##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2010
 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
    Smaller reporting company o(Do not check if a smaller reporting company)
 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 June 30, 2010 (unaudited) and December 31, 2009
    
    
    4Consolidated Income Statements for the Three and Six Months Ended June 30, 2010 and 2009 (unaudited)
    
    
    5Consolidated Statements of Changes in Stockholders Equity for the Six Months Ended June 30, 2010
(unaudited) and for the Year Ended December 31, 2009
    
    
    6Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2010 and 2009 (unaudited)
    
    
    7Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2010
and 2009 (unaudited)
    
    
    8Notes to Consolidated Financial Statements (unaudited)
    
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    29PART II. Other InformationItem 1. Legal Proceedings
    
    
    30Item 1A. Risk Factors
    
    
    30Item 6. Exhibits
    
    
    31EX-31.1EX-31.2EX-32.1EX-32.2
  2




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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
  3




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PART I  FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share data)
 June 30,
    
    
    December 31,2010
    
    
    2009(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    31,837
    
    
    $
    36,117Accounts receivable, trade (net of allowance for doubtful accounts of $1,394 and $1,617
as of June 30, 2010 and December 31, 2009, respectively)
    
    
    57,936
    
    
    
    52,021Receivable from businesses distributed to common stockholders
    
    
    1,443
    
    
    
    1,443Inventories:Raw materials and supplies
    
    
    17,103
    
    
    
    18,226Work-in-process
    
    
    7,563
    
    
    
    8,231Finished goods
    
    
    154
    
    
    
    370Prepaid expenses and other current assets
    
    
    5,174
    
    
    
    7,642Total current assets
    
    
    121,210
    
    
    
    124,050Property and equipment
    
    
    66,976
    
    
    
    66,909Less: accumulated depreciation and amortization
    
    
    (37,503
    )
    
    
    (36,741
    )Property and equipment, net
    
    
    29,473
    
    
    
    30,168Goodwill
    
    
    13,148
    
    
    
    13,148Deferred tax assets
    
    
    4,341
    
    
    
    3,707Intangible and other assets
    
    
    3,656
    
    
    
    3,916Total assets
    
    $
    171,828
    
    
    $
    174,989Liabilities and Stockholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    139
    
    
    $
    174Accounts payable
    
    
    16,722
    
    
    
    17,077Accrued expenses and other current liabilities
    
    
    22,135
    
    
    
    25,599Income taxes payable
    
    
    1,140
    
    
    
    1,589Total current liabilities
    
    
    40,136
    
    
    
    44,439Long-term debt, non-current
    
    
    30,076
    
    
    
    30,139Net pension liability
    
    
    11,500
    
    
    
    12,358Other liabilities
    
    
    2,760
    
    
    
    2,723Commitments and contingencies (Note 9)Stockholders equity:Series B Preferred Stock, unlimited shares authorized, none outstanding
    
    
    
    
    
    
    Common stock, no par value; 60,000,000 shares authorized; 40,742,815 and 40,682,815 shares
issued as of June 30, 2010 and December 31, 2009, respectively
    
    
    4,723
    
    
    
    4,723Additional paid-in capital
    
    
    132,600
    
    
    
    132,106Accumulated deficit
    
    
    (17,908
    )
    
    
    (21,859
    )Accumulated other comprehensive loss
    
    
    (14,046
    )
    
    
    (11,627
    )Treasury stock, at cost (4,008,963 shares as of June 30, 2010 and December 31, 2009)
    
    
    (18,013
    )
    
    
    (18,013
    )Total stockholders equity
    
    
    87,356
    
    
    
    85,330Total liabilities and stockholders equity
    
    $
    171,828
    
    
    $
    174,989
  4




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED INCOME STATEMENTS
 (in thousands, except per share data)
 (Unaudited)
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues
    
    $
    77,513
    
    
    $
    69,726
    
    
    $
    143,948
    
    
    $
    132,758Costs and expenses:Operating costs (exclusive of depreciation and amortization)
    
    
    51,922
    
    
    
    47,261
    
    
    
    97,584
    
    
    
    89,839Depreciation and amortization expense
    
    
    1,572
    
    
    
    1,447
    
    
    
    3,121
    
    
    
    2,790Selling, general and administrative expense
    
    
    18,493
    
    
    
