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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended September 30, 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 001-05083
 
 FURMANITE CORPORATION
  Delaware
    
    74-1191271(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)2435 North Central ExpresswaySuite 700Richardson, Texas
    
    75080(Address of principal executive offices)
    
    (Zip Code)
 (972) 699-4000
 Not Applicable
 
 þ o
 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




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##### 



FURMANITE CORPORATION AND SUBSIDIARIES
INDEX
 PageNumberCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
    
    
    3PART I. Financial InformationItem 1. Financial StatementsConsolidated Balance Sheets as of September 30, 2009 (unaudited) and December 31, 2008
    
    
    4Consolidated Income Statements for the Three and Nine Months Ended September 30, 2009 and 2008 (unaudited)
    
    
    5Consolidated Statements of Changes in Stockholders Equity for the Nine Months Ended September 30, 2009
(unaudited) and for the Year Ended December 31, 2008
    
    
    6Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008 (unaudited)
    
    
    7Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2009
and 2008 (unaudited)
    
    
    8Notes to Consolidated Financial Statements (unaudited)
    
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    27PART II. Other InformationItem 1. Legal Proceedings
    
    
    28Item 1A. Risk Factors
    
    
    28Item 4.
Submission of Matters to a Vote of Security Holders
    
    
    29Item 6. Exhibits
    
    
    30EX-31.1EX-31.2EX-31.3EX-32.1EX-32.2EX-32.3
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
  3




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PART I  FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share data)
 September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    36,210
    
    
    $
    30,793Accounts receivable, trade (net of allowance for doubtful accounts of
$2,011 and $4,627 as of September 30, 2009 and December 31, 2008, respectively)
    
    
    59,696
    
    
    
    64,879Receivable from businesses distributed to common stockholders
    
    
    1,443
    
    
    
    1,443Inventories:Raw materials and supplies
    
    
    18,186
    
    
    
    14,690Work-in-process
    
    
    9,415
    
    
    
    9,929Finished goods
    
    
    295
    
    
    
    249Prepaid expenses and other current assets
    
    
    5,411
    
    
    
    5,744Total current assets
    
    
    130,656
    
    
    
    127,727Property and equipment
    
    
    65,985
    
    
    
    58,119Less accumulated depreciation and amortization
    
    
    (35,453
    )
    
    
    (28,841
    )Property and equipment, net
    
    
    30,532
    
    
    
    29,278Goodwill
    
    
    13,148
    
    
    
    13,148Other assets
    
    
    5,390
    
    
    
    3,125Total assets
    
    $
    179,726
    
    
    $
    173,278Liabilities and Stockholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    182
    
    
    $
    336Accounts payable
    
    
    14,884
    
    
    
    17,990Accrued expenses and other current liabilities
    
    
    26,662
    
    
    
    25,086Income taxes payable
    
    
    2,339
    
    
    
    489Total current liabilities
    
    
    44,067
    
    
    
    43,901Long-term debt, non-current
    
    
    35,184
    
    
    
    35,363Net pension liability
    
    
    550
    
    
    
    661Other liabilities
    
    
    2,229
    
    
    
    2,036Commitments and contingenciesStockholders 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 September 30, 2009 and December 31, 2008, respectively
    
    
    4,723
    
    
    
    4,715Additional paid-in capital
    
    
    131,979
    
    
    
    131,418Accumulated deficit
    
    
    (17,715
    )
    
    
    (19,029
    )Accumulated other comprehensive loss
    
    
    (3,278
    )
    
    
    (7,774
    )Treasury stock, at cost (4,008,963 shares as of September 30, 2009 and December 31, 2008)
    
    
    (18,013
    )
    
    
    (18,013
    )Total stockholders equity
    
    
    97,696
    
    
    
    91,317Total liabilities and stockholders equity
    
    $
    179,726
    
    
    $
    173,278
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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED INCOME STATEMENTS
 (in thousands, except per share data)
 (Unaudited)
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    70,757
    
