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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, 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
(State or other jurisdiction of 
incorporation or organization)
    
    74-1191271
(I.R.S. Employer Identification No.)2435 North Central Expressway 
Suite 700
Richardson, Texas
(Address of principal executive offices)
    
    75080
(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 September 30, 2010 (unaudited) and December 31, 2009
    
    
    4Consolidated Income Statements for the Three and Nine Months Ended September 30, 2010 and 2009
(unaudited)
    
    
    5Consolidated Statements of Changes in Stockholders Equity for the Nine Months Ended September 30,
2010 (unaudited) and for the Year Ended December 31, 2009
    
    
    6Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009 (unaudited)
    
    
    7Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 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
    
    
    30Item 4. Controls and Procedures
    
    
    30PART II. Other InformationItem 1. Legal Proceedings
    
    
    31Item 1A. Risk Factors
    
    
    31Item 6. Exhibits
    
    
    32EX-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)
 September 30,
    
    
    December 31,2010
    
    
    2009(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    39,782
    
    
    $
    36,117Accounts receivable, trade (net of allowance for doubtful accounts of
$1,456 and $1,617 as of September 30, 2010 and December 31, 2009, respectively)
    
    
    58,437
    
    
    
    52,021Receivable from businesses distributed to common stockholders
    
    
    1,443
    
    
    
    1,443Inventories:Raw materials and supplies
    
    
    18,268
    
    
    
    18,226Work-in-process
    
    
    7,558
    
    
    
    8,231Finished goods
    
    
    171
    
    
    
    370Prepaid expenses and other current assets
    
    
    4,460
    
    
    
    7,642Total current assets
    
    
    130,119
    
    
    
    124,050Property and equipment
    
    
    70,570
    
    
    
    66,909Less: accumulated depreciation and amortization
    
    
    (40,852
    )
    
    
    (36,741
    )Property and equipment, net
    
    
    29,718
    
    
    
    30,168Goodwill
    
    
    13,148
    
    
    
    13,148Deferred tax assets
    
    
    4,525
    
    
    
    3,707Intangible and other assets
    
    
    3,609
    
    
    
    3,916Total assets
    
    $
    181,119
    
    
    $
    174,989Liabilities and Stockholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    116
    
    
    $
    174Accounts payable
    
    
    15,539
    
    
    
    17,077Accrued expenses and other current liabilities
    
    
    26,943
    
    
    
    25,599Income taxes payable
    
    
    1,183
    
    
    
    1,589Total current liabilities
    
    
    43,781
    
    
    
    44,439Long-term debt, non-current
    
    
    30,092
    
    
    
    30,139Net pension liability
    
    
    11,975
    
    
    
    12,358Other liabilities
    
    
    2,812
    
    
    
    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; 40,754,000 and 40,682,815 shares
issued as of September 30, 2010 and December 31, 2009, respectively
    
    
    4,724
    
    
    
    4,723Additional paid-in capital
    
    
    132,779
    
    
    
    132,106Accumulated deficit
    
    
    (16,097
    )
    
    
    (21,859
    )Accumulated other comprehensive loss
    
    
    (10,934
    )
    
    
    (11,627
    )Treasury stock, at cost (4,008,963 shares as of September 30, 2010 and December 31, 2009)
    
    
    (18,013
    )
    
    
    (18,013
    )Total stockholders equity
    
    
    92,459
    
    
    
    85,330Total liabilities and stockholders equity
    
    $
    181,119
    
    
    $
    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 Nine MonthsEnded September 30,
    
    
    Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues
    
    $
    66,935
    
    
    $
    70,757
    
    
    $
    210,883
    
    
    $
    203,515Costs and expenses:Operating costs (exclusive of depreciation and amortization)
    
    
    45,714
    
    
    
    46,592
    
    
    
    143,298
    
    
    
    136,431Depreciation and amortization expense
    
    
    1,646
    
    
    
    1,563
    
    
    
    4,767
    
    
    
    4,353Selling, general and administrative expense
    
    
    16,869
    
    
    
    21,016
    
    
    
    54,125
    
    
    
    58,699Total costs and expenses
    
    
    64,229
    
    
    
    69,171
    
    
    
