##### 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, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 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
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



FURMANITE CORPORATION AND SUBSIDIARIES
INDEX
 PageNumberPART I.
    
    Financial Information
    
    
    3Item 1.
    
    Financial Statements
    
    
    3Consolidated Balance Sheets as of June 30, 2008 (unaudited) and December 31, 2007.
    
    
    3Consolidated Statements of Income for the three and six months ended June 30, 2008 and 2007 (unaudited)
    
    
    4Consolidated Statements of Changes in Stockholders Equity for the six months ended June 30, 2008 (unaudited) and the year ended December 31, 2007
    
    
    5Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007 (unaudited)
    
    
    6Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2008 and 2007 (unaudited)
    
    
    7Notes to Consolidated Financial Statements (unaudited)
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3.
    
    Quantitative and Qualitative Disclosure About Market Risk
    
    
    25Item 4.
    
    Controls and Procedures
    
    
    25PART II.
    
    Other Information
    
    
    26Item 1.
    
    Legal Proceedings
    
    
    26Item 1A.
    
    Risk Factors
    
    
    26Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    27Item 6.
    
    Exhibits
    
    
    28Certification 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
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share and per share data)
 June 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    33,823
    
    
    $
    31,570Accounts receivable, trade (net of allowance for doubtful accounts of $3,883 and $4,011
as of June 30, 2008 and December 31, 2007, respectively)
    
    
    69,035
    
    
    
    62,552Receivable from businesses distributed to common stockholders
    
    
    1,443
    
    
    
    1,443Inventories:Raw materials and supplies
    
    
    15,794
    
    
    
    13,770Work-in-process
    
    
    10,674
    
    
    
    8,100Finished goods
    
    
    1,577
    
    
    
    2,343Prepaid expenses and other current assets
    
    
    5,621
    
    
    
    5,616Total current assets
    
    
    137,967
    
    
    
    125,394Property and equipment
    
    
    61,215
    
    
    
    57,505Less accumulated depreciation and amortization
    
    
    29,851
    
    
    
    27,663Property and equipment, net
    
    
    31,364
    
    
    
    29,842Goodwill
    
    
    13,148
    
    
    
    13,148Pension asset (excess of fair value over projected benefit)
    
    
    1,277
    
    
    
    430Other assets
    
    
    3,390
    
    
    
    3,239Total assets
    
    $
    187,146
    
    
    $
    172,053Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    17,858
    
    
    $
    16,025Accrued expenses and other current liabilities
    
    
    29,756
    
    
    
    26,341Income tax payable
    
    
    4,172
    
    
    
    3,542Current portion of long-term debt
    
    
    471
    
    
    
    2,569Total current liabilities
    
    
    52,257
    
    
    
    48,477Long-term debt, less current portion
    
    
    38,454
    
    
    
    43,185Other liabilities
    
    
    1,976
    
    
    
    2,055Commitments 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; 40,521,368 and 39,959,792
shares issued as of June 30, 2008 and December 31, 2007, respectively
    
    
    4,704
    
    
    
    4,643Additional paid-in capital
    
    
    131,052
    
    
    
    128,363Accumulated deficit
    
    
    (29,574
    )
    
    
    (40,943
    )Accumulated other comprehensive income
    
    
    6,471
    
    
    
    4,467Treasury stock
    
    
    (18,194
    )
    
    
    (18,194
    )Total stockholders equity
    
    
    94,459
    
    
    
    78,336Total liabilities and stockholders equity
    
    $
    187,146
    
    
    $
    172,053
  3




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 (in thousands, except per share data)
 (Unaudited)
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    $
    90,185
    
    
    $
    74,723
    
    
    $
    163,572
    
    
    $
    143,168Costs and expenses:Operating costs (exclusive of depreciation and
amortization)
    
    
    56,557
    
    
    
    49,563
    
    
    
    103,865
    
    
    
    94,686Depreciation and amortization
    
    
    1,763
    
    
    
    1,049
    
    
    
    3,019
    
    
    
