Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Feb. 07, 2014 | Jun. 30, 2013 | |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'EPIQ SYSTEMS INC | ' | ' |
Entity Central Index Key | '0001027207 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Accelerated Filer | ' | ' |
Entity Public Float | ' | ' | $426,780,000 |
Entity Common Stock, Shares Outstanding | ' | 35,652,732 | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
CURRENT ASSETS: | ' | ' |
Cash and cash equivalents | $40,336 | $3,808 |
Trade accounts receivable, less allowance for doubtful accounts of $4,379 and $4,825 | 145,134 | 103,415 |
Prepaid expenses | 10,617 | 9,967 |
Other current assets | 3,882 | 3,414 |
Total Current Assets | 199,969 | 120,604 |
LONG-TERM ASSETS: | ' | ' |
Property and equipment, net | 72,118 | 44,552 |
Internally developed software, net | 16,201 | 18,905 |
Goodwill | 404,302 | 404,211 |
Other intangibles, less accumulated amortization of $108,933 and $90,099 | 41,117 | 59,951 |
Other long-term assets | 14,074 | 6,493 |
Total Long-term Assets, net | 547,812 | 534,112 |
Total Assets | 747,781 | 654,716 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable | 30,419 | 17,351 |
Current maturities of long-term obligations | 13,349 | 9,151 |
Accrued compensation | 17,932 | 5,086 |
Customer deposits | 2,717 | 16,094 |
Deferred revenue | 4,020 | 3,131 |
Dividends payable | 3,142 | 3,231 |
Other accrued expenses | 6,985 | 6,905 |
Total Current Liabilities | 78,564 | 60,949 |
LONG-TERM LIABILITIES: | ' | ' |
Deferred income taxes | 35,558 | 41,409 |
Other long-term liabilities | 8,537 | 5,700 |
Long-term obligations (excluding current maturities) | 299,108 | 203,288 |
Total Long-term Liabilities | 343,203 | 250,397 |
COMMITMENTS AND CONTINGENCIES | ' | ' |
EQUITY: | ' | ' |
Preferred stock - $1 par value; 2,000,000 shares authorized; none issued and outstanding | ' | ' |
Common stock - $0.01 par value; Authorized 100,000,000 shares; Issued and outstanding 2013 - 40,298,852 and 34,991,629 shares respectively, Issued and outstanding 2012 - 39,923,852 and 35,922,509 shares, respectively | 403 | 399 |
Additional paid-in capital | 291,414 | 291,065 |
Accumulated other comprehensive loss | -541 | -1,432 |
Retained earnings | 102,754 | 104,445 |
Treasury stock, at cost - 5,307,223 shares and 4,001,343 shares, respectively | -68,016 | -51,107 |
Total Equity | 326,014 | 343,370 |
Total Liabilities and Equity | $747,781 | $654,716 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ' | ' |
Trade accounts receivable, allowance for doubtful accounts (in dollars) | $4,379 | $4,825 |
Other intangibles, accumulated amortization (in dollars) | $108,933 | $90,099 |
Preferred stock, par value (in dollars per share) | $1 | $1 |
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 (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 40,298,852 | 39,923,852 |
Common stock, shares outstanding | 34,991,629 | 35,922,509 |
Treasury stock, shares | 5,307,223 | 4,001,343 |
CONSOLIDATED_STATEMENTS_OF_INC
CONSOLIDATED STATEMENTS OF INCOME (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
REVENUE: | ' | ' | ' |
Operating revenue | $438,690 | $344,750 | $261,265 |
Reimbursable expenses | 43,393 | 28,335 | 22,061 |
Total Revenue | 482,083 | 373,085 | 283,326 |
OPERATING EXPENSE: | ' | ' | ' |
Direct cost of operating revenue (exclusive of depreciation and amortization shown separately below) | 210,458 | 145,629 | 90,954 |
Reimbursed direct costs | 41,766 | 27,426 | 21,773 |
Selling, general and administrative | 149,045 | 117,023 | 97,779 |
Depreciation and software and leasehold amortization | 30,971 | 27,399 | 23,081 |
Amortization of identifiable intangible assets | 18,834 | 26,588 | 21,323 |
Fair value adjustment to contingent consideration | 2,580 | -17,188 | -7,166 |
Acquisition related (income) expense | ' | -200 | 7,681 |
Intangible asset impairment expense | ' | 1,777 | 1,278 |
Other operating (income) expense | -791 | -20 | ' |
Total Operating Expense | 452,863 | 328,434 | 256,703 |
INCOME FROM OPERATIONS | 29,220 | 44,651 | 26,623 |
INTEREST EXPENSE (INCOME): | ' | ' | ' |
Interest expense | 12,130 | 9,263 | 5,844 |
Interest income | -15 | -18 | -128 |
Net Interest Expense | 12,115 | 9,245 | 5,716 |
INCOME BEFORE INCOME TAXES | 17,105 | 35,406 | 20,907 |
PROVISION FOR INCOME TAXES | 5,995 | 12,979 | 8,827 |
NET INCOME | $11,110 | $22,427 | $12,080 |
NET INCOME PER SHARE INFORMATION: | ' | ' | ' |
Basic (in dollars per share) | $0.31 | $0.62 | $0.34 |
Diluted (in dollars per share) | $0.30 | $0.61 | $0.33 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ' | ' | ' |
Basic (in shares) | 35,434 | 35,497 | 35,186 |
Diluted (in shares) | 36,302 | 36,373 | 36,506 |
Cash dividends declared per common share (in dollars per share) | $0.36 | $0.39 | $0.21 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ' | ' | ' |
Net income | $11,110 | $22,427 | $12,080 |
Other comprehensive income: | ' | ' | ' |
Foreign currency translation adjustment | 891 | 555 | -16 |
Comprehensive income | $12,001 | $22,982 | $12,064 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock |
Balance at Dec. 31, 2010 | $328,523,000 | $391,000 | $281,119,000 | ($1,971,000) | $91,069,000 | ($42,085,000) |
Balance (in shares) at Dec. 31, 2010 | ' | 39,063,000 | ' | ' | ' | -3,295,000 |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Net income | 12,080,000 | ' | ' | ' | 12,080,000 | ' |
Foreign currency translation adjustment | -16,000 | ' | ' | -16,000 | ' | ' |
Tax benefit/deficiency from share-based compensation | 264,000 | ' | 264,000 | ' | ' | ' |
Restricted common stock issued under share-based compensation plans | 2,857,000 | 4,000 | -1,883,000 | ' | ' | 4,736,000 |
Restricted common stock issued under share-based compensation plans (in shares) | ' | 431,000 | ' | ' | ' | 367,000 |
Common stock repurchased under share-based compensation plans | -900,000 | ' | ' | ' | ' | -900,000 |
Common stock repurchased under share-based compensation plans (in shares) | -66,290 | ' | ' | ' | ' | -67,000 |
Share repurchases (Note 7) | -9,958,000 | ' | ' | ' | ' | -9,958,000 |
Share repurchases (Note 7) (in shares) | ' | ' | ' | ' | ' | -745,000 |
Dividends declared ($0.36, $0.385 and $0.205 per share for the year ended December 31, 2013, 2012 and 2011 respectively) (Note 7) | -7,300,000 | ' | ' | ' | -7,300,000 | ' |
Share-based compensation expense | 7,369,000 | ' | 7,369,000 | ' | ' | ' |
Balance at Dec. 31, 2011 | 332,919,000 | 395,000 | 286,869,000 | -1,987,000 | 95,849,000 | -48,207,000 |
Balance (in shares) at Dec. 31, 2011 | ' | 39,494,000 | ' | ' | ' | -3,740,000 |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Net income | 22,427,000 | ' | ' | ' | 22,427,000 | ' |
Foreign currency translation adjustment | 555,000 | ' | ' | 555,000 | ' | ' |
Tax benefit/deficiency from share-based compensation | -315,000 | ' | -315,000 | ' | ' | ' |
Restricted common stock issued under share-based compensation plans | 4,000 | 4,000 | ' | ' | ' | ' |
Restricted common stock issued under share-based compensation plans (in shares) | ' | 430,000 | ' | ' | ' | ' |
Stock option exercises | 880,000 | ' | -2,208,000 | ' | ' | 3,088,000 |
Stock option exercises (in shares) | ' | ' | ' | ' | ' | 240,000 |
Common stock repurchased under share-based compensation plans | -2,689,000 | ' | ' | ' | ' | -2,689,000 |
Common stock repurchased under share-based compensation plans (in shares) | -217,713 | ' | ' | ' | ' | -217,000 |
Share repurchases (Note 7) | -3,299,000 | ' | ' | ' | ' | -3,299,000 |
Share repurchases (Note 7) (in shares) | ' | ' | ' | ' | ' | -284,000 |
Dividends declared ($0.36, $0.385 and $0.205 per share for the year ended December 31, 2013, 2012 and 2011 respectively) (Note 7) | -13,831,000 | ' | ' | ' | -13,831,000 | ' |
Share-based compensation expense | 6,719,000 | ' | 6,719,000 | ' | ' | ' |
Balance at Dec. 31, 2012 | 343,370,000 | 399,000 | 291,065,000 | -1,432,000 | 104,445,000 | -51,107,000 |
Balance (in shares) at Dec. 31, 2012 | ' | 39,924,000 | ' | ' | ' | -4,001,000 |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Net income | 11,110,000 | ' | ' | ' | 11,110,000 | ' |
Foreign currency translation adjustment | 891,000 | ' | ' | 891,000 | ' | ' |
Tax benefit/deficiency from share-based compensation | 2,828,000 | ' | 2,828,000 | ' | ' | ' |
Restricted common stock issued under share-based compensation plans | 4,000 | 4,000 | -2,020,000 | ' | ' | 2,020,000 |
Restricted common stock issued under share-based compensation plans (in shares) | ' | 375,000 | ' | ' | ' | 153,000 |
Stock option exercises | 3,001,000 | ' | -7,466,000 | ' | ' | 10,467,000 |
Stock option exercises (in shares) | ' | ' | ' | ' | ' | 780,000 |
Common stock repurchased under share-based compensation plans | -6,515,000 | ' | ' | ' | ' | -6,515,000 |
Common stock repurchased under share-based compensation plans (in shares) | -471,248 | ' | ' | ' | ' | -471,000 |
Share repurchases (Note 7) | -22,881,000 | ' | ' | ' | ' | -22,881,000 |
Share repurchases (Note 7) (in shares) | ' | ' | ' | ' | ' | -1,768,000 |
Dividends declared ($0.36, $0.385 and $0.205 per share for the year ended December 31, 2013, 2012 and 2011 respectively) (Note 7) | -12,801,000 | ' | ' | ' | -12,801,000 | ' |
Share-based compensation expense | 7,007,000 | ' | 7,007,000 | ' | ' | ' |
Balance at Dec. 31, 2013 | $326,014,000 | $403,000 | $291,414,000 | ($541,000) | $102,754,000 | ($68,016,000) |
Balance (in shares) at Dec. 31, 2013 | ' | 40,299,000 | ' | ' | ' | -5,307,000 |
CONSOLIDATED_STATEMENTS_OF_CHA1
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ' | ' | ' |
Dividends declared (in dollars per share) | $0.36 | $0.39 | $0.21 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' | ' |
Net income | $11,110 | $22,427 | $12,080 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' | ' |
Depreciation and software and leasehold amortization | 30,971 | 27,399 | 23,081 |
Amortization of intangible assets | 18,834 | 26,588 | 21,323 |
Fair value adjustment to contingent consideration | 2,580 | -17,188 | -7,166 |
Intangible asset impairment expense | ' | 1,777 | 1,278 |
Share-based compensation expense | 10,008 | 6,719 | 7,369 |
Loan fee amortization and write-off | 1,903 | 716 | 641 |
Provision for doubtful accounts | 2,411 | 2,223 | 2,303 |
Accretion of discount | ' | 1,162 | 212 |
Deferred income tax expense | -6,517 | 1,473 | 2,430 |
Other, net | -803 | -105 | 358 |
Changes in operating assets and liabilities, net of effects from business acquisitions: | ' | ' | ' |
Trade accounts receivable | -43,392 | -17,123 | -9,029 |
Prepaid expenses and other assets | -2,281 | 2,833 | 40 |
Accounts payable and other liabilities | 21,921 | 1,547 | -7,022 |
Customer deposits | -13,377 | 14,122 | -581 |
Deferred Revenue | 877 | -85 | 1,784 |
Excess tax benefit related to share-based compensation | -1,328 | ' | -77 |
Other | -319 | -750 | 1,659 |
Net cash provided by operating activities | 32,598 | 73,735 | 50,683 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' | ' |
Purchase of property and equipment | -34,646 | -16,025 | -12,320 |
Internally developed software costs | -6,061 | -6,467 | -6,320 |
Cash paid for business acquisitions, net of cash acquired | ' | ' | -166,930 |
Proceeds from sale of assets | 5 | 499 | ' |
Other investing activities, net | ' | 186 | 106 |
Net cash used in investing activities | -40,702 | -21,807 | -185,464 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' | ' |
Proceeds from issuance of long-term debt | 300,000 | ' | ' |
Proceeds from revolver borrowings | 88,000 | 65,000 | 214,000 |
Payments to reduce revolver borrowings | -287,000 | -83,000 | -64,000 |
Debt issuance costs | -8,141 | ' | -1,940 |
Payments under long-term obligations | -7,903 | -7,163 | -2,953 |
Payment of deferred acquisition consideration | -3,139 | -8,400 | ' |
Excess tax benefit related to share-based compensation | 1,328 | ' | 77 |
Common stock repurchases (Note 7) | -29,396 | -5,988 | -10,858 |
Cash dividends paid (Note 7) | -12,891 | -12,386 | -5,514 |
Proceeds from exercise of stock options | 3,005 | 884 | 2,857 |
Net cash provided by (used in) financing activities | 43,863 | -51,053 | 131,669 |
Effect of exchange rate changes on cash | 769 | 95 | 511 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 36,528 | 970 | -2,601 |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 3,808 | 2,838 | 5,439 |
CASH AND CASH EQUIVALENTS, END OF YEAR | $40,336 | $3,808 | $2,838 |
NATURE_OF_OPERATIONS_AND_SUMMA
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||
Principles of Consolidation | ||||||||
The Consolidated Financial Statements include the accounts of Epiq Systems, Inc. ("Epiq") and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. | ||||||||
Nature of Operations | ||||||||
We provide integrated technology solutions for the legal profession. Our solutions are designed to streamline the administration of bankruptcy, litigation, investigations, financial transactions and regulatory compliance matters. We offer innovative managed technology solutions for eDiscovery, document review, legal notification, claims administration and controlled disbursement of funds. Our clients include leading law firms, corporate legal departments, bankruptcy trustees, government agencies, mortgage processors, and financial institutions. | ||||||||
Use of Estimates | ||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the periods reported. Actual results may differ from those estimates. | ||||||||
Cash and Cash Equivalents | ||||||||
Cash and cash equivalents include cash on hand and in banks and all liquid investments with original maturities of three months or less at the time of purchase. | ||||||||
Accounts Receivable | ||||||||
Accounts receivable are recorded at the invoiced amount and are non-interest bearing. We maintain an allowance for doubtful accounts to reserve for potentially uncollectible receivables. We review accounts receivable to identify amounts due from customers which are past due to identify specific customers with known disputes or collectability issues. In determining the amount of the reserve, we make judgments about the creditworthiness of significant customers based on ongoing credit evaluations. | ||||||||
Long-lived Assets | ||||||||
Property and equipment, including leasehold improvements and purchased software, are stated at cost and depreciated or amortized on a straight-line basis over the estimated useful life of each asset or, for leasehold improvements, the lesser of the lease term or useful life. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. We first evaluate recoverability of assets to be held and used by comparing the carrying amount of the asset to undiscounted expected future cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment amount is then calculated using a fair-value-based test that compares the fair value of the asset to its carrying value. | ||||||||
Internally Developed Software | ||||||||
Certain internal software development costs incurred in the creation of computer software products for sale, lease or otherwise to be marketed are capitalized once technological feasibility has been established. Capitalized costs are amortized; beginning in the period the product is available for general release, based on the ratio of current revenue to current and estimated future revenue for each product with minimum annual amortization equal to the straight-line amortization over the remaining estimated economic life of the product. Certain internal software development costs incurred in the creation of computer software products for internal use are capitalized when the preliminary project phase is complete and when management, with the relevant authority, authorizes and commits funding to the project and it is probable the project will be completed and the software will be used to perform the function intended. Capitalized costs are amortized, beginning in the period each module or component of the product is ready for its intended use, on a straight-line basis over the estimated economic life of the product. Internally developed software is tested annually for impairment, or more often if an event occurs or circumstances change that would more likely than not reduce the net realizable value to less than its unamortized capitalized cost. | ||||||||
Goodwill | ||||||||
Goodwill consists of the excess of cost of acquired enterprises over the sum of the amounts assigned to identifiable assets acquired less liabilities assumed. We assess goodwill for impairment on an annual basis at a reporting unit level. A reporting unit is a component of a segment that constitutes a business, for which discrete financial information is available, and for which the operating results are regularly reviewed by management. In the first quarter of 2013, we reorganized our internal management reporting structure. Under the new structure, we began reporting our financial performance for our two reportable segments: the Technology segment and the Bankruptcy and Settlement Administration segment. The composition of the segment previously called eDiscovery remains unchanged and is now referred to as the Technology segment ("Technology"). The former Bankruptcy segment and Settlement Administration segment were combined and are now reported as the Bankruptcy and Settlement Administration segment ("Bankruptcy and Settlement Administration"). We have identified our operating segments (Technology and Bankruptcy and Settlement Administration) as our reporting units for purposes of testing for goodwill impairment. At the time of the prior year's goodwill impairment testing, we had identified our three reportable segments as our reporting units (eDiscovery, Bankruptcy, and Settlement Administration). At the time of the change in reporting units during the first quarter of 2013, we evaluated our goodwill balance and determined that there was no impairment of goodwill as a result of the change in reporting units. Goodwill is assessed between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, a change in strategic direction, legal factors, operating performance indicators, a change in the competitive environment, the sale or disposition of a significant portion of a reporting unit, or future economic factors such as unfavorable changes in our stock price and market capitalization or unfavorable changes in the estimated future discounted cash flows of our reporting units. Our annual test is performed as of July 31 each year, and there have been no events since the last annual test to indicate that it is more likely than not that the recorded goodwill balance has become impaired. | ||||||||
Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. We considered both a market approach and an income approach in order to develop an estimate of the fair value of each reporting unit for purposes of our annual impairment test. When available, and as appropriate, we use market multiples derived from a set of competitors or companies with comparable market characteristics to establish fair values for a particular reporting unit (market approach). We also estimate fair value using discounted projected cash flow analysis (income approach). Potential impairment is indicated when the carrying value of a reporting unit, including goodwill, exceeds its estimated fair value. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. In addition, financial and credit market volatility directly impacts our fair value measurement through our weighted average cost of capital, used to determine our discount rate, and through our stock price, used to determine our market capitalization. We may be required to recognize impairment of goodwill based on future economic factors such as unfavorable changes in our stock price and market capitalization or unfavorable changes in the estimated future discounted cash flows of our reporting units. | ||||||||
If we determine that the estimated fair value of any reporting unit is less than the reporting unit's carrying value, then we proceed to the second step of the goodwill impairment analysis to measure the potential impairment charge. An impairment loss is recognized for any excess of the carrying value of the reporting unit's goodwill over the implied fair value. If goodwill on our Consolidated Balance Sheet becomes impaired during a future period, the resulting impairment charge could have a material impact on our results of operations and financial condition. | ||||||||
Our recognized goodwill totaled $404.3 million as of December 31, 2013. As of July 31, 2013, which is the date of our most recent impairment test, the fair value of each of our reporting units was in excess of the carrying value of the reporting unit. We have not, to date, recorded any goodwill impairments. | ||||||||
Intangible Assets | ||||||||
Identifiable intangible assets, resulting from various business acquisitions, consist of customer relationships, agreements not to compete, and trade names. We amortize the identifiable intangible assets over their estimated economic benefit period, generally from five to ten years. These definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances have indicated that the carrying amount of these assets might not be recoverable. If we were to determine that events and circumstances warrant a change to the estimate of an identifiable intangible asset's remaining useful life, then the remaining carrying amount of the identifiable intangible asset would be amortized prospectively over that revised remaining useful life. Additionally, information resulting from other events and circumstances, may indicate that the carrying value of one or more identifiable intangible assets is not recoverable which would result in recognition of an impairment charge. See Note 4 for additional information. | ||||||||
Deferred Loan Fees | ||||||||
Incremental, third-party costs related to establishing credit facilities are capitalized and amortized based on the terms of the related debt. The unamortized costs are included as a component of other long-term assets on our Consolidated Balance Sheets. Amortization costs are included as a component of interest expense on our Consolidated Statements of Income. | ||||||||
Share-Based Compensation | ||||||||
We measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognize that cost over the period during which an employee is required to provide service in exchange for the award. We recognize this expense on a straight-line basis over the requisite service period of the award based on the portion of the award expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We recognize compensation expense for awards subject to performance criteria when it is probable that the performance goal will be achieved. | ||||||||
Income Taxes | ||||||||
A deferred tax asset or liability is recognized for the anticipated future tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements and for operating loss and tax credit carryforwards. A valuation allowance is provided when, in the opinion of management, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Realization of the deferred tax assets is dependent on our ability to generate sufficient future taxable income and, if necessary, execution of our tax planning strategies. In the event we determine that sufficient future taxable income, taking into consideration tax planning strategies, may not generate sufficient taxable income to fully realize net deferred tax assets, we may be required to establish or increase valuation allowances by a charge to income tax expense in the period such a determination is made. This charge may have a material impact on recognized income tax expense on our Consolidated Statements of Income. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The recognition of a change in enacted tax rates may have a material impact on recognized income tax expense and on our Consolidated Statements of Income. | ||||||||
We follow accounting guidance which prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under this guidance, tax positions are initially recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant facts. Application of this guidance requires numerous estimates based on available information. We consider many factors when evaluating and estimating our tax positions and tax benefits, and our recognized tax positions and tax benefits may not accurately anticipate actual outcomes. As we obtain additional information, we may need to periodically adjust our recognized tax positions and tax benefits. These periodic adjustments may have a material impact on our Consolidated Statements of Income. For additional information related to uncertain tax positions see Note 10. | ||||||||
Derivative Instruments | ||||||||
We may use derivative financial instruments as part of our risk management strategy to reduce our interest rate exposure. We do not enter into derivative financial instruments for speculative or trading purposes. The fair value of derivative instruments are recognized as assets and/or liabilities at the balance sheet date. Changes in the fair value of derivative instruments are recognized in operating results or included in accumulated other comprehensive income (loss), depending on whether the derivative instrument is accounted for as a derivative under Accounting Standards Codification ("ASC") 815 "Derivatives and Hedging" or whether the Company elects, and the relationship between the hedged item and hedging instrument, qualifies for hedge accounting treatment and whether it is considered a fair value or cash flow hedge. | ||||||||
For the Company's interest rate cap agreement that was entered in November 2013, the Company has elected to account for the interest rate cap as a cash flow hedge of the risks in changes to expected cash flows related to the interest rate payments on its variable rate term loan that was entered in August 2013. The Company has concluded that the interest rate cap and the underlying exposure are structured in a manner that qualifies for an assumption of perfect effectiveness with no ineffectiveness recognized under ASC 815. As such, all changes in the fair value, including changes in the interest rate cap agreement's time value, of the interest rate cap agreement that occurred from the inception of the cash flow hedge and December 31, 2013 are recognized in accumulated other comprehensive income ("AOCI"). As the caplets settle, the settlement amount is reclassified from AOCI to earnings; which is consistent with the hedged exposure (interest expense) effecting earnings. | ||||||||
The exchange of cash associated with derivative transactions is classified in the Consolidated Statement of Cash Flows in the same category as the cash flows from the items subject to the economic hedging relationships. | ||||||||
The change in fair value of the interest rate cap for the year ended December 31, 2013 was de minimis and had no impact on the Consolidated Statements of Other Comprehensive Income. We did not utilize any derivative instruments during the years ended December 31, 2012 or 2011. For additional information related to derivative instruments see Note 5 and 9. | ||||||||
Revenue Recognition | ||||||||
We have agreements with clients pursuant to which we deliver various services each month. | ||||||||
Following is a description of significant sources of our revenue: | ||||||||
• | ||||||||
Fees contingent upon the month-to-month delivery of services defined by client contracts, such as claims processing, claims reconciliation, professional services, call center support, disbursement services, project management, collection and forensic services, consulting services, document review services, and conversion of data into an organized, searchable electronic database. The amount we earn varies based primarily on the size and complexity of the engagement, the number of hours of professional services provided, and the number of documents or volume of data processed or reviewed. | ||||||||
• | ||||||||
Data hosting fees and volume-based fees. | ||||||||
• | ||||||||
Deposit-based and service fees. Deposit-based fees are earned based on a percentage of Chapter 7 assets placed on deposit with a designated financial institution by our trustee clients, to whom we provide, at no charge, software licenses, limited hardware and hardware maintenance, and postcontract customer support services. The fees earned based on assets placed on deposit by our trustee clients may vary based on fluctuations in short-term interest rates and changes in service fees assessed on such deposits. | ||||||||