    
    $
    75,883
    
    
    $
    203,515
    
    
    $
    239,455Costs and expenses:Operating costs (exclusive of depreciation and amortization)
    
    
    46,592
    
    
    
    50,089
    
    
    
    136,431
    
    
    
    153,954Depreciation and amortization expense
    
    
    1,563
    
    
    
    1,386
    
    
    
    4,353
    
    
    
    4,405Selling, general and administrative expense
    
    
    21,016
    
    
    
    17,848
    
    
    
    58,699
    
    
    
    58,803Total costs and expenses
    
    
    69,171
    
    
    
    69,323
    
    
    
    199,483
    
    
    
    217,162Operating income
    
    
    1,586
    
    
    
    6,560
    
    
    
    4,032
    
    
    
    22,293Interest income and other income (expense), net
    
    
    191
    
    
    
    445
    
    
    
    410
    
    
    
    414Interest expense
    
    
    (524
    )
    
    
    (353
    )
    
    
    (1,116
    )
    
    
    (1,380
    )Income before income taxes
    
    
    1,253
    
    
    
    6,652
    
    
    
    3,326
    
    
    
    21,327Income tax expense
    
    
    (1,050
    )
    
    
    (1,250
    )
    
    
    (2,012
    )
    
    
    (4,556
    )Net income
    
    $
    203
    
    
    $
    5,402
    
    
    $
    1,314
    
    
    $
    16,771Earnings per common share:Basic
    
    $
    0.01
    
    
    $
    0.15
    
    
    $
    0.04
    
    
    $
    0.46Diluted
    
    $
    0.01
    
    
    $
    0.15
    
    
    $
    0.04
    
    
    $
    0.45Weighted-average number of common and common equivalent shares used
in computing net income per common share:Basic
    
    
    36,635
    
    
    
    36,495
    
    
    
    36,618
    
    
    
    36,388Diluted
    
    
    36,796
    
    
    
    37,065
    
    
    
    36,751
    
    
    
    36,965
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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 Nine Months Ended September 30, 2009 (Unaudited) and Year Ended December 31, 2008
 (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, 2008
    
    
    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 income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,314
    
    
    
    
    
    
    
    
    
    
    
    1,314Stock-based compensation and stock
option exercises
    
    
    70,000
    
    
    
    
    
    
    
    8
    
    
    
    561
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    569Change in pension net actuarial loss and
prior service credit, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (368
    )
    
    
    
    
    
    
    (368
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,864
    
    
    
    
    
    
    
    4,864Balances at September 30, 2009
    
    
    40,682,815
    
    
    
    4,008,963
    
    
    $
    4,723
    
    
    $
    131,979
    
    
    $
    (17,715
    )
    
    $
    (3,278
    )
    
    $
    (18,013
    )
    
    $
    97,696
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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 (Unaudited)
 For the Nine MonthsEnded September 30,2009
    
    
    2008Operating activities:Net income
    
    $
    1,314
    
    
    $
    16,771Reconciliation of net income to net cash provided by operating activities:Depreciation and amortization
    
    
    4,353
    
    
    
    4,405Provision for doubtful accounts
    
    
    312
    
    
    
    83Deferred income taxes
    
    
    (220
    )
    
    
    (47
    )Stock-based compensation expense
    
    
    443
    
    
    
    335Other, net
    
    
    (142
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    5,072
    
    
    
    (1,282
    )Inventories
    
    
    (901
    )
    
    
    (3,886
    )Prepaid expenses and other current assets
    
    
    694
    
    
    
    749Accounts payable
    
    
    (2,473
    )
    
    
    (3,784
    )Accrued expenses and other current liabilities
    
    
    740
    
    
    
    3,710Income taxes payable
    
    
    2,113
    
    
    
    94Other, net
    
    
    53
    
    
    
    (1,262
    )Net cash provided by operating activities
    
    
    11,358
    
    
    
    15,886Investing activities:Capital expenditures
    
    
    (5,446
    )
    
    
    (5,434
    )Acquisition of assets
    
    
    (700
    )
    
