Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Feb. 23, 2015 | Jun. 30, 2014 |
Document and Entity Information | |||
Entity Registrant Name | EPIQ SYSTEMS INC | ||
Entity Central Index Key | 1027207 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $438 | ||
Entity Common Stock, Shares Outstanding | 37,041,224 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
CURRENT ASSETS: | ||
Cash and cash equivalents | $54,226 | $40,336 |
Trade accounts receivable, less allowance for doubtful accounts of $3,986 and $4,379, respectively | 117,854 | 145,134 |
Prepaid expenses | 12,934 | 10,617 |
Income taxes receivable | 9,437 | |
Deferred income taxes | 4,625 | 3,824 |
Other current assets | 71 | 58 |
Total Current Assets | 199,147 | 199,969 |
LONG-TERM ASSETS: | ||
Property and equipment, net | 70,579 | 72,118 |
Internally developed software, net | 14,713 | 16,201 |
Goodwill | 404,187 | 404,302 |
Other intangibles, net | 29,605 | 41,117 |
Other long-term assets | 20,021 | 14,074 |
Total Long-term Assets | 539,105 | 547,812 |
Total Assets | 738,252 | 747,781 |
CURRENT LIABILITIES: | ||
Accounts payable | 18,548 | 30,419 |
Current maturities of long-term obligations | 10,959 | 13,349 |
Accrued compensation | 18,673 | 17,932 |
Customer deposits | 2,534 | 2,717 |
Deferred revenue | 2,276 | 4,020 |
Dividends payable | 3,376 | 3,142 |
Other accrued expenses | 7,988 | 6,985 |
Total Current Liabilities | 64,354 | 78,564 |
LONG-TERM LIABILITIES: | ||
Deferred income taxes | 34,650 | 35,558 |
Other long-term liabilities | 11,789 | 8,537 |
Long-term obligations (excluding current maturities) | 302,522 | 299,108 |
Total Long-term Liabilities | 348,961 | 343,203 |
COMMITMENTS AND CONTINGENCIES | ||
EQUITY: | ||
Preferred Stock | ||
Common stock-$0.01 par value; Authorized 100,000,000 shares; Issued and outstanding 2014-40,835,651 and 36,680,469 shares, respectively; Issued and outstanding 2013-40,298,852 and 34,991,629 shares, respectively | 408 | 403 |
Additional paid-in capital | 294,054 | 291,414 |
Accumulated other comprehensive loss | -4,362 | -541 |
Retained earnings | 88,391 | 102,754 |
Treasury stock, at cost - 4,155,182 shares and 5,307,223 shares, respectively | -53,554 | -68,016 |
Total Equity | 324,937 | 326,014 |
Total Liabilities and Equity | 738,252 | 747,781 |
Participating preferred stock | ||
EQUITY: | ||
Preferred Stock |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Trade accounts receivable, allowance for doubtful accounts (in dollars) | $3,986 | $4,379 |
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 | 40,835,651 | 40,298,852 |
Common stock, shares outstanding | 36,680,469 | 34,991,629 |
Treasury stock, shares | 4,155,182 | 5,307,223 |
Participating preferred stock | ||
Preferred stock, par value (in dollars per share) | $1 | $0 |
Preferred stock, shares authorized | 100,000 | 0 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONSOLIDATED_STATEMENTS_OF_INC
CONSOLIDATED STATEMENTS OF INCOME (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
REVENUE: | |||
Operating revenue | $444,118 | $438,690 | $344,750 |
Reimbursable expenses | 30,352 | 43,393 | 28,335 |
Total Revenue | 474,470 | 482,083 | 373,085 |
OPERATING EXPENSE: | |||
Direct cost of operating revenue (exclusive of depreciation and amortization shown separately below) | 216,317 | 210,458 | 145,629 |
Reimbursable expenses | 29,592 | 41,766 | 27,426 |
Selling, general and administrative expense | 167,041 | 149,045 | 117,023 |
Depreciation and software and leasehold amortization | 36,042 | 30,971 | 27,399 |
Amortization of identifiable intangible assets | 12,655 | 18,834 | 26,588 |
Fair value adjustment to contingent consideration | 1,142 | 2,580 | -17,188 |
Intangible asset impairment expense | 1,777 | ||
Other operating (income) expense | 880 | -791 | -220 |
Total Operating Expense | 463,669 | 452,863 | 328,434 |
INCOME FROM OPERATIONS | 10,801 | 29,220 | 44,651 |
INTEREST EXPENSE (INCOME): | |||
Interest expense | 16,674 | 12,130 | 9,263 |
Interest income | -21 | -15 | -18 |
Net Interest Expense | 16,653 | 12,115 | 9,245 |
INCOME (LOSS) BEFORE INCOME TAXES | -5,852 | 17,105 | 35,406 |
PROVISION FOR (BENEFIT FROM) INCOME TAXES | -4,515 | 5,995 | 12,979 |
NET INCOME (LOSS) | ($1,337) | $11,110 | $22,427 |
NET INCOME (LOSS) PER SHARE INFORMATION: | |||
Basic | ($0.04) | $0.31 | $0.62 |
Diluted | ($0.04) | $0.30 | $0.61 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||
Basic | 35,512 | 35,434 | 35,497 |
Diluted | 35,512 | 36,302 | 36,373 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
NET INCOME(LOSS) | ($1,337) | $11,110 | $22,427 |
Other comprehensive income: | |||
Foreign currency translation adjustment, net of $0 tax in all years | -2,411 | 891 | 555 |
Unrealized losses on derivatives, net of tax benefit of $1,067, $0 and $0, respectively | -1,410 | ||