    20,212
    
    
    
    37,256
    
    
    
    37,683Total costs and expenses
    
    
    71,987
    
    
    
    68,920
    
    
    
    137,961
    
    
    
    130,312Operating income
    
    
    5,526
    
    
    
    806
    
    
    
    5,987
    
    
    
    2,446Interest income and other income (expense), net
    
    
    (246
    )
    
    
    313
    
    
    
    96
    
    
    
    219Interest expense
    
    
    (241
    )
    
    
    (299
    )
    
    
    (482
    )
    
    
    (592
    )Income before income taxes
    
    
    5,039
    
    
    
    820
    
    
    
    5,601
    
    
    
    2,073Income tax expense
    
    
    (1,479
    )
    
    
    (589
    )
    
    
    (1,650
    )
    
    
    (962
    )Net income
    
    $
    3,560
    
    
    $
    231
    
    
    $
    3,951
    
    
    $
    1,111Earnings per common share:Basic
    
    $
    0.10
    
    
    $
    0.01
    
    
    $
    0.11
    
    
    $
    0.03Diluted
    
    $
    0.10
    
    
    $
    0.01
    
    
    $
    0.11
    
    
    $
    0.03Weighted-average number of common and common equivalent shares used
in computing net income per common share:Basic
    
    
    36,734
    
    
    
    36,615
    
    
    
    36,711
    
    
    
    36,609Diluted
    
    
    36,932
    
    
    
    36,795
    
    
    
    36,871
    
    
    
    36,763
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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 Six Months Ended June 30, 2010 (Unaudited) and Year Ended December 31, 2009
 (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, 2009
    
    
    40,612,815
    
    
    
    4,008,963
    
    
    $
    4,715
    
    
    $
    131,418
    
    
    $
    (19,029
    )
    
    $
    (7,774
    )
    
    $
    (18,013
    )
    
    $
    91,317Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,830
    )
    
    
    
    
    
    
    
    
    
    
    (2,830
    )Stock-based compensation and stock
option exercises
    
    
    70,000
    
    
    
    
    
    
    
    8
    
    
    
    688
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    696Change in pension net actuarial loss and
prior service credit, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,918
    )
    
    
    
    
    
    
    (8,918
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,065
    
    
    
    
    
    
    
    5,065Balances at December 31, 2009
    
    
    40,682,815
    
    
    
    4,008,963
    
    
    $
    4,723
    
    
    $
    132,106
    
    
    $
    (21,859
    )
    
    $
    (11,627
    )
    
    $
    (18,013
    )
    
    $
    85,330Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,951
    
    
    
    
    
    
    
    
    
    
    
    3,951Stock-based compensation and stock
option exercises
    
    
    60,000
    
    
    
    
    
    
    
    
    
    
    
    494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    494Change in pension net actuarial loss and
prior service credit, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,137
    
    
    
    
    
    
    
    1,137Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,556
    )
    
    
    
    
    
    
    (3,556
    )Balances at 
June 30, 2010
    
    
    40,742,815
    
    
    
    4,008,963
    
    
    $
    4,723
    
    
    $
    132,600
    
    
    $
    (17,908
    )
    
    $
    (14,046
    )
    
    $
    (18,013
    )
    
    $
    87,356
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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 (Unaudited)
 For the Six MonthsEnded June 30,2010
    
    
    2009Operating activities:Net income
    
    $
    3,951
    
    
    $
    1,111Reconciliation of net income to net cash provided by operating activities:Depreciation and amortization
    
    
    3,121
    
    
    
    2,790Provision for doubtful accounts
    
    
    327
    
    
    
    205Deferred income taxes
    
    
    (86
    )
    
    
    (145
    )Stock-based compensation expense
    
    
    494
    
    
    
    281Other, net
    
    
    441
    
    
    
    (643
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (6,850
    )
    
    
    5,506Inventories
    
    
    1,842
    
    
    
    (1,756
    )Prepaid expenses and other current assets
    
    
    1,316
    
    
    
    (243
    )Accounts payable
    
    
    (496
    )
    
    
    (2,817
    )Accrued expenses and other current liabilities
    
    
    (3,142
    )
    
    
    (2,023
    )Income taxes payable
    
    
    (352
    )
    