• | ||||||||
Legal noticing services to parties of interest in bankruptcy, class action and other administrative matters, including direct notification and media campaign, and advertising management in which we coordinate notification, primarily through print media outlets to potential parties of interest for a particular client engagement. | ||||||||
• | ||||||||
Monitoring and noticing fees earned based on monthly or on-demand requests for information provided through our AACER® software product. | ||||||||
• | ||||||||
Reimbursed expenses, primarily related to postage on mailing services. | ||||||||
Non-Software Arrangements | ||||||||
Certain of our services are billed based on unit prices and volumes for which we have identified each deliverable service element. Based on our evaluation of each element, we have determined that each element delivered has standalone value to our customers because we or other vendors sell such services separately from any other services and deliverables. For certain of these services we have obtained objective and reliable evidence of the fair value of each element based either on the price we charge when we sell an element on a standalone basis or on third-party evidence of fair value of such similar services. For elements where evidence cannot be established, the best estimate of sales price has been used. Our arrangements do not include general rights of return. Accordingly, each of the service elements in our multiple element case and document management arrangements qualifies as a separate unit of accounting. We allocate revenue to the various units of accounting in our arrangements based on the fair value or best estimated selling price of each unit of accounting, which is generally consistent with the stated prices in our arrangements. In instances when revenue recognition is deferred, we utilize the relative selling price method to calculate the revenue recognized for each period. As we have evidence of an arrangement, revenue for each separate unit of accounting is recognized each period. Revenue is recognized as the services are rendered, our fee becomes fixed and determinable, and collectability is reasonably assured. Payments received in advance of satisfaction of the related revenue recognition criteria are recognized as a customer deposit on our Consolidated Balance Sheets until all revenue recognition criteria have been satisfied. | ||||||||
Software Arrangements | ||||||||
For our Chapter 7 bankruptcy trustee arrangements, we provide our trustee clients with a software license, hardware lease, hardware maintenance, and post-contract customer support services, all at no charge to the trustee. The trustees place their liquidated estate deposits with a financial institution with which we have an arrangement. We earn contingent monthly fees from the financial institutions based on the average dollar amount of deposits held by the trustees with that financial institution related to the software license, hardware lease, hardware maintenance, and post-contract customer support services provided to our trustee clients. The monthly deposit fees have two components consisting of an interest-based component and a non-interest based service fee component. Since we have not established vendor specific objective evidence of the fair value of the software license, we do not recognize any revenue on delivery of the software. The software element is deferred and included with the remaining undelivered elements, which are post-contract customer support services. Revenue related to post-contract customer support is entirely contingent on the placement of liquidated estate deposits by the trustee with the financial institution. Accordingly, we recognize this contingent usage based revenue as the fee becomes fixed or determinable at the time actual usage occurs and collectability is probable. This occurs monthly as a result of the computation, billing and collection of monthly deposit fees contractually agreed to. At that time, we have also satisfied the other revenue recognition criteria since we have persuasive evidence that an arrangement exists, services have been rendered, the price is fixed and determinable, and collectability is reasonably assured. | ||||||||
We also provide our trustee clients with certain hardware, such as desktop computers, monitors, and printers as well as hardware maintenance. We retain ownership of all hardware provided and we account for this hardware as a lease. As the hardware maintenance arrangement is an executory contract similar to an operating lease, we use guidance related to contingent rentals in operating lease arrangements for hardware maintenance as well as for the hardware lease. Since the payments under all of our arrangements are contingent upon the level of trustee deposits and the delivery of upgrades and other services, and there remain important uncertainties regarding the amount of unreimbursable costs yet to be incurred by us, we account for the hardware lease as an operating lease. Therefore, all lease payments, based on the estimated fair value of hardware provided, were accounted for as contingent rentals which requires that we recognize rental income when the changes in the factor on which the contingent lease payment is based actually occur. This occurs at the end of each period as we achieve our target when deposits are held at the depository financial institution as, at that time, evidence of an arrangement exists, delivery has occurred, the amount has become fixed and determinable, and collection is reasonably assured. This revenue, which is substantially less than ten percent of our total revenue for the years ended December 31, 2013, 2012 and 2011, is included in the Consolidated Statements of Income as a component of "Operating revenue." | ||||||||
Reimbursements | ||||||||
We have revenue related to the reimbursed expenses, primarily postage. Reimbursed postage and other reimbursable direct costs are recorded gross in the Consolidated Statements of Income as "Reimbursable expenses" and as "Reimbursed direct costs", in the revenue and operating expenses sections, respectively. | ||||||||
Costs Related to Contract Acquisition, Origination, and Set-up | ||||||||
We expense customer contract acquisition, origination, and set-up costs as incurred. | ||||||||
Depreciation and Software and Leasehold Amortization | ||||||||
Depreciation and software and leasehold amortization for the years ended December 31, 2013, 2012 and 2011, was $31.0 million, $27.4 million, and $23.1 million, respectively. The caption "Depreciation and software and leasehold amortization" in the accompanying Consolidated Statements of Income includes costs that are directly related to services of approximately $16.0 million, $12.8 million, and $10.2 million, for the years ended December 31, 2013, 2012 and 2011, respectively. | ||||||||
Income Per Share | ||||||||
Basic net income per share is computed on the basis of weighted average outstanding common shares. We have determined that certain nonvested share awards (also referred to as restricted stock awards) issued by the Company are participating securities because they have non-forfeitable rights to dividends. Accordingly, basic net income per share is calculated under the two-class method calculation. | ||||||||
Diluted net income per share is computed on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect, if any, of stock options. The numerator of the diluted net income per share calculation is decreased by the allocation of net income and dividends to nonvested shares, if the net impact is dilutive. In determining diluted earnings per share, we use the more dilutive earnings per share result between two-class method calculation and the treasury stock method calculation applied to our outstanding nonvested share awards. See Note 11 for additional information. | ||||||||
Segment Information | ||||||||
Our Chief Operating Decision Maker (Epiq's Chief Executive Officer) makes operating decisions and assesses business performance, based on our internal financial reporting structure, on a reportable segment level basis. See Note 14 for additional information. | ||||||||
Foreign Currency Translation | ||||||||
Local currencies are the functional currencies for our operating subsidiaries. Accordingly, assets and liabilities of these subsidiaries are translated at the rate of exchange at the balance sheet date. Adjustments from the translation process are part of accumulated other comprehensive loss and are included as a separate component of equity. The changes in foreign currency translation adjustments were not adjusted for income taxes since they relate to indefinite term investments in non-United States subsidiaries. Income and expense items of significant value are translated as of the date of the transactions for these subsidiaries; however, day to day operational transactions are translated at average rates of exchange. As of December 31, 2013, 2012, and 2011, cumulative translation adjustments included in accumulated other comprehensive loss were $0.5 million, $1.4 million, and $2.0 million, respectively. | ||||||||
Other Comprehensive Income | ||||||||
The only component of other comprehensive income is foreign currency translation. The following table sets forth a reconciliation of other comprehensive income for the years ended December 31, 2013, 2012, and 2011: | ||||||||
Foreign Currency | Accumulated Other | |||||||
Translation | Comprehensive | |||||||
Income | ||||||||
Balance at December 31, 2010 | $ | (1,971 | ) | $ | (1,971 | ) | ||
Current period activity: | ||||||||
Foreign currency translation adjustment | (16 | ) | (16 | ) | ||||
| | | | | | | | |
Balance at December 31, 2011 | (1,987 | ) | (1,987 | ) | ||||
Current period activity: | ||||||||
Foreign currency translation adjustment | 555 | 555 | ||||||
| | | | | | | | |
Balance at December 31, 2012 | (1,432 | ) | (1,432 | ) | ||||
Current period activity: | ||||||||
Foreign currency translation adjustment | 891 | 891 | ||||||
| | | | | | | | |
Balance at December 31, 2013 | $ | (541 | ) | $ | (541 | ) | ||
| | | | | | | | |
| | | | | | | | |
Accounting for Contingencies | ||||||||
We may be involved in various legal proceedings from time to time in the ordinary course of business. Except for income tax contingencies, we record accruals for contingencies to the extent that we conclude their occurrence is probable and that the related liabilities are reasonably estimable. We record anticipated recoveries under existing insurance contracts when we are assured of recovery. Many factors are considered when making these assessments, including the progress of the case, opinions or views of legal counsel, prior case law, our experience or the experience of other companies with similar cases, and our intent on how to respond. Litigation and other contingencies are inherently unpredictable and excessive damage awards do occur. As such, these assessments can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. | ||||||||
Recently Adopted Accounting Pronouncements | ||||||||
In February 2013, the Financial Accounting Standards Board issued guidance which requires companies to disclose additional information about items reclassified out of AOCI. Such additional information includes changes in AOCI balances by component with separate presentation of reclassification adjustments and current period other comprehensive income; and significant items reclassified out of AOCI by component, either on the face of the income statement or as a separate note to the financial statements. This guidance does not change current generally accepted accounting principles in the United States of America requirements for interim financial statement reporting of other comprehensive income. However, we would be required to include information about changes in AOCI balances by component and significant items reclassified out of AOCI in interim reporting periods. We have elected to present changes in AOCI balances by component in a separate note to the consolidated financial statements. This requirement was effective for us beginning with our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 and did not require retrospective application. | ||||||||
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
PROPERTY AND EQUIPMENT | ' | ||||||||
PROPERTY AND EQUIPMENT | ' | ||||||||
NOTE 2: PROPERTY AND EQUIPMENT | |||||||||
The classification of property and equipment and the related estimated useful lives is as follows: | |||||||||
December 31, | |||||||||
Estimated | |||||||||
2013 | 2012 | Useful Life | |||||||
(in thousands) | |||||||||
Land | $ | 1,247 | $ | 1,758 | |||||
Building and building and leasehold improvements | 22,127 | 14,688 | 3 - 30 years | ||||||
Furniture and fixtures | 7,712 | 5,858 | 5 years | ||||||
Computer equipment and purchased software | 110,449 | 88,086 | 2 - 5 years | ||||||
Transportation equipment | 7,522 | 7,522 | 3 - 5 years | ||||||
Operations equipment | 6,122 | 6,405 | 3 - 5 years | ||||||
Construction in progress | 18,295 | 2,611 | |||||||
| | | | | | | | | |
173,474 | 126,928 | ||||||||
Accumulated depreciation and amortization | 101,356 | (82,376 | ) | ||||||
| | | | | | | | | |
Property and equipment | $ | 72,118 | $ | 44,552 | |||||
| | | | | | | | | |
| | | | | | | | | |
Computer equipment and purchased software includes property acquired under capital leases. As of December 31, 2013 and 2012, assets acquired under capital leases had a historical cost basis of $13.9 million and $16.2 million, respectively. | |||||||||
As of December 31, 2013, the balance of $18.3 million in construction in progress includes assets purchased, but not yet placed into service, related to the purchase of hardware and software to support revenue growth and to equip our new U.S. data center. | |||||||||
INTERNALLY_DEVELOPED_SOFTWARE
INTERNALLY DEVELOPED SOFTWARE | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
INTERNALLY DEVELOPED SOFTWARE | ' | |||||||
INTERNALLY DEVELOPED SOFTWARE | ' | |||||||
NOTE 3: INTERNALLY DEVELOPED SOFTWARE | ||||||||
The following is a summary of internally developed software: | ||||||||
Year Ended | ||||||||
December 31, | ||||||||
2013 | 2012 | |||||||
(in thousands) | ||||||||
Amounts capitalized, beginning of year | $ | 62,962 | $ | 57,540 | ||||
Development costs capitalized | 6,061 | 6,467 | ||||||
Foreign currency translation | — | (20 | ) | |||||
Dispositions | (161 | ) | (1,025 | ) | ||||
| | | | | | | | |
Amounts capitalized, end of year | 68,862 | 62,962 | ||||||
Accumulated amortization, end of year | (52,661 | ) | (44,057 | ) | ||||
| | | | | | | | |
Internally developed software, net | $ | 16,201 | $ | 18,905 | ||||
| | | | | | | | |
| | | | | | | | |
Included in the above are capitalized software development costs for projects in progress of $3.7 million and $3.6 million at December 31, 2013 and 2012, respectively. During the years ended December 31, 2013, 2012, and 2011, we recognized amortization expense related to capitalized software development costs of $8.8 million, $8.6 million, and $7.3 million, respectively. Internally developed software is tested for impairment whenever events or changes in circumstances indicate that the net realizable value may be less than the unamortized capitalized cost. | ||||||||
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | |||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | |||||||||||||
NOTE 4: GOODWILL AND INTANGIBLE ASSETS | ||||||||||||||
The change in the carrying amount of goodwill for the years ended December 31, 2013 and 2012 was as follows: | ||||||||||||||
Technology | Bankruptcy | Total | ||||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Balance as of December 31, 2011 | $ | 187,773 | $ | 214,963 | $ | 402,736 | ||||||||
Purchase price adjustments | 1,276 | — | 1,276 | |||||||||||
Foreign currency translation and other | 199 | — | 199 | |||||||||||
| | | | | | | | | | | ||||
Balance as of December 31, 2012 | $ | 189,248 | $ | 214,963 | $ | 404,211 | ||||||||
Foreign currency translation and other | 91 | — | 91 | |||||||||||
| | | | | | | | | | | ||||
Balance as of December 31, 2013 | $ | 189,339 | $ | 214,963 | $ | 404,302 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
During 2012 we increased goodwill recorded in connection with our acquisition of De Novo Legal LLC ("De Novo") by $1.3 million. This adjustment was based on information obtained after December 31, 2011, related to the results of an independent valuation of the fair value of De Novo's property, plant and equipment | ||||||||||||||
Identifiable intangible assets as of December 31, 2013 and 2012 consisted of the following: | ||||||||||||||
December 31, 2013 | December 31, 2012 | |||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | |||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||
(in thousands) | ||||||||||||||
Amortizing intangible assets: | ||||||||||||||
Customer relationships | $ | 124,512 | $ | 90,274 | $ | 124,512 | $ | 73,713 | ||||||
Trade names | 6,591 | 2,481 | 6,591 | 1,650 | ||||||||||
Non-compete agreements | 18,947 | 16,178 | 18,947 | 14,736 | ||||||||||
| | | | | | | | | | | | | | |
Total | $ | 150,050 | $ | 108,933 | $ | 150,050 | $ | 90,099 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Customer relationships, non-compete agreements and trade names carry a weighted average life of seven years, five years and eight years, respectively. | ||||||||||||||
During the second quarter of 2012 the remaining useful life of the AACER® trade name was evaluated to determine whether events and circumstances continue to support an indefinite useful life and it was determined that an indefinite life was no longer appropriate. This conclusion was based on plans to market current and potential future products or services under the Epiq trade name and we expect the useful life of the AACER® trade name to be ten years. Accordingly, we began amortizing this trade name beginning on July 1, 2012. | ||||||||||||||
Due to the change from an indefinite life to a ten-year useful life, we tested the AACER® trade name for impairment as of June 30, 2012, based on financial forecasts and the expected useful life of ten years. Per the results of this valuation analysis, the carrying value of the trade name exceeded its fair value by $1.8 million and accordingly we recorded this amount in 2012 as "Intangible asset impairment expense" in the accompanying Consolidated Statements of Income. In 2011, as a result of our annual impairment test, the carrying value of this non-amortizing trade name was in excess of its fair value calculated under the relief from royalty method and as a result we recognized $1.3 million of impairment expense reflected in "Intangible asset impairment expense" on our Consolidated Statement of Income for the year ended December 31, 2011. | ||||||||||||||
Aggregate amortization expense related to amortizing intangible assets was $18.8 million, $26.6 million, and $21.3 million, for the years ended December 31, 2013, 2012, and 2011, respectively. The following table outlines the estimated future amortization expense related to amortizing intangible assets held at December 31, 2013: | ||||||||||||||
Year Ending December 31, | (in thousands) | |||||||||||||
2014 | $ | 12,569 | ||||||||||||
2015 | 9,893 | |||||||||||||
2016 | 6,232 | |||||||||||||
2017 | 5,390 | |||||||||||||
2018 | 3,434 | |||||||||||||
2019 and thereafter | 3,599 | |||||||||||||
| | | | | ||||||||||
Total | $ | 41,117 | ||||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
LONGTERM_OBLIGATIONS
LONG-TERM OBLIGATIONS | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
LONG-TERM OBLIGATIONS | ' | ||||||||||||
LONG-TERM OBLIGATIONS | ' | ||||||||||||
NOTE 5: LONG-TERM OBLIGATIONS | |||||||||||||
The following is a summary of long-term obligations outstanding: | |||||||||||||
Final | Weighted-Average | December 31, | December 31, | ||||||||||
Maturity | Interest Rate | 2013 | 2012 | ||||||||||
Date | |||||||||||||
(in thousands) | |||||||||||||
Senior secured term loan | Aug-20 | 4.75 | % | $ | 299,250 | $ | — | ||||||
Senior revolving loan | Aug-18 | n/a | — | 199,000 | |||||||||
Capital leases | Apr-17 | 4.3 | % | 6,548 | 2,860 | ||||||||
Note payable | Oct-14 | 2.1 | % | 4,079 | 7,080 | ||||||||
Acquisition-related liabilities | Mar-14 | n/a | 2,580 | 3,499 | |||||||||
| | | | | | | | | | | | | |
Total long-term obligations, including current portion | 312,457 | 212,439 | |||||||||||
| | | | | | | | | | | | | |
Current maturities of long-term obligations | |||||||||||||
Senior secured term loan | (3,000 | ) | — | ||||||||||
Capital leases | (3,690 | ) | (1,640 | ) | |||||||||
Notes payable | (4,079 | ) | (4,012 | ) | |||||||||
Acquisition-related liabilities | (2,580 | ) | (3,499 | ) | |||||||||
| | | | | | | | | | | | | |
Total current maturities of long-term obligations | (13,349 | ) | (9,151 | ) | |||||||||
| | | | | | | | | | | | | |
Total Long-term obligations | $ | 299,108 | $ | 203,288 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Credit Facilities | |||||||||||||
2013 Secured Credit Facility | |||||||||||||
On August 27, 2013, we entered into a $400 million senior secured credit facility consisting of a senior revolving loan in a principal amount equal to $100 million, maturing in August 2018, and a senior secured term loan in a principal amount equal to $300 million, maturing in August 2020 (the "Credit Facility"). The Credit Facility replaces the Fourth Amended and Restated Credit and Security Agreement, dated as of April 25, 2011 (the "Former Credit Facility"). | |||||||||||||
During the term of the Credit Facility, Epiq has the right, subject to compliance with the covenants specified in the Credit Facility, to increase the Credit Facility to a maximum of $600 million including increasing the total borrowing capacity under the senior revolving loan up to a maximum of $200 million. The Credit Facility is secured by liens on our real property and a significant portion of our personal property. | |||||||||||||
Proceeds from the senior secured term loan were used to pay for, among other items, fees and expenses of approximately $8.1 million associated with the Credit Facility, and the repayment of the outstanding balance under the Former Credit Facility, which was then terminated. During the year ended December 31, 2013, approximately $1.0 million was included in interest expense on the accompanying Consolidated Statements of Income, related to the write-off of a portion of the unamortized deferred debt issuance costs for the Former Credit Facility. | |||||||||||||
The senior secured term loan bears interest as follows: (1) 2.75% plus prime rate subject to a 2% floor; or (2) 3.75% plus one, two, three or six month LIBOR rate subject to a 1% LIBOR floor. As of December 31, 2013, all outstanding borrowings under the term loan were based on LIBOR subject to a 1% LIBOR floor and the applicable margin was 3.75%. | |||||||||||||
Borrowings under the senior revolving loan bear interest at various rates based on our total net leverage ratio with two rate options as follows: (1) for base rate advances, borrowings bear interest at prime rate plus 200 to 300 basis points; and (2) for LIBOR rate advances, borrowings bear interest at LIBOR rate plus 300 to 400 basis points. As of December 31, 2013, there were no borrowings outstanding under the senior revolving loan. | |||||||||||||
Commencing on December 31, 2013, the term loan facility requires quarterly payments of principal, in equal quarterly installments of $0.8 million and a final installment equal to the remaining principal balance in August 2020. | |||||||||||||
In November 2013, for an upfront cash payment of $46,000, we entered into a two-year 3% interest rate cap agreement for a notional amount of $150,000,000 equal to the portion of the senior secured term loan being hedged. The interest rate cap will amortize consistent with the senior secured term loan. The interest rate cap agreement settles monthly and expires on August 31, 2015. It bears a strike rate of 3% with an underlying of the one month USD LIBOR, which is consistent with the variable rate on the Company's senior secured term loan. At the inception of the cash flow hedging relationship and as of December 31, 2013, the hedge was determined to be highly effective and is expected to continue to be highly effective in mitigating the risk of increases in the Company's expected interest expense payments related to its senior secured term loan consistent with LIBOR rising above 3%. | |||||||||||||
The Company has determined that the hedging relationship qualifies for cash flow hedge accounting; accordingly, as of December 31, 2013, all changes in the fair value of the interest rate cap were included in accumulated other comprehensive income and represented a de-minimus amount as of December 31, 2013. As the monthly interest rate caplets settle, the settlement amount is reclassified from AOCI and recorded in interest expense. This is consistent with the timing of the hedged item, the monthly interest expense settlements on the senior secured term loan. There was no intrinsic value related to the interest rate caplets which settled during the year ended December 31, 2013 and, as such, no amount was recognized in interest expense. The hedge was determined to be perfectly effective during the period from inception of the cash flow hedge through December 31, 2013 with no ineffectiveness recognized in earnings. The fair value of the interest rate cap as of December 31, 2013 was $27,000 and was included in other noncurrent assets. The amount expected to be reclassified from AOCI to earnings in the next 12 months represents the estimated fair value of the interest rate caplets that will settle during this period which is $500. We did not utilize any derivative instruments during the years ended December 31, 2012 or 2011. | |||||||||||||
We manage exposure to counter-party credit risk related to our derivative positions by entering into contracts with various major financial institutions that can be expected to fully perform under the terms of such instruments. We do not anticipate non-performance by any of the counter-parties. Our exposure to credit risk in the event of non-performance by any of the counter-parties is limited to those assets that have been recorded, but have not yet been received in cash. | |||||||||||||
In addition, the Credit Facility contains certain annual mandatory pre-payment terms based on a percentage of excess cash flow, commencing with measurement for the fiscal year ending December 31, 2014, and initial payment, if any, in fiscal year 2015. Excess cash flow, as defined in the Credit Facility includes Consolidated EBITDA adjusted for capital expenditures, interest paid, income taxes paid, principal payments, certain acquisition-related obligations and working capital changes. Such annual mandatory prepayments are only required when the net leverage ratio exceeds 2.75 to 1.00. | |||||||||||||
The Credit Facility contains a financial covenant related to a net leverage ratio (as defined in the Credit Facility) which is not permitted to exceed 4.50 to 1.00 as well as other customary covenants related to limitations on (i) creating liens, debt, guarantees or other contingent obligations, (ii) engaging in mergers, acquisitions and consolidations, (iii) paying dividends or other distributions to, and redeeming and repurchasing securities from, equity holders, (iv) prepaying, redeeming or repurchasing subordinated or junior debt, and (v) engaging in certain transactions with affiliates, in each case, subject to customary exceptions. As of December 31, 2013, we were in compliance with all covenants. | |||||||||||||
Capital Leases | |||||||||||||
We lease certain equipment under capital leases that generally require monthly payments with final maturity dates during various periods through 2017. As of December 31, 2013, our capital leases had a weighted-average interest rate of approximately 4.3%. See Note 2 for further discussion of assets acquired under capital leases. | |||||||||||||
Notes Payable | |||||||||||||
During 2011 we entered into a note payable related to a software license agreement that bears interest of approximately 2.1% for the remainder of its term and is payable quarterly through the fourth quarter of 2014. | |||||||||||||