COMPREHENSIVE INCOME(LOSS) | ($5,158) | $12,001 | $22,982 |
CONSOLIDATED_STATEMENT_OF_COMP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Unrealized losses on derivatives, tax benefit | $1,067 | $0 | $0 |
Foreign currency translation adjustment, net of tax | $0 | $0 | $0 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Total |
In Thousands, except Share data, unless otherwise specified | ||||||
Balance at Dec. 31, 2011 | $395 | $286,869 | ($1,987) | $95,849 | ($48,207) | $332,919 |
Balance (in shares) at Dec. 31, 2011 | 39,494,000 | -3,740,000 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 22,427 | 22,427 | ||||
Foreign currency translation adjustment, net of $0 tax in all years | 555 | 555 | ||||
Tax benefit/deficiency from share-based compensation | -315 | -315 | ||||
Restricted common stock issued under share-based compensation plans | 4 | 4 | ||||
Restricted common stock issued under share-based compensation plans (in shares) | 430,000 | |||||
Stock option exercises | -2,208 | 3,088 | 880 | |||
Stock option exercises (in shares) | 240,000 | |||||
Common stock repurchased under share-based compensation plans | -2,689 | -2,689 | ||||
Common stock repurchased under share-based compensation plans (in shares) | -217,000 | -217,713 | ||||
Share repurchases (Note 7) | -3,299 | -3,299 | ||||
Share repurchases (Note 7) (in shares) | -284,000 | |||||
Dividends declared ($0.36, $0.36 and $0.385 per share for the year ended December 31, 2014, 2013 and 2012 respectively) (Note 7) | -13,831 | -13,831 | ||||
Share-based compensation expense | 6,719 | 6,719 | ||||
Balance at Dec. 31, 2012 | 399 | 291,065 | -1,432 | 104,445 | -51,107 | 343,370 |
Balance (in shares) at Dec. 31, 2012 | 39,924,000 | -4,001,000 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 11,110 | 11,110 | ||||
Foreign currency translation adjustment, net of $0 tax in all years | 891 | 891 | ||||
Tax benefit/deficiency from share-based compensation | 2,828 | 2,828 | ||||
Restricted common stock issued under share-based compensation plans | 4 | -2,020 | 2,020 | 4 | ||
Restricted common stock issued under share-based compensation plans (in shares) | 375,000 | 153,000 | ||||
Stock option exercises | -7,466 | 10,467 | 3,001 | |||
Stock option exercises (in shares) | 780,000 | |||||
Common stock repurchased under share-based compensation plans | -6,515 | -6,515 | ||||
Common stock repurchased under share-based compensation plans (in shares) | -471,000 | -471,248 | ||||
Share repurchases (Note 7) | -22,881 | -22,881 | ||||
Share repurchases (Note 7) (in shares) | -1,768,000 | |||||
Dividends declared ($0.36, $0.36 and $0.385 per share for the year ended December 31, 2014, 2013 and 2012 respectively) (Note 7) | -12,801 | -12,801 | ||||
Share-based compensation expense | 7,007 | 7,007 | ||||
Balance at Dec. 31, 2013 | 403 | 291,414 | -541 | 102,754 | -68,016 | 326,014 |
Balance (in shares) at Dec. 31, 2013 | 40,299,000 | -5,307,000 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | -1,337 | -1,337 | ||||
Foreign currency translation adjustment, net of $0 tax in all years | -2,411 | -2,411 | ||||
Unrealized losses on cash flow hedges | -1,410 | -1,410 | ||||
Tax benefit/deficiency from share-based compensation | -966 | -966 | ||||
Restricted common stock issued under share-based compensation plans | 5 | -1,478 | 4,479 | 3,006 | ||
Restricted common stock issued under share-based compensation plans (in shares) | 537,000 | 347,000 | ||||
Stock option exercises | -1,467 | 13,965 | 12,498 | |||
Stock option exercises (in shares) | 1,081,000 | |||||
Common stock repurchased under share-based compensation plans | -3,982 | -3,982 | ||||
Common stock repurchased under share-based compensation plans (in shares) | -276,000 | -323,090 | ||||
Dividends declared ($0.36, $0.36 and $0.385 per share for the year ended December 31, 2014, 2013 and 2012 respectively) (Note 7) | -13,026 | -13,026 | ||||
Share-based compensation expense | 6,551 | 6,551 | ||||
Balance at Dec. 31, 2014 | $408 | $294,054 | ($4,362) | $88,391 | ($53,554) | $324,937 |
Balance (in shares) at Dec. 31, 2014 | 40,836,000 | -4,155,000 |
CONSOLIDATED_STATEMENTS_OF_CHA1
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | |||
Common Stock, Dividends, Per Share, Declared | $0.36 | $0.36 | $0.39 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income (loss) | ($1,337) | $11,110 | $22,427 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and software and leasehold amortization | 36,042 | 30,971 | 27,399 |
Amortization of intangible assets | 12,655 | 18,834 | 26,588 |
Share-based compensation expense | 13,098 | 10,008 | 6,719 |
Fair value adjustment to contingent consideration | 1,142 | 2,580 | -17,188 |
Loan fee amortization and write-off | 2,153 | 1,903 | 716 |
Provision for doubtful accounts | 3,552 | 2,411 | 2,223 |
