þ | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, |
o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
(State or other jurisdiction of incorporation or organization) | No. 74-2853258 (I.R.S. Employer Identification No.) |
Title of each class: Common Stock, $0.001 par value | Name of each exchange on which registered: The Nasdaq Global Select Market |
Large accelerated filero | Accelerated filerþ | |
Non-accelerated filero | Smaller reporting companyo |
PART I | |||||||
Item 1. | Business. | 1 | |||||
Item 1A. | Risk Factors. | ||||||
Item 1B. | Unresolved Staff Comments. | ||||||
Item 2. | Properties. | ||||||
Item 3. | Legal Proceedings. | ||||||
Item 4. | |||||||
PART II | |||||||
Item 5. | Market for | ||||||
Item 6. | Selected Financial Data. | ||||||
Item 7. | |||||||
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. | ||||||
Item 8. | Financial Statements and Supplementary Data. | ||||||
Item 9. | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure. | ||||||
Item 9A. | Controls and Procedures. | ||||||
Item 9B. | Other Information. | ||||||
PART III | |||||||
Item 10. | Directors, Executive Officers and Corporate Governance. | ||||||
Item 11. | Executive Compensation. | ||||||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. | ||||||
Item 13. | Certain Relationships and Related Transactions, and Director Independence. | ||||||
Item 14. | Principal Accounting Fees and Services. | ||||||
PART IV | |||||||
Item 15. | Exhibits, |
Item 1. | Business. |
• | give managers and executives the information they need to make quality business decisions and dynamically adapt their business processes and systems to respond to client demands, market opportunities, or business problems; |
• | improve the quality and lower the cost of customer acquisition and care through web-based customer self-service and provisioning; |
• | reduce supply chain costs and improve logistics by flexibly and quickly integrating processes and systems and making relevant real-time information and applications available online to suppliers, partners, and distributors; |
• | increase the effectiveness and value of legacy enterprise technology infrastructure investments by enabling faster application development and deployment, increased flexibility, and lower management costs; and |
• | increase employee productivity through better information flow and collaboration capabilities and by automating routine processes to enable focus on unique problems and opportunities. |
• | Business integration and service oriented architectures (SOA). We design, develop, and implement business integration and SOA solutions that allow our clients to integrate all of their business processes end-to-end and across the enterprise. Truly innovative companies are extending those processes and eliminating functional friction between the enterprise, core customers, and partners. Our business integration solutions can extend and extract core applications, reduce infrastructure strains and cost, web-enable legacy applications, provide real-time insight into business metrics, and introduce efficiencies for customers, suppliers, and partners. |
• | Enterprise portals and collaboration. We design, develop, implement, and integrate secure and scalable enterprise portals and collaboration solutions for our clients and their customers, suppliers, and partners that include searchable data systems, collaborative systems for process improvement, transaction processing, unified and extended reporting, content management, social media/networking tools, and personalization. |
• | Custom applications. We design, develop, implement, and integrate custom application solutions that deliver enterprise-specific functionality to meet the unique requirements and needs of our clients. Our substantial experience with platforms including J2EE, .Net, and Open-source enables enterprises of all types to leverage cutting-edge technologies to meet business-driven needs. |
• | Technology platform implementations. We design, develop, and implement technology platform implementations that allow our clients to establish a robust, reliable Internet-based infrastructure for integrated business applications which extend enterprise technology assets to employees, customers, suppliers, and partners. Our platform services include application server selection, architecture planning, installation and configuration, clustering for availability, performance assessment and issue remediation, security services, and technology migrations. |
• | Customer relationship management (CRM). We design, develop, and implement advanced CRM solutions that facilitate customer acquisition, service and support, and sales and marketing by understanding our customers’ needs through interviews, requirement gathering sessions, call center analysis, developing an iterative prototype driven solution, and integrating the solution to legacy processes and applications. |
• | Enterprise performance management (EPM). We design, develop, and implement EPM solutions that allow our clients to quickly adapt their business processes to respond to new market opportunities or competitive threats by taking advantage of business strategies supported by flexible business applications and IT infrastructures. |
• | Enterprise content management (ECM). We design, develop, and implement ECM solutions that enable the management of all unstructured information regardless of file type or format. Our ECM solutions can facilitate the creation of new content and/or provide easy access and retrieval of existing digital assets from other enterprise tools such as enterprise resource planning (ERP), customer relationship management, or legacy applications. Our ECM solutions include Enterprise Imaging and Document Management, Web Content Management, Digital Asset Management, Enterprise Records Management, Compliance and Control, Business Process Management and Collaboration, and Enterprise Search. |
• | Business intelligence. We design, develop, and implement business intelligence solutions that allow companies to interpret and act upon accurate, timely, and integrated information. Business intelligence solutions help our clients make more informed business decisions by classifying, aggregating, and correlating data into meaningful business information. Our business intelligence solutions allow our clients to transform data into knowledge for quick and effective decision making and can include information strategy, data warehousing, and business analytics and reporting. |
• | Domain Expertise. We have acquired significant domain expertise in a core set of technology solutions and software platforms. These solutions include business integration, portals and collaboration, custom applications, technology platform implementations, customer relationship management, enterprise performance management, enterprise content management, and business intelligence, among others. The platforms in which we have significant domain expertise and on which these solutions are built include IBM, Oracle and Microsoft, among others. |
• | Industry Expertise. We serve many of the world’s largest and most respected companies with deep business process experience across a variety of industries. These industries include healthcare, financial services and banking, telecommunications, automotive, and energy, among others. |
• | Delivery Model and Methodology. We believe our significant domain expertise enables us to provide high-value solutions through expert project teams that deliver measurable results by working collaboratively with clients through a user-centered, technology-based, and business-driven solutions methodology. Our methodology includes a proven execution process map we developed, which allows for repeatable, high quality services delivery. The methodology leverages the thought leadership of our senior strategists and practitioners to support the client project team and focuses on transforming our clients’ business processes to provide enhanced customer value and operating efficiency, enabled by web technology. As a result, we believe we are able to offer our clients the dedicated attention that small firms usually provide and the delivery and project management that larger firms usually offer. |
• | Client Relationships. We have built a track record of quality solutions and client satisfaction through the timely, efficient and successful completion of numerous projects for our clients. As a result, we have established long-term relationships with many of our clients who continue to engage us for additional projects and serve as references for us. For the years ending December 31, 2011, 2010 and 2009, 81%, 84% and 92%, respectively, of services revenues were derived from clients who continued to utilize our services from the prior year, excluding any revenues from acquisitions completed in that year. |
• | Vendor Relationship and Endorsements. We have built meaningful relationships with software providers, whose products we use to design and implement solutions for our clients. These relationships enable us to reduce our cost of sales and sales cycle times and increase win rates by leveraging our partners’ marketing efforts and endorsements. We also serve as a sales channel for our partners, helping them market and sell their software products. We are an IBM Premier Business Partner, an Oracle Platinum Partner, a Microsoft Gold Certified Partner and National Systems Integrator, a TeamTIBCO Partner, and an EMC Consulting Preferred Partner. Our vendors have recognized our relationships with several awards. In 2011 we were named IBM’s Lotus North America Distinguished Partner, making us a three-time winner of this award. We also received the IBM Information Management Solution Excellence Award and the IBM Information Management Business Analytics Solution Provider Achievement Award. |
