##### Table of Contents



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 June 30, 2007
 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
 Xanser Corporation
 
 þ o
  o þ o
 o þ




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##### 



FURMANITE CORPORATION AND SUBSIDIARIES
  
 INDEX
 PageNumberPART I.
    
    Financial Information
    
    
    3Item 1.
    
    Financial Statements
    
    
    3Condensed Consolidated Balance Sheets as of June 30, 2007
(unaudited) and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations for the three
and six months ended June 30, 2007 and 2006 (unaudited)
    
    
    4Condensed Consolidated Statements of Changes in Stockholders
Equity for the six months ended June 30, 2007 (unaudited) and the
year ended December 31, 2006
    
    
    5Condensed Consolidated Statements of Cash Flows for the six
months ended June 30, 2007 and 2006 (unaudited)
    
    
    6Condensed Consolidated Statements of Comprehensive Income for
the three and six months ended June 30, 2007 and 2006 (unaudited)
    
    
    7Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    8Item 2.
    

Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosure About Market Risk
    
    
    22Item 4.
    
    Controls and Procedures
    
    
    22PART II.
    
    Other Information
    
    
    23Item 1.
    
    Legal Proceedings
    
    
    23Item 1A.
    
    Risk Factors
    
    
    23Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    23Item 6.
    
    Exhibits
    
    
    24Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands, except share data)
 June 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    24,778
    
    
    $
    23,937Accounts receivable, trade (net of allowance for doubtful accounts of $3,530
and $3,341 as of June 30, 2007 and December 31, 2006, respectively)
    
    
    60,647
    
    
    
    59,325Receivable from businesses distributed to common stockholders
    
    
    1,443
    
    
    
    1,443Inventories:Raw materials and supplies
    
    
    12,729
    
    
    
    12,633Work-in-process
    
    
    8,312
    
    
    
    6,970Finished goods
    
    
    2,100
    
    
    
    1,808Prepaid and other current assets
    
    
    4,295
    
    
    
    5,046Total current assets
    
    
    114,304
    
    
    
    111,162Property and equipment
    
    
    56,732
    
    
    
    51,523Less accumulated depreciation and amortization
    
    
    28,339
    
    
    
    25,554Property and equipment, net
    
    
    28,393
    
    
    
    25,969Goodwill
    
    
    13,148
    
    
    
    13,148Other assets
    
    
    6,986
    
    
    
    6,018Total assets
    
    $
    162,831
    
    
    $
    156,297Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    15,335
    
    
    $
    14,702Accrued expenses and other current liabilities
    
    
    23,237
    
    
    
    22,425Accrued income taxes
    
    
    2,283
    
    
    
    2,581Bank overdraft
    
    
    333
    
    
    
    1,553Current portion of long-term debt
    
    
    4,138
    
    
    
    787Total current liabilities
    
    
    45,326
    
    
    
    42,048Long-term debt, less current portion
    
    
    43,452
    
    
    
    48,721Pension liability
    
    
    3,118
    
    
    
    3,042Other liabilities
    
    
    1,881
    
    
    
    1,881Stockholders equity:Common stock, no par value; 60,000,000 shares authorized; 39,572,644 and
39,258,025 shares issued as of June 30, 2007 and December 31, 2006, respectively
    
    
    4,597
    
    
    
    4,558Additional paid-in capital
    
    
    126,535
    
    
    
    124,884Retained earnings (accumulated deficit)
    
    
    (47,980
    )
    
    
    (53,438
    )Accumulated other comprehensive income
    
    
    4,096
    
    
    
    2,921Treasury stock
    
    
    (18,194
    )
    
    
    (18,320
    )Total stockholders equity
    
    
    69,054
    
    
    
    60,605Total liabilities and stockholders equity
    
    $
    162,831
    
    
    $
    156,297
  3




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except share and per share data)
 (Unaudited)
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    74,723
    