    
    Proceeds from sale of assets
    
    
    226
    
    
    
    Net cash used in investing activities
    
    
    (5,920
    )
    
    
    (5,434
    )Financing activities:Payments on debt
    
    
    (35,382
    )
    
    
    (7,913
    )Proceeds from issuance of debt
    
    
    35,049
    
    
    
    Debt issuance costs
    
    
    (567
    )
    
    
    Issuance of common stock
    
    
    126
    
    
    
    278Payments on 8.75% convertible subordinated debentures
    
    
    
    
    
    
    (155
    )Net cash used in financing activities
    
    
    (774
    )
    
    
    (7,790
    )Effect of exchange rate changes on cash
    
    
    753
    
    
    
    (512
    )Increase in cash and cash equivalents
    
    
    5,417
    
    
    
    2,150Cash and cash equivalents at beginning of period
    
    
    30,793
    
    
    
    31,570Cash and cash equivalents at end of period
    
    $
    36,210
    
    
    $
    33,720Non-cash financing activities:Conversion of 8.75% convertible debentures to common stock
    
    $
    
    
    
    $
    1,884Settlement of accrued bonuses in common stock
    
    $
    
    
    
    $
    488Supplemental cash flow information:Cash paid for interest
    
    $
    1,091
    
    
    $
    1,539Cash paid (received) for income taxes, including refunds received
    
    $
    (113
    )
    
    $
    4,376
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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (in thousands)
 (Unaudited)
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    203
    
    
    $
    5,402
    
    
    $
    1,314
    
    
    $
    16,771Other comprehensive income:Change in pension net actuarial loss and prior service credit, net of tax
    
    
    162
    
    
    
    208
    
    
    
    (368
    )
    
    
    158Foreign currency translation adjustments
    
    
    1,165
    
    
    
    (5,324
    )
    
    
    4,864
    
    
    
    (3,270
    )Total other comprehensive income
    
    
    1,327
    
    
    
    (5,116
    )
    
    
    4,496
    
    
    
    (3,112
    )Comprehensive income
    
    $
    1,530
    
    
    $
    286
    
    
    $
    5,810
    
    
    $
    13,659
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FURMANITE CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009
(Unaudited)
 1. General and Summary of Significant Accounting Policies
   Revenue Recognition
 Revenue Recognition in Financial Statements Revenue
Recognition
 Inventories
  9




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New Accounting Pronouncements
 FASB Accounting Standards Codification TM FASB Accounting
Standards Codification TM Accounting Standards
Codification
 Employers Disclosures about Postretirement Benefit
Plan Assets Employers Disclosures about Pensions and Other Postretirement Benefits,
 2. Earnings Per Share
   For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    203
    
    
    $
    5,402
    
    
    $
    1,314
    
    
    $
    16,771Basic weighted-average common shares outstanding
    
    
    36,635
    
    
    
    36,495
    
    
    
    36,618
    
    
    
    36,388Dilutive effect of common stock equivalents
    
    
    161
    
    
    
    570
    
    
    
    133
    
    
    
    577Diluted weighted-average common shares outstanding
    
    
    36,796
    
    
    
    37,065
    
    
    
    36,751
    
    
    
    36,965Earnings per share:Basic
    
    $
    0.01
    
    
    $
    0.15
    
    
    $
    0.04
    
    
    $
    0.46Diluted
    
    $
    0.01
    
    
    $
    0.15
    
    
    $
    0.04
    
    
    $
    0.45Stock options excluded from diluted weighted-average common shares
outstanding because their inclusion would have an anti-dilutive effect:
    
    
    577
    
    
    
    55
    
    
    
    547
    
    
    
    118
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3. Accrued Expenses
  September 30,
    
    
    December 31,2009
    
    
    2008Compensation and benefits
    
    $
    10,854
    
    
    $
    9,505Estimated potential uninsured liability claims
    
    
    2,394
    
    
    
    2,394Value added tax payable
    
    
    1,835
    
    
    