Deferred income tax (benefit) expense | -538 | -6,517 | 1,473 |
Excess tax benefit related to share-based compensation | -1,142 | -1,328 | |
Intangible asset impairment expense | 1,777 | ||
Accretion of discount | 1,162 | ||
Other, net | 364 | -803 | -105 |
Changes in operating assets and liabilities: | |||
Trade accounts receivable | 22,513 | -43,392 | -17,123 |
Prepaid expenses and other assets | -1,180 | -2,281 | 2,833 |
Accounts payable and other liabilities | -3,882 | 16,063 | -693 |
Customer deposits | -182 | -13,377 | 14,122 |
Deferred revenue | -1,748 | 877 | -85 |
Income taxes | -11,700 | 5,858 | 2,240 |
Other | -88 | -319 | -750 |
Net cash provided by operating activities | 69,722 | 32,598 | 73,735 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of property and equipment | -28,885 | -34,646 | -16,025 |
Internally developed software costs | -7,154 | -6,061 | -6,467 |
Cash paid for business acquisitions, net of cash acquired | -302 | ||
Cash proceeds from sale of assets | 924 | 5 | 499 |
Other investing activities, net | 186 | ||
Net cash used in investing activities | -35,417 | -40,702 | -21,807 |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from issuance of long-term debt | 300,000 | ||
Proceeds from revolver borrowings | 88,000 | 65,000 | |
Payments to reduce revolver borrowings | -287,000 | -83,000 | |
Debt issuance costs | -837 | -8,141 | |
Payments under long-term obligations | -10,821 | -7,903 | -7,163 |
Payment of acquisition - related liabilities | -4,962 | -3,139 | -8,400 |
Excess tax benefit related to share-based compensation | 1,142 | 1,328 | |
Common stock repurchases (Note 7) | -3,982 | -29,396 | -5,988 |
Cash dividends paid (Note 7) | -12,793 | -12,891 | -12,386 |
Proceeds from exercise of stock options | 12,503 | 3,005 | 884 |
Net cash provided by (used in) financing activities | -19,750 | 43,863 | -51,053 |
Effect of exchange rate changes on cash | -665 | 769 | 95 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 13,890 | 36,528 | 970 |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 40,336 | 3,808 | 3,808 |
CASH AND CASH EQUIVALENTS, END OF YEAR | 54,226 | 40,336 | 3,808 |
Cash paid for: | |||
Interest | 14,056 | 10,381 | 7,630 |
Income taxes paid, net | 8,324 | 7,488 | 8,843 |
Non-cash investing and financing transactions: | |||
Property, equipment, and leasehold improvements accrued in accounts payable and other long-term liabilities | 2,413 | 10,261 | 3,076 |
Capitalized lease obligations | 446 | 7,902 | 176 |
Dividends declared but not yet paid (Note 7) | 3,376 | 3,142 | 3,231 |
Notes payable (Note 5) | 12,895 | ||
Contingent consideration incurred in business acquisition (Note 13) | $976 |
NATURE_OF_OPERATIONS_AND_SUMMA
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |
Dec. 31, 2014 | ||
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," "the Company," "we," "us," or "our") and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. | ||
Description of Business | ||
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 the consolidated 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, and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include the carrying amount of intangibles, goodwill, and valuation allowances for receivables, contingencies and deferred income tax assets. Actual results can, and often do, differ from those assumed in our 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. | ||
Property and Equipment, Software and Leasehold Improvements | ||
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 loss recognized is the amount by which the carrying amount exceeds the fair value. | ||
Depreciation and software and leasehold amortization for the years ended December 31, 2014, 2013 and 2012, was $36.0 million, $31.0 million and $27.4 million, respectively. The caption "Depreciation and software and leasehold amortization" in the accompanying Consolidated Statements of Income (Loss) includes costs that are directly related to services of approximately $23.1 million, $16.0 million and $12.8 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||
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. | ||
Purchase Price Allocation | ||
We have acquired a number of businesses in past years, and we may acquire additional businesses in the future. Accounting for the acquisition of a business requires us to determine the fair value of all assets acquired, including identifiable intangible assets, liabilities assumed, and contingent consideration obligations. The cost of the acquisition is allocated to these assets and liabilities in amounts equal to the estimated fair value of each asset and liability, and any remaining acquisition cost is classified as goodwill. This allocation process requires the use of estimates and assumptions, including quoted market prices and estimates of future cash flows to be generated by the acquired assets. Acquisition-related costs for potential and completed acquisitions are expensed, as incurred, and are included in "Other operating expense" in our Consolidated Statements of Income (Loss). Accordingly, the acquisition cost allocation has had, and will continue to have, a significant impact on our current operating results. | ||