    202,190
    
    
    
    199,483Operating income
    
    
    2,706
    
    
    
    1,586
    
    
    
    8,693
    
    
    
    4,032Interest income and other income (expense), net
    
    
    438
    
    
    
    191
    
    
    
    534
    
    
    
    410Interest expense
    
    
    (238
    )
    
    
    (524
    )
    
    
    (720
    )
    
    
    (1,116
    )Income before income taxes
    
    
    2,906
    
    
    
    1,253
    
    
    
    8,507
    
    
    
    3,326Income tax expense
    
    
    (1,095
    )
    
    
    (1,050
    )
    
    
    (2,745
    )
    
    
    (2,012
    )Net income
    
    $
    1,811
    
    
    $
    203
    
    
    $
    5,762
    
    
    $
    1,314Earnings per common share:Basic
    
    $
    0.05
    
    
    $
    0.01
    
    
    $
    0.16
    
    
    $
    0.04Diluted
    
    $
    0.05
    
    
    $
    0.01
    
    
    $
    0.16
    
    
    $
    0.04Weighted-average number of common and common equivalent shares used
in computing net income per common share:Basic
    
    
    36,743
    
    
    
    36,635
    
    
    
    36,722
    
    
    
    36,618Diluted
    
    
    36,903
    
    
    
    36,796
    
    
    
    36,881
    
    
    
    36,751
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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 Nine Months Ended September 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,762
    
    
    
    
    
    
    
    
    
    
    
    5,762Stock-based compensation and stock
option exercises
    
    
    71,185
    
    
    
    
    
    
    
    1
    
    
    
    673
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    674Change in
pension net actuarial loss and prior service credit, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    802
    
    
    
    
    
    
    
    802Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (109
    )
    
    
    
    
    
    
    (109
    )Balances at September 30, 2010
    
    
    40,754,000
    
    
    
    4,008,963
    
    
    $
    4,724
    
    
    $
    132,779
    
    
    $
    (16,097
    )
    
    $
    (10,934
    )
    
    $
    (18,013
    )
    
    $
    92,459
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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 (Unaudited)
 For the Nine MonthsEnded September 30,2010
    
    
    2009Operating activities:Net income
    
    $
    5,762
    
    
    $
    1,314Reconciliation of net income to net cash provided by operating activities:Depreciation and amortization
    
    
    4,767
    
    
    
    4,353Provision for doubtful accounts
    
    
    253
    
    
    
    312Deferred income taxes
    
    
    (144
    )
    
    
    (220
    )Stock-based compensation expense
    
    
    654
    
    
    
    443Other, net
    
    
    153
    
    
    
    (142
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (6,486
    )
    
    
    5,072Inventories
    
    
    839
    
    
    
    (901
    )Prepaid expenses and other current assets
    
    
    2,151
    
    
    
    694Accounts payable
    
    
    (1,536
    )
    
    
    (2,473
    )Accrued expenses and other current liabilities
    
    
    1,854
    
    
    
    740Income taxes payable
    
    
    (272
    )
    
    
    2,113Other, net
    
    
    (33
    )
    
    
    53Net cash provided by operating activities
    
    
    7,962
    
    
    
    11,358Investing activities:Capital expenditures
    
    
    (4,484
    )
    
    
    (5,446
    )Acquisition of assets
    
    
    (350
    )
    
    
    (700
    )Proceeds from sale of assets
    
    
    759
    
    
    
    226Net cash used in investing activities
    
    
    (4,075
    )
    
    
    (5,920
    )Financing activities:Payments on debt
    
    
    (188
    )
    
    
    (35,382
    )Proceeds from issuance of debt
    
    
    76
    
    
    
    35,049Debt issuance costs
    
    
    
    
    
    
    (567
    )Issuance of common stock
    
    
    20
    
    
    
    126Net cash used in financing activities
    
    
    (92
    )
    
    
    (774
    )Effect of exchange rate changes on cash
    
    
    (130
    )
    
    
    753Increase in cash and cash equivalents
    
    
    3,665
    
    
    
    5,417Cash and cash equivalents at beginning of period
    
    
    36,117
    
    
    
