##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 for the transition period from
to
 Commission File Number 001-05083
 
 FURMANITE CORPORATION
  Delaware
(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 June 30, 2009 (unaudited) and December 31, 2008
    
    
    4Consolidated Income Statements for the Three and Six Months Ended June 30, 2009 and 2008 (unaudited)
    
    
    5Consolidated Statements of Changes in Stockholders Equity for the Six Months Ended June 30, 2009 (unaudited)
and for the Year Ended December 31, 2008
    
    
    6Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008 (unaudited)
    
    
    7Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2009 and 2008
(unaudited)
    
    
    8Notes to Consolidated Financial Statements (unaudited)
    
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    28PART II. Other InformationItem 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    29Item 6. Exhibits
    
    
    30EX-10.1EX-10.4EX-10.5EX-10.6EX-31.1EX-31.2EX-31.3EX-32.1EX-32.2EX-32.3




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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
  3




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PART I  FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share data)
 June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    31,584
    
    
    $
    30,793Accounts receivable, trade (net of allowance for doubtful accounts of $2,317 and $4,627
as of June 30, 2009 and December 31, 2008, respectively)
    
    
    59,594
    
    
    
    64,879Receivable from businesses distributed to common stockholders
    
    
    1,443
    
    
    
    1,443Inventories:Raw materials and supplies
    
    
    16,970
    
    
    
    14,690Work-in-process
    
    
    9,471
    
    
    
    9,929Finished goods
    
    
    293
    
    
    
    249Prepaid expenses and other current assets
    
    
    6,101
    
    
    
    5,744Total current assets
    
    
    125,456
    
    
    
    127,727Property and equipment
    
    
    64,177
    
    
    
    58,119Less accumulated depreciation and amortization
    
    
    (33,336
    )
    
    
    (28,841
    )Property and equipment, net
    
    
    30,841
    
    
    
    29,278Goodwill
    
    
    13,148
    
    
    
    13,148Other assets
    
    
    4,966
    
    
    
    3,125Total assets
    
    $
    174,411
    
    
    $
    173,278Liabilities and Stockholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    297
    
    
    $
    336Accounts payable
    
    
    14,666
    
    
    
    17,990Accrued expenses and other current liabilities
    
    
    23,635
    
    
    
    25,086Income taxes payable
    
    
    2,355
    
    
    
    489Total current liabilities
    
    
    40,953
    
    
    
    43,901Long-term debt, non-current
    
    
    35,178
    
    
    
    35,363Net pension liability
    
    
    628
    
    
    
    661Other liabilities
    
    
    1,774
    
    
    
    2,036Commitments and contingenciesStockholders equity:Series B Preferred Stock, unlimited shares authorized, none outstanding
    
    
    
    
    
    
    Common stock, no par value; 60,000,000 shares authorized; 40,642,815 and 40,612,815 shares issued
as of June 30, 2009 and December 31, 2008, respectively
    
    
    4,715
    
    
    
    4,715Additional paid-in capital
    
    
    131,699
    
    
    
    131,418Accumulated deficit
    
    
    (17,918
    )
    
    
    (19,029
    )Accumulated other comprehensive loss
    
    
    (4,605
    )
    
    
    (7,774
    )Treasury
stock, at cost (4,008,963 shares as of June 30, 2009 and December 31, 2008)
    
    
    (18,013
    )
    
    
    (18,013
    )Total stockholders equity
    
    
    95,878
    
    
    
    91,317Total liabilities and stockholders equity
    
    $
    174,411
    
    
    $
    173,278
  4




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED INCOME STATEMENTS
 (in thousands, except per share data)
 (Unaudited)
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    69,726
    
    
    $
    90,185
    
    
    $
    132,758
    
    
    
    $163,572Costs and expenses:Operating costs (exclusive of depreciation and amortization)
    
    
    47,261
    
    
    
    56,557
    
    
    
    89,839
    
    
    
    103,865Depreciation and amortization
    
    
    1,447
    
    
    
    1,763
    
    
    
    2,790
    
    
    
    3,019Selling, general and administrative
    
    
    20,212
    
    
    
    21,357
    
    
    
    37,683
    
    
    
    40,955Total costs and expenses
    
    
    68,920
    
    
    
    79,677
    
    
    
    130,312
    
    
    
    147,839Operating income
    
    
    806
    
    
    
