    (663
    )
    
    $
    430Amounts recognized in accumulated other comprehensive income:Net actuarial loss
    
    $
    6,218
    
    
    $
    5,256Prior service cost (credit)
    
    
    (687
    )
    
    
    (1,090
    )Net amount
recognized in accumulated other comprehensive income
    
    $
    5,531
    
    
    $
    4,166
    2008
    
    2007Equity securities
    
    
    43
    %
    
    
    56
    %Debt securities
    
    
    50
    
    
    
    38Real estate
    
    
    1
    
    
    
    1Cash and other
    
    
    6
    
    
    
    5100
    %
    
    
    100
    %
  F-19




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
  2009
    
    $
    2,3192010
    
    
    2,3772011
    
    
    2,4372012
    
    
    2,4982013
    
    
    2,560Thereafter
    
    
    13,791Total
    
    $
    25,982
 9. Stockholders Equity
  Series B Preferred Stock
  Stock Option Plans
    F-20




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
   2008
    
    2007
    
    2006Expected volatility
    
    
    41.2
    %
    
    34.3% to 36.2%
    
    34.1% to 38.6%Risk-free interest rate
    
    
    1.6
    %
    
    3.6% to 4.4%
    
    4.1% to 5.1%Expected dividends
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected term in years
    
    
    5
    
    
    
    5
    
    
    
    3.5
   Weighted-AverageWeighted-
    
    Remaining
    
    AggregateAverage
    
    Contractual
    
    IntrinsicExercise
    
    Term
    
    ValueOptions
    
    Shares
    
    Price
    
    (Years)
    
    ($000)Outstanding at January 1, 2006
    
    
    1,611,694
    
    
    $
    2.47Granted
    
    
    125,000
    
    
    $
    4.84Exercised
    
    
    (512,019
    )
    
    $
    2.18Forfeited
    
    
    (211,000
    )
    
    $
    2.83Outstanding at December 31, 2006
    
    
    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
    
    
    $
    4.25
    
    
    
    3.7
    
    
    $
    1,454Exercisable at December 31, 2008
    
    
    441,783
    
    
    $
    3.18
    
    
    
    3.6
    
    
    $
    1,049
  F-21




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
  Weighted-AverageGrant-DateNonvested Options
    
    Options
    
    Fair ValueNonvested at December 31, 2007
    
    
    424,000
    
    
    $
    1.36Granted
    
    
    284,000
    
    
    $
    1.93Vested
    
    
    (161,000
    )
    
    $
    1.42Forfeited
    
    
    (28,000
    )
    
    $
    2.81Nonvested at December 31, 2008
    
    
    519,000
    
    
    $
    1.71
   Average
    
    AverageOutstanding
    
    ExercisableAverage 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
    
    
    
    1.7
    
    
    
    1.7$2.30 - $3.13
    
    
    195,783
    
    
    
    195,783
    
    
    $
    2.46
    
    
    $
    2.46
    
    
    
    5.3
    
    
    
    5.3$3.14 - $11.80
    
    
    755,000
    
    
    
    236,000
    
    
    $
    4.75
    
    
    $
    3.83
    
    
    
    3.4
    
    
    
    2.2960,783
    
    
    
    441,783
    
    
    $
    4.25
    
    
    $
    3.18
    
    
    
    3.7
    
    
    
    3.6
  Restricted Stock Awards
    F-22




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
 .
 10. Accumulated Other Comprehensive Income (Loss)
  2008
    
    
    2007Net actuarial loss and prior service credit
    
    $
    (5,531
    )
    
    $
    (4,166
    )Deferred tax benefit
    
    
    1,548
    
    
    
    1,169Net of tax
    
    
    (3,983
    )
    
    
    (2,997
    )Adjustment for FASB Statement No. 158 measurement date
change, net of tax
    
    
    (10
    )
    
    
    Foreign currency translation adjustment
    
    
    (3,781
    )
    