    30,793Cash and cash equivalents at end of period
    
    $
    39,782
    
    
    $
    36,210Supplemental cash flow information:Cash paid for interest
    
    $
    601
    
    
    $
    1,091Cash paid (received) for income taxes, net of refunds received
    
    $
    2,826
    
    
    $
    (113
    )
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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 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    1,811
    
    
    $
    203
    
    
    $
    5,762
    
    
    $
    1,314Other comprehensive income:Change in
pension net actuarial loss and prior service credit, net of tax
    
    
    (335
    )
    
    
    162
    
    
    
    802
    
    
    
    (368
    )Foreign currency translation adjustments
    
    
    3,447
    
    
    
    1,165
    
    
    
    (109
    )
    
    
    4,864Total other comprehensive income
    
    
    3,112
    
    
    
    1,327
    
    
    
    693
    
    
    
    4,496Comprehensive income
    
    $
    4,923
    
    
    $
    1,530
    
    
    $
    6,455
    
    
    $
    5,810
  8




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 September 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
 Disclosures about the Credit
Quality of Financing Receivables and the Allowance for Credit Losses
 2. Earnings Per Share
   For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    1,811
    
    
    $
    203
    
    
    $
    5,762
    
    
    $
    1,314Basic weighted-average common shares outstanding
    
    
    36,743
    
    
    
    36,635
    
    
    
    36,722
    
    
    
    36,618Dilutive effect of common stock equivalents
    
    
    160
    
    
    
    161
    
    
    
    159
    
    
    
    133Diluted weighted-average common shares outstanding
    
    
    36,903
    
    
    
    36,796
    
    
    
    36,881
    
    
    
    36,751Earnings per share:Basic
    
    $
    0.05
    
    
    $
    0.01
    
    
    $
    0.16
    
    
    $
    0.04Dilutive
    
    $
    0.05
    
    
    $
    0.01
    
    
    $
    0.16
    
    
    $
    0.04Stock options excluded from diluted weighted-average common shares
outstanding because their inclusion would have an anti-dilutive effect:
    
    
    810
    
    
    
    577
    
    
    
    643
    
    
    
    547
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3. Accrued Expenses and Other Current Liabilities
 Accrued expenses and other current liabilities consist of the following (in thousands):September 30,
    
    
    December 31,2010
    
    
    2009Compensation and benefits1
    
    $
    17,521
    
    
    $
    11,085Estimated potential uninsured liability claims
    
    
    1,886
    
    
    
    3,405Taxes other than income
    
    
    1,276
    
    
    
    1,393Value added tax payable
    
    
    2,411
    
    
    
    1,612Professional, audit and legal fees
    
    
    1,320
    
    
    
    948Customer deposit
    
    
    113
    
    
    
    2,731Other employee related expenses
    
    
    535
    
    
    
    634Rent
    
    
    681
    
    
    
    600Interest
    
    
    25
    
    
    
    42Payments due on purchased assets
    
    
    
    
    
    
    350Other2
    
    
    1,175
    
    
    
    2,799$
    26,943
    
    
    $
    25,599
 
 1
    
    Includes restructuring accruals of $2.1 million and $0.7 million as of September 30, 2010 and December 31, 2009.2
    
    Includes restructuring accruals of $0.2 million as of September 30, 2010. 4. Indebtedness
 Long-term debt consists of the following (in thousands):September 30,
    
    
    December 31,2010
    
    
    2009Borrowings under the revolving credit facility
    
    $
    30,000
    
    
    $
    30,000Capital leases
    
    
    208
    
    
    
    313Total long-term debt
    
    
    30,208
    
    
    
    30,313Less: current portion of long-term debt
    
    
    (116
    )
    
    
    (174
    )Total long-term debt, non-current
    
    $
    30,092
    
    
    $
    30,139
    11




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5. Retirement Plan
   For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    211
    
    
    $
    125
    
    
    $
    615
    
    
    $
    362Interest cost
    
    
    928
    
    
    
    835
    
    
    
    2,707
    
    
    
    2,420Expected return on plan assets
    
    
    (910
    )
    
    
    (763
    )
    
    
    (2,655
    )
    
    
    (2,213
    )Amortization of prior service cost
    
    
    (24
    )
    