Determining the fair value of contingent consideration requires an assessment of the projected revenue over the measurement period and applying an appropriate discount rate based upon the weighted average cost of capital. This fair value assessment is also required in periods subsequent to a business combination. Such estimates are inherently difficult and subjective and variances from such estimates could have a material impact on our Consolidated Financial Statements. | ||
Although we believe the assumptions and estimates we have made are reasonable, because they are based on estimates and judgment, they are inherently uncertain. Examples of critical estimates included in business combination accounting may include but are not limited to: future expected cash flows from projected revenues; the acquired company's trade name and trademarks as well as assumptions about the period of time the acquired trade name and trademarks will continue to be used in the combined company's product portfolio; customer attrition rates, new client acquisition rates, effectiveness of sales and marketing programs, pricing for products and services, long-term growth rates and discount rates. | ||
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 at least an annual basis at a reporting unit level and have identified our operating segments (Technology and Bankruptcy and Settlement Administration) as our reporting units for purposes of testing for goodwill impairment. | ||
The goodwill impairment test consists of a two-step process, if necessary. The first step is to compare the fair value of a reporting unit to its carrying value, including goodwill. 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. | ||
The second step compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. The loss recognized cannot exceed the carrying amount of goodwill. As of July 31, 2014, 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. | ||
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. As of December 31, 2014, there have been no events since our last annual test to indicate that it is more likely than not that the recorded goodwill balance had become impaired. Our consolidated goodwill totaled $404.2 million as of December 31, 2014. | ||
Intangible Assets | ||
Identifiable intangible assets, resulting from various business acquisitions, consist of customer relationships, agreements not to compete, technology, 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 to the Consolidated Financial Statements for further detail. | ||
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 (Loss). | ||
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. The fair value of our stock option grants is estimated on the grant date using a Black-Scholes option-pricing model. We recognize compensation expense related to stock option grants on a straight-line basis over the period the grant is earned by the employee. | ||
The fair value of our restricted stock awards is the quoted market value of Epiq's stock on the grant date. In the period it becomes probable that the minimum performance criteria specified in the restricted stock award agreement will be achieved, we recognize expense for the proportionate share of the total fair value of the award related to the vesting period that has already lapsed. The remaining cost of the award is expensed on a straight-line basis over the balance of the vesting period. In the event we determine it is no longer probable that we will achieve the minimum performance criteria specified in the restricted stock award agreement, we reverse all of the previously recognized compensation expense in the period such a determination is made. | ||
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 (Loss). 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 (Loss). | ||
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 to the Consolidated Financial Statements. | ||
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 is 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 we elect, 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. See Note 5 to the Consolidated Financial Statements for more information on our hedging activities. | ||
Revenue Recognition | ||
We have agreements with clients pursuant to which we deliver various services. Our significant sources of revenue are: | ||
• | 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. | |