    2,007Taxes other than income
    
    
    1,653
    
    
    
    1,810Professional, audit and legal fees
    
    
    1,492
    
    
    
    1,521Other employee related expenses
    
    
    687
    
    
    
    982Rent
    
    
    561
    
    
    
    388Payment due on purchased assets
    
    
    550
    
    
    
    Interest
    
    
    54
    
    
    
    136Other
    
    
    6,582
    
    
    
    6,343$
    26,662
    
    
    $
    25,086
 4. Indebtedness
  September 30,
    
    
    December 31,2009
    
    
    2008Borrowings
under new revolving credit facility (the new credit
agreement)
    
    $
    35,000
    
    
    $
    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
    
    
    366
    
    
    
    609Total long-term debt
    
    
    35,366
    
    
    
    35,699Less current portion of long-term debt
    
    
    182
    
    
    
    336Total long-term debt, non-current
    
    $
    35,184
    
    
    $
    35,363
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5. Retirement Plan
  For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    125
    
    
    $
    187
    
    
    $
    362
    
    
    $
    577Interest cost
    
    
    835
    
    
    
    1,019
    
    
    
    2,420
    
    
    
    3,149Expected return on plan assets
    
    
    (763
    )
    
    
    (1,308
    )
    
    
    (2,213
    )
    
    
    (4,040
    )Amortization of prior service cost
    
    
    (25
    )
    
    
    (29
    )
    
    
    (71
    )
    
    
    (90
    )Amortization of net actuarial loss
    
    
    47
    
    
    
    
    
    
    
    136
    
    
    
    Net periodic pension cost (benefit)
    
    $
    219
    
    
    $
    (131
    )
    
    $
    634
    
    
    $
    (404
    )
  6. Stock-Based Compensation
  12




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7. Accumulated Other Comprehensive Loss
  September 30,
    
    
    December 31,2009
    
    
    2008Net actuarial loss and prior service credit
    
    $
    (6,057
    )
    
    $
    (5,531
    )Less: deferred tax benefit
    
    
    1,696
    
    
    
    1,548Net of tax
    
    
    (4,361
    )
    
    
    (3,983
    )Adjustment
for FASB ASC 715 (FASB Statement No. 158) measurement date change, net of tax
    
    
    
    
    
    
    (10
    )Foreign currency translation adjustment
    
    
    1,083
    
    
    
    (3,781
    )Total accumulated other comprehensive loss
    
    $
    (3,278
    )
    
    $
    (7,774
    )
 8. Uncertain Tax Positions
 Accounting for Uncertainty in
Income Taxes
  Balance at December 31, 2008
    
    $
    974Additions based on tax positions related to the current year
    
    
    184Reductions due to lapses of statutes of limitations
    
    
    Balance at September 30, 2009
    
    $
    1,158
 9. Commitments and Contingencies
   13




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10. Business Segment Data and Geographical Information
   United
    
    
    
    
    
    
    Asia-States
    
    
    Europe
    
    
    Pacific
    
    
    TotalThree months ended September 30, 2009:Under pressure services
    
    $
    11,664
    
    
    $
    11,333
    
    
    $
    4,180
    
    
    $
    27,177Turnaround services
    
    
    12,211
    
    
    
    14,684
    
    
    
    4,613
    
    
    
    31,508Other services
    
    
    4,062
    
    
    
    6,911
    
    
    
    1,099
    
    
    
    12,072Total revenues
    
    $
    27,937
    
    
    $
    32,928
    
    
    $
    9,892
    
    
    $
    70,757Three months ended September 30, 2008:Under pressure services
    
    $
    12,172
    
    
    $
    9,224
    
    
    $
    2,953
    
    
    $
    24,349Turnaround services
    
    
    12,582
    
    
    
    20,794
    
    
    
    4,263
    
    
    
    37,639Other services
    
    
    5,924
    
    
    
    7,070
    
    
    
    901
    
    
    