    10,508
    
    
    
    2,446
    
    
    
    15,733Interest income and other income (expense), net
    
    
    313
    
    
    
    (209
    )
    
    
    219
    
    
    
    (31
    )Interest expense
    
    
    (299
    )
    
    
    (396
    )
    
    
    (592
    )
    
    
    (1,027
    )Income before income taxes
    
    
    820
    
    
    
    9,903
    
    
    
    2,073
    
    
    
    14,675Income tax expense
    
    
    (589
    )
    
    
    (2,244
    )
    
    
    (962
    )
    
    
    (3,306
    )Net income
    
    $
    231
    
    
    $
    7,659
    
    
    $
    1,111
    
    
    $
    11,369Earnings per common share:Basic
    
    $
    0.01
    
    
    $
    0.21
    
    
    $
    0.03
    
    
    $
    0.31Diluted
    
    $
    0.01
    
    
    $
    0.21
    
    
    $
    0.03
    
    
    $
    0.31Weighted-average number of common and common equivalent shares used
in computing net income per common share:Basic
    
    
    36,615
    
    
    
    36,432
    
    
    
    36,609
    
    
    
    36,334Diluted
    
    
    36,795
    
    
    
    36,972
    
    
    
    36,763
    
    
    
    36,915
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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 Six Months Ended June 30, 2009 (Unaudited) and Year Ended December 31, 2008
 (in thousands, except share data)
 AccumulatedAdditional
    
    
    
    
    
    OtherCommon Shares
    
    Common
    
    Paid-In
    
    Accumulated
    
    Comprehensive
    
    TreasuryIssued
    
    Treasury
    
    Stock
    
    Capital
    
    Deficit
    
    Income (Loss)
    
    Stock
    
    TotalBalances at January 1, 2008
    
    
    39,959,792
    
    
    
    4,048,963
    
    
    $
    4,643
    
    
    $
    128,363
    
    
    $
    (40,943
    )
    
    $
    4,467
    
    
    $
    (18,194
    )
    
    $
    78,336Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,868
    
    
    
    
    
    
    
    
    
    
    
    21,868Stock-based compensation and stock
options exercises
    
    
    294,679
    
    
    
    (40,000
    )
    
    
    29
    
    
    
    1,214
    
    
    
    
    
    
    
    
    
    
    
    181
    
    
    
    1,424Conversion of convertible debentures to
common stock
    
    
    358,344
    
    
    
    
    
    
    
    43
    
    
    
    1,841
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,884Change in pension net actuarial loss and
prior service credit, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (986
    )
    
    
    
    
    
    
    (986
    )Adjustment
for FASB Statement No. 158
measurement date change, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    (10
    )
    
    
    
    
    
    
    36Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,245
    )
    
    
    
    
    
    
    (11,245
    )Balances at December 31, 2008
    
    
    40,612,815
    
    
    
    4,008,963
    
    
    
    4,715
    
    
    
    131,418
    
    
    
    (19,029
    )
    
    
    (7,774
    )
    
    
    (18,013
    )
    
    
    91,317Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,111
    
    
    
    
    
    
    
    
    
    
    
    1,111Stock-based compensation and stock
option exercises
    
    
    30,000
    
    
    
    
    
    
    
    
    
    
    
    281
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    281Change in pension net actuarial loss and
prior service credit, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (530
    )
    
    
    
    
    
    
    (530
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,699
    
    
    
    
    
    
    
    3,699Balances at June 30, 2009
    
    
    40,642,815
    
    
    
    4,008,963
    
    
    $
    4,715
    
    
    $
    131,699
    
    
    $
    (17,918
    )
    
    $
    (4,605
    )
    
    $
    (18,013
    )
    
    $
    95,878
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FURMANITE CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 (Unaudited)
 For the Six MonthsEnded June 30,2009
    
    
    2008Operating activities:Net income
    
    $
    1,111
    
    
    $
    11,369Reconciliation of net income to net cash provided by operating activities:Depreciation and amortization
    
    
    2,790
    
    
    
    3,019Provision for doubtful accounts
    
    
    205
    
    
    
    76Deferred income taxes
    
    
    (145
    )
    
    
    (79
    )Stock-based compensation expense
    
    
    281
    
    
    
    212Other, net
    
    
    (643
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    5,506
    
    
    