• | Deposit-based fees earned for the provision of software licenses, limited hardware and hardware maintenance, and post-contract customer support services to our trustee clients are based on a percentage of Chapter 7 assets placed on deposit with designated financial institutions by our trustee clients. Our trustee clients do not directly pay fees in connection with these 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. | |
• | Data hosting fees and volume-based fees. | |
• | 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 and other pass-through expenses. | |
Non-Software Arrangements | ||
Certain of our services, such as data hosting, processing and professional 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 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 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 for the software license, hardware lease, hardware maintenance, and post-contract customer support services provided to our trustee clients based on the average dollar amount of deposits held by the trustees with that financial institution. The monthly deposit fees have two components consisting of an interest-based component and a non-interest based service fee. 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 future 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. 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, are accounted for as contingent rentals, which require 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 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 represents less than ten percent of our total revenue for the years ended December 31, 2014, 2013 and 2012, is included in the Consolidated Statements of Income (Loss) as a component of "Operating revenue." | ||
Reimbursements | ||
We have revenue related to reimbursable expenses, primarily postage. Reimbursable postage and other reimbursable expenses are recorded gross in the Consolidated Statements of Income (Loss) as "Reimbursable expenses" in the revenue and operating expenses sections. | ||
Costs Related to Contract Acquisition, Origination, and Set-up | ||
We expense customer contract acquisition, origination, and set-up costs as incurred. | ||
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, 2014, 2013, and 2012, cumulative translation adjustments included in accumulated other comprehensive loss were $3.0 million, $0.5 million and $1.4 million, respectively. | ||
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 Issued Accounting Pronouncements | ||
In August 2014, the Financial Accounting Standards Board (the "FASB") issued new guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements which is intended to enhance the timeliness, clarity and consistency of disclosure concerning such uncertainties. The new guidance requires management to perform assessments, on an interim and annual basis, of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's interim or annual financial statements, as applicable. In addition, entities must provide certain disclosures if there is substantial doubt about the entity's ability to continue as a going concern. The guidance is effective for us beginning January 1, 2017. We do not expect this new guidance to have a material effect on our consolidated financial position, results of operations or cash flows. | ||
In June 2014, the FASB issued new guidance related to share-based payment awards with performance targets attainable after the requisite service period. The new guidance clarifies that companies should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, no compensation expense should be recorded related to an award for which the transfer to the employee is contingent on the attainment of a performance target until it becomes probable that the performance target will be met. The new guidance does not require any new or additional disclosures. This guidance will be effective for us beginning January 1, 2016. We do not expect this new guidance to have a material effect on our consolidated financial position, results of operations or cash flows. | ||
In May 2014, the FASB and the International Accounting Standards Board issued their final standard on revenue from contracts with customers. This standard outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most of the current revenue recognition guidance. The new guidance requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, an entity should apply the following steps: (1) identify the contract with a customer, (2) identify the performance obligations under the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations under the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance also provides for additional disclosures with respect to revenues and cash flows arising from contracts with customers. This new revenue guidance will be effective for us beginning in the first quarter of fiscal 2017 and early adoption is not permitted. Entities have the option of using either a full retrospective or a modified approach (cumulative effect adjustment in period of adoption) to adopt the new guidance. We are currently assessing the impact of this new revenue guidance on our consolidated financial position, results of operations and cash flows. | ||