• | Offshore Capability. We serve our clients from locations in 20 markets throughout North America and, in addition, we operate global development centers in Hangzhou, China and Chennai, India. These facilities are staffed with colleagues who have specializations that include application development, adapter and interface development, quality assurance and testing, monitoring and support, product development, platform migration, and portal development with expertise in IBM, Oracle and Microsoft technologies. In addition to our offshore capabilities, we employ a number of foreign nationals in the United States on H1-B visas. The facility in Chennai, India is also a recruiting and development facility used to continue to grow our base of H1-B foreign national colleagues. As of December 31, 2011, we had 204 colleagues at the Hangzhou, China facility and 205 colleagues with H1-B visas. We intend to continue to leverage our existing offshore capabilities to support our growth and provide our clients flexible options for project delivery. |
small local consulting firms that operate in no more than one or two geographic regions; |
national consulting firms, such as Accenture, |
in-house professional services organizations of software companies; and |
we believe in long-term client and vendor relationships built on investment in innovative solutions, delivering more value than the competition, and a commitment to excellence; |
we believe in growth and profitability and building meaningful scale; |
we believe each of us is ultimately responsible for our own career development and has a commitment to mentor others; |
we believe that Perficient has an obligation to invest in our |
we believe the best career development comes on the job; and |
we love challenging new work opportunities. |
Item 1A. | Risk Factors. |
political and economic instability; |
global health conditions and potential natural disasters; |
unexpected changes in regulatory requirements; |
international currency controls and exchange rate fluctuations; |
reduced protection for intellectual property rights in some countries; and |
additional vulnerability from terrorist groups targeting American interests abroad. |
• | general economic and political conditions; |
• | our ability to differentiate, and/or clearly convey the value of, our services; |
• | the pricing practices of our competitors, including the aggressive use by our competitors of offshore resources to provide lower-cost service delivery capabilities, or the introduction of new services or products by our competitors; |
• | our clients’ desire to reduce their costs; |
• | our ability to charge higher prices where market demand or the value of our services justifies it; |
• | our ability to accurately estimate, attain, and sustain contract revenues, margins, and cash flows over long contract periods; and |
• | procurement practices of clients and their use of third-party advisors. |
• | the failure of management and acquired services personnel to perform as expected; |
• | the acquisition of fixed fee customer agreements that require more effort than anticipated to complete; |
• | the risks of entering markets in which we have no, or limited, prior experience, including offshore operations in countries in which we have no prior experience; |
• | the failure to identify or adequately assess any undisclosed or potential liabilities or problems of the acquired business including legal liabilities; |
• | the failure of the acquired business to achieve the forecasts we used to determine the purchase price; or |
• | the potential loss of key personnel of the acquired business. |
demand for software and services; |
customer budget cycles; |
changes in our |
pricing changes in our industry; and |
government regulation and legal developments regarding the use of the Internet. |
Item 1B. | Unresolved Staff Comments. |
Item 2. | Properties. |
Item 3. | Legal Proceedings. |
Item 4. |
Item 5. | Market for |
High | Low | |||||||
Year Ending December 31, 2011: | ||||||||
First Quarter | $ | 13.16 | $ | 10.68 | ||||
Second Quarter | 12.76 | 9.22 | ||||||
Third Quarter | 11.32 | 7.09 | ||||||
Fourth Quarter | 10.32 | 6.41 | ||||||
Year Ending December 31, 2010: | ||||||||
First Quarter | $ | 12.01 | $ | 8.50 | ||||
Second Quarter | 12.99 | 8.91 | ||||||
Third Quarter | 9.71 | 8.21 | ||||||
Fourth Quarter | 13.00 | 9.17 |
High | Low | |||||||
Year Ending December 31, 2008: | ||||||||
First Quarter | $ | 17.08 | $ | 6.43 | ||||
Second Quarter | 11.91 | 7.82 | ||||||
Third Quarter | 10.94 | 6.04 | ||||||
Fourth Quarter | 6.80 | 2.31 | ||||||
Year Ending December 31, 2007: | ||||||||
First Quarter | $ | 21.55 | $ | 16.02 | ||||
Second Quarter | 23.29 | 18.51 | ||||||
Third Quarter | 25.19 | 18.91 | ||||||
Fourth Quarter | 24.75 | 14.65 |
Period | Total Number of Shares Purchased | Average Price Paid Per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||
Beginning Balance as of October 1, 2011 | 7,097,567 | $ | 7.29 | 7,097,567 | $ | 8,271,213 | ||||
October 1-31, 2011 | -- | -- | -- | $ | 8,271,213 | |||||
November 1-30, 2011 | 55,000 | 9.36 | 55,000 | $ | 7,756,483 | |||||
December 1-31, 2011 | 215,000 | 8.15 | 215,000 | $ | 6,004,112 | |||||
Ending Balance as of December 31, 2011 | 7,367,567 | $ | 7.33 | 7,367,567 | ||||||
(1) Average price paid per share includes commission. |
Period | Total Number of Shares Purchased | Average Price Paid Per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) | ||||||||||||
Beginning Balance as of October 1, 2008 | 637,031 | 637,031 | $ | 5,213,570 | ||||||||||||
October 1-31, 2008 | 91,018 | 5.22 | 91,018 | $ | 4,745,283 | |||||||||||
November 1-30, 2008 | 671,887 | 3.59 | 671,887 | $ | 2,672,362 | |||||||||||
December 1-31, 2008 | 448,364 | 4.25 | 448,364 | $ | 10,821,786 | |||||||||||
Ending Balance as of December 31, 2008 | 1,848,300 | 1,848,300 |
Item 6. | Selected Financial Data. |
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||||||||||||||||||
Income Statement Data: | (In thousands) | (In thousands) | ||||||||||||||||||||||||||||||||||||||
Revenues | $ | 231,488 | $ | 218,148 | $ | 160,926 | $ | 96,997 | $ | 58,848 | $ | 262,439 | $ | 214,952 | $ | 188,150 | $ | 231,488 | $ | 218,148 | ||||||||||||||||||||
Gross margin | $ | 73,502 | $ | 75,690 | $ | 53,756 | $ | 32,418 | $ | 18,820 | $ | 81,134 | $ | 62,767 | $ | 48,333 | $ | 73,502 | $ | 75,690 | ||||||||||||||||||||
Selling, general and administrative | $ | 47,242 | $ | 41,963 | $ | 32,268 | $ | 17,917 | $ | 11,068 | $ | 51,672 | $ | 45,477 | $ | 40,042 | $ | 47,242 | $ | 41,963 | ||||||||||||||||||||
Depreciation and amortization | $ | 6,949 | $ | 6,265 | $ | 4,406 | $ | 2,226 | $ | 1,209 | $ | 8,095 | $ | 4,784 | $ | 5,750 | $ | 6,949 | $ | 6,265 | ||||||||||||||||||||
Acquisition costs | $ | 1,249 | $ | 993 | $ | -- | $ | -- | $ | -- | ||||||||||||||||||||||||||||||
Adjustment to fair value of contingent consideration | $ | 1,586 | $ | (4 | ) | $ | -- | $ | -- | $ | -- | |||||||||||||||||||||||||||||
Impairment of intangible assets | $ | 1,633 | $ | -- | $ | -- | $ | -- | $ | -- | $ | -- | $ | -- | $ | -- | $ | 1,633 | $ | -- | ||||||||||||||||||||
Income from operations | $ | 17,678 | $ | 27,462 | $ | 17,082 | $ | 12,275 | $ | 6,543 | $ | 18,532 | $ | 11,517 | $ | 2,541 | $ | 17,678 | $ | 27,462 | ||||||||||||||||||||
Net interest income (expense) | $ | 528 | $ | 172 | $ | (407 | ) | $ | (643 | ) | $ | (134 | ) | |||||||||||||||||||||||||||
Net interest income | $ | 68 | $ | 163 | $ | 209 | $ | 528 | $ | 172 | ||||||||||||||||||||||||||||||
Net other income (expense) | $ | (915 | ) | $ | 20 | $ | 174 | $ | 43 | $ | 32 | $ | 45 | $ | 68 | $ | 260 | $ | (915 | ) | $ | 20 | ||||||||||||||||||
Income before income taxes | $ | 17,291 | $ | 27,654 | $ | 16,849 | $ | 11,675 | $ | 6,441 | $ | 18,645 | $ | 11,748 | $ | 3,010 | $ | 17,291 | $ | 27,654 | ||||||||||||||||||||
Net income | $ | 10,000 | $ | 16,230 | $ | 9,567 | $ | 7,177 | $ | 3,913 | $ | 10,747 | $ | 6,480 | $ | 1,463 | $ | 10,000 | $ | 16,230 |
As of December 31, | As of December 31, | |||||||||||||||||||||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||||||||||||||||||
Balance Sheet Data: | (In thousands) | (In thousands) | ||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 22,909 | $ | 8,070 | $ | 4,549 | $ | 5,096 | $ | 3,905 | ||||||||||||||||||||||||||||||
Cash, cash equivalents, and short-term investments | $ | 9,732 | $ | 24,008 | $ | 24,302 | $ | 22,909 | $ | 8,070 | ||||||||||||||||||||||||||||||
Working capital | $ | 56,176 | $ | 41,368 | $ | 24,859 | $ | 17,078 | $ | 9,234 | $ | 51,476 | $ | 47,632 | $ | 50,205 | $ | 56,176 | $ | 41,368 | ||||||||||||||||||||
Long-term investments | $ | -- | $ | 2,254 | $ | 3,652 | $ | -- | $ | -- | ||||||||||||||||||||||||||||||
Property and equipment, net | $ | 2,345 | $ | 3,226 | $ | 1,806 | $ | 960 | $ | 806 | $ | 3,490 | $ | 2,355 | $ | 1,278 | $ | 2,345 | $ | 3,226 | ||||||||||||||||||||
Goodwill and intangible assets, net | $ | 115,634 | $ | 121,339 | $ | 81,056 | $ | 52,031 | $ | 37,340 | $ | 142,166 | $ | 124,056 | $ | 111,773 | $ | 115,634 | $ | 121,339 | ||||||||||||||||||||
Total assets | $ | 194,247 | $ | 189,992 | $ | 131,000 | $ | 84,935 | $ | 62,582 | $ | 223,932 | $ | 207,678 | $ | 184,810 | $ | 194,247 | $ | 189,992 | ||||||||||||||||||||
Current portion of long term debt and line of credit | $ | -- | $ | -- | $ | 1,201 | $ | 1,581 | $ | 1,379 | ||||||||||||||||||||||||||||||