    (6,559
    )Inventories
    
    
    (1,756
    )
    
    
    (3,832
    )Prepaid expenses and other current assets
    
    
    (243
    )
    
    
    305Accounts payable
    
    
    (2,817
    )
    
    
    1,833Accrued expenses and other current liabilities
    
    
    (2,023
    )
    
    
    3,904Income taxes payable
    
    
    2,901
    
    
    
    630Other, net
    
    
    (596
    )
    
    
    (230
    )Net cash provided by operating activities
    
    
    4,571
    
    
    
    10,648Investing activities:Capital expenditures
    
    
    (3,018
    )
    
    
    (4,221
    )Acquisition of assets
    
    
    (500
    )
    
    
    Proceeds from sale of assets
    
    
    162
    
    
    
    Net cash used in investing activities
    
    
    (3,356
    )
    
    
    (4,221
    )Financing activities:Payments on debt
    
    
    (224
    )
    
    
    (4,789
    )Payments on 8.75% convertible subordinated debentures
    
    
    
    
    
    
    (155
    )Issuance of common stock
    
    
    
    
    
    
    165Net cash used in financing activities
    
    
    (224
    )
    
    
    (4,779
    )Effect of exchange rate changes on cash
    
    
    (200
    )
    
    
    605Increase in cash and cash equivalents
    
    
    791
    
    
    
    2,253Cash and cash equivalents at beginning of period
    
    
    30,793
    
    
    
    31,570Cash and cash equivalents at end of period
    
    $
    31,584
    
    
    $
    33,823Non-cash financing activities:Conversion of 8.75% convertible debentures to common stock
    
    $
    
    
    
    $
    1,884Settlement of accrued bonuses in common stock
    
    $
    
    
    
    $
    488Supplemental cash flow information:Cash paid for interest
    
    $
    606
    
    
    $
    1,246Cash paid (received) for income taxes, including refunds received
    
    $
    (726
    )
    
    $
    2,886
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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 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    231
    
    
    $
    7,659
    
    
    $
    1,111
    
    
    $
    11,369Other comprehensive income:Change in pension net actuarial loss and prior service credit, net of tax
    
    
    (579
    )
    
    
    (27
    )
    
    
    (530
    )
    
    
    (50
    )Foreign currency translation adjustments
    
    
    4,720
    
    
    
    235
    
    
    
    3,699
    
    
    
    2,054Total other comprehensive income
    
    
    4,141
    
    
    
    208
    
    
    
    3,169
    
    
    
    2,004Comprehensive income
    
    $
    4,372
    
    
    $
    7,867
    
    
    $
    4,280
    
    
    $
    13,373
  8




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 (Unaudited)
 1. General and Summary of Significant Accounting Policies
   Revenue Recognition
 Revenue Recognition in Financial Statements Revenue
Recognition
 Inventories
  9




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New Accounting Pronouncements
 Employers Disclosures about Postretirement Benefit Plan Assets Employers Disclosures
about Pensions and Other Postretirement Benefits,
 Determining Fair Value When the Volume and Level
of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly Fair
Value Measurements
 Recognition and Presentation of
Other-Than-Temporary Impairments
 Interim Disclosures about Fair Value of Financial Instruments. Disclosures
about Fair Value of Financial Instruments Interim Financial Reporting
 Subsequent Events
  10




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2. Earnings Per Share
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    231
    
    
    $
    7,659
    
    
    $
    1,111
    
    
    $
    11,369Basic weighted-average common shares outstanding
    
    
    36,615
    
    
    
    36,432
    
    
    
    36,609
    
    
    
    36,334Dilutive effect of common stock equivalents
    
    
    180
    
    
    
    540
    
    
    
    154
    
    
    
    581Diluted weighted-average common shares outstanding
    
    
    36,795
    
    
    
    36,972
    
    
    
    36,763
    
    
    
    36,915Income per share:Basic
    
    $
    0.01
    
    
    $
    0.21
    
    
    $
    0.03
    
    
    $
    0.31Dilutive
    
    $
    0.01
    
    
    $
    0.21
    
    
    $
    0.03
    
    
    $
    0.31Stock options and restricted stock grants excluded from diluted
weighted-average common shares outstanding because their
inclusion would have an anti-dilutive effect:
    
    
    672
    
    
    