    
    $
    64,544
    
    
    $
    143,168
    
    
    $
    119,338Costs and expenses:Operating costs
    
    
    49,563
    
    
    
    41,380
    
    
    
    94,686
    
    
    
    77,006Depreciation and amortization
    
    
    1,049
    
    
    
    968
    
    
    
    2,120
    
    
    
    1,853Selling, general and administrative
    
    
    18,240
    
    
    
    19,835
    
    
    
    37,391
    
    
    
    37,113Total costs and expenses
    
    
    68,852
    
    
    
    62,183
    
    
    
    134,197
    
    
    
    115,972Operating income
    
    
    5,871
    
    
    
    2,361
    
    
    
    8,971
    
    
    
    3,366Interest and other income, net
    
    
    200
    
    
    
    193
    
    
    
    376
    
    
    
    412Interest expense
    
    
    (935
    )
    
    
    (469
    )
    
    
    (1,787
    )
    
    
    (1,026
    )Income before income taxes
    
    
    5,136
    
    
    
    2,085
    
    
    
    7,560
    
    
    
    2,752Income tax expense
    
    
    (1,284
    )
    
    
    (1,329
    )
    
    
    (2,102
    )
    
    
    (2,032
    )Net income
    
    $
    3,852
    
    
    $
    756
    
    
    $
    5,458
    
    
    $
    720Earnings per common share:Basic
    
    $
    0.11
    
    
    $
    0.02
    
    
    $
    0.15
    
    
    $
    0.02Diluted
    
    $
    0.11
    
    
    $
    0.02
    
    
    $
    0.15
    
    
    $
    0.02Weighted-average number of common and common
equivalent shares used in computing net income
per common share:Basic
    
    
    35,306
    
    
    
    34,725
    
    
    
    35,254
    
    
    
    34,591Diluted
    
    
    35,808
    
    
    
    35,253
    
    
    
    35,716
    
    
    
    35,182
  4




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 Six Months Ended June 30, 2007 (Unaudited) and Year Ended December 31, 2006
 (in thousands, except share data)
 Retained
    
    AccumulatedAdditional
    
    Earnings
    
    OtherCommon Shares
    
    Common
    
    Paid-In
    
    (Accumulated
    
    Comprehensive
    
    TreasuryIssued
    
    Treasury
    
    Stock
    
    Capital
    
    Deficit)
    
    Income (Loss)
    
    Stock
    
    TotalBalance at January 1, 2006
    
    
    38,805,695
    
    
    
    4,398,012
    
    
    $
    4,507
    
    
    $
    124,481
    
    
    $
    (50,565
    )
    
    $
    (7,091
    )
    
    $
    (20,028
    )
    
    $
    51,304Staff Accounting Bulletin No. 108
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    997
    
    
    
    
    
    
    
    
    
    
    
    997Revised Balance 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
    
    
    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
    
    
    
    
    
    
    
    5,133Balance at December 31, 2006
    
    
    39,258,025
    
    
    
    4,076,963
    
    
    
    4,558
    
    
    
    124,884
    
    
    
    (53,438
    )
    
    
    2,921
    
    
    
    (18,320
    )
    
    
    60,605Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,458
    
    
    
    
    
    
    
    
    
    
    
    5,458Stock-based compensation
    
    
    33,132
    
    
    
    (28,000
    )
    
    
    5
    
    
    
    204
    
    
    
    
    
    
    
    
    
    
    
    126
    
    
    
    335Conversion of convertible debentures
to
common stock
    
    
    281,487
    
    
    
    
    
    
    
    34
    
    
    
    1,447
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,481Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,175
    
    
    
    
    
    
    
    1,175Balance at June 30, 2007
    
    
    39,572,644
    
    
    
    4,048,963
    
    
    $
    4,597
    
    
    $
    126,535
    
    
    $
    (47,980
    )
    
    $
    4,096
    
    
    $
    (18,194
    )
    
    $
    69,054
  5




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 (Unaudited)
 For the Six MonthsEnded June 30,2007
    