    13,895Total revenues
    
    $
    30,678
    
    
    $
    37,088
    
    
    $
    8,117
    
    
    $
    75,883Nine months ended September 30, 2009:Under pressure services
    
    $
    32,246
    
    
    $
    29,480
    
    
    $
    11,375
    
    
    $
    73,101Turnaround services
    
    
    41,899
    
    
    
    38,965
    
    
    
    10,789
    
    
    
    91,653Other services
    
    
    16,168
    
    
    
    19,896
    
    
    
    2,697
    
    
    
    38,761Total revenues
    
    $
    90,313
    
    
    $
    88,341
    
    
    $
    24,861
    
    
    $
    203,515Nine months ended September 30, 2008:Under pressure services
    
    $
    35,592
    
    
    $
    31,249
    
    
    $
    8,681
    
    
    $
    75,522Turnaround services
    
    
    54,712
    
    
    
    58,121
    
    
    
    14,333
    
    
    
    127,166Other services
    
    
    17,252
    
    
    
    16,991
    
    
    
    2,524
    
    
    
    36,767Total revenues
    
    $
    107,556
    
    
    $
    106,361
    
    
    $
    25,538
    
    
    $
    239,455
 14




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##### Table of Contents



United
    
    
    
    
    
    
    Asia-States
    
    
    Europe
    
    
    Pacific
    
    
    TotalThree months ended September 30, 2009:Operating income (loss)
    
    $
    (3,305
    )
    
    $
    2,786
    
    
    $
    2,105
    
    
    $
    1,586Allocation of headquarter costs
    
    
    2,263
    
    
    
    (1,740
    )
    
    
    (523
    )
    
    
    Adjusted operating income (loss)
    
    $
    (1,042
    )
    
    $
    1,046
    
    
    $
    1,582
    
    
    $
    1,586Three months ended September 30, 2008:Operating income (loss)
    
    $
    (445
    )
    
    $
    5,499
    
    
    $
    1,506
    
    
    $
    6,560Allocation of headquarter costs
    
    
    1,195
    
    
    
    (977
    )
    
    
    (218
    )
    
    
    Adjusted operating income
    
    $
    750
    
    
    $
    4,522
    
    
    $
    1,288
    
    
    $
    6,560Nine months ended September 30, 2009:Operating income (loss)
    
    $
    (6,225
    )
    
    $
    5,744
    
    
    $
    4,513
    
    
    $
    4,032Allocation of headquarter costs
    
    
    5,600
    
    
    
    (4,365
    )
    
    
    (1,235
    )
    
    
    Adjusted operating income (loss)
    
    $
    (625
    )
    
    $
    1,379
    
    
    $
    3,278
    
    
    $
    4,032Nine months ended September 30, 2008:Operating income
    
    $
    1,123
    
    
    $
    16,255
    
    
    $
    4,915
    
    
    $
    22,293Allocation of headquarter costs
    
    
    5,630
    
    
    
    (4,534
    )
    
    
    (1,096
    )
    
    
    Adjusted operating income
    
    $
    6,753
    
    
    $
    11,721
    
    
    $
    3,819
    
    
    $
    22,293
  September 30,
    
    
    December 31,2009
    
    
    2008United States
    
    $
    31,926
    
    
    $
    32,066Europe
    
    
    13,231
    
    
    
    10,587Asia-Pacific
    
    
    3,913
    
    
    
    2,898$
    49,070
    
    
    $
    45,551
 15




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##### Table of Contents



11. 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.
    12.
Subsequent Events
  16




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Business Overview
  Financial Overview
  Results of Operations
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands, except per share data)Revenues
    
    $
    70,757
    
    
    $
    75,883
    
    
    $
    203,515
    
    
    $
    239,455Costs and expenses:Operating costs (exclusive of depreciation and amortization)
    
    
    46,592
    
    
    
    50,089
    
    
    
    136,431
    
    
    
    153,954Depreciation and amortization expense
    
    
    1,563
    
    
    
    1,386
    
    
    
    4,353
    
    
    
    4,405Selling, general and administrative expense
    
    
    21,016
    
    
    