    150
    
    
    
    592
    
    
    
    150
 3. Accrued Expenses
  June 30,
    
    
    December 31,2009
    
    
    2008Compensation and benefits
    
    $
    8,690
    
    
    $
    9,505Estimated potential uninsured liability claims
    
    
    2,394
    
    
    
    2,394Value added tax payable
    
    
    1,231
    
    
    
    2,007Taxes other than income
    
    
    1,547
    
    
    
    1,810Professional, audit and legal fees
    
    
    1,204
    
    
    
    1,521Payments due on purchased assets
    
    
    750
    
    
    
    Other employee related expenses
    
    
    447
    
    
    
    982Rent
    
    
    494
    
    
    
    388Interest
    
    
    107
    
    
    
    136Other
    
    
    6,771
    
    
    
    6,343$
    23,635
    
    
    $
    25,086
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4. Indebtedness
  June 30,
    
    
    December 31,2009
    
    
    2008Borrowings under $50.0 million
revolving bank facility (the $50.0 million
facility)
    
    $
    27,590
    
    
    $
    27,590Borrowings secured by a letter of credit
under $50.0 million facility (the $15.0
million facility)
    
    
    7,500
    
    
    
    7,500Capital leases
    
    
    385
    
    
    
    609Total long-term debt
    
    
    35,475
    
    
    
    35,699Less current portion of long-term debt
    
    
    297
    
    
    
    336Total long-term debt, non-current
    
    $
    35,178
    
    
    $
    35,363
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5. Retirement Plan
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    126
    
    
    $
    195
    
    
    $
    237
    
    
    $
    390Interest cost
    
    
    842
    
    
    
    1,063
    
    
    
    1,586
    
    
    
    2,130Expected return on plan assets
    
    
    (770
    )
    
    
    (1,364
    )
    
    
    (1,450
    )
    
    
    (2,732
    )Amortization of prior service cost
    
    
    (25
    )
    
    
    (30
    )
    
    
    (47
    )
    
    
    (61
    )Amortization of net actuarial loss
    
    
    47
    
    
    
    
    
    
    
    89
    
    
    
    Net periodic pension cost (benefit)
    
    $
    220
    
    
    $
    (136
    )
    
    $
    415
    
    
    $
    (273
    )
  6. Stock-Based Compensation
  7. Accumulated Other Comprehensive Loss
  June 30,
    
    
    December 31,2009
    
    
    2008Net actuarial loss and prior service credit
    
    $
    (6,282
    )
    
    $
    (5,531
    )Less: deferred tax benefit
    
    
    1,759
    
    
    
    1,548Net of tax
    
    
    (4,523
    )
    
    
    (3,983
    )Adjustment for FASB Statement No. 158 measurement date change, net of tax
    
    
    
    
    
    
    (10
    )Foreign currency translation adjustment
    
    
    (82
    )
    
    
    (3,781
    )Total accumulated other comprehensive loss
    
    $
    (4,605
    )
    
    $
    (7,774
    )
 13




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8. Uncertain Tax Positions
 Accounting for Uncertainty in Income Taxes
  Balance at December 31, 2008
    
    $
    974Additions based on tax positions related to the current year
    
    
    119Reductions due to lapses of statutes of limitations
    
    
    Balance at June 30, 2009
    
    $
    1,093
 9. Commitments and Contingencies
     14




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10. Business Segment Data and Geographical Information
   United
    
    
    
    
    
    
    Asia-States
    
    
    Europe
    
    
    Pacific
    
    
    TotalThree months ended June 30, 2009:Under pressure services
    
    $
    11,191
    
    
    $
    8,416
    
    
    $
    4,533
    
    
    $
    24,140Turnaround services
    
    
    14,206
    
    
    
    13,507
    
    
    
    3,772
    
    
    
    31,485Other services
    
    
    6,905
    
    
    
    6,291
    
    
    
    905
    
    
    
    14,101Total revenues
    
    $
    32,302
    
    
    $
    28,214
    
    
    $
    9,210
    
    
    $
    69,726Three 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
    
    
    $
    90,185Six months ended June 30, 2009:Under pressure services
    
    $
    20,582
    
    
    $
    18,147
    
    
    $
    7,195
    
    
    $
    45,924Turnaround services
    
    
    29,688
    
    
    
    24,281
    
    
    