    
    2,901Other, net
    
    
    (47
    )
    
    
    (596
    )Net cash provided by operating activities
    
    
    519
    
    
    
    4,571Investing activities:Capital expenditures
    
    
    (3,451
    )
    
    
    (3,018
    )Acquisition of assets
    
    
    (350
    )
    
    
    (500
    )Proceeds from sale of assets
    
    
    195
    
    
    
    162Net cash used in investing activities
    
    
    (3,606
    )
    
    
    (3,356
    )Financing activities:Payments on debt
    
    
    (99
    )
    
    
    (224
    )Net cash used in financing activities
    
    
    (99
    )
    
    
    (224
    )Effect of exchange rate changes on cash
    
    
    (1,094
    )
    
    
    (200
    )(Decrease) increase in cash and cash equivalents
    
    
    (4,280
    )
    
    
    791Cash and cash equivalents at beginning of period
    
    
    36,117
    
    
    
    30,793Cash and cash equivalents at end of period
    
    $
    31,837
    
    
    $
    31,584Supplemental cash flow information:Cash paid for interest
    
    $
    400
    
    
    $
    606Cash paid (received) for income taxes, net of refunds received
    
    $
    1,577
    
    
    $
    (726
    )
  7




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (in thousands)
(Unaudited)
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    3,560
    
    
    $
    231
    
    
    $
    3,951
    
    
    $
    1,111Other comprehensive income:Change in pension net actuarial loss
and prior service credit, 
net of tax
    
    
    205
    
    
    
    (579
    )
    
    
    1,137
    
    
    
    (530
    )Foreign currency translation adjustments
    
    
    (1,356
    )
    
    
    4,720
    
    
    
    (3,556
    )
    
    
    3,699Total other comprehensive income (loss)
    
    
    (1,151
    )
    
    
    4,141
    
    
    
    (2,419
    )
    
    
    3,169Comprehensive income
    
    $
    2,409
    
    
    $
    4,372
    
    
    $
    1,532
    
    
    $
    4,280
  8




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  June 30, 2010
(Unaudited)
 1. General and Summary of Significant Accounting Policies
 General
   Revenue Recognition
 Revenue Recognition
   9




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Inventories
  New Accounting Pronouncements
 Improving Disclosures about
Fair Value Measurements
 Amendments to Certain
Recognition and Disclosure Requirements Subsequent Events
 2. Earnings Per Share
   For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    3,560
    
    
    $
    231
    
    
    $
    3,951
    
    
    $
    1,111Basic weighted-average common shares outstanding
    
    
    36,734
    
    
    
    36,615
    
    
    
    36,711
    
    
    
    36,609Dilutive effect of common stock equivalents
    
    
    198
    
    
    
    180
    
    
    
    160
    
    
    
    154Diluted weighted-average common shares outstanding
    
    
    36,932
    
    
    
    36,795
    
    
    
    36,871
    
    
    
    36,763Earnings per share:Basic
    
    $
    0.10
    
    
    $
    0.01
    
    
    $
    0.11
    
    
    $
    0.03Dilutive
    
    $
    0.10
    
    
    $
    0.01
    
    
    $
    0.11
    
    
    $
    0.03Stock options excluded from diluted weighted-average common shares
outstanding because their inclusion would have an anti-dilutive effect:
    
    
    515
    
    
    
    672
    
    
    
    560
    
    
    
    592
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3. Accrued Expenses and Other Current Liabilities
  June 30,
    
    
    December 31,2010
    
    
    2009Compensation and benefits1
    
    $
    12,858
    
    
    $
    11,085Estimated potential uninsured liability claims
    
    
    1,886
    
    
    
    3,405Taxes other than income
    
    
    1,601
    
    
    
    1,393Value added tax payable
    
    
    1,562
    
    
    
    1,612Professional, audit and legal fees
    
    
    1,050
    
    
    
    948Customer deposit
    
    
    936
    
    
    
    2,731Other employee related expenses
    
    
    598
    
    
    
    634Rent
    
    
    559
    
    
    
    600Interest
    
    
    33
    
    
    
    42Payments due on purchased assets
    
    
    
    
    
    
    350Other2
    
    
    1,052
    
    
    
