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Hill International Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: March 11, 2011 04:26PM

Hill International Inc. (HIL) filed Annual Report for the period ended 2010-12-31. Hill International Inc has a market cap of $210 million; its shares were traded at around $5.49 with a P/E ratio of 14.5 and P/S ratio of 0.5.



Highlight of Business Operations:

During 2010, we made three acquisitions: McLachlan Lister Pty. Ltd. (“MLL”), the Construction Management Division of dck North America, LLC (“dck”) and TCM Group, Inc. (“TCM”). These acquisitions provide us with additional geographical presence in the Asia Pacific region and the United States. Aggregate consideration amounted to $24,117,000, consisting of cash of $18,705,000, contingent consideration amounting to $2,850,000 and deferred payments amounting to $2,562,000. The contingent consideration will be payable if two of the acquired companies achieve certain operating profit targets in 2011. The contingent consideration has been accrued and is included in other current liabilities in the consolidated balance sheet. In the event that the companies do not achieve the required level of earnings, the contingent consideration will be adjusted through a charge or credit to the 2011 consolidated statement of earnings. We acquired intangible assets and goodwill amounting to $9,950,000 and $11,540,000, respectively. The acquired intangible assets have a weighted average life of 6.6 years. The intangible assets consist of client related intangibles of $5,531,000 with lives ranging from five to ten years, contract intangibles of $3,909,000 with lives ranging from two to three-and–a-half years and a trade name intangible of $510,000 with a two-year life. Goodwill, amounting to $6,592,000, of which $3,272,000 is deductible for income tax purposes, has been allocated to the Project Management segment and goodwill amounting to $5,356,000, which is not deductible for income tax purposes, has been allocated to the Construction Claims segment. The results of operations of the acquired companies are not material to our consolidated results of operations.

During 2009, we purchased two companies: Boyken International, Inc. (“Boyken”) and TRS Consultants, Inc. (“TRS”). Aggregate consideration amounted to $6,236,000, consisting of cash of $2,500,000, 429,241 shares of our common stock amounting to $2,736,000 and contingent consideration amounting to $1,000,000. The contingent consideration will be paid in the event one of the acquired companies achieves operating profit of $1,000,000 in 2010, 2011 or 2012. The contingent consideration has been accrued and is included in other current liabilities in the consolidated balance sheet. In the event that the company does not achieve the required level of earnings, the contingent consideration will be written off through a credit to the 2012 consolidated statement of earnings. We acquired intangible assets and goodwill

amounting to $3,572,000 and $2,809,000, respectively. The acquired intangible assets have a weighted average life of 7.2 years. The intangible assets consist of client related intangibles of $2,332,000 with a 10 year life and contract intangibles of $1,240,000 with a two-year life. Goodwill, of which $1,512,000 is expected to be deductible for income tax purposes, has been allocated to the Project Management segment. These acquisitions provide us with a greater geographical presence in the United States. The results of operations of the acquired companies are not material to our consolidated results of operations.

During 2008, we purchased six companies for aggregate consideration amounting to $46,093,000, consisting of cash of $40,842,000, 82,436 shares of our common stock amounting to $1,300,000, and contingent consideration amounting to $2,872,000. The contingent consideration was settled in 2009 for cash of $1,138,000 and 132,479 shares of our common stock aggregating $1,650,000. In addition, the sellers of one of the acquired companies had the opportunity to receive additional consideration of up to $8,413,000 under an earn-out arrangement payable at the rate of $4,364,000 in 2009 and $4,049,000 in 2010 based on the acquired company’s financial performance in 2008 and 2009. Based on that company’s performance in 2008, an earn-out payment of $1,526,000 was paid in 2009. The company’s financial results in 2009 did not achieve the level necessary to require an earn-out payment.

Read the The complete Report



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