    6,176
    
    
    
    60,145Other services
    
    
    12,106
    
    
    
    12,985
    
    
    
    1,598
    
    
    
    26,689Total revenues
    
    $
    62,376
    
    
    $
    55,413
    
    
    $
    14,969
    
    
    $
    132,758Six 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
    
    
    $
    163,572
 15




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##### Table of Contents



United
    
    
    
    
    
    
    Asia-States
    
    
    Europe
    
    
    Pacific
    
    
    TotalThree months ended June 30, 2009:Operating income (loss)
    
    $
    (2,015
    )
    
    $
    883
    
    
    $
    1,938
    
    
    $
    806Allocation of headquarter costs
    
    
    1,969
    
    
    
    (1,487
    )
    
    
    (482
    )
    
    
    Adjusted operating income (loss)
    
    $
    (46
    )
    
    $
    (604
    )
    
    $
    1,456
    
    
    $
    806Three 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
    
    
    $
    10,508Six months ended June 30, 2009:Operating income (loss)
    
    $
    (2,920
    )
    
    $
    2,958
    
    
    $
    2,408
    
    
    $
    2,446Allocation of headquarter costs
    
    
    3,337
    
    
    
    (2,625
    )
    
    
    (712
    )
    
    
    Adjusted operating income
    
    $
    417
    
    
    $
    333
    
    
    $
    1,696
    
    
    $
    2,446Six 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
    
    
    $
    15,733
  June 30,
    
    
    December 31,2009
    
    
    2008United States
    
    $
    33,085
    
    
    $
    32,066Europe
    
    
    12,193
    
    
    
    10,587Asia-Pacific
    
    
    3,677
    
    
    
    2,898$
    48,955
    
    
    $
    45,551
 16




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##### Table of Contents



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.
    12. Subsequent Event
    17




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FURMANITE CORPORATION AND SUBSIDIARIES
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Business Overview
  Financial Overview
  Results of Operations
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands, except per share data)Revenues
    
    $
    69,726
    
    
    $
    90,185
    
    
    $
    132,758
    
    
    $
    163,572Costs and expenses:Operating costs (exclusive of depreciation and amortization)
    
    
    47,261
    
    
    
    56,557
    
    
    
    89,839
    
    
    
    103,865Depreciation and amortization
    
    
    1,447
    
    
    
    1,763
    
    
    
    2,790
    
    
    
    3,019Selling, general and administrative
    
    
    20,212
    
    
    
    21,357
    
    
    
    37,683
    
    
    
    40,955Total costs and expenses
    
    
    68,920
    
    
    
    79,677
    
    
    
    130,312
    
    
    
    147,839Operating income
    
    
    806
    
    
    
    10,508
    
    
    
    2,446
    
    
    
    15,733Interest income and other income (expense), net
    
    
    313
    
    
    
    (209
    )
    
    
    219
    
    
    
    (31
    )Interest expense
    
    
    (299
    )
    
    
    (396
    )
    
    
    (592
    )
    
    
    (1,027
    )Income before income taxes
    
    
    820
    
    
    
    9,903
    
    
    
    2,073
    
    
    
    14,675Income tax expense
    
    
    (589
    )
    
    
    (2,244
    )
    
    
    (962
    )
    
    
    (3,306
    )Net income
    
    $
    231
    
    
    $
    7,659
    
    
    $
    1,111
    
    
    $
    11,369Earnings per share:Basic
    
    $
    0.01
    
    
    $
    0.21
    
    
    $
    0.03
    
    
    $
    0.31Diluted
    
    $
    0.01
    
    
    $
    0.21
    
    
    $
    0.03
    
    
    $
    0.31
 18




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Geographical information
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:United States
    
    $
    32,302
    
    
    $
    40,810
    
    
    $
    62,376
    
    
    $
    76,877Europe
    
    
    28,214
    
    
    
    39,748
    
    
    
    55,413
    
    
    
    69,273Asia-Pacific
    
    
    9,210
    
    
    
    9,627
    
    
    
    14,969
    
    
    
    17,422Total revenues
    
    
    69,726
    
    
    
    90,185
    
    
    
    132,758
    
    
    
    163,572Costs and expenses:Operating costs (exclusive of depreciation and amortization)United States
    
    
    21,745
    
    
    
    26,408
    
    
    
