Free Redacted Document - District Court of Delaware - Delaware

Case 1:05-cv-00879-SLR Document 145-10 Filed O9/O1/2006 Page 1 013

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ll Item 7. MANAGEMEN'l"$ DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND `RESULTS OF
OPERATIONS
Introduction ‘
The following discussion and analysis is provided to increase understanding of, and should be read in conjunction with, the
consolidated fmancial statements and accompanying notes, as well as the Business and Risk Factors sections of this report on
Form _l0-KQ
Overview
InfraSource Services, Inc. ("lnfraSource") and its wholly owned subsidiaries on a consolidated basis (referred to as "the
.Company," "we," "us," or "our,") are one of the largest specialty contractors servicing electric, natural gas and
telecornrnunications infrastructure inthe UnitedStates based on market share. G reer . :¢2@re= ;w.·rt a »r. ar e
‘ »" ~>tf»t~ ww eug¤;» _ In connection
with the Merger, we acquired all-of the voting interests of InfraSource Incorporated for total purchase price consideration of
$231.5 million, including transaction costs, purchase price contingencies and working capital settlement.
On May 12, 2004, we completed our initial public offering (“IPO") of 8,500,000 shares of common stock at a price to the
public of $13 per share. Thernet proceeds of the offering to us of approximately $100.8 million, aher deducting underwriters’
discounts and offering expenses, were used as follows: (I) $50.2 million was used to repay a portion of term loans outstanding
under our senior credit facility; (2) $30.0 million was used to repay theprincipal amount of our subordinated note with Exelon; and
(3) the remaining proceeds of approximately $20.6 million were retained for general corporate purposes-
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Acquisitions and Dispositions V
Merger: In the Merger on September 24, 2003, we acquired all of the voting interests of Inf1aSource Incorporated for total
purchase price consideration of $231.5 million, inc1uding·tra.nsaction costs, purchase price contingencies and the working capital
settlement. The 1nfraSource Group- is reflected in our consolidated statements of operations beginning September 24, 2003, the
acquisition date, and is also reflected as the predecessor entity for all periods prior to the Merger. -
In accordance with the terms of the Merger, the purchase price was subject to adjustment based upon the detemiination of
adjusted working capital as of September 23, 2003. We fmalized the working capital adjustment, as well` as various other purchase
price contingencies, during the year ended December 31, 2004, resulting in a payment to us from Exelon of approximately $7.7
million, including interest of approximately $0,2 million. During the year ended December 31, 2004, we also fmalized certain
allocation estimates, including the valuation of certain specialty equipment acquired. The aggregate effect of these purchase price
adjustments was a decrease to goodwill of approximately $0.9 million. During the year ended December 31, 2005, we decreased
goodwill by $0.9 million as a result of recording a deferred tax asset related to net operating loss carryforward benefits acquired in
the Merger. .
As of December 31, 2004 and 2005, goodwill related to the Merger, was $705 and $7 l-4‘million, respectively. As of
December 31, 2005, $10.0 million and $61.4 million of the Merger goodwill is related to our TS and ICS segment, respectively.
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