    
    2006Operating activities:Net income
    
    $
    5,458
    
    
    $
    720Reconciliation of net income to net cash used in operating activities:Depreciation and amortization
    
    
    2,120
    
    
    
    1,853Stock-based compensation expense
    
    
    101
    
    
    
    122Provision for doubtful accounts
    
    
    161
    
    
    
    1,379Deferred income taxes
    
    
    (272
    )
    
    
    (402
    )Changes in operating assets and liabilities  net of business acquisition:Accounts receivable
    
    
    (1,483
    )
    
    
    (10,866
    )Inventories
    
    
    (1,730
    )
    
    
    (2,442
    )Prepaid expenses and other current assets
    
    
    751
    
    
    
    532Accounts payable, accrued expenses and other
    
    
    1,146
    
    
    
    2,640Net cash provided by (used in) operating activities
    
    
    6,252
    
    
    
    (6,464
    )Investing activities:Capital expenditures
    
    
    (4,189
    )
    
    
    (2,852
    )Other, net
    
    
    121
    
    
    
    694Net cash used in investing activities
    
    
    (4,068
    )
    
    
    (2,158
    )Financing activities:Borrowings
    
    
    
    
    
    
    18,000Payments on debt
    
    
    (636
    )
    
    
    (8,511
    )Issuance of common stock
    
    
    234
    
    
    
    780Bank overdraft
    
    
    (1,220
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (1,622
    )
    
    
    10,269Effect of exchange rate changes on cash
    
    
    279
    
    
    
    339Increase in cash and cash equivalents
    
    
    841
    
    
    
    1,986Cash and cash equivalents at beginning of period
    
    
    23,937
    
    
    
    21,526Cash and cash equivalents at end of period
    
    $
    24,778
    
    
    $
    23,512
  6




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (in thousands)
 (Unaudited)
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    3,852
    
    
    $
    756
    
    
    $
    5,458
    
    
    $
    720Other comprehensive income:Foreign currency translation adjustments,
net of tax
    
    
    656
    
    
    
    486
    
    
    
    1,175
    
    
    
    1,357Total other comprehensive income
    
    
    656
    
    
    
    486
    
    
    
    1,175
    
    
    
    1,357Comprehensive income
    
    $
    4,508
    
    
    $
    1,242
    
    
    $
    6,633
    
    
    $
    2,077
  7




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 (Unaudited)
 1. General and Summary of Significant Accounting Policies
    Change in Presentation
  8




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 (Unaudited)
  Effect of Adopting New Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes- an interpretation of FASB Statement No. 109
  Accounting
for Income Taxes
  Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements
  9




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 (Unaudited)
 Fair Value Measurement
 The Fair Value Option for Financial Assets and
Financial Liabilities
 2. Earnings Per Share
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    3,852
    
    
    $
    756
    
    
    $
    5,458
    
    
    $
    720Basic weighted-average common shares outstanding
    
    
    35,306
    
    
    
    34,725
    
    
    
    35,254
    
    
    
    34,591Dilutive effect of common stock equivalents
    
    
    502
    
    
    
    528
    
    
    
    462
    
    
    
    591Diluted weighted-average common shares outstanding
    
    
    35,808
    
    
    
    35,253
    
    
    
    35,716
    
    
    
    35,182Income per share:Basic
    
    $
    0.11
    
    
    $
    0.02
    
    
    $
    0.15
    
    
    $
    0.02Dilutive
    
    $
    0.11
    
    
    $
    0.02
    
    
    $
    0.15
    
    
    $
    0.02
  10




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 (Unaudited)
 3. Accrued Expenses
  June 30,
    
    
    December 31,2007
    
    
    2006Compensation and benefits
    
    $
    8,742
    
    
    $
    7,099Asset and equipment costs of sales
    
    
    1,576
    
    
    
    1,197Value added tax payable
    
    
    2,203
    
    
    
    1,563Taxes other than income
    
    
    1,593
    
    
    