Acquisition-related Liabilities | |||||||||||||
In 2011 and 2010, in connection with the acquisitions of Jupiter eSources LLC ("Jupiter eSources") and De Novo, we incurred liabilities related to potential contingent consideration based on future revenue growth. | |||||||||||||
Amounts recorded in connection with acquisition-related liabilities as of December 31, 2013 and 2012 are as follows: | |||||||||||||
December 31, | December 31, | ||||||||||||
2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||
De Novo contingent consideration: | |||||||||||||
Current portion | $ | 2,580 | $ | — | |||||||||
| | | | | | | | ||||||
Total De Novo contingent consideration | 2,580 | — | |||||||||||
| | | | | | | | ||||||
De Novo deferred acquisition price: | |||||||||||||
Current portion | — | 3,499 | |||||||||||
| | | | | | | | ||||||
Total De Novo deferred acquisition price | — | 3,499 | |||||||||||
| | | | | | | | ||||||
Total acquisition-related liabilities | $ | 2,580 | $ | 3,499 | |||||||||
| | | | | | | | ||||||
| | | | | | | | ||||||
Jupiter eSources | |||||||||||||
The undiscounted amount of all potential future payments that we could be required to make under the Jupiter eSources contingent consideration is between $0 and $10 million over the remaining measurement period through December 2014. During 2011, based on our probability assessments of projected revenue over the remainder of the measurement period, we determined that it was not likely that any contingent consideration for Jupiter eSources would be realized and recognized a total decrease in the fair value of $7.2 million which was reflected in "Fair value adjustment to contingent consideration" on the Consolidated Statements of Income for the year ended December 31, 2011. Our probability assessment of projected revenue over the remainder of the measurement period did not change in 2012 and 2013 and as such there is no liability recorded related to this contingent consideration as of December 31, 2013 and 2012. | |||||||||||||
In connection with the acquisition of Jupiter eSources, we withheld $8.4 million of the purchase price for potential claims for indemnification and purchase price adjustments that was subsequently paid in May 2012. The $8.4 million payment was previously misclassified as an investment activity and has been reclassified as a financing activity in the Consolidated Statement of Cash Flows for the year ended December 31, 2012. | |||||||||||||
De Novo | |||||||||||||
In connection with the acquisition of De Novo, a portion of the purchase price was deferred and was being held for potential indemnification claims. During the third quarter of 2013 we paid $3.1 million of the deferred purchase price, adjusted for indemnification claims, to the sellers. The balance remaining after payment to the sellers of $0.8 million was written off as a credit to operating expense, which is included in Other Operating Income on the Consolidated Statements of Income for the year ended December 31, 2013. | |||||||||||||
The undiscounted amount of all potential future payments that could have been required under the De Novo contingent consideration opportunity was between $0 and $29.1 million over the initial two-year measurement period which ended on December 31, 2012 and December 31, 2013, respectively. A portion of the De Novo contingent consideration was contingent upon certain of the sellers remaining employees of Epiq and is therefore recognized as compensation expense. If those sellers did not remain employees of Epiq, the portion of the contingent consideration to which they were entitled was forfeited and was not allocated to the remaining sellers. The portion of the contingent consideration that was not tied to employment was considered to be part of the total consideration paid for net assets in connection with the purchase of De Novo. | |||||||||||||
Based on operating revenue recorded for the 2013 measurement period, as defined in the purchase agreement, a portion of the De Novo contingent consideration opportunity was achieved in the fourth quarter of 2013. As a result, we recorded a total adjustment of $3.4 million to the contingent consideration obligation as of December 31, 2013 of which $2.6 million is included in "Current maturities of long-term obligations" and $0.8 million is included in "Other accrued expenses" on the accompanying Consolidated Balance Sheets as of December 31, 2013. On the accompanying Consolidated Statements of Income, $2.6 million is included in "Fair value adjustment to contingent consideration" related to non-employee sellers and $0.8 million related to sellers who are Epiq employees is included in "Selling, general and administrative expense" for the year ended December 31, 2013. | |||||||||||||
During 2012, the employment ended for one of the De Novo employees entitled to a portion of the contingent consideration. According to the terms of the purchase agreement with De Novo, the portion of the contingent consideration subject to the continued employment of this employee was forfeited in its entirety. Also during 2012, based on projected revenue over the remainder of the measurement period, we recorded a total decrease in the fair value of the contingent consideration obligation of $17.2 million for the year ended December 31, 2012 which is included in "Fair value adjustment to contingent consideration" in the Consolidated Statements of Income. See Note 13 of our Notes to Consolidated Financial Statements for further detail related to the De Novo contingent consideration and holdback amounts. | |||||||||||||
Scheduled Principal Payments | |||||||||||||
Our long-term obligations, consisting of our senior secured term loan (based upon the required quarterly payments but not considering the additional principal payments under the excess cash flow provisions notes above), acquisition-related liabilities, and capitalized leases, mature as follows for years ending December 31: | |||||||||||||
(in thousands) | |||||||||||||
2014 | $ | 13,349 | |||||||||||
2015 | 5,666 | ||||||||||||
2016 | 3,104 | ||||||||||||
2017 | 3,083 | ||||||||||||
2018 and thereafter | 287,255 | ||||||||||||
| | | | | |||||||||
Total | $ | 312,457 | |||||||||||
| | | | | |||||||||
| | | | | |||||||||
OPERATING_LEASES
OPERATING LEASES | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
OPERATING LEASES | ' | ||||
OPERATING LEASES | ' | ||||
NOTE 6: OPERATING LEASES | |||||
We have non-cancelable operating leases for office space at various locations expiring at various times through 2020. Each of the leases requires us to pay all executory costs (property taxes, maintenance and insurance). Certain of our lease agreements provide for scheduled rent increases during the lease term. Rent expense is recognized on a straight-line basis over the lease term. Landlord-provided tenant improvement allowances are recorded as a liability and amortized as a reduction to rent expense over the lease term. Additionally, we have non-cancelable operating leases for office equipment and automobiles expiring through 2017. | |||||
Future minimum lease payments during the years ending December 31 are as follows: | |||||
Total Future | |||||
Minimum Lease | |||||
Payments | |||||
(in thousands) | |||||
2014 | $ | 10,702 | |||
2015 | 7,346 | ||||
2016 | 3,670 | ||||
2017 | 1,907 | ||||
2018 | 1,835 | ||||
Thereafter | 7,381 | ||||
| | | | | |
Total minimum lease payments | $ | 32,841 | |||
| | | | | |
| | | | | |
Expense related to operating leases for the years ended December 31, 2013, 2012 and 2011 was approximately $12.6 million, $11.5 million, and $11.4 million, respectively. | |||||
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2013 | |
EQUITY | ' |
EQUITY | ' |
NOTE 7: EQUITY | |
Share Repurchases | |
On June 1, 2012, our Board authorized the repurchase, through December 31, 2013, of up to an aggregate of $35.0 million of our outstanding shares of common stock (the "2012 Program"). Repurchases were permitted to be made pursuant to the 2012 Program from time to time at prevailing market prices in the open market, in block trades or in privately negotiated purchases, or any combination thereof. The Company was permitted to utilize one or more plans with its brokers or banks for pre-authorized purchases within defined limits pursuant to applicable laws to effect all or a portion of the repurchases. The timing, manner, price and amount of share repurchases under the 2012 Program was determined by the Company in its discretion and was subject to market and economic conditions, prevailing stock prices, loan covenants, leverage objectives, applicable legal and regulatory requirements, and other factors. | |
During the year ended December 31, 2013, we purchased 1,768,296 shares of common stock under the 2012 Program for approximately $22.9 million, at an average cost of $12.94 per share. During the year ended December 31, 2012, we purchased 283,980 shares of common stock under the 2012 Program for approximately $3.3 million, at an average cost of $11.62 per share. | |
On November 6, 2013, our Board approved and authorized the repurchase, on or prior to December 31, 2015, of our outstanding shares of common stock up to an aggregate of $35.0 million (the "2014 Share Repurchase Program"). The 2014 Share Repurchase Program became effective on January 1, 2014, upon the expiration of the 2012 program. | |
Beginning on January 1, 2014, repurchases may be made pursuant to the 2014 Share Repurchase Program from time to time at prevailing market prices in the open market, in block trades or in privately negotiated purchases, or any combination thereof. We may utilize one or more plans with our brokers or banks for pre-authorized purchases within defined limits pursuant to applicable laws to effect all or a portion of the repurchases. The timing, manner, price and amount of any share repurchases under the 2014 Share Repurchase Program will be determined by the Company in its discretion and will be subject to market and economic conditions, prevailing stock prices, loan covenants, leverage objectives, applicable legal and regulatory requirements, and other factors. | |
We also have a policy that requires shares to be repurchased by us to satisfy employee tax withholding obligations upon the vesting of restricted stock awards or the exercise of stock options. During the years ended December 31, 2013, 2012, and 2011 we repurchased 471,248 shares for approximately $6.5 million, 217,713 shares for approximately $2.7 million, and 66,290 shares for approximately $0.9 million, respectively, to satisfy employee tax withholding obligations upon the vesting of restricted stock awards and the net share settlement of certain stock options exercises. | |
Dividends | |
Total dividends declared in 2013 were $12.8 million or $0.36 per share and total dividends paid in 2013 totaled $12.9 million, or $0.36 per outstanding common share. Total dividends declared in 2012 were $13.8 million or $0.385 per outstanding common share and total dividends paid in 2012 totaled $12.4 million, or $0.345 per outstanding common share inclusive of a special dividend declared and paid during the fourth quarter of 2012. Dividends payable were approximately $3.1 million and $3.2 million at December 31, 2013 and 2012, respectively. | |
EMPLOYEE_BENEFIT_PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2013 | |
EMPLOYEE BENEFIT PLANS | ' |
EMPLOYEE BENEFIT PLANS | ' |
NOTE 8: EMPLOYEE BENEFIT PLANS | |
Stock Purchase Plan | |
We have an employee stock purchase plan that allows employees to purchase shares of our common stock through payroll deduction. The purchase price for all employee participants is based on the closing bid price on the last business day of the month. | |
Defined Contribution Plan | |
We have a defined contribution 401(k) plan that covers substantially all employees. We match 60% of the first 10% of employee contributions and have the option of making additional discretionary contributions. We also sponsor a 401(k) plan covering eligible employees of one of our subsidiaries for which we do not match employee contributions. Our plan expense was approximately $2.5 million, $2.0 million, and $1.6 million for the years ended December 31, 2013, 2012, and 2011, respectively. | |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
NOTE 9: FAIR VALUE MEASUREMENTS | ||||||||||||||
Fair Values of Assets and Liabilities | ||||||||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. We are required to use valuation techniques that are consistent with the market approach, income approach, and/or cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from independent sources, or unobservable, meaning those that reflect our own estimate about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Accounting standards establish a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The hierarchy requires us to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are listed below. | ||||||||||||||
Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities. | ||||||||||||||
Level 2—Observable inputs other than those included in Level 1, such as quoted market prices for similar assets and liabilities in active markets or quoted prices for identical assets in inactive markets. | ||||||||||||||
Level 3—Unobservable inputs reflecting our own assumptions and best estimate of what inputs market participants would use in pricing an asset or liability. | ||||||||||||||
The carrying value and estimated fair value of our cash equivalents, which consist of short-term money market funds, are classified as Level 1. There were no transfers between Level 1 and Level 2 during the years ended December 31, 2013, 2012 or 2011. Our Level 3 liability is valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the contingent consideration. | ||||||||||||||
For fair value measurements categorized within Level 3 of the fair value hierarchy, our accounting and finance management, who report to the chief financial officer, determine our valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of our accounting and finance management and are approved by the chief financial officer. Fair value calculations are generally prepared by third-party valuation experts who rely on discussions with management in addition to the use of management's assumptions and estimates as they relate to the assets or liabilities in Level 3. Such assumptions and estimates include inputs such as estimates of future cash flows, projected profit and loss information, discount rates, and assumptions as they relate to future pertinent events. Through regular interaction with the third-party valuation experts, finance and accounting management determine that the valuation techniques used and inputs and outputs of the models reflect the requirements of accounting standards as they relate to fair value measurements. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. | ||||||||||||||
As of December 31, 2013, 2012 and 2011, our assets and liabilities that are measured and recorded at fair value on a recurring basis were as follows: | ||||||||||||||
Estimated Fair Value Measurements | ||||||||||||||
Significant | ||||||||||||||
Other | ||||||||||||||
Quoted Prices | Observable | Significant | ||||||||||||
in Active | Inputs | Unobservable | ||||||||||||
Carrying Value | Markets | Inputs | ||||||||||||
Items Measured at Fair Value on a Recurring Basis | (Level 1) | (Level 2) | (Level 3) | |||||||||||
(in thousands) | ||||||||||||||
December 31, 2013: | ||||||||||||||
Assets: | ||||||||||||||
Interest rate cap | $ | 27 | $ | - | $ | 27 | $ | - | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
December 31, 2012: | ||||||||||||||
Assets: | ||||||||||||||
Money market funds | $ | 34 | $ | 34 | $ | — | $ | — | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
December 31, 2011: | ||||||||||||||
Assets: | ||||||||||||||
Money market funds | $ | 34 | $ | 34 | $ | — | $ | — | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Liabilities: | ||||||||||||||
Contingent consideration(1) | $ | 16,226 | $ | - | $ | — | $ | 16,226 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
-1 | ||||||||||||||
The contingent consideration represents the estimated fair value, as of the acquisition date, of the estimated contingent consideration that could have been payable in connection with the De Novo acquisition that was contingent upon achieving performance hurdles based on operating revenue objectives. The carrying value at December 31, 2011, was based on management's estimate of projected revenue over the measurement period as well as the probability of contingent consideration achievement and an applied discount rate to the projected contingent consideration payments that approximated the weighted average cost of capital. As discussed in Note 5 the carrying value was adjusted to zero during the third quarter of 2012. | ||||||||||||||
As of December 31, 2013 and 2012, the carrying value of our trade accounts receivable, accounts payable, certain other liabilities, deferred acquisition price liabilities and capital leases approximated fair value. At December 31, 2013 and 2012, the amount outstanding under our credit facility was $302.3 million and $199.0 million, respectively, which approximated fair value due to the borrowing rates currently available to the Company for debt with similar terms and is classified as Level 2. | ||||||||||||||
As of December 31, 2013, the estimated fair value of the Company's interest rate cap was approximately $27,000 and was determined via the Black-Scholes option pricing model which utilizes certain observable inputs including the forward and spot curves for the underlying 1 month LIBOR and the estimated volatility for the 1 month LIBOR over the remaining term of the interest rate cap agreement. Based on these characteristics the interest rate cap is classified as a level 2. The fair value of the interest rate cap is subject to material change based upon changes in the forward curve for 1 month LIBOR and the volatility thereof. | ||||||||||||||
The following table presents changes in the fair value of contingent consideration related to the De Novo acquisition for the year ended December 31, 2012. The contingent consideration recorded on the Consolidated Balance Sheets as of December 31, 2013 was based on actual revenue achieved. | ||||||||||||||
Fair Value | ||||||||||||||
Measurements | ||||||||||||||
Using Significant | ||||||||||||||
Unobservable Inputs | ||||||||||||||
(Level 3) | ||||||||||||||
(in thousands) | ||||||||||||||
Total | ||||||||||||||
Ending balance December 31, 2011 | $ | 16,226 | ||||||||||||
Increase in fair value related to accretion | 962 | |||||||||||||
Decrease in fair value of contingent consideration obligation | (17,188 | ) | ||||||||||||
| | | | | ||||||||||
Ending balance December 31, 2012 | $ | — | ||||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
The decrease in fair value of $17.2 million during the year ended December 31, 2012, is attributable to the change in fair value of the contingent consideration for the De Novo acquisition which is reflected in "Fair value adjustment to contingent consideration" on the Consolidated Statement of Income. | ||||||||||||||
Significant Customer and Concentration of Credit Risk | ||||||||||||||
For the years ended December 31, 2013, 2012 and 2011, we had no customers which accounted for more than 10% of our consolidated revenue or consolidated accounts receivable. | ||||||||||||||
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
INCOME TAXES | ' | ||||||||||
INCOME TAXES | ' | ||||||||||
NOTE 10: INCOME TAXES | |||||||||||
Income before income taxes consisted of the following: | |||||||||||
Year Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
(in thousands) | |||||||||||
Income before income taxes | |||||||||||
United States | $ | 12,273 | $ | 32,148 | $ | 18,406 | |||||
Foreign | 4,832 | 3,258 | 2,501 | ||||||||
| | | | | | | | | | | |
Total | $ | 17,105 | $ | 35,406 | $ | 20,907 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The provision for income taxes included the following: | |||||||||||
Year Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
(in thousands) | |||||||||||
Provision for income taxes | |||||||||||
Currently payable income taxes | |||||||||||
Federal | $ | 9,121 | $ | 9,447 | $ | 3,062 | |||||
State | 1,849 | 1,221 | 2,408 | ||||||||
Foreign | 1,542 | 838 | 927 | ||||||||
| | | | | | | | | | | |
Total | 12,512 | 11,506 | 6,397 | ||||||||
| | | | | | | | | | | |
Deferred income taxes | |||||||||||
Federal | (4,687 | ) | 946 | 2,333 | |||||||
State | (1,724 | ) | 619 | 323 | |||||||
Foreign | (106 | ) | (92 | ) | (226 | ) | |||||
| | | | | | | | | | | |
Total | (6,517 | ) | 1,473 | 2,430 | |||||||
| | | | | | | | | | | |
Provision for income taxes | $ | 5,995 | $ | 12,979 | $ | 8,827 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
A reconciliation of the provision for income taxes at the statutory rate of 35% to the provision for income taxes at our effective rate is shown below: | |||||||||||
Year Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
(in thousands) | |||||||||||
Computed at the statutory rate | $ | 5,987 | $ | 12,392 | $ | 7,318 | |||||
Change in taxes resulting from: | |||||||||||
State income taxes, net of federal tax effect | 81 | 1,136 | 1,747 | ||||||||
Foreign tax and change in foreign valuation allowance | (322 | ) | (394 | ) | (175 | ) | |||||
Permanent differences | 797 | 578 | 450 | ||||||||
Uncertain Tax Positions | 447 | — | 192 | ||||||||
Research and Development Credits | (676 | ) | (239 | ) | (490 | ) | |||||
Domestic Production Activities Deduction | (422 | ) | (568 | ) | (286 | ) | |||||
Other | 110 | 74 | 71 | ||||||||
| | | | | | | | | | | |
Provision for income taxes | $ | 5,995 | $ | 12,979 | $ | 8,827 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities on the accompanying Consolidated Balance Sheets are as follows: | |||||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
(in thousands) | |||||||||||
Deferred tax assets: | |||||||||||
Allowance for doubtful accounts | $ | 1,661 | $ | 1,524 | |||||||
Share-based compensation | 10,474 | 9,711 | |||||||||
Intangible assets | 2,653 | 2,483 | |||||||||
Deferred rent | 527 | 799 | |||||||||
Accrued liabilities | 2,094 | 2,574 | |||||||||
Foreign loss carryforwards | 639 | 69 | |||||||||
State net operating loss carryforwards | 838 | 631 | |||||||||
Valuation allowances | (808 | ) | (101 | ) | |||||||
| | | | | | | | ||||
Total deferred tax assets | 18,078 | 17,690 | |||||||||
| | | | | | | | ||||
Deferred tax liabilities: | |||||||||||
Prepaid expenses | (2,199 | ) | (2,740 | ) | |||||||
Intangible assets | (33,300 | ) | (35,523 | ) | |||||||
Property and equipment and software development costs | (11,321 | ) | (13,817 | ) | |||||||
Deferred debt discharge income | (2,649 | ) | (3,300 | ) | |||||||
Other | (100 | ) | (318 | ) | |||||||
| | | | | | | | ||||
Total deferred tax liabilities | (49,569 | ) | (55,698 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | $ | (31,491 | ) | $ | (38,008 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
Prior to our acquisition of Encore, as part of a debt restructuring in 2009, Encore elected to defer recognition of approximately $8.9 million of debt discharge income pursuant to Section 108(i) of the Internal Revenue Code of 1986, as amended. For each year 2013 through 2017, we will include approximately $1.8 million of deferred debt discharge income in taxable income. | |||||||||||
As of December 31, 2013, we had as filed state operating loss carryforwards of $9.3 million. These carryforwards expire in varying amounts in years 2014 through 2033. Of these carryforwards, $2.9 million was generated in states where it is uncertain that we will be able to utilize these losses resulting in a $0.1 million deferred tax asset. A $0.1 million valuation allowance was recorded relating to these losses. Management believes that it is more likely than not that we will be able to utilize the other remaining state loss carryforwards and, therefore, no additional valuation allowance is necessary. | |||||||||||
As of December 31, 2012, we had as filed state operating loss carryforwards of $6.6 million. These carryforwards expire in varying amounts in years 2014 through 2032. Of these carryforwards, $0.9 million was generated in a state in which Epiq no longer maintained a presence or a filing obligation resulting in a $0.1 million deferred tax asset. A $0.1 million valuation allowance was recorded relating to these losses. | |||||||||||
As a result of certain realization requirements for tax benefits relating to employee exercise of stock options, the deferred tax assets and liabilities shown above exclude certain deferred tax assets relating to state net operating losses generated in 2013. These losses arose directly from tax deductions related to equity compensation in excess of compensation recognized for financial reporting. Equity will be increased by $0.1million if and when such deferred tax assets are ultimately realized. We use tax law ordering for the purpose of determining when excess tax benefits have been realized. | |||||||||||
During 2013, we recorded a $0.6 million valuation allowance relating to approximately $1.6 million of net operating losses generated in new international jurisdictions. This valuation allowance will be released when management believes it is more likely than not that based on the available positive and negative evidence the losses will be utilized. | |||||||||||
During 2013, our Hong Kong net operating loss was fully utilized. Accordingly, we have released the $0.1 million valuation allowance related to this loss. | |||||||||||
We have received certification for the Kansas High Performance Incentive Program ("HPIP") tax credit in conjunction with investments made in our Kansas facilities. As of December 31, 2013, $0.7 million of HPIP credits were available to offset our 2013 and future Kansas income tax. The credit may be carried forward for a period of ten years provided we continue to meet the HPIP certification requirements. | |||||||||||
On January 2, 2013, the American Taxpayer Relief Act was passed into law and it extended the federal research credit to tax years 2012 and 2013. The credit had expired on December 31, 2011. Since this was enacted in 2013, and because a tax law is accounted for in the period of enactment, the 2012 research credit related tax benefits of approximately $0.5 million were recognized in 2013. The tax benefit of $0.2 million recognized in 2012 reflected in the rate reconciliation table is a result of additional benefit related to periods prior to December 31, 2012. | |||||||||||
On December 31, 2013, the federal research credit expired. Although extending the credit beyond 2013 has been introduced into legislation, it has not been passed. If the credit is not extended, this would increase our effective tax rate in future tax periods | |||||||||||
The net deferred tax liability is presented on the Consolidated Balance Sheets as follows: | |||||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
(in thousands) | |||||||||||
Other current assets | $ | 3,824 | $ | 3,235 | |||||||
Other long-term assets | 243 | 166 | |||||||||
Long-term deferred income tax liability | (35,558 | ) | (41,409 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | $ | (31,491 | ) | $ | (38,008 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
United States income and foreign withholding taxes have not been recognized on the excess of earnings for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration. Generally, such earnings become subject to United States taxation upon the remittance of dividends or a sale or liquidation of the foreign subsidiary. The amount of such excess totaled approximately $11.7 million at December 31, 2013. It is not practicable to estimate the amount of any deferred tax liability related to this amount. | |||||||||||
As of December 31, 2013, 2012 and 2011, the gross amount of unrecognized tax benefits, including penalty and interest, was approximately $6.4 million, $5.4 million, and $4.9 million, respectively. If recognized, approximately $5.2 million, $4.4 million, and $4.1 million, would have affected our effective tax rate in 2013, 2012, and 2011, respectively. | |||||||||||
The following table summarizes the activity related to our gross unrecognized tax benefits excluding interest and penalties (in thousands): | |||||||||||