Long-term debt and line of credit, less current portion | $ | -- | $ | -- | $ | 137 | $ | 5,338 | $ | 2,902 | ||||||||||||||||||||||||||||||
Total stockholders' equity | $ | 174,818 | $ | 165,562 | $ | 107,352 | $ | 65,911 | $ | 44,622 | $ | 198,959 | $ | 177,164 | $ | 168,348 | $ | 174,818 | $ | 165,562 |
Revenues: | 2008 | 2007 | 2006 | |||||||||
Services revenues | 89.6 | % | 87.8 | % | 85.6 | % | ||||||
Software and hardware revenues | 4.6 | 6.5 | 9.0 | |||||||||
Reimbursable expenses | 5.8 | 5.7 | 5.4 | |||||||||
Total revenues | 100.0 | 100.0 | 100.0 | |||||||||
Cost of revenues (exclusive of depreciation and amortization, shown separately below): | ||||||||||||
Project personnel costs | 56.6 | 52.6 | 52.3 | |||||||||
Software and hardware costs | 3.7 | 5.5 | 7.5 | |||||||||
Reimbursable expenses | 5.7 | 5.7 | 5.4 | |||||||||
Other project related expenses | 2.2 | 1.5 | 1.3 | |||||||||
Total cost of revenues | 68.2 | 65.3 | 66.5 | |||||||||
Services gross margin | 34.4 | 38.4 | 37.4 | |||||||||
Software and hardware gross margin | 19.4 | 15.9 | 16.1 | |||||||||
Total gross margin | 31.8 | 34.7 | 33.5 | |||||||||
Selling, general and administrative | 20.4 | 19.2 | 20.1 | |||||||||
Depreciation and intangibles amortization | 3.0 | 2.9 | 2.7 | |||||||||
Impairment of intangibles | 0.7 | 0.0 | 0.0 | |||||||||
Income from operations | 7.7 | 12.6 | 10.6 | |||||||||
Interest income (expense), net | 0.2 | 0.1 | (0.3 | ) | ||||||||
Other income (expense), net | (0.4 | ) | 0.0 | 0.1 | ||||||||
Income before income taxes | 7.5 | 12.7 | 10.5 | |||||||||
Provision for income taxes | 3.2 | 5.2 | 4.5 | |||||||||
Net income | 4.3 | % | 7.5 | % | 6.0 | % |
Revenues: | 2011 | 2010 | 2009 | |||||||||
Services revenues | 88.8 | % | 86.1 | % | 88.4 | % | ||||||
Software and hardware revenues | 6.0 | 9.6 | 6.9 | |||||||||
Reimbursable expenses | 5.2 | 4.3 | 4.7 | |||||||||
Total revenues | 100.0 | 100.0 | 100.0 | |||||||||
Cost of revenues (depreciation and amortization, shown separately below): | ||||||||||||
Project personnel costs | 56.9 | 55.5 | 61.0 | |||||||||
Software and hardware costs | 5.2 | 8.4 | 6.2 | |||||||||
Reimbursable expenses | 5.2 | 4.3 | 4.7 | |||||||||
Other project related expenses | 1.8 | 2.6 | 2.4 | |||||||||
Total cost of revenues | 69.1 | 70.8 | 74.3 | |||||||||
Services gross margin | 33.9 | 32.6 | 28.2 | |||||||||
Software and hardware gross margin | 13.5 | 11.9 | 10.2 | |||||||||
Total gross margin | 30.9 | 29.2 | 25.7 | |||||||||
Selling, general and administrative | 19.7 | 21.2 | 21.3 | |||||||||
Depreciation and amortization | 3.1 | 2.2 | 3.0 | |||||||||
Acquisition costs | 0.5 | 0.5 | 0.0 | |||||||||
Adjustment to fair value of contingent consideration | 0.5 | 0.0 | 0.0 | |||||||||
Income from operations | 7.1 | 5.3 | 1.4 | |||||||||
Net interest income | 0.0 | 0.1 | 0.1 | |||||||||
Net other income | 0.0 | 0.0 | 0.1 | |||||||||
Income before income taxes | 7.1 | 5.4 | 1.6 | |||||||||
Provision for income taxes | 3.0 | 2.5 | 0.8 | |||||||||
Net income | 4.1 | % | 2.9 | % | 0.8 | % |
Financial Results | Explanation for Increases Over Prior Year Period | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||
For the Year Ended December 31, 2011 | For the Year Ended December 31, 2010 | Total Increase/ (Decrease) Over Prior Year Period | Increase Attributable to Acquired Companies* | Increase/ (Decrease) Attributable to Base Business** | ||||||||||||||||
Services Revenues | $ | 233,166 | $ | 185,173 | $ | 47,993 | $ | 38,014 | $ | 9,979 | ||||||||||
Software and Hardware Revenues | 15,624 | 20,556 | (4,932 | ) | 26 | (4,958 | ) | |||||||||||||
Reimbursable Expenses | 13,649 | 9,223 | 4,426 | 931 | 3,495 | |||||||||||||||
Total Revenues | $ | 262,439 | $ | 214,952 | $ | 47,487 | $ | 38,971 | $ | 8,516 |
Financial Results | Explanation for Increases/(Decreases) Over Prior Year Period | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||
For the Year Ended December 31, 2008 | For the Year Ended December 31, 2007 | Total Increase/ (Decrease) Over Prior Year Period | Increase Attributable to Acquired Companies* | Increase/ (Decrease) Attributable to Base Business** | ||||||||||||||||
Services Revenues | $ | 207,480 | $ | 191,395 | $ | 16,085 | $ | 29,611 | $ | (13,526 | ) | |||||||||
Software and Hardware Revenues | 10,713 | 14,243 | (3,530 | ) | 1,871 | (5,401 | ) | |||||||||||||
Reimbursable Expenses | 13,295 | 12,510 | 785 | 1,372 | (587 | ) | ||||||||||||||
Total Revenues | $ | 231,488 | $ | 218,148 | $ | 13,340 | $ | 32,854 | $ | (19,514 | ) |
For the Year Ended | For the Year Ended | Increase | ||||||||||
Selling, General and Administrative Expense (in millions) | December 31, 2011 | December 31, 2010 | / (Decrease) | |||||||||
Sales-related costs | $ | 14.9 | $ | 11.9 | $ | 3.0 | ||||||
Salary expense | 11.3 | 9.2 | 2.1 | |||||||||
Stock compensation expense | 6.9 | 8.6 | (1.7 | ) | ||||||||
Recruiting expense | 3.9 | 2.3 | 1.6 | |||||||||
Bad debt expense | 1.0 | -- | 1.0 | |||||||||
Variable compensation expense | 0.7 | 2.3 | (1.6 | ) | ||||||||
Other | 13.0 | 11.2 | 1.8 | |||||||||
Total | $ | 51.7 | $ | 45.5 | $ | 6.2 |
Increase / (Decrease) | ||||
Selling, General, and Administrative Expense | (in millions) | |||
Stock compensation expense | $ | 1.7 | ||
Office and technology-related costs | 1.5 | |||
Salary expense | 1.4 | |||
Sales related costs | 1.0 | |||
Bad debt expense | 0.8 | |||
Customer dispute settlement | 0.8 | |||
Other | 0.6 | |||
Bonus expense | (2.6 | ) | ||
Net increase | $ | 5.2 |
Financial Results | Explanation for Increases Over Prior Year Period | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||
For the Year Ended December 31, 2010 | For the Year Ended December 31, 2009 | Total Increase Over Prior Year Period | Increase Attributable to Acquired Companies* | Increase Attributable to Base Business** | ||||||||||||||||
Services Revenues | $ | 185,173 | $ | 166,397 | $ | 18,776 | $ | 7,956 | $ | 10,820 | ||||||||||
Software and Hardware Revenues | 20,556 | 12,968 | 7,588 | 1,667 | 5,921 | |||||||||||||||
Reimbursable Expenses | 9,223 | 8,785 | 438 | 470 | (32 | ) | ||||||||||||||
Total Revenues | $ | 214,952 | $ | 188,150 | $ | 26,802 | $ | 10,093 | $ | 16,709 |
Financial Results | Explanation for Increases/(Decreases) Over Prior Year Period | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||
For the Year Ended December 31, 2007 | For the Year Ended December 31, 2006 | Total Increase/ (Decrease) Over Prior Year Period | Increase Attributable to Acquired Companies* | Increase/ (Decrease) Attributable to Base Business** | ||||||||||||||||
Services Revenues | $ | 191,395 | $ | 137,722 | $ | 53,673 | $ | 43,437 | $ | 10,236 | ||||||||||
Software and Hardware Revenues | 14,243 | 14,435 | (192 | ) | 1,570 | (1,762 | ) | |||||||||||||
Reimbursable Expenses | 12,510 | 8,769 | 3,741 | 2,578 | 1,163 | |||||||||||||||
Total Revenues | $ | 218,148 | $ | 160,926 | $ | 57,222 | $ | 47,585 | $ | 9,637 |
Increase / (Decrease) | ||||
Selling, General, and Administrative Expense | (in millions) | |||
Sales related costs | $ | 3.4 | ||
Stock compensation expense | 2.5 | |||
Salary expense | 1.9 | |||
Bad debt expense | 0.8 | |||
Office and technology-related costs | 1.6 | |||
Recruiting and training-related costs | 0.8 | |||
Other | 0.5 | |||
Bonus expense | (1.8 | ) | ||
Net increase | $ | 9.7 |
For the Year Ended | For the Year Ended | |||||||||||
Selling, General and Administrative Expense (in millions) | December 31, 2010 | December 31, 2009 | Increase | |||||||||
Sales-related costs | $ | 11.9 | $ | 11.6 | $ | 0.3 | ||||||
Salary expense | 9.2 | 8.8 | 0.4 | |||||||||
Stock compensation expense | 8.6 | 7.1 | 1.5 | |||||||||
Recruiting expense | 2.3 | 1.8 | 0.5 | |||||||||
Variable compensation expense | 2.3 | 0.4 | 1.9 | |||||||||
Bad debt expense | -- | (0.5 | ) | 0.5 | ||||||||
Other | 11.2 | 10.8 | 0.4 | |||||||||
Total | $ | 45.5 | $ | 40.0 | $ | 5.5 |
As of December 31, | ||||||||
2008 | 2007 | |||||||
Cash and cash equivalents | $ | 22.9 | $ | 8.1 | ||||
Working capital (including cash and cash equivalents) | $ | 56.2 | $ | 41.5 | ||||
Amounts available under credit facilities | $ | 49.9 | $ | 49.8 |
As of December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Cash, cash equivalents, and investments | $ | 9.7 | $ | 26.3 | $ | 28.0 | ||||||
Working capital (including cash and cash equivalents) | $ | 51.5 | $ | 47.6 | $ | 50.2 | ||||||
Amounts available under credit facilities | $ | 50.0 | $ | 50.0 | $ | 50.0 |
Payments Due by Period | Payments Due by Period | |||||||||||||||||||||||||||||||||||||||
Contractual Obligations | Total | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | Total | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | ||||||||||||||||||||||||||||||
Operating lease obligations | $ | 7,673 | $ | 2,258 | $ | 3,884 | $ | 1,216 | $ | 315 | $ | 10,254 | $ | 2,458 | $ | 4,387 | $ | 2,851 | $ | 558 | ||||||||||||||||||||
Total | $ | 7,673 | $ | 2,258 | $ | 3,884 | $ | 1,216 | $ | 315 | $ | 10,254 | $ | 2,458 | $ | 4,387 | $ | 2,851 | $ | 558 |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 8. | Financial Statements and Supplementary Data. |
December 31, | December 31, | |||||||||||||||
2008 | 2007 | 2011 | 2010 | |||||||||||||
ASSETS | (In thousands, except share information) | (In thousands, except share information) | ||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 22,909 | $ | 8,070 | $ | 9,732 | $ | 12,707 | ||||||||
Accounts and note receivable, net of allowance for doubtful accounts of $1,497 in 2008 and $1,475 in 2007 | 47,584 | 50,855 | ||||||||||||||
Short-term investments | -- | 11,301 | ||||||||||||||