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
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 | |||||||||
2014 | 2013 | Useful Life | |||||||
(in thousands) | |||||||||
Land | $ | 1,247 | $ | 1,247 | |||||
Building and building and leasehold improvements | 23,428 | 22,127 | 3 - 30 years | ||||||
Furniture and fixtures | 8,796 | 7,712 | 5 years | ||||||
Computer equipment and purchased software | 131,229 | 110,449 | 2 - 5 years | ||||||
Transportation equipment | 5,027 | 7,522 | 3 - 5 years | ||||||
Operations equipment | 6,267 | 6,122 | 3 - 5 years | ||||||
Construction in progress | 4,402 | 18,295 | |||||||
| | | | | | | | | |
180,396 | 173,474 | ||||||||
Accumulated depreciation and amortization | (109,817 | ) | (101,356 | ) | |||||
| | | | | | | | | |
Property and equipment, net | $ | 70,579 | $ | 72,118 | |||||
| | | | | | | | | |
| | | | | | | | | |
Computer equipment and purchased software includes property acquired under capital leases. At December 31, 2014 and 2013, there was $4.4 million and $8.2 million, respectively, of assets under capital lease, inclusive of accumulated depreciation of $4.0 million and $5.7 million, respectively, included in the above table. | |||||||||
INTERNALLY_DEVELOPED_SOFTWARE
INTERNALLY DEVELOPED SOFTWARE | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
INTERNALLY DEVELOPED SOFTWARE | ||||||||
INTERNALLY DEVELOPED SOFTWARE | NOTE 3: INTERNALLY DEVELOPED SOFTWARE | |||||||
The following is a summary of internally developed software: | ||||||||
Year Ended | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
(in thousands) | ||||||||
Amounts capitalized, beginning of year | $ | 68,862 | $ | 62,962 | ||||
Development costs capitalized | 7,154 | 6,061 | ||||||
Dispositions | (44 | ) | (161 | ) | ||||
| | | | | | | | |
Amounts capitalized, end of year | 75,972 | 68,862 | ||||||
Accumulated amortization, end of year | (61,259 | ) | (52,661 | ) | ||||
| | | | | | | | |
Internally developed software, net | $ | 14,713 | $ | 16,201 | ||||
| | | | | | | | |
| | | | | | | | |
Included in the above are capitalized software development costs for projects in progress of $1.0 million and $3.7 million at December 31, 2014 and 2013, respectively. During the years ended December 31, 2014, 2013 and 2012, we recognized amortization expense related to capitalized software development costs of $8.6 million, $8.8 million and $8.6 million, respectively. | ||||||||
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
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, 2014 and 2013 was as follows: | ||||||||||||||
Technology | Bankruptcy | Total | ||||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Balance as of January 1, 2013 | $ | 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 | ||||||||
Acquisition | — | 153 | 153 | |||||||||||
Foreign currency translation and other | (268 | ) | — | (268 | ) | |||||||||
| | | | | | | | | | | ||||
Balance as of December 31, 2014 | $ | 189,071 | $ | 215,116 | $ | 404,187 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Identifiable intangible assets as of December 31, 2014 and 2013 consisted of the following: | ||||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | |||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||
(in thousands) | ||||||||||||||
Amortizing intangible assets: | ||||||||||||||
Customer relationships | $ | 124,512 | $ | 100,840 | $ | 124,512 | $ | 90,274 | ||||||
Trade names | 6,591 | 3,312 | 6,591 | 2,481 | ||||||||||
Technology | 1,142 | 86 | — | — | ||||||||||
Non-compete agreements | 18,947 | 17,349 | 18,947 | 16,178 | ||||||||||
| | | | | | | | | | | | | | |
Total | $ | 151,192 | $ | 121,587 | $ | 150,050 | $ | 108,933 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Customer relationships, trade names, technology and non-compete agreements carry a weighted average life of 6.9 years, 7.9 years, 10 years and 5 years, respectively. | ||||||||||||||
Aggregate amortization expense related to amortizing intangible assets was $12.7 million, $18.8 million and $26.6 million for the years ended December 31, 2014, 2013, and 2012, respectively. | ||||||||||||||
The following table outlines the estimated future amortization expense related to amortizing intangible assets held at December 31, 2014: | ||||||||||||||
Year Ending December 31, | (in thousands) | |||||||||||||
2015 | $ | 10,007 | ||||||||||||
2016 | 6,346 | |||||||||||||
2017 | 5,504 | |||||||||||||
2018 | 3,548 | |||||||||||||
2019 | 2,870 | |||||||||||||