    2,799$
    22,135
    
    
    $
    25,599
 
 1
    
    Includes restructuring accruals of $0.6 million and $0.7 million as of June 30,
2010 and December 31, 2009, respectively, and $0.3 million of retirement related costs as of June
30, 2010.2
    
    Includes restructuring accruals of $0.2 million as of June 30, 2010. 4. Indebtedness
  June 30,
    
    
    December 31,2010
    
    
    2009Borrowings under the revolving credit facility
    
    $
    30,000
    
    
    $
    30,000Capital leases
    
    
    215
    
    
    
    313Total long-term debt
    
    
    30,215
    
    
    
    30,313Less: current portion of long-term debt
    
    
    (139
    )
    
    
    (174
    )Total long-term debt, non-current
    
    $
    30,076
    
    
    $
    30,139
    11




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5. Retirement Plan
   For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    198
    
    
    $
    126
    
    
    $
    404
    
    
    $
    237Interest cost
    
    
    879
    
    
    
    842
    
    
    
    1,779
    
    
    
    1,586Expected return on plan assets
    
    
    (862
    )
    
    
    (770
    )
    
    
    (1,745
    )
    
    
    (1,450
    )Amortization of prior service cost
    
    
    (23
    )
    
    
    (25
    )
    
    
    (46
    )
    
    
    (47
    )Amortization of net actuarial loss
    
    
    260
    
    
    
    47
    
    
    
    526
    
    
    
    89Net periodic pension cost
    
    $
    452
    
    
    $
    220
    
    
    $
    918
    
    
    $
    415
  6. Stock-Based Compensation
  12




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7. Accumulated Other Comprehensive Loss
  June 30,
    
    
    December 31,2010
    
    
    2009Net actuarial loss and prior service credit
    
    $
    (16,325
    )
    
    $
    (17,902
    )Less: deferred tax benefit
    
    
    4,551
    
    
    
    4,991Net of tax
    
    
    (11,774
    )
    
    
    (12,911
    )Foreign currency translation adjustment
    
    
    (2,272
    )
    
    
    1,284Total accumulated other comprehensive loss
    
    $
    (14,046
    )
    
    $
    (11,627
    )
 8. Income Taxes
 Income Taxes
     13




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Balance at December 31, 2009
    
    $
    1,007Additions based on tax positions
    
    
    131Reductions due to lapses of statutes of limitations
    
    
    (31
    )Balance at June 30, 2010
    
    $
    1,107
 9. Commitments and Contingencies
      10. Business Segment Data and Geographical Information
   14




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Asia-Americas
    
    
    EMEA
    
    
    Pacific
    
    
    TotalThree months ended June 30, 2010:Under pressure services
    
    $
    12,359
    
    
    $
    8,049
    
    
    $
    4,174
    
    
    $
    24,582Turnaround services
    
    
    15,678
    
    
    
    14,654
    
    
    
    6,863
    
    
    
    37,195Other services
    
    
    9,513
    
    
    
    5,143
    
    
    
    1,080
    
    
    
    15,736Total revenues
    
    $
    37,550
    
    
    $
    27,846
    
    
    $
    12,117
    
    
    $
    77,513Three months ended June 30, 2009:Under pressure services
    
    $
    11,191
    
    
    $
    8,416
    
    
    $
    4,533
    
    
    $
    24,140Turnaround services
    
    
    14,206
    
    
    
    13,507
    
    
    
    3,772
    
    
    
    31,485Other services
    
    
    6,905
    
    
    
    6,291
    
    
    
    905
    
    
    
    14,101Total revenues
    
    $
    32,302
    
    
    $
    28,214
    
    
    $
    9,210
    
    
    $
    69,726Six months ended June 30, 2010:Under pressure services
    
    $
    23,737
    
    
    $
    17,604
    
    
    $
    8,238
    
    
    $
    49,579Turnaround services
    
    
    31,041
    
    
    
    25,290
    
    
    
    10,581
    
    
    
    66,912Other services
    
    
    14,339
    
    
    
    11,213
    
    
    
    1,905
    
    
    
    27,457Total revenues
    
    $
    69,117
    
    
    $
    54,107
    
    
    $
    20,724
    
    
    $
    143,948Six months ended June 30, 2009:Under pressure services
    
    $
    20,582
    
    
    $
    18,147
    
    
    $
    7,195
    
    
    $
    45,924Turnaround services
    
    
    29,688
    
    
    