    
    7,464Total accumulated other comprehensive income (loss)
    
    $
    (7,774
    )
    
    $
    4,467
 11. Income Taxes
 Accounting for Uncertainty in Income Taxes
  Balance at December 31, 2006
    
    $
    877Additions based on tax positions related to the current year
    
    
    385Reductions due to lapses of statutes of limitations
    
    
    (265
    )Balance at December 31, 2007
    
    
    997Additions based on tax positions related to the current year
    
    
    361Reductions due to lapses of statutes of limitations
    
    
    (384
    )Balance at December 31, 2008
    
    $
    974
  F-23




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
  2008
    
    
    2007
    
    
    2006Domestic operations
    
    $
    13,891
    
    
    $
    404
    
    
    $
    (13,809
    )Foreign operations
    
    
    11,665
    
    
    
    18,010
    
    
    
    13,768Income (loss) before income taxes
    
    $
    25,556
    
    
    $
    18,414
    
    
    $
    (41
    )
  Federal
    
    
    Foreign
    
    
    State
    
    
    Total2008: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
    
    
    $
    5,9192006:Current
    
    $
    
    
    
    $
    4,004
    
    
    $
    (140
    )
    
    $
    3,864Deferred
    
    
    
    
    
    
    (473
    )
    
    
    
    
    
    
    (473
    )$
    
    
    
    $
    3,531
    
    
    $
    (140
    )
    
    $
    3,391
  2008
    
    
    2007
    
    
    2006Expected tax expense (benefit) at statutory rates
    
    $
    8,945
    
    
    $
    6,261
    
    
    $
    (14
    )Increase (decrease) in taxes resulting from:Change in valuation allowance
    
    
    (5,105
    )
    
    
    (2,489
    )
    
    
    4,028State income taxes, net
    
    
    510
    
    
    
    516
    
    
    
    (220
    )Foreign tax rate differences
    
    
    (1,302
    )
    
    
    (586
    )
    
    
    (1,161
    )Permanent differences
    
    
    198
    
    
    
    2,572
    
    
    
    (88
    )Resolution of state and foreign tax issues
    
    
    61
    
    
    
    (67
    )
    
    
    49Adjustment to net operating loss carryforwards
    
    
    
    
    
    
    (473
    )
    
    
    1,042Other
    
    
    381
    
    
    
    185
    
    
    
    (245
    )$
    3,688
    
    
    $
    5,919
    
    
    $
    3,391
    F-24




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
  2008
    
    
    2007Deferred tax assets:Federal net operating loss carryforwards
    
    $
    10,345
    
    
    $
    11,836Alternative minimum tax credit carryforwards
    
    
    2,794
    
    
    
    2,689State net operating loss carryforwards
    
    
    887
    
    
    
    1,184Accrued expenses
    
    
    1,110
    
    
    
    3,481Intangible assets
    
    
    784
    
    
    
    1,022Foreign subsidiaries, primarily NOLs, pension and accrued expenses
    
    
    4,586
    
    
    
    3,843Other
    
    
    654
    
    
    
    652Total gross deferred tax assets
    
    
    21,160
    
    
    
    24,707Deferred tax liabilities:Property and equipment, principally due to differences in depreciation
    
    
    (1,483
    )
    
    
    (618
    )Foreign deferred tax liabilities, primarily property and equipment
    
    
    (768
    )
    
    
    (84
    )Net deferred tax asset before valuation allowance
    
    
    18,909
    
    
    
    24,005Less valuation allowance
    
    
    (17,560
    )
    
    
    (22,665
    )Net deferred tax asset
    
    $
    1,349
    
    
    $
    1,340
  12. Commitments and Contingencies
    Capital
    
    
    OperatingLeases
    
    
    Leases2009
    
    $
    361
    
    
    $
    7,6262010
    
    
    180
    
    
    
    5,8712011
    
    
    102
    
    
    
    4,4572012
    
    
    
    
    
    
    2,6722013
    
    
    