Total cash, cash equivalents, and short-term investments | 9,732 | 24,008 | ||||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $1,057 in 2011 and $228 in 2010 | 60,892 | 48,496 | ||||||||||||||
Prepaid expenses | 1,374 | 1,182 | 1,246 | 1,270 | ||||||||||||
Other current assets | 3,157 | 4,142 | 3,118 | 2,584 | ||||||||||||
Total current assets | 75,024 | 64,249 | 74,988 | 76,358 | ||||||||||||
Long-term investments | -- | 2,254 | ||||||||||||||
Property and equipment, net | 2,345 | 3,226 | 3,490 | 2,355 | ||||||||||||
Goodwill | 104,178 | 103,686 | 132,038 | 115,227 | ||||||||||||
Intangible assets, net | 11,456 | 17,653 | 10,128 | 8,829 | ||||||||||||
Other non-current assets | 1,244 | 1,178 | 3,288 | 2,655 | ||||||||||||
Total assets | $ | 194,247 | $ | 189,992 | $ | 223,932 | $ | 207,678 | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 4,509 | $ | 4,160 | $ | 5,029 | $ | 6,072 | ||||||||
Other current liabilities | 14,339 | 18,550 | 18,483 | 22,654 | ||||||||||||
Total current liabilities | 18,848 | 22,710 | 23,512 | 28,726 | ||||||||||||
Deferred income taxes | -- | 1,549 | ||||||||||||||
Other non-current liabilities | 581 | 171 | 1,461 | 1,788 | ||||||||||||
Total liabilities | $ | 19,429 | $ | 24,430 | $ | 24,973 | $ | 30,514 | ||||||||
Commitments and contingencies (see Notes 4 and 10) | ||||||||||||||||
Commitments and contingencies (see Note 12) | ||||||||||||||||
Stockholders' equity: | ||||||||||||||||
Common stock ($0.001 par value per share; 50,000,000 shares authorized and 30,350,700 shares issued and 28,502,400 shares outstanding as of December 31, 2008; 29,423,296 shares issued and outstanding as of December 31, 2007) | $ | 30 | $ | 29 | ||||||||||||
Stockholders’ equity: | ||||||||||||||||
Common stock ($0.001 par value per share; 50,000,000 shares authorized and 36,217,914 shares issued and 28,742,906 shares outstanding as of December 31, 2011; 33,373,410 shares issued and 27,275,936 shares outstanding as of December 31, 2010) | $ | 36 | $ | 33 | ||||||||||||
Additional paid-in capital | 197,653 | 188,998 | 248,855 | 224,966 | ||||||||||||
Accumulated other comprehensive loss | (338 | ) | (117 | ) | (279 | ) | (225 | ) | ||||||||
Treasury stock, at cost (1,848,300 shares as of December 31, 2008) | (9,179 | ) | -- | |||||||||||||
Accumulated deficit | (13,348 | ) | (23,348 | ) | ||||||||||||
Total stockholders' equity | 174,818 | 165,562 | ||||||||||||||
Total liabilities and stockholders' equity | $ | 194,247 | $ | 189,992 | ||||||||||||
Treasury stock, at cost (7,475,008 shares as of December 31, 2011; 6,097,474 shares as of December 31, 2010) | (54,995 | ) | (42,205 | ) | ||||||||||||
Retained earnings (deficit) | 5,342 | (5,405 | ) | |||||||||||||
Total stockholders’ equity | 198,959 | 177,164 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 223,932 | $ | 207,678 |
Year Ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Revenues: | (In thousands, except share and per share information) | |||||||||||
Services | $ | 233,166 | $ | 185,173 | $ | 166,397 | ||||||
Software and hardware | 15,624 | 20,556 | 12,968 | |||||||||
Reimbursable expenses | 13,649 | 9,223 | 8,785 | |||||||||
Total revenues | 262,439 | 214,952 | 188,150 | |||||||||
Cost of revenues (exclusive of depreciation and amortization, shown separately below): | ||||||||||||
Project personnel costs | 149,243 | 119,304 | 114,877 | |||||||||
Software and hardware costs | 13,521 | 18,108 | 11,641 | |||||||||
Reimbursable expenses | 13,649 | 9,223 | 8,785 | |||||||||
Other project related expenses | 4,892 | 5,550 | 4,514 | |||||||||
Total cost of revenues | 181,305 | 152,185 | 139,817 | |||||||||
Gross margin | 81,134 | 62,767 | 48,333 | |||||||||
Selling, general and administrative | 51,672 | 45,477 | 40,042 | |||||||||
Depreciation | 1,754 | 830 | 1,483 | |||||||||
Amortization | 6,341 | 3,954 | 4,267 | |||||||||
Acquisition costs | 1,249 | 993 | -- | |||||||||
Adjustment to fair value of contingent consideration | 1,586 | (4 | ) | -- | ||||||||
Income from operations | 18,532 | 11,517 | 2,541 | |||||||||
Net interest income | 68 | 163 | 209 | |||||||||
Net other income | 45 | 68 | 260 | |||||||||
Income before income taxes | 18,645 | 11,748 | 3,010 | |||||||||
Provision for income taxes | 7,898 | 5,268 | 1,547 | |||||||||
Net income | $ | 10,747 | $ | 6,480 | $ | 1,463 | ||||||
Basic net income per share | $ | 0.39 | $ | 0.24 | $ | 0.05 | ||||||
Diluted net income per share | $ | 0.37 | $ | 0.23 | $ | 0.05 | ||||||
Shares used in computing basic net income per share | 27,745,312 | 26,856,481 | 27,538,300 | |||||||||
Shares used in computing diluted net income per share | 29,184,286 | 28,303,547 | 28,558,160 |
Accumulated | ||||||||||||||||||||||||||||
Common | Common | Additional | Other | Retained | Total | |||||||||||||||||||||||
Stock | Stock | Paid-in | Comprehensive | Treasury | Earnings | Stockholders' | ||||||||||||||||||||||
Shares | Amount | Capital | Loss | Stock | (Deficit) | Equity | ||||||||||||||||||||||
Balance at December 31, 2008 | 28,502 | $ | 30 | $ | 197,653 | $ | (338 | ) | $ | (9,179 | ) | $ | (13,348 | ) | $ | 174,818 | ||||||||||||
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan | 298 | 1 | 974 | -- | -- | -- | 975 | |||||||||||||||||||||
Net tax shortfall from stock option exercises and restricted stock vesting | -- | -- | (459 | ) | -- | -- | -- | (459 | ) | |||||||||||||||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions | 973 | 1 | 9,835 | -- | -- | -- | 9,836 | |||||||||||||||||||||
Purchases of treasury stock | (2,690 | ) | -- | -- | -- | (18,350 | ) | -- | (18,350 | ) | ||||||||||||||||||
Net unrealized loss on investments | -- | -- | -- | (5 | ) | -- | -- | (5 | ) | |||||||||||||||||||
Foreign currency translation adjustment | -- | -- | -- | 70 | -- | -- | 70 | |||||||||||||||||||||
Net income | -- | -- | -- | -- | -- | 1,463 | 1,463 | |||||||||||||||||||||
Total comprehensive income | -- | -- | -- | -- | -- | -- | 1,528 | |||||||||||||||||||||
Balance at December 31, 2009 | 27,083 | $ | 32 | $ | 208,003 | $ | (273 | ) | $ | (27,529 | ) | $ | (11,885 | ) | $ | 168,348 | ||||||||||||
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan | 381 | -- | 1,468 | -- | -- | -- | 1,468 | |||||||||||||||||||||
Net tax benefit from stock option exercises and restricted stock vesting | -- | -- | 1,038 | -- | -- | -- | 1,038 | |||||||||||||||||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions | 920 | 1 | 10,830 | -- | -- | -- | 10,831 | |||||||||||||||||||||
Purchases of treasury stock | (1,559 | ) | -- | -- | -- | (14,676 | ) | -- | (14,676 | ) | ||||||||||||||||||
Issuance of stock for acquisitions | 451 | -- | 3,627 | -- | -- | -- | 3,627 | |||||||||||||||||||||
Net unrealized gain on investments | -- | -- | -- | 25 | -- | -- | 25 | |||||||||||||||||||||
Foreign currency translation adjustment | -- | -- | -- | 23 | -- | -- | 23 | |||||||||||||||||||||
Net income | -- | -- | -- | -- | -- | 6,480 | 6,480 | |||||||||||||||||||||
Total comprehensive income | -- | -- | -- | -- | -- | -- | 6,528 | |||||||||||||||||||||
Balance at December 31, 2010 | 27,276 | $ | 33 | $ | 224,966 | $ | (225 | ) | $ | (42,205 | ) | $ | (5,405 | ) | $ | 177,164 | ||||||||||||
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan | 814 | 1 | 3,711 | -- | -- | -- | 3,712 | |||||||||||||||||||||
Net tax benefit from stock option exercises and restricted stock vesting | -- | -- | 1,219 | -- | -- | -- | 1,219 | |||||||||||||||||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions | 929 | 1 | 9,177 | -- | -- | -- | 9,178 | |||||||||||||||||||||
Purchases of treasury stock | (1,378 | ) | -- | -- | -- | (12,790 | ) | -- | (12,790 | ) | ||||||||||||||||||
Issuance of stock for acquisitions | 1,102 | 1 | 9,782 | -- | -- | -- | 9,783 | |||||||||||||||||||||
Net unrealized loss on investments | -- | -- | -- | (19 | ) | -- | -- | (19 | ) | |||||||||||||||||||
Foreign currency translation adjustment | -- | -- | -- | (35 | ) | -- | -- | (35 | ) | |||||||||||||||||||
Net income | -- | -- | -- | -- | -- | 10,747 | 10,747 | |||||||||||||||||||||
Total comprehensive income | -- | -- | -- | -- | -- | -- | 10,693 | |||||||||||||||||||||
Balance at December 31, 2011 | 28,743 | $ | 36 | $ | 248,855 | $ | (279 | ) | $ | (54,995 | ) | $ | 5,342 | $ | 198,959 |
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Revenues: | (In thousands, except per share information) | |||||||||||
Services | $ | 207,480 | $ | 191,395 | $ | 137,722 | ||||||
Software and hardware | 10,713 | 14,243 | 14,435 | |||||||||
Reimbursable expenses | 13,295 | 12,510 | 8,769 | |||||||||
Total revenues | 231,488 | 218,148 | 160,926 | |||||||||
Cost of revenues (exclusive of depreciation and amortization, shown separately below): | ||||||||||||
Project personnel costs | 131,019 | 114,692 | 84,161 | |||||||||
Software and hardware costs | 8,639 | 11,982 | 12,118 | |||||||||
Reimbursable expenses | 13,295 | 12,510 | 8,769 | |||||||||
Other project related expenses | 5,033 | 3,274 | 2,122 | |||||||||
Total cost of revenues | 157,986 | 142,458 | 107,170 | |||||||||
Gross margin | 73,502 | 75,690 | 53,756 | |||||||||
Selling, general and administrative | 47,242 | 41,963 | 32,268 | |||||||||
Depreciation | 2,139 | 1,553 | 948 | |||||||||
Amortization | 4,810 | 4,712 | 3,458 | |||||||||
Impairment of intangible assets | 1,633 | -- | -- | |||||||||
Income from operations | 17,678 | 27,462 | 17,082 | |||||||||
Interest income | 555 | 239 | 102 | |||||||||
Interest expense | (27 | ) | (67 | ) | (509 | ) | ||||||
Other income (expense) | (915 | ) | 20 | 174 | ||||||||
Income before income taxes | 17,291 | 27,654 | 16,849 | |||||||||
Provision for income taxes | 7,291 | 11,424 | 7,282 | |||||||||
Net income | $ | 10,000 | $ | 16,230 | $ | 9,567 | ||||||
Basic net income per share | $ | 0.34 | $ | 0.58 | $ | 0.38 | ||||||
Diluted net income per share | $ | 0.33 | $ | 0.54 | $ | 0.35 | ||||||
Shares used in computing basic net income per share | 29,412,329 | 27,998,093 | 25,033,337 | |||||||||
Shares used in computing diluted net income per share | 30,350,616 | 30,121,962 | 27,587,449 |
Common | Common | Additional | Accumulated Other | Total | ||||||||||||||||||||||||
Stock | Stock | Paid-in | Comprehensive | Treasury | Accumulated | Stockholders' | ||||||||||||||||||||||
Shares | Amount | Capital | Loss | Stock | Deficit | Equity | ||||||||||||||||||||||
Balance at December 31, 2005 | 23,295 | $ | 23 | $ | 115,120 | $ | (87 | ) | $ | -- | $ | (49,145 | ) | $ | 65,911 | |||||||||||||
Bay Street, Insolexen, and EGG acquisition purchase accounting adjustments | 1,499 | 2 | 17,989 | -- | -- | -- | 17,991 | |||||||||||||||||||||
Warrants exercised | 145 | -- | 146 | -- | -- | -- | 146 | |||||||||||||||||||||
Stock options exercised | 1,672 | 2 | 4,001 | -- | -- | -- | 4,003 | |||||||||||||||||||||
Purchases of stock under the Employee Stock Purchase Plan | 6 | -- | 86 | -- | -- | -- | 86 | |||||||||||||||||||||
Tax benefit of stock option exercises and restricted stock vesting | -- | -- | 6,554 | -- | -- | -- | 6,554 | |||||||||||||||||||||
Stock compensation | 83 | -- | 3,132 | -- | -- | -- | 3,132 | |||||||||||||||||||||
Foreign currency translation adjustment | -- | -- | -- | (38 | ) | -- | -- | (38 | ) | |||||||||||||||||||
Net income | -- | -- | -- | -- | -- | 9,567 | 9,567 | |||||||||||||||||||||
Total comprehensive income | -- | -- | -- | -- | -- | -- | 9,529 | |||||||||||||||||||||
Balance at December 31, 2006 | 26,700 | $ | 27 | $ | 147,028 | $ | (125 | ) | $ | -- | $ | (39,578 | ) | $ | 107,352 | |||||||||||||
E Tech, Tier1, BoldTech, and ePairs acquisition purchase accounting adjustments | 1,250 | 1 | 24,975 | -- | -- | -- | 24,976 | |||||||||||||||||||||
Stock options exercised | 1,160 | 1 | 3,696 | -- | -- | -- | 3,697 | |||||||||||||||||||||
Purchases of stock under the Employee Stock Purchase Plan | 11 | -- | 206 | -- | -- | -- | 206 | |||||||||||||||||||||
Tax benefit of stock option exercises and restricted stock vesting | -- | -- | 6,889 | -- | -- | -- | 6,889 | |||||||||||||||||||||
Stock compensation | 302 | -- | 6,204 | -- | -- | -- | 6,204 | |||||||||||||||||||||
Foreign currency translation adjustment | -- | -- | -- | 8 | -- | -- | 8 | |||||||||||||||||||||
Net income | -- | -- | -- | -- | -- | 16,230 | 16,230 | |||||||||||||||||||||
Total comprehensive income | -- | -- | -- | -- | -- | 16,238 | ||||||||||||||||||||||
Balance at December 31, 2007 | 29,423 | $ | 29 | $ | 188,998 | $ | (117 | ) | $ | -- | $ | (23,348 | ) | $ | 165,562 | |||||||||||||
E Tech and ePairs acquisition purchase accounting adjustments | (19 | ) | -- | (290 | ) | -- | -- | -- | (290 | ) | ||||||||||||||||||
Stock options exercised | 338 | 1 | 726 | -- | -- | -- | 727 | |||||||||||||||||||||
Purchases of stock under the Employee Stock Purchase Plan | 29 | -- | 196 | -- | -- | -- | 196 | |||||||||||||||||||||
Tax expense of stock option exercises and restricted stock vesting | -- | -- | (922 | ) | -- | -- | -- | (922 | ) | |||||||||||||||||||
Stock compensation and retirement savings plan contributions | 579 | -- | 8,945 | -- | -- | -- | 8,945 | |||||||||||||||||||||
Purchases of treasury stock | (1,848 | ) | -- | -- | -- | (9,179 | ) | -- | (9,179 | ) | ||||||||||||||||||
Foreign currency translation adjustment | -- | -- | -- | (221 | ) | -- | -- | (221 | ) | |||||||||||||||||||
Net income | -- | -- | -- | -- | -- | 10,000 | 10,000 | |||||||||||||||||||||
Total comprehensive income | -- | -- | -- | -- | -- | 9,779 | ||||||||||||||||||||||
Balance at December 31, 2008 | 28,502 | $ | 30 | $ | 197,653 | $ | (338 | ) | $ | (9,179 | ) | $ | (13,348 | ) | $ | 174,818 |
Year Ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
OPERATING ACTIVITIES | (In thousands) | |||||||||||
Net income | $ | 10,747 | $ | 6,480 | $ | 1,463 | ||||||
Adjustments to reconcile net income to net cash provided by operations: | ||||||||||||
Depreciation | 1,754 | 830 | 1,483 | |||||||||
Amortization | 6,341 | 3,954 | 4,267 | |||||||||
Deferred income taxes | 531 | 205 | (18 | ) | ||||||||
Non-cash stock compensation and retirement savings plan contributions | 9,178 | 10,831 | 9,836 | |||||||||
Tax benefit from stock option exercises and restricted stock vesting | (1,838 | ) | (1,531 | ) | (583 | ) | ||||||
Adjustment to fair value of contingent consideration for purchase of business | 1,586 | (4 | ) | -- | ||||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||||||
Accounts and note receivable | (7,587 | ) | (5,491 | ) | 9,427 | |||||||
Other assets | (320 | ) | 1,626 | (342 | ) | |||||||
Accounts payable | (1,522 | ) | 642 | (884 | ) | |||||||
Other liabilities | (4,550 | ) | 1,189 | (2,086 | ) | |||||||
Net cash provided by operating activities | 14,320 | 18,731 | 22,563 | |||||||||
INVESTING ACTIVITIES | ||||||||||||
Proceeds from sales and maturity of investments | 13,555 | -- | -- | |||||||||
Purchase of investments | -- | (4,252 | ) | (9,984 | ) | |||||||
Purchase of property and equipment | (2,776 | ) | (1,161 | ) | (415 | ) | ||||||
Capitalization of software developed for internal use | (179 | ) | (160 | ) | (311 | ) | ||||||
Purchase of businesses | (19,385 | ) | (4,941 | ) | -- | |||||||
Net cash used in investing activities | (8,785 | ) | (10,514 | ) | (10,710 | ) | ||||||
FINANCING ACTIVITIES | ||||||||||||
Proceeds from short-term borrowings | 14,000 | -- | -- | |||||||||
Payments on short-term borrowings | (14,000 | ) | -- | -- | ||||||||
Payments for credit facility financing fees | (306 | ) | -- | -- | ||||||||
Payment of contingent consideration for purchase of business | (1,244 | ) | (1,875 | ) | -- | |||||||
Tax benefit from stock option exercises and restricted stock vesting | 1,838 | 1,531 | 583 | |||||||||
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan | 3,712 | 1,468 | 975 | |||||||||
Purchases of treasury stock | (11,791 | ) | (14,676 | ) | (18,350 | ) | ||||||
Remittance of taxes withheld as part of a net share settlement of restricted stock vesting | (747 | ) | -- | -- | ||||||||
Net cash used in financing activities | (8,538 | ) | (13,552 | ) | (16,792 | ) | ||||||
Effect of exchange rate on cash and cash equivalents | 28 | 67 | 5 | |||||||||
Change in cash and cash equivalents | (2,975 | ) | (5,268 | ) | (4,934 | ) | ||||||
Cash and cash equivalents at beginning of period | 12,707 | 17,975 | 22,909 | |||||||||
Cash and cash equivalents at end of period | $ | 9,732 | $ | 12,707 | $ | 17,975 | ||||||
Supplemental disclosures: | ||||||||||||
Cash paid for interest | $ | 5 | $ | 22 | $ | 50 | ||||||
Cash paid for income taxes | $ | 7,810 | $ | 4,265 | $ | 1,831 | ||||||
Non-cash activities: | ||||||||||||
Stock issued for purchase of businesses (net of stock reacquired for escrow claim) | $ | 6,616 | $ | 2,859 | $ | -- | ||||||
Stock issued for settlement of contingent consideration for purchase of business | $ | 2,915 | $ | 768 | $ | -- | ||||||
Estimated fair value of contingent consideration for purchase of business | $ | 2,377 | $ | 3,339 | $ | -- |
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
OPERATING ACTIVITIES | (In thousands) | |||||||||||
Net income | $ | 10,000 | $ | 16,230 | $ | 9,567 | ||||||
Adjustments to reconcile net income to net cash provided by operations: | ||||||||||||
Depreciation | 2,139 | 1,553 | 948 | |||||||||
Amortization | 4,810 | 4,712 | 3,458 | |||||||||
Impairment of intangible assets | 1,633 | |||||||||||
Deferred income taxes | (1,769 | ) | (495 | ) | 1,393 | |||||||
Non-cash stock compensation and retirement savings plan contributions | 8,945 | 6,204 | 3,132 | |||||||||
Non-cash interest expense | -- | -- | 6 | |||||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||||||
Accounts and note receivable | 3,081 | (1,589 | ) | (5,771 | ) | |||||||
Other assets | 354 | 3,256 | (294 | ) | ||||||||
Accounts payable | 399 | (1,694 | ) | 1,251 | ||||||||
Other liabilities | (2,824 | ) | (5,126 | ) | (543 | ) | ||||||
Net cash provided by operating activities | 26,768 | 23,051 | 13,147 | |||||||||
INVESTING ACTIVITIES | ||||||||||||
Purchase of property and equipment | (1,320 | ) | (2,035 | ) | (1,518 | ) | ||||||
Capitalization of software developed for internal use | (185 | ) | (181 | ) | (136 | ) | ||||||
Cash paid for acquisitions and related costs | (836 | ) | (26,774 | ) | (17,210 | ) | ||||||
Payments on Javelin notes | -- | -- | (250 | ) | ||||||||
Net cash used in investing activities | (2,341 | ) | (28,990 | ) | (19,114 | ) | ||||||
FINANCING ACTIVITIES | ||||||||||||
Proceeds from short-term borrowings | -- | 11,900 | 34,900 | |||||||||
Payments on short-term borrowings | -- | (11,900 | ) | (38,900 | ) | |||||||
Payments on long-term debt | �� | -- | (1,338 | ) | (1,338 | ) | ||||||
Payments for credit facility financing fees | (420 | ) | -- | -- | ||||||||
Tax benefit (expense) of stock option exercises and restricted stock vesting | (922 | ) | 6,889 | 6,554 | ||||||||
Proceeds from the exercise of stock options and Employee Stock Purchase Plan | 923 | 3,903 | 4,089 | |||||||||
Proceeds from the exercise of warrants | -- | -- | 146 | |||||||||
Purchases of treasury stock | (9,179 | ) | -- | -- | ||||||||
Net cash provided by financing activities | (9,598 | ) | 9,454 | 5,451 | ||||||||
Effect of exchange rate on cash and cash equivalents | 10 | 6 | (31 | ) | ||||||||
Change in cash and cash equivalents | 14,839 | 3,521 | (547 | ) | ||||||||
Cash and cash equivalents at beginning of period | 8,070 | 4,549 | 5,096 | |||||||||
Cash and cash equivalents at end of period | $ | 22,909 | $ | 8,070 | $ | 4,549 | ||||||
Supplemental disclosures: | ||||||||||||
Cash paid for interest | $ | 15 | $ | 40 | $ | 540 | ||||||
Cash paid for income taxes | $ | 10,206 | $ | 3,680 | $ | 3,156 | ||||||
Non-cash activities: | ||||||||||||
Stock issued for purchase of businesses (stock reacquired for escrow claim) | $ | (290 | ) | $ | 24,976 | $ | 17,991 | |||||
Change in goodwill | $ | 492 | $ | (1,957 | ) | $ | 318 | |||||
Write-off of deferred offering costs | $ | (943 | ) | $ | -- | $ | -- |
Year Ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Net income | $ | 10,747 | $ | 6,480 | $ | 1,463 | ||||||
Basic: | ||||||||||||
Weighted-average shares of common stock outstanding | 27,745 | 26,856 | 27,538 | |||||||||
Shares used in computing basic net income per share | 27,745 | 26,856 | 27,538 | |||||||||
Effect of dilutive securities: | ||||||||||||
Stock options | 279 | 659 | 610 | |||||||||
Warrants (1) | 5 | 7 | 6 | |||||||||
Restricted stock subject to vesting | 578 | 774 | 404 | |||||||||
Contingently issuable shares (2) | 222 | -- | -- | |||||||||
Shares issuable for acquisition consideration (3) | 355 | 8 | -- | |||||||||
Shares used in computing diluted net income per share (4) | 29,184 | 28,304 | 28,558 | |||||||||
Basic net income per share | $ | 0.39 | $ | 0.24 | $ | 0.05 | ||||||
Diluted net income per share | $ | 0.37 | $ | 0.23 | $ | 0.05 |
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Net income | $ | 10,000 | $ | 16,230 | $ | 9,567 | ||||||
Basic: | ||||||||||||
Weighted-average shares of common stock outstanding | 29,338 | 27,442 | 23,783 | |||||||||
Weighted-average shares of common stock subject to contingency (i.e., restricted stock) | 74 | 556 | 1,250 | |||||||||
Shares used in computing basic net income per share | 29,412 | 27,998 | 25,033 | |||||||||
Effect of dilutive securities: | ||||||||||||
Stock options | 835 | 1,707 | 2,281 | |||||||||
Warrants | 6 | 8 | 74 | |||||||||
Restricted stock subject to vesting | 98 | 409 | 199 | |||||||||
Shares used in computing diluted net income per share (1) | 30,351 | 30,122 | 27,587 | |||||||||
Basic net income per share | $ | 0.34 | $ | 0.58 | $ | 0.38 | ||||||
Diluted net income per share | $ | 0.33 | $ | 0.54 | $ | 0.35 |
(1) | All outstanding warrants expired on December 30, 2011. |
(2) | Represents the Company’s estimate of shares to be issued to speakTECH pursuant to the Agreement and Plan of Merger and Exervio Consulting, Inc. (“Exervio”) pursuant to the Asset Purchase Agreement. Refer to Note 7 for further discussion. |
(3) | Represents the shares held in escrow pursuant to the Agreement and Plan of Merger with speakTECH and pursuant to the Asset Purchase Agreements with Exervio and JCB Partners, LLC (“JCB”) as part of the consideration. These shares were not included in the calculation of basic net income per share due to the uncertainty of their ultimate status. |
(4) | As of December 31, |
Acquired tangible assets | $ | 2.1 | ||
Acquired intangible assets | 1.6 | |||
Liabilities assumed | (1.2 | ) | ||
Goodwill | 2.8 | |||
Total purchase price | $ | 5.3 |
Acquired tangible assets | $ | 4.3 | ||
Acquired intangible assets | 3.3 | |||
Liabilities assumed | (6.1 | ) | ||
Goodwill | 7.9 | |||
Total purchase price | $ | 9.4 |
Acquired tangible assets | $ | 2.6 | ||
Acquired intangible assets | 4.5 | |||
Liabilities assumed | (1.1 | ) | ||
Goodwill | 5.2 | |||
Total purchase price | $ | 11.2 |
Acquired tangible assets | $ | 2.8 | ||
Acquired intangible assets | 3.0 | |||
Liabilities assumed | (1.3 | ) | ||
Goodwill | 12.1 | |||
Total purchase price | $ | 16.6 |
Acquisition Date to December 31, 2011 | ||||
Revenues | $ | 20,367 | ||
Net income | $ | 823 |
December 31, | ||||||||
2011 | 2010 | |||||||
Revenues | $ | 274,596 | $ | 257,906 | ||||
Net income | $ | 12,905 | $ | 5,770 |
2011 | 2010 | |||||||
Balance, beginning of year | $ | 115,227 | $ | 104,168 | ||||
Preliminary purchase price allocations for acquisitions (Note 7) | 17,169 | 11,059 | ||||||
Purchase accounting adjustments | (358 | ) | -- | |||||
Balance, end of year | $ | 132,038 | $ | 115,227 |
2008 | 2007 | |||||||
Balance, beginning of year | $ | 103,686 | $ | 69,170 | ||||
Purchase price allocated to goodwill upon acquisition (Note 13) | -- | 35,301 | ||||||
Adjustments to preliminary purchase price allocations for acquisitions | 1,088 | 1,172 | ||||||
Adjustment to E Tech purchase price allocation for escrow claim | (378 | ) | -- | |||||
Utilization of net operating loss carryforwards associated with acquisitions | (218 | ) | (1,957 | ) | ||||
Balance, end of year | $ | 104,178 | $ | 103,686 |
Year ended December 31, | ||||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||
Customer relationships | $ | 18,013 | $ | (7,693 | ) | $ | 10,320 | $ | 21,130 | $ | (5,285 | ) | $ | 15,845 | ||||||||||
Non-compete agreements | 2,633 | (2,098 | ) | 535 | 2,633 | (1,550 | ) | 1,083 | ||||||||||||||||
Internally developed software | 1,358 | (757 | ) | 601 | 1,173 | (448 | ) | 725 | ||||||||||||||||
Total | $ | 22,004 | $ | (10,548 | ) | $ | 11,456 | $ | 24,936 | $ | (7,283 | ) | $ | 17,653 |
Year ended December 31, | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||
Customer relationships | $ | 20,713 | $ | (11,976 | ) | $ | 8,737 | $ | 19,543 | $ | (12,169 | ) | $ | 7,374 | ||||||||||
Non-compete agreements | 1,073 | (309 | ) | 764 | 1,031 | (413 | ) | 618 | ||||||||||||||||
Customer backlog | -- | -- | -- | 51 | -- | 51 | ||||||||||||||||||
Trade name | 152 | (84 | ) | 68 | 169 | (25 | ) | 144 | ||||||||||||||||
Internally developed software | 1,036 | (477 | ) | 559 | 1,039 | (397 | ) | 642 | ||||||||||||||||
Total | $ | 22,974 | $ | (12,846 | ) | $ | 10,128 | $ | 21,833 | $ | (13,004 | ) | $ | 8,829 |
Customer relationships | |
Non-compete agreements | 3 - 5 years |
Internally developed software | 3 - 5 years |
Trade name | 1 - 3 years |
2012 | $ | 4,162 | ||
2013 | $ | 2,677 | ||
2014 | $ | 1,504 | ||
2015 | $ | 664 | ||
2016 | $ | 510 | ||
Thereafter | $ | 611 |
2009 | $ | 4,107 | ||
2010 | $ | 3,336 | ||
2011 | $ | 2,710 | ||
2012 | $ | 971 | ||
2013 | $ | 83 | ||
Thereafter | $ | 249 |
Shares | Range of Exercise Prices | Weighted-Average Exercise Price | Aggregate Intrinsic Value | |||||||||||||
Options outstanding at January 1, 2006 | 5,268 | $ | 0.02 - 16.94 | $ | 3.53 | |||||||||||
Options granted | -- | -- | -- | |||||||||||||
Options exercised | (1,672 | ) | $ | 0.02 - 12.13 | $ | 2.4 | $ | 18,637 | ||||||||
Options canceled | (44 | ) | $ | 1.01 - 13.25 | $ | 5.41 | ||||||||||
Options outstanding at December 31, 2006 | 3,552 | $ | 0.02 - 16.94 | $ | 4.03 | |||||||||||
Options granted | 9 | $ | 3.00 - 3.00 | $ | 3 | |||||||||||
Options exercised | (1,160 | ) | $ | 0.02 - 16.94 | $ | 3.18 | $ | 21,055 | ||||||||
Options canceled | (22 | ) | $ | 2.28 -7.48 | $ | 3.36 | ||||||||||
Options outstanding at December 31, 2007 | 2,379 | $ | 0.02 - 16.94 | $ | 4.44 | |||||||||||
Options granted | -- | -- | $ | -- | ||||||||||||
Options exercised | (338 | ) | 0.02 - 10.00 | $ | 2.15 | $ | 2,726 | |||||||||
Options canceled | (11 | ) | 0.50 - 13.25 | $ | 7.57 | |||||||||||
Options outstanding at December 31, 2008 | 2,030 | 0.03 - 16.94 | $ | 4.81 | $ | 2,560 | ||||||||||
Options vested, December 31, 2006 | 2,347 | $ | 0.02 - 16.94 | $ | 3.62 | |||||||||||
Options vested, December 31, 2007 | 1,887 | $ | 0.02 - 16.94 | $ | 4.03 | |||||||||||
Options vested, December 31, 2008 | 1,773 | $ | 0.03 - 16.94 | $ | 4.59 | $ | 2,560 |
Shares | Range of Exercise Prices | Weighted-Average Exercise Price | Aggregate Intrinsic Value | |||||||||||||
Options outstanding at January 1, 2009 | 2,030 | $ | 0.03 – 16.94 | $ | 4.81 | |||||||||||
Options granted | -- | -- | -- | |||||||||||||
Options exercised | (279 | ) | 0.10 – 7.48 | 3.04 | $ | 1,043 | ||||||||||
Options canceled | (47 | ) | 0.03 – 13.25 | 5.35 | ||||||||||||
Options outstanding at December 31, 2009 | 1,704 | $ | 0.03 – 16.94 | $ | 5.08 | |||||||||||
Options granted | -- | -- | -- | |||||||||||||
Options exercised | (369 | ) | 0.03 – 10.00 | 3.66 | $ | 2,480 | ||||||||||
Options canceled | (136 | ) | 1.01 – 16.94 | 13.53 | ||||||||||||
Options outstanding at December 31, 2010 | 1,199 | $ | 0.03 – 9.19 | $ | 4.56 | |||||||||||
Options granted | -- | -- | -- | |||||||||||||
Options exercised | (802 | ) | 0.03 – 9.19 | 4.49 | $ | 5,598 | ||||||||||
Options canceled | (39 | ) | 1.41 – 7.48 | 5.58 | ||||||||||||
Options outstanding at December 31, 2011 | 358 | $ | 0.03 – 9.19 | $ | 4.61 | $ | 1,932 | |||||||||
Options vested, December 31, 2009 | 1,532 | $ | 0.03 – 16.94 | $ | 4.95 | |||||||||||
Options vested, December 31, 2010 | 1,113 | $ | 0.03 – 9.19 | $ | 4.43 | |||||||||||
Options vested, December 31, 2011 | 358 | $ | 0.03 – 9.19 | $ | 4.61 | $ | 1,932 |
Options Outstanding | Options Exercisable | |||||||||||||||||||||
Range of Exercise Prices | Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Options | Weighted Average Exercise Price | |||||||||||||||||
$ | 0.03 – 2.28 | 106,018 | $ | 1.68 | 1.54 | 106,018 | $ | 1.68 | ||||||||||||||
$ | 3.10 – 4.72 | 60,394 | $ | 3.38 | 2.47 | 60,394 | $ | 3.38 | ||||||||||||||
$ | 6.31 – 9.19 | 191,276 | $ | 6.62 | 3.03 | 191,276 | $ | 6.62 | ||||||||||||||
$ | 0.03 – 9.19 | 357,688 | $ | 4.61 | 2.50 | 357,688 | $ | 4.61 |
Shares | Weighted-Average Grant Date Fair Value | |||||||
Restricted stock awards outstanding at January 1, 2011 | 2,606 | $ | 8.97 | |||||
Awards granted (1) | 720 | $ | 10.31 | |||||
Awards vested | (822 | ) | $ | 10.07 | ||||
Awards canceled or forfeited | (461 | ) | $ | 8.76 | ||||
Restricted stock awards outstanding at December 31, 2011 | 2,043 | $ | 9.16 |
(1) | Includes the issuance of 97,800 shares of restricted stock to former JCB employees. The grants vest in 20% increments annually over a 5-year period. If the recipient is not employed by the Company for any reason during the 5-year period, then any unvested shares will be forfeited. |
Shares | Weighted-Average Grant Date Fair Value | ||||
Restricted stock awards outstanding at January 1, 2008 | 2,053 | $ | 14.33 | ||
Awards granted | 2,024 | $ | 6.12 | ||
Awards vested | (452 | ) | $ | 14.07 | |
Awards canceled or forfeited | (115 | ) | $ | 13.82 | |
Restricted stock awards outstanding at December 31, 2008 | 3,510 | $ | 9.65 |
Options Outstanding | Options Exercisable | |||||||||||||||||||||
Range of Exercise Prices | Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Options | Weighted Average Exercise Price | |||||||||||||||||
$ | 0.03 – 2.28 | 632,782 | $ | 1.71 | 3.86 | 632,782 | $ | 1.71 | ||||||||||||||
$ | 2.77 – 3.75 | 481,335 | $ | 3.52 | 3.02 | 481,335 | $ | 3.52 | ||||||||||||||
$ | 4.40 – 6.24 | 76,689 | $ | 5.02 | 4.19 | 76,689 | $ | 5.02 | ||||||||||||||
$ | 6.31 – 6.31 | 555,000 | $ | 6.31 | 5.96 | 297,857 | $ | 6.31 | ||||||||||||||
$ | 7.48 – 16.94 | 284,039 | $ | 10.91 | 3.62 | 284,039 | $ | 10.91 | ||||||||||||||
$ | 0.03 – 16.94 | 2,029,845 | $ | 4.81 | 4.21 | 1,772,702 | $ | 4.59 |
Year Ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Current: | ||||||||||||
Federal | $ | 6,358 | $ | 4,009 | $ | 1,173 | ||||||
State | 996 | 1,043 | 385 | |||||||||
Foreign | 13 | 11 | 7 | |||||||||
Total current | 7,367 | 5,063 | 1,565 | |||||||||
Deferred: | ||||||||||||
Federal | 487 | 192 | (16 | ) | ||||||||
State | 44 | 13 | (2 | ) | ||||||||
Total deferred | 531 | 205 | (18 | ) | ||||||||
Total provision for income taxes | $ | 7,898 | $ | 5,268 | $ | 1,547 |
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Current: | ||||||||||||
Federal | $ | 7,639 | $ | 4,110 | $ | 1,138 | ||||||
State | 1,536 | 752 | 260 | |||||||||
Foreign | (9 | ) | 26 | 102 | ||||||||
Total current | 9,166 | 4,888 | 1,500 | |||||||||
Tax benefit on acquired net operating loss carryforward | 488 | 385 | 246 | |||||||||
Tax benefit (expense) from stock option exercises and restricted stock vesting | (922 | ) | 6,889 | 6,554 | ||||||||
Deferred: | ||||||||||||
Federal | (1,304 | ) | (668 | ) | (902 | ) | ||||||
State | (137 | ) | (70 | ) | (116 | ) | ||||||
Total deferred | (1,441 | ) | (738 | ) | (1,018 | ) | ||||||
Total provision for income taxes | $ | 7,291 | $ | 11,424 | $ | 7,282 |
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2008 | 2007 | 2006 | 2011 | 2010 | 2009 | |||||||||||||||||||
Domestic | $ | 16,879 | $ | 27,640 | $ | 16,565 | $ | 17,614 | $ | 9,770 | $ | 2,995 | ||||||||||||
Foreign | 412 | 14 | 284 | 1,031 | 1,978 | 15 | ||||||||||||||||||
Total | $ | 17,291 | $ | 27,654 | $ | 16,849 | $ | 18,645 | $ | 11,748 | $ | 3,010 |
December 31, | ||||||||
2011 | 2010 | |||||||
Deferred tax assets: | ||||||||
Current deferred tax assets: | ||||||||
Accrued liabilities | $ | 568 | $ | 539 | ||||
Net operating losses | 385 | 273 | ||||||
Bad debt reserve | 297 | 260 | ||||||
Net current deferred tax assets | $ | 1,250 | $ | 1,072 |
December 31, | ||||||||
2008 | 2007 | |||||||
Deferred tax assets: | (In thousands) | |||||||
Current deferred tax assets: | ||||||||
Accrued liabilities | $ | 435 | $ | 384 | ||||
Net operating losses | 475 | 273 | ||||||
Bad debt reserve | 878 | 511 | ||||||
1,788 | 1,168 | |||||||
Valuation allowance | (31 | ) | (24 | ) | ||||
Net current deferred tax assets | $ | 1,757 | $ | 1,144 | ||||
Non-current deferred tax assets: | ||||||||
Net operating losses and capital loss | $ | 1,985 | $ | 2,380 | ||||
Fixed assets | 329 | 169 | ||||||
Deferred compensation | 1,654 | 1,031 | ||||||
3,968 | 3,580 | |||||||
Valuation allowance | (109 | ) | (106 | ) | ||||
Net non-current deferred tax assets | $ | 3,859 | $ | 3,474 |
December 31, | ||||||||
2008 | 2007 | |||||||
Deferred tax liabilities: | (In thousands) | |||||||
Current deferred tax liabilities: | ||||||||
Deferred income | $ | 302 | $ | 307 | ||||
Prepaid expenses | 419 | -- | ||||||
Net current deferred tax liabilities | $ | 721 | $ | 307 | ||||
Non-current deferred tax liabilities: | ||||||||
Deferred income | $ | 84 | $ | 402 | ||||
Deferred compensation | 244 | 214 | ||||||
Intangibles | 3,510 | 4,407 | ||||||
Total non-current deferred tax liabilities | $ | 3,838 | $ | 5,023 | ||||
Net current deferred tax asset | $ | 1,036 | $ | 837 | ||||
Net non-current deferred tax asset (liability) | $ | 21 | $ | (1,549 | ) |
December 31, | ||||||||
2011 | 2010 | |||||||
Non-current deferred tax assets: | ||||||||
Net operating losses and capital loss | $ | 1,873 | $ | 1,407 | ||||
Fixed assets | -- | 183 | ||||||
Deferred compensation | 1,908 | 2,510 | ||||||
Goodwill and intangibles | 2,847 | 456 | ||||||
Accrued liabilities | 236 | 170 | ||||||
Acquisition-related costs | 295 | 152 | ||||||
Equity in undistributed foreign earnings | -- | 43 | ||||||
Net non-current deferred tax assets | $ | 7,159 | $ | 4,921 |
December 31, | ||||||||
2011 | 2010 | |||||||
Deferred tax liabilities: | ||||||||
Current deferred tax liabilities: | ||||||||
Deferred income | $ | -- | $ | 53 | ||||
Prepaid expenses | 403 | 363 | ||||||
Net current deferred tax liabilities | $ | 403 | $ | 416 | ||||
Non-current deferred tax liabilities: | ||||||||
Equity in undistributed foreign earnings | $ | 123 | $ | -- | ||||
Goodwill and intangibles | 6,832 | 5,338 | ||||||
Accrued liabilities | 34 | -- | ||||||
Fixed assets | 87 | -- | ||||||
Total non-current deferred tax liabilities | $ | 7,076 | $ | 5,338 | ||||
Net current deferred tax asset | $ | 847 | $ | 656 | ||||
Net non-current deferred tax asset (liability) | $ | 83 | $ | (417 | ) |
Year ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Balance, beginning of year | $ | 130 | $ | 2,056 | $ | 2,345 | ||||||
Additions | 9 | 31 | -- | |||||||||
Additions/(Reductions) from purchase accounting | 2 | (1,957 | ) | (289 | ) | |||||||
Balance, end of year | $ | 141 | $ | 130 | $ | 2,056 |
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2008 | 2007 | 2006 | 2011 | 2010 | 2009 | |||||||||||||||||||
Federal corporate statutory rate | 35.0 | % | 34.3 | % | 34.3 | % | 34.6 | % | 34.2 | % | 34.0 | % | ||||||||||||
State taxes, net of federal benefit | 4.5 | 4.2 | 4.6 | 4.1 | 5.7 | 8.4 | ||||||||||||||||||
Effect of foreign operations | -- | 0.1 | -- | (0.9 | ) | (3.7 | ) | -- | ||||||||||||||||
Stock compensation | 0.9 | 1.9 | 3.6 | 1.4 | 4.5 | 7.4 | ||||||||||||||||||
Non-deductible acquisition costs | 2.1 | 1.7 | -- | |||||||||||||||||||||
Other | 1.7 | 0.8 | 0.7 | 1.1 | 2.4 | 1.6 | ||||||||||||||||||
Effective income tax rate | 42.1 | % | 41.3 | % | 43.2 | % | 42.4 | % | 44.8 | % | 51.4 | % |
Operating Leases | ||||
2012 | $ | 2,458 | ||
2013 | 2,429 | |||
2014 | 1,958 | |||
2015 | 1,482 | |||
2016 | 1,369 | |||
Thereafter | 558 | |||
Total minimum lease payments | $ | 10,254 |
Operating Leases | ||||
2009 | $ | 2,258 | ||
2010 | 2,125 | |||
2011 | 1,759 | |||
2012 | 745 | |||
2013 | 471 | |||
Thereafter | 315 | |||
Total minimum lease payments | $ | 7,673 |
December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Accounts receivable: | ||||||||
Accounts receivable | $ | 30,565 | $ | 36,894 | ||||
Unbilled revenues | 16,374 | 15,436 | ||||||
Note receivable (1) | 2,142 | -- | ||||||
Allowance for doubtful accounts | (1,497 | ) | (1,475 | ) | ||||
Total | $ | 47,584 | $ | 50,855 |
December 31, | ||||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
Accounts receivable: | ||||||||
Accounts receivable | $ | 44,438 | $ | 33,406 | ||||
Unbilled revenues | 17,511 | 15,318 | ||||||
Allowance for doubtful accounts | (1,057 | ) | (228 | ) | ||||
Total | $ | 60,892 | $ | 48,496 |
Property and Equipment: | ||||||||
Computer hardware (useful life of 3 years) | $ | 5,710 | $ | 5,064 | ||||
Leasehold improvements (useful life of 5 years) | 1,801 | 1,159 | ||||||
Software (useful life of 1 year) | 1,494 | 1,287 | ||||||
Furniture and fixtures (useful life of 5 years) | 1,474 | 1,160 | ||||||
Less: Accumulated depreciation | (6,989 | ) | (6,315 | ) | ||||
Total | $ | 3,490 | $ | 2,355 |
Other current liabilities: | ||||||||
Accrued variable compensation | $ | 6,998 | $ | 8,456 | ||||
Payroll related costs | 2,504 | 1,986 | ||||||
Accrued subcontractor fees | 2,392 | 2,631 | ||||||
Estimated fair value of contingent consideration liability (Note 7) | 2,377 | 3,339 | ||||||
Deferred revenues | 1,041 | 1,121 | ||||||
Accrued medical claims expense | 902 | 810 | ||||||
Acquired liabilities | 239 | 2,244 | ||||||
Other current liabilities | 2,030 | 2,067 | ||||||
Total | $ | 18,483 | $ | 22,654 |
Other non-current liabilities: | ||||||||
Deferred compensation liability | $ | 1,141 | $ | 1,162 | ||||
Deferred income taxes | 309 | 417 | ||||||
Other non-current liabilities | 11 | 209 | ||||||
Total | $ | 1,461 | $ | 1,788 |
December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Other current assets: | ||||||||
Income tax receivable | $ | 1,558 | $ | 1,174 | ||||
Deferred tax asset | 1,036 | 837 | ||||||
Other current assets | 563 | 2,131 | ||||||
Total | $ | 3,157 | $ | 4,142 | ||||
Other current liabilities: | ||||||||
Accrued bonus | $ | 5,644 | $ | 9,378 | ||||
Accrued subcontractor fees | 1,625 | 2,399 | ||||||
Deferred revenues | 1,575 | 1,439 | ||||||
Payroll related costs | 1,495 | 1,862 | ||||||
Accrued settlement (2) | 800 | -- | ||||||