    2,120Selling, general and administrative
    
    
    21,357
    
    
    
    18,240
    
    
    
    40,955
    
    
    
    37,391Total costs and expenses
    
    
    79,677
    
    
    
    68,852
    
    
    
    147,839
    
    
    
    134,197Operating income
    
    
    10,508
    
    
    
    5,871
    
    
    
    15,733
    
    
    
    8,971Other income (expense), net
    
    
    (209
    )
    
    
    200
    
    
    
    (31
    )
    
    
    376Interest expense
    
    
    (396
    )
    
    
    (935
    )
    
    
    (1,027
    )
    
    
    (1,787
    )Income before income taxes
    
    
    9,903
    
    
    
    5,136
    
    
    
    14,675
    
    
    
    7,560Income tax expense
    
    
    (2,244
    )
    
    
    (1,284
    )
    
    
    (3,306
    )
    
    
    (2,102
    )Net income
    
    $
    7,659
    
    
    $
    3,852
    
    
    $
    11,369
    
    
    $
    5,458Earnings per common share:Basic
    
    $
    0.21
    
    
    $
    0.11
    
    
    $
    0.31
    
    
    $
    0.15Diluted
    
    $
    0.21
    
    
    $
    0.11
    
    
    $
    0.31
    
    
    $
    0.15Weighted-average number of common and common equivalent
shares used in computing net income per common share:Basic
    
    
    36,432
    
    
    
    35,306
    
    
    
    36,334
    
    
    
    35,254Diluted
    
    
    36,972
    
    
    
    35,808
    
    
    
    36,915
    
    
    
    35,716
  4




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 Six Months Ended June 30, 2008 (Unaudited) and Year Ended December 31, 2007
 (in thousands, except share data)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Shares
    
    
    Common
    
    
    Paid-In
    
    
    Accumulated
    
    
    Comprehensive
    
    
    TreasuryIssued
    
    
    Treasury
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    Income (Loss)
    
    
    Stock
    
    
    TotalBalance at January 1, 2007
    
    
    39,258,025
    
    
    
    4,076,963
    
    
    $
    4,558
    
    
    $
    124,884
    
    
    $
    (53,438
    )
    
    $
    2,921
    
    
    $
    (18,320
    )
    
    $
    60,605Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,495
    
    
    
    
    
    
    
    
    
    
    
    12,495Stock based compensation and stock
option exercises
    
    
    139,139
    
    
    
    (28,000
    )
    
    
    15
    
    
    
    589
    
    
    
    
    
    
    
    
    
    
    
    126
    
    
    
    730Conversion of convertible debentures
to common stock
    
    
    562,628
    
    
    
    
    
    
    
    70
    
    
    
    2,890
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,960Minimum pension liability adjustment
for subsidiary, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,247
    )
    
    
    
    
    
    
    (1,247
    )Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,793
    
    
    
    
    
    
    
    2,793Balance at December 31, 2007
    
    
    39,959,792
    
    
    
    4,048,963
    
    
    
    4,643
    
    
    
    128,363
    
    
    
    (40,943
    )
    
    
    4,467
    
    
    
    (18,194
    )
    
    
    78,336Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,369
    
    
    
    
    
    
    
    
    
    
    
    11,369Stock-based compensation and stock
option exercises
    
    
    203,232
    
    
    
    
    
    
    
    18
    
    
    
    848
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    866Conversion of convertible debentures
to common stock
    
    
    358,344
    
    
    
    
    
    
    
    43
    
    
    
    1,841
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,884Minimum pension liability adjustment
for subsidiary, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50
    )
    
    
    
    
    
    
    (50
    )Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,054
    
    
    
    
    
    
    
    2,054Balance at June 30, 2008
    
    
    40,521,368
    
    
    
    4,048,963
    
    
    $
    4,704
    
    
    $
    131,052
    
    
    $
    (29,574
    )
    
    $
    6,471
    
    
    $
    (18,194
    )
    
    $
    94,459
  5




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FURMANITE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 For the Six MonthsEnded June 30,2008
    