    17,848
    
    
    
    58,699
    
    
    
    58,803Total costs and expenses
    
    
    69,171
    
    
    
    69,323
    
    
    
    199,483
    
    
    
    217,162Operating income
    
    
    1,586
    
    
    
    6,560
    
    
    
    4,032
    
    
    
    22,293Interest income and other income (expense), net
    
    
    191
    
    
    
    445
    
    
    
    410
    
    
    
    414Interest expense
    
    
    (524
    )
    
    
    (353
    )
    
    
    (1,116
    )
    
    
    (1,380
    )Income before income taxes
    
    
    1,253
    
    
    
    6,652
    
    
    
    3,326
    
    
    
    21,327Income tax expense
    
    
    (1,050
    )
    
    
    (1,250
    )
    
    
    (2,012
    )
    
    
    (4,556
    )Net income
    
    $
    203
    
    
    $
    5,402
    
    
    $
    1,314
    
    
    $
    16,771Earnings per share:Basic
    
    $
    0.01
    
    
    $
    0.15
    
    
    $
    0.04
    
    
    $
    0.46Diluted
    
    $
    0.01
    
    
    $
    0.15
    
    
    $
    0.04
    
    
    $
    0.45
 17




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Geographical information
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:United States
    
    $
    27,937
    
    
    $
    30,678
    
    
    $
    90,313
    
    
    $
    107,556Europe
    
    
    32,928
    
    
    
    37,088
    
    
    
    88,341
    
    
    
    106,361Asia-Pacific
    
    
    9,892
    
    
    
    8,117
    
    
    
    24,861
    
    
    
    25,538Total revenues
    
    
    70,757
    
    
    
    75,883
    
    
    
    203,515
    
    
    
    239,455Costs and expenses:Operating costs (exclusive of depreciation and amortization)United States
    
    
    18,551
    
    
    
    21,377
    
    
    
    60,532
    
    
    
    71,048Europe
    
    
    22,431
    
    
    
    23,999
    
    
    
    61,321
    
    
    
    67,758Asia-Pacific
    
    
    5,610
    
    
    
    4,713
    
    
    
    14,578
    
    
    
    15,148Total operating costs (exclusive of depreciation and amortization)
    
    
    46,592
    
    
    
    50,089
    
    
    
    136,431
    
    
    
    153,954Depreciation and amortization expenseUnited States, including corporate
    
    
    854
    
    
    
    779
    
    
    
    2,456
    
    
    
    2,553Europe
    
    
    417
    
    
    
    396
    
    
    
    1,162
    
    
    
    1,185Asia-Pacific
    
    
    292
    
    
    
    211
    
    
    
    735
    
    
    
    667Total depreciation and amortization expense
    
    
    1,563
    
    
    
    1,386
    
    
    
    4,353
    
    
    
    4,405Selling, general and administrative expenseUnited States, including corporate
    
    
    11,837
    
    
    
    8,967
    
    
    
    33,550
    
    
    
    32,832Europe
    
    
    7,294
    
    
    
    7,194
    
    
    
    20,114
    
    
    
    21,163Asia-Pacific
    
    
    1,885
    
    
    
    1,687
    
    
    
    5,035
    
    
    
    4,808Total selling general and administrative expense
    
    
    21,016
    
    
    
    17,848
    
    
    
    58,699
    
    
    
    58,803Total costs and expenses
    
    $
    69,171
    
    
    $
    69,323
    
    
    $
    199,483
    
    
    $
    217,162
  Revenues
   18




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Operating Costs (exclusive of depreciation and amortization)
    Depreciation
and Amortization Expense
  Selling,
General and Administrative Expense
  19




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Interest Expense
  Income Taxes
 Income Taxes
   20




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Liquidity and Capital Resources
       21




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22




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##### Table of Contents



Critical Accounting Policies and Estimates
 FASB Accounting Standards Codification Generally
Accepted Accounting Principles
   Revenue Recognition
 Revenue Recognition in Financial Statements Revenue Recognition
 23