2013 | 2012 | 2011 | |||||||||
Unrecognized Tax Benefits as of January 1 | $ | 4,639 | $ | 4,164 | $ | 2,255 | |||||
Gross increases for prior year tax positions | 243 | 1,266 | 1,844 | ||||||||
Gross decreases for prior year tax positions | (53 | ) | — | (3 | ) | ||||||
Gross increase for current year tax positions | 530 | 323 | 363 | ||||||||
Settlements | (33 | ) | (755 | ) | (23 | ) | |||||
Lapse of statute of limitations | — | (359 | ) | (272 | ) | ||||||
| | | | | | | | | | | |
Unrecognized Tax Benefits at December 31 | $ | 5,326 | $ | 4,639 | $ | 4,164 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
We file income tax returns in the United States federal jurisdiction, the United Kingdom, Hong Kong, Japan, Canada and various state jurisdictions. We have also made an evaluation of the potential impact of assessments by state jurisdictions in which we have not filed tax returns. | |||||||||||
As of December 31, 2013, the 2010 - 2012 federal, state and foreign tax returns are subject to examination. In addition, the 2009 statute of limitations remains open in certain state and foreign jurisdictions. It is reasonably possible that approximately $0.5 million of unrecognized tax benefits will be recognized in the next twelve months due to the closing of the 2009 year for state jurisdictions of which $0.4 million will affect our effective tax rate. | |||||||||||
In 2012, we increased our unrecognized tax benefits for prior year tax positions by $1.3 million. This increase is due to filing amended state returns to claim refunds and to claim credits that will be carried forward to future years. Also, during 2012, the Internal Revenue Service concluded their examination of our 2009 federal return and determined that no additional taxes were owed. As a result, we have considered 2009 to be effectively settled and have recognized $0.2 million of unrecognized tax benefits which affected our effective tax rate. | |||||||||||
In 2011, we increased our unrecognized tax benefits relating to the Encore acquisition by $1.8 million and the increase is included in "Gross increases for prior year tax positions" in the table of gross unrecognized tax benefits. Encore generated federal and certain state net operating losses originating in 2006 on its separately filed income tax returns that had not been fully utilized as of December 31, 2011. The federal losses were fully utilized as of December 31, 2012. Although the statute of limitations generally lapses after three years from filing the return, these net operating losses could still be adjusted if examined by federal or state income tax auditors. | |||||||||||
During 2013, we were informed that our income tax returns for the years ended December 31, 2009, 2010 and 2011 will be audited by the State of New York. In the fourth quarter, we provided responses to the auditor's initial information requests. In addition, in January 2014, we were informed that our income tax returns for 2010 and 2011 will also be audited by New York City. The outcomes of these tax examinations cannot be predicted with certainty, but we do not expect any adjustments to be material. If any issues are resolved in a manner not consistent with our expectations, we could be required to adjust our provision for income tax in the period such resolution occurs. | |||||||||||
We have classified interest and penalties as a component of income tax expense. Estimated interest and penalties classified as a component of income tax expense during 2013, 2012, and 2011 totaled $0.2 million, $0.1 million, and $0.1 million, respectively. Accrued interest and penalties, included as a component of "Other long-term liabilities" on the accompanying Consolidated Balance Sheets, totaled $0.8 million and $0.2 million, respectively, as of December 31, 2013. As of December 31, 2012, the accrued interest and penalties were $0.6 million and $0.2 million, respectively. | |||||||||||
NET_INCOME_PER_SHARE
NET INCOME PER SHARE | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
NET INCOME PER SHARE | ' | |||||||||||||||||||
NET INCOME PER SHARE | ' | |||||||||||||||||||
NOTE 11: NET INCOME PER SHARE | ||||||||||||||||||||
Basic net income per share is computed on the basis of weighted average outstanding common shares. We have determined that certain nonvested share awards (also referred to as restricted stock awards) issued by the Company are participating securities because they have non-forfeitable rights to dividends. Accordingly, basic net income per share is calculated under the two-class method calculation. | ||||||||||||||||||||
Diluted net income per share is computed on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect, if any, of outstanding stock options. The numerator of the diluted net income per share calculation is decreased by the allocation of net income and dividends declared to nonvested shares, if the net impact is dilutive. | ||||||||||||||||||||
In determining diluted earnings per share, we use the more dilutive earnings per share result between two-class method calculation and the treasury stock method calculation applied to our outstanding nonvested share awards. | ||||||||||||||||||||
The computation of basic and diluted net income per share for the years ended December 31, 2013 and 2012 is as follows: | ||||||||||||||||||||
Year Ended December 31, 2013 | Year Ended December 31, 2012 | |||||||||||||||||||
Net Income | Weighted | Per Share | Net Income | Weighted | Per Share | |||||||||||||||
(Numerator) | Average | Amount | (Numerator) | Average | Amount | |||||||||||||||
Common | Common | |||||||||||||||||||
Shares | Shares | |||||||||||||||||||
Outstanding | Outstanding | |||||||||||||||||||
(Denominator) | (Denominator) | |||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Net income | $ | 11,110 | $ | 22,427 | ||||||||||||||||
Less: amounts allocated to nonvested shares | (113 | ) | (268 | ) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Basic net income available to common stockholders | 10,997 | 35,434 | $ | 0.31 | 22,159 | 35,497 | $ | 0.62 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Effect of dilutive securities: | ||||||||||||||||||||
Stock options | — | 868 | — | 876 | ||||||||||||||||
Add back: amounts allocated to nonvested shares | 113 | — | 268 | — | ||||||||||||||||
Less: amounts re-allocated to nonvested shares | (113 | ) | — | (268 | ) | — | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Diluted net income available to common stockholders | $ | 10,997 | 36,302 | $ | 0.3 | $ | 22,159 | 36,373 | $ | 0.61 | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
The computation of basic and diluted net income per share for the year ended December 31, 2011 is as follows: | ||||||||||||||||||||
Year ended December 31, 2011 | ||||||||||||||||||||
Net Income | Weighted | Per Share | ||||||||||||||||||
(Numerator) | Average | Amount | ||||||||||||||||||
Common | ||||||||||||||||||||
Shares | ||||||||||||||||||||
Outstanding | ||||||||||||||||||||
(Denominator) | ||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Net income | $ | 12,080 | ||||||||||||||||||
Less: amounts allocated to nonvested shares | (139 | ) | ||||||||||||||||||
| | | | | | | | | | | ||||||||||
Basic net income available to common stockholders | 11,941 | 35,186 | $ | 0.34 | ||||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Effect of dilutive securities: | ||||||||||||||||||||
Stock options | — | 1,320 | ||||||||||||||||||
Add-back: amounts allocated to nonvested shares | 139 | — | ||||||||||||||||||
Less: amounts re-allocated to nonvested shares | (139 | ) | — | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Diluted net income available to common stockholders | $ | 11,941 | 36,506 | $ | 0.33 | |||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
For the years ended December 31, 2013, 2012, and 2011 weighted-average outstanding stock options totaling approximately 2.0 million, 3.1 million, and 2.3 million, shares of common stock, respectively, were antidilutive and therefore not included in the computation of diluted net income per share. | ||||||||||||||||||||
SHAREBASED_COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
SHARE-BASED COMPENSATION. | ' | ||||||||||||||||
SHARE-BASED COMPENSATION | ' | ||||||||||||||||
NOTE 12: SHARE-BASED COMPENSATION | |||||||||||||||||
Share-based compensation is measured at grant date, based on the fair value of the award, and is recognized on a straight-line basis over the requisite service period. The following table presents total share-based compensation expense, which is a non-cash charge, included in the Consolidated Statements of Income: | |||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||
(in thousands) | |||||||||||||||||
Direct cost of operating revenue | $ | 660 | $ | 201 | $ | 309 | |||||||||||
Selling, general and administrative | 9,348 | 6,518 | 7,060 | ||||||||||||||
| | | | | | | | | | | |||||||
Pre-tax share-based compensation expense | 10,008 | 6,719 | 7,369 | ||||||||||||||
Income tax benefit | (4,135 | ) | (2,908 | ) | (3,190 | ) | |||||||||||
| | | | | | | | | | | |||||||
Total share-based compensation expense, net of tax | $ | 5,873 | $ | 3,811 | $ | 4,179 | |||||||||||
| | | | | | | | | | | |||||||
| | | | | | | | | | | |||||||
Share-based compensation expense was adjusted for stock options and awards that we estimate will be forfeited prior to vesting. We use historical information to estimate employee termination and the resulting forfeiture rate. As of December 31, 2013, there was $2.8 million of total unrecognized compensation cost related to outstanding, unvested stock options and restricted stock, which will be recognized over a weighted-average period of approximately 2.5 years. | |||||||||||||||||
The 2004 Equity Incentive Plan, as amended (the "2004 Plan") limits the combined grant of options to acquire shares of common stock, stock appreciation rights, and nonvested share (commonly referred to as restricted stock) awards stock to 7,500,000 shares. Any grant under the 2004 Plan that expires or terminates unexercised, becomes unexercisable or is forfeited will be available for further grants. At December 31, 2013, there were approximately 1,117,000 shares of common stock available for future equity-related grants under the 2004 Plan. | |||||||||||||||||
As part of certain acquisitions and as an inducement in hiring of certain new key executives, stock options are issued outside of the 2004 Plan from time to time. These options are granted at an option exercise price equal to fair market value of the common stock on the date of grant, are non-qualified options, are exercisable for up to 10 years from the date of grant, and generally vest 25% on the second anniversary of the grant date and continue to vest 25% per year on each anniversary of the grant date until fully vested. | |||||||||||||||||
Although various forms of equity instruments may be issued under the 2004 Plan, through December 31, 2013, we have only issued incentive stock options, nonqualified stock options, and nonvested share awards. | |||||||||||||||||
Stock Options | |||||||||||||||||
Stock options are awards which allow the employee or director to purchase shares of our common stock at prices equal to the fair value at the date of grant. Stock options are issued with an exercise price equal to the grant date closing market price of our common stock. Stock options become exercisable under various vesting schedules, ranging from immediate vesting to a seven year vesting period, and expire ten years from the date of grant. | |||||||||||||||||
The estimated fair value of stock options is determined using the Black-Scholes valuation model. Key inputs and assumptions to estimate the fair value of stock options include the grant price of the award, the expected option term, the volatility of the company's stock, the risk-free interest rate, and the company's dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by individuals who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the company. | |||||||||||||||||
The fair value of each stock option grant was estimated at the date of grant using a Black-Scholes option pricing model. The following table presents the weighted-average assumptions used and the weighted-average fair value per option granted. No stock options were granted during the year ended December 31, 2013. | |||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2012 | 2011 | ||||||||||||||||
Expected life of stock option in years | 6.8 | 6.6 | |||||||||||||||
Expected volatility | 39 | % | 30 | % | |||||||||||||
Risk-free interest rate | 1.1 | % | 2.5 | % | |||||||||||||
Dividend yield | 2.3 | % | 1.1 | % | |||||||||||||
Weighted average grant-date fair value | $ | 3.51 | $ | 4.49 | |||||||||||||
We estimate the expected term of our stock options based on the historical exercise pattern of groups of employees that have similar historical exercise behavior. The expected volatility is estimated based upon implied volatilities from traded stock options on our stock and on our stock's historical volatility, based on daily stock prices. The expected risk-free interest rate is based on the United States Treasury yield curve in effect at the time of the grant. We calculate the expected dividend yield based on an average of historical stock prices and on our estimate of dividends expected to be paid. | |||||||||||||||||
A summary of option activity during the year ended December 31, 2013 is presented below (shares and aggregate intrinsic value in thousands): | |||||||||||||||||
Shares | Weighted | Weighted | Aggregate | ||||||||||||||
Average | Average | Intrinsic Value | |||||||||||||||
Exercise Price | Contractual | ||||||||||||||||
Term | |||||||||||||||||
Outstanding, beginning of period | 5,795 | $ | 12.23 | ||||||||||||||
Granted | — | — | |||||||||||||||
Exercised | (1,924 | ) | 10.07 | ||||||||||||||
Forfeited and expired | (46 | ) | 14.16 | ||||||||||||||
| | | | | | | | | | | | | | ||||
Outstanding, end of period | 3,825 | $ | 13.32 | 3.88 | $ | 11,290 | |||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Options vested and expected to vest, end of period | 3,783 | $ | 13.33 | 3.83 | $ | 11,128 | |||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Options exercisable, end of period | 3,380 | $ | 13.38 | 3.41 | $ | 9,821 | |||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
The aggregate intrinsic value was calculated using the difference between the December 31, 2013 market price and the grant price for only those awards that have a grant price that is less than the December 31, 2013 market price. | |||||||||||||||||
The following table summarizes information about stock options outstanding as of December 31, 2013 (in thousands, except contractual life and price data): | |||||||||||||||||
Options Outstanding | |||||||||||||||||
Options Exercisable | |||||||||||||||||
Weighted- | |||||||||||||||||
Average | |||||||||||||||||
Remaining | |||||||||||||||||
Contractual Life | |||||||||||||||||
Range of | Number | (in years) | Weighted- | Number | Weighted- | ||||||||||||
Exercise Prices | Outstanding | Average | Exercisable | Average | |||||||||||||
Exercise | Exercise | ||||||||||||||||
Price | Price | ||||||||||||||||
$8.13 to $10.39 | 952 | 2.51 | $ | 10.05 | 952 | $ | 10.05 | ||||||||||
$10.40 to $12.64 | 605 | 4.99 | 11.72 | 355 | 12.08 | ||||||||||||
$12.65 to $15.15 | 1,228 | 4.19 | 13.89 | 1,104 | 13.84 | ||||||||||||
$15.16 to $18.15 | 1,040 | 4.1 | 16.52 | 969 | 16.56 | ||||||||||||
| | | | | | | | | | | | | | | | | |
3,825 | 3.88 | 13.32 | 3,380 | 13.38 | |||||||||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Exercises of Stock Options | |||||||||||||||||
The total intrinsic value of stock options exercised during the years ended December 31, 2013, 2012, and 2011 was $8.7 million, $2.2 million, and $2.4 million, respectively. During the years ended December 31, 2013, 2012, and 2011 we received cash for payment of the grant price of exercised stock options of approximately $3.0 million, $0.9 million, and $2.9 million, respectively, and we anticipate we will realize a tax benefit related to these exercised stock options of approximately $6.7 million, $2.6 million, and $1.9 million, respectively. The cash received for payment of the grant price is included as a component of cash flows from financing activities. The tax benefit related to the option exercise price in excess of the option fair value at grant date is separately disclosed as a component of cash flows from financing activities on the Consolidated Statement of Cash Flows, and the remainder of the tax benefit is included as a component of cash flows from operating activities. | |||||||||||||||||
We settle stock option exercises and nonvested share awards with newly issued common shares or treasury stock. | |||||||||||||||||
Nonvested Share Awards | |||||||||||||||||
A summary of nonvested share activity during the year ended December 31, 2013 is presented below (shares in thousands): | |||||||||||||||||
Shares | Weighted | ||||||||||||||||
Average Grant | |||||||||||||||||
Date Fair | |||||||||||||||||
Value | |||||||||||||||||
Nonvested, beginning of period | 430 | $ | 11.85 | ||||||||||||||
Granted | 528 | 12.9 | |||||||||||||||
Vested | (594 | ) | 12.4 | ||||||||||||||
Forfeited/Canceled | — | — | |||||||||||||||
| | | | | | | | ||||||||||
Outstanding, end of period | 364 | $ | 12.48 | ||||||||||||||
| | | | | | | | ||||||||||
| | | | | | | | ||||||||||
The fair value of performance-based stock awards is based on the closing market price of our common stock on the date of award. Nonvested share awards entitle the holder to shares of common stock when the award vests. | |||||||||||||||||
During the year ended December 31, 2013, we granted 527,600 nonvested share awards at a weighted-average grant date price of $12.90 per share of which 330,000 shares will vest one year after the grant date and upon certification by the compensation committee of the Board of the achievement of certain Company financial performance criteria for the calendar year ended December 31, 2013 and 164,100 shares vested upon issuance. The remaining 33,500 nonvested stock awards vest one year from the grant date. As of December 31, 2013, the performance condition had been met. | |||||||||||||||||
In January 2014 we granted 694,730 nonvested share awards at a grant date price of $15.02 per share of which 450,000 shares will vest one year after the grant date and upon certification by the compensation committee of the Board of the achievement of certain Company financial performance criteria for the calendar year ending December 31, 2014; 219,730 shares vested upon issuance. The remaining 25,000 nonvested share awards vest one year from the grant date. Included in the shares which vested upon issuance were 199,730 shares with a grant date fair value of approximately $3.0 million for awards related to the achievement of 2013 objectives. The related expense is included in "Accrued compensation" and in "Selling, general and administrative expense" on the accompanying Consolidated Balance Sheets and Consolidated Income Statements, respectively, as of December 31, 2013. | |||||||||||||||||
During the year ended December 31, 2012, we granted 430,000 nonvested share awards at a weighted-average grant date price of $11.85 per share. These awards vested 12 months after the date of grant upon achievement of a performance condition for the calendar year ended December 31, 2012. | |||||||||||||||||
During the year ended December 31, 2011, we granted 430,000 nonvested share awards at a weighted-average grant date price of $13.39 per share. These awards vested 12 months after the date of grant upon achievement of a performance condition for the calendar year ended December 31, 2011. | |||||||||||||||||
ACQUISITIONS
ACQUISITIONS | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
ACQUISITIONS | ' | ||||
ACQUISITIONS | ' | ||||
NOTE 13: ACQUISITIONS | |||||
De Novo Legal LLC | |||||
In connection with the acquisition of De Novo on December 28, 2011, a portion of the purchase price was deferred and was being held as security for potential indemnification claims. During the third quarter of 2013 we paid $3.1 million of the deferred purchase price, adjusted for indemnification claims to the sellers. As of December 31, 2012, $3.5 million was recorded in "Current maturities of long-term obligations" related to the holdback. In connection with the De Novo acquisition, contingent consideration was potentially payable to the sellers if performance measures based on operating revenue objectives were achieved. The undiscounted amount of all potential future payments that could be required under the De Novo contingent consideration opportunity was between $0 and $29.1 million over the remaining measurement period which ended on December 31, 2013. | |||||
A portion of the De Novo contingent consideration was contingent upon certain of the sellers remaining employees of Epiq and is therefore recognized as compensation expense. If those sellers did not remain employees of Epiq, the portion of the contingent consideration to which they were entitled was forfeited and was not allocated to the remaining sellers. The portion of the contingent consideration tied to certain sellers' continued employment is recognized as compensation expense. The portion of the contingent consideration that was not tied to continued employment was considered to be part of the total consideration transferred for the purchase of De Novo and was measured as of the acquisition date and recognized at fair value. The fair value of potential contingent consideration was determined using a present value calculation combined with the probability of the potential payouts based on projected revenue. Subsequent changes in fair value, measured quarterly, up to the end of the final measurement period were recognized in earnings. | |||||
Based on operating revenue recorded during the 2013 measurement period, as defined in the purchase agreement, a portion of the De Novo contingent consideration opportunity was achieved during the fourth quarter of 2013. As a result, we recorded a total adjustment of $3.4 million to the contingent consideration obligation as of December 31, 2013 of which $2.6 million is included in "Fair value adjustment to contingent consideration" related to non-employee sellers and $0.8 million related to sellers who are Epiq employees is included in "Selling, general and administrative expense" in the Consolidated Statements of Income for the year ended December 31, 2013. | |||||
During 2012, the employment ended for one of the De Novo employees entitled to a portion of the contingent consideration and the portion of the contingent consideration subject to the continued employment of this employee was forfeited in its entirety. Also during 2012, based on projected revenue over the remainder of the measurement period, we recorded a total decrease in the fair value of the contingent consideration obligation of $17.2 million for the year ended December 31, 2012 which is included in "Fair value adjustment to contingent consideration" in the Consolidated Statements of Income and approximately $3.4 million of accrued compensation expense was reversed during the year ended December 31, 2012 which is included in "Selling, general and administrative" expense on the Consolidated Statement of Income. For the year ended December 31, 2012 compensation expense related to this obligation was $0. | |||||
The change in fair value of the De Novo contingent consideration also includes $1.1 million related to accretion expense, which is included in "Interest expense" in the Consolidated Statement of Income for the year ended December 31, 2012. | |||||
Transaction related costs, which were expensed during the period in which they were incurred, are reflected in "Other operating expense" in the Consolidated Statements of Income, and totaled $3.5 million for the year ended December 31, 2011, for this acquisition. | |||||
The acquisition of De Novo on December 28, 2011, did not have a material impact on our results of operations for the year ended December 31, 2011. | |||||
Encore Discovery Solutions | |||||
Transaction related costs, related to the April 4, 2011 acquisition of Encore Discovery Solutions ("Encore") were expensed during the period in which they were incurred, and are reflected in "Other operating expense" in the Consolidated Statement of Income, and totaled $3.9 million for the year ended December 31, 2011, for this acquisition. | |||||
For the year ended December 31, 2011, our consolidated results of operations, included $42.2 million and $8.3 million of operating revenue and operating income, respectively, related to the Encore legal entity subsequent to the acquisition date. These amounts are not necessarily reflective of the actual impact of the Encore acquisition on our results of operations due to post-acquisition integration with our legal entities. | |||||
Jupiter eSources LLC | |||||
In connection with the acquisition of Jupiter eSources LLC ("Jupiter eSources"), we withheld $8.4 million of the purchase price for any claims for indemnification and purchase price adjustments that was subsequently paid in May 2012 and is included as "Payment of deferred acquisition consideration" on the Consolidated Statements of Cash Flows for the year ended December 31, 2012. | |||||
As a result of a contingent consideration opportunity based on future revenue growth related to the October 1, 2010 acquisition of Jupiter eSources, we also have potential future contingent consideration. The potential undiscounted amount of all future payments that we could be required to make under the contingent consideration opportunity is between $0 and $10 million over the remaining measurement period through December 2014. Based on our assessments of projected revenue over the remainder of the measurement period, we determined that it is not likely that any contingent consideration for Jupiter eSources will be realized and as such there is no liability recorded related to this contingent consideration as of December 31, 2013 or 2012. | |||||
Pro forma financial information | |||||
The following unaudited condensed pro forma financial information presents consolidated results of operations as if the De Novo and Encore acquisitions had taken place on January 1, 2010 (in thousands). These amounts were prepared in accordance with the acquisition method of accounting under existing standards and are not necessarily indicative of the results of operations that would have occurred if our acquisitions of De Novo and Encore had been completed on January 1, 2010, nor are they indicative of our future operating results. | |||||
Year Ended | |||||
December 31, | |||||
2011 | |||||
Total revenue | $ | 356,954 | |||
Operating revenue | 334,893 | ||||
Net income | 22,759 |
SEGMENT_REPORTING
SEGMENT REPORTING | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
SEGMENT REPORTING | ' | |||||||||||||
SEGMENT REPORTING | ' | |||||||||||||
NOTE 14: SEGMENT REPORTING | ||||||||||||||
In the first quarter of 2013, we reorganized our internal management reporting structure. Under the new structure, we began reporting our financial performance based on the following two reportable segments: the Technology segment and the Bankruptcy and Settlement Administration segment. The composition of the segment previously called eDiscovery remains unchanged and is now referred to as the Technology segment. The former Bankruptcy segment and Settlement Administration segment were combined and will now be reported as the Bankruptcy and Settlement Administration segment. Although our consolidated results of operations, financial position and cash flows were not impacted, we have updated the segment disclosures for prior periods to reflect our new internal management reporting structure. | ||||||||||||||
Our Technology segment provides eDiscovery managed services and technology solutions comprised of consulting, collections and forensics, processing, search and review, and document review to companies and law firms. Produced documents are made available primarily through a hosted environment utilizing our proprietary software DocuMatrix™ and third-party software which allows for efficient attorney review and data requests. Our Bankruptcy and Settlement Administration segment provides managed services and technology solutions that address the needs of our customers with respect to litigation, claims and project administration, compliance matters, controlled disbursements, corporate restructuring, bankruptcy and class action proceedings. | ||||||||||||||