    
    2007Operating activities:Net income
    
    $
    11,369
    
    
    $
    5,458Reconciliation of net income to net cash provided by operating activities:Depreciation and amortization
    
    
    3,019
    
    
    
    2,120Provision for doubtful accounts
    
    
    76
    
    
    
    161Deferred income taxes
    
    
    (79
    )
    
    
    (272
    )Stock-based compensation expense
    
    
    212
    
    
    
    101Changes in operating assets and liabilities:Accounts receivable
    
    
    (6,559
    )
    
    
    (1,280
    )Inventories
    
    
    (3,832
    )
    
    
    (1,730
    )Prepaid expenses and other current assets
    
    
    305
    
    
    
    367Accounts payable
    
    
    1,833
    
    
    
    430Accrued expenses and other current liabilities
    
    
    3,904
    
    
    
    812Income tax payable
    
    
    630
    
    
    
    (299
    )Other, net
    
    
    (230
    )
    
    
    271Net cash provided by operating activities
    
    
    10,648
    
    
    
    6,139Investing activities:Capital expenditures
    
    
    (4,221
    )
    
    
    (4,189
    )Net cash used in investing activities
    
    
    (4,221
    )
    
    
    (4,189
    )Financing activities:Payments on debt
    
    
    (4,789
    )
    
    
    (402
    )Payments on 8.75% convertible subordinated debentures
    
    
    (155
    )
    
    
    Issuance of common stock
    
    
    165
    
    
    
    234Bank overdrafts
    
    
    
    
    
    
    (1,220
    )Net cash used in financing activities
    
    
    (4,779
    )
    
    
    (1,388
    )Effect of exchange rate changes on cash
    
    
    605
    
    
    
    279Increase in cash and cash equivalents
    
    
    2,253
    
    
    
    841Cash and cash equivalents at beginning of period
    
    
    31,570
    
    
    
    23,937Cash and cash equivalents at end of period
    
    $
    33,823
    
    
    $
    24,778Non-cash financing activities:Conversion of 8.75% convertible debentures to common stock.
    
    $
    1,884
    
    
    $
    1,481Settlement of accrued bonuses in common stock
    
    $
    488
    
    
    $
    
  6




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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 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    7,659
    
    
    $
    3,852
    
    
    $
    11,369
    
    
    $
    5,458Other comprehensive income (loss):Minimum pension liability adjustment, net of tax
    
    
    (27
    )
    
    
    
    
    
    
    (50
    )
    
    
    Foreign currency translation adjustments
    
    
    235
    
    
    
    656
    
    
    
    2,054
    
    
    
    1,175Total other comprehensive income
    
    
    208
    
    
    
    656
    
    
    
    2,004
    
    
    
    1,175Comprehensive income
    
    $
    7,867
    
    
    $
    4,508
    
    
    $
    13,373
    
    
    $
    6,633
  7




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 (Unaudited)
 1. General and Summary of Significant Accounting Policies
   Reclassifications
   8




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 (Unaudited)
  New Accounting Pronouncements
 Fair Value Measurement Effective Date of FASB
Statement No. 157
 Employers Accounting for Defined Benefit Pension
and Other Post Retirement Plans  an amendment of FASB Statements No. 87, 88, 106, and 132 (R)
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 Business Combinations
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangible Assets
 9




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 (Unaudited)
  2. Earnings Per Share
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    7,659
    
    
    $
    3,852
    
    
    $
    11,369
    
    
    $
    5,458Basic weighted-average common shares outstanding
    
    
    36,432
    
    
    
    35,306
    
    
    
    36,334
    
    
    
    35,254Diluted effect of common stock equivalents
    
    
    540
    
    
    
    502
    
    
    
    581
    
    
    
    462Diluted weighted-average common shares outstanding
    
    
    36,972
    
    
    
    35,808
    
    
    
    36,915
    
    
    
