2003 Annual Report - Enerflex

The acquisition was accounted for using the purchase method, and the results of operations of EnSource have been includedwith those of the Company from July 19, 2002. The final cost of the acquisition was $144,645,000. At December 31, 2002, certainitems were reclassified in the purchase price equation to conform with Enerflex’s financial statement presentation.The final purchase price was allocated as follows:December 31 2002Shares issued $ 141,040Transaction costs 3,408Fair value of options issued 197$ 144,645Non-cash working capital $ 38,631Future income taxes 2,522Property, plant and equipment 29,145Rental assets 24,054Assets held for sale 4,591Other long-term assets 431Goodwill 104,924Bank indebtedness (37,612)Long-term debt (22,041)$ 144,645Note 3. INVENTORYDecember 31 2003 2002Finished goods $ 10,711 $ 11,442Manufacturing materials 14,981 23,409Repair parts held for resale 31,559 34,203Work in progress:Costs in excess of related billings 17,791 19,716Billings in excess of related costs (3,880) (7,529)$ 71,162 $ 81,241Note 4. RENTAL EQUIPMENTDecember 31 2003 2002Cost $ 87,121 $ 78,637Less accumulated depreciation (15,311) (10,545)Net book value $ 71,810 $ 68,092Depreciation of rental equipment included in income in 2003 was $6,091,000 (2002 - $4,866,000), which was included in costof goods sold.Enerflex 2003 Annual Report60