The segment performance measure is based on earnings before interest, taxes, depreciation and amortization, intangible asset impairment expense, fair value adjustments to contingent consideration, share-based compensation expense, and other operating expense. In management's evaluation of performance, certain costs, such as compensation for administrative staff and executive management, are not allocated by segment and, accordingly, the following reportable segment results do not include such unallocated costs. | ||||||||||||||
Assets reported within a segment are those assets that can be identified to a segment and primarily consist of trade receivables, property, equipment and leasehold improvements, software, identifiable intangible assets and goodwill. Cash, tax-related assets, and certain prepaid assets and other assets are not allocated to our segments. Although we can and do identify long-lived assets such as property, equipment and leasehold improvements, software, and identifiable intangible assets to reportable segments, we do not allocate the related depreciation and amortization or intangible asset impairment expense to the segment as management evaluates segment performance exclusive of these non-cash charges. | ||||||||||||||
Following is a summary of segment information for the years ended December 31, 2013, 2012 and 2011. | ||||||||||||||
Year Ended December 31, 2013 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Operating revenues | $ | 284,929 | $ | 153,761 | $ | — | $ | 438,690 | ||||||
Intersegment revenue | 384 | — | (384 | ) | — | |||||||||
| | | | | | | | | | | | | | |
Operating revenues including intersegment revenue | 285,313 | 153,761 | (384 | ) | 438,690 | |||||||||
Reimbursable expenses | 2,488 | 40,905 | — | 43,393 | ||||||||||
| | | | | | | | | | | | | | |
Total revenues | 287,801 | 194,666 | (384 | ) | 482,083 | |||||||||
Direct costs, general and administrative costs | 198,462 | 145,596 | (384 | ) | 343,674 | |||||||||
| | | | | | | | | | | | | | |
Segment performance measure | $ | 89,339 | $ | 49,070 | $ | — | $ | 138,409 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Year Ended December 31, 2012 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Operating revenues | $ | 196,959 | $ | 147,791 | $ | — | $ | 344,750 | ||||||
Intersegment revenue | 203 | — | (203 | ) | — | |||||||||
| | | | | | | | | | | | | | |
Operating revenues including intersegment revenue | 197,162 | 147,791 | (203 | ) | 344,750 | |||||||||
Reimbursable expenses | 1,546 | 26,789 | — | 28,335 | ||||||||||
| | | | | | | | | | | | | | |
Total revenues | 198,708 | 174,580 | (203 | ) | 373,085 | |||||||||
Direct costs, general and administrative costs | 125,182 | 122,359 | (203 | ) | 247,338 | |||||||||
| | | | | | | | | | | | | | |
Segment performance measure | $ | 73,526 | $ | 52,221 | $ | — | $ | 125,747 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Year Ended December 31, 2011 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Operating revenues | $ | 132,918 | $ | 128,347 | $ | — | $ | 261,265 | ||||||
Intersegment revenue | 75 | — | (75 | ) | — | |||||||||
| | | | | | | | | | | | | | |
Operating revenues including intersegment revenue | 132,993 | 128,347 | (75 | ) | 261,265 | |||||||||
Reimbursable expenses | 601 | 21,460 | — | 22,061 | ||||||||||
| | | | | | | | | | | | | | |
Total revenues | 133,594 | 149,807 | (75 | ) | 283,326 | |||||||||
Direct costs, general and administrative costs | 77,606 | 96,430 | (75 | ) | 173,961 | |||||||||
| | | | | | | | | | | | | | |
Segment performance measure | $ | 55,988 | $ | 53,377 | $ | — | $ | 109,365 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Following is a reconciliation of our segment performance measure to consolidated income before income taxes: | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
(in thousands) | ||||||||||||||
Segment performance measure | $ | 138,409 | $ | 125,747 | $ | 109,365 | ||||||||
Corporate and unallocated expenses | (47,587 | ) | (36,021 | ) | (29,176 | ) | ||||||||
Share-based compensation expense | (10,008 | ) | (6,719 | ) | (7,369 | ) | ||||||||
Depreciation and software and leasehold amortization | (30,971 | ) | (27,399 | ) | (23,081 | ) | ||||||||
Amortization of identifiable intangible assets | (18,834 | ) | (26,588 | ) | (21,323 | ) | ||||||||
Fair value adjustment to contingent consideration | (2,580 | ) | 17,188 | 7,166 | ||||||||||
Acquisition related income (expense) | — | 200 | (7,681 | ) | ||||||||||
Intangible asset impairment expense | — | (1,777 | ) | (1,278 | ) | |||||||||
Other operating income | 791 | 20 | — | |||||||||||
| | | | | | | | | | | ||||
Consolidated income from operations | 29,220 | 44,651 | 26,623 | |||||||||||
Interest expense, net | (12,115 | ) | (9,245 | ) | (5,716 | ) | ||||||||
| | | | | | | | | | | ||||
Income before income taxes | $ | 17,105 | $ | 35,406 | $ | 20,907 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Following are total assets by segment: | ||||||||||||||
December 31, | December 31, | |||||||||||||
2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||
Assets | ||||||||||||||
Technology | $ | 369,135 | $ | 335,051 | ||||||||||
Bankruptcy and Settlement Administration | 281,073 | 296,811 | ||||||||||||
Corporate and unallocated | 97,573 | 22,854 | ||||||||||||
| | | | | | | | |||||||
Total consolidated assets | $ | 747,781 | $ | 654,716 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Following are capital expenditures (including software development costs and non-cash expenditures) by segment: | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
(in thousands) | ||||||||||||||
Capital Expenditures | ||||||||||||||
Technology | $ | 22,234 | $ | 14,153 | $ | 18,731 | ||||||||
Bankruptcy and Settlement Administration | 3,161 | 4,010 | 4,387 | |||||||||||
Corporate and unallocated | 15,312 | 4,391 | 7,117 | |||||||||||
| | | | | | | | | | | ||||
Total consolidated capital expenditures | $ | 40,707 | $ | 22,554 | $ | 30,235 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Following is revenue, determined by the location providing the services, by geographical area: | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
(in thousands) | ||||||||||||||
Revenue | ||||||||||||||
United States | $ | 431,615 | $ | 346,454 | $ | 261,864 | ||||||||
Other countries | 50,468 | 26,631 | 21,462 | |||||||||||
| | | | | | | | | | | ||||
Total | $ | 482,083 | $ | 373,085 | $ | 283,326 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Following are long-lived assets, excluding intangible assets, by geographical area: | ||||||||||||||
December 31, | December 31, | |||||||||||||
2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||
Long-lived assets | ||||||||||||||
United States | $ | 84,384 | $ | 61,550 | ||||||||||
Other countries | 3,935 | 1,907 | ||||||||||||
| | | | | | | | |||||||
Total | $ | 88,319 | $ | 63,457 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
SUPPLEMENTAL_CASH_FLOW_INFORMA
SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ' | ||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ' | ||||||||||
NOTE 15: SUPPLEMENTAL CASH FLOW INFORMATION | |||||||||||
Supplemental cash flow information is as follows: | |||||||||||
Year Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
(in thousands) | |||||||||||
Cash paid for: | |||||||||||
Interest | $ | 10,381 | $ | 7,630 | $ | 5,068 | |||||
Income taxes paid, net | 7,488 | 8,843 | 4,712 | ||||||||
Non-cash investing and financing transactions: | |||||||||||
Property, equipment, and leasehold improvements accrued in accounts payable and other long-term liabilities | 10,261 | 3,076 | 917 | ||||||||
Obligation incurred in purchase transaction | — | — | 29,447 | ||||||||
Capitalized lease obligations and notes payable | 7,902 | 176 | 11,200 | ||||||||
Dividends declared but not yet paid | 3,142 | 3,231 | 1,786 |
LEGAL_PROCEEDINGS
LEGAL PROCEEDINGS | 12 Months Ended |
Dec. 31, 2013 | |
LEGAL PROCEEDINGS | ' |
LEGAL PROCEEDINGS | ' |
NOTE 16: LEGAL PROCEEDINGS | |
We are at times involved in litigation and other legal claims in the ordinary course of business. When appropriate in management's estimation, we may record reserves in our financial statements for pending litigation and other claims. Although it is not possible to predict with certainty the outcome of litigation, we do not believe that any of the current pending legal proceedings to which we are a party will have a material impact on our results of operations or financial condition. | |
SCHEDULE_II_VALUATION_AND_QUAL
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | ' | ||||||||||||||||
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | ' | ||||||||||||||||
SCHEDULE II | |||||||||||||||||
VALUATION AND QUALIFYING ACCOUNTS | |||||||||||||||||
(in thousands) | |||||||||||||||||
Additions | |||||||||||||||||
Description | Balance at | Charged to | Charged to | Deductions | Balance at | ||||||||||||
beginning of | costs and | other | from | end of | |||||||||||||
year | expenses | accounts | reserves | year | |||||||||||||
Allowance for doubtful receivables | |||||||||||||||||
For the year ended December 31, 2013 | $ | 4,825 | $ | 2,411 | $ | — | $ | (2,857 | ) | $ | 4,379 | ||||||
For the year ended December 31, 2012 | $ | 4,514 | $ | 2,223 | $ | — | $ | (1,912 | ) | $ | 4,825 | ||||||
For the year ended December 31, 2011 | $ | 3,778 | $ | 2,303 | $ | — | $ | (1,567 | ) | $ | 4,514 | ||||||
Additions | |||||||||||||||||
Description | Balance at | Charged to | Charged to | Deductions | Balance at | ||||||||||||
beginning of | costs and | other | from | end of | |||||||||||||
year | expenses | accounts | reserves | year | |||||||||||||
Deferred tax valuation allowance | |||||||||||||||||
For the year ended December 31, 2013 | $ | 101 | $ | 776 | $ | — | (69 | ) | $ | 808 | |||||||
For the year ended December 31, 2012 | $ | 172 | $ | — | $ | — | $ | (71 | ) | $ | 101 | ||||||
For the year ended December 31, 2011 | $ | 176 | $ | — | $ | 32 | $ | (36 | ) | $ | 172 | ||||||
NATURE_OF_OPERATIONS_AND_SUMMA1
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||
Principles of Consolidation | ' | |||||||
Principles of Consolidation | ||||||||
The Consolidated Financial Statements include the accounts of Epiq Systems, Inc. ("Epiq") and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. | ||||||||
Use of Estimates | ' | |||||||
Use of Estimates | ||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the periods reported. Actual results may differ from those estimates. | ||||||||
Cash and Cash Equivalents | ' | |||||||
Cash and Cash Equivalents | ||||||||
Cash and cash equivalents include cash on hand and in banks and all liquid investments with original maturities of three months or less at the time of purchase. | ||||||||
Accounts Receivable | ' | |||||||
Accounts Receivable | ||||||||
Accounts receivable are recorded at the invoiced amount and are non-interest bearing. We maintain an allowance for doubtful accounts to reserve for potentially uncollectible receivables. We review accounts receivable to identify amounts due from customers which are past due to identify specific customers with known disputes or collectability issues. In determining the amount of the reserve, we make judgments about the creditworthiness of significant customers based on ongoing credit evaluations. | ||||||||
Long-lived Assets | ' | |||||||
Long-lived Assets | ||||||||
Property and equipment, including leasehold improvements and purchased software, are stated at cost and depreciated or amortized on a straight-line basis over the estimated useful life of each asset or, for leasehold improvements, the lesser of the lease term or useful life. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. We first evaluate recoverability of assets to be held and used by comparing the carrying amount of the asset to undiscounted expected future cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment amount is then calculated using a fair-value-based test that compares the fair value of the asset to its carrying value. | ||||||||
Internally Developed Software | ' | |||||||
Internally Developed Software | ||||||||
Certain internal software development costs incurred in the creation of computer software products for sale, lease or otherwise to be marketed are capitalized once technological feasibility has been established. Capitalized costs are amortized; beginning in the period the product is available for general release, based on the ratio of current revenue to current and estimated future revenue for each product with minimum annual amortization equal to the straight-line amortization over the remaining estimated economic life of the product. Certain internal software development costs incurred in the creation of computer software products for internal use are capitalized when the preliminary project phase is complete and when management, with the relevant authority, authorizes and commits funding to the project and it is probable the project will be completed and the software will be used to perform the function intended. Capitalized costs are amortized, beginning in the period each module or component of the product is ready for its intended use, on a straight-line basis over the estimated economic life of the product. Internally developed software is tested annually for impairment, or more often if an event occurs or circumstances change that would more likely than not reduce the net realizable value to less than its unamortized capitalized cost. | ||||||||
Goodwill | ' | |||||||
Goodwill | ||||||||
Goodwill consists of the excess of cost of acquired enterprises over the sum of the amounts assigned to identifiable assets acquired less liabilities assumed. We assess goodwill for impairment on an annual basis at a reporting unit level. A reporting unit is a component of a segment that constitutes a business, for which discrete financial information is available, and for which the operating results are regularly reviewed by management. In the first quarter of 2013, we reorganized our internal management reporting structure. Under the new structure, we began reporting our financial performance for our two reportable segments: the Technology segment and the Bankruptcy and Settlement Administration segment. The composition of the segment previously called eDiscovery remains unchanged and is now referred to as the Technology segment ("Technology"). The former Bankruptcy segment and Settlement Administration segment were combined and are now reported as the Bankruptcy and Settlement Administration segment ("Bankruptcy and Settlement Administration"). We have identified our operating segments (Technology and Bankruptcy and Settlement Administration) as our reporting units for purposes of testing for goodwill impairment. At the time of the prior year's goodwill impairment testing, we had identified our three reportable segments as our reporting units (eDiscovery, Bankruptcy, and Settlement Administration). At the time of the change in reporting units during the first quarter of 2013, we evaluated our goodwill balance and determined that there was no impairment of goodwill as a result of the change in reporting units. Goodwill is assessed between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, a change in strategic direction, legal factors, operating performance indicators, a change in the competitive environment, the sale or disposition of a significant portion of a reporting unit, or future economic factors such as unfavorable changes in our stock price and market capitalization or unfavorable changes in the estimated future discounted cash flows of our reporting units. Our annual test is performed as of July 31 each year, and there have been no events since the last annual test to indicate that it is more likely than not that the recorded goodwill balance has become impaired. | ||||||||
Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. We considered both a market approach and an income approach in order to develop an estimate of the fair value of each reporting unit for purposes of our annual impairment test. When available, and as appropriate, we use market multiples derived from a set of competitors or companies with comparable market characteristics to establish fair values for a particular reporting unit (market approach). We also estimate fair value using discounted projected cash flow analysis (income approach). Potential impairment is indicated when the carrying value of a reporting unit, including goodwill, exceeds its estimated fair value. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. In addition, financial and credit market volatility directly impacts our fair value measurement through our weighted average cost of capital, used to determine our discount rate, and through our stock price, used to determine our market capitalization. We may be required to recognize impairment of goodwill based on future economic factors such as unfavorable changes in our stock price and market capitalization or unfavorable changes in the estimated future discounted cash flows of our reporting units. | ||||||||
If we determine that the estimated fair value of any reporting unit is less than the reporting unit's carrying value, then we proceed to the second step of the goodwill impairment analysis to measure the potential impairment charge. An impairment loss is recognized for any excess of the carrying value of the reporting unit's goodwill over the implied fair value. If goodwill on our Consolidated Balance Sheet becomes impaired during a future period, the resulting impairment charge could have a material impact on our results of operations and financial condition. | ||||||||
Our recognized goodwill totaled $404.3 million as of December 31, 2013. As of July 31, 2013, which is the date of our most recent impairment test, the fair value of each of our reporting units was in excess of the carrying value of the reporting unit. We have not, to date, recorded any goodwill impairments. | ||||||||
Intangible Assets | ' | |||||||
Intangible Assets | ||||||||
Identifiable intangible assets, resulting from various business acquisitions, consist of customer relationships, agreements not to compete, and trade names. We amortize the identifiable intangible assets over their estimated economic benefit period, generally from five to ten years. These definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances have indicated that the carrying amount of these assets might not be recoverable. If we were to determine that events and circumstances warrant a change to the estimate of an identifiable intangible asset's remaining useful life, then the remaining carrying amount of the identifiable intangible asset would be amortized prospectively over that revised remaining useful life. Additionally, information resulting from other events and circumstances, may indicate that the carrying value of one or more identifiable intangible assets is not recoverable which would result in recognition of an impairment charge. See Note 4 for additional information. | ||||||||
Deferred Loan Fees | ' | |||||||
Deferred Loan Fees | ||||||||
Incremental, third-party costs related to establishing credit facilities are capitalized and amortized based on the terms of the related debt. The unamortized costs are included as a component of other long-term assets on our Consolidated Balance Sheets. Amortization costs are included as a component of interest expense on our Consolidated Statements of Income. | ||||||||
Share-Based Compensation | ' | |||||||
Share-Based Compensation | ||||||||
We measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognize that cost over the period during which an employee is required to provide service in exchange for the award. We recognize this expense on a straight-line basis over the requisite service period of the award based on the portion of the award expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We recognize compensation expense for awards subject to performance criteria when it is probable that the performance goal will be achieved. | ||||||||
Income Taxes | ' | |||||||
Income Taxes | ||||||||
A deferred tax asset or liability is recognized for the anticipated future tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements and for operating loss and tax credit carryforwards. A valuation allowance is provided when, in the opinion of management, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Realization of the deferred tax assets is dependent on our ability to generate sufficient future taxable income and, if necessary, execution of our tax planning strategies. In the event we determine that sufficient future taxable income, taking into consideration tax planning strategies, may not generate sufficient taxable income to fully realize net deferred tax assets, we may be required to establish or increase valuation allowances by a charge to income tax expense in the period such a determination is made. This charge may have a material impact on recognized income tax expense on our Consolidated Statements of Income. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The recognition of a change in enacted tax rates may have a material impact on recognized income tax expense and on our Consolidated Statements of Income. | ||||||||
We follow accounting guidance which prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under this guidance, tax positions are initially recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant facts. Application of this guidance requires numerous estimates based on available information. We consider many factors when evaluating and estimating our tax positions and tax benefits, and our recognized tax positions and tax benefits may not accurately anticipate actual outcomes. As we obtain additional information, we may need to periodically adjust our recognized tax positions and tax benefits. These periodic adjustments may have a material impact on our Consolidated Statements of Income. For additional information related to uncertain tax positions see Note 10. | ||||||||
Derivative Instruments | ' | |||||||
Derivative Instruments | ||||||||
We may use derivative financial instruments as part of our risk management strategy to reduce our interest rate exposure. We do not enter into derivative financial instruments for speculative or trading purposes. The fair value of derivative instruments are recognized as assets and/or liabilities at the balance sheet date. Changes in the fair value of derivative instruments are recognized in operating results or included in accumulated other comprehensive income (loss), depending on whether the derivative instrument is accounted for as a derivative under Accounting Standards Codification ("ASC") 815 "Derivatives and Hedging" or whether the Company elects, and the relationship between the hedged item and hedging instrument, qualifies for hedge accounting treatment and whether it is considered a fair value or cash flow hedge. | ||||||||
For the Company's interest rate cap agreement that was entered in November 2013, the Company has elected to account for the interest rate cap as a cash flow hedge of the risks in changes to expected cash flows related to the interest rate payments on its variable rate term loan that was entered in August 2013. The Company has concluded that the interest rate cap and the underlying exposure are structured in a manner that qualifies for an assumption of perfect effectiveness with no ineffectiveness recognized under ASC 815. As such, all changes in the fair value, including changes in the interest rate cap agreement's time value, of the interest rate cap agreement that occurred from the inception of the cash flow hedge and December 31, 2013 are recognized in accumulated other comprehensive income ("AOCI"). As the caplets settle, the settlement amount is reclassified from AOCI to earnings; which is consistent with the hedged exposure (interest expense) effecting earnings. | ||||||||
The exchange of cash associated with derivative transactions is classified in the Consolidated Statement of Cash Flows in the same category as the cash flows from the items subject to the economic hedging relationships. | ||||||||
The change in fair value of the interest rate cap for the year ended December 31, 2013 was de minimis and had no impact on the Consolidated Statements of Other Comprehensive Income. We did not utilize any derivative instruments during the years ended December 31, 2012 or 2011. For additional information related to derivative instruments see Note 5 and 9. | ||||||||
Revenue Recognition | ' | |||||||
Revenue Recognition | ||||||||
We have agreements with clients pursuant to which we deliver various services each month. | ||||||||
Following is a description of significant sources of our revenue: | ||||||||
• | ||||||||
Fees contingent upon the month-to-month delivery of services defined by client contracts, such as claims processing, claims reconciliation, professional services, call center support, disbursement services, project management, collection and forensic services, consulting services, document review services, and conversion of data into an organized, searchable electronic database. The amount we earn varies based primarily on the size and complexity of the engagement, the number of hours of professional services provided, and the number of documents or volume of data processed or reviewed. | ||||||||
• | ||||||||
Data hosting fees and volume-based fees. | ||||||||
• | ||||||||
Deposit-based and service fees. Deposit-based fees are earned based on a percentage of Chapter 7 assets placed on deposit with a designated financial institution by our trustee clients, to whom we provide, at no charge, software licenses, limited hardware and hardware maintenance, and postcontract customer support services. The fees earned based on assets placed on deposit by our trustee clients may vary based on fluctuations in short-term interest rates and changes in service fees assessed on such deposits. | ||||||||
• | ||||||||
Legal noticing services to parties of interest in bankruptcy, class action and other administrative matters, including direct notification and media campaign, and advertising management in which we coordinate notification, primarily through print media outlets to potential parties of interest for a particular client engagement. | ||||||||
• | ||||||||
Monitoring and noticing fees earned based on monthly or on-demand requests for information provided through our AACER® software product. | ||||||||
• | ||||||||
Reimbursed expenses, primarily related to postage on mailing services. | ||||||||
Non-Software Arrangements | ||||||||
Certain of our services are billed based on unit prices and volumes for which we have identified each deliverable service element. Based on our evaluation of each element, we have determined that each element delivered has standalone value to our customers because we or other vendors sell such services separately from any other services and deliverables. For certain of these services we have obtained objective and reliable evidence of the fair value of each element based either on the price we charge when we sell an element on a standalone basis or on third-party evidence of fair value of such similar services. For elements where evidence cannot be established, the best estimate of sales price has been used. Our arrangements do not include general rights of return. Accordingly, each of the service elements in our multiple element case and document management arrangements qualifies as a separate unit of accounting. We allocate revenue to the various units of accounting in our arrangements based on the fair value or best estimated selling price of each unit of accounting, which is generally consistent with the stated prices in our arrangements. In instances when revenue recognition is deferred, we utilize the relative selling price method to calculate the revenue recognized for each period. As we have evidence of an arrangement, revenue for each separate unit of accounting is recognized each period. Revenue is recognized as the services are rendered, our fee becomes fixed and determinable, and collectability is reasonably assured. Payments received in advance of satisfaction of the related revenue recognition criteria are recognized as a customer deposit on our Consolidated Balance Sheets until all revenue recognition criteria have been satisfied. | ||||||||
Software Arrangements | ||||||||
For our Chapter 7 bankruptcy trustee arrangements, we provide our trustee clients with a software license, hardware lease, hardware maintenance, and post-contract customer support services, all at no charge to the trustee. The trustees place their liquidated estate deposits with a financial institution with which we have an arrangement. We earn contingent monthly fees from the financial institutions based on the average dollar amount of deposits held by the trustees with that financial institution related to the software license, hardware lease, hardware maintenance, and post-contract customer support services provided to our trustee clients. The monthly deposit fees have two components consisting of an interest-based component and a non-interest based service fee component. Since we have not established vendor specific objective evidence of the fair value of the software license, we do not recognize any revenue on delivery of the software. The software element is deferred and included with the remaining undelivered elements, which are post-contract customer support services. Revenue related to post-contract customer support is entirely contingent on the placement of liquidated estate deposits by the trustee with the financial institution. Accordingly, we recognize this contingent usage based revenue as the fee becomes fixed or determinable at the time actual usage occurs and collectability is probable. This occurs monthly as a result of the computation, billing and collection of monthly deposit fees contractually agreed to. At that time, we have also satisfied the other revenue recognition criteria since we have persuasive evidence that an arrangement exists, services have been rendered, the price is fixed and determinable, and collectability is reasonably assured. | ||||||||
We also provide our trustee clients with certain hardware, such as desktop computers, monitors, and printers as well as hardware maintenance. We retain ownership of all hardware provided and we account for this hardware as a lease. As the hardware maintenance arrangement is an executory contract similar to an operating lease, we use guidance related to contingent rentals in operating lease arrangements for hardware maintenance as well as for the hardware lease. Since the payments under all of our arrangements are contingent upon the level of trustee deposits and the delivery of upgrades and other services, and there remain important uncertainties regarding the amount of unreimbursable costs yet to be incurred by us, we account for the hardware lease as an operating lease. Therefore, all lease payments, based on the estimated fair value of hardware provided, were accounted for as contingent rentals which requires that we recognize rental income when the changes in the factor on which the contingent lease payment is based actually occur. This occurs at the end of each period as we achieve our target when deposits are held at the depository financial institution as, at that time, evidence of an arrangement exists, delivery has occurred, the amount has become fixed and determinable, and collection is reasonably assured. This revenue, which is substantially less than ten percent of our total revenue for the years ended December 31, 2013, 2012 and 2011, is included in the Consolidated Statements of Income as a component of "Operating revenue." | ||||||||
Reimbursements | ||||||||
We have revenue related to the reimbursed expenses, primarily postage. Reimbursed postage and other reimbursable direct costs are recorded gross in the Consolidated Statements of Income as "Reimbursable expenses" and as "Reimbursed direct costs", in the revenue and operating expenses sections, respectively. | ||||||||
Costs Related to Contract Acquisition, Origination, and Set-up | ' | |||||||
Costs Related to Contract Acquisition, Origination, and Set-up | ||||||||
We expense customer contract acquisition, origination, and set-up costs as incurred. | ||||||||
Depreciation and Software and Leasehold Amortization | ' | |||||||
Depreciation and Software and Leasehold Amortization | ||||||||
Depreciation and software and leasehold amortization for the years ended December 31, 2013, 2012 and 2011, was $31.0 million, $27.4 million, and $23.1 million, respectively. The caption "Depreciation and software and leasehold amortization" in the accompanying Consolidated Statements of Income includes costs that are directly related to services of approximately $16.0 million, $12.8 million, and $10.2 million, for the years ended December 31, 2013, 2012 and 2011, respectively. | ||||||||
Income Per Share | ' | |||||||
Income Per Share | ||||||||
Basic net income per share is computed on the basis of weighted average outstanding common shares. We have determined that certain nonvested share awards (also referred to as restricted stock awards) issued by the Company are participating securities because they have non-forfeitable rights to dividends. Accordingly, basic net income per share is calculated under the two-class method calculation. | ||||||||
Diluted net income per share is computed on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect, if any, of stock options. The numerator of the diluted net income per share calculation is decreased by the allocation of net income and dividends to nonvested shares, if the net impact is dilutive. In determining diluted earnings per share, we use the more dilutive earnings per share result between two-class method calculation and the treasury stock method calculation applied to our outstanding nonvested share awards. See Note 11 for additional information. | ||||||||
Segment Information | ' | |||||||
Segment Information | ||||||||
Our Chief Operating Decision Maker (Epiq's Chief Executive Officer) makes operating decisions and assesses business performance, based on our internal financial reporting structure, on a reportable segment level basis. See Note 14 for additional information. | ||||||||
Foreign Currency Translation | ' | |||||||
Foreign Currency Translation | ||||||||
Local currencies are the functional currencies for our operating subsidiaries. Accordingly, assets and liabilities of these subsidiaries are translated at the rate of exchange at the balance sheet date. Adjustments from the translation process are part of accumulated other comprehensive loss and are included as a separate component of equity. The changes in foreign currency translation adjustments were not adjusted for income taxes since they relate to indefinite term investments in non-United States subsidiaries. Income and expense items of significant value are translated as of the date of the transactions for these subsidiaries; however, day to day operational transactions are translated at average rates of exchange. As of December 31, 2013, 2012, and 2011, cumulative translation adjustments included in accumulated other comprehensive loss were $0.5 million, $1.4 million, and $2.0 million, respectively. | ||||||||
Other Comprehensive Income | ' | |||||||
Other Comprehensive Income | ||||||||
The only component of other comprehensive income is foreign currency translation. The following table sets forth a reconciliation of other comprehensive income for the years ended December 31, 2013, 2012, and 2011: | ||||||||
Foreign Currency | Accumulated Other | |||||||
Translation | Comprehensive | |||||||
Income | ||||||||
Balance at December 31, 2010 | $ | (1,971 | ) | $ | (1,971 | ) | ||
Current period activity: | ||||||||
Foreign currency translation adjustment | (16 | ) | (16 | ) | ||||
| | | | | | | | |
Balance at December 31, 2011 | (1,987 | ) | (1,987 | ) | ||||
Current period activity: | ||||||||
Foreign currency translation adjustment | 555 | 555 | ||||||
| | | | | | | | |
Balance at December 31, 2012 | (1,432 | ) | (1,432 | ) | ||||
Current period activity: | ||||||||
Foreign currency translation adjustment | 891 | 891 | ||||||
| | | | | | | | |
Balance at December 31, 2013 | $ | (541 | ) | $ | (541 | ) | ||
| | | | | | | | |
| | | | | | | | |
Accounting for Contingencies | ' | |||||||
Accounting for Contingencies | ||||||||
We may be involved in various legal proceedings from time to time in the ordinary course of business. Except for income tax contingencies, we record accruals for contingencies to the extent that we conclude their occurrence is probable and that the related liabilities are reasonably estimable. We record anticipated recoveries under existing insurance contracts when we are assured of recovery. Many factors are considered when making these assessments, including the progress of the case, opinions or views of legal counsel, prior case law, our experience or the experience of other companies with similar cases, and our intent on how to respond. Litigation and other contingencies are inherently unpredictable and excessive damage awards do occur. As such, these assessments can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. | ||||||||
Recently Adopted Accounting Pronouncements | ' | |||||||
Recently Adopted Accounting Pronouncements | ||||||||
In February 2013, the Financial Accounting Standards Board issued guidance which requires companies to disclose additional information about items reclassified out of AOCI. Such additional information includes changes in AOCI balances by component with separate presentation of reclassification adjustments and current period other comprehensive income; and significant items reclassified out of AOCI by component, either on the face of the income statement or as a separate note to the financial statements. This guidance does not change current generally accepted accounting principles in the United States of America requirements for interim financial statement reporting of other comprehensive income. However, we would be required to include information about changes in AOCI balances by component and significant items reclassified out of AOCI in interim reporting periods. We have elected to present changes in AOCI balances by component in a separate note to the consolidated financial statements. This requirement was effective for us beginning with our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 and did not require retrospective application. | ||||||||
NATURE_OF_OPERATIONS_AND_SUMMA2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||
Schedule of reconciliation of other comprehensive income | ' | |||||||
Foreign Currency | Accumulated Other | |||||||
Translation | Comprehensive | |||||||
Income | ||||||||
Balance at December 31, 2010 | $ | (1,971 | ) | $ | (1,971 | ) | ||
Current period activity: | ||||||||
Foreign currency translation adjustment | (16 | ) | (16 | ) | ||||
| | | | | | | | |
Balance at December 31, 2011 | (1,987 | ) | (1,987 | ) | ||||
Current period activity: | ||||||||
Foreign currency translation adjustment | 555 | 555 | ||||||
| | | | | | | | |
Balance at December 31, 2012 | (1,432 | ) | (1,432 | ) | ||||
Current period activity: | ||||||||
Foreign currency translation adjustment | 891 | 891 | ||||||
| | | | | | | | |
Balance at December 31, 2013 | $ | (541 | ) | $ | (541 | ) | ||
| | | | | | | | |
| | | | | | | | |
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
PROPERTY AND EQUIPMENT | ' | ||||||||
Schedule of classification of property and equipment and the related estimated useful lives | ' | ||||||||
December 31, | |||||||||
Estimated | |||||||||
2013 | 2012 | Useful Life | |||||||
(in thousands) | |||||||||
Land | $ | 1,247 | $ | 1,758 | |||||
Building and building and leasehold improvements | 22,127 | 14,688 | 3 - 30 years | ||||||
Furniture and fixtures | 7,712 | 5,858 | 5 years | ||||||
Computer equipment and purchased software | 110,449 | 88,086 | 2 - 5 years | ||||||
Transportation equipment | 7,522 | 7,522 | 3 - 5 years | ||||||
Operations equipment | 6,122 | 6,405 | 3 - 5 years | ||||||
Construction in progress | 18,295 | 2,611 | |||||||
| | | | | | | | | |
173,474 | 126,928 | ||||||||
Accumulated depreciation and amortization | 101,356 | (82,376 | ) | ||||||
| | | | | | | | | |
Property and equipment | $ | 72,118 | $ | 44,552 | |||||
| | | | | | | | | |
| | | | | | | | | |
INTERNALLY_DEVELOPED_SOFTWARE_
INTERNALLY DEVELOPED SOFTWARE (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
INTERNALLY DEVELOPED SOFTWARE | ' | |||||||
Summary of internally developed software | ' | |||||||
Year Ended | ||||||||
December 31, | ||||||||
2013 | 2012 | |||||||
(in thousands) | ||||||||
Amounts capitalized, beginning of year | $ | 62,962 | $ | 57,540 | ||||
Development costs capitalized | 6,061 | 6,467 | ||||||
Foreign currency translation | — | (20 | ) | |||||
Dispositions | (161 | ) | (1,025 | ) | ||||
| | | | | | | | |
Amounts capitalized, end of year | 68,862 | 62,962 | ||||||
Accumulated amortization, end of year | (52,661 | ) | (44,057 | ) | ||||
| | | | | | | | |
Internally developed software, net | $ | 16,201 | $ | 18,905 | ||||
| | | | | | | | |
| | | | | | | | |
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | |||||||||||||
Schedule of change in the carrying amount of goodwill | ' | |||||||||||||
Technology | Bankruptcy | Total | ||||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Balance as of December 31, 2011 | $ | 187,773 | $ | 214,963 | $ | 402,736 | ||||||||
Purchase price adjustments | 1,276 | — | 1,276 | |||||||||||
Foreign currency translation and other | 199 | — | 199 | |||||||||||
| | | | | | | | | | | ||||
Balance as of December 31, 2012 | $ | 189,248 | $ | 214,963 | $ | 404,211 | ||||||||
Foreign currency translation and other | 91 | — | 91 | |||||||||||
| | | | | | | | | | | ||||
Balance as of December 31, 2013 | $ | 189,339 | $ | 214,963 | $ | 404,302 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Schedule of Identifiable intangible assets | ' | |||||||||||||
December 31, 2013 | December 31, 2012 | |||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | |||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||
(in thousands) | ||||||||||||||
Amortizing intangible assets: | ||||||||||||||
Customer relationships | $ | 124,512 | $ | 90,274 | $ | 124,512 | $ | 73,713 | ||||||
Trade names | 6,591 | 2,481 | 6,591 | 1,650 | ||||||||||
Non-compete agreements | 18,947 | 16,178 | 18,947 | 14,736 | ||||||||||
| | | | | | | | | | | | | | |
Total | $ | 150,050 | $ | 108,933 | $ | 150,050 | $ | 90,099 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Schedule of estimated future amortization expense related to intangible assets | ' | |||||||||||||
Year Ending December 31, | (in thousands) | |||||||||||||
2014 | $ | 12,569 | ||||||||||||
2015 | 9,893 | |||||||||||||
2016 | 6,232 | |||||||||||||
2017 | 5,390 | |||||||||||||
2018 | 3,434 | |||||||||||||
2019 and thereafter | 3,599 | |||||||||||||
| | | | | ||||||||||
Total | $ | 41,117 | ||||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
LONGTERM_OBLIGATIONS_Tables
LONG-TERM OBLIGATIONS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
LONG-TERM OBLIGATIONS | ' | ||||||||||||
Summary of long-term obligations outstanding | ' | ||||||||||||
Final | Weighted-Average | December 31, | December 31, | ||||||||||
Maturity | Interest Rate | 2013 | 2012 | ||||||||||
Date | |||||||||||||
(in thousands) | |||||||||||||
Senior secured term loan | Aug-20 | 4.75 | % | $ | 299,250 | $ | — | ||||||
Senior revolving loan | Aug-18 | n/a | — | 199,000 | |||||||||
Capital leases | Apr-17 | 4.3 | % | 6,548 | 2,860 | ||||||||
Note payable | Oct-14 | 2.1 | % | 4,079 | 7,080 | ||||||||
Acquisition-related liabilities | Mar-14 | n/a | 2,580 | 3,499 | |||||||||
| | | | | | | | | | | | | |
Total long-term obligations, including current portion | 312,457 | 212,439 | |||||||||||
| | | | | | | | | | | | | |
Current maturities of long-term obligations | |||||||||||||
Senior secured term loan | (3,000 | ) | — | ||||||||||
Capital leases | (3,690 | ) | (1,640 | ) | |||||||||
Notes payable | (4,079 | ) | (4,012 | ) | |||||||||
Acquisition-related liabilities | (2,580 | ) | (3,499 | ) | |||||||||
| | | | | | | | | | | | | |
Total current maturities of long-term obligations | (13,349 | ) | (9,151 | ) | |||||||||
| | | | | | | | | | | | | |
Total Long-term obligations | $ | 299,108 | $ | 203,288 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Schedule of amounts recorded in connection with acquisition-related liabilities | ' | ||||||||||||
December 31, | December 31, | ||||||||||||
2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||
De Novo contingent consideration: | |||||||||||||
Current portion | $ | 2,580 | $ | — | |||||||||
| | | | | | | | ||||||
Total De Novo contingent consideration | 2,580 | — | |||||||||||
| | | | | | | | ||||||
De Novo deferred acquisition price: | |||||||||||||
Current portion | — | 3,499 | |||||||||||
| | | | | | | | ||||||
Total De Novo deferred acquisition price | — | 3,499 | |||||||||||
| | | | | | | | ||||||
Total acquisition-related liabilities | $ | 2,580 | $ | 3,499 | |||||||||
| | | | | | | | ||||||
| | | | | | | | ||||||
Schedule of maturity of long-term obligations | ' | ||||||||||||
Our long-term obligations, consisting of our senior secured term loan (based upon the required quarterly payments but not considering the additional principal payments under the excess cash flow provisions notes above), acquisition-related liabilities, and capitalized leases, mature as follows for years ending December 31: | |||||||||||||
(in thousands) | |||||||||||||
2014 | $ | 13,349 | |||||||||||
2015 | 5,666 | ||||||||||||
2016 | 3,104 | ||||||||||||
2017 | 3,083 | ||||||||||||
2018 and thereafter | 287,255 | ||||||||||||
| | | | | |||||||||
Total | $ | 312,457 | |||||||||||
| | | | | |||||||||
| | | | | |||||||||
OPERATING_LEASES_Tables
OPERATING LEASES (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
OPERATING LEASES | ' | ||||
Schedule of future minimum lease payments | ' | ||||
Future minimum lease payments during the years ending December 31 are as follows: | |||||
Total Future | |||||
Minimum Lease | |||||
Payments | |||||
(in thousands) | |||||
2014 | $ | 10,702 | |||
2015 | 7,346 | ||||
2016 | 3,670 | ||||
2017 | 1,907 | ||||
2018 | 1,835 | ||||
Thereafter | 7,381 | ||||
| | | | | |
Total minimum lease payments | $ | 32,841 | |||
| | | | | |
| | | | | |
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
Schedule of assets and liabilities measured and recorded at fair value on a recurring basis | ' | |||||||||||||
Estimated Fair Value Measurements | ||||||||||||||
Significant | ||||||||||||||
Other | ||||||||||||||
Quoted Prices | Observable | Significant | ||||||||||||
in Active | Inputs | Unobservable | ||||||||||||
Carrying Value | Markets | Inputs | ||||||||||||
Items Measured at Fair Value on a Recurring Basis | (Level 1) | (Level 2) | (Level 3) | |||||||||||
(in thousands) | ||||||||||||||
December 31, 2013: | ||||||||||||||
Assets: | ||||||||||||||
Interest rate cap | $ | 27 | $ | - | $ | 27 | $ | - | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
December 31, 2012: | ||||||||||||||
Assets: | ||||||||||||||
Money market funds | $ | 34 | $ | 34 | $ | — | $ | — | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
December 31, 2011: | ||||||||||||||
Assets: | ||||||||||||||
Money market funds | $ | 34 | $ | 34 | $ | — | $ | — | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Liabilities: | ||||||||||||||
Contingent consideration(1) | $ | 16,226 | $ | - | $ | — | $ | 16,226 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
-1 | ||||||||||||||
The contingent consideration represents the estimated fair value, as of the acquisition date, of the estimated contingent consideration that could have been payable in connection with the De Novo acquisition that was contingent upon achieving performance hurdles based on operating revenue objectives. The carrying value at December 31, 2011, was based on management's estimate of projected revenue over the measurement period as well as the probability of contingent consideration achievement and an applied discount rate to the projected contingent consideration payments that approximated the weighted average cost of capital. As discussed in Note 5 the carrying value was adjusted to zero during the third quarter of 2012. | ||||||||||||||
Schedule of changes in the fair value of contingent consideration related to the De Novo acquisition | ' | |||||||||||||
Fair Value | ||||||||||||||
Measurements | ||||||||||||||
Using Significant | ||||||||||||||
Unobservable Inputs | ||||||||||||||
(Level 3) | ||||||||||||||
(in thousands) | ||||||||||||||
Total | ||||||||||||||
Ending balance December 31, 2011 | $ | 16,226 | ||||||||||||
Increase in fair value related to accretion | 962 | |||||||||||||
Decrease in fair value of contingent consideration obligation | (17,188 | ) | ||||||||||||
| | | | | ||||||||||
Ending balance December 31, 2012 | $ | — | ||||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
INCOME TAXES | ' | ||||||||||
Schedule of income before income taxes | ' | ||||||||||
Year Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
(in thousands) | |||||||||||
Income before income taxes | |||||||||||
United States | $ | 12,273 | $ | 32,148 | $ | 18,406 | |||||
Foreign | 4,832 | 3,258 | 2,501 | ||||||||
| | | | | | | | | | | |
Total | $ | 17,105 | $ | 35,406 | $ | 20,907 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of provision for income taxes | ' | ||||||||||
Year Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
(in thousands) | |||||||||||
Provision for income taxes | |||||||||||
Currently payable income taxes | |||||||||||
Federal | $ | 9,121 | $ | 9,447 | $ | 3,062 | |||||
State | 1,849 | 1,221 | 2,408 | ||||||||
Foreign | 1,542 | 838 | 927 | ||||||||
| | | | | | | | | | | |
Total | 12,512 | 11,506 | 6,397 | ||||||||
| | | | | | | | | | | |
Deferred income taxes | |||||||||||
Federal | (4,687 | ) | 946 | 2,333 | |||||||
State | (1,724 | ) | 619 | 323 | |||||||
Foreign | (106 | ) | (92 | ) | (226 | ) | |||||
| | | | | | | | | | | |
Total | (6,517 | ) | 1,473 | 2,430 | |||||||
| | | | | | | | | | | |
Provision for income taxes | $ | 5,995 | $ | 12,979 | $ | 8,827 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of reconciliation of the provision for income taxes at the statutory rate to the provision for income taxes at effective rate | ' | ||||||||||
Year Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
(in thousands) | |||||||||||
Computed at the statutory rate | $ | 5,987 | $ | 12,392 | $ | 7,318 | |||||
Change in taxes resulting from: | |||||||||||
State income taxes, net of federal tax effect | 81 | 1,136 | 1,747 | ||||||||
Foreign tax and change in foreign valuation allowance | (322 | ) | (394 | ) | (175 | ) | |||||
Permanent differences | 797 | 578 | 450 | ||||||||
Uncertain Tax Positions | 447 | — | 192 | ||||||||
Research and Development Credits | (676 | ) | (239 | ) | (490 | ) | |||||
Domestic Production Activities Deduction | (422 | ) | (568 | ) | (286 | ) | |||||
Other | 110 | 74 | 71 | ||||||||
| | | | | | | | | | | |
Provision for income taxes | $ | 5,995 | $ | 12,979 | $ | 8,827 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities | ' | ||||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
(in thousands) | |||||||||||
Deferred tax assets: | |||||||||||
Allowance for doubtful accounts | $ | 1,661 | $ | 1,524 | |||||||
Share-based compensation | 10,474 | 9,711 | |||||||||
Intangible assets | 2,653 | 2,483 | |||||||||
Deferred rent | 527 | 799 | |||||||||
Accrued liabilities | 2,094 | 2,574 | |||||||||
Foreign loss carryforwards | 639 | 69 | |||||||||
State net operating loss carryforwards | 838 | 631 | |||||||||
Valuation allowances | (808 | ) | (101 | ) | |||||||
| | | | | | | | ||||
Total deferred tax assets | 18,078 | 17,690 | |||||||||
| | | | | | | | ||||
Deferred tax liabilities: | |||||||||||
Prepaid expenses | (2,199 | ) | (2,740 | ) | |||||||
Intangible assets | (33,300 | ) | (35,523 | ) | |||||||
Property and equipment and software development costs | (11,321 | ) | (13,817 | ) | |||||||
Deferred debt discharge income | (2,649 | ) | (3,300 | ) | |||||||
Other | (100 | ) | (318 | ) | |||||||
| | | | | | | | ||||
Total deferred tax liabilities | (49,569 | ) | (55,698 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | $ | (31,491 | ) | $ | (38,008 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
a | |||||||||||
Schedule of net deferred tax liability | ' | ||||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
(in thousands) | |||||||||||
Other current assets | $ | 3,824 | $ | 3,235 | |||||||
Other long-term assets | 243 | 166 | |||||||||
Long-term deferred income tax liability | (35,558 | ) | (41,409 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | $ | (31,491 | ) | $ | (38,008 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
Summary of the activity related to gross unrecognized tax benefits excluding interest and penalties | ' | ||||||||||
The following table summarizes the activity related to our gross unrecognized tax benefits excluding interest and penalties (in thousands): | |||||||||||
2013 | 2012 | 2011 | |||||||||
Unrecognized Tax Benefits as of January 1 | $ | 4,639 | $ | 4,164 | $ | 2,255 | |||||
Gross increases for prior year tax positions | 243 | 1,266 | 1,844 | ||||||||
Gross decreases for prior year tax positions | (53 | ) | — | (3 | ) | ||||||
Gross increase for current year tax positions | 530 | 323 | 363 | ||||||||
Settlements | (33 | ) | (755 | ) | (23 | ) | |||||
Lapse of statute of limitations | — | (359 | ) | (272 | ) | ||||||
| | | | | | | | | | | |
Unrecognized Tax Benefits at December 31 | $ | 5,326 | $ | 4,639 | $ | 4,164 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
NET_INCOME_PER_SHARE_Tables
NET INCOME PER SHARE (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
NET INCOME PER SHARE | ' | |||||||||||||||||||
Schedule of computation of basic and diluted net income per share | ' | |||||||||||||||||||
Year Ended December 31, 2013 | Year Ended December 31, 2012 | |||||||||||||||||||
Net Income | Weighted | Per Share | Net Income | Weighted | Per Share | |||||||||||||||
(Numerator) | Average | Amount | (Numerator) | Average | Amount | |||||||||||||||
Common | Common | |||||||||||||||||||
Shares | Shares | |||||||||||||||||||
Outstanding | Outstanding | |||||||||||||||||||
(Denominator) | (Denominator) | |||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Net income | $ | 11,110 | $ | 22,427 | ||||||||||||||||
Less: amounts allocated to nonvested shares | (113 | ) | (268 | ) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Basic net income available to common stockholders | 10,997 | 35,434 | $ | 0.31 | 22,159 | 35,497 | $ | 0.62 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Effect of dilutive securities: | ||||||||||||||||||||
Stock options | — | 868 | — | 876 | ||||||||||||||||
Add back: amounts allocated to nonvested shares | 113 | — | 268 | — | ||||||||||||||||
Less: amounts re-allocated to nonvested shares | (113 | ) | — | (268 | ) | — | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Diluted net income available to common stockholders | $ | 10,997 | 36,302 | $ | 0.3 | $ | 22,159 | 36,373 | $ | 0.61 | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Year ended December 31, 2011 | ||||||||||||||||||||
Net Income | Weighted | Per Share | ||||||||||||||||||
(Numerator) | Average | Amount | ||||||||||||||||||
Common | ||||||||||||||||||||
Shares | ||||||||||||||||||||
Outstanding | ||||||||||||||||||||
(Denominator) | ||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Net income | $ | 12,080 | ||||||||||||||||||
Less: amounts allocated to nonvested shares | (139 | ) | ||||||||||||||||||
| | | | | | | | | | | ||||||||||
Basic net income available to common stockholders | 11,941 | 35,186 | $ | 0.34 | ||||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Effect of dilutive securities: | ||||||||||||||||||||
Stock options | — | 1,320 | ||||||||||||||||||
Add-back: amounts allocated to nonvested shares | 139 | — | ||||||||||||||||||
Less: amounts re-allocated to nonvested shares | (139 | ) | — | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Diluted net income available to common stockholders | $ | 11,941 | 36,506 | $ | 0.33 | |||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
SHAREBASED_COMPENSATION_Tables
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
SHARE-BASED COMPENSATION. | ' | ||||||||||||||||
Schedule of share-based compensation expense | ' | ||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||
(in thousands) | |||||||||||||||||
Direct cost of operating revenue | $ | 660 | $ | 201 | $ | 309 | |||||||||||
Selling, general and administrative | 9,348 | 6,518 | 7,060 | ||||||||||||||
| | | | | | | | | | | |||||||
Pre-tax share-based compensation expense | 10,008 | 6,719 | 7,369 | ||||||||||||||
Income tax benefit | (4,135 | ) | (2,908 | ) | (3,190 | ) | |||||||||||
| | | | | | | | | | | |||||||
Total share-based compensation expense, net of tax | $ | 5,873 | $ | 3,811 | $ | 4,179 | |||||||||||
| | | | | | | | | | | |||||||
| | | | | | | | | | | |||||||
Schedule of weighted-average assumptions used and the weighted-average fair value per option granted | ' | ||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2012 | 2011 | ||||||||||||||||
Expected life of stock option in years | 6.8 | 6.6 | |||||||||||||||
Expected volatility | 39 | % | 30 | % | |||||||||||||
Risk-free interest rate | 1.1 | % | 2.5 | % | |||||||||||||
Dividend yield | 2.3 | % | 1.1 | % | |||||||||||||
Weighted average grant-date fair value | $ | 3.51 | $ | 4.49 | |||||||||||||
Summary of option activity | ' | ||||||||||||||||
A summary of option activity during the year ended December 31, 2013 is presented below (shares and aggregate intrinsic value in thousands): | |||||||||||||||||
Shares | Weighted | Weighted | Aggregate | ||||||||||||||
Average | Average | Intrinsic Value | |||||||||||||||
Exercise Price | Contractual | ||||||||||||||||
Term | |||||||||||||||||
Outstanding, beginning of period | 5,795 | $ | 12.23 | ||||||||||||||
Granted | — | — | |||||||||||||||
Exercised | (1,924 | ) | 10.07 | ||||||||||||||
Forfeited and expired | (46 | ) | 14.16 | ||||||||||||||
| | | | | | | | | | | | | | ||||
Outstanding, end of period | 3,825 | $ | 13.32 | 3.88 | $ | 11,290 | |||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Options vested and expected to vest, end of period | 3,783 | $ | 13.33 | 3.83 | $ | 11,128 | |||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Options exercisable, end of period | 3,380 | $ | 13.38 | 3.41 | $ | 9,821 | |||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Summary of information about stock options outstanding | ' | ||||||||||||||||
The following table summarizes information about stock options outstanding as of December 31, 2013 (in thousands, except contractual life and price data): | |||||||||||||||||
Options Outstanding | |||||||||||||||||
Options Exercisable | |||||||||||||||||
Weighted- | |||||||||||||||||
Average | |||||||||||||||||
Remaining | |||||||||||||||||
Contractual Life | |||||||||||||||||
Range of | Number | (in years) | Weighted- | Number | Weighted- | ||||||||||||
Exercise Prices | Outstanding | Average | Exercisable | Average | |||||||||||||
Exercise | Exercise | ||||||||||||||||
Price | Price | ||||||||||||||||
$8.13 to $10.39 | 952 | 2.51 | $ | 10.05 | 952 | $ | 10.05 | ||||||||||
$10.40 to $12.64 | 605 | 4.99 | 11.72 | 355 | 12.08 | ||||||||||||
$12.65 to $15.15 | 1,228 | 4.19 | 13.89 | 1,104 | 13.84 | ||||||||||||
$15.16 to $18.15 | 1,040 | 4.1 | 16.52 | 969 | 16.56 | ||||||||||||
| | | | | | | | | | | | | | | | | |
3,825 | 3.88 | 13.32 | 3,380 | 13.38 | |||||||||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Summary of nonvested share activity | ' | ||||||||||||||||
A summary of nonvested share activity during the year ended December 31, 2013 is presented below (shares in thousands): | |||||||||||||||||
Shares | Weighted | ||||||||||||||||
Average Grant | |||||||||||||||||
Date Fair | |||||||||||||||||
Value | |||||||||||||||||
Nonvested, beginning of period | 430 | $ | 11.85 | ||||||||||||||
Granted | 528 | 12.9 | |||||||||||||||
Vested | (594 | ) | 12.4 | ||||||||||||||
Forfeited/Canceled | — | — | |||||||||||||||
| | | | | | | | ||||||||||
Outstanding, end of period | 364 | $ | 12.48 | ||||||||||||||
| | | | | | | | ||||||||||
| | | | | | | | ||||||||||
ACQUISITIONS_Tables
ACQUISITIONS (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Acquisitions | ' | ||||
Schedule of unaudited condensed pro forma financial information | ' | ||||
Year Ended | |||||
December 31, | |||||
2011 | |||||
Total revenue | $ | 356,954 | |||
Operating revenue | 334,893 | ||||
Net income | 22,759 |
SEGMENT_REPORTING_Tables
SEGMENT REPORTING (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
SEGMENT REPORTING | ' | |||||||||||||
Summary of segment information | ' | |||||||||||||
Year Ended December 31, 2013 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Operating revenues | $ | 284,929 | $ | 153,761 | $ | — | $ | 438,690 | ||||||
Intersegment revenue | 384 | — | (384 | ) | — | |||||||||
| | | | | | | | | | | | | | |
Operating revenues including intersegment revenue | 285,313 | 153,761 | (384 | ) | 438,690 | |||||||||
Reimbursable expenses | 2,488 | 40,905 | — | 43,393 | ||||||||||
| | | | | | | | | | | | | | |
Total revenues | 287,801 | 194,666 | (384 | ) | 482,083 | |||||||||
Direct costs, general and administrative costs | 198,462 | 145,596 | (384 | ) | 343,674 | |||||||||
| | | | | | | | | | | | | | |
Segment performance measure | $ | 89,339 | $ | 49,070 | $ | — | $ | 138,409 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Year Ended December 31, 2012 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Operating revenues | $ | 196,959 | $ | 147,791 | $ | — | $ | 344,750 | ||||||
Intersegment revenue | 203 | — | (203 | ) | — | |||||||||
| | | | | | | | | | | | | | |
Operating revenues including intersegment revenue | 197,162 | 147,791 | (203 | ) | 344,750 | |||||||||
Reimbursable expenses | 1,546 | 26,789 | — | 28,335 | ||||||||||
| | | | | | | | | | | | | | |
Total revenues | 198,708 | 174,580 | (203 | ) | 373,085 | |||||||||
Direct costs, general and administrative costs | 125,182 | 122,359 | (203 | ) | 247,338 | |||||||||
| | | | | | | | | | | | | | |
Segment performance measure | $ | 73,526 | $ | 52,221 | $ | — | $ | 125,747 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Year Ended December 31, 2011 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Operating revenues | $ | 132,918 | $ | 128,347 | $ | — | $ | 261,265 | ||||||
Intersegment revenue | 75 | — | (75 | ) | — | |||||||||
| | | | | | | | | | | | | | |
Operating revenues including intersegment revenue | 132,993 | 128,347 | (75 | ) | 261,265 | |||||||||
Reimbursable expenses | 601 | 21,460 | — | 22,061 | ||||||||||
| | | | | | | | | | | | | | |
Total revenues | 133,594 | 149,807 | (75 | ) | 283,326 | |||||||||
Direct costs, general and administrative costs | 77,606 | 96,430 | (75 | ) | 173,961 | |||||||||
| | | | | | | | | | | | | | |
Segment performance measure | $ | 55,988 | $ | 53,377 | $ | — | $ | 109,365 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Schedule of reconciliation of segment performance measure to consolidated income before income taxes | ' | |||||||||||||
Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
(in thousands) | ||||||||||||||
Segment performance measure | $ | 138,409 | $ | 125,747 | $ | 109,365 | ||||||||
Corporate and unallocated expenses | (47,587 | ) | (36,021 | ) | (29,176 | ) | ||||||||
Share-based compensation expense | (10,008 | ) | (6,719 | ) | (7,369 | ) | ||||||||
Depreciation and software and leasehold amortization | (30,971 | ) | (27,399 | ) | (23,081 | ) | ||||||||
Amortization of identifiable intangible assets | (18,834 | ) | (26,588 | ) | (21,323 | ) | ||||||||
Fair value adjustment to contingent consideration | (2,580 | ) | 17,188 | 7,166 | ||||||||||
Acquisition related income (expense) | — | 200 | (7,681 | ) | ||||||||||
Intangible asset impairment expense | — | (1,777 | ) | (1,278 | ) | |||||||||
Other operating income | 791 | 20 | — | |||||||||||
| | | | | | | | | | | ||||
Consolidated income from operations | 29,220 | 44,651 | 26,623 | |||||||||||
Interest expense, net | (12,115 | ) | (9,245 | ) | (5,716 | ) | ||||||||
| | | | | | | | | | | ||||
Income before income taxes | $ | 17,105 | $ | 35,406 | $ | 20,907 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Schedule of total assets by segment | ' | |||||||||||||
December 31, | December 31, | |||||||||||||
2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||
Assets | ||||||||||||||
Technology | $ | 369,135 | $ | 335,051 | ||||||||||
Bankruptcy and Settlement Administration | 281,073 | 296,811 | ||||||||||||
Corporate and unallocated | 97,573 | 22,854 | ||||||||||||
| | | | | | | | |||||||
Total consolidated assets | $ | 747,781 | $ | 654,716 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Schedule of capital expenditures (including software development costs and non-cash expenditures) by segment | ' | |||||||||||||
Following are capital expenditures (including software development costs and non-cash expenditures) by segment: | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
(in thousands) | ||||||||||||||
Capital Expenditures | ||||||||||||||
Technology | $ | 22,234 | $ | 14,153 | $ | 18,731 | ||||||||
Bankruptcy and Settlement Administration | 3,161 | 4,010 | 4,387 | |||||||||||
Corporate and unallocated | 15,312 | 4,391 | 7,117 | |||||||||||
| | | | | | | | | | | ||||
Total consolidated capital expenditures | $ | 40,707 | $ | 22,554 | $ | 30,235 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Schedule of revenue, determined by the location providing the services, by geographical area | ' | |||||||||||||
Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
(in thousands) | ||||||||||||||
Revenue | ||||||||||||||
United States | $ | 431,615 | $ | 346,454 | $ | 261,864 | ||||||||
Other countries | 50,468 | 26,631 | 21,462 | |||||||||||
| | | | | | | | | | | ||||
Total | $ | 482,083 | $ | 373,085 | $ | 283,326 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Schedule of long-lived assets, excluding intangible assets, by geographical area | ' | |||||||||||||
December 31, | December 31, | |||||||||||||
2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||
Long-lived assets | ||||||||||||||
United States | $ | 84,384 | $ | 61,550 | ||||||||||
Other countries | 3,935 | 1,907 | ||||||||||||
| | | | | | | | |||||||
Total | $ | 88,319 | $ | 63,457 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
SUPPLEMENTAL_CASH_FLOW_INFORMA1
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ' | ||||||||||
Schedule of supplemental cash flow information | ' | ||||||||||
Year Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
(in thousands) | |||||||||||
Cash paid for: | |||||||||||
Interest | $ | 10,381 | $ | 7,630 | $ | 5,068 | |||||
Income taxes paid, net | 7,488 | 8,843 | 4,712 | ||||||||
Non-cash investing and financing transactions: | |||||||||||
Property, equipment, and leasehold improvements accrued in accounts payable and other long-term liabilities | 10,261 | 3,076 | 917 | ||||||||
Obligation incurred in purchase transaction | — | — | 29,447 | ||||||||
Capitalized lease obligations and notes payable | 7,902 | 176 | 11,200 | ||||||||
Dividends declared but not yet paid | 3,142 | 3,231 | 1,786 |
NATURE_OF_OPERATIONS_AND_SUMMA3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
item | segment | |||
segment | ||||
Goodwill | ' | ' | ' | ' |
Number of reporting segments | ' | 2 | 3 | ' |
Number of events indicating impairment of goodwill | ' | 0 | ' | ' |
Impairment of goodwill | $0 | ' | ' | ' |
Goodwill | ' | 404,302,000 | 404,211,000 | 402,736,000 |
Revenue Recognition | ' | ' | ' | ' |
Amount charged from trustee clients for support services | ' | 0 | ' | ' |
Number of components of monthly deposit fees | ' | 2 | ' | ' |
Depreciation and Software and Leasehold Amortization | ' | ' | ' | ' |
Depreciation and software and leasehold amortization | ' | 30,971,000 | 27,399,000 | 23,081,000 |
Costs related to services | ' | 16,000,000 | 12,800,000 | 10,200,000 |
Foreign Currency Translation | ' | ' | ' | ' |
Cumulative translation adjustments included in accumulated other comprehensive loss | ' | $500,000 | $1,400,000 | $2,000,000 |
Minimum | ' | ' | ' | ' |
Intangible Assets | ' | ' | ' | ' |
Useful lives of intangible assets | ' | '5 years | ' | ' |
Maximum | ' | ' | ' | ' |
Intangible Assets | ' | ' | ' | ' |
Useful lives of intangible assets | ' | '10 years | ' | ' |
NATURE_OF_OPERATIONS_AND_SUMMA4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Other Comprehensive Income | ' | ' | ' |
Balance at the beginning of the period | ($1,432) | ($1,987) | ($1,971) |
Accumulated Other Comprehensive Income, Current period activity | 891 | 555 | -16 |
Balance at the end of the period | -541 | -1,432 | -1,987 |
Foreign Currency Translation | ' | ' | ' |
Other Comprehensive Income | ' | ' | ' |
Balance at the beginning of the period | -1,432 | -1,987 | -1,971 |
Accumulated Other Comprehensive Income, Current period activity | 891 | 555 | -16 |
Balance at the end of the period | ($541) | ($1,432) | ($1,987) |
PROPERTY_AND_EQUIPMENT_Details
PROPERTY AND EQUIPMENT (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | $173,474,000 | $126,928,000 |
Accumulated depreciation and amortization | -101,356,000 | -82,376,000 |
Property and equipment | 72,118,000 | 44,552,000 |
Assets acquired under capital leases | 13,900,000 | 16,200,000 |
Land | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | 1,247,000 | 1,758,000 |
Building and building and leasehold improvements | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | 22,127,000 | 14,688,000 |
Building and building and leasehold improvements | Minimum | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Estimated Useful Life | '3 years | ' |
Building and building and leasehold improvements | Maximum | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Estimated Useful Life | '30 years | ' |
Furniture and fixtures | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | 7,712,000 | 5,858,000 |
Estimated Useful Life | '5 years | ' |
Computer equipment and purchased software | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | 110,449,000 | 88,086,000 |
Computer equipment and purchased software | Minimum | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Estimated Useful Life | '2 years | ' |
Computer equipment and purchased software | Maximum | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Estimated Useful Life | '5 years | ' |
Transportation equipment | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | 7,522,000 | 7,522,000 |
Transportation equipment | Minimum | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Estimated Useful Life | '3 years | ' |
Transportation equipment | Maximum | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Estimated Useful Life | '5 years | ' |
Operations equipment | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | 6,122,000 | 6,405,000 |
Operations equipment | Minimum | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Estimated Useful Life | '3 years | ' |
Operations equipment | Maximum | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Estimated Useful Life | '5 years | ' |
Construction in progress | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | $18,295,000 | $2,611,000 |
INTERNALLY_DEVELOPED_SOFTWARE_1
INTERNALLY DEVELOPED SOFTWARE (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Capitalized software development costs | ' | ' | ' |
Amounts capitalized, beginning of year | $62,962,000 | $57,540,000 | ' |
Development costs capitalized | 6,061,000 | 6,467,000 | ' |
Foreign currency translation | ' | -20,000 | ' |
Dispositions | -161,000 | -1,025,000 | ' |
Amounts capitalized, end of year | 68,862,000 | 62,962,000 | 57,540,000 |
Accumulated amortization, end of year | -52,661,000 | -44,057,000 | ' |
Internally developed software, net | 16,201,000 | 18,905,000 | ' |
Capitalized software development costs for projects in progress | 3,700,000 | 3,600,000 | ' |
Amortization expense recognized related to capitalized software development costs | $8,800,000 | $8,600,000 | $7,300,000 |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS (Details) (USD $) | 12 Months Ended | 12 Months Ended | ||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 |
Technology | Technology | Bankruptcy and Settlement Administration | Bankruptcy and Settlement Administration | Bankruptcy and Settlement Administration | De Novo Legal LLC | |||
Change in the carrying amount of goodwill | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at the beginning of period | $404,211 | $402,736 | $189,248 | $187,773 | $214,963 | $214,963 | $214,963 | ' |
Purchase price adjustments | ' | 1,276 | ' | 1,276 | ' | ' | ' | 1,300 |
Foreign currency translation and other | 91 | 199 | 91 | 199 | ' | ' | ' | ' |
Balance at the end of period | $404,302 | $404,211 | $189,339 | $189,248 | $214,963 | $214,963 | $214,963 | ' |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS (Details 2) (USD $) | 12 Months Ended | 3 Months Ended | 12 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2011 | Jun. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Jun. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | |
Trade names | AACER trade name | Customer relationships | Customer relationships | Customer relationships | Trade names | Trade names | Trade names | AACER trade name | Non-compete agreements | Non-compete agreements | Non-compete agreements | ||||
Weighted Average | Weighted Average | Weighted Average | |||||||||||||
Amortizing and Non-amortizing intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gross Carrying Amount | $150,050,000 | $150,050,000 | ' | ' | ' | $124,512,000 | $124,512,000 | ' | $6,591,000 | $6,591,000 | ' | ' | $18,947,000 | $18,947,000 | ' |
Accumulated Amortization | 108,933,000 | 90,099,000 | ' | ' | ' | 90,274,000 | 73,713,000 | ' | 2,481,000 | 1,650,000 | ' | ' | 16,178,000 | 14,736,000 | ' |
Weighted average life | ' | ' | ' | ' | ' | ' | ' | '7 years | ' | ' | '8 years | ' | ' | ' | '5 years |
Useful lives of intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '10 years | ' | ' | ' |
Intangible asset impairment expense | ' | 1,777,000 | 1,278,000 | ' | 1,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Impairment expense recognized | ' | ' | ' | 1,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization of identifiable intangible assets | $18,834,000 | $26,588,000 | $21,323,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
GOODWILL_AND_INTANGIBLE_ASSETS4
GOODWILL AND INTANGIBLE ASSETS (Details 3) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Estimated future amortization expense related to intangible assets | ' | ' |
2014 | $12,569 | ' |
2015 | 9,893 | ' |
2016 | 6,232 | ' |
2017 | 5,390 | ' |
2018 | 3,434 | ' |
2019 and thereafter | 3,599 | ' |
Total | $41,117 | $59,951 |
LONGTERM_OBLIGATIONS_Details
LONG-TERM OBLIGATIONS (Details) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 2 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||
Aug. 27, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 28, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | 31-May-12 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2011 | Oct. 01, 2010 | Aug. 27, 2013 | Dec. 31, 2013 | Aug. 27, 2013 | Dec. 31, 2013 | Nov. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Nov. 30, 2013 | Dec. 31, 2013 | Aug. 27, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | |
Interest rate cap | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | Jupiter eSources LLC | Jupiter eSources LLC | Jupiter eSources LLC | Jupiter eSources LLC | Jupiter eSources LLC | Credit Facility | Credit Facility | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Capital leases | Capital leases | Notes payable | Notes payable | Acquisition-related liabilities | Acquisition-related liabilities | Deferred acquisition price | Contingent consideration | ||||
Contingent consideration - purchase price consideration | Contingent consideration - purchase price consideration | Contingent consideration - purchase price consideration | Current maturities of long-term obligations | Other accrued expenses | Selling, general and administrative expense | Contingent consideration - purchase price consideration | Interest rate cap | Interest rate cap | Interest rate cap | Interest rate cap | Prime rate | LIBOR | LIBOR | item | Prime rate | Prime rate | Prime rate | LIBOR | LIBOR | LIBOR | De Novo Legal LLC | De Novo Legal LLC | ||||||||||||||||||||||||
Interest expense | Interest rate cap | Minimum | Maximum | Minimum | Maximum | |||||||||||||||||||||||||||||||||||||||||
LONG-TERM OBLIGATIONS | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total long-term obligations, including current portion | ' | $312,457,000 | $212,439,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $299,250,000 | ' | ' | ' | ' | ' | ' | ' | $0 | ' | $199,000,000 | ' | ' | ' | ' | ' | ' | $6,548,000 | $2,860,000 | $4,079,000 | $7,080,000 | $2,580,000 | $3,499,000 | $3,499,000 | $2,580,000 |
Total current maturities of long-term obligations | ' | -13,349,000 | -9,151,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -3,690,000 | -1,640,000 | -4,079,000 | -4,012,000 | -2,580,000 | -3,499,000 | ' | ' |
Total Long-term obligations | ' | 299,108,000 | 203,288,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4.30% | ' | 2.10% | ' | ' | ' | ' | ' |
Aggregate amount of funds available | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 400,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal amount of debt issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 300,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity subject at the entity's option, subject to compliance with covenants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 600,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 200,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fees and expenses associated with the repayment of the Credit Facility, and the repayment of the outstanding balance under the Former Credit Facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Write-off of a portion of the unamortized deferred debt issuance costs for the Former Credit Facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basis points added to reference rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.75% | 3.75% | ' | ' | ' | ' | ' | 2.00% | 3.00% | ' | 3.00% | 4.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Variable interest rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'prime rate | 'one, two, three or six month LIBOR rate | ' | ' | ' | ' | 'Prime rate | ' | ' | 'LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate, variable interest rate floor | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.00% | 1.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of rate options | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
First date of required quarterly payments of principal | 31-Dec-13 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Payments of the principal amount of debt quarterly | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Upfront cash payment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 46,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term of derivative contract | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '2 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notional amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 150,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Strike rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Variable rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '1 month LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intrinsic value of settled derivatives | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount recognized | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ineffectiveness gain (loss) recognized in earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of derivative | ' | ' | ' | 27,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount expected to be reclassified from AOCI to earnings in the next 12 months | ' | ' | ' | 500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Threshold leverage ratio for determination of annual mandatory prepayments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.75 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net leverage ratio, maximum | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4.5 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate bearing notes payable (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.10% | ' | ' | ' | ' | ' |
Potential undiscounted amount of all future payments, minimum | ' | ' | ' | ' | ' | 0 | ' | ' | ' | 0 | ' | ' | ' | ' | ' | 0 | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Potential undiscounted amount of all future payments, maximum | ' | ' | ' | ' | ' | 29,100,000 | ' | ' | ' | 29,100,000 | ' | ' | ' | ' | ' | 10,000,000 | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of contingent consideration | ' | ' | ' | ' | ' | ' | 17,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of potential contingent consideration recorded | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Payment of deferred acquisition consideration | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Payment of deferred acquisition consideration reclassified from investing activities to financing activities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contingent consideration paid | ' | ' | ' | ' | 3,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance amount written off as a credit to operating expenses | ' | ' | ' | ' | ' | 800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period over which potential future payments are required to be made | ' | ' | ' | ' | ' | '2 years | '2 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Adjustment to contingent consideration liability | ' | ' | ' | ' | ' | $3,400,000 | ' | $2,600,000 | ($17,200,000) | ' | $2,600,000 | $800,000 | $800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
LONGTERM_OBLIGATIONS_Details_2
LONG-TERM OBLIGATIONS (Details 2) (USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Maturity of long-term obligations consisting of senior secured term loan, acquisition-related liabilities, and capitalized leases | ' |
2014 | $13,349 |
2015 | 5,666 |
2016 | 3,104 |
2017 | 3,083 |
2018 and thereafter | 287,255 |
Total | $312,457 |
OPERATING_LEASES_Details
OPERATING LEASES (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Total Future Minimum Lease Payments | ' | ' | ' |
2014 | $10,702,000 | ' | ' |
2015 | 7,346,000 | ' | ' |
2016 | 3,670,000 | ' | ' |
2017 | 1,907,000 | ' | ' |
2018 | 1,835,000 | ' | ' |
Thereafter | 7,381,000 | ' | ' |
Total minimum lease payments | 32,841,000 | ' | ' |
Expense related to operating leases | $12,600,000 | $11,500,000 | $11,400,000 |
EQUITY_Details
EQUITY (Details) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | |||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Jun. 02, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 06, 2013 | Dec. 31, 2013 | |
2012 Program | 2012 Program | 2012 Program | 2014 Share Repurchase Program | 2014 Share Repurchase Program | ||||
plan | plan | |||||||
Share Repurchases | ' | ' | ' | ' | ' | ' | ' | ' |
Authorized amount under stock repurchase program | ' | ' | ' | $35,000,000 | ' | ' | $35,000,000 | ' |
Minimum number of plans to be utilized with brokers or banks for pre-authorized purchases | ' | ' | ' | ' | ' | 1 | ' | 1 |
Number of shares of common stock repurchased under stock repurchase program | ' | ' | ' | ' | 1,768,296 | 283,980 | ' | ' |
Value of shares of common stock repurchased under stock repurchase program | 22,881,000 | 3,299,000 | 9,958,000 | ' | 22,900,000 | 3,300,000 | ' | ' |
Weighted average cost of common stock repurchased (in dollars per share) | ' | ' | ' | ' | $12.94 | $11.62 | ' | ' |
Number of common stock repurchased to satisfy employee tax withholding obligations (in Shares) | 471,248 | 217,713 | 66,290 | ' | ' | ' | ' | ' |
Value of common stock repurchased to satisfy employee tax withholding obligations | 6,515,000 | 2,689,000 | 900,000 | ' | ' | ' | ' | ' |
Dividend | ' | ' | ' | ' | ' | ' | ' | ' |
Cash dividends declared on outstanding shares of common stock (in dollars per share) | $0.36 | $0.39 | $0.21 | ' | ' | ' | ' | ' |
Cash dividends paid on outstanding shares of common stock (in dollars per share) | $0.36 | $0.35 | ' | ' | ' | ' | ' | ' |
Dividends payable | 3,142,000 | 3,231,000 | 1,786,000 | ' | ' | ' | ' | ' |
Total dividends declared | 12,800,000 | 13,800,000 | ' | ' | ' | ' | ' | ' |
Total dividend paid | $12,891,000 | $12,386,000 | $5,514,000 | ' | ' | ' | ' | ' |
EMPLOYEE_BENEFIT_PLANS_Details