    35,716Earnings per share:Basic
    
    $
    0.21
    
    
    $
    0.11
    
    
    $
    0.31
    
    
    $
    0.15Dilutive
    
    $
    0.21
    
    
    $
    0.11
    
    
    $
    0.31
    
    
    $
    0.15
  10




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 (Unaudited)
 3. Accrued Expenses
  June 30,
    
    
    December 31,2008
    
    
    2007Compensation and benefits
    
    $
    11,274
    
    
    $
    9,833Employee expenses, travel and training
    
    
    1,797
    
    
    
    564Asset and equipment costs of sales
    
    
    1,920
    
    
    
    2,009Value added tax payable
    
    
    2,757
    
    
    
    1,731Taxes other than income
    
    
    2,007
    
    
    
    1,619Interest
    
    
    199
    
    
    
    422Professional, audit and legal fees
    
    
    3,514
    
    
    
    3,320Rent
    
    
    567
    
    
    
    544Other
    
    
    5,721
    
    
    
    6,299$
    29,756
    
    
    $
    26,341
 4. Long-Term Debt
  June 30,
    
    
    December 31,2008
    
    
    2007Borrowings 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)
    
    
    10,500
    
    
    
    15,0008.75% convertible subordinated debentures
    
    
    
    
    
    
    2,040Capital leases
    
    
    835
    
    
    
    1,124Total long-term debt
    
    
    38,925
    
    
    
    45,754Less current portion
    
    
    471
    
    
    
    2,569Total long-term debt, less current portion
    
    $
    38,454
    
    
    $
    43,185
   11




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 (Unaudited)
   5. Retirement Plan
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    195
    
    
    $
    159
    
    
    $
    390
    
    
    $
    318Interest cost
    
    
    1,063
    
    
    
    957
    
    
    
    2,130
    
    
    
    1,914Expected return on plan assets
    
    
    (1,364
    )
    
    
    (1,099
    )
    
    
    (2,732
    )
    
    
    (2,198
    )Amortization of prior service cost
    
    
    (30
    )
    
    
    (28
    )
    
    
    (61
    )
    
    
    (56
    )Recognized net loss
    
    
    0
    
    
    
    204
    
    
    
    0
    
    
    
    408Net periodic pension cost (benefit)
    
    $
    (136
    )
    
    $
    193
    
    
    $
    (273
    )
    
    $
    386
  6. Stock-Based Compensation
   12




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 (Unaudited)
 7. Other Comprehensive Income
  June 30,
    
    
    December 31.2008
    
    
    2007Minimum pension liability:Net actuarial loss
    
    $
    (5,256
    )
    
    $
    (5,256
    )Unamortized prior service cost
    
    
    1,028
    
    
    
    1,090Minimum pension liability
    
    
    (4,228
    )
    
    
    (4,166
    )Deferred tax asset
    
    
    1,181
    
    
    
    1,169Net minimum pension liability
    
    
    (3,047
    )
    
    
    (2,997
    )Foreign currency translation adjustment
    
    
    9,518
    
    
    
    7,464$
    6,471
    
    
    $
    4,467
 8. Income Taxes
 Accounting for Uncertainty in Income Taxes
  Balance at December 31, 2007
    
    $
    997Additions based on tax positions related to the current year
    
    
    157Reductions for tax positions taken in prior years
    
    
    (145
    )Balance at June 30, 2008
    
    $
    1,009
 9. Commitments and Contingencies
  13




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 (Unaudited)
      14




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FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 (Unaudited)
 10. Business Segment Data
  United
    
    
    
    
    
    
    Asia-States
    
    
    Europe
    
    
    Pacific
    
    
    TotalThree months ended June 30, 2008:Under pressure services
    
    $
    12,852
    
    
    $
    10,605
    
    
    $
    2,560
    
    
    $
    26,017Turnaround services
    
    
    21,612
    
    
    
    23,752
    
    
    
    6,288
    
    
    
    51,652Other services
    
    
    6,346
    
    
    
    5,391
    
    
    
    779
    
    
    
