CJ 2017 Annual Report

Amounts Recognized as of Merger Date Measurement Period Adjustments (1) Estimated Fair Value Accounts receivable $ 262,973 $ 11,079 $ 274,052 Inventory 35,491 (7,372) 28,119 Other current assets 8,857 (1,940) 6,917 Property, plant and equipment 1,024,622 (59,378) 965,244 Goodwill 444,162 12,684 456,846 Other intangible assets 28,300 13,700 42,000 Other assets 11,171 (2,913) 8,258 Total assets acquired 1,815,576 (34,140) 1,781,436 Accounts payable (195,913) 19,610 (176,303) Other current liabilities (23,813) (7,503) (31,316) Deferred income taxes (187,515) (21,368) (208,883) Total liabilities assumed (407,241) (9,261) (416,502) Net assets acquired $ 1,408,335 $ (43,401) $ 1,364,934 (1) The measurement period adjustments reflect changes in the estimated fair values of certain assets and liabilities, including income taxes. The measurement period adjustments were recorded to reflect new information obtained about facts and circumstances existing as of the date the Nabors Merger was consummated and did not result from intervening events subsequent to that date. The fair value and gross contractual amount of accounts receivable acquired on March 24, 2015 was $274.1 million and $296.2 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 fair values (in thousands) and ranges of estimated useful lives. As with fair value estimates, the determination of estimated useful lives requires judgments and assumptions. Estimated Useful Lives Estimated Fair Value Land Indefinite $ 42,741 Building and leasehold improvements 2-25 79,456 Office furniture, fixtures and equipment 2-5 2,845 Machinery & Equipment 2-10 628,791 Transportation equipment 2-5 166,457 Construction in progress 44,954 Property, plant and equipment $ 965,244 Other intangibles were assessed a fair value of $42.0 million with a weighted average amortization period of approximately 11 years. These intangible assets consist of developed technology of $19.6 million, amortizable over 5 – 15 years, customer relationships of $13.0 million, amortizable over 15 years, trade name of $8.5 million, amortizable over ten years, and non-compete agreements of $0.9 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 between C&J’s Completion Services and Well Support Services reporting units on the basis of historical levels of EBITDA with $141.4 million allocated to Completion Services and $315.4 million allocated to Well Support Services. The goodwill recognized as a result of the Nabors Merger was primarily attributable to the expected increased economies of scale, capabilities, resources and geographic footprint of the combined company as well as the cost savings opportunities as C&J expected to capitalize on synergies from the new combined company. The tax deductible portion of goodwill and other intangibles is $60.8 million and $22.3 million, respectively. C&J ENERGY SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 111