    1,251Interest
    
    
    520
    
    
    
    477Other
    
    
    8,603
    
    
    
    10,838$
    23,237
    
    
    $
    22,425
 4. Long-Term Debt
  June 30,
    
    
    December 31,2007
    
    
    2006Borrowings under $50,000 revolving bank facility (the $50.0 million facility)
    
    $
    27,590
    
    
    $
    27,590Borrowings under $15,000 revolving bank facility (the $15.0 million facility)
    
    
    15,000
    
    
    
    15,0008.75% convertible subordinated debentures due in 2008
    
    
    3,519
    
    
    
    5,000Capital leases
    
    
    1,481
    
    
    
    1,918Total long-term debt
    
    
    47,590
    
    
    
    49,508Less current portion of long-term debt
    
    
    4,138
    
    
    
    787$
    43,452
    
    
    $
    48,721
     11




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 (Unaudited)
 5. Retirement Plan
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Service costs
    
    $
    159
    
    
    $
    126
    
    
    $
    318
    
    
    $
    256Interest costs
    
    
    957
    
    
    
    875
    
    
    
    1,914
    
    
    
    1,776Expected return on plan assets
    
    
    (1,099
    )
    
    
    (946
    )
    
    
    (2,198
    )
    
    
    (1,920
    )Amortization of prior service cost
    
    
    (28
    )
    
    
    (26
    )
    
    
    (56
    )
    
    
    (54
    )Recognized net loss
    
    
    204
    
    
    
    173
    
    
    
    408
    
    
    
    350Net periodic pension cost
    
    $
    193
    
    
    $
    202
    
    
    $
    386
    
    
    $
    408
 Employers Accounting for Defined Benefit Pension
and Other Post Retirement Plans
  6. Stock-Based Compensation
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to
Employees
  12




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 (Unaudited)
 7. Financial Instruments
  8. Commitments and Contingencies
    13




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 (Unaudited)
 9. Business Segment Data
   United
    
    
    
    
    
    
    Asia-States
    
    
    Europe
    
    
    Pacific
    
    
    TotalThree Months Ended June 30, 2007:Under pressure services
    
    $
    13,294
    
    
    $
    7,550
    
    
    $
    2,244
    
    
    $
    23,088Turnaround services
    
    
    13,309
    
    
    
    22,236
    
    
    
    4,801
    
    
    
    40,346Other services
    
    
    6,134
    
    
    
    4,612
    
    
    
    543
    
    
    
    11,289Total revenues
    
    $
    32,737
    
    
    $
    34,398
    
    
    $
    7,588
    
    
    $
    74,723Operating income (loss)
    
    $
    (247
    )
    
    $
    4,644
    
    
    $
    1,474
    
    
    $
    5,871Three Months Ended June 30, 2006:Under pressure services
    
    $
    10,711
    
    
    $
    7,302
    
    
    $
    1,391
    
    
    $
    19,404Turnaround services
    
    
    11,150
    
    
    
    17,234
    
    
    
    3,585
    
    
    
    31,969Other services
    
    
    6,993
    
    
    
    5,735
    
    
    
    443
    
    
    
    13,171Total revenues
    
    $
    28,854
    
    
    $
    30,271
    
    
    $
    5,419
    
    
    $
    64,544Operating income (loss)
    
    $
    (3,521
    )
    
    $
    4,777
    
    
    $
    1,105
    
    
    $
    2,361Six Months Ended June 30, 2007:Under pressure services
    
    $
    24,485
    
    
    $
    15,648
    
    
    $
    3,972
    
    
    $
    44,105Turnaround services
    
    
    28,612
    
    
    
    38,187
    
    
    
    9,563
    
    
    
    76,362Other services
    
    
    12,158
    
    
    
    9,490
    
    
    
    1,053
    
    
    
    22,701Total revenues
    
    $
    65,255
    
    
    $
    63,325
    
    
    $
    14,588
    
    
    $
    143,168Operating income (loss)
    
