CJ 2017 Annual Report

Current assets $ 45,895 Property and equipment 64,496 Goodwill 147,515 Other intangible assets 71,500 Total assets acquired $ 329,406 Current liabilities $ 17,442 Deferred income taxes 31,301 Other liabilities 8,746 Total liabilities assumed $ 57,489 Net assets acquired $ 271,917 The preliminary fair value and gross contractual amount of accounts receivable acquired on November 30, 2017 was $30.0 million and $30.1 million, respectively. Based on the age of certain accounts receivable, a portion of the gross contractual amount was estimated to be uncollectible. Property, plant and equipment assets acquired consist of the following preliminary fair values (in thousands) and preliminary ranges of estimated useful lives. As with fair value estimates, the determination of estimated useful lives requires judgments and assumptions that are preliminary and subject to change during the measurement period. Estimated Useful Lives Estimated Fair Value Land Indefinite $ 2,010 Building and leasehold improvements 5-25 5,700 Office furniture, fixtures and equipment 3-5 946 Machinery & Equipment 2-10 52,880 Construction in progress 2,960 Property, plant and equipment $ 64,496 Other intangibles were assessed a preliminary fair value of $71.5 million with a preliminary weighted average amortization period of approximately 14.8 years. These intangible assets consist of customer relationships of $58.1 million, amortizable over 15 years, trade name of $11.8 million, amortizable over 15 years, and non-compete agreements of $1.6 million, amortizable over five years. The amount allocated to goodwill represents the excess of the purchase price over the fair value of the net assets acquired. Goodwill was allocated to the Company's Completion Services reporting unit. The goodwill recognized as a result of the O-Tex transaction was primarily attributable to the expected increased economies of scale, enhanced capabilities and resources, and an expanded geographic footprint. The tax deductible portion of goodwill and other intangibles is $4.4 million and $10.7 million, respectively. The Company treated the O-Tex acquisition as a non-taxable transaction. Such treatment resulted in the acquired assets and liabilities having carryover basis for tax purposes. An estimated deferred tax liability in the amount of $31.3 million was recorded to account for the differences between the preliminary purchase price allocation and carryover tax basis. Acquisition-related costs associated with the O-Tex transaction were expensed as incurred and totaled $4.4 million for the year ended December 31, 2017, and are included in selling, general and administrative expenses. The results of operations for O-Tex that have been included in C&J's consolidated financial statements subsequent to the November 30, 2017 acquisition date through December 31, 2017 include revenue of $16.2 million and a net income of $0.4 million. The following unaudited pro forma results of operations have been prepared as though the O-Tex transaction was completed on January 1, 2016. Pro forma amounts are based on the purchase price allocation of the acquisition and are not necessarily indicative of results that may be reported in the future (in thousands): C&J ENERGY SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 109