    24,281
    
    
    
    6,176
    
    
    
    60,145Other services
    
    
    12,106
    
    
    
    12,985
    
    
    
    1,598
    
    
    
    26,689Total revenues
    
    $
    62,376
    
    
    $
    55,413
    
    
    $
    14,969
    
    
    $
    132,758
 15




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##### Table of Contents



Asia-Americas
    
    
    EMEA
    
    
    Pacific
    
    
    TotalThree months ended June 30, 2010:Operating income1
    
    $
    515
    
    
    $
    1,569
    
    
    $
    3,442
    
    
    $
    5,526Allocation of headquarter costs
    
    
    2,187
    
    
    
    (1,536
    )
    
    
    (651
    )
    
    
    Adjusted operating income
    
    $
    2,702
    
    
    $
    33
    
    
    $
    2,791
    
    
    $
    5,526Three months ended June 30, 2009:Operating income (loss)
    
    $
    (2,015
    )
    
    $
    883
    
    
    $
    1,938
    
    
    $
    806Allocation of headquarter costs
    
    
    1,969
    
    
    
    (1,487
    )
    
    
    (482
    )
    
    
    Adjusted operating income (loss)
    
    $
    (46
    )
    
    $
    (604
    )
    
    $
    1,456
    
    
    $
    806Six months ended June 30, 2010:Operating income (loss)2
    
    $
    (169
    )
    
    $
    933
    
    
    $
    5,223
    
    
    $
    5,987Allocation of headquarter costs
    
    
    4,317
    
    
    
    (3,146
    )
    
    
    (1,171
    )
    
    
    Adjusted operating income (loss)
    
    $
    4,148
    
    
    $
    (2,213
    )
    
    $
    4,052
    
    
    $
    5,987Six months ended June 30, 2009:Operating income (loss)
    
    $
    (2,920
    )
    
    $
    2,958
    
    
    $
    2,408
    
    
    $
    2,446Allocation of headquarter costs
    
    
    3,337
    
    
    
    (2,625
    )
    
    
    (712
    )
    
    
    Adjusted operating income
    
    $
    417
    
    
    $
    333
    
    
    $
    1,696
    
    
    $
    2,446
 
 1
    
    Includes restructuring charges totaling $0.2 million and $0.7 million in the
Americas and EMEA, respectively.2
    
    Includes restructuring charges totaling $0.4 million and $2.3 million in the Americas and EMEA,
respectively.  June 30,
    
    
    December 31,2010
    
    
    2009Americas
    
    $
    17,165
    
    
    $
    17,050EMEA
    
    
    10,570
    
    
    
    11,248Asia-Pacific
    
    
    3,356
    
    
    
    3,717$
    31,091
    
    
    $
    32,015
 11. Fair Value of Financial Instruments and Credit Risk
 Fair Value Measurement 
 
    
    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.
 16




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##### Table of Contents




    
    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. Restructuring
  2009 Cost Reduction Initiative
  2010 Cost Reduction Initiative
  Exit or
Disposal Cost Obligations Nonretirement Postemployment Benefits.
 17




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##### Table of Contents



Reserve at
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reserve atDecember 31,
    
    
    
    
    
    
    
    
    
    Foreign currency
    
    June 30,2009
    
    Charges
    
    Cash payments
    
    adjustments
    
    20102009 InitiativeSeverance and benefit costs
    
    $
    690
    
    
    $
    1,286
    
    
    $
    (1,633
    )
    
    $
    (61
    )
    
    $
    282Lease termination costs
    
    
    
    
    
    
    405
    
    
    
    (290
    )
    
    
    (1
    )
    
    
    114Other restructuring costs
    
    
    
    
    
    
    441
    
    
    
    (416
    )
    
    
    
    
    
    
    252010 InitiativeSeverance and benefit costs
    
    
    
    
    
    
    592
    
    
    
    (264
    )
    
    
    17
    
    
    
    345$
    690
    
    
    $
    2,724
    
    
    $
    (2,603
    )
    
    $
    (45
    )
    
    $
    766
  For the Three Months Ended
    
    
    For the Six Months EndedJune 30, 2010
    
    
    June 30, 2009
    
    
    June 30, 2010
    
    
    June 30, 2009Severance and benefit costs
    
    $
    692
    
    
    $
    
    
    