    
    (25
    )
    
    
    (70
    )
    
    
    (71
    )Amortization of net actuarial loss
    
    
    274
    
    
    
    47
    
    
    
    800
    
    
    
    136Net periodic pension cost
    
    $
    479
    
    
    $
    219
    
    
    $
    1,397
    
    
    $
    634
  6. Stock-Based Compensation
  12




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7. Accumulated Other Comprehensive Loss
  September 30,
    
    
    December 31,2010
    
    
    2009Net actuarial loss and prior service credit
    
    $
    (16,787
    )
    
    $
    (17,902
    )Less: deferred tax benefit
    
    
    4,678
    
    
    
    4,991Net of tax
    
    
    (12,109
    )
    
    
    (12,911
    )Foreign currency translation adjustment
    
    
    1,175
    
    
    
    1,284Total accumulated other comprehensive loss
    
    $
    (10,934
    )
    
    $
    (11,627
    )
 8. Income Taxes
 Income Taxes
       13




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Balance at December 31, 2009
    
    $
    1,007Additions based on tax positions
    
    
    204Reductions due to lapses of statutes of limitations
    
    
    (69
    )Balance at September 30, 2010
    
    $
    1,142
 9. Commitments and Contingencies
      14




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10. Business Segment Data and Geographical Information
    Asia-Americas
    
    
    EMEA
    
    
    Pacific
    
    
    TotalThree months ended September 30, 2010:Under pressure services
    
    $
    12,099
    
    
    $
    8,990
    
    
    $
    4,931
    
    
    $
    26,020Turnaround services
    
    
    11,935
    
    
    
    13,864
    
    
    
    4,242
    
    
    
    30,041Other services
    
    
    3,374
    
    
    
    5,389
    
    
    
    2,111
    
    
    
    10,874Total revenues
    
    $
    27,408
    
    
    $
    28,243
    
    
    $
    11,284
    
    
    $
    66,935Three 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
    
    
    $
    70,757Nine months ended September 30, 2010:Under pressure services
    
    $
    35,836
    
    
    $
    26,594
    
    
    $
    13,169
    
    
    $
    75,599Turnaround services
    
    
    42,976
    
    
    
    39,154
    
    
    
    14,823
    
    
    
    96,953Other services
    
    
    17,713
    
    
    
    16,602
    
    
    
    4,016
    
    
    
    38,331Total revenues
    
    $
    96,525
    
    
    $
    82,350
    
    
    $
    32,008
    
    
    $
    210,883Nine 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
    
    
    $
    203,515
 15




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##### Table of Contents



Asia-Americas
    
    
    EMEA
    
    
    Pacific
    
    
    TotalThree months ended September 30, 2010:Operating income (loss)1
    
    $
    (996
    )
    
    $
    964
    
    
    $
    2,738
    
    
    $
    2,706Allocation of headquarter costs
    
    
    1,915
    
    
    
    (1,365
    )
    
    
    (550
    )
    
    
    Adjusted operating income (loss)
    
    $
    919
    
    
    $
    (401
    )
    
    $
    2,188
    
    
    $
    2,706Three 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
    
    
    $
    1,586Nine months ended September 30, 2010:Operating income (loss)2
    
    $
    (1,165
    )
    
    $
    1,897
    
    
    $
    7,961
    
    
    $
    8,693Allocation of headquarter costs
    
    
    6,232
    
    
    
    (4,511
    )
    
    
    (1,721
    )
    
    
    Adjusted operating income (loss)
    
    $
    5,067
    
    
    $
    (2,614
    )
    
    $
    6,240
    
    
    $
    8,693Nine 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
    
    
    $
    4,032
 
 1
    
    Includes restructuring charges totaling $0.1 million and $1.9 million in the Americas and EMEA, respectively.2
    
    Includes restructuring charges totaling $0.4 million and $4.3 million in the Americas and EMEA, respectively.  September 30,
    
    
    December 31,2010
    
    
    2009Americas
    
    $
    16,687
    
    
    $
    17,050EMEA
    
    
    10,958
    
    
    
    11,248Asia-Pacific
    
    
    3,614
    
    
    