2020 and thereafter | 1,330 | |||||||||||||
| | | | | ||||||||||
Total | $ | 29,605 | ||||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
LONGTERM_OBLIGATIONS
LONG-TERM OBLIGATIONS | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
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 Date | Interest Rate(1) | 2014 | 2013 | ||||||||||
(in thousands) | |||||||||||||
Senior secured term loan | Aug-20 | 4.25 | % | $ | 296,250 | $ | 299,250 | ||||||
Senior revolving loan | Aug-18 | n/a | — | — | |||||||||
Capital leases | Jan-19 | 3.1 | % | 3,177 | 6,548 | ||||||||
Notes payable | Sep-17 | 2.2 | % | 12,895 | 4,079 | ||||||||
Acquisition-related liabilities | May-21 | n/a | 1,159 | 2,580 | |||||||||
| | | | | | | | | | | | | |
Total long-term obligations, including current portion | 313,481 | 312,457 | |||||||||||
| | | | | | | | | | | | | |
Current maturities of long-term obligations | |||||||||||||
Senior secured term loan | (3,574 | ) | (3,000 | ) | |||||||||
Capital leases | (2,749 | ) | (3,690 | ) | |||||||||
Notes payable | (4,593 | ) | (4,079 | ) | |||||||||
Acquisition-related liabilities | (43 | ) | (2,580 | ) | |||||||||
| | | | | | | | | | | | | |
Total current maturities of long-term obligations | (10,959 | ) | (13,349 | ) | |||||||||
| | | | | | | | | | | | | |
Total Long-term obligations | $ | 302,522 | $ | 299,108 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
-1 | Weighted average interest rate as of December 31, 2014. | ||||||||||||
Credit Agreement | |||||||||||||
On August 27, 2013, we entered into a $400 million senior secured credit facility consisting of a $100 million senior revolving loan commitment, maturing in August 2018, and a $300 million senior secured term loan, maturing in August 2020 (the "Credit Agreement"). | |||||||||||||
During the term of the Credit Agreement, we have the right, subject to compliance with the covenants specified in the Credit Agreement, to increase the credit facility from $400 million up to a maximum of $600 million in one or more tranches. Such rights include increasing the term loan from $300 million up to $500 million and total capacity under the senior revolving loan commitment from its original $100 million up to a maximum of $200 million and the aggregate total increase not to exceed $200 million. The credit facility is secured by liens on our real property and a significant portion of our personal property. | |||||||||||||
On March 26, 2014, we entered into the First Amendment to the Credit Agreement ("First Amendment") which reduced the interest rate options for our senior secured term loan and reduced the LIBOR floor resulting in a total interest rate reduction of 50 basis points as described below. | |||||||||||||
Prior to the First Amendment, the senior secured term loan bore 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 subject to a 1% LIBOR floor. Effective with the date of the First Amendment, the senior secured loan bears interest as follows: (1) 2.50% plus prime rate subject to a 1.75% floor; or (2) 3.50% plus one, two, three or six month LIBOR subject to a 0.75% LIBOR floor. As of December 31, 2014, all outstanding borrowings under the senior secured term loan were based on the 0.75% LIBOR floor and the applicable margin was 3.50% for an aggregate floating rate of 4.25%. | |||||||||||||
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 advances, borrowings bear interest at LIBOR plus 300 to 400 basis points. As of December 31, 2014, there were no borrowings outstanding under the senior revolving loan and outstanding letters of credit were $1.0 million. | |||||||||||||
The term loan facility under our credit facility requires scheduled quarterly principal payments of $750,000, and a final installment equal to the remaining principal balance in August 2020. In addition, the Credit Agreement contains certain annual mandatory prepayment terms based on a percentage of excess cash flow, commencing with measurement for the fiscal year ending December 31, 2014. Excess cash flow, as defined in the Credit Agreement includes Consolidated EBITDA (as defined in the Credit Agreement) adjusted for capital expenditures, changes in working capital, interest paid, income taxes paid, principal payments, dividends and certain acquisition-related obligations. Such annual mandatory prepayments are only required when the net leverage ratio exceeds 2.75 to 1.00. As of December 31, 2014, mandatory prepayments outstanding under the credit facility were $0.6 million, which are included in Current maturities of long-term debt in the Consolidated Balance Sheet. | |||||||||||||
As of December 31, 2014, the Credit Agreement contained financial covenants related to a net leverage ratio (as defined in the Credit Agreement) 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. Under our Credