Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Feb. 25, 2015 | Jun. 30, 2014 |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | EDGW | ||
Entity Registrant Name | EDGEWATER TECHNOLOGY INC/DE/ | ||
Entity Central Index Key | 1017968 | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 11,467,206 | ||
Entity Public Float | $77.60 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $26,768 | $20,321 |
Accounts receivable, net of allowance of $150 | 24,654 | 19,842 |
Deferred tax assets, net | 1,196 | 1,175 |
Prepaid expenses and other current assets | 1,053 | 936 |
Total current assets | 53,671 | 42,274 |
Property and equipment, net | 1,029 | 1,437 |
Intangible assets, net | 480 | 956 |
Goodwill | 12,049 | 12,049 |
Deferred tax assets, net | 25,974 | 29,097 |
Other assets | 210 | 254 |
Total assets | 93,413 | 86,067 |
Current liabilities: | ||
Accounts payable | 315 | 680 |
Accrued liabilities | 16,142 | 14,326 |
Deferred revenue | 1,516 | 1,715 |
Total current liabilities | 17,973 | 16,721 |
Other liabilities | 411 | 760 |
Total liabilities | 18,384 | 17,481 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value; 2,000 shares authorized, no shares issued or outstanding | ||
Common stock, $0.01 par value; 48,000 shares authorized, 29,736 shares issued and 11,440 and 11,049 shares outstanding as of December 31, 2014 and 2013, respectively | 297 | 297 |
Paid-in capital | 210,989 | 211,852 |
Treasury stock, at cost, 18,296 and 18,687 shares at December 31, 2014 and 2013, respectively | -119,878 | -123,186 |
Accumulated other comprehensive loss | -220 | -154 |
Accumulated deficit | -16,159 | -20,223 |
Total stockholders' equity | 75,029 | 68,586 |
Total liabilities and stockholders' equity | $93,413 | $86,067 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $150 | $150 |
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 48,000,000 | 48,000,000 |
Common stock, shares issued | 29,736,000 | 29,736,000 |
Common stock, shares outstanding | 11,440,000 | 11,049,000 |
Treasury stock, shares | 18,296,000 | 18,687,000 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenue: | |||
Service revenue | $96,604 | $84,616 | $83,137 |
Software revenue | 8,118 | 11,587 | 10,190 |
Reimbursable expenses | 8,267 | 7,353 | 7,554 |
Total revenue | 112,989 | 103,556 | 100,881 |
Cost of revenue: | |||
Project and personnel costs | 58,912 | 52,741 | 51,594 |
Software costs | 4,444 | 5,890 | 6,454 |
Reimbursable expenses | 8,267 | 7,353 | 7,554 |
Total cost of revenue | 71,623 | 65,984 | 65,602 |
Gross profit | 41,366 | 37,572 | 35,279 |
Operating expenses: | |||
Selling, general and administrative | 33,016 | 31,636 | 31,563 |
Depreciation and amortization | 928 | 1,225 | 1,801 |
Total operating expenses | 33,944 | 32,861 | 33,364 |
Operating income | 7,422 | 4,711 | 1,915 |
Other expense, net | 181 | 92 | 67 |
Income before income taxes | 7,241 | 4,619 | 1,848 |
Tax provision (benefit) | 3,177 | -30,089 | 401 |
Net income | 4,064 | 34,708 | 1,447 |
Comprehensive income: | |||
Currency translation adjustment | -66 | -31 | -24 |
Total comprehensive income | $3,998 | $34,677 | $1,423 |
Income per share: | |||
Basic net income per share of common stock | $0.37 | $3.21 | $0.13 |
Diluted net income per share of common stock | $0.31 | $2.88 | $0.13 |
Shares used in computing basic net income per share of common stock | 11,131 | 10,813 | 11,180 |
Shares used in computing diluted net income per share of common stock | 13,090 | 12,031 | 11,589 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Total | Common Stock [Member] | Paid-in Capital [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained (Deficit) [Member] |
In Thousands | ||||||
BALANCE at Dec. 31, 2011 | $31,713 | $297 | $213,282 | ($125,389) | ($99) | ($56,378) |
BALANCE, Shares at Dec. 31, 2011 | 29,736 | -18,425 | ||||
Issuance of common stock related to employee stock plans | 763 | -1,463 | 2,226 | |||
Issuance of common stock related to employee stock plans, Shares | 280 | |||||
Repurchases of common stock | -2,643 | -2,643 | ||||
Repurchases of common stock, Shares | -694 | |||||
Share-based compensation expense | 1,419 | 1,419 | ||||
Currency translation adjustment | -24 | -24 | ||||
Net income | 1,447 | 1,447 | ||||
BALANCE at Dec. 31, 2012 | 32,675 | 297 | 213,238 | -125,806 | -123 | -54,931 |
BALANCE, Shares at Dec. 31, 2012 | 29,736 | -18,839 | ||||
Issuance of common stock related to employee stock plans | 1,278 | -2,855 | 4,133 | |||
Issuance of common stock related to employee stock plans, Shares | 517 | |||||
Repurchases of common stock | -1,513 | -1,513 | ||||
Repurchases of common stock, Shares | 365 | -365 | ||||
Share-based compensation expense | 1,469 | 1,469 | ||||
Currency translation adjustment | -31 | -31 | ||||
Net income | 34,708 | 34,708 | ||||
BALANCE at Dec. 31, 2013 | 68,586 | 297 | 211,852 | -123,186 | -154 | -20,223 |
BALANCE, Shares at Dec. 31, 2013 | 29,736 | -18,687 | ||||
Issuance of common stock related to employee stock plans | 1,900 | -2,375 | 4,275 | |||
Issuance of common stock related to employee stock plans, Shares | 534 | |||||
Repurchases of common stock | -967 | -967 | ||||
Repurchases of common stock, Shares | 143 | -143 | ||||
Share-based compensation expense | 1,512 | 1,512 | ||||
Currency translation adjustment | -66 | -66 | ||||
Net income | 4,064 | 4,064 | ||||
BALANCE at Dec. 31, 2014 | $75,029 | $297 | $210,989 | ($119,878) | ($220) | ($16,159) |
BALANCE, Shares at Dec. 31, 2014 | 29,736 | -18,296 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $4,064,000 | $34,708,000 | $1,447,000 |
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisitions: | |||
Depreciation and amortization | 1,141,000 | 1,552,000 | 1,957,000 |
Provision for doubtful accounts | -100,000 | -50,000 | |
Deferred income taxes | 3,102,000 | -30,358,000 | -28,000 |
Share-based compensation | 1,512,000 | 1,469,000 | 1,419,000 |
Excess tax benefits from stock options | -43,000 | 31,000 | |
Lease abandonment | -400,000 | ||
Loss on disposal of fixed assets | 0 | 9,000 | 0 |
Change in fair value of contingent earn out consideration | -231,000 | ||
Changes in operating accounts: | |||
Accounts receivable | -4,838,000 | -1,508,000 | 5,046,000 |
Prepaid expenses and other current assets | -119,000 | 476,000 | -660,000 |
Other assets | 44,000 | -5,000 | -11,000 |
Accounts payable | -364,000 | 87,000 | -1,265,000 |
Accrued liabilities | 1,867,000 | -374,000 | -188,000 |
Deferred revenue | -198,000 | -1,254,000 | 1,400,000 |
Net cash provided by operating activities | 5,768,000 | 4,733,000 | 8,836,000 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Acquisition of intellectual property | -200,000 | ||
Capitalization of product development costs | -40,000 | -296,000 | -235,000 |
Purchases of property and equipment | -220,000 | -311,000 | -357,000 |
Net cash used in investing activities | -260,000 | -807,000 | -592,000 |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Payments on capital leases | -52,000 | ||
Proceeds from employee stock purchase plans and stock option exercises | 1,900,000 | 1,278,000 | 763,000 |
Excess tax benefits from stock options | 43,000 | -31,000 | |
Repurchases of common stock | -967,000 | -1,513,000 | -2,643,000 |
Net cash provided by (used in) financing activities | 976,000 | -266,000 | -1,932,000 |
Effects of exchange rates on cash | -35,000 | 10,000 | 6,000 |
Net increase in cash and cash equivalents | 6,447,000 | 3,670,000 | 6,318,000 |
CASH AND CASH EQUIVALENTS, beginning of period | 20,321,000 | 16,651,000 | 10,333,000 |
CASH AND CASH EQUIVALENTS, end of period | 26,768,000 | 20,321,000 | 16,651,000 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||
Interest paid | 16,000 | ||
Cash paid for income taxes | 606,000 | 266,000 | 549,000 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||
Issuance of restricted stock awards | $678,000 | $1,051,000 |
Nature_of_Business_and_Basis_o
Nature of Business and Basis of Presentation | 12 Months Ended | |
Dec. 31, 2014 | ||
Accounting Policies [Abstract] | ||
Nature of Business and Basis of Presentation | 1 | NATURE OF BUSINESS AND BASIS OF PRESENTATION: |
Edgewater Technology, Inc. (“Edgewater”, the “Company”, “we”, or “our”) is a strategic consulting firm that brings a synergistic blend of classic consulting and product-based consulting services to its customer base. Headquartered in Wakefield, Massachusetts, we typically go to market both vertically by industry and horizontally by product and technology specialty and provide our customers with a wide range of business and technology offerings. We work with customers, primarily within North America, to reduce costs, improve process and increase revenue through the judicious use of technology. As a result, substantially all our revenue and assets are in North America. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Summary of Significant Accounting Policies | 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |||||||||||
The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes. | |||||||||||||
Basis of Presentation – | |||||||||||||
The consolidated financial statements include the accounts of Edgewater and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation. | |||||||||||||
The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The Company did not identify any recognizable events during this period. | |||||||||||||
Use of Estimates – | |||||||||||||
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. These accounting principles require management to make certain estimates, judgments and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. These estimates, judgments and assumptions used in preparing the accompanying consolidated financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements. Although the Company regularly assesses these estimates, judgments and assumptions used in preparing these consolidated financial statements, actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known. | |||||||||||||
Cash and Cash Equivalents – | |||||||||||||
Cash and cash equivalent balances consist of deposits and investments in money market funds. All highly liquid investments with remaining maturities of three months or less at the date of purchase are considered cash equivalents. The Company’s cash equivalents consisted of $4.1 million in money market funds as of December 31, 2014 and 2013. | |||||||||||||
Property and Equipment – | |||||||||||||
Property and equipment are stated at cost, net of accumulated depreciation and amortization. Property and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets, which range from three to ten years. Additions that extend the lives of the assets are capitalized, while repairs and maintenance costs are expensed as incurred. | |||||||||||||
Product Development Costs – | |||||||||||||
The Company periodically develops software modules to be used within the Microsoft Dynamics AX environment. Capitalization of qualified software development costs begins upon the establishment of technological feasibility. Amortization of capitalized software development costs, which is recorded as a component of cost of revenue, is provided on a product-by-product basis, beginning upon commercial release of the product, and continuing over the remaining estimated economic life of the product, not to exceed three years. At each balance sheet date, the Company evaluates the unamortized capitalized software development costs for potential impairment by comparing the net unamortized balance to the net realizable value of the products. The Company capitalized a total of $40 thousand and $493 thousand in software development costs during the years ended December 31, 2014 and 2013, respectively. Amortization expense of $214 thousand, $327 thousand and $156 thousand has been recorded (within software costs on the consolidated statements of comprehensive income) during the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||||||
Impairment of Long-Lived Assets – | |||||||||||||
The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Impairment is generally assessed by a comparison of cash flows expected to be generated by an asset to its carrying value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. | |||||||||||||
Goodwill and Intangible Assets – | |||||||||||||
Goodwill has an indefinite useful life and is not amortized but is evaluated for impairment annually (the “Annual Impairment Test”) or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Intangible assets consist primarily of non-compete arrangements, customer relationships and trade names and trademarks. Intangible assets that have finite lives are amortized using either the straight-line method or based on estimated future cash flows to approximate the pattern in which the economic benefit of the asset will be utilized. Amortization is recorded over the estimated useful lives ranging from 1.5 to 7.5 years and is further described in Note 6. | |||||||||||||
The Company engages in business activities in one reportable segment, which combines management consulting, technical knowledge, and enterprise management solutions to develop custom technology and business process solutions. The Company has three reporting units (operating segments) for purposes of its allocation of goodwill and performance of its impairment evaluation. The Company aggregates our three individual reporting units into one reportable segment based upon similar economic characteristics and other operating similarities. | |||||||||||||
Goodwill is tested for impairment annually at the reporting unit level utilizing the “fair value” methodology. The annual measurement date is December 2. Factors the Company considers important that could trigger an interim review for impairment include, but are not limited to, the following: | |||||||||||||
¡ | Significant under-performance relative to historical or projected future operating results; | ||||||||||||
¡ | Significant changes in the manner of its use of acquired assets or the strategy for its overall business; | ||||||||||||
¡ | Significant negative industry or economic trends; | ||||||||||||
¡ | Significant decline in its stock price for a sustained period; and | ||||||||||||
¡ | Its market capitalization relative to net book value. | ||||||||||||
Goodwill is evaluated for impairment using a two-step process. The first step is to compare the fair value of the reporting unit to the carrying amount of the reporting unit (the “First Step”). If the carrying amount exceeds the fair value, a second step must be followed to calculate potential impairment (the “Second Step”). Otherwise, if the fair value of the reporting unit exceeds the carrying amount, the goodwill is not considered to be impaired as of the measurement date. In its review of the carrying value of the goodwill, the Company determines fair values for the reporting unit using the Income Approach, or more specifically the Discounted Cash Flow Method, and the Market Approach, utilizing the Guideline Company Method. These valuation methods require management to project revenues, operating expenses, working capital investment, capital spending and cash flows for the reporting unit over a multi-year period, as well as determine the weighted average cost of capital to be used as a discount rate. The 2014 analysis confirmed that fair values exceeded carrying values, and therefore no impairment existed, and accordingly, a second step analysis was not deemed necessary. | |||||||||||||
Revenue Recognition – | |||||||||||||
Our Company recognizes revenue primarily through the provision of consulting services and the resale of third-party, off the shelf software and maintenance. | |||||||||||||
We recognize revenue by providing consulting services under written service contracts with our customers. The service contracts we enter into generally fall into three specific categories: time and materials, fixed-price and retainer. | |||||||||||||
We consider amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable and collectability is reasonably assured. We establish billing terms at the time at which the project deliverables and milestones are agreed. Our standard payment terms are 30 days from invoice date. Out-of-pocket reimbursable expenses charged to customers are reflected as revenue. | |||||||||||||
When a customer enters into a time and materials, fixed-price or a periodic retainer-based contract, the Company recognizes revenue in accordance with its evaluation of the deliverables in each contract. If the deliverables represent separate units of accounting, the Company then measures and allocates the consideration from the arrangement to the separate units, based on vendor specific objective evidence (“VSOE”) of the value for each deliverable. | |||||||||||||
The revenue under time and materials contracts is recognized as services are rendered and performed at contractually agreed upon rates. Revenue pursuant to fixed-price contracts is recognized under the proportional performance method of accounting. We routinely evaluate whether revenue and profitability should be recognized in the current period. We estimate the proportional performance on our fixed-price contracts on a monthly basis utilizing hours incurred to date as a percentage of total estimated hours to complete the project. This method is used because reasonably dependable estimates of costs and revenue earned can be made, based on historical experience and milestones identified in any particular contract. If we do not have a sufficient basis to measure progress toward completion, revenue is recognized upon completion of performance, subject to any warranty provisions or other project management assessments as to the status of work performed. | |||||||||||||
Estimates of total project costs are continuously monitored during the term of an engagement. There are situations where the number of hours to complete projects may exceed our original estimate, as a result of an increase in project scope, unforeseen events that arise, or the inability of the client or the delivery team to fulfill their responsibilities. Accordingly, recorded revenues and costs are subject to revision throughout the life of a project based on current information and historical trends. Such revisions may result in increases or decreases to revenue and income and are reflected in the consolidated financial statements in the periods in which they are first identified. | |||||||||||||
If our initial estimates of the resources required or the scope of work to be performed on a contract are inaccurate, or we do not manage the project properly within the planned time period, a provision for estimated losses on incomplete projects is made. Any known or probable losses on projects are charged to operations in the period in which such losses are determined. A formal project review process takes place quarterly, although projects are evaluated on an ongoing basis. Management reviews the estimated total direct costs on each contract to determine if the estimated amounts are accurate, and estimates are adjusted as needed in the period identified. No losses were recognized on contracts during the years ended December 31, 2014, 2013 or 2012. | |||||||||||||
We also perform services on a periodic retainer basis under infrastructure service contracts, which include monthly hosting and support services. Revenue under periodic retainer-based contracts is recognized ratably over the contract period, as outlined within the respective contract. In the event additional services are required, above the minimum retained or contracted amount, then such services are billed on a time and materials basis. | |||||||||||||
Typically, the Company provides warranty services on its fixed-price contracts related to providing customers with the ability to have any “design flaws” remedied and/or have our Company “fix” routine defects. The warranty services, as outlined in the respective contracts, are provided for a specific period of time after a project is complete. The Company values the warranty services based upon historical labor hours incurred for similar services at standard billing rates. Revenue related to the warranty provisions within our fixed-price contracts is recognized as the services are performed or the revenue is earned. The warranty period is typically for a 30-60 day period after the project is complete. | |||||||||||||
Customer prepayments, even if nonrefundable, are deferred (classified as deferred revenue) and recognized over future periods as services are performed. | |||||||||||||
Software revenue represents the resale of certain third-party off-the-shelf software and maintenance and is recorded on a gross basis provided we act as a principal in the transaction, which we have determined based upon several factors including, but not limited to, the fact that we have credit risk and we set the price to the end user. In the event we do not meet the requirements to be considered a principal in the software sale transaction and act as an agent, software revenue will be recorded on a net basis. | |||||||||||||
Prior to the second quarter of 2013, we recorded substantially all of our software resale revenue on a gross basis (reporting the revenue and cost from the transaction in our consolidated statement of comprehensive income). However, beginning in the second quarter of 2013, due to changes in the nature of the terms of certain of our Microsoft Dynamics AX software resale arrangements (primarily the risk of credit loss and ability to establish pricing), we began to recognize a portion of our software resale revenue on a net basis (reporting only the net profit from the transaction as revenue in our consolidated statement of comprehensive income). | |||||||||||||
The majority of the software sold by the Company is delivered electronically. For software that is delivered electronically, we consider delivery to have occurred when the customer either (a) takes possession of the software via a download (that is, when the customer takes possession of the electronic data on its hardware), or (b) has been provided with access codes that allow the customer to take immediate possession of the software on its hardware pursuant to an agreement or purchase order for the software. | |||||||||||||
The Company enters into multiple element arrangements which typically include software, post-contract support (or maintenance), and consulting services. Consistent with the software described above, maintenance that is in the form of a pass through transaction is recognized upon delivery of the software, as all related warranty and maintenance is performed by the primary software vendor and not the Company. Maintenance fee revenue for the Company’s software products, which is inconsequential in all years presented, is recognized ratably over the term of the arrangements, which are generally for a one-year period. The Company has established VSOE with respect to the services provided based on the price charged when the services are sold separately. The Company has established VSOE for maintenance based upon the stated renewal rate. | |||||||||||||
A significant amount of our 2013 software revenue is associated with the recognition of PI2 license revenue. In June 2012, Microsoft purchased the Company’s internally developed PI2 software and intellectual property (the “PI2 Solution”) for an aggregate purchase price of $3.25 million. The sale of the PI2 Solution was a significant multiple element contract. This contract includes $3.25 million of license consideration and subsequent development and training services. At the time of the sale, we determined that the license did not have stand-alone value without the services, and accordingly we accounted for the license and related services as one unit. Since June 2012, we have recognized the license revenue over the period the expected services are to be performed. | |||||||||||||
We perform routine periodic reviews of our current and expected performance against the service contracts in connection with our PI2 revenue recognition procedures. The Company recognized $2.5 million and $788 thousand in PI2-related software revenue during the years ended December 31, 2013 and 2012, respectively. As of December 31, 2013, there was no future PI2-related software revenue expected to be recognized as the Company had completed all deliverables required under the associated Microsoft services contracts. | |||||||||||||
Allowance for Doubtful Accounts – | |||||||||||||
The Company maintains an allowance for doubtful accounts related to its accounts receivable that have been deemed to have a high risk of uncollectability. Management reviews its accounts receivable balances on a monthly basis to determine if any receivables are potentially uncollectible. Management further analyzes historical collection trends and changes in its customer payment patterns, customer concentration and credit worthiness when evaluating the adequacy of its allowance for doubtful accounts. The Company includes any accounts receivable balances that are deemed to be potentially uncollectible, along with a general reserve, in its overall allowance for doubtful accounts. | |||||||||||||
Billed and unbilled receivables that are specifically identified as being at risk are provided for with a charge to revenue or bad debts as appropriate in the period the risk is identified. | |||||||||||||
Based on the information available, management believes the allowance for doubtful accounts is adequate; however, future write-offs could exceed the recorded allowance. | |||||||||||||
Cost of Services – | |||||||||||||
Our cost of services is composed primarily of project personnel costs, including direct salaries, payroll taxes, employee benefits, contractor costs and travel expenses for personnel dedicated to customer projects. These costs represent the most significant expense we incur in providing our services. | |||||||||||||
Other Expense, Net – | |||||||||||||
The following table represents the components of other expense, net: | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(In Thousands) | |||||||||||||
Interest expense (income) | $ | 15 | $ | (2 | ) | $ | (6 | ) | |||||
Loss on foreign exchange transactions | 166 | 94 | 73 | ||||||||||
Other expense, net | $ | 181 | $ | 92 | $ | 67 | |||||||
Provision for Taxes – | |||||||||||||
In determining our current income tax provision, we assess temporary differences resulting from different treatments of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded in our consolidated balance sheets. We evaluate the realizability of our deferred tax assets and assess the need for a valuation allowance on an ongoing basis. In evaluating our deferred tax assets, we consider whether it is more likely than not that the deferred income tax assets will be realized. The ultimate realization of our deferred tax assets depends upon generating sufficient future taxable income during the periods in which our temporary differences either become deductible or expire. This assessment requires significant judgment. | |||||||||||||
Any future changes in the valuation allowance could result in additional income tax expense (benefit) and reduce or increase stockholders’ equity, and such changes could have a significant impact upon our earnings in the future. | |||||||||||||
Income tax reserves are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not realized based on the technical merits of the position. Potential interest and penalties associated with such uncertain tax position is recorded as a component of the income tax provision. | |||||||||||||
Earnings Per Share – | |||||||||||||
A reconciliation of net income and weighted average shares used in computing basic and diluted net income per share is as follows: | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(In Thousands, Except Per | |||||||||||||
Share Data) | |||||||||||||
Basic net income per share: | |||||||||||||
Net income applicable to common shares | $ | 4,064 | $ | 34,708 | $ | 1,447 | |||||||
Weighted average common shares outstanding | 11,131 | 10,813 | 11,180 | ||||||||||
Basic net income per share of common stock | $ | 0.37 | $ | 3.21 | $ | 0.13 | |||||||
Diluted net income per share: | |||||||||||||
Net income applicable to common shares | $ | 4,064 | $ | 34,708 | $ | 1,447 | |||||||
Weighted average common shares outstanding | 11,131 | 10,813 | 11,180 | ||||||||||
Dilutive effects of stock options and restricted stock awards | 1,959 | 1,218 | 409 | ||||||||||
Weighted average common shares, assuming dilutive effect of stock options | 13,090 | 12,031 | 11,589 | ||||||||||
Diluted net income per share of common stock | $ | 0.31 | $ | 2.88 | $ | 0.13 | |||||||
Share-based awards, inclusive of all grants made under the Company’s equity plans, for which either the stock option exercise price, or the fair value of the restricted share award, exceeds the average market price over the period, have an anti-dilutive effect on earnings per share, and accordingly, are excluded from the diluted computations for all periods presented. Had such shares been included, shares for the diluted computation would have increased by approximately 47 thousand, 507 thousand and 1.7 million in the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014 and 2013, there were approximately 3.9 million and 4.1 million share-based awards outstanding under the Company’s equity plans, respectively. | |||||||||||||
Fair Value of Financial Instruments – | |||||||||||||
Edgewater’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and contingent earnout accruals. The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to the relatively short-term nature of the accounts. | |||||||||||||
Concentrations of Credit Risk – | |||||||||||||
Financial instruments that potentially subject the Company to significant concentration of market or credit risk consist principally of cash equivalent instruments and accounts receivable. The Company places its cash balances with reputable financial institutions. Trade receivables potentially subject the Company to credit risk. The Company extends credit to its customers based upon an evaluation of the customer’s financial condition and credit history and generally does not require collateral. | |||||||||||||
Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. We have never experienced any losses related to these balances. | |||||||||||||
The Company has historically incurred minimal credit losses. No customer balances were in excess of 10% of the Company’s total receivables balance as of December 31, 2014 or 2013. | |||||||||||||
For the years ended December 31, 2014, 2013 and 2012, no customer represented 10% or more of the Company’s total revenue or total service revenue. For the years ended December 31, 2014, 2013 and 2012, our five largest customers represented 17.8%, 16.5% and 14.8% of our service revenue in the aggregate, respectively. | |||||||||||||
Comprehensive Income – | |||||||||||||
Other comprehensive income consists of periodic currency translation adjustments. | |||||||||||||
Share-Based Compensation – | |||||||||||||
The Company recognizes the total fair value of share-based awards as compensation expense, over the requisite employee service period (generally the vesting period of the grant). The Company has used the Black-Scholes option-pricing model to compute the estimated fair value of stock option grants on the date of the award. The Black-Scholes option-pricing model includes assumptions regarding dividend yields, expected volatility, expected option term and risk-free interest rates. The Company estimates expected volatility based upon historical volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Restricted stock awards are valued at the price of our common stock on the date of the award. | |||||||||||||
The assumptions used in computing the fair value of share-based awards reflect management’s best estimates but involve uncertainties relating to market and other conditions, many of which are outside of the Company’s control. As a result, if other assumptions or estimates had been used, the share-based compensation expense that was recorded for the years ended December 31, 2014, 2013, and 2012 could have been materially different. Furthermore, if different assumptions are used in future periods, share-based compensation expense could be materially impacted in the future. | |||||||||||||
Foreign Currency Translation — | |||||||||||||
The financial statements for Edgewater’s non-U.S. operations use the local currency as the functional currency and are translated to U.S. dollars. For assets and liabilities, the year-end rate is used. For revenues, expenses, gains and losses, the average rate for the period is used. Unrealized currency adjustments in our financial statements are accumulated in equity as a component of accumulated other comprehensive income. Realized net gains (losses) on foreign currency transactions are immaterial and are reflected in earnings. | |||||||||||||
Recent Accounting Pronouncements — | |||||||||||||
In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (ASU 2013-11). ASU 2013-11 clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. This new guidance is effective on a prospective basis for fiscal years and interim reporting periods within those years, beginning after December 15, 2013. The adoption of ASU 2013-11 did not have a material impact on our financial position, results of operations or cash flows. | |||||||||||||
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new guidance is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016; early adoption is not permitted. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance. This update could impact the timing and amounts of revenue recognized. The Company is currently evaluating the effect that implementation of this update will have on its consolidated financial position and results of operations upon adoption. | |||||||||||||
In August 2014, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (ASU 2014-15), to provide guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The adoption of ASU 2014-15 is not expected to have a material impact on our financial position, results of operations or cash flows. |
Fair_Value_Measurement
Fair Value Measurement | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Fair Value Measurement | 3 | FAIR VALUE MEASUREMENTS: | |||||||||||||||
The following valuation hierarchy is used for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: | |||||||||||||||||
¡ | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. | ||||||||||||||||
¡ | Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. | ||||||||||||||||
¡ | Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. | ||||||||||||||||
A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. | |||||||||||||||||
As of December 31, 2014 and 2013, the Company’s only financial assets and liabilities required to be measured on a recurring basis were its money market investments. | |||||||||||||||||
The following table represents the Company’s fair value hierarchy for its financial assets and liabilities required to be measured on a recurring basis: | |||||||||||||||||
Basis of Fair Value Measurements | |||||||||||||||||
Balance | Quoted Prices | Significant | Significant | ||||||||||||||
in Active Markets | Other | Unobservable | |||||||||||||||
for Identical Items | Observable | Inputs | |||||||||||||||
(Level 1) | Inputs | (Level 3) | |||||||||||||||
(Level 2) | |||||||||||||||||
(In Thousands) | |||||||||||||||||
Balance at December 31, 2014: | |||||||||||||||||
Financial assets: | |||||||||||||||||
Money market investment | $ | 4,084 | $ | 4,084 | $ | - | $ | - | |||||||||
Total financial assets | $ | 4,084 | $ | 4,084 | $ | - | $ | - | |||||||||
Balance at December 31, 2013: | |||||||||||||||||
Financial assets: | |||||||||||||||||
Money market investment | $ | 4,084 | $ | 4,084 | $ | - | $ | - | |||||||||
Total financial assets | $ | 4,084 | $ | 4,084 | $ | - | $ | - | |||||||||
The Company did not transfer any financial instruments into or out of Level 3 classification during 2014, 2013 or 2012. | |||||||||||||||||
The Company classified its liability for contingent earnout consideration related to its acquisitions of Fullscope and Meridian within Level 3 of the fair value hierarchy because the fair values are determined using significant unobservable inputs, which included probability weighted cash flows. During the year ended December 31, 2012 the Company reversed $231 of accrued contingent earnout consideration (recorded with selling, general and administrative expense on our consolidated statement of comprehensive income). The Company had no amounts recorded as Level 3 instruments as of December 31, 2014, 2013 or 2012. |
Accounts_Receivable
Accounts Receivable | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Receivables [Abstract] | |||||||||||||
Accounts Receivable | 4 | ACCOUNTS RECEIVABLE: | |||||||||||
Included in accounts receivable are unbilled amounts totaling approximately $2.4 million and $2.7 million at December 31, 2014 and 2013, respectively, which relate to services performed during the year and billed in the subsequent year. The Company maintains allowances for potential losses which management believes are adequate to absorb any probable losses to be incurred in realizing the accounts receivable amounts recorded in the accompanying consolidated financial statements. | |||||||||||||
The following are the changes in the allowance for doubtful accounts: | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(In Thousands) | |||||||||||||
Balance at beginning of year | $ | 150 | $ | 250 | $ | 300 | |||||||
Provisions for doubtful accounts | 47 | 39 | 21 | ||||||||||
Charge-offs, net of recoveries | (47 | ) | (139 | ) | (71 | ) | |||||||
Balance at end of year | $ | 150 | $ | 150 | $ | 250 | |||||||
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Property and Equipment | 5 | PROPERTY AND EQUIPMENT: | |||||||
Components of property and equipment consisted of the following: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(In Thousands) | |||||||||
Furniture, fixtures and equipment | $ | 1,553 | $ | 1,553 | |||||
Computer equipment and software | 1,210 | 1,357 | |||||||
Leasehold improvements | 3,045 | 3,058 | |||||||
5,808 | 5,968 | ||||||||
Less accumulated depreciation and amortization | (4,779 | ) | (4,531 | ) | |||||
Total | $ | 1,029 | $ | 1,437 | |||||
Depreciation expense related to property and equipment for the years ended December 31, 2014, 2013 and 2012 totaled approximately $626 thousand, $814 thousand and $837 thousand, respectively. The Company disposed of $378 thousand and $345 thousand of equipment that was no longer in use during 2014 and 2013, respectively. A loss on disposal of property and equipment of $9 thousand was recognized in the year ended December 31, 2013. No gain or loss on disposal was recognized during the years ended December 31, 2014 or 2012, respectively. |
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||
Goodwill and Intangible Assets | 6 | GOODWILL AND INTANGIBLE ASSETS: | |||||||||||||||
The changes in the carrying amount of goodwill are as follows: | |||||||||||||||||
Goodwill | |||||||||||||||||
(In Thousands) | |||||||||||||||||
Balance at January 1, 2013 | $ | 12,049 | |||||||||||||||
Adjustments to goodwill in 2013 | - | ||||||||||||||||
Balance at December 31, 2013 | 12,049 | ||||||||||||||||
Adjustments to goodwill in 2014 | - | ||||||||||||||||
Balance at December 31, 2014 | $ | 12,049 | |||||||||||||||
Cumulative goodwill impairment charges of $54.6 million (related to impairments recognized in 2002 and 2008) are reflected in the ending goodwill balance at December 31, 2014. | |||||||||||||||||
As of December 31, 2014, the net carrying amount of intangible assets consists of amounts related to business combination transactions consummated by the Company in 2009 and 2010 and capitalized internally developed software costs. | |||||||||||||||||
Other net intangibles amounted to $480 thousand and $956 thousand as of December 31, 2014 and 2013, respectively. Below is a summary of the Company’s identifiable intangible assets that are subject to amortization: | |||||||||||||||||
December 31, 2014 | |||||||||||||||||
Gross | Impairment | Accumulated | Net | ||||||||||||||
Carrying | Charges | Amortization | Carrying | ||||||||||||||
Amount | Amount | ||||||||||||||||
(In Thousands) | |||||||||||||||||
Identifiable intangibles: | |||||||||||||||||
Non-compete agreements | $ | 3,860 | $ | - | $ | 3,822 | $ | 38 | |||||||||
Customer relationships | 10,378 | - | 10,330 | 48 | |||||||||||||
Asset purchase agreement | 1,400 | - | 1,400 | - | |||||||||||||
Trade name and trademark | 600 | - | 600 | - | |||||||||||||
Capitalized product development costs | 1,139 | - | 745 | 394 | |||||||||||||
$ | 17,377 | $ | - | $ | 16,897 | $ | 480 | ||||||||||
December 31, 2013 | |||||||||||||||||
Gross | Impairment | Accumulated | Net | ||||||||||||||
Carrying | Charges | Amortization | Carrying | ||||||||||||||
Amount | Amount | ||||||||||||||||
(In Thousands) | |||||||||||||||||
Identifiable intangibles: | |||||||||||||||||
Non-compete agreements | $ | 3,860 | $ | - | $ | 3,634 | $ | 226 | |||||||||
Customer relationships | 10,378 | - | 10,239 | 139 | |||||||||||||
Asset purchase agreement | 1,400 | - | 1,400 | - | |||||||||||||
Trade name and trademark | 600 | - | 586 | 14 | |||||||||||||
Capitalized product development costs | 1,099 | - | 522 | 577 | |||||||||||||
$ | 17,337 | $ | - | $ | 16,381 | $ | 956 | ||||||||||
The intangible assets were identified and valued by the Company. The original estimated useful lives of the acquired identifiable intangible assets are as follows: | |||||||||||||||||
Non-compete agreements | 4 to 5 years | ||||||||||||||||
Customer relationships | 4 to 7.5 years | ||||||||||||||||
Asset purchase agreement | 1.5 years | ||||||||||||||||
Trade name and trademark | 5 years | ||||||||||||||||
Capitalized product development costs | 3 years | ||||||||||||||||
Intangible assets are amortized assuming no expected residual value over the periods in which the economic benefit of these assets is consumed. The weighted average amortization period for all intangible assets subject to amortization was 0.5 years, 1.5 years and 2.5 years as of December 31, 2014, 2013 and 2012, respectively. Amortization expense related to all intangible assets was $302 thousand, $738 thousand and $1.1 million in 2014, 2013 and 2012, respectively. | |||||||||||||||||
Amortization of $214 thousand, $327 thousand and $156 thousand related to capitalized software development costs were included within cost of revenue (specifically within software expense) on the consolidated statements of comprehensive income for the year ended December 31, 2014, 2013 and 2012, respectively. | |||||||||||||||||
Estimated annual amortization expense for the next five years ending December 31, which encompasses the remaining useful life of the intangible assets, is as follows: | |||||||||||||||||
Amortization | |||||||||||||||||
Expense | |||||||||||||||||
(In Thousands) | |||||||||||||||||
2015 | $ | 279 | |||||||||||||||
2016 | 190 | ||||||||||||||||
2017 | 11 | ||||||||||||||||
2018 | - | ||||||||||||||||
2019 | - | ||||||||||||||||
Accrued_Expenses_and_Other_Lia
Accrued Expenses and Other Liabilities | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | |||||||||
Accrued Expenses and Other Liabilities | 7 | ACCRUED EXPENSES AND OTHER LIABILITIES: | |||||||
Components of accrued expenses consisted of the following: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(In Thousands) | |||||||||
Accrued bonuses | $ | 4,268 | $ | 3,126 | |||||
Accrued commissions | 3,012 | 2,765 | |||||||
Accrued vacation | 2,106 | 1,983 | |||||||
Accrued payroll related liabilities | 2,055 | 1,682 | |||||||
Accrued software expense | 820 | 1,093 | |||||||
Short-term portion of lease abandonment accrual | 609 | 475 | |||||||
Deferred rent | 400 | 513 | |||||||
Accrued sales and use tax | 274 | 275 | |||||||
Income tax related accruals | 107 | 614 | |||||||
Other accrued expenses | 2,491 | 1,800 | |||||||
Total | $ | 16,142 | $ | 14,326 | |||||
Other long-term liabilities consisted of the Company’s long-term portion of lease abandonment accrual as of December 31, 2014 and 2013. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||
Income Taxes | 8 | INCOME TAXES: | |||||||||||||||||||||||
General overview: | |||||||||||||||||||||||||
The Company is subject to U.S. federal tax as well as income tax in multiple states and local and foreign jurisdictions. The Company’s 2004 through 2014 tax years are open and may be subject to examination by these taxing authorities. Such examinations, if any, could result in challenges to tax positions taken and, accordingly, we may record adjustments to our tax provision based on the outcome of such matters. | |||||||||||||||||||||||||
The Company has elected to recognize interest and penalties related to income tax matters as a part of the income tax provision (benefit). | |||||||||||||||||||||||||
For the year ended December 31, 2014, we recorded an income tax provision of $3.2 million compared to an income tax benefit of $(30.1) million and an income tax provision of $401 thousand in the years ended December 31, 2013 and 2012, respectively. The significant tax benefit recognized during 2013 related to the reversal of the majority of the valuation allowance provided against the carrying value of our deferred tax assets. | |||||||||||||||||||||||||
Deferred tax asset valuation allowance: | |||||||||||||||||||||||||
As of December 31, 2014, we had gross deferred tax assets of $28.7 million. Our deferred tax assets have arisen as a result of timing differences (primarily generated in connection with historical goodwill and intangible asset impairment charges), net operating loss carryforwards and tax credits. These assets represent amounts that we are able to use to reduce our future taxable income. | |||||||||||||||||||||||||
We maintained a valuation allowance of $1.5 million against the carrying value of our gross deferred tax attributes as of December 31, 2014 and 2013. Prior to December 31, 2013, we maintained a full valuation allowance on our deferred tax assets, reducing the carrying value of these assets on our balance sheet to zero. | |||||||||||||||||||||||||
We assess the realizability of our deferred tax assets and assess the need for a valuation allowance on an ongoing basis. The periodic assessment of the net carrying value of our deferred tax assets under the applicable accounting rules is highly judgmental. We are required to consider all available positive and negative evidence in evaluating the likelihood that we will be able to realize the benefit of our deferred tax assets in the future. Such evidence includes scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and the results of recent operations. Since this evaluation requires consideration of events that may occur some years into the future, there is significant judgment involved, and our conclusion could be materially different should certain of our expectations not transpire. | |||||||||||||||||||||||||
When assessing all available evidence, we consider the extent to which we have generated pre-tax income or losses over the most recent three-year period to be an important piece of objective evidence. Beginning in 2010, we maintained a full valuation allowance against our net deferred tax assets primarily due to the fact that we had essentially been in a cumulative pre-tax loss position over the most recent three-year period. While there had been a trend of positive evidence that had been strengthening in subsequent years, it was not sufficiently persuasive to outweigh the negative evidence provided by our cumulative pre-tax loss position. During the year ended December 31, 2013, we emerged from a cumulative three year pre-tax loss position, which removed this important piece of negative evidence from our evaluation. | |||||||||||||||||||||||||
Our assessment for the year ended December 31, 2013 considered the following positive and negative evidence. Based on this evidence, we concluded that it was more likely than not that we would generate sufficient pre-tax income in future periods to utilize substantially all of our deferred tax assets. | |||||||||||||||||||||||||
Positive Evidence: | |||||||||||||||||||||||||
¡ | We had generated U.S.-based pre-tax income of more than $8.2 million over the previous three years and had utilized some of our available tax assets to reduce tax liabilities that would have otherwise arisen in those periods. | ||||||||||||||||||||||||
¡ | The majority of our federal net operating loss carryforwards do not expire until 2020. | ||||||||||||||||||||||||
¡ | Our financial performance had continued to improve. We had reported steady growth in operating income over the previous three years and believed that our financial performance would continue to improve. | ||||||||||||||||||||||||
¡ | Our forecasts of future taxable income indicated that our pre-tax income and taxable income would increase in the future. | ||||||||||||||||||||||||
Negative Evidence: | |||||||||||||||||||||||||
¡ | In the absence of a cumulative loss in the previous three years, the remaining negative evidence consists of our accumulated deficit. | ||||||||||||||||||||||||
After consideration of this evidence, we determined that it was unlikely that the losses incurred prior to the year ended December 31, 2011 would be repeated and as a result, we did not place significant weight on the negative evidence provided by our pre-2011 losses. | |||||||||||||||||||||||||
We believed that our positive evidence was strong. The improved financial performance in previous years was an objectively verifiable piece of positive evidence and was the result of a number of factors that had been present to a greater or lesser extent in prior years but had only gathered sufficient weight during 2013 to deliver objectively verifiable, consistent taxable income. | |||||||||||||||||||||||||
In light of the fact that the majority of our federal NOLs expire in 2020, a key consideration in our analysis was the Company’s projections of future taxable income. In performing our analysis, we utilized the most updated plans and projections that we used to manage our underlying business and calculated the utilization of our deferred tax assets under a number of scenarios. | |||||||||||||||||||||||||
The Company, during its 2014 period assessment of the need for a valuation allowance against the carrying value of deferred tax assets, noted that the same historical positive and negative evidence contemplated in our 2013 analysis, in conjunction with the continued improvement in operating performance during 2014, provided the Company with strengthening positive evidence supporting that a full valuation allowance was not required. | |||||||||||||||||||||||||
Realization of our deferred tax assets is dependent on our generating sufficient taxable income in future periods. Although we believe it is more likely than not that future taxable income would be sufficient to allow us to recover substantially all of the value of our deferred tax assets, realization is not assured and future events could cause us to change our judgment. In the event that actual results differ from our estimates, or we adjust these estimates in the future periods, further adjustments to our valuation allowance may be recorded, which could materially impact our financial position and net income (loss) in the period of the adjustment. | |||||||||||||||||||||||||
Income tax provision (benefit): | |||||||||||||||||||||||||
Significant components of the Company’s income tax provision (benefit) consisted of the following: | |||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||
Current tax expense: | |||||||||||||||||||||||||
Federal | $ | - | $ | - | $ | - | |||||||||||||||||||
State | 377 | 234 | 263 | ||||||||||||||||||||||
Foreign | 68 | 95 | 93 | ||||||||||||||||||||||
445 | 329 | 356 | |||||||||||||||||||||||
Deferred tax expense (benefit): | |||||||||||||||||||||||||
Federal | 2,092 | 5,088 | 1,178 | ||||||||||||||||||||||
State | 709 | 748 | 173 | ||||||||||||||||||||||
Foreign | 301 | - | - | ||||||||||||||||||||||
Change in valuation allowance | - | (36,226 | ) | (1,323 | ) | ||||||||||||||||||||
3,102 | (30,390 | ) | 28 | ||||||||||||||||||||||
Unrecognized tax benefit | (370 | ) | (28 | ) | 17 | ||||||||||||||||||||
Income tax provision (benefit) | $ | 3,177 | $ | (30,089 | ) | $ | 401 | ||||||||||||||||||
The Company has not provided for U.S. income taxes on undistributed earnings of its foreign subsidiary because the Company considers such earnings to be indefinitely reinvested. In the event of distribution of those earnings in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes, subject to an adjustment, if any, for foreign tax credits, and foreign withholding taxes payable to certain foreign tax authorities. Determination of the amount of U.S. income tax liability that would be incurred is not practicable because of the complexities associated with this hypothetical calculation. | |||||||||||||||||||||||||
The differences in income taxes determined by applying the statutory federal tax rate of 34% to income from continuing operations before income taxes and the amounts recorded in the accompanying consolidated statements of comprehensive income result from the following: | |||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | ||||||||||||||||||||
(Dollar Amounts In Thousands) | |||||||||||||||||||||||||
Income tax at statutory rate | $ | 2,468 | 34 | % | $ | 1,570 | 34 | % | $ | 628 | 34 | % | |||||||||||||
Add (deduct): | |||||||||||||||||||||||||
State income taxes, net of federal tax benefit | 556 | 7.7 | 243 | 5.2 | 174 | 9.4 | |||||||||||||||||||
Tax rate difference on foreign income taxes | 26 | 0.4 | 47 | 1 | 188 | 10.1 | |||||||||||||||||||
Tax effect of rate change on deferred tax assets | 252 | 3.5 | (169 | ) | (3.6 | ) | - | - | |||||||||||||||||
Non-deductible items | 112 | 1.6 | 98 | 2.1 | 160 | 8.6 | |||||||||||||||||||
Net decrease in deferred tax attributes | 183 | 2.5 | 4,370 | 94.6 | 516 | 27.9 | |||||||||||||||||||
Decrease in valuation allowance against certain deferred tax assets | - | - | (36,226 | ) | (784.3 | ) | (1,323 | ) | (71.6 | ) | |||||||||||||||
Unrecognized tax benefits | (370 | ) | (5.1 | ) | (28 | ) | (0.6 | ) | 17 | 0.9 | |||||||||||||||
Other, net | (50 | ) | (0.7 | ) | 6 | 0.1 | 41 | 2.4 | |||||||||||||||||
$ | 3,177 | 43.9 | % | $ | (30,089 | ) | (651.5 | )% | $ | 401 | 21.7 | % | |||||||||||||
Deferred income taxes: | |||||||||||||||||||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2014 and 2013 are as follows: | |||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||
Deferred income tax assets: | |||||||||||||||||||||||||
Net operating loss carryforwards and credits | $ | 17,539 | $ | 19,552 | |||||||||||||||||||||
Acquired intangible assets | 6,444 | 7,543 | |||||||||||||||||||||||
Reserves and accruals | 1,565 | 1,656 | |||||||||||||||||||||||
Share-based compensation | 2,877 | 2,775 | |||||||||||||||||||||||
Depreciation | 407 | 346 | |||||||||||||||||||||||
Total deferred income tax assets | 28,832 | 31,872 | |||||||||||||||||||||||
Deferred income tax liabilities: | |||||||||||||||||||||||||
Acquired intangible assets | (18 | ) | (96 | ) | |||||||||||||||||||||
Other | (144 | ) | (4 | ) | |||||||||||||||||||||
Total deferred income tax liabilities | (162 | ) | (100 | ) | |||||||||||||||||||||
Valuation allowance | (1,500 | ) | (1,500 | ) | |||||||||||||||||||||
Deferred income tax asset, net | $ | 27,170 | $ | 30,272 | |||||||||||||||||||||
Components of the net deferred tax assets reported in the accompanying consolidated balance sheets are as follows: | |||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||
Current | Long-term | Current | Long-term | ||||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||
Assets | $ | 1,265 | $ | 27,677 | $ | 1,238 | $ | 30,625 | |||||||||||||||||
Liabilities | (3 | ) | (269 | ) | (4 | ) | (87 | ) | |||||||||||||||||
Valuation allowance | (66 | ) | (1,434 | ) | (59 | ) | (1,441 | ) | |||||||||||||||||
Net deferred tax asset (liability) | $ | 1,196 | $ | 25,974 | $ | 1,175 | $ | 29,097 | |||||||||||||||||
Significant deferred tax attributes and current activity within the Company’s deferred tax accounts included the following: | |||||||||||||||||||||||||
Net Operating Loss Carryforwards and Credits: As of December 31, 2014, we had tax affected net operating loss carryforwards for both federal and state income tax purposes of approximately $15.3 million and alternative minimum and worker’s opportunity credits of approximately $2.1 million, which expire at various intervals through 2030. However, $12.1 million of the Company’s federal net operating loss carryforwards and $1.0 million of worker’s opportunity tax credits are set to expire in 2020. | |||||||||||||||||||||||||
Not included in the federal net operating loss carryforwards are $1.1 million of excess tax deductions from stock option exercises during fiscal 2014 and 2013. Pursuant to the guidance on accounting for stock-based compensation, the deferred tax asset relating to excess tax benefits from these exercises was not recognized for financial statement purposes. The future benefit from these deductions will be recorded as a credit to additional paid-in capital when taxes payable are reduced on the income tax return. | |||||||||||||||||||||||||
Additionally, the Internal Revenue Code contains provisions that limit the amount of net operating loss and tax credit carryforwards available to be used in any given year in the event of certain circumstances, including significant changes in ownership interests. These limitations may result in the expiration of our historical net operating loss carryforwards and tax credits prior to their utilization. The Company has various tax effected net operating loss carryforwards for state income tax purposes of approximately $1.1 million which expire at various intervals through 2034. | |||||||||||||||||||||||||
Annual changes to the deferred tax valuation allowance are as follows: | |||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||
Balance, beginning of year | $ | 1,500 | $ | 37,726 | $ | 39,049 | |||||||||||||||||||
Additions | - | - | - | ||||||||||||||||||||||
Reductions, net | - | (36,226 | ) | (1,323 | ) | ||||||||||||||||||||
Balance, end of year | $ | 1,500 | $ | 1,500 | $ | 37,726 | |||||||||||||||||||
Unrecognized tax benefits: | |||||||||||||||||||||||||
In accordance with our evaluation of unrecognized tax benefits, we have established a liability representing our estimated amount of unrecognized tax benefits, plus an additional provision for penalties and interest. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows: | |||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||
Gross unrecognized tax benefits, beginning of year | $ | 108 | $ | 140 | $ | 155 | |||||||||||||||||||
Increase in tax position in current year | - | - | - | ||||||||||||||||||||||
Settlement/Expiration of statute | - | (32 | ) | (15 | ) | ||||||||||||||||||||
De-recognition through administrative policy | (99 | ) | - | - | |||||||||||||||||||||
Gross unrecognized tax benefits, end of year | $ | 9 | $ | 108 | $ | 140 | |||||||||||||||||||
The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits and income tax liabilities, when applicable, as part of income tax expense in its consolidated statements of comprehensive income. As of December 31, 2014 and 2013, accrued interest and penalties was $49 thousand and $320 thousand, respectively. | |||||||||||||||||||||||||
As of December 31, 2014, the $9 thousand tax benefit, if recognized, would not have a material impact on our effective tax rate. We do not expect our unrecognized tax benefits to change significantly over the next twelve months. |
Employee_Benefit_Plans
Employee Benefit Plans | 12 Months Ended | |
Dec. 31, 2014 | ||
Postemployment Benefits [Abstract] | ||
Employee Benefit Plans | 9 | EMPLOYEE BENEFIT PLANS: |
The Company has a 401(k) tax deferred savings plan that is available to all employees who satisfy certain minimum hour requirements each year (the “Plan”). The Company matches 30% of each participant’s annual contribution under the Plan, up to 6% of each participant’s annual base salary. Contributions by the Company to the Plan were approximately $592 thousand, $550 thousand and $540 thousand in each of the years ended December 31, 2014, 2013 and 2012. |
Employee_ShareBased_Compensati
Employee Share-Based Compensation Plans | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||
Employee Share-Based Compensation Plans | 10 | EMPLOYEE SHARE-BASED COMPENSATION PLANS: | |||||||||||||||
Overview | |||||||||||||||||
The total fair value of share-based awards is recognized as a compensation expense, over the requisite employee service period (generally the vesting period of the grant). The Company has used the Black-Scholes option-pricing model to compute the estimated fair value of share-based awards on the date of grant. The Black-Scholes option pricing model includes assumptions regarding dividend yields, expected volatility, expected option term and risk-free interest rates. Expected volatility is estimated based upon a combination of historical and implied volatility. The risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant. | |||||||||||||||||
Share-Based Compensation Plans | |||||||||||||||||
The Company has five share-based compensation plans which are described below: the Amended and Restated 1996 Stock Option Plan (“1996 Plan”), the Amended and Restated 2000 Stock Option Plan (“2000 Plan”), the 2003 Equity Incentive Plan (“2003 Plan”), the 2008 Omnibus Incentive Plan (“2008 Plan”), and the 2012 Omnibus Incentive Plan (“2012 Plan”), collectively the “Equity Plans.” Specifics related to each plan are as follows: | |||||||||||||||||
1996 Plan: Grants for shares under the 1996 Plan were limited to 15% of the Company’s outstanding common stock. The only grants outstanding under the 1996 Plan are non-qualified stock option grants, with total qualified stock option grants under the 1996 Plan limited to 650,000 shares of the Company’s common stock. No grants of qualified stock options were ever issued under the 1996 Plan. The 1996 Plan expired on June 30, 2006; thus, no further grants have been awarded after June 30, 2006, but options awarded prior to that date remain outstanding subject to the terms of the 1996 Plan and any related option agreements. | |||||||||||||||||
2000 Plan: The 2000 Plan provides for grants of non-qualified stock options of the Company’s common stock. The 2000 Plan is limited to grants covering up to 4.0 million shares of the Company’s common stock. | |||||||||||||||||
2003 Plan: The 2003 Plan provides for grants of non-qualified stock options and awards of restricted shares of the Company’s common stock. The 2003 Plan is limited to stock option grants and restricted stock awards covering up to 500,000 shares of the Company’s common stock. The 2003 Plan expired on May 22, 2013; thus, no further grants have been awarded after May 22, 2013, but options awarded prior to that date remain outstanding subject to the terms of the 2003 Plan and any related option agreements. | |||||||||||||||||
2008 Plan: The 2008 Plan provides for a broad range of awards, including stock options and awards of restricted shares of the Company’s common stock. The 2008 Plan authorizes the issuance of 1.5 million shares of the Company’s common stock. The 2008 Plan became effective on June 11, 2008. | |||||||||||||||||
2012 Plan: The 2012 Plan provides for a broad range of awards, including stock options and awards of restricted shares of the Company’s common stock. The 2012 Plan authorizes the issuance of 1.1 million shares of the Company’s common stock. The 2012 Plan became effective on June 6, 2012. | |||||||||||||||||
As of December 31, 2014, there are 349,274; 19,702; and 203,527 shares available for future grant under the 2000 Plan, 2008 Plan, and 2012 Plan, respectively. No shares were available for issuance under the 1996 Plan, as it expired on June 30, 2006 or the 2003 Plan, as it expired on May 22, 2013. | |||||||||||||||||
The Equity Plans provide that the exercise price of the stock options will be determined based upon the fair market value of the Company’s common stock on the NASDAQ Global Market System as of the date of grant. Options granted to officers and employees generally vest in three-, four- or five-year periods, dependent upon the plan or award, and expire on the seventh anniversary of the grant date. Annual options granted to non-employee members of the Company’s Board of Directors generally vest in equal quarterly increments and expire on the fifth anniversary of the grant date, and option grants issued upon their initial election to the Company’s Board of Directors vest in equal one-third increments as of the date of grant and the first and second anniversary of the date of grant. | |||||||||||||||||
During the years ended December 31, 2014 and 2013, the Company granted options to purchase 352,500 and 412,170 shares of common stock, respectively, principally as part of a long-term incentive program and in connection with the Company’s Board of Directors compensation program. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model utilizing the assumptions noted in the following table. Expected volatility is based upon historical volatility of the Company’s common stock. The expected life (period of time the award will be outstanding) was estimated using the historical exercise behavior of the Company’s employees. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The Company applied an estimated forfeiture rate of 22.5% (in all periods presented) to the calculated fair value of each option. The applied forfeiture rate utilized by the Company was based upon the historical forfeiture experience of the Equity Plans. | |||||||||||||||||
The share-based compensation expense and its classification in the statements of comprehensive income were as follows: | |||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
(In Thousands) | |||||||||||||||||
Project and personnel costs | $ | 242 | $ | 276 | $ | 366 | |||||||||||
Selling, general and administrative | 1,270 | 1,193 | 1,053 | ||||||||||||||
Total share-based compensation expense | $ | 1,512 | $ | 1,469 | $ | 1,419 | |||||||||||
The fair value of each option award granted during 2014, 2013 and 2012, was based upon the following weighted-average assumptions: | |||||||||||||||||
Year Ending December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Expected volatility | 48 | % | 47.5 | % | 52.4 | % | |||||||||||
Expected dividend yield | - | % | - | % | - | % | |||||||||||
Expected life (in years) | 3.69 | 3.75 | 3.86 | ||||||||||||||
Risk-free interest rate | 0.8 | % | 0.4 | % | 0.4 | % | |||||||||||
The weighted-average grant-date fair value of all options granted (excluding restricted share awards) during the year ended December 31, 2014, 2013 and 2012 was $2.53, $1.51 and $1.53 per share, respectively. | |||||||||||||||||
A summary of stock option activity under the Equity Plans (excluding restricted share awards) is presented below: | |||||||||||||||||
Stock Options: | Shares | Weighted | Weighted | Aggregate | |||||||||||||
Under | Average | Average | Intrinsic | ||||||||||||||
Options | Exercise Price | Remaining | Value | ||||||||||||||
Per Share | Contractual | ||||||||||||||||
Term (Years) | |||||||||||||||||
(In Thousands) | |||||||||||||||||
Outstanding at January 1, 2013 | 4,109,537 | $ | 3.85 | ||||||||||||||
Granted | 412,170 | 4.18 | |||||||||||||||
Exercised | (250,123 | ) | 3.39 | ||||||||||||||
Forfeited or expired | (262,556 | ) | 4.3 | ||||||||||||||
Outstanding at December 31, 2013 | 4,009,028 | $ | 3.89 | 3.87 | $ | 12,933 | |||||||||||
Granted | 352,500 | 6.92 | |||||||||||||||
Exercised | (346,189 | ) | 3.69 | ||||||||||||||
Forfeited or expired | (280,106 | ) | 8.45 | ||||||||||||||
Outstanding at December 31, 2014 | 3,735,233 | $ | 3.85 | 3.51 | $ | 13,667 | |||||||||||
Vested and expected to vest at December 31, 2014 | 3,555,183 | $ | 3.79 | 3.42 | $ | 10,054 | |||||||||||
Exercisable at December 31, 2014 | 2,935,009 | $ | 3.5 | 3.02 | $ | 11,779 | |||||||||||
The total intrinsic value of stock options exercised during 2014, 2013 and 2012 was approximately $1.2 million, $639 thousand and $103 thousand, respectively. | |||||||||||||||||
2003 Equity Incentive Plan, 2008 Omnibus Incentive Plan, and 2012 Omnibus Incentive Plan — Restricted Share Awards | |||||||||||||||||
The 2003 Plan, the 2008 Plan, and 2012 Plan also authorize the granting of restricted share awards to officers, employees and certain non-employee members of the Board of Directors (the “Restricted Share Plans”). Restricted share awards are made at prices determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) and are compensatory in nature. Employees granted restricted share awards are required to provide consideration for the shares at the share price set by the Compensation Committee, which historically has equaled the par value per share of the Company’s common stock ($0.01 per share). Shares of restricted stock generally vest over a 5-year period, during which time the Company has the right to repurchase any unvested shares at the amount paid if the relationship between the employee and the Company ceases. As of December 31, 2014, 154 thousand restricted share awards were subject to repurchase by the Company under the restricted stock agreements. The Company records compensation expense related to restricted share awards on a straight-line basis over the vesting term of the award. | |||||||||||||||||
During the years ended December 31, 2014 and 2013, the Company issued 84,800 and 131,380 restricted share awards, respectively, to employees at a purchase price of $0.01 per share. No restricted share awards were issued to employees during the year ended December 31, 2012. Additionally, the Company recognized share-based compensation expense of $386 thousand, $178 thousand and $18 thousand during the years ended December 31, 2014, 2013 and 2012, respectively related to restricted share awards. | |||||||||||||||||
A summary of non-vested restricted share activity under the Restricted Share Plans is presented below: | |||||||||||||||||
Restricted Share Awards: | Non-vested | Weighted | |||||||||||||||
Restricted | Average | ||||||||||||||||
Shares | Grant Date | ||||||||||||||||
Fair Value | |||||||||||||||||
Non-vested at January 1, 2013 | 9,000 | $ | 2.97 | ||||||||||||||
Granted | 131,380 | 4.16 | |||||||||||||||
Vested | (14,190 | ) | (2.97 | ) | |||||||||||||
Non-vested at December 31, 2013 | 126,190 | $ | 4.13 | ||||||||||||||
Granted | 84,800 | 7.01 | |||||||||||||||
Vested | (57,272 | ) | (4.49 | ) | |||||||||||||
Non-vested at December 31, 2014 | 153,718 | $ | 5.57 | ||||||||||||||
Expected to vest at December 31, 2014 | 153,718 | $ | 5.57 | ||||||||||||||
The total fair value of stock awards vested during the years ended December 31, 2014, 2013 and 2012 was $797 thousand, $55 thousand and $24 thousand, respectively. | |||||||||||||||||
Employee Stock Purchase Plan | |||||||||||||||||
In June 2008, in connection with the Company’s Annual Meeting of Stockholders, the stockholders of the Company approved, and the Company adopted, the Edgewater Technology, Inc. 2008 Employee Stock Purchase Plan (the “2008 ESPP Plan”). The 2008 ESPP Plan became effective on October 1, 2008. The 2008 ESPP Plan, which was amended in June 2011, allows a maximum of 1,200,000 shares of the Company’s common stock to be purchased by Edgewater employees. | |||||||||||||||||
The 2008 ESPP Plan offers eligible employees the option to purchase the Company’s common stock at 85% of the lower of the closing price, as quoted on NASDAQ, on either the first trading day or the last trading day of the quarterly purchase period. Enrollment periods occur on January 1 and July 1. Purchases occur every three months. The 2008 ESPP Plan is designed to qualify for certain tax benefits for employees under section 423 of the Internal Revenue Code. | |||||||||||||||||
During the year ended December 31, 2014, 2013 and 2012, the Company issued 103,401; 135,100 and 176,375 shares, respectively, to employees under the 2008 ESPP Plan. | |||||||||||||||||
The fair value of each 2008 ESPP Plan offering was estimated on the date of grant using the Black-Scholes option pricing model that uses the weighted-average assumptions noted in the following table. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility was based on historical volatility. | |||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Expected volatility | 47.2 | % | 42.7 | % | 52.5 | % | |||||||||||
Expected dividend yield | - | % | - | % | - | % | |||||||||||
Expected life (in years) | 0.25 | 0.25 | 0.25 | ||||||||||||||
Risk-free interest rate | 0 | % | 0.1 | % | 0.1 | % | |||||||||||
The weighted-average fair value of the shares issued under the 2008 ESPP Plan in 2014, 2013 and 2012, based upon the assumptions in the preceding table, was $1.75, $1.05 and $0.78, respectively. | |||||||||||||||||
Compensation Expense | |||||||||||||||||
As of December 31, 2014, unrecognized compensation expense, net of estimated forfeitures, related to the unvested portion of all share-based compensation arrangements was approximately $1.7 million and is expected to be recognized over a weighted average period of 1.02 years. | |||||||||||||||||
The Company is using previously purchased treasury shares for all shares issued for options, restricted share awards and 2008 ESPP Plan issuances. Shares may also be issued from unissued share reserves. |
Capital_Stock
Capital Stock | 12 Months Ended | |
Dec. 31, 2014 | ||
Equity [Abstract] | ||
Capital Stock | 11 | CAPITAL STOCK: |
Common and Preferred Stock - | ||
The Company’s stockholders had authorized 48.0 million shares of common stock available for issuance as of December 31, 2014 and 2013, and had 2.0 million shares of preferred stock available for issuance as of December 31, 2014 and 2013. | ||
Stock Repurchase Program - | ||
In December 2007, our Board of Directors (the “Board”) authorized a stock repurchase program for up to $5.0 million of common stock on the open market or through privately negotiated transactions from time-to-time through December 31, 2008 (the “Stock Repurchase Program”). The Board subsequently amended the Stock Repurchase Program, authorizing both an increase to and an extension of the Stock Repurchase Program. The Stock Repurchase Program, as amended, had a maximum purchase value of shares of $23.1 million (the “Purchase Authorization”) and was set to expire on September 19, 2014 (the “Repurchase Period”). On September 18, 2014, we announced that the Board had approved an extension of the Repurchase Period to September 25, 2015. | ||
The timing and amount of the purchases will be based upon market conditions, securities law considerations and other factors. The Stock Repurchase Program does not obligate the Company to acquire a specific number of shares in any period and may be modified, suspended, extended or discontinued at any time, without prior notice. | ||
The Company repurchased a total of 143 thousand and 365 thousand shares of common stock during the years ended December 31, 2014 and 2013, respectively, at an aggregate purchase price of $967 thousand and $1.5 million, respectively. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||
Commitments and Contingencies | |||||||||
12 | COMMITMENTS AND CONTINGENCIES: | ||||||||
Commitments. We lease office space and certain equipment under operating leases that expire at various times through 2016. Future minimum lease payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2014, were as follows: | |||||||||
Year Ending December 31, | Abandoned | Operating | |||||||
Lease | Leases | ||||||||
(In Thousands) | |||||||||
2014 | $ | 609 | $ | 915 | |||||
2015 | 456 | 649 | |||||||
2016 | - | 5 | |||||||
2017 | - | - | |||||||
Thereafter | - | - | |||||||
$ | 1,065 | $ | 1,569 | ||||||
Rent payments under operating leases were $1.8 million, $1.7 million and $1.6 million for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||
Contingencies. We are sometimes a party to litigation incidental to our business. We believe that these routine legal proceedings will not have a material adverse effect on our financial position. We are not involved in any legal proceedings which would be material to our consolidated financial statements. We maintain insurance in amounts with coverages and deductibles that we believe are reasonable. However, there can be no assurance that such coverages will continue to be available on reasonable terms or will be available in sufficient amounts to cover possible claims that may arise in the future, or that our insurers will not disclaim coverage as to any future claim. The successful assertion of one or more claims against the Company that exceed available insurance coverages or changes in the Company’s insurance policies, including premium increases or the imposition of a large deductible or co-insurance requirements, could have a material adverse effect on the Company’s business, results of operations and financial condition. | |||||||||
The Company had approximately $58 thousand and $428 thousand of unrecognized tax benefits, penalties and interest expense related to uncertain tax positions as of December 31, 2014 and 2013, respectively. | |||||||||
As of December 31, 2014, we have an accrual for pre-acquisition sales and use tax exposure of $250 thousand. The potential sales and use tax-related liability was created by the methods employed by a former employee of Fullscope to conceal a fraudulent activity. The originally estimated sales and use tax exposure of $1.5 million was reduced as we update our filings and submitted the required payments. Future amounts recovered, if any, will be recorded by the Company in the period in which the amounts are determined to be probable of recovery from escrow. | |||||||||
Revolving_Line_of_Credit
Revolving Line of Credit | 12 Months Ended | |
Dec. 31, 2014 | ||
Debt Disclosure [Abstract] | ||
Revolving Line of Credit | 13 | REVOLVING LINE OF CREDIT |
In September 2013, the Company entered into a three-year secured revolving credit facility (the “Credit Facility”). The Credit Facility allows the Company to borrow up to $10.0 million and includes an additional accordion feature that allows the Company to request an additional $5.0 million as needed, extending the total credit facility borrowing capacity to $15.0 million over its three-year term. The Credit Facility is secured by substantially all assets of the Company and its domestic subsidiaries, and is subject to normal covenants. The Company was in compliance with all covenants as of December 31, 2014. Under the terms of the Credit Facility, any advances will accrue interest at a variable per annum rate of interest equal to, as elected by the Company, (i) the Prime Rate, or (ii) the LIBOR Rate plus 1.5%. Interest is due and payable, in arrears, on a monthly basis. The Company will be obligated to pay an annual commitment fee of 0.15% on the daily undrawn balance of the facility. Any amounts outstanding under the Credit Facility will be due on September 23, 2016. No amounts were drawn under this facility as of December 31, 2014. | ||
Sale_of_Intellectual_Property
Sale of Intellectual Property | 12 Months Ended | |
Dec. 31, 2014 | ||
Text Block [Abstract] | ||
Sale of Intellectual Property | 14 | SALE OF INTELLECTUAL PROPERTY |
In June 2012, Microsoft purchased Edgewater Fullscope’s PI2 software and intellectual property for an aggregate of $3.25 million. The sale of PI2 also included services and represents a significant multiple element contract which the Company entered into during the second quarter of 2012. This contract includes $3.25 million of license consideration and subsequent development and training services. We determined that the license did not have stand-alone value without the services, and thus the license and services were accounted for as one unit, with revenue associated with the Microsoft IP Sale recognized in direct proportion to the actual periodic services performed, as compared to the anticipated development services to be performed over the duration of the agreement. We allocated revenue to each element in the multiple-element arrangement based on the element’s respective fair value, with the fair value determined by the price charged when that element is sold separately. We recognized $2.5 million and $788 thousand of license-related revenue, reported as Software revenue in our consolidated statement of comprehensive income, during the years ended December 31, 2013 and 2012, respectively. We completed all deliverable required in the PI2-related services contracts as of December 31, 2013. Accordingly, no PI2-related software or service revenue will be recognized after December 31, 2013. |
Unaudited_Supplementary_Quarte
Unaudited Supplementary Quarterly Financial Information | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||
Unaudited Supplementary Quarterly Financial Information | 15 | UNAUDITED SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION: | |||||||||||||||||||
The following tables set forth certain unaudited supplementary quarterly financial information for the years ended December 31, 2014 and 2013. The quarterly operating results are not necessarily indicative of future results of operations. | |||||||||||||||||||||
2014 | |||||||||||||||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Total | |||||||||||||||||
(In Thousands, Except Per Share Data) | |||||||||||||||||||||
Total revenue | $ | 27,614 | $ | 29,222 | $ | 28,729 | $ | 27,424 | $ | 112,989 | |||||||||||
Gross profit | $ | 10,107 | $ | 10,886 | $ | 10,416 | $ | 9,957 | $ | 41,366 | |||||||||||
Net income | $ | 711 | $ | 1,721 | $ | 976 | $ | 656 | $ | 4,064 | |||||||||||
Basic income per share | $ | 0.06 | $ | 0.15 | $ | 0.09 | $ | 0.06 | $ | 0.37 | |||||||||||
Diluted income per share | $ | 0.06 | $ | 0.13 | $ | 0.08 | $ | 0.05 | $ | 0.31 | |||||||||||
2013 | |||||||||||||||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Total | |||||||||||||||||
(In Thousands, Except Per Share Data) | |||||||||||||||||||||
Total revenue | $ | 23,476 | $ | 27,900 | $ | 25,399 | $ | 26,781 | $ | 103,556 | |||||||||||
Gross profit | $ | 7,140 | $ | 10,041 | $ | 9,657 | $ | 10,734 | $ | 37,572 | |||||||||||
Net (loss) income | $ | (889 | ) | $ | 1,414 | $ | 1,772 | $ | 32,411 | $ | 34,708 | ||||||||||
Basic (loss) income per share | $ | (0.08 | ) | $ | 0.13 | $ | 0.17 | $ | 2.99 | $ | 3.21 | ||||||||||
Diluted (loss) income per share | $ | (0.08 | ) | $ | 0.12 | $ | 0.14 | $ | 2.55 | $ | 2.88 |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Basis of Presentation | Basis of Presentation – | ||||||||||||
The consolidated financial statements include the accounts of Edgewater and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation. | |||||||||||||
The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The Company did not identify any recognizable events during this period. | |||||||||||||
Use of Estimates | Use of Estimates – | ||||||||||||
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. These accounting principles require management to make certain estimates, judgments and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. These estimates, judgments and assumptions used in preparing the accompanying consolidated financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements. Although the Company regularly assesses these estimates, judgments and assumptions used in preparing these consolidated financial statements, actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known. | |||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents – | ||||||||||||
Cash and cash equivalent balances consist of deposits and investments in money market funds. All highly liquid investments with remaining maturities of three months or less at the date of purchase are considered cash equivalents. The Company’s cash equivalents consisted of $4.1 million in money market funds as of December 31, 2014 and 2013. | |||||||||||||
Property and Equipment | Property and Equipment – | ||||||||||||
Property and equipment are stated at cost, net of accumulated depreciation and amortization. Property and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets, which range from three to ten years. Additions that extend the lives of the assets are capitalized, while repairs and maintenance costs are expensed as incurred. | |||||||||||||
Product Development Costs | Product Development Costs – | ||||||||||||
The Company periodically develops software modules to be used within the Microsoft Dynamics AX environment. Capitalization of qualified software development costs begins upon the establishment of technological feasibility. Amortization of capitalized software development costs, which is recorded as a component of cost of revenue, is provided on a product-by-product basis, beginning upon commercial release of the product, and continuing over the remaining estimated economic life of the product, not to exceed three years. At each balance sheet date, the Company evaluates the unamortized capitalized software development costs for potential impairment by comparing the net unamortized balance to the net realizable value of the products. The Company capitalized a total of $40 thousand and $493 thousand in software development costs during the years ended December 31, 2014 and 2013, respectively. Amortization expense of $214 thousand, $327 thousand and $156 thousand has been recorded (within software costs on the consolidated statements of comprehensive income) during the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||||||
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets – | ||||||||||||
The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Impairment is generally assessed by a comparison of cash flows expected to be generated by an asset to its carrying value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. | |||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets – | ||||||||||||
Goodwill has an indefinite useful life and is not amortized but is evaluated for impairment annually (the “Annual Impairment Test”) or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Intangible assets consist primarily of non-compete arrangements, customer relationships and trade names and trademarks. Intangible assets that have finite lives are amortized using either the straight-line method or based on estimated future cash flows to approximate the pattern in which the economic benefit of the asset will be utilized. Amortization is recorded over the estimated useful lives ranging from 1.5 to 7.5 years and is further described in Note 6. | |||||||||||||
The Company engages in business activities in one reportable segment, which combines management consulting, technical knowledge, and enterprise management solutions to develop custom technology and business process solutions. The Company has three reporting units (operating segments) for purposes of its allocation of goodwill and performance of its impairment evaluation. The Company aggregates our three individual reporting units into one reportable segment based upon similar economic characteristics and other operating similarities. | |||||||||||||
Goodwill is tested for impairment annually at the reporting unit level utilizing the “fair value” methodology. The annual measurement date is December 2. Factors the Company considers important that could trigger an interim review for impairment include, but are not limited to, the following: | |||||||||||||
¡ | Significant under-performance relative to historical or projected future operating results; | ||||||||||||
¡ | Significant changes in the manner of its use of acquired assets or the strategy for its overall business; | ||||||||||||
¡ | Significant negative industry or economic trends; | ||||||||||||
¡ | Significant decline in its stock price for a sustained period; and | ||||||||||||
¡ | Its market capitalization relative to net book value. | ||||||||||||
Goodwill is evaluated for impairment using a two-step process. The first step is to compare the fair value of the reporting unit to the carrying amount of the reporting unit (the “First Step”). If the carrying amount exceeds the fair value, a second step must be followed to calculate potential impairment (the “Second Step”). Otherwise, if the fair value of the reporting unit exceeds the carrying amount, the goodwill is not considered to be impaired as of the measurement date. In its review of the carrying value of the goodwill, the Company determines fair values for the reporting unit using the Income Approach, or more specifically the Discounted Cash Flow Method, and the Market Approach, utilizing the Guideline Company Method. These valuation methods require management to project revenues, operating expenses, working capital investment, capital spending and cash flows for the reporting unit over a multi-year period, as well as determine the weighted average cost of capital to be used as a discount rate. The 2014 analysis confirmed that fair values exceeded carrying values, and therefore no impairment existed, and accordingly, a second step analysis was not deemed necessary. | |||||||||||||
Revenue Recognition | Revenue Recognition – | ||||||||||||
Our Company recognizes revenue primarily through the provision of consulting services and the resale of third-party, off the shelf software and maintenance. | |||||||||||||
We recognize revenue by providing consulting services under written service contracts with our customers. The service contracts we enter into generally fall into three specific categories: time and materials, fixed-price and retainer. | |||||||||||||
We consider amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable and collectability is reasonably assured. We establish billing terms at the time at which the project deliverables and milestones are agreed. Our standard payment terms are 30 days from invoice date. Out-of-pocket reimbursable expenses charged to customers are reflected as revenue. | |||||||||||||
When a customer enters into a time and materials, fixed-price or a periodic retainer-based contract, the Company recognizes revenue in accordance with its evaluation of the deliverables in each contract. If the deliverables represent separate units of accounting, the Company then measures and allocates the consideration from the arrangement to the separate units, based on vendor specific objective evidence (“VSOE”) of the value for each deliverable. | |||||||||||||
The revenue under time and materials contracts is recognized as services are rendered and performed at contractually agreed upon rates. Revenue pursuant to fixed-price contracts is recognized under the proportional performance method of accounting. We routinely evaluate whether revenue and profitability should be recognized in the current period. We estimate the proportional performance on our fixed-price contracts on a monthly basis utilizing hours incurred to date as a percentage of total estimated hours to complete the project. This method is used because reasonably dependable estimates of costs and revenue earned can be made, based on historical experience and milestones identified in any particular contract. If we do not have a sufficient basis to measure progress toward completion, revenue is recognized upon completion of performance, subject to any warranty provisions or other project management assessments as to the status of work performed. | |||||||||||||
Estimates of total project costs are continuously monitored during the term of an engagement. There are situations where the number of hours to complete projects may exceed our original estimate, as a result of an increase in project scope, unforeseen events that arise, or the inability of the client or the delivery team to fulfill their responsibilities. Accordingly, recorded revenues and costs are subject to revision throughout the life of a project based on current information and historical trends. Such revisions may result in increases or decreases to revenue and income and are reflected in the consolidated financial statements in the periods in which they are first identified. | |||||||||||||
If our initial estimates of the resources required or the scope of work to be performed on a contract are inaccurate, or we do not manage the project properly within the planned time period, a provision for estimated losses on incomplete projects is made. Any known or probable losses on projects are charged to operations in the period in which such losses are determined. A formal project review process takes place quarterly, although projects are evaluated on an ongoing basis. Management reviews the estimated total direct costs on each contract to determine if the estimated amounts are accurate, and estimates are adjusted as needed in the period identified. No losses were recognized on contracts during the years ended December 31, 2014, 2013 or 2012. | |||||||||||||
We also perform services on a periodic retainer basis under infrastructure service contracts, which include monthly hosting and support services. Revenue under periodic retainer-based contracts is recognized ratably over the contract period, as outlined within the respective contract. In the event additional services are required, above the minimum retained or contracted amount, then such services are billed on a time and materials basis. | |||||||||||||
Typically, the Company provides warranty services on its fixed-price contracts related to providing customers with the ability to have any “design flaws” remedied and/or have our Company “fix” routine defects. The warranty services, as outlined in the respective contracts, are provided for a specific period of time after a project is complete. The Company values the warranty services based upon historical labor hours incurred for similar services at standard billing rates. Revenue related to the warranty provisions within our fixed-price contracts is recognized as the services are performed or the revenue is earned. The warranty period is typically for a 30-60 day period after the project is complete. | |||||||||||||
Customer prepayments, even if nonrefundable, are deferred (classified as deferred revenue) and recognized over future periods as services are performed. | |||||||||||||
Software revenue represents the resale of certain third-party off-the-shelf software and maintenance and is recorded on a gross basis provided we act as a principal in the transaction, which we have determined based upon several factors including, but not limited to, the fact that we have credit risk and we set the price to the end user. In the event we do not meet the requirements to be considered a principal in the software sale transaction and act as an agent, software revenue will be recorded on a net basis. | |||||||||||||
Prior to the second quarter of 2013, we recorded substantially all of our software resale revenue on a gross basis (reporting the revenue and cost from the transaction in our consolidated statement of comprehensive income). However, beginning in the second quarter of 2013, due to changes in the nature of the terms of certain of our Microsoft Dynamics AX software resale arrangements (primarily the risk of credit loss and ability to establish pricing), we began to recognize a portion of our software resale revenue on a net basis (reporting only the net profit from the transaction as revenue in our consolidated statement of comprehensive income). | |||||||||||||
The majority of the software sold by the Company is delivered electronically. For software that is delivered electronically, we consider delivery to have occurred when the customer either (a) takes possession of the software via a download (that is, when the customer takes possession of the electronic data on its hardware), or (b) has been provided with access codes that allow the customer to take immediate possession of the software on its hardware pursuant to an agreement or purchase order for the software. | |||||||||||||
The Company enters into multiple element arrangements which typically include software, post-contract support (or maintenance), and consulting services. Consistent with the software described above, maintenance that is in the form of a pass through transaction is recognized upon delivery of the software, as all related warranty and maintenance is performed by the primary software vendor and not the Company. Maintenance fee revenue for the Company’s software products, which is inconsequential in all years presented, is recognized ratably over the term of the arrangements, which are generally for a one-year period. The Company has established VSOE with respect to the services provided based on the price charged when the services are sold separately. The Company has established VSOE for maintenance based upon the stated renewal rate. | |||||||||||||
A significant amount of our 2013 software revenue is associated with the recognition of PI2 license revenue. In June 2012, Microsoft purchased the Company’s internally developed PI2 software and intellectual property (the “PI2 Solution”) for an aggregate purchase price of $3.25 million. The sale of the PI2 Solution was a significant multiple element contract. This contract includes $3.25 million of license consideration and subsequent development and training services. At the time of the sale, we determined that the license did not have stand-alone value without the services, and accordingly we accounted for the license and related services as one unit. Since June 2012, we have recognized the license revenue over the period the expected services are to be performed. | |||||||||||||
We perform routine periodic reviews of our current and expected performance against the service contracts in connection with our PI2 revenue recognition procedures. The Company recognized $2.5 million and $788 thousand in PI2-related software revenue during the years ended December 31, 2013 and 2012, respectively. As of December 31, 2013, there was no future PI2-related software revenue expected to be recognized as the Company had completed all deliverables required under the associated Microsoft services contracts. | |||||||||||||
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts – | ||||||||||||
The Company maintains an allowance for doubtful accounts related to its accounts receivable that have been deemed to have a high risk of uncollectability. Management reviews its accounts receivable balances on a monthly basis to determine if any receivables are potentially uncollectible. Management further analyzes historical collection trends and changes in its customer payment patterns, customer concentration and credit worthiness when evaluating the adequacy of its allowance for doubtful accounts. The Company includes any accounts receivable balances that are deemed to be potentially uncollectible, along with a general reserve, in its overall allowance for doubtful accounts. | |||||||||||||
Billed and unbilled receivables that are specifically identified as being at risk are provided for with a charge to revenue or bad debts as appropriate in the period the risk is identified. | |||||||||||||
Based on the information available, management believes the allowance for doubtful accounts is adequate; however, future write-offs could exceed the recorded allowance. | |||||||||||||
Cost of Services | Cost of Services – | ||||||||||||
Our cost of services is composed primarily of project personnel costs, including direct salaries, payroll taxes, employee benefits, contractor costs and travel expenses for personnel dedicated to customer projects. These costs represent the most significant expense we incur in providing our services. | |||||||||||||
Other Expense, Net | Other Expense, Net – | ||||||||||||
The following table represents the components of other expense, net: | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(In Thousands) | |||||||||||||
Interest expense (income) | $ | 15 | $ | (2 | ) | $ | (6 | ) | |||||
Loss on foreign exchange transactions | 166 | 94 | 73 | ||||||||||
Other expense, net | $ | 181 | $ | 92 | $ | 67 | |||||||
Provision for Taxes | Provision for Taxes – | ||||||||||||
In determining our current income tax provision, we assess temporary differences resulting from different treatments of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded in our consolidated balance sheets. We evaluate the realizability of our deferred tax assets and assess the need for a valuation allowance on an ongoing basis. In evaluating our deferred tax assets, we consider whether it is more likely than not that the deferred income tax assets will be realized. The ultimate realization of our deferred tax assets depends upon generating sufficient future taxable income during the periods in which our temporary differences either become deductible or expire. This assessment requires significant judgment. | |||||||||||||
Any future changes in the valuation allowance could result in additional income tax expense (benefit) and reduce or increase stockholders’ equity, and such changes could have a significant impact upon our earnings in the future. | |||||||||||||
Income tax reserves are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not realized based on the technical merits of the position. Potential interest and penalties associated with such uncertain tax position is recorded as a component of the income tax provision. | |||||||||||||
Earnings Per Share | Earnings Per Share – | ||||||||||||
A reconciliation of net income and weighted average shares used in computing basic and diluted net income per share is as follows: | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(In Thousands, Except Per | |||||||||||||
Share Data) | |||||||||||||
Basic net income per share: | |||||||||||||
Net income applicable to common shares | $ | 4,064 | $ | 34,708 | $ | 1,447 | |||||||
Weighted average common shares outstanding | 11,131 | 10,813 | 11,180 | ||||||||||
Basic net income per share of common stock | $ | 0.37 | $ | 3.21 | $ | 0.13 | |||||||
Diluted net income per share: | |||||||||||||
Net income applicable to common shares | $ | 4,064 | $ | 34,708 | $ | 1,447 | |||||||
Weighted average common shares outstanding | 11,131 | 10,813 | 11,180 | ||||||||||
Dilutive effects of stock options and restricted stock awards | 1,959 | 1,218 | 409 | ||||||||||
Weighted average common shares, assuming dilutive effect of stock options | 13,090 | 12,031 | 11,589 | ||||||||||
Diluted net income per share of common stock | $ | 0.31 | $ | 2.88 | $ | 0.13 | |||||||
Share-based awards, inclusive of all grants made under the Company’s equity plans, for which either the stock option exercise price, or the fair value of the restricted share award, exceeds the average market price over the period, have an anti-dilutive effect on earnings per share, and accordingly, are excluded from the diluted computations for all periods presented. Had such shares been included, shares for the diluted computation would have increased by approximately 47 thousand, 507 thousand and 1.7 million in the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014 and 2013, there were approximately 3.9 million and 4.1 million share-based awards outstanding under the Company’s equity plans, respectively. | |||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments – | ||||||||||||
Edgewater’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and contingent earnout accruals. The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to the relatively short-term nature of the accounts. | |||||||||||||
Concentrations of Credit Risk | Concentrations of Credit Risk – | ||||||||||||
Financial instruments that potentially subject the Company to significant concentration of market or credit risk consist principally of cash equivalent instruments and accounts receivable. The Company places its cash balances with reputable financial institutions. Trade receivables potentially subject the Company to credit risk. The Company extends credit to its customers based upon an evaluation of the customer’s financial condition and credit history and generally does not require collateral. | |||||||||||||
Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. We have never experienced any losses related to these balances. | |||||||||||||
The Company has historically incurred minimal credit losses. No customer balances were in excess of 10% of the Company’s total receivables balance as of December 31, 2014 or 2013. | |||||||||||||
For the years ended December 31, 2014, 2013 and 2012, no customer represented 10% or more of the Company’s total revenue or total service revenue. For the years ended December 31, 2014, 2013 and 2012, our five largest customers represented 17.8%, 16.5% and 14.8% of our service revenue in the aggregate, respectively. | |||||||||||||
Comprehensive Income | Comprehensive Income – | ||||||||||||
Other comprehensive income consists of periodic currency translation adjustments. | |||||||||||||
Share-Based Compensation | Share-Based Compensation – | ||||||||||||
The Company recognizes the total fair value of share-based awards as compensation expense, over the requisite employee service period (generally the vesting period of the grant). The Company has used the Black-Scholes option-pricing model to compute the estimated fair value of stock option grants on the date of the award. The Black-Scholes option-pricing model includes assumptions regarding dividend yields, expected volatility, expected option term and risk-free interest rates. The Company estimates expected volatility based upon historical volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Restricted stock awards are valued at the price of our common stock on the date of the award. | |||||||||||||
The assumptions used in computing the fair value of share-based awards reflect management’s best estimates but involve uncertainties relating to market and other conditions, many of which are outside of the Company’s control. As a result, if other assumptions or estimates had been used, the share-based compensation expense that was recorded for the years ended December 31, 2014, 2013, and 2012 could have been materially different. Furthermore, if different assumptions are used in future periods, share-based compensation expense could be materially impacted in the future. | |||||||||||||
Foreign Currency Translation | Foreign Currency Translation – | ||||||||||||
The financial statements for Edgewater’s non-U.S. operations use the local currency as the functional currency and are translated to U.S. dollars. For assets and liabilities, the year-end rate is used. For revenues, expenses, gains and losses, the average rate for the period is used. Unrealized currency adjustments in our financial statements are accumulated in equity as a component of accumulated other comprehensive income. Realized net gains (losses) on foreign currency transactions are immaterial and are reflected in earnings. | |||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements – | ||||||||||||
In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (ASU 2013-11). ASU 2013-11 clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. This new guidance is effective on a prospective basis for fiscal years and interim reporting periods within those years, beginning after December 15, 2013. The adoption of ASU 2013-11 did not have a material impact on our financial position, results of operations or cash flows. | |||||||||||||
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new guidance is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016; early adoption is not permitted. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance. This update could impact the timing and amounts of revenue recognized. The Company is currently evaluating the effect that implementation of this update will have on its consolidated financial position and results of operations upon adoption. | |||||||||||||
In August 2014, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (ASU 2014-15), to provide guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The adoption of ASU 2014-15 is not expected to have a material impact on our financial position, results of operations or cash flows. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Components of Other Expense, Net | The following table represents the components of other expense, net: | ||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(In Thousands) | |||||||||||||
Interest expense (income) | $ | 15 | $ | (2 | ) | $ | (6 | ) | |||||
Loss on foreign exchange transactions | 166 | 94 | 73 | ||||||||||
Other expense, net | $ | 181 | $ | 92 | $ | 67 | |||||||
Reconciliation of Net Income (Loss) and Weighted Average Shares used in Computing Basic and Diluted Net Income (Loss) Per Share | A reconciliation of net income and weighted average shares used in computing basic and diluted net income per share is as follows: | ||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(In Thousands, Except Per | |||||||||||||
Share Data) | |||||||||||||
Basic net income per share: | |||||||||||||
Net income applicable to common shares | $ | 4,064 | $ | 34,708 | $ | 1,447 | |||||||
Weighted average common shares outstanding | 11,131 | 10,813 | 11,180 | ||||||||||
Basic net income per share of common stock | $ | 0.37 | $ | 3.21 | $ | 0.13 | |||||||
Diluted net income per share: | |||||||||||||
Net income applicable to common shares | $ | 4,064 | $ | 34,708 | $ | 1,447 | |||||||
Weighted average common shares outstanding | 11,131 | 10,813 | 11,180 | ||||||||||
Dilutive effects of stock options and restricted stock awards | 1,959 | 1,218 | 409 | ||||||||||
Weighted average common shares, assuming dilutive effect of stock options | 13,090 | 12,031 | 11,589 | ||||||||||
Diluted net income per share of common stock | $ | 0.31 | $ | 2.88 | $ | 0.13 | |||||||
Fair_Value_Measurement_Tables
Fair Value Measurement (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Company's Fair Value Hierarchy for its Financial Assets and Liabilities | The following table represents the Company’s fair value hierarchy for its financial assets and liabilities required to be measured on a recurring basis: | ||||||||||||||||
Basis of Fair Value Measurements | |||||||||||||||||
Balance | Quoted Prices | Significant | Significant | ||||||||||||||
in Active Markets | Other | Unobservable | |||||||||||||||
for Identical Items | Observable | Inputs | |||||||||||||||
(Level 1) | Inputs | (Level 3) | |||||||||||||||
(Level 2) | |||||||||||||||||
(In Thousands) | |||||||||||||||||
Balance at December 31, 2014: | |||||||||||||||||
Financial assets: | |||||||||||||||||
Money market investment | $ | 4,084 | $ | 4,084 | $ | - | $ | - | |||||||||
Total financial assets | $ | 4,084 | $ | 4,084 | $ | - | $ | - | |||||||||
Balance at December 31, 2013: | |||||||||||||||||
Financial assets: | |||||||||||||||||
Money market investment | $ | 4,084 | $ | 4,084 | $ | - | $ | - | |||||||||
Total financial assets | $ | 4,084 | $ | 4,084 | $ | - | $ | - | |||||||||
Accounts_Receivable_Tables
Accounts Receivable (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Receivables [Abstract] | |||||||||||||
Changes in Allowance for Doubtful Accounts | The following are the changes in the allowance for doubtful accounts: | ||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(In Thousands) | |||||||||||||
Balance at beginning of year | $ | 150 | $ | 250 | $ | 300 | |||||||
Provisions for doubtful accounts | 47 | 39 | 21 | ||||||||||
Charge-offs, net of recoveries | (47 | ) | (139 | ) | (71 | ) | |||||||
Balance at end of year | $ | 150 | $ | 150 | $ | 250 | |||||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Components of Property and Equipment | Components of property and equipment consisted of the following: | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(In Thousands) | |||||||||
Furniture, fixtures and equipment | $ | 1,553 | $ | 1,553 | |||||
Computer equipment and software | 1,210 | 1,357 | |||||||
Leasehold improvements | 3,045 | 3,058 | |||||||
5,808 | 5,968 | ||||||||
Less accumulated depreciation and amortization | (4,779 | ) | (4,531 | ) | |||||
Total | $ | 1,029 | $ | 1,437 | |||||
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||
Changes in the Carrying Amount of Goodwill | The changes in the carrying amount of goodwill are as follows: | ||||||||||||||||
Goodwill | |||||||||||||||||
(In Thousands) | |||||||||||||||||
Balance at January 1, 2013 | $ | 12,049 | |||||||||||||||
Adjustments to goodwill in 2013 | - | ||||||||||||||||
Balance at December 31, 2013 | 12,049 | ||||||||||||||||
Adjustments to goodwill in 2014 | - | ||||||||||||||||
Balance at December 31, 2014 | $ | 12,049 | |||||||||||||||
Summary of the Identifiable Intangible Assets Subject for Amortization | Below is a summary of the Company’s identifiable intangible assets that are subject to amortization: | ||||||||||||||||
December 31, 2014 | |||||||||||||||||
Gross | Impairment | Accumulated | Net | ||||||||||||||
Carrying | Charges | Amortization | Carrying | ||||||||||||||
Amount | Amount | ||||||||||||||||
(In Thousands) | |||||||||||||||||
Identifiable intangibles: | |||||||||||||||||
Non-compete agreements | $ | 3,860 | $ | - | $ | 3,822 | $ | 38 | |||||||||
Customer relationships | 10,378 | - | 10,330 | 48 | |||||||||||||
Asset purchase agreement | 1,400 | - | 1,400 | - | |||||||||||||
Trade name and trademark | 600 | - | 600 | - | |||||||||||||
Capitalized product development costs | 1,139 | - | 745 | 394 | |||||||||||||
$ | 17,377 | $ | - | $ | 16,897 | $ | 480 | ||||||||||
December 31, 2013 | |||||||||||||||||
Gross | Impairment | Accumulated | Net | ||||||||||||||
Carrying | Charges | Amortization | Carrying | ||||||||||||||
Amount | Amount | ||||||||||||||||
(In Thousands) | |||||||||||||||||
Identifiable intangibles: | |||||||||||||||||
Non-compete agreements | $ | 3,860 | $ | - | $ | 3,634 | $ | 226 | |||||||||
Customer relationships | 10,378 | - | 10,239 | 139 | |||||||||||||
Asset purchase agreement | 1,400 | - | 1,400 | - | |||||||||||||
Trade name and trademark | 600 | - | 586 | 14 | |||||||||||||
Capitalized product development costs | 1,099 | - | 522 | 577 | |||||||||||||
$ | 17,337 | $ | - | $ | 16,381 | $ | 956 | ||||||||||
Estimated Useful Lives of the Acquired Identifiable Intangible Assets | The intangible assets were identified and valued by the Company. The original estimated useful lives of the acquired identifiable intangible assets are as follows: | ||||||||||||||||
Non-compete agreements | 4 to 5 years | ||||||||||||||||
Customer relationships | 4 to 7.5 years | ||||||||||||||||
Asset purchase agreement | 1.5 years | ||||||||||||||||
Trade name and trademark | 5 years | ||||||||||||||||
Capitalized product development costs | 3 years | ||||||||||||||||
Estimated Annual Amortization Expense | Estimated annual amortization expense for the next five years ending December 31, which encompasses the remaining useful life of the intangible assets, is as follows: | ||||||||||||||||
Amortization | |||||||||||||||||
Expense | |||||||||||||||||
(In Thousands) | |||||||||||||||||
2015 | $ | 279 | |||||||||||||||
2016 | 190 | ||||||||||||||||
2017 | 11 | ||||||||||||||||
2018 | - | ||||||||||||||||
2019 | - | ||||||||||||||||
Accrued_Expenses_and_Other_Lia1
Accrued Expenses and Other Liabilities (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | |||||||||
Components of Accrued Expenses | Components of accrued expenses consisted of the following: | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(In Thousands) | |||||||||
Accrued bonuses | $ | 4,268 | $ | 3,126 | |||||
Accrued commissions | 3,012 | 2,765 | |||||||
Accrued vacation | 2,106 | 1,983 | |||||||
Accrued payroll related liabilities | 2,055 | 1,682 | |||||||
Accrued software expense | 820 | 1,093 | |||||||
Short-term portion of lease abandonment accrual | 609 | 475 | |||||||
Deferred rent | 400 | 513 | |||||||
Accrued sales and use tax | 274 | 275 | |||||||
Income tax related accruals | 107 | 614 | |||||||
Other accrued expenses | 2,491 | 1,800 | |||||||
Total | $ | 16,142 | $ | 14,326 | |||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||
Components of Company's Income Tax Provision (Benefit) | Significant components of the Company’s income tax provision (benefit) consisted of the following: | ||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||
Current tax expense: | |||||||||||||||||||||||||
Federal | $ | - | $ | - | $ | - | |||||||||||||||||||
State | 377 | 234 | 263 | ||||||||||||||||||||||
Foreign | 68 | 95 | 93 | ||||||||||||||||||||||
445 | 329 | 356 | |||||||||||||||||||||||
Deferred tax expense (benefit): | |||||||||||||||||||||||||
Federal | 2,092 | 5,088 | 1,178 | ||||||||||||||||||||||
State | 709 | 748 | 173 | ||||||||||||||||||||||
Foreign | 301 | - | - | ||||||||||||||||||||||
Change in valuation allowance | - | (36,226 | ) | (1,323 | ) | ||||||||||||||||||||
3,102 | (30,390 | ) | 28 | ||||||||||||||||||||||
Unrecognized tax benefit | (370 | ) | (28 | ) | 17 | ||||||||||||||||||||
Income tax provision (benefit) | $ | 3,177 | $ | (30,089 | ) | $ | 401 | ||||||||||||||||||
Statutory Federal Tax Rate of Income from Continuing Operations | The differences in income taxes determined by applying the statutory federal tax rate of 34% to income from continuing operations before income taxes and the amounts recorded in the accompanying consolidated statements of comprehensive income result from the following: | ||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | ||||||||||||||||||||
(Dollar Amounts In Thousands) | |||||||||||||||||||||||||
Income tax at statutory rate | $ | 2,468 | 34 | % | $ | 1,570 | 34 | % | $ | 628 | 34 | % | |||||||||||||
Add (deduct): | |||||||||||||||||||||||||
State income taxes, net of federal tax benefit | 556 | 7.7 | 243 | 5.2 | 174 | 9.4 | |||||||||||||||||||
Tax rate difference on foreign income taxes | 26 | 0.4 | 47 | 1 | 188 | 10.1 | |||||||||||||||||||
Tax effect of rate change on deferred tax assets | 252 | 3.5 | (169 | ) | (3.6 | ) | - | - | |||||||||||||||||
Non-deductible items | 112 | 1.6 | 98 | 2.1 | 160 | 8.6 | |||||||||||||||||||
Net decrease in deferred tax attributes | 183 | 2.5 | 4,370 | 94.6 | 516 | 27.9 | |||||||||||||||||||
Decrease in valuation allowance against certain deferred tax assets | - | - | (36,226 | ) | (784.3 | ) | (1,323 | ) | (71.6 | ) | |||||||||||||||
Unrecognized tax benefits | (370 | ) | (5.1 | ) | (28 | ) | (0.6 | ) | 17 | 0.9 | |||||||||||||||
Other, net | (50 | ) | (0.7 | ) | 6 | 0.1 | 41 | 2.4 | |||||||||||||||||
$ | 3,177 | 43.9 | % | $ | (30,089 | ) | (651.5 | )% | $ | 401 | 21.7 | % | |||||||||||||
Components of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2014 and 2013 are as follows: | ||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||
Deferred income tax assets: | |||||||||||||||||||||||||
Net operating loss carryforwards and credits | $ | 17,539 | $ | 19,552 | |||||||||||||||||||||
Acquired intangible assets | 6,444 | 7,543 | |||||||||||||||||||||||
Reserves and accruals | 1,565 | 1,656 | |||||||||||||||||||||||
Share-based compensation | 2,877 | 2,775 | |||||||||||||||||||||||
Depreciation | 407 | 346 | |||||||||||||||||||||||
Total deferred income tax assets | 28,832 | 31,872 | |||||||||||||||||||||||
Deferred income tax liabilities: | |||||||||||||||||||||||||
Acquired intangible assets | (18 | ) | (96 | ) | |||||||||||||||||||||
Other | (144 | ) | (4 | ) | |||||||||||||||||||||
Total deferred income tax liabilities | (162 | ) | (100 | ) | |||||||||||||||||||||
Valuation allowance | (1,500 | ) | (1,500 | ) | |||||||||||||||||||||
Deferred income tax asset, net | $ | 27,170 | $ | 30,272 | |||||||||||||||||||||
Components of the Net Deferred Tax Assets | Components of the net deferred tax assets reported in the accompanying consolidated balance sheets are as follows: | ||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||
Current | Long-term | Current | Long-term | ||||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||
Assets | $ | 1,265 | $ | 27,677 | $ | 1,238 | $ | 30,625 | |||||||||||||||||
Liabilities | (3 | ) | (269 | ) | (4 | ) | (87 | ) | |||||||||||||||||
Valuation allowance | (66 | ) | (1,434 | ) | (59 | ) | (1,441 | ) | |||||||||||||||||
Net deferred tax asset (liability) | $ | 1,196 | $ | 25,974 | $ | 1,175 | $ | 29,097 | |||||||||||||||||
Deferred Tax Valuation Allowance | Annual changes to the deferred tax valuation allowance are as follows: | ||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||
Balance, beginning of year | $ | 1,500 | $ | 37,726 | $ | 39,049 | |||||||||||||||||||
Additions | - | - | - | ||||||||||||||||||||||
Reductions, net | - | (36,226 | ) | (1,323 | ) | ||||||||||||||||||||
Balance, end of year | $ | 1,500 | $ | 1,500 | $ | 37,726 | |||||||||||||||||||
Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows: | ||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||||
Gross unrecognized tax benefits, beginning of year | $ | 108 | $ | 140 | $ | 155 | |||||||||||||||||||
Increase in tax position in current year | - | - | - | ||||||||||||||||||||||
Settlement/Expiration of statute | - | (32 | ) | (15 | ) | ||||||||||||||||||||
De-recognition through administrative policy | (99 | ) | - | - | |||||||||||||||||||||
Gross unrecognized tax benefits, end of year | $ | 9 | $ | 108 | $ | 140 | |||||||||||||||||||
Employee_ShareBased_Compensati1
Employee Share-Based Compensation Plans (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||
Summary of Share-Based Compensation Expense | The share-based compensation expense and its classification in the statements of comprehensive income were as follows: | ||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
(In Thousands) | |||||||||||||||||
Project and personnel costs | $ | 242 | $ | 276 | $ | 366 | |||||||||||
Selling, general and administrative | 1,270 | 1,193 | 1,053 | ||||||||||||||
Total share-based compensation expense | $ | 1,512 | $ | 1,469 | $ | 1,419 | |||||||||||
Schedule of Fair Value of Option Award Granted Based Upon Weighted-Average Assumptions | The fair value of each option award granted during 2014, 2013 and 2012, was based upon the following weighted-average assumptions: | ||||||||||||||||
Year Ending December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Expected volatility | 48 | % | 47.5 | % | 52.4 | % | |||||||||||
Expected dividend yield | - | % | - | % | - | % | |||||||||||
Expected life (in years) | 3.69 | 3.75 | 3.86 | ||||||||||||||
Risk-free interest rate | 0.8 | % | 0.4 | % | 0.4 | % | |||||||||||
Summary of Stock Option Activity Under the Equity Plans | A summary of stock option activity under the Equity Plans (excluding restricted share awards) is presented below: | ||||||||||||||||
Stock Options: | Shares | Weighted | Weighted | Aggregate | |||||||||||||
Under | Average | Average | Intrinsic | ||||||||||||||
Options | Exercise Price | Remaining | Value | ||||||||||||||
Per Share | Contractual | ||||||||||||||||
Term (Years) | |||||||||||||||||
(In Thousands) | |||||||||||||||||
Outstanding at January 1, 2013 | 4,109,537 | $ | 3.85 | ||||||||||||||
Granted | 412,170 | 4.18 | |||||||||||||||
Exercised | (250,123 | ) | 3.39 | ||||||||||||||
Forfeited or expired | (262,556 | ) | 4.3 | ||||||||||||||
Outstanding at December 31, 2013 | 4,009,028 | $ | 3.89 | 3.87 | $ | 12,933 | |||||||||||
Granted | 352,500 | 6.92 | |||||||||||||||
Exercised | (346,189 | ) | 3.69 | ||||||||||||||
Forfeited or expired | (280,106 | ) | 8.45 | ||||||||||||||
Outstanding at December 31, 2014 | 3,735,233 | $ | 3.85 | 3.51 | $ | 13,667 | |||||||||||
Vested and expected to vest at December 31, 2014 | 3,555,183 | $ | 3.79 | 3.42 | $ | 10,054 | |||||||||||
Exercisable at December 31, 2014 | 2,935,009 | $ | 3.5 | 3.02 | $ | 11,779 | |||||||||||
Summary of Non-vested Restricted Share Activity Under the Restricted Share Plans | A summary of non-vested restricted share activity under the Restricted Share Plans is presented below: | ||||||||||||||||
Restricted Share Awards: | Non-vested | Weighted | |||||||||||||||
Restricted | Average | ||||||||||||||||
Shares | Grant Date | ||||||||||||||||
Fair Value | |||||||||||||||||
Non-vested at January 1, 2013 | 9,000 | $ | 2.97 | ||||||||||||||
Granted | 131,380 | 4.16 | |||||||||||||||
Vested | (14,190 | ) | (2.97 | ) | |||||||||||||
Non-vested at December 31, 2013 | 126,190 | $ | 4.13 | ||||||||||||||
Granted | 84,800 | 7.01 | |||||||||||||||
Vested | (57,272 | ) | (4.49 | ) | |||||||||||||
Non-vested at December 31, 2014 | 153,718 | $ | 5.57 | ||||||||||||||
Expected to vest at December 31, 2014 | 153,718 | $ | 5.57 | ||||||||||||||
Summary Weighted-average Fair Value of the Shares Issued Under the ESPP Plans | Expected volatility was based on historical volatility. | ||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Expected volatility | 47.2 | % | 42.7 | % | 52.5 | % | |||||||||||
Expected dividend yield | - | % | - | % | - | % | |||||||||||
Expected life (in years) | 0.25 | 0.25 | 0.25 | ||||||||||||||
Risk-free interest rate | 0 | % | 0.1 | % | 0.1 | % |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||
Non-cancellable Lease Terms | Commitments. We lease office space and certain equipment under operating leases that expire at various times through 2016. Future minimum lease payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2014, were as follows: | ||||||||
Year Ending December 31, | Abandoned | Operating | |||||||
Lease | Leases | ||||||||
(In Thousands) | |||||||||
2014 | $ | 609 | $ | 915 | |||||
2015 | 456 | 649 | |||||||
2016 | - | 5 | |||||||
2017 | - | - | |||||||
Thereafter | - | - | |||||||
$ | 1,065 | $ | 1,569 | ||||||
Unaudited_Supplementary_Quarte1
Unaudited Supplementary Quarterly Financial Information (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||
Unaudited Supplementary Quarterly Financial Information | The following tables set forth certain unaudited supplementary quarterly financial information for the years ended December 31, 2014 and 2013. The quarterly operating results are not necessarily indicative of future results of operations. | ||||||||||||||||||||
2014 | |||||||||||||||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Total | |||||||||||||||||
(In Thousands, Except Per Share Data) | |||||||||||||||||||||
Total revenue | $ | 27,614 | $ | 29,222 | $ | 28,729 | $ | 27,424 | $ | 112,989 | |||||||||||
Gross profit | $ | 10,107 | $ | 10,886 | $ | 10,416 | $ | 9,957 | $ | 41,366 | |||||||||||
Net income | $ | 711 | $ | 1,721 | $ | 976 | $ | 656 | $ | 4,064 | |||||||||||
Basic income per share | $ | 0.06 | $ | 0.15 | $ | 0.09 | $ | 0.06 | $ | 0.37 | |||||||||||
Diluted income per share | $ | 0.06 | $ | 0.13 | $ | 0.08 | $ | 0.05 | $ | 0.31 | |||||||||||
2013 | |||||||||||||||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Total | |||||||||||||||||
(In Thousands, Except Per Share Data) | |||||||||||||||||||||
Total revenue | $ | 23,476 | $ | 27,900 | $ | 25,399 | $ | 26,781 | $ | 103,556 | |||||||||||
Gross profit | $ | 7,140 | $ | 10,041 | $ | 9,657 | $ | 10,734 | $ | 37,572 | |||||||||||
Net (loss) income | $ | (889 | ) | $ | 1,414 | $ | 1,772 | $ | 32,411 | $ | 34,708 | ||||||||||
Basic (loss) income per share | $ | (0.08 | ) | $ | 0.13 | $ | 0.17 | $ | 2.99 | $ | 3.21 | ||||||||||
Diluted (loss) income per share | $ | (0.08 | ) | $ | 0.12 | $ | 0.14 | $ | 2.55 | $ | 2.88 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 12 Months Ended | 0 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 30, 2012 | |
Unit | ||||
Segment | ||||
Customer | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Maturity period of cash and cash equivalent | Three months or less | |||
Cash equivalent balances consisted in money market funds | $4,100,000 | $4,100,000 | ||
Capitalized amount in product development cost | 40,000 | 493,000 | ||
Amortization from capitalized software development costs | 214,000 | 327,000 | 156,000 | |
Number of operating segments for business activities | 1 | |||
Number of reporting units for goodwill allocation | 3 | |||
Standard payment terms to customers | 30 days | |||
Losses recognized on fixed-price contracts | 0 | 0 | 0 | |
Maintenance fee revenue recognition period | 1 year | |||
Purchase of software and intellectual property | 8,118,000 | 11,587,000 | 10,190,000 | |
License related revenue | 2,500,000 | 788,000 | ||
Software modules contract expected revenue recognized after expiration | 0 | |||
Diluted computation increased | 47,000 | 507,000 | 1,700,000 | |
Share-based awards outstanding under equity plans | 3,735,233 | 4,009,028 | 4,109,537 | |
Excess customer balance from receivables | 0 | 0 | ||
Customer balances excess percentage of total receivables balance | 10.00% | 10.00% | ||
Customer threshold percentage of total receivables or total service revenue | 10.00% | 10.00% | 10.00% | |
Number of largest customers | 5 | |||
Revenue from Rights Concentration Risk [Member] | Sales Revenue, Net [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Aggregate service revenue | 17.80% | 16.50% | 14.80% | |
Edgewater Fullscope [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
License related revenue | 2,500,000 | 788,000 | ||
PI2 Solution [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Purchase of software and intellectual property | $3,250,000 | |||
Minimum [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property and equipment estimated useful lives | 3 years | |||
Acquired intangible assets useful lives | 1 year 6 months | |||
Warranty period on fixed-price contracts | 30 days | |||
Maximum [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Property and equipment estimated useful lives | 10 years | |||
Estimated economic life of product | 3 years | |||
Acquired intangible assets useful lives | 7 years 6 months | |||
Warranty period on fixed-price contracts | 60 days |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies - Components of Other Expense, Net (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Regulatory Assets [Abstract] | |||
Interest expense (income) | $15 | ($2) | ($6) |
Loss on foreign exchange transactions | 166 | 94 | 73 |
Other expense, net | $181 | $92 | $67 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies - Reconciliation of Net Income (Loss) and Weighted Average Shares used in Computing Basic and Diluted Net Income (Loss) Per Share (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Basic net income per share: | |||||||||||
Net income applicable to common shares | $4,064 | $34,708 | $1,447 | ||||||||
Weighted average common shares outstanding | 11,131 | 10,813 | 11,180 | ||||||||
Basic net income per share of common stock | $0.06 | $0.09 | $0.15 | $0.06 | $2.99 | $0.17 | $0.13 | ($0.08) | $0.37 | $3.21 | $0.13 |
Diluted net income per share: | |||||||||||
Net income applicable to common shares | $4,064 | $34,708 | $1,447 | ||||||||
Weighted average common shares outstanding | 11,131 | 10,813 | 11,180 | ||||||||
Dilutive effects of stock options and restricted stock awards | 1,959 | 1,218 | 409 | ||||||||
Weighted average common shares, assuming dilutive effect of stock options | 13,090 | 12,031 | 11,589 | ||||||||
Diluted net income per share of common stock | $0.05 | $0.08 | $0.13 | $0.06 | $2.55 | $0.14 | $0.12 | ($0.08) | $0.31 | $2.88 | $0.13 |
Fair_Value_Measurement_Company
Fair Value Measurement - Company's Fair Value Hierarchy for its Financial Assets and Liabilities (Detail) (Fair Value, Measurements, Recurring [Member], USD $) | Dec. 31, 2014 | Dec. 24, 2013 |
In Thousands, unless otherwise specified | ||
Financial assets: | ||
Total financial assets | $4,084 | $4,084 |
Money Market Investment [Member] | ||
Financial assets: | ||
Total financial assets | 4,084 | 4,084 |
Quoted Prices in Active Markets for Identical Items (Level1) [Member] | ||
Financial assets: | ||
Total financial assets | 4,084 | 4,084 |
Quoted Prices in Active Markets for Identical Items (Level1) [Member] | Money Market Investment [Member] | ||
Financial assets: | ||
Total financial assets | $4,084 | $4,084 |
Fair_Value_Measurement_Additio
Fair Value Measurement - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Financial instruments transferred into or out of Level 3 classification | $0 | $0 | $0 |
Level 3 instruments recorded | 0 | 0 | 0 |
Meridian [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Selling and administrative expense | $231,000 |
Accounts_Receivable_Additional
Accounts Receivable - Additional Information (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Accounts Receivable Textual [Abstract] | ||
Accounts receivable unbilled amounts | $2.40 | $2.70 |
Accounts_Receivable_Changes_in
Accounts Receivable - Changes in Allowance for Doubtful Accounts (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Receivables [Abstract] | |||
Balance at beginning of year | $150 | $250 | $300 |
Provisions for doubtful accounts | 47 | 39 | 21 |
Charge-offs, net of recoveries | -47 | -139 | -71 |
Balance at end of year | $150 | $150 | $250 |
Property_and_Equipment_Compone
Property and Equipment - Components of Property and Equipment (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $5,808 | $5,968 |
Less accumulated depreciation and amortization | -4,779 | -4,531 |
Total | 1,029 | 1,437 |
Furniture, Fixtures and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,553 | 1,553 |
Computer Equipment and Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,210 | 1,357 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $3,045 | $3,058 |
Property_and_Equipment_Additio
Property and Equipment - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Property And Equipment Textual [Abstract] | |||
Depreciation expense related to plant and equipment | $626,000 | $814,000 | $837,000 |
Amount disposed of property plant and equipment | 378,000 | 345,000 | |
Gain or loss on disposal of property plant and equipment | $0 | ($9,000) | $0 |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets - Changes in the Carrying Amount of Goodwill (Detail) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, beginning Balance | $12,049 | $12,049 |
Adjustments to goodwill | 0 | 0 |
Goodwill, ending Balance | $12,049 | $12,049 |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Impairment charges of cumulative goodwill | $54,600,000 | ||
Other net intangibles | 480,000 | 956,000 | |
Weighted average amortization period of intangible assets | 6 months | 1 year 6 months | 2 years 6 months |
Amortization expense of intangible assets | 302,000 | 738,000 | 1,100,000 |
Amortization from capitalized software development costs | $214,000 | $327,000 | $156,000 |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets - Summary of the Identifiable Intangible Assets Subject for Amortization (Detail) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $17,377 | $17,337 |
Impairment Charges | 0 | 0 |
Accumulated Amortization | 16,897 | 16,381 |
Net Carrying Amount | 480 | 956 |
Non-compete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 3,860 | 3,860 |
Impairment Charges | 0 | 0 |
Accumulated Amortization | 3,822 | 3,634 |
Net Carrying Amount | 38 | 226 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 10,378 | 10,378 |
Impairment Charges | 0 | 0 |
Accumulated Amortization | 10,330 | 10,239 |
Net Carrying Amount | 48 | 139 |
Asset Purchase Agreement [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,400 | 1,400 |
Impairment Charges | 0 | 0 |
Accumulated Amortization | 1,400 | 1,400 |
Trade Name and Trademark [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 600 | 600 |
Impairment Charges | 0 | 0 |
Accumulated Amortization | 600 | 586 |
Net Carrying Amount | 14 | |
Capitalized Product Development Costs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,139 | 1,099 |
Impairment Charges | 0 | 0 |
Accumulated Amortization | 745 | 522 |
Net Carrying Amount | $394 | $577 |
Goodwill_and_Intangible_Assets5
Goodwill and Intangible Assets - Estimated Useful lives of the Acquired Identifiable Intangible Assets (Detail) | 12 Months Ended |
Dec. 31, 2014 | |
Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 1 year 6 months |
Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 7 years 6 months |
Non-compete Agreements [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 4 years |
Non-compete Agreements [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 5 years |
Customer Relationships [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 4 years |
Customer Relationships [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 7 years 6 months |
Asset Purchase Agreement [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 1 year 6 months |
Trade Name and Trademark [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 5 years |
Capitalized Product Development Costs [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 3 years |
Goodwill_and_Intangible_Assets6
Goodwill and Intangible Assets - Estimated Annual Amortization Expense (Detail) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Estimated annual amortization expense | |
2015 | $279 |
2016 | 190 |
2017 | 11 |
2018 | 0 |
2019 | $0 |
Accrued_Expenses_and_Other_Lia2
Accrued Expenses and Other Liabilities - Components of Accrued Expenses (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Components of accrued liabilities | ||
Accrued bonuses | $4,268 | $3,126 |
Accrued commissions | 3,012 | 2,765 |
Accrued vacation | 2,106 | 1,983 |
Accrued payroll related liabilities | 2,055 | 1,682 |
Accrued software expense | 820 | 1,093 |
Short-term portion of lease abandonment accrual | 609 | 475 |
Deferred rent | 400 | 513 |
Accrued sales and use tax | 274 | 275 |
Income tax related accruals | 107 | 614 |
Other accrued expenses | 2,491 | 1,800 |
Total | $16,142 | $14,326 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income Tax Benefit [Line Items] | ||||
Income tax provision (benefit) | $3,177,000 | ($30,089,000) | $401,000 | |
Gross deferred tax assets | 28,832,000 | 31,872,000 | ||
Valuation allowance | 1,500,000 | 1,500,000 | 37,726,000 | 39,049,000 |
Pre-tax income | 8,200,000 | |||
Pretax income period | 3 years | |||
Statutory federal tax rate to income from continuing operations | 34.00% | |||
Excess tax deductions from stock option exercises | 1,100,000 | 1,100,000 | ||
Accrued interest and penalties | 49,000 | 320,000 | ||
Tax benefit unrecognized | 9,000 | |||
Expire in 2030 [Member] | ||||
Income Tax Benefit [Line Items] | ||||
Foreign tax credits | 2,100,000 | |||
Expire in 2030 [Member] | Federal [Member] | ||||
Income Tax Benefit [Line Items] | ||||
Net operating loss carryforwards | 15,300,000 | |||
Expire in 2030 [Member] | State [Member] | ||||
Income Tax Benefit [Line Items] | ||||
Net operating loss carryforwards | 15,300,000 | |||
Expire in 2020 [Member] | ||||
Income Tax Benefit [Line Items] | ||||
Net operating loss carryforwards | 12,100,000 | |||
Foreign tax credits | 1,000,000 | |||
Expire in 2034 [Member] | ||||
Income Tax Benefit [Line Items] | ||||
Net operating loss carryforwards | $1,100,000 | |||
Earliest Tax Year [Member] | ||||
Income Tax Benefit [Line Items] | ||||
Open tax year subject to examination | 2004 | |||
Latest Tax Year [Member] | ||||
Income Tax Benefit [Line Items] | ||||
Open tax year subject to examination | 2014 |
Income_Taxes_Components_of_Com
Income Taxes - Components of Company's Income Tax Provision (Benefit) (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Current tax expense: | |||
Federal | $0 | $0 | $0 |
State | 377 | 234 | 263 |
Foreign | 68 | 95 | 93 |
Total | 445 | 329 | 356 |
Deferred tax expense (benefit): | |||
Federal | 2,092 | 5,088 | 1,178 |
State | 709 | 748 | 173 |
Foreign | 301 | ||
Change in valuation allowance | -36,226 | -1,323 | |
Total | 3,102 | -30,390 | 28 |
Unrecognized tax benefit | -370 | -28 | 17 |
Income tax provision (benefit) | $3,177 | ($30,089) | $401 |
Income_Taxes_Statutory_Federal
Income Taxes - Statutory Federal Tax Rate of Income from Continuing Operations (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Abstract] | |||
Income tax at statutory rate, Amount | $2,468 | $1,570 | $628 |
Add (deduct), Amount | |||
State income taxes, net of federal tax benefit, Amount | 556 | 243 | 174 |
Tax rate difference on foreign income taxes, Amount | 26 | 47 | 188 |
Tax effect of rate change on deferred tax assets, Amount | 252 | -169 | |
Non-deductible items, Amount | 112 | 98 | 160 |
Net decrease in deferred tax attributes, Amount | 183 | 4,370 | 516 |
Decrease in valuation allowance against certain deferred tax assets, Amount | -36,226 | -1,323 | |
Unrecognized tax benefits, Amount | -370 | -28 | 17 |
Other, net, Amount | -50 | 6 | 41 |
Income tax provision (benefit) | $3,177 | ($30,089) | $401 |
Income tax at statutory rate | 34.00% | 34.00% | 34.00% |
Add (deduct): | |||
State income taxes, net of federal tax benefit, Rate | 7.70% | 5.20% | 9.40% |
Tax rate difference on foreign income taxes, Rate | 0.40% | 1.00% | 10.10% |
Tax effect of rate change on deferred tax assets, Rate | 3.50% | -3.60% | |
Non-deductible items, Rate | 1.60% | 2.10% | 8.60% |
Net decrease in deferred tax attributes, Rate | 2.50% | 94.60% | 27.90% |
Decrease in valuation allowance against certain deferred tax assets, Rate | -784.30% | -71.60% | |
Unrecognized tax benefits, Rate | -5.10% | -0.60% | 0.90% |
Other, net, Rate | -0.70% | 0.10% | 2.40% |
Income (loss) from continuing operations | 43.90% | -651.50% | 21.70% |
Income_Taxes_Components_of_Def
Income Taxes - Components of Deferred Tax Assets and Liabilities (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Thousands, unless otherwise specified | ||||
Deferred income tax assets: | ||||
Net operating loss carryforwards and credits | $17,539 | $19,552 | ||
Acquired intangible assets | 6,444 | 7,543 | ||
Reserves and accruals | 1,565 | 1,656 | ||
Share-based compensation | 2,877 | 2,775 | ||
Depreciation | 407 | 346 | ||
Total deferred income tax assets | 28,832 | 31,872 | ||
Deferred income tax liabilities: | ||||
Acquired intangible assets | -18 | -96 | ||
Other | -144 | -4 | ||
Total deferred income tax liabilities | -162 | -100 | ||
Valuation allowance | -1,500 | -1,500 | -37,726 | -39,049 |
Deferred income tax asset , net | $27,170 | $30,272 |
Income_Taxes_Components_of_the
Income Taxes - Components of the Net Deferred Tax Assets (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Income Tax Disclosure [Abstract] | ||
Assets, Current | $1,265 | $1,238 |
Liabilities, Current | -3 | -4 |
Valuation allowance, Current | -66 | -59 |
Net deferred tax asset (liability), Current | 1,196 | 1,175 |
Assets, Long-term | 27,677 | 30,625 |
Liabilities, Long-term | -269 | -87 |
Valuation allowance, Long-term | -1,434 | -1,441 |
Net deferred tax asset (liability), Long-term | $25,974 | $29,097 |
Income_Taxes_Deferred_Tax_Valu
Income Taxes - Deferred Tax Valuation Allowance (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Abstract] | |||
Balance, beginning of year | $1,500 | $37,726 | $39,049 |
Additions | 0 | 0 | 0 |
Reductions, net | -36,226 | -1,323 | |
Balance, end of year | $1,500 | $1,500 | $37,726 |
Income_Taxes_Reconciliation_of
Income Taxes - Reconciliation of Unrecognized Tax Benefits (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Abstract] | |||
Gross unrecognized tax benefits, beginning of year | $108 | $140 | $155 |
Increases in tax position in current year | 0 | 0 | 0 |
Settlement/Expiration of statute | -32 | -15 | |
De-recognition through administrative policy | -99 | ||
Gross unrecognized tax benefits, end of year | $9 | $108 | $140 |
Employee_Benefit_Plans_Additio
Employee Benefit Plans - Additional Information (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Schedule Of Sale Of Subsidiary [Abstract] | |||
Percentage of participant's annual contribution under tax deferred savings plan | 30.00% | ||
Percentage of participant's annual base salary | 6.00% | ||
Company's contributions to employee benefit plan | $592 | $550 | $540 |
Employee_ShareBased_Compensati2
Employee Share-Based Compensation Plans - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
CompensationPlan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of share-based compensation plans | 5 | ||
Unrecognized compensation expense | $1,700,000 | ||
Expected weighted average recognition period for unrecognized compensation expense | 1 year 7 days | ||
Shares under options, Granted | 352,500 | 412,170 | |
Estimated forfeiture rate | 22.50% | ||
Weighted average grant date fair value of options granted | $2.53 | $1.51 | $1.53 |
Intrinsic value of stock options exercised | 1,200,000 | 639,000 | 103,000 |
Common stock, par value | $0.01 | $0.01 | |
Stock-based compensation expense under share based plans | 1,512,000 | 1,469,000 | 1,419,000 |
Total fair value of stock awards vested | 797,000 | 55,000 | 24,000 |
Employee stock purchase plan, percentage of purchase price | 85.00% | ||
Option Plans [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Period for shares of restricted stock vested | 4 years | ||
Restricted Stock Units (RSUs) [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Period for shares of restricted stock vested | 5 years | ||
Weighted average grant date fair value of options granted | $7.01 | $4.16 | |
Common stock, par value | $0.01 | ||
Issuance of restricted stock awards, shares | 154,000 | ||
Restricted share awards issued to employees | 84,800 | 131,380 | 0 |
Purchase price of restricted share awards issued to employees | $0.01 | $0.01 | |
Stock-based compensation expense under share based plans | $386,000 | $178,000 | $18,000 |
Minimum [Member] | Option Plans [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Period for shares of restricted stock vested | 3 years | ||
Maximum [Member] | Option Plans [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Period for shares of restricted stock vested | 5 years | ||
1996 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Outstanding shares of common stock | 15.00% | ||
Stock option grants | 650,000 | ||
Shares available for future grant | 0 | ||
Stock option plan, expiration date | 30-Jun-06 | ||
2000 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock option grants | 4,000,000 | ||
Shares available for future grant | 349,274 | ||
2008 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock option grants | 1,200,000 | ||
Shares available for future grant | 19,702 | ||
Share issued | 1,500,000 | ||
Stock option plan, effective date | 11-Jun-08 | ||
2012 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock option grants | 1,100,000 | ||
Shares available for future grant | 203,527 | ||
Stock option plan, effective date | 6-Jun-12 | ||
Employee Stock Purchase Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share issued | 103,401 | 135,100 | 176,375 |
Weighted-average fair value of the shares issued under the ESPP Plans | $1.75 | $1.05 | $0.78 |
2003 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock option grants | 500,000 | ||
Shares available for future grant | 0 | ||
Stock option plan, expiration date | 22-May-13 |
Employee_ShareBased_Compensati3
Employee Share-Based Compensation Plans - Summary of Share-Based Compensation Expense (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total share-based compensation expense | $1,512 | $1,469 | $1,419 |
Project and Personnel Costs [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total share-based compensation expense | 242 | 276 | 366 |
Selling, General and Administrative [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total share-based compensation expense | $1,270 | $1,193 | $1,053 |
Employee_ShareBased_Compensati4
Employee Share-Based Compensation Plans - Schedule of Fair Value of Option Award Granted Based Upon Weighted-Average Assumptions (Detail) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Expected volatility | 48.00% | 47.50% | 52.40% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected life (in years) | 3 years 8 months 9 days | 3 years 9 months | 3 years 10 months 10 days |
Risk-free interest rate | 0.80% | 0.40% | 0.40% |
Employee_ShareBased_Compensati5
Employee Share-Based Compensation Plans - Summary of Stock Option Activity Under the Equity Plans (Detail) (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Shares Under Options, Beginning Balance | 4,009,028 | 4,109,537 |
Shares under options, Granted | 352,500 | 412,170 |
Shares Under Options, Exercised | -346,189 | -250,123 |
Shares Under Options, Forfeited or expired | -280,106 | -262,556 |
Shares Under Options, Ending Balance | 3,735,233 | 4,009,028 |
Weighted Average Exercise Price, Beginning Balance | $3.89 | $3.85 |
Shares Under Options, Vested and expected to vest at December 31, 2014 | 3,555,183 | |
Weighted Average Exercise Price, Granted | $6.92 | $4.18 |
Shares Under Options, Exercisable at December 31, 2014 | 2,935,009 | |
Weighted Average Exercise Price, Exercised | $3.69 | $3.39 |
Weighted Average Exercise Price, Forfeited or expired | $8.45 | $4.30 |
Weighted Average Exercise Price, Ending Balance | $3.85 | $3.89 |
Weighted Average Exercise Price, Vested and expected to vest at December 31, 2014 | $3.79 | |
Weighted Average Exercise Price, Exercisable at December 31, 2014 | $3.50 | |
Weighted Average Remaining Contractual Term, Outstanding | 3 years 6 months 4 days | 3 years 10 months 13 days |
Weighted Average Remaining Contractual Term, Vested and Expected to vest | 3 years 5 months 1 day | |
Weighted Average Remaining Contractual Term, Exercisable | 3 years 7 days | |
Aggregate Intrinsic Value, Outstanding | $13,667 | $12,933 |
Aggregate Intrinsic Value, Vested and expected to vest | 10,054 | |
Aggregate Intrinsic Value, Exercisable | $11,779 |
Employee_ShareBased_Compensati6
Employee Share-Based Compensation Plans - Summary of Non-vested Restricted Share Activity Under the Restricted Share Plans (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted Average Grant Value, Granted | $2.53 | $1.51 | $1.53 |
Restricted Stock Units (RSUs) [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Non-vested Restricted Shares, Beginning Balance | 126,190 | 9,000 | |
Non-vested Restricted Shares, Granted | 84,800 | 131,380 | |
Non-vested Restricted Shares, Vested | -57,272 | -14,190 | |
Non-vested Restricted Shares, Ending Balance | 153,718 | 126,190 | |
Weighted Average Grant Date Fair Value, Non-vested Beginning Balance | $4.13 | $2.97 | |
Non-vested restricted shares, Expected to vest | 153,718 | ||
Weighted Average Grant Value, Granted | $7.01 | $4.16 | |
Weighted Average Grant Value, Vested | ($4.49) | ($2.97) | |
Weighted Average Grant Date Fair Value, Non-vested Ending Balance | $5.57 | $4.13 | |
Weighted average grant date fair value, Expected to vest | $5.57 |
Employee_ShareBased_Compensati7
Employee Share-Based Compensation Plans - Summary Weighted-average Fair Value of the Shares Issued Under the ESPP Plans (Detail) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 48.00% | 47.50% | 52.40% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected life (in years) | 3 years 8 months 9 days | 3 years 9 months | 3 years 10 months 10 days |
Risk-free interest rate | 0.80% | 0.40% | 0.40% |
Employee Stock Purchase Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 47.20% | 42.70% | 52.50% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected life (in years) | 3 months | 3 months | 3 months |
Risk-free interest rate | 0.00% | 0.10% | 0.10% |
Capital_Stock_Additional_Infor
Capital Stock - Additional Information (Detail) (USD $) | 12 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2008 | Dec. 31, 2007 | |
Changes In Equity And Comprehensive Income Line Items [Line Items] | |||||
Common stock available for issuance, Authorized | 48,000,000 | 48,000,000 | |||
Preferred stock available for issuance | 2,000,000 | 2,000,000 | |||
Stock repurchase program | $23,100,000 | $5,000,000 | |||
Extension of the repurchase period | 19-Sep-14 | ||||
Repurchase of common stock | 143,000 | 365,000 | |||
Aggregate purchase prices common stock shares | $967,000 | $1,513,000 | $2,643,000 | ||
Prior Stock Repurchase Program [Member] | |||||
Changes In Equity And Comprehensive Income Line Items [Line Items] | |||||
Extension of the repurchase period | 25-Sep-15 |
Commitments_and_Contingencies_1
Commitments and Contingencies - Non-cancellable Lease Terms (Detail) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Commitments and Contingencies Disclosure [Abstract] | |
Abandoned Lease, 2014 | $609 |
Abandoned Lease, 2015 | 456 |
Abandoned Lease, 2016 | 0 |
Abandoned Lease, 2017 | 0 |
Abandoned Lease, Thereafter | 0 |
Abandoned Lease, Total | 1,065 |
Operating Leases, 2014 | 915 |
Operating Leases, 2015 | 649 |
Operating Leases, 2016 | 5 |
Operating Leases, 2017 | 0 |
Operating Leases, Thereafter | 0 |
Operating Leases, Total | $1,569 |
Commitments_and_Contingencies_2
Commitments and Contingencies - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent payments under operating leases | $1,800,000 | $1,700,000 | $1,600,000 |
Unrecognized tax benefits ,penalties and interest expense | 58,000 | 428,000 | |
Liability associated with potential pre-acquisition sales | 250,000 | ||
Sales and use tax exposure estimated | $1,500,000 |
Revolving_Line_of_Credit_Addit
Revolving Line of Credit - Additional Information (Detail) (Revolving Credit Facility [Member], USD $) | 12 Months Ended | |
Dec. 31, 2014 | Sep. 30, 2013 | |
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Revolving credit facility period | 3 years | |
Borrowing credit facility | $10,000,000 | |
Additional borrowing credit facility | 5,000,000 | |
Total credit facility borrowing capacity | 15,000,000 | |
Variable interest rate | The LIBOR Rate plus 1.5% | |
LIBOR Rate plus | 1.50% | |
Annual commitment fee | 0.15% | |
Due date of amounts outstanding under credit facility | 23-Sep-16 | |
Amount drawn under credit facility | $0 |
Sale_of_Intellectual_Property_
Sale of Intellectual Property - Additional Information (Detail) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 30, 2012 | |
Accounting | ||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Sale of software and intellectual property | $3,250,000 | |||
License related revenue | $2,500,000 | $788,000 | ||
Number of units for Accounting | 1 |
Unaudited_Supplementary_Quarte2
Unaudited Supplementary Quarterly Financial Information - Unaudited Supplementary Quarterly Financial Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenue | $27,424 | $28,729 | $29,222 | $27,614 | $26,781 | $25,399 | $27,900 | $23,476 | $112,989 | $103,556 | $100,881 |
Gross profit | 9,957 | 10,416 | 10,886 | 10,107 | 10,734 | 9,657 | 10,041 | 7,140 | 41,366 | 37,572 | 35,279 |
Net (loss) income | $656 | $976 | $1,721 | $711 | $32,411 | $1,772 | $1,414 | ($889) | $4,064 | $34,708 | $1,447 |
Basic (loss) income per share | $0.06 | $0.09 | $0.15 | $0.06 | $2.99 | $0.17 | $0.13 | ($0.08) | $0.37 | $3.21 | $0.13 |
Diluted (loss) income per share | $0.05 | $0.08 | $0.13 | $0.06 | $2.55 | $0.14 | $0.12 | ($0.08) | $0.31 | $2.88 | $0.13 |