    3,717$
    31,259
    
    
    $
    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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
    
    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
    
    
    
    
    
    
    
    
    
    
    Foreign currency
    
    
    Reserve atDecember 31, 2009
    
    
    Charges
    
    
    Cash payments
    
    
    adjustments
    
    
    September 30, 20102009 InitiativeSeverance and benefit costs
    
    $
    690
    
    
    $
    1,315
    
    
    $
    (1,762
    )
    

    $
    (23
    )
    
    $
    220Lease termination costs
    
    
    
    
    
    
    590
    
    
    
    (450
    )
    
    
    6
    
    
    
    146Other restructuring costs
    
    
    
    
    
    
    479
    
    
    
    (446
    )
    
    
    1
    
    
    
    342010 InitiativeSeverance and benefit costs
    
    
    
    
    
    
    2,272
    
    
    
    (445
    )
    
    
    102
    
    
    
    1,929Other restructuring costs
    
    
    
    
    
    
    60
    
    
    
    (38
    )
    
    
    1
    
    
    
    23$
    690
    
    
    $
    4,716
    
    
    $
    (3,141
    )
    
    $
    87
    
    
    $
    2,352
  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30, 2010
    
    
    September 30, 2009
    
    
    September 30, 2010
    
    
    September 30, 2009Severance and benefit costs
    
    $
    1,709
    
    
    $
    
    
    
    $
    3,587
    
    
    $
    Lease termination costs
    
    
    185
    
    
    
    
    
    
    
    590
    
    
    
    Other restructuring costs
    
    
    98
    
    
    
    
    
    
    
    539
    
    
    
    $
    1,992
    
    
    $
    
    
    
    $
    4,716
    
    
    $
    
  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30, 2010
    
    
    September 30, 2009
    
    
    September 30, 2010
    
    
    September 30, 2009Americas
    
    $
    68
    
    
    $
    
    
    
    $
    435
    
    
    $
    EMEA
    
    
    1,924
    
    
    
    
    
    
    
    4,281
    
    
    
    $
    1,992
    
    
    $
    
    
    
    $
    4,716
    
    
    $
    
  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 Nine MonthsEnded September 30,
    
    
    Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(in thousands, except per share data)Revenues
    
    $
    66,935
    
    
    $
    70,757
    
    
    $
    210,883
    
    
    $
    203,515Costs and expenses:Operating costs (exclusive of depreciation and amortization)
    
    
    45,714
    
    
    
    46,592
    
    
    
    143,298
    
    
    
    136,431Depreciation and amortization expense
    
    
    1,646
    
    
    
    1,563
    
    
    
    4,767
    
    
    
    4,353Selling, general and administrative expense
    
    
    16,869
    
    
    
    21,016
    
    
    
    54,125
    
    
    
    58,699Total costs and expenses
    
    
    64,229
    
    
    
    69,171
    
    
    
    202,190
    
    
    
    199,483Operating income
    
    
    2,706
    
    
    
    1,586
    
    
    
    8,693
    
    
    
    4,032Interest income and other income (expense), net
    
    
    438
    
    
    
    191
    
    
    
    534
    
    
    
    410Interest expense
    
    
    (238
    )
    
    
    (524
    )
    
    
    (720
    )
    
    
    (1,116
    )Income before income taxes
    
    
    2,906
    
    
    
    1,253
    
    
    
    8,507
    
    
    
    3,326Income tax expense
    
    
    (1,095
    )
    
    
    (1,050
    )
    
    
    (2,745
    )
    
    
    (2,012
    )Net income
    
    $
    1,811
    
    
    $
    203
    
    
    $
    5,762
    
    
    $
    1,314Earnings per share:Basic
    
    $
    0.05
    
    
    $
    0.01
    
    
    $
    0.16
    
    
    $
    0.04Diluted
    
    $
    0.05
    
    
    $
    0.01
    
    
    $
    0.16
    
    
    $
    0.04
 20




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Geographical Information
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues:Americas
    
    $
    27,408
    
    
    $
    27,937
    
    
    $
    96,525
    
    
    $
    90,313EMEA
    
    
    28,243
    
    
    
    32,928
    
    
    