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##### Table of Contents



Revenue Arrangements with Multiple Deliverables
 Allowance for Doubtful Accounts
  Goodwill, Intangible and Long-Lived Assets
 Goodwill and Other Intangible Assets
  24




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##### Table of Contents



Accounting for the Impairment or Disposal of Long-Lived Assets
 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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##### Table of Contents



Contingencies
 Environmental
   Other
  New Accounting Pronouncements
 FASB Accounting Standards Codification TM FASB Accounting Standards
Codification TM Accounting Standards Codification
 Employers Disclosures about Postretirement Benefit
Plan Assets Employers Disclosures about Pensions and Other Postretirement Benefits,
 Off-Balance Sheet Transactions
  Inflation and Changing Prices
  26




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 i.e.
    
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  27




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 PART II  Other Information
 
 Item 1. Legal Proceedings
      
 Item 1A. Risk Factors
  28




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  1.
    
    Election of four directors to serve until their terms expire at the next annual meeting of
stockholders:
 Number of Shares
    
    Number of SharesNominee
    
    For
    
    WithheldMichael L. Rose
    
    
    29,204,322
    
    
    
    1,515,642Sangwoo Ahn
    
    
    20,385,089
    
    
    
    10,334,875Charles R. Cox
    

    
    22,108,584
    
    
    
    8,611,380Hans Kessler
    

    
    22,133,313
    
    
    
    8,586,651There were
no broker non-votes on this proposal
 2.
    
    Approval of the Amendment and Restatement of the Furmanite Corporation 1994 Stock Incentive
Plan:
 Number of SharesFor
    
    
    18,744,491Against
    
    
    4,171,832Abstain
    
    
    36,844There were
no broker non-votes on this proposal
 29




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##### Table of Contents



Item 6. Exhibits
 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 to 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,
incorporated by reference herein to Exhibit 3.8 to the Registrants
Form 10-K for the year ended December 31, 2007.4.1
    
    
    Certificate of Designation, Preferences and Rights related to the
Registrants Series B Junior Participating Preferred Stock,
incorporated by reference herein to Exhibit 4.2 to the Registrants
Form 10-K for the year ended
December 31, 2008.4.2
    
    
    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 Right Certificate and the Summary of Rights to Purchase Stock
(incorporated by reference herein to Exhibit 4.1 to the Registrants
Form 8-A/A filed on April 18, 2008).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/A filed on April 18, 2008).10.1
    
    
    Loan Agreement, dated July 31, 2009, incorporated by reference
herein to Exhibit 10.1 to the Registrants Current Report on Form
8-K filed on August 7, 2009.10.2
    
    
    Guaranty and Collateral Agreement, dated July 31, 2009, incorporated
by reference herein to Exhibit 10.2 to the Registrants Current
Report on Form 8-K filed on August 7, 2009.31.1*
    
    
    Certification of Chief Executive Officer, Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002, dated November 5, 2009.31.2*
    
    
    Certification of Chief Financial Officer, Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002, dated November 5, 2009.31.3*
    
    
    Certification of Principal Accounting Officer, Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002, dated November 5, 2009.32.1*
    
    
    Certification of Chief Executive Officer, Pursuant to Section 906(a)
of the Sarbanes-Oxley Act of 2002, dated
November 5, 2009.32.2*
    
    
    Certification of Chief Financial Officer, Pursuant to Section 906(a)
of the Sarbanes-Oxley Act of 2002, dated
November 5, 2009.32.3*
    
    
    Certification of Principal Accounting Officer, Pursuant to Section
906(a) of the Sarbanes-Oxley Act of 2002, dated November 5, 2009.
 
 *
    
    Filed herewith. 30




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FURMANITE CORPORATION
(Registrant)/s/ MIGUEL A. DESDINMiguel A. DesdinSenior Vice President, Chief Financial OfficerDate: November 5, 2009 /s/ ROBERT S. MUFFRobert S. MuffPrincipal Accounting OfficerDate: November 5, 2009 31