EMPLOYEE BENEFIT PLANS (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
item | |||
Defined Contribution Plan | ' | ' | ' |
Employer matching contribution (as a percent) | 60.00% | ' | ' |
Employee's contribution as percentage of salary matched by employer | 10.00% | ' | ' |
Number of subsidiaries in which employees were covered under the defined contribution plan | 1 | ' | ' |
Plan expense | $2.50 | $2 | $1.60 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 12 Months Ended | |||||||||||
Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2011 | |
Interest rate cap | Recurring Basis | Recurring Basis | Recurring Basis | Recurring Basis | Recurring Basis | Recurring Basis | Recurring Basis | Recurring Basis | Recurring Basis | Recurring Basis | Recurring Basis | |
Carrying Value | Carrying Value | Carrying Value | Carrying Value | Quoted Prices in Active Markets (Level 1) | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||
Interest rate cap | Interest rate cap | |||||||||||
Assets and liabilities measured and recorded at fair value on a recurring basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount transferred from Level 1 to Level 2 | ' | $0 | $0 | $0 | ' | ' | ' | ' | ' | ' | ' | ' |
Amount transferred from Level 2 to Level 1 | ' | 0 | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' |
Derivative asset | ' | ' | ' | ' | ' | ' | ' | 27,000 | ' | ' | 27,000 | ' |
Money market funds | ' | ' | ' | ' | 34,000 | ' | 34,000 | ' | 34,000 | 34,000 | ' | ' |
Contingent consideration | ' | ' | ' | ' | ' | $0 | $16,226,000 | ' | ' | ' | ' | $16,226,000 |
Variable rate basis | '1 month LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details 2) (Credit Facility, USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Credit Facility | ' | ' |
Fair value of Financial Assets and Liabilities | ' | ' |
Amount outstanding under credit facility, which approximated fair value | $302.30 | $199 |
FAIR_VALUE_MEASUREMENTS_Detail2
FAIR VALUE MEASUREMENTS (Details 3) (Contingent consideration, De Novo Legal LLC, USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2012 |
Contingent consideration | De Novo Legal LLC | ' |
Change in the acquisition-related contingent consideration obligation | ' |
Balance at the beginning of period | $16,226 |
Increase in fair value related to accretion | 962 |
Decrease in fair value of contingent consideration obligation | ($17,188) |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Income before income taxes | ' | ' | ' |
United States | $12,273 | $32,148 | $18,406 |
Foreign | 4,832 | 3,258 | 2,501 |
INCOME BEFORE INCOME TAXES | 17,105 | 35,406 | 20,907 |
Currently payable income taxes | ' | ' | ' |
Federal | 9,121 | 9,447 | 3,062 |
State | 1,849 | 1,221 | 2,408 |
Foreign | 1,542 | 838 | 927 |
Total | 12,512 | 11,506 | 6,397 |
Deferred income taxes | ' | ' | ' |
Federal | -4,687 | 946 | 2,333 |
State | -1,724 | 619 | 323 |
Foreign | -106 | -92 | -226 |
Total | -6,517 | 1,473 | 2,430 |
Provision for income taxes | 5,995 | 12,979 | 8,827 |
Reconciliation of the provision for income taxes at the statutory rate to the provision for income taxes at effective rate | ' | ' | ' |
Statutory rate for income taxes (as a percent) | 35.00% | ' | ' |
Computed at the statutory rate | 5,987 | 12,392 | 7,318 |
State income taxes, net of federal tax effect | 81 | 1,136 | 1,747 |
Foreign tax and change in foreign valuation allowance | -322 | -394 | -175 |
Permanent differences | 797 | 578 | 450 |
Uncertain Tax Positions | 447 | ' | 192 |
Research and Development Credits | -676 | -239 | -490 |
Domestic Production Activities Deduction | -422 | -568 | -286 |
Other | 103 | 74 | 71 |
Provision for income taxes | 5,995 | 12,979 | 8,827 |
Deferred tax assets: | ' | ' | ' |
Allowance for doubtful accounts | 1,661 | 1,524 | ' |
Share-based compensation | 10,474 | 9,711 | ' |
Intangible assets | 2,653 | 2,483 | ' |
Deferred rent | 527 | 799 | ' |
Accrued liabilities | 2,094 | 2,574 | ' |
Foreign loss carryforwards | 639 | 69 | ' |
State net operating loss carryforwards | 838 | 631 | ' |
Valuation allowances | -808 | -101 | ' |
Total deferred tax assets | 18,078 | 17,690 | ' |
Deferred tax liabilities: | ' | ' | ' |
Prepaid expenses | -2,199 | -2,740 | ' |
Intangible assets | -33,300 | -35,523 | ' |
Property and equipment and software development costs | -11,321 | -13,817 | ' |
Deferred debt discharge income | -2,649 | -3,300 | ' |
Other | -100 | -318 | ' |
Total deferred tax liabilities | -49,569 | -55,698 | ' |
Net deferred tax liability | ($31,491) | ($38,008) | ' |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Deferred debt discharge income included in taxable income | ' | ' |
Increase in equity on realization of deferred tax assets | $100,000 | ' |
Tax benefit related to prior period | ' | 200,000 |
Net deferred tax liability | ' | ' |
Other current assets | 3,824,000 | 3,235,000 |
Other long-term assets | 243,000 | 166,000 |
Long-term deferred income tax liability | -35,558,000 | -41,409,000 |
Net deferred tax liability | -31,491,000 | -38,008,000 |
Undistributed amount of foreign subsidiaries | 11,700,000 | ' |
Research credits | ' | ' |
Deferred debt discharge income included in taxable income | ' | ' |
Amount of tax credit carryforward | 500,000 | ' |
HPIP tax credit | ' | ' |
Deferred debt discharge income included in taxable income | ' | ' |
Amount of tax credit carryforward | 700,000 | ' |
Period of carry forward of tax credit | '10 years | ' |
State | ' | ' |
Deferred debt discharge income included in taxable income | ' | ' |
Operating loss carryforwards generated in state in which entity no longer maintains a presence or a filing obligation | 2,900,000 | 900,000 |
Deferred tax asset resulting from operating loss carryforwards | 100,000 | 100,000 |
Valuation allowance relating to operating loss carryforwards | 100,000 | 100,000 |
New international | ' | ' |
Deferred debt discharge income included in taxable income | ' | ' |
Operating loss carryforwards | 1,600,000 | ' |
Valuation allowance relating to operating loss carryforwards | 600,000 | ' |
Hong Kong | ' | ' |
Deferred debt discharge income included in taxable income | ' | ' |
Valuation allowance relating to operating loss carryforwards | 100,000 | ' |
Encore | ' | ' |
INCOME TAXES | ' | ' |
Deferred debt discharge income | 8,900,000 | ' |
Deferred debt discharge income included in taxable income | ' | ' |
2013 | 1,800,000 | ' |
2014 | 1,800,000 | ' |
2015 | 1,800,000 | ' |
2016 | 1,800,000 | ' |
2017 | 1,800,000 | ' |
Encore | State | ' | ' |
Deferred debt discharge income included in taxable income | ' | ' |
Operating loss carryforwards | $9,300,000 | $6,600,000 |
INCOME_TAXES_Details_3
INCOME TAXES (Details 3) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
INCOME TAXES | ' | ' | ' |
Unrecognized tax benefits including penalty and interest | $6,400,000 | $5,400,000 | $4,900,000 |
Unrecognized tax benefits, which if recognized would affect effective tax rate | 5,200,000 | 4,400,000 | 4,100,000 |
Activity related to gross unrecognized tax benefits excluding interest and penalties | ' | ' | ' |
Unrecognized Tax Benefits at the beginning of the period | 4,639,000 | 4,164,000 | 2,255,000 |
Gross increases for prior year tax positions | 243,000 | 1,266,000 | 1,844,000 |
Gross decreases for prior year tax positions | -53,000 | ' | -3,000 |
Gross increase for current year tax positions | 530,000 | 323,000 | 363,000 |
Settlements | -33,000 | -755,000 | -23,000 |
Lapse of statute of limitations | ' | -359,000 | -272,000 |
Unrecognized Tax Benefits at the end of the period | $5,326,000 | $4,639,000 | $4,164,000 |
INCOME_TAXES_Details_4
INCOME TAXES (Details 4) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
INCOME TAXES | ' | ' | ' |
Unrecognized tax benefits that will affect the effective tax rate | $5,200,000 | $4,400,000 | $4,100,000 |
Gross increases for prior year tax positions | 243,000 | 1,266,000 | 1,844,000 |
State | ' | ' | ' |
INCOME TAXES | ' | ' | ' |
Unrecognized tax benefits that will affect the effective tax rate | 500,000 | ' | ' |
Unrecognized tax benefits that will be recognized in next twelve months | 400,000 | ' | ' |
Internal Revenue Service | ' | ' | ' |
INCOME TAXES | ' | ' | ' |
Unrecognized tax benefits that will affect the effective tax rate | ' | $200,000 | ' |
INCOME_TAXES_Details_5
INCOME TAXES (Details 5) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Income tax examination | ' | ' | ' |
Interest and penalties on income tax | $0.20 | $0.10 | $0.10 |
Accrued interest | 0.8 | 0.6 | ' |
Accrued penalties | $0.20 | $0.20 | ' |
NET_INCOME_PER_SHARE_Details
NET INCOME PER SHARE (Details) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
NET INCOME PER SHARE | ' | ' | ' |
Net income | $11,110 | $22,427 | $12,080 |
Less: amounts allocated to nonvested shares | -113 | -268 | -139 |
Basic net income available to common stockholders | 10,997 | 22,159 | 11,941 |
Computation of basic and diluted net income per share | ' | ' | ' |
Add back: amounts allocated to nonvested shares | 113 | 268 | 139 |
Less: amounts re-allocated to nonvested shares | -113 | -268 | -139 |
Diluted net income available to common stockholders | $10,997 | $22,159 | $11,941 |
Weighted Average Common Shares Outstanding (Denominator) | ' | ' | ' |
Weighted Average Common Shares Outstanding Basic | 35,434,000 | 35,497,000 | 35,186,000 |
Weighted Average Common Shares Outstanding Diluted | 36,302,000 | 36,373,000 | 36,506,000 |
Per Share Amount | ' | ' | ' |
Basic net income available to common stockholders (in dollars per share) | $0.31 | $0.62 | $0.34 |
Diluted net income available to common stockholders (in dollars per share) | $0.30 | $0.61 | $0.33 |
Antidilutive securities excluded from computation of diluted net income per share | ' | ' | ' |
Weighted-average outstanding stock options that were anti-dilutive (in Shares) | 2,000,000 | 3,100,000 | 2,300,000 |
Stock options | ' | ' | ' |
Weighted Average Common Shares Outstanding (Denominator) | ' | ' | ' |
Effect on weighted average common shares outstanding from dilutive securities | 868,000 | 876,000 | 1,320,000 |
SHAREBASED_COMPENSATION_Detail
SHARE-BASED COMPENSATION (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
SHARE-BASED COMPENSATION | ' | ' | ' |
Pre-tax share-based compensation expense | $10,008 | $6,719 | $7,369 |
Income tax benefit | -4,135 | -2,908 | -3,190 |
Total share-based compensation expense, net of tax | 5,873 | 3,811 | 4,179 |
Direct cost of operating revenue | ' | ' | ' |
SHARE-BASED COMPENSATION | ' | ' | ' |
Pre-tax share-based compensation expense | 660 | 201 | 309 |
Selling, general and administrative | ' | ' | ' |
SHARE-BASED COMPENSATION | ' | ' | ' |
Pre-tax share-based compensation expense | $9,348 | $6,518 | $7,060 |
SHAREBASED_COMPENSATION_Detail1
SHARE-BASED COMPENSATION (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
SHARE-BASED COMPENSATION | ' | ' | ' |
Unrecognized compensation cost related to outstanding, unvested stock options and restricted stock | $2,800,000 | ' | ' |
Weighted average recognition period of unrecognized compensation cost | '2 years 6 months | ' | ' |
Stock options | ' | ' | ' |
SHARE-BASED COMPENSATION | ' | ' | ' |
Expiration period of stock options | '10 years | ' | ' |
Vesting period | '7 years | ' | ' |
Granted (in shares) | 0 | ' | ' |
Weighted-average assumptions used and the weighted-average fair value per option granted | ' | ' | ' |
Expected life of stock option | ' | '6 years 9 months 18 days | '6 years 7 months 6 days |
Expected volatility (as a percent) | ' | 39.00% | 30.00% |
Risk-free interest rate (as a percent) | ' | 1.10% | 2.50% |
Dividend yield (as a percent) | ' | 2.30% | 1.10% |
Weighted average grant-date fair value (in dollars per share) | ' | $3.51 | $4.49 |
Shares | ' | ' | ' |
Outstanding, beginning of period (in shares) | 5,795,000 | ' | ' |
Exercised (in shares) | -1,924,000 | ' | ' |
Forfeited and expired (in shares) | -46,000 | ' | ' |
Outstanding, end of period (in shares) | 3,825,000 | 5,795,000 | ' |
Options vested and expected to vest, end of period (in shares) | 3,783,000 | ' | ' |
Options exercisable, end of period (in shares) | 3,380,000 | ' | ' |
Weighted Average Exercise Price | ' | ' | ' |
Outstanding, beginning of period (in dollars per share) | $12.23 | ' | ' |
Exercised (in dollars per share) | $10.07 | ' | ' |
Forfeited and expired (in dollars per share) | $14.16 | ' | ' |
Outstanding, end of period (in dollars per share) | $13.32 | $12.23 | ' |
Options vested and expected to vest, end of period (in dollars per share) | $13.33 | ' | ' |
Options exercisable, end of period (in dollars per share) | $13.38 | ' | ' |
Weighted Average Contractual Term | ' | ' | ' |
Outstanding, end of period | '3 years 10 months 17 days | ' | ' |
Options vested and expected to vest, end of period | '3 years 9 months 29 days | ' | ' |
Options exercisable, end of period | '3 years 4 months 28 days | ' | ' |
Aggregate Intrinsic Value | ' | ' | ' |
Outstanding, end of period | 11,290,000 | ' | ' |
Options vested and expected to vest, end of period | 11,128,000 | ' | ' |
Options exercisable, end of period | $9,821,000 | ' | ' |
2004 Plan | ' | ' | ' |
SHARE-BASED COMPENSATION | ' | ' | ' |
Limits in the grants of awards (in shares) | 7,500,000 | ' | ' |
Number of shares available for future equity-related grants | 1,117,000 | ' | ' |
2004 Plan | Stock options | ' | ' | ' |
SHARE-BASED COMPENSATION | ' | ' | ' |
Expiration period of stock options | '10 years | ' | ' |
Percentage of awards vesting on second anniversary | 25.00% | ' | ' |
Percentage of awards vesting each quarter after second anniversary | 25.00% | ' | ' |
SHAREBASED_COMPENSATION_Detail2
SHARE-BASED COMPENSATION (Details 3) (USD $) | 12 Months Ended | ||
In Millions, except Share data in Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Options Outstanding | ' | ' | ' |
Number Outstanding (in shares) | 3,825 | ' | ' |
Weighted Average Remaining Contractual Life | '3 years 10 months 17 days | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $13.32 | ' | ' |
Options Exercisable | ' | ' | ' |
Number Exercisable (in shares) | 3,380 | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $13.38 | ' | ' |
Exercises of Stock Options | ' | ' | ' |
Total intrinsic value of stock options exercised | $8.70 | $2.20 | $2.40 |
Cash received for payment of the grant price of exercised stock options | 3 | 0.9 | 2.9 |
Expected tax benefit to be realized from exercised stock options | $6.70 | $2.60 | $1.90 |
Stock options | $8.13 to $10.39 | ' | ' | ' |
Stock options outstanding | ' | ' | ' |
Range of exercise prices, low end of the range (in dollars per share) | $8.13 | ' | ' |
Range of exercise prices, high end of the range (in dollars per share) | $10.39 | ' | ' |
Options Outstanding | ' | ' | ' |
Number Outstanding (in shares) | 952 | ' | ' |
Weighted Average Remaining Contractual Life | '2 years 6 months 4 days | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $10.05 | ' | ' |
Options Exercisable | ' | ' | ' |
Number Exercisable (in shares) | 952 | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $10.05 | ' | ' |
Stock options | $10.40 to $12.64 | ' | ' | ' |
Stock options outstanding | ' | ' | ' |
Range of exercise prices, low end of the range (in dollars per share) | $10.40 | ' | ' |
Range of exercise prices, high end of the range (in dollars per share) | $12.64 | ' | ' |
Options Outstanding | ' | ' | ' |
Number Outstanding (in shares) | 605 | ' | ' |
Weighted Average Remaining Contractual Life | '4 years 11 months 26 days | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $11.72 | ' | ' |
Options Exercisable | ' | ' | ' |
Number Exercisable (in shares) | 355 | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $12.08 | ' | ' |
Stock options | $12.65 to $15.15 | ' | ' | ' |
Stock options outstanding | ' | ' | ' |
Range of exercise prices, low end of the range (in dollars per share) | $12.65 | ' | ' |
Range of exercise prices, high end of the range (in dollars per share) | $15.15 | ' | ' |
Options Outstanding | ' | ' | ' |
Number Outstanding (in shares) | 1,228 | ' | ' |
Weighted Average Remaining Contractual Life | '4 years 2 months 8 days | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $13.89 | ' | ' |
Options Exercisable | ' | ' | ' |
Number Exercisable (in shares) | 1,104 | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $13.84 | ' | ' |
Stock options | $15.16 to $18.15 | ' | ' | ' |
Stock options outstanding | ' | ' | ' |
Range of exercise prices, low end of the range (in dollars per share) | $15.16 | ' | ' |
Range of exercise prices, high end of the range (in dollars per share) | $18.15 | ' | ' |
Options Outstanding | ' | ' | ' |
Number Outstanding (in shares) | 1,040 | ' | ' |
Weighted Average Remaining Contractual Life | '4 years 1 month 6 days | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $16.52 | ' | ' |
Options Exercisable | ' | ' | ' |
Number Exercisable (in shares) | 969 | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $16.56 | ' | ' |
SHAREBASED_COMPENSATION_Detail3
SHARE-BASED COMPENSATION (Details 4) (Nonvested share awards, USD $) | 12 Months Ended | 1 Months Ended | |||||||||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 |
Year ended December 31, 2013 grants | Year ended December 31, 2013 grants | Year ended December 31, 2013 grants | Subsequent event | Subsequent event | Subsequent event | Subsequent event | Achievement of 2013 objectives | ||||
Vest one year after and upon certification of achievement of performance criteria by the compensation committee of the Board | Vest upon issuance | Vest in one year | Year ended December 31, 2013 grants | Year ended December 31, 2013 grants | Year ended December 31, 2013 grants | Subsequent event | |||||
Vest one year after and upon certification of achievement of performance criteria by the compensation committee of the Board | Vest upon issuance | Vest in one year | Year ended December 31, 2013 grants | ||||||||
Nonvested Share Awards | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Granted (in shares) | 528,000 | 430,000 | 430,000 | 330,000 | 164,100 | 33,500 | 694,730 | 450,000 | 219,730 | 25,000 | 199,730 |
Grant date fair value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $3 |
Shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Nonvested, beginning of period (in shares) | 430,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Granted (in shares) | 528,000 | 430,000 | 430,000 | 330,000 | 164,100 | 33,500 | 694,730 | 450,000 | 219,730 | 25,000 | 199,730 |
Vested (in shares) | -594,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding, end of period (in shares) | 364,000 | 430,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Grant Date Fair Value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Nonvested, beginning of period (in dollars per shares) | $11.85 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted-average grant date price (in dollars per share) | $12.90 | $11.85 | $13.39 | ' | ' | ' | $15.02 | ' | ' | ' | ' |
Vested (in dollars per shares) | $12.40 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding, end of period (in dollars per shares) | $12.48 | $11.85 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Vesting period | ' | '12 months | '12 months | ' | ' | '1 year | ' | ' | ' | '1 year | ' |
ACQUISITIONS_Details
ACQUISITIONS (Details) (USD $) | 12 Months Ended | 3 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 28, 2011 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Oct. 01, 2010 | Oct. 01, 2010 | |
De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | Encore Discovery Solutions | Jupiter eSources LLC | Jupiter eSources LLC | Jupiter eSources LLC | Jupiter eSources LLC | |||
item | Selling, general and administrative expense | Contingent consideration - purchase price consideration | Contingent consideration - purchase price consideration | Contingent consideration - purchase price consideration | Contingent consideration - continued employment | Current maturities of long-term obligations | Current maturities of long-term obligations | Contingent consideration - purchase price consideration | ||||||||||
Acquisitions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred purchase price paid | ' | ' | $3,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Holdback amount recorded in long-term obligations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,500,000 | ' | ' | ' | ' | ' |
Potential undiscounted amount of all future payments, minimum | ' | ' | ' | 0 | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | 0 | ' | ' | 0 |
Potential undiscounted amount of all future payments, maximum | ' | ' | ' | 29,100,000 | ' | ' | ' | ' | ' | 29,100,000 | ' | ' | ' | ' | 10,000,000 | ' | ' | 10,000,000 |
Adjustment to contingent consideration liability | ' | ' | ' | 3,400,000 | ' | ' | 800,000 | 2,600,000 | -17,200,000 | ' | -3,400,000 | 2,600,000 | ' | ' | ' | ' | ' | ' |
Number of employees whose employment ended | ' | ' | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Compensation expense related to portion of the contingent consideration tied to employment reflected in general and administrative expense | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Change in fair value accretion expense included in interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 1,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Transaction related costs | -200,000 | 7,681,000 | ' | ' | ' | 3,500,000 | ' | ' | ' | ' | ' | ' | ' | 3,900,000 | ' | ' | ' | ' |
Operating revenue | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 42,200,000 | ' | ' | ' | ' |
Operating income | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,300,000 | ' | ' | ' | ' |
Amount withheld as security at the acquisition date for potential indemnification claims | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,400,000 | ' |
Liability recorded related to contingent consideration | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' |
Pro forma financial information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total revenue | ' | 356,954,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Operating revenue | ' | 334,893,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | ' | $22,759,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
SEGMENT_REPORTING_Details
SEGMENT REPORTING (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
segment | segment | ||
SEGMENT REPORTING | ' | ' | ' |
Number of reporting segments | 2 | 3 | ' |
Segment information | ' | ' | ' |
Operating revenues | $438,690 | $344,750 | $261,265 |
Reimbursable expenses | 43,393 | 28,335 | 22,061 |
Total Revenue | 482,083 | 373,085 | 283,326 |
Technology | ' | ' | ' |
Segment information | ' | ' | ' |
Operating revenues | 284,929 | 196,959 | 132,918 |
Bankruptcy and Settlement Administration | ' | ' | ' |
Segment information | ' | ' | ' |
Operating revenues | 153,761 | 147,791 | 128,347 |
Operating segment | ' | ' | ' |
Segment information | ' | ' | ' |
Direct costs, selling, general and administrative costs | 343,674 | 247,338 | 173,961 |
Segment performance measure | 138,409 | 125,747 | 109,365 |
Operating segment | Technology | ' | ' | ' |
Segment information | ' | ' | ' |
Operating revenues | 285,313 | 197,162 | 132,993 |
Reimbursable expenses | 2,488 | 1,546 | 601 |
Total Revenue | 287,801 | 198,708 | 133,594 |
Direct costs, selling, general and administrative costs | 198,462 | 125,182 | 77,606 |
Segment performance measure | 89,339 | 73,526 | 55,988 |
Operating segment | Bankruptcy and Settlement Administration | ' | ' | ' |
Segment information | ' | ' | ' |
Operating revenues | 153,761 | 147,791 | 128,347 |
Reimbursable expenses | 40,905 | 26,789 | 21,460 |
Total Revenue | 194,666 | 174,580 | 149,807 |
Direct costs, selling, general and administrative costs | 145,596 | 122,359 | 96,430 |
Segment performance measure | 49,070 | 52,221 | 53,377 |
Eliminations | ' | ' | ' |
Segment information | ' | ' | ' |
Operating revenues | -384 | -203 | -75 |
Total Revenue | -384 | -203 | -75 |
Direct costs, selling, general and administrative costs | -384 | -203 | -75 |
Eliminations | Technology | ' | ' | ' |
Segment information | ' | ' | ' |
Operating revenues | $384 | $203 | $75 |
SEGMENT_REPORTING_Details_2
SEGMENT REPORTING (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Reconciliation of our segment performance measure to income before income taxes | ' | ' | ' |
Corporate and unallocated expenses | ($47,587) | ($36,021) | ($29,176) |
Share-based compensation expense | -10,008 | -6,719 | -7,369 |
Depreciation and software and leasehold amortization | -30,971 | -27,399 | -23,081 |
Amortization of identifiable intangible assets | -18,834 | -26,588 | -21,323 |
Fair value adjustment to contingent consideration | -2,580 | 17,188 | 7,166 |
Acquisition related income (expense) | ' | 200 | -7,681 |
Intangible asset impairment expense | ' | -1,777 | -1,278 |
Other operating income | 791 | 20 | ' |
INCOME FROM OPERATIONS | 29,220 | 44,651 | 26,623 |
Interest expense, net | -12,115 | -9,245 | -5,716 |
INCOME BEFORE INCOME TAXES | 17,105 | 35,406 | 20,907 |
Operating segment | ' | ' | ' |
Reconciliation of our segment performance measure to income before income taxes | ' | ' | ' |
Segment performance measure | $138,409 | $125,747 | $109,365 |
SEGMENT_REPORTING_Details_3
SEGMENT REPORTING (Details 3) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Assets | ' | ' |
Total consolidated assets | $747,781 | $654,716 |
Corporate and unallocated | ' | ' |
Assets | ' | ' |
Total consolidated assets | 97,573 | 22,854 |
Technology | ' | ' |
Assets | ' | ' |
Total consolidated assets | 369,135 | 335,051 |
Bankruptcy and Settlement Administration | ' | ' |
Assets | ' | ' |
Total consolidated assets | $281,073 | $296,811 |
SEGMENT_REPORTING_Details_4
SEGMENT REPORTING (Details 4) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Capital Expenditures | ' | ' | ' |
Total consolidated capital expenditures | $40,707 | $22,554 | $30,235 |
Technology | ' | ' | ' |
Capital Expenditures | ' | ' | ' |
Total consolidated capital expenditures | 22,234 | 14,153 | 18,731 |
Bankruptcy and Settlement Administration | ' | ' | ' |
Capital Expenditures | ' | ' | ' |
Total consolidated capital expenditures | 3,161 | 4,010 | 4,387 |
Corporate and unallocated | ' | ' | ' |
Capital Expenditures | ' | ' | ' |
Total consolidated capital expenditures | $15,312 | $4,391 | $7,117 |
SEGMENT_REPORTING_Details_5
SEGMENT REPORTING (Details 5) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Revenue and long-lived assets excluding intangible assets, by geographical area | ' | ' | ' |
Revenue | $482,083 | $373,085 | $283,326 |
Long-lived assets | 88,319 | 63,457 | ' |
United States | ' | ' | ' |
Revenue and long-lived assets excluding intangible assets, by geographical area | ' | ' | ' |
Revenue | 431,615 | 346,454 | 261,864 |
Long-lived assets | 84,384 | 61,550 | ' |
Other countries | ' | ' | ' |
Revenue and long-lived assets excluding intangible assets, by geographical area | ' | ' | ' |
Revenue | 50,468 | 26,631 | 21,462 |
Long-lived assets | $3,935 | $1,907 | ' |
SUPPLEMENTAL_CASH_FLOW_INFORMA2
SUPPLEMENTAL CASH FLOW INFORMATION (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Cash paid for: | ' | ' | ' |
Interest | $10,381 | $7,630 | $5,068 |
Income taxes paid, net | 7,488 | 8,843 | 4,712 |
Non-cash investing and financing transactions: | ' | ' | ' |
Property, equipment, and leasehold improvements accrued in accounts payable and other long-term liabilities | 10,261 | 3,076 | 917 |
Obligation incurred in purchase transaction | ' | ' | 29,447 |
Capitalized lease obligations and notes payable | 7,902 | 176 | 11,200 |
Dividends declared but not yet paid | $3,142 | $3,231 | $1,786 |
SCHEDULE_II_VALUATION_AND_QUAL1
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Allowance for doubtful receivables | ' | ' | ' |
VALUATION AND QUALIFYING ACCOUNTS | ' | ' | ' |
Balance at the beginning of the period | $4,825 | $4,514 | $3,778 |
Additions, Charged to costs and expenses | 2,411 | 2,223 | 2,303 |
Deductions from reserves | -2,857 | -1,912 | -1,567 |
Balance at the end of the period | 4,379 | 4,825 | 4,514 |
Deferred tax valuation allowance | ' | ' | ' |
VALUATION AND QUALIFYING ACCOUNTS | ' | ' | ' |
Balance at the beginning of the period | 101 | 172 | 176 |
Additions, Charged to costs and expenses | 776 | ' | ' |
Additions, Charged to other accounts | ' | ' | 32 |
Deductions from reserves | -69 | -71 | -36 |
Balance at the end of the period | $808 | $101 | $172 |