    $
    (833
    )
    
    $
    7,077
    
    
    $
    2,727
    
    
    $
    8,971Six Months Ended June 30, 2006:Under pressure services
    
    $
    20,403
    
    
    $
    14,682
    
    
    $
    2,818
    
    
    $
    37,903Turnaround services
    
    
    20,854
    
    
    
    29,096
    
    
    
    6,628
    
    
    
    56,578Other services
    
    
    13,367
    
    
    
    10,296
    
    
    
    1,194
    
    
    
    24,857Total revenues
    
    $
    54,624
    
    
    $
    54,074
    
    
    $
    10,640
    
    
    $
    119,338Operating income (loss)
    
    $
    (5,365
    )
    
    $
    6,797
    
    
    $
    1,934
    
    
    $
    3,366
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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Business Overview
    Financial Overview
  15




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 Results of Operations
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(in thousands, except per share data)Revenues
    
    $
    74,723
    
    
    $
    64,544
    
    
    $
    143,168
    
    
    $
    119,338Costs and expenses:Operating costs
    
    
    49,563
    
    
    
    41,380
    
    
    
    94,686
    
    
    
    77,006Depreciation and amortization
    
    
    1,049
    
    
    
    968
    
    
    
    2,120
    
    
    
    1,853Selling, general and administrative
    
    
    18,240
    
    
    
    19,835
    
    
    
    37,391
    
    
    
    37,113Total costs and expenses
    
    
    68,852
    
    
    
    62,183
    
    
    
    134,197
    
    
    
    115,972Operating income
    
    
    5,871
    
    
    
    2,361
    
    
    
    8,971
    
    
    
    3,366Interest and other income, net
    
    
    200
    
    
    
    193
    
    
    
    376
    
    
    
    412Interest expense
    
    
    (935
    )
    
    
    (469
    )
    
    
    (1,787
    )
    
    
    (1,026
    )Income before income taxes
    
    
    5,136
    
    
    
    2,085
    
    
    
    7,560
    
    
    
    2,752Income tax expense
    
    
    (1,284
    )
    
    
    (1,329
    )
    
    
    (2,102
    )
    
    
    (2,032
    )Net income
    
    $
    3,852
    
    
    $
    756
    
    
    $
    5,458
    
    
    $
    720Earnings per share:Basic
    
    $
    0.11
    
    
    $
    0.02
    
    
    $
    0.15
    
    
    $
    0.02Diluted
    
    $
    0.11
    
    
    $
    0.02
    
    
    $
    0.15
    
    
    $
    0.02
 Revenues
   Operating Costs
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FURMANITE CORPORATION AND SUBSIDIARIES
   Selling, General and Administrative
   Depreciation and Amortization
  Interest Expense
  17




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 Income Taxes
 Accounting
for Income Taxes
  Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109
 Liquidity and Capital Resources
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FURMANITE CORPORATION AND SUBSIDIARIES
       19




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 Critical Accounting Policies and Estimates
   Accounting for Income Taxes
 New
Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes- an
interpretation of FASB Statement No. 109
  Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements
  20




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
  Fair Value Measurement
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Off-Balance Sheet Transactions
  21




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 i.e.
   
 Item 4. Controls and Procedures
 et seq
  22




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 Part II  Other Information
 
 Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
  
 Item 4. Submission of Matters to a Vote of Security Holders
  1.
    
    Election of the individuals named below to serve as Directors of the Company until its Annual
Meeting of Stockholders in 2008 and until their respective successors are duly elected and
qualified or until their death, resignation or removal from office.
 Number of SharesFor
    
    WithheldSangwoo Ahn
    
    
    26,156,761
    
    
    
    4,429,276John R. Barnes
    
    
    29,053,300
    
    
    
    1,532,737Charles R. Cox
    
    
    29,065,556
    
    
    
    1,520,481Hans Kessler
    
    
    29,062,430
    
    
    
    1,523,607
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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 2.
    