    12,516Total revenues
    
    $
    40,810
    
    
    $
    39,748
    
    
    $
    9,627
    
    
    $
    90,185Three 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
    
    
    $
    74,723Six months ended June 30, 2008:Under pressure services
    
    $
    22,358
    
    
    $
    21,059
    
    
    $
    5,151
    
    
    $
    48,568Turnaround services
    
    
    43,191
    
    
    
    38,606
    
    
    
    10,753
    
    
    
    92,550Other services
    
    
    11,328
    
    
    
    9,608
    
    
    
    1,518
    
    
    
    22,454Total revenues
    
    $
    76,877
    
    
    $
    69,273
    
    
    $
    17,422
    
    
    $
    163,572Six 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
    
    
    $
    143,168
 15




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 (Unaudited)
  United
    
    
    
    
    
    
    Asia-States
    
    
    Europe
    
    
    Pacific
    
    
    TotalThree months ended June 30, 2008:Operating income
    
    $
    761
    
    
    $
    7,612
    
    
    $
    2,135
    
    
    $
    10,508Allocation of headquarter costs
    
    
    2,412
    
    
    
    (1,944
    )
    
    
    (468
    )
    
    
    Adjusted operating income
    
    $
    3,173
    
    
    $
    5,668
    
    
    $
    1,667
    
    
    $
    10,508Three months ended June 30, 2007:Operating income (loss)
    
    $
    (247
    )
    
    $
    4,644
    
    
    $
    1,474
    
    
    $
    5,871Allocation of headquarter costs
    
    
    1,283
    
    
    
    (1,050
    )
    
    
    (233
    )
    
    
    Adjusted operating income
    
    $
    1,036
    
    
    $
    3,594
    
    
    $
    1,241
    
    
    $
    5,871Six months ended June 30, 2008:Operating income
    
    $
    1,568
    
    
    $
    10,756
    
    
    $
    3,409
    
    
    $
    15,733Allocation of headquarter costs
    
    
    4,182
    
    
    
    (3,349
    )
    
    
    (833
    )
    
    
    Adjusted operating income
    
    $
    5,750
    
    
    $
    7,407
    
    
    $
    2,576
    
    
    $
    15,733Six months ended June 30, 2007:Operating income (loss)
    
    $
    (833
    )
    
    $
    7,077
    
    
    $
    2,727
    
    
    $
    8,971Allocation of headquarter costs
    
    
    2,452
    
    
    
    (1,990
    )
    
    
    (462
    )
    
    
    Adjusted operating income
    
    $
    1,619
    
    
    $
    5,087
    
    
    $
    2,265
    
    
    $
    8,971
  June 30,
    
    
    December 31,2008
    
    
    2007United States
    
    $
    95,421
    
    
    $
    89,650Europe
    
    
    73,169
    
    
    
    65,252Asia-Pacific.
    
    
    18,556
    
    
    
    17,151$
    187,146
    
    
    $
    172,053
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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 (Unaudited)
 11. Fair Value of Financial Instruments and Credit Risk
  
    
    Level 1  Quoted prices in active markets for identical assets or liabilities. These
are typically obtained from real-time quotes for transactions in active exchange markets
involving identical assets.
    
    Level 2  Quoted prices for similar assets and liabilities in active markets; quoted
prices included for identical or similar assets and liabilities that are not active; and
model-derived valuations in which all significant inputs and significant value drivers are
observable in active markets. These are typically obtained from readily-available pricing
sources for comparable instruments.
    
    Level 3  Unobservable inputs, where there is little or no market activity for the
asset or liability. These inputs reflect the reporting entitys own assumptions about the
assumptions that market participants would use in pricing the asset or liability, based on
the best information available in the circumstances.
   