    41,981
    
    
    
    49,671Europe
    
    
    20,267
    
    
    
    24,565
    
    
    
    38,890
    
    
    
    43,759Asia-Pacific
    
    
    5,249
    
    
    
    5,584
    
    
    
    8,968
    
    
    
    10,435Total operating costs (exclusive of depreciation and amortization)
    
    
    47,261
    
    
    
    56,557
    
    
    
    89,839
    
    
    
    103,865Depreciation and amortizationUnited States, including corporate
    
    
    812
    
    
    
    1,111
    
    
    
    1,602
    
    
    
    1,774Europe
    
    
    394
    
    
    
    403
    
    
    
    745
    
    
    
    789Asia-Pacific
    
    
    241
    
    
    
    249
    
    
    
    443
    
    
    
    456Total depreciation and amortization
    
    
    1,447
    
    
    
    1,763
    
    
    
    2,790
    
    
    
    3,019Selling, general and administrativeUnited States, including corporate
    
    
    11,760
    
    
    
    12,530
    
    
    
    21,713
    
    
    
    23,864Europe
    
    
    6,670
    
    
    
    7,168
    
    
    
    12,820
    
    
    
    13,969Asia-Pacific
    
    
    1,782
    
    
    
    1,659
    
    
    
    3,150
    
    
    
    3,122Total selling general and administrative
    
    
    20,212
    
    
    
    21,357
    
    
    
    37,683
    
    
    
    40,955Total costs and expenses
    
    $
    68,920
    
    
    $
    79,677
    
    
    $
    130,312
    
    
    $
    147,839
  Revenues
   19




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Operating Costs (exclusive of depreciation and amortization)
   Depreciation and Amortization
  Selling, General and Administrative
  20




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Interest Expense
  Income Taxes
 Accounting for Income Taxes
   Liquidity and Capital Resources
    21




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22




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##### Table of Contents



Critical Accounting Policies and Estimates
   23




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Revenue Recognition
 Revenue Recognition in Financial Statements Revenue Recognition
   Revenue Arrangements with Multiple Deliverables
 Allowance for Doubtful Accounts
  Goodwill, Intangible and Long-Lived Assets
 Goodwill and Other Intangible Assets
   Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144)
 24




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##### Table of Contents



Stock-Based Compensation
  Income Taxes
 Accounting for Uncertainty in Income
Taxes-an interpretation of FASB Statement No. 109 (FIN No.
48)
  Defined Benefit Pension Plan
  25




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##### Table of Contents



Contingencies
 Environmental
   Other
  New Accounting Pronouncements
 Employers Disclosures about Postretirement Benefit Plan Assets Employers Disclosures
about Pensions and Other Postretirement Benefits,
 Determining Fair Value When the Volume and Level
of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly Fair
Value Measurements
 Recognition and Presentation of
Other-Than-Temporary Impairments
 Interim
Disclosures about Fair Value of Financial Instruments. Disclosures
about Fair Value of Financial Instruments Interim Financial Reporting
 26




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##### Table of Contents



Subsequent Events
  Off-Balance Sheet Transactions
  Inflation and Changing Prices
  27




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 i.e.
    
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  28




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##### Table of Contents



FURMANITE CORPORATION AND SUBSIDIARIES
 
 PART II  Other Information
 
 Item 1. Legal Proceedings
       
 Item 1A. Risk Factors
  29




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##### Table of Contents



Item 6. Exhibits
 3.1
    
    Restated Certificate of Incorporation of the Registrant, dated September 26, 1979, incorporated by reference
herein to Exhibit 3.1 to the Registrants Registration Statement on Form S-16.3.2
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant, dated April 30,
1981, incorporated by reference herein to Exhibit 3.2 to the Registrants Form 10-K for the year ended
December 31, 1981.3.3
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant, dated May 28, 1985,
incorporated by reference herein to Exhibit 4.1 to the Registrants Form 10-Q for the quarter ended June 30,
1985.3.4
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant, dated September 17,
1985, incorporated by reference herein to Exhibit 4.1 to the Registrants Form 10-Q for the quarter ended
September 30, 1985.3.5
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant, dated July 10,
1990, incorporated by reference herein to Exhibit 3.5 to the Registrants Form 10-K for the year ended
December 31, 1990.3.6
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant, dated September 21,
1990, incorporated by reference herein to Exhibit 3.5 to the Registrants Form 10-Q for the quarter ended
September 30, 1990.3.7
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant, dated August 8,
2001, incorporated by reference herein to Exhibit 3.1 to the Registrants Current Report on Form 8-K filed
on August 22, 2001.3.8
    
    By-laws of the Registrant, as amended and restated June 14, 2007, incorporated by reference herein to
Exhibit 3.8 to the Registrants Form 10-K for the year ended December 31, 2007.4.1
    
    Certificate of Designation, Preferences and Rights related to the Registrants Series B Junior Participating
Preferred Stock, incorporated by reference herein to Exhibit 4.2 to the Registrants Form 10-K for the year
ended
December 31, 2008.4.2
    
    Rights Agreement, dated as of April 15, 2008, between the Registrant and The Bank of New York Trust Company,
N.A., a national banking association, as Rights Agent, which includes as exhibits, the Form of Right
Certificate and the Summary of Rights to Purchase Stock (incorporated by reference herein to Exhibit 4.1 to
the Registrants Form 8-A/A filed on April 18, 2008).4.3
    
    Letters to stockholders of the Registrant, dated April 19, 2008 (incorporated by reference herein to Exhibit 4.2 to the Registrants Form 8-A/A filed on April 18, 2008).10.1*
    
    First Amendment, dated as of December 31, 2003, to the Amended and Restated Loan Agreement dated as of
August 13, 2002 among Furmanite Limited, Furmanite Worldwide, Inc., the financial institutions from time to
time party thereto and Bank of Scotland, as Agent.10.2
    
    Second Amendment, dated as of December 31, 2005, to the Amended and Restated Loan Agreement dated as of
August 13, 2002 among Furmanite Limited, Furmanite Worldwide, Inc., the financial institutions from time to
time party thereto and Bank of Scotland, as Agent, filed as Exhibit 10.1 of the exhibits to the Registrants
Current Report on Form 8-K filed on January 6, 2006, which exhibit is hereby incorporated by reference.10.3
    
    Third Amendment, dated as of March 31, 2006, to the Amended and Restated Loan Agreement dated as of August
13, 2002 among Furmanite Limited, Furmanite Worldwide, Inc., the financial institutions from time to time
party thereto and Bank of Scotland, as Agent, filed as Exhibit 10.6 of the exhibits to the Registrants Form
10-Q for the quarter ended March 31, 2006, which exhibit is
hereby incorporated by reference.10.4*
    
    Fourth Amendment, dated as of October 31, 2006, to the Amended and Restated Loan Agreement dated as of
August 13, 2002 among Furmanite Limited, Furmanite Worldwide, Inc., the financial institutions from time to
time party thereto and Bank of Scotland, as Agent.10.5*
    
    Fifth Amendment, dated as of March 31, 2008, to the Amended and Restated Loan Agreement dated as of August
13, 2002 among Furmanite Limited, Furmanite Worldwide, Inc., the financial institutions from time to time
party thereto and Bank of Scotland, as Agent.10.6*
    
    Sixth Amendment, dated as of April 1, 2008, to the Amended and Restated Loan Agreement dated as of August
13, 2002 among Furmanite Limited, Furmanite Worldwide, Inc., the financial institutions from time to time
party thereto and Bank of Scotland, as Agent.
 30




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31.1*
    
    Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated
August 6, 2009.31.2*
    
    Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated
August 6, 2009.31.3*
    
    Certification of Principal Accounting Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
dated August 6, 2009.32.1*
    
    Certification of Chief Executive Officer, Pursuant to Section 906(a) of the Sarbanes-Oxley Act of 2002, dated
August 6, 2009.32.2*
    
    Certification of Chief Financial Officer, Pursuant to Section 906(a) of the Sarbanes-Oxley Act of 2002, dated
August 6, 2009.32.3*
    
    Certification of Principal Accounting Officer, Pursuant to Section 906(a) of the Sarbanes-Oxley Act of 2002,
dated August 6, 2009.
 
 *
    
    Filed herewith. 31




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FURMANITE CORPORATION
(Registrant)/s/ MIGUEL A. DESDINMiguel A. DesdinSenior Vice President, Chief Financial Officer  /s/ ROBERT S. MUFFRobert S. MuffPrincipal Accounting Officer  32