    $
    1,878
    
    
    $
    Lease
termination costs
    
    
    89
    
    
    
    
    
    
    
    405
    
    
    
    Other restructuring costs
    
    
    89
    
    
    
    
    
    
    
    441
    
    
    
    $
    870
    
    
    $
    
    
    
    $
    2,724
    
    
    $
    
  For the Three Months Ended
    
    
    For the Six Months EndedJune 30, 2010
    
    
    June 30, 2009
    
    
    June 30, 2010
    
    
    June 30, 2009Americas
    
    $
    180
    
    
    $
    
    
    
    $
    367
    
    
    $
    EMEA
    
    
    690
    
    
    
    
    
    
    
    2,357
    
    
    
    $
    870
    
    
    $
    
    
    
    $
    2,724
    
    
    $
    
  18




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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
      19




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Results of Operations
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(in thousands, except per share data)Revenues
    
    $
    77,513
    
    
    $
    69,726
    
    
    $
    143,948
    
    
    $
    132,758Costs and expenses:Operating costs (exclusive of depreciation and amortization)
    
    
    51,922
    
    
    
    47,261
    
    
    
    97,584
    
    
    
    89,839Depreciation and amortization expense
    
    
    1,572
    
    
    
    1,447
    
    
    
    3,121
    
    
    
    2,790Selling, general and administrative expense
    
    
    18,493
    
    
    
    20,212
    
    
    
    37,256
    
    
    
    37,683Total costs and expenses
    
    
    71,987
    
    
    
    68,920
    
    
    
    137,961
    
    
    
    130,312Operating income
    
    
    5,526
    
    
    
    806
    
    
    
    5,987
    
    
    
    2,446Interest income and other income (expense), net
    
    
    (246
    )
    
    
    313
    
    
    
    96
    
    
    
    219Interest expense
    
    
    (241
    )
    
    
    (299
    )
    
    
    (482
    )
    
    
    (592
    )Income before income taxes
    
    
    5,039
    
    
    
    820
    
    
    
    5,601
    
    
    
    2,073Income tax expense
    
    
    (1,479
    )
    
    
    (589
    )
    
    
    (1,650
    )
    
    
    (962
    )Net income
    
    $
    3,560
    
    
    $
    231
    
    
    $
    3,951
    
    
    $
    1,111Earnings per share:Basic
    
    $
    0.10
    
    
    $
    0.01
    
    
    $
    0.11
    
    
    $
    0.03Diluted
    
    $
    0.10
    
    
    $
    0.01
    
    
    $
    0.11
    
    
    $
    0.03
 20




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Geographical Information
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues:Americas
    
    $
    37,550
    
    
    $
    32,302
    
    
    $
    69,117
    
    
    $
    62,376EMEA
    
    
    27,846
    
    
    
    28,214
    
    
    
    54,107
    
    
    
    55,413Asia-Pacific
    
    
    12,117
    
    
    
    9,210
    
    
    
    20,724
    
    
    
    14,969Total revenues
    
    
    77,513
    
    
    
    69,726
    
    
    
    143,948
    
    
    
    132,758Costs and expenses:Operating costs (exclusive of depreciation and amortization)Americas
    
    
    25,260
    
    
    
    21,745
    
    
    
    46,024
    
    
    
    41,981EMEA
    
    
    19,805
    
    
    
    20,267
    
    
    
    39,732
    
    
    
    38,890Asia-Pacific
    
    
    6,857
    
    
    
    5,249
    
    
    
    11,828
    
    
    
    8,968Total operating costs (exclusive of depreciation and amortization)
    
    
    51,922
    
    
    
    47,261
    
    
    
    97,584
    
    
    
    89,839Operating costs as a percentage of revenue
    
    
    67.0
    %
    
    
    67.8
    %
    
    
    67.8
    %
    
    
    67.7
    %Depreciation and amortization expenseAmericas, including corporate
    
    
    846
    
    
    
    812
    
    
    
    1,658
    
    
    
    1,602EMEA
    
    
    453
    
    
    
    394
    
    
    
    920
    
    
    
    745Asia-Pacific
    
    
    273
    
    
    
    241
    
    
    