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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
  18




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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 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands, except per share data)Revenues
    
    $
    90,185
    
    
    $
    74,723
    
    
    $
    163,572
    
    
    $
    143,168Costs and expenses:Operating costs (exclusive of
depreciation and amortization)
    
    
    56,557
    
    
    
    49,563
    
    
    
    103,865
    
    
    
    94,686Depreciation and amortization
    
    
    1,763
    
    
    
    1,049
    
    
    
    3,019
    
    
    
    2,120Selling, general and administrative
    
    
    21,357
    
    
    
    18,240
    
    
    
    40,955
    
    
    
    37,391Total costs and expenses
    
    
    79,677
    
    
    
    68,852
    
    
    
    147,839
    
    
    
    134,197Operating income
    
    
    10,508
    
    
    
    5,871
    
    
    
    15,733
    
    
    
    8,971Other income (expense), net
    
    
    (209
    )
    
    
    200
    
    
    
    (31
    )
    
    
    376Interest expense
    
    
    (396
    )
    
    
    (935
    )
    
    
    (1,027
    )
    
    
    (1,787
    )Income before income taxes
    
    
    9,903
    
    
    
    5,136
    
    
    
    14,675
    
    
    
    7,560Income tax expense
    
    
    (2,244
    )
    
    
    (1,284
    )
    
    
    (3,306
    )
    
    
    (2,102
    )Net income
    
    $
    7,659
    
    
    $
    3,852
    
    
    $
    11,369
    
    
    $
    5,458Earnings per share:Basic
    
    $
    0.21
    
    
    $
    0.11
    
    
    $
    0.31
    
    
    $
    0.15Diluted
    
    $
    0.21
    
    
    $
    0.11
    
    
    $
    0.31
    
    
    $
    0.15
 Revenues
   Operating Costs
  19




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
   Depreciation and Amortization
  Selling, General and Administrative
   Interest Expense
  Income Taxes
 Accounting for Income Taxes
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FURMANITE CORPORATION AND SUBSIDIARIES
    Liquidity and Capital Resources
       21




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
     Critical Accounting Policies and Estimates
   22




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
  Accounting for Uncertainty in
Income Taxes  an interpretation of FASB Statement No. 109
  New Accounting Pronouncements
 Fair Value Measurements Effective Date of FASB Statement No. 157
 Employers Accounting for Defined Benefit Pension
and Other Post Retirement Plans  an amendment of FASB Statements No. 87, 88, 106, and 132 (R)
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB No. 115
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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
  Business Combinations
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangible Assets
 Off-Balance Sheet Transactions
 
 24




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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
  25




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 PART II  Other Information
 
 Item 1. Legal Proceedings
     
 Item 1A. Risk Factors
  26




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 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 2009 and until their respective successors are duly elected and
qualified or until their death, resignation or removal from office.
 Number of SharesFor
    
    WithheldSangwoo Ahn
    
    
    19,501,848
    
    
    
    9,493,127John R. Barnes
    
    
    22,245,942
    
    
    
    6,749,033Charles R. Cox
    
    
    23,306,626
    
    
    
    5,688,349Hans Kessler
    
    
    23,307,797
    
    
    
    5,687,178
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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 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 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 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
    
    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 1 of the exhibits to the Registrants Current Report on Form 8-K
and Registration Statement on Form 8-A, dated April 5,
1988, which exhibit is hereby incorporated by reference.4.2
    
    Rights Agreement,
dated as of April 15, 2008, between the Registrant and The Bank of NewYork
Trust Company, N.A., a national banking association, as Rights Agent, which includes as exhibits,
the Form of Right Certificate and the Summary of Rights to Purchase Stock, 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.31.1
    
    Certification of Chief Executive Officer, Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, dated August 8, 2008.31.2
    
    Certification of Chief Financial Officer, Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, dated August 8, 2008.32.1
    
    Certification of Chief Executive Officer, Pursuant to Section 906(a) of the
Sarbanes-Oxley Act of 2002, dated August 8, 2008.32.2
    
    Certification of Chief Financial Officer, Pursuant to Section 906(a) of the
Sarbanes-Oxley Act of 2002, dated August 8, 2008.
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FURMANITE CORPORATION AND SUBSIDIARIES
 Signature
  FURMANITE CORPORATION
(Registrant)/s/ HOWARD C. WADSWORTHHoward C. WadsworthSr. Vice President, Treasurer and Secretary
(Chief Financial Officer)  29