    
    
    
    1,192Thereafter
    
    
    
    
    
    
    1,849Total minimum lease payments
    
    $
    643
    
    
    $
    23,667Less amounts representing interest
    
    
    (34
    )Present value of future minimum lease payments
    
    $
    609
 F-25




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
      13. Business Segment Data and Geographical Information
   F-26




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
  United
    
    
    
    
    
    
    Asia-States
    
    
    Europe
    
    
    Pacific
    
    
    TotalYear 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 income (loss)
    
    $
    (5,342
    )
    
    $
    18,991
    
    
    $
    6,998
    
    
    $
    20,647Allocation of headquarter costs
    
    
    5,493
    
    
    
    (4,408
    )
    
    
    (1,085
    )
    
    
    Adjusted operating income (loss)
    
    $
    151
    
    
    $
    14,583
    
    
    $
    5,913
    
    
    $
    20,647Year ended December 31, 2006:Under pressure services
    
    $
    42,724
    
    
    $
    30,084
    
    
    $
    7,315
    
    
    $
    80,123Turnaround services
    
    
    39,437
    
    
    
    64,652
    
    
    
    14,663
    
    
    
    118,752Other services
    
    
    26,152
    
    
    
    18,638
    
    
    
    2,723
    
    
    
    47,513Total revenues
    
    $
    108,313
    
    
    $
    113,374
    
    
    $
    24,701
    
    
    $
    246,388Operating income (loss)
    
    $
    (18,163
    )
    
    $
    14,740
    
    
    $
    5,323
    
    
    $
    1,900Allocation of headquarter costs
    
    
    5,420
    
    
    
    (4,317
    )
    
    
    (1,103
    )
    
    
    Adjusted operating income (loss)
    
    $
    (12,743
    )
    
    $
    10,423
    
    
    $
    4,220
    
    
    $
    1,900
  2008
    
    
    2007United States
    
    $
    104,058
    
    
    $
    89,650Europe
    
    
    54,580
    
    
    
    65,252Asia-Pacific
    
    
    14,640
    
    
    
    17,151$
    173,278
    
    
    $
    172,053
  14. Significant Customers
  F-27




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
 15. Fair Value of Financial Instruments and Credit Risk
  
    
    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 beliefs about the
assumptions that market participants would use in pricing the asset or liability, based on
the best information available in the circumstances.
    F-28




---



##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
 16. Quarterly Financial Data (Unaudited)
  Quarter EndedMarch 31
    
    June 30
    
    September 30
    
    December 312008: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
    
    
    $
    0.142007:Revenues
    
    $
    68,445
    
    
    $
    74,723
    
    
    $
    74,190
    
    
    $
    72,929Operating income
    
    $
    3,100
    
    
    $
    5,871
    
    
    $
    5,814
    
    
    $
    5,862Net income
    
    $
    1,606
    
    
    $
    3,852
    
    
    $
    3,629
    
    
    $
    3,408Earnings per common share:Basic
    
    $
    0.05
    
    
    $
    0.11
    
    
    $
    0.10
    
    
    $
    0.09Diluted
    
    $
    0.04
    
    
    $
    0.11
    
    
    $
    0.10
    
    
    $
    0.09
 F-29




---



##### Table of Contents



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/ MICHAEL L. ROSE
    
    Chief Executive Officer and
    
    March 13, 2009MICHAEL L. ROSE
    
    Chairman (Principal Executive Officer)/s/ HOWARD C. WADSWORTH
    
    Senior Vice President, Treasurer and
    
    March 13, 2009HOWARD C. WADSWORTH
    
    Secretary (Principal Financial and Accounting Officer)/s/ SANGWOO AHN
    
    Director
    
    March 13, 2009SANGWOO AHN/s/ CHARLES R. COX
    
    Director
    
    March 13, 2009CHARLES R. COX/s/ HANS KESSLER
    
    Director
    
    March 13, 2009HANS KESSLER
 F-30