    543
    
    
    
    443Total depreciation and amortization expense
    
    
    1,572
    
    
    
    1,447
    
    
    
    3,121
    
    
    
    2,790Depreciation and amortization expense as a percentage of revenue
    
    
    2.0
    %
    
    
    2.1
    %
    
    
    2.2
    %
    
    
    2.1
    %Selling, general and administrative expenseAmericas, including corporate
    
    
    10,929
    
    
    
    11,760
    
    
    
    21,604
    
    
    
    21,713EMEA
    
    
    6,019
    
    
    
    6,670
    
    
    
    12,522
    
    
    
    12,820Asia-Pacific
    
    
    1,545
    
    
    
    1,782
    
    
    
    3,130
    
    
    
    3,150Total selling general and administrative expense
    
    
    18,493
    
    
    
    20,212
    
    
    
    37,256
    
    
    
    37,683Selling, general and administrative expense as a percentage of revenue
    
    
    23.9
    %
    
    
    29.0
    %
    
    
    25.9
    %
    
    
    28.4
    %Total costs and expenses
    
    $
    71,987
    
    
    $
    68,920
    
    
    $
    137,961
    
    
    $
    130,312
  Revenues
  21




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Operating Costs (exclusive of depreciation and amortization)
    Depreciation and Amortization
  22




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Selling, General and Administrative
    Other Income
 Interest Expense
  Interest Income and Other Income (Expense), Net
  23




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Income Taxes
 Income Taxes
   Liquidity and Capital Resources
       24




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25




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##### Table of Contents



Critical Accounting Policies and Estimates
   Revenue Recognition
 Revenue Recognition
   Allowance for Doubtful Accounts
  26




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Goodwill, Intangible and Long-Lived Assets
 Intangibles  Goodwill and Other
   Property, Plant, and Equipment .
 Stock-Based Compensation
  Income Taxes
   27




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Defined Benefit Pension Plan
  Contingencies
 Environmental
   Other
  Restructuring
 Exit or Disposal Cost
Obligations Nonretirement Postemployment Benefits.
 New Accounting Pronouncements
 Improving Disclosures about
Fair Value Measurements
 Amendments to Certain
Recognition and Disclosure Requirements Subsequent Events
 28




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Off-Balance Sheet Transactions
  Inflation and Changing Prices
  
 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
  29




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 PART II  Other Information
 
 Item 1. Legal Proceedings
      
 Item 1A. Risk Factors
  30




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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,
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/A filed on April 18, 2008).4.4
    
    Consulting Agreement, dated April 7, 2010, among Furmanite
Corporation and Michael L. Rose, the Companys former Chief
Executive Officer, as Consultant, incorporated by reference herein
to Exhibit 4.4 to the Registrants Form 10-Q for the quarter ended
March 31, 2010.10.1
    
    Credit Agreement, dated July 31, 2009, among Furmanite Worldwide,
Inc. and certain subsidiaries, as Borrowers, Bank of America, N.A.
as Administrative Agent, Compass Bank as Syndication Agent and the
Lenders party thereto, incorporated by reference herein to Exhibit
10.1 to the Registrants Current Report on Form 8-K filed on August
7, 2009.10.2
    
    Guaranty and Collateral Agreement, dated July 31, 2009, among
Furmanite Worldwide, Inc. and each of the other grantors (as defined
therein) in favor of Bank of America, N.A. as Administrative Agent
incorporated by reference herein to Exhibit 10.2 to the Registrants
Current Report on Form 8-K filed on August 7, 2009.31.1*
    
    Certification of Chief Executive Officer, Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002, dated as of August 6, 2010.31.2*
    
    Certification of Principal Financial Officer, Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002, dated as of August 6, 2010.32.1*
    
    Certification of Chief Executive Officer, Pursuant to Section 906(a)
of the Sarbanes-Oxley Act of 2002, dated as of August 6, 2010.32.2*
    
    Certification of Principal Financial Officer, Pursuant to Section
906(a) of the Sarbanes-Oxley Act of 2002, dated as of August 6,
2010.
 
 *
    
    Filed herewith. 31




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Signature
  FURMANITE CORPORATION
(Registrant)/s/ ROBERT S. MUFFRobert S. MuffChief Accounting Officer
(Principal Financial Officer)  32