    82,350
    
    
    
    88,341Asia-Pacific
    
    
    11,284
    
    
    
    9,892
    
    
    
    32,008
    
    
    
    24,861Total revenues
    
    
    66,935
    
    
    
    70,757
    
    
    
    210,883
    
    
    
    203,515Costs and expenses:Operating costs (exclusive of depreciation and amortization)Americas
    
    
    18,465
    
    
    
    18,551
    
    
    
    64,489
    
    
    
    60,532EMEA
    
    
    20,614
    
    
    
    22,431
    
    
    
    60,346
    
    
    
    61,321Asia-Pacific
    
    
    6,635
    
    
    
    5,610
    
    
    
    18,463
    
    
    
    14,578Total operating costs (exclusive of depreciation and amortization)
    
    
    45,714
    
    
    
    46,592
    
    
    
    143,298
    
    
    
    136,431Operating costs as a percentage of revenue
    
    
    68.3
    %
    
    
    65.8
    %
    
    
    68.0
    %
    
    
    67.0
    %Depreciation and amortization expenseAmericas, including corporate
    
    
    886
    
    
    
    854
    
    
    
    2,544
    
    
    
    2,456EMEA
    
    
    467
    
    
    
    417
    
    
    
    1,387
    
    
    
    1,162Asia-Pacific
    
    
    293
    
    
    
    292
    
    
    
    836
    
    
    
    735Total depreciation and amortization expense
    
    
    1,646
    
    
    
    1,563
    
    
    
    4,767
    
    
    
    4,353Depreciation and amortization expense as a percentage of revenue
    
    
    2.5
    %
    
    
    2.2
    %
    
    
    2.3
    %
    
    
    2.1
    %Selling, general and administrative expenseAmericas, including corporate
    
    
    9,053
    
    
    
    11,837
    
    
    
    30,657
    
    
    
    33,550EMEA
    
    
    6,198
    
    
    
    7,294
    
    
    
    18,720
    
    
    
    20,114Asia-Pacific
    
    
    1,618
    
    
    
    1,885
    
    
    
    4,748
    
    
    
    5,035Total selling general and administrative expense
    
    
    16,869
    
    
    
    21,016
    
    
    
    54,125
    
    
    
    58,699Selling, general and administrative expense as a percentage of revenue
    
    
    25.2
    %
    
    
    29.7
    %
    
    
    25.7
    %
    
    
    28.8
    %Total costs and expenses
    
    $
    64,229
    
    
    $
    69,171
    
    
    $
    202,190
    
    
    $
    199,483
  Revenues
  21




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Operating Costs (exclusive of depreciation and amortization)
    22




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Depreciation and Amortization
   Selling, General and Administrative
    23




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Other Income
 Interest Expense
  Interest Income and Other Income (Expense), Net
  Income Taxes
 Income Taxes
     Liquidity and Capital Resources
  24




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25




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Critical Accounting Policies and Estimates
  26




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Revenue Recognition
 Revenue Recognition
   Allowance for Doubtful Accounts
  Goodwill, Intangible and Long-Lived Assets
 Intangibles  Goodwill and Other
   27




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Property, Plant, and Equipment .
 Stock-Based Compensation
  Income Taxes
   Defined Benefit Pension Plan
  Contingencies
 Environmental
  28




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##### Table of Contents



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
 Disclosures about the Credit
Quality of Financing Receivables and the Allowance for Credit Losses
 Off-Balance Sheet Transactions
  Inflation and Changing Prices
  29




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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
  30




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 PART II  Other Information
 
 Item 1. Legal Proceedings
      
 Item 1A. Risk Factors
  31




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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 November 5,
2010.31.2*
    
    Certification of Principal Financial Officer, Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002, dated as of November 5,
2010.32.1*
    
    Certification of Chief Executive Officer, Pursuant to Section 906(a)
of the Sarbanes-Oxley Act of 2002, dated as of November 5,
2010.32.2*
    
    Certification of Principal Financial Officer, Pursuant to Section
906(a) of the Sarbanes-Oxley Act of 2002, dated as of November 5,
2010.
 
 *
    
    Filed herewith. 32




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

(Principal Financial Officer)  33