Accrued reimbursable expenses | 671 | 788 | ||||||
Accrued medical claims expense | 654 | 850 | ||||||
Other accrued expenses | 1,875 | 2,005 | ||||||
Total | $ | 14,339 | $ | 18,721 |
Property and Equipment: | ||||||||
Computer hardware (useful life of 2 years) | $ | 6,206 | $ | 5,805 | ||||
Furniture and fixtures (useful life of 5 years) | 1,406 | 1,248 | ||||||
Leasehold improvements (useful life of 5 years) | 969 | 884 | ||||||
Software (useful life of 1 year) | 1,216 | 920 | ||||||
Less: Accumulated depreciation | (7,452 | ) | (5,631 | ) | ||||
Total | $ | 2,345 | $ | 3,226 |
Year ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Balance, beginning of year | $ | 1,475 | $ | 707 | $ | 367 | ||||||
Charged to expense | 1,822 | 1,060 | 264 | |||||||||
Additions (reductions) resulting from purchase accounting | (203 | ) | 153 | 371 | ||||||||
Uncollected balances written off, net of recoveries | (1,597 | ) | (445 | ) | (295 | ) | ||||||
Balance, end of year | $ | 1,497 | $ | 1,475 | $ | 707 |
Year ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Balance, beginning of year | $ | 228 | $ | 315 | $ | 1,497 | ||||||
Charges (reductions) to expense | 1,037 | (68 | ) | (448 | ) | |||||||
Uncollected balances written off, net of recoveries | (208 | ) | (19 | ) | (734 | ) | ||||||
Balance, end of year | $ | 1,057 | $ | 228 | $ | 315 |
Three Months Ended, | ||||||||||||||||
March 31, 2011 | June 30, 2011 | September 30, 2011 | December 31, 2011 | |||||||||||||
(Unaudited) | ||||||||||||||||
Total revenues | $ | 56,245 | $ | 65,587 | $ | 70,174 | $ | 70,433 | ||||||||
Gross margin | $ | 16,289 | $ | 21,222 | $ | 22,317 | $ | 21,306 | ||||||||
Income from operations | $ | 3,054 | $ | 4,881 | $ | 5,717 | $ | 4,940 | ||||||||
Income before income taxes | $ | 3,036 | $ | 4,888 | $ | 5,729 | $ | 4,992 | ||||||||
Net income | $ | 1,793 | $ | 2,767 | $ | 3,466 | $ | 2,721 | ||||||||
Basic net income per share | $ | 0.07 | $ | 0.10 | $ | 0.12 | $ | 0.10 | ||||||||
Diluted net income per share | $ | 0.06 | $ | 0.10 | $ | 0.12 | $ | 0.09 |
Three Months Ended, | ||||||||||||||||
March 31, 2010 | June 30, 2010 | September 30, 2010 | December 31, 2010 | |||||||||||||
(Unaudited) | ||||||||||||||||
Total revenues | $ | 48,915 | $ | 55,460 | $ | 54,648 | $ | 55,929 | ||||||||
Gross margin | $ | 13,419 | $ | 16,952 | $ | 16,451 | $ | 15,945 | ||||||||
Income from operations | $ | 1,542 | $ | 3,270 | $ | 3,531 | $ | 3,174 | ||||||||
Income before income taxes | $ | 1,575 | $ | 3,303 | $ | 3,599 | $ | 3,271 | ||||||||
Net income | $ | 868 | $ | 2,051 | $ | 2,253 | $ | 1,308 | ||||||||
Basic net income per share | $ | 0.03 | $ | 0.08 | $ | 0.08 | $ | 0.05 | ||||||||
Diluted net income per share | $ | 0.03 | $ | 0.07 | $ | 0.08 | $ | 0.05 |
Three Months Ended, | ||||||||||||||||
March 31, 2008 | June 30, 2008 | September 30, 2008 | December 31, 2008 | |||||||||||||
(Unaudited) | ||||||||||||||||
Revenues: | ||||||||||||||||
Services | $ | 52,100 | $ | 53,632 | $ | 52,510 | $ | 49,238 | ||||||||
Software and hardware | 1,684 | 2,098 | 2,290 | 4,641 | ||||||||||||
Reimbursable expenses | 3,539 | 3,370 | 3,506 | 2,880 | ||||||||||||
Total revenues | $ | 57,323 | $ | 59,100 | $ | 58,306 | $ | 56,759 | ||||||||
Gross margin | $ | 17,562 | $ | 20,139 | $ | 19,176 | 16,625 | |||||||||
Income from operations | $ | 5,047 | $ | 6,802 | $ | 4,402 | $ | 1,427 | ||||||||
Income before income taxes | $ | 5,203 | $ | 6,793 | $ | 3,677 | $ | 1,618 | ||||||||
Net income | $ | 3,076 | $ | 3,989 | $ | 2,176 | $ | 759 | ||||||||
Basic net income per share | $ | 0.10 | $ | 0.13 | $ | 0.07 | $ | 0.03 | ||||||||
Diluted net income per share | $ | 0.10 | $ | 0.13 | $ | 0.07 | $ | 0.03 |
Three Months Ended, | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2007 | 2007 | 2007 | 2007 | |||||||||||||
(Unaudited) | ||||||||||||||||
Revenues: | ||||||||||||||||
Services | $ | 43,297 | $ | 45,961 | $ | 48,387 | $ | 53,750 | ||||||||
Software | 4,192 | 3,696 | 1,582 | 4,773 | ||||||||||||
Reimbursable expenses | 2,560 | 2,938 | 3,115 | 3,897 | ||||||||||||
Total revenues | $ | 50,049 | $ | 52,595 | $ | 53,084 | $ | 62,420 | ||||||||
Gross margin | $ | 17,052 | $ | 18,185 | $ | 19,046 | $ | 21,407 | ||||||||
Income from operations | $ | 5,570 | $ | 6,907 | $ | 7,569 | $ | 7,416 | ||||||||
Income before income taxes | $ | 5,575 | $ | 6,958 | $ | 7,649 | $ | 7,472 | ||||||||
Net income | $ | 3,160 | $ | 4,014 | $ | 4,541 | $ | 4,515 | ||||||||
Basic net income per share | $ | 0.12 | $ | 0.15 | $ | 0.16 | $ | 0.15 | ||||||||
Diluted net income per share | $ | 0.11 | $ | 0.13 | $ | 0.15 | $ | 0.15 |
Item 9. | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure. |
Item 9A. | Controls and Procedures. |
Item 9B. | Other Information. |
Item 10. | Directors, Executive Officers and Corporate Governance. |
Name | Age | Position | |||
Paul E. Martin | Chief Financial Officer, Treasurer and Secretary | ||||
Item 11. | Executive Compensation. |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
Item 13. | Certain Relationships and Related Transactions, and Director Independence. |
Item 14. | Principal Accounting Fees and Services. |
Item 15. | Exhibits, Financial Statement Schedules. |
Financial Statements |
Index | Page(s) | |||
Consolidated Balance Sheets | ||||
Consolidated Statements of | ||||
Consolidated Statements of Changes in | ||||
Consolidated Statements of Cash Flows | ||||
Notes to Consolidated Financial Statements | ||||
2. | Financial Statement Schedules |
3. | Exhibits |
PERFICIENT, INC. | ||
By: | /s/ Paul E. Martin | |
Date: March | Paul E. Martin | |
Chief Financial Officer |
Signature | Title | Date | |||
/s/ | Director, President and Chief Executive Officer | March 1, 2012 | |||
Jeffrey S. Davis | (Principal Executive Officer) | ||||
/s/ Paul E. Martin | Chief | March | |||
/s/ Ralph C. Derrickson | Director | March | |||
Ralph C. Derrickson | |||||
/s/ | Director | March | |||
/s/ John S. Hamlin | Director | March 1, 2012 | |||
John S. Hamlin | |||||
/s/ | Director | March | |||
/s/ David S. Lundeen | Director | March | |||
David S. Lundeen | |||||
/s/ David D. May | Director | March 1, 2012 | |||
David D. May |
Exhibit Number | Description | ||
3.1 | |||
Certificate of Incorporation of Perficient, Inc., previously filed with the Securities and Exchange Commission as an Exhibit to our Registration Statement on Form SB-2 (File No. 333-78337) declared effective on July 28, 1999 by the Securities and Exchange Commission and incorporated herein by reference | |||
3.2 | Certificate of Amendment to Certificate of Incorporation of Perficient, Inc., previously filed with the Securities and Exchange Commission as an Exhibit to our Form 8-A filed with the Securities and Exchange Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 on February 15, 2005 and incorporated herein by reference | ||
3.3 | Certificate of Amendment to Certificate of Incorporation of Perficient, Inc., previously filed with the Securities and Exchange Commission as an Exhibit to our Registration Statement on Form S-8 (File No. 333-130624) filed on December 22, 2005 and incorporated herein by reference | ||
3.4 | Bylaws of Perficient, Inc., previously filed with the Securities and Exchange Commission as an Exhibit to our Current Report on Form 8-K filed November 9, 2007 and incorporated herein by reference | ||
4.1 | Specimen Certificate for shares of Perficient, Inc. common stock, previously filed with the Securities and Exchange Commission as an Exhibit to our | ||
4.2 | Form of Common Stock Purchase Warrant, previously filed with the Securities and Exchange Commission as an Exhibit to our Current Report on Form 8-K (File No.001-15169) filed on January 17, 2002 and incorporated herein by reference | ||
10.1† | Perficient, Inc. Amended and Restated 1999 Stock Option/Stock Issuance Plan, previously filed with the Securities and Exchange Commission as an Exhibit to our | ||
10.2† | Perficient, Inc. 2009 Long-Term Incentive Plan, as amended, previously filed with the Securities and Exchange Commission as an Exhibit to our Current Report on Form 8-K filed February 25, 2010 and incorporated herein by reference | ||
10.3† | Form of Stock Option Agreement, previously filed with the Securities and Exchange Commission as an Exhibit to our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004 and incorporated herein by reference | ||
10.4† | Perficient, Inc. Employee Stock Purchase Plan, previously filed with the Securities and Exchange Commission as Appendix A to the Registrant's Schedule 14A (File No. 001-15169) on October 13, 2005 and incorporated herein by reference | ||
10.5† | Form of Restricted Stock Agreement, previously filed with the Securities and Exchange Commission as an Exhibit to our | ||
10.6† | Form of |
Employment Agreement between Perficient, Inc. and | ||
10.8† | ||
Employment Agreement between Perficient, Inc. and Jeffrey S. Davis dated | ||
Exhibit Number | | |
Description | ||
Amended and Restated |
21.1* | |||
Subsidiaries | |||
23.1* | Consent of KPMG LLP | ||
24.1* | Power of Attorney (included on the signature page hereto) | ||
31.1* | Certification by the Chief Executive Officer of Perficient, Inc. as required by Section 302 of the Sarbanes-Oxley Act of 2002 | ||
31.2* | Certification by the Chief Financial Officer of Perficient, Inc. as required by Section 302 of the Sarbanes-Oxley Act of 2002 | ||
32.1* | Certification by the Chief Executive Officer and Chief Financial Officer of Perficient, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
† | Identifies an Exhibit that consists of or includes a management contract or compensatory plan or arrangement. |
* | Filed herewith. |