    Approval of an amendment to the certificate of incorporation to change the name of the
Company from Xanser Corporation to Furmanite Corporation.
 Number of SharesFor
    
    
    30,288,498Against
    
    
    116,069Abstain
    
    
    181,470
 
 Item 6. Exhibits
 3.1
    
    Restated Certificate of Incorporation of the Registrant, dated September 26,
1979, filed as Exhibit 3.1 of the exhibits to the Registrants Registration Statement
on Form S-16, which exhibit is hereby incorporated by reference.3.2
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the
Registrant, dated April 30, 1981, filed as Exhibit 3.2 of the exhibits to the
Registrants Annual Report on Form 10-K (Form 10-K) for the year ended December 31,
1981, which exhibit is hereby incorporated by reference.3.3
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the
Registrant, dated May 28, 1985, filed as Exhibit 4.1 of the exhibits to the
Registrants Quarterly Report on Form 10-Q (Form 10-Q) for the quarter ended June 30,
1985, which exhibit is hereby incorporated by reference.3.4
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the
Registrant, dated September 17, 1985, filed as Exhibit 4.1 of the exhibits to the
Registrants Form 10-Q for the quarter ended September 30, 1985, which exhibit is
hereby incorporated by reference.3.5
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the
Registrant, dated July 10, 1990, filed as Exhibit 3.5 of the exhibits to the
Registrants Form 10-K for the year ended December 31, 1990, which exhibit is hereby
incorporated by reference.3.6
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the
Registrant, dated September 21, 1990, filed as Exhibit 3.5 of the exhibits to the
Registrants Form 10-Q for the quarter ended September 30, 1990, which exhibit is
hereby incorporated by reference.3.7
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the
Registrant, dated August 8, 2001, filed as Exhibit 3.1 to the Registrants Current
Report on Form 8-K filed on August 22, 2001, which exhibit is hereby incorporated by
reference.3.8
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the
Registrant, dated May 17, 2007, filed as Exhibit 3.2 to the Registrants Current
Report on Form 8-K filed on June 20, 2007, which exhibit is hereby incorporated by
reference.3.9
    
    By-laws of the Registrant, as amended and restated
June 14, 2007, filed as
Exhibit 3.1 to Registrants Current Report on Form 8-K
filed on June 20, 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
Form 10-K for the year ended December 31, 1998, which exhibit is incorporated herein by
reference.4.2
    
    Indenture between Moran Energy Inc. (Moran) and First City National Bank of
Houston (First City), dated January 15, 1984, under which Moran issued the 8 3/4%
Convertible Subordinated Debentures due 2008, filed as Exhibit 4.1 to Morans
Registration Statement on Form S-3 (SEC File No. 2-81227), which exhibit is hereby
incorporated by reference.4.3
    
    First Supplemental Indenture between the Registrant and First City, dated as of
March 20, 1984, under which the Registrant assumed obligations under the Indenture
listed as Exhibit 4.2 above, filed as Exhibit 4.7 of the Registrants Form 10-K for the
year ended December 31, 1983, which exhibit is hereby incorporated by reference.31.1
    
    Certification of Chief Executive Officer, Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, dated August 9, 2007.31.2
    
    Certification of Chief Financial Officer, Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, dated August 9, 2007.32.1
    
    Certification of Chief Executive Officer, Pursuant to Section 906(a) of the
Sarbanes-Oxley Act of 2002, dated August 9, 2007.32.2
    
    Certification of Chief Financial Officer, Pursuant to Section 906(a) of the
Sarbanes-Oxley Act of 2002, dated August 9, 2007.
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FURMANITE CORPORATION AND SUBSIDIARIES
 
 
 Signature
  FURMANITE CORPORATION
(Registrant)/s/  HOWARD C. WADSWORTHHoward C. WadsworthSr. Vice President, Treasurer and
Secretary

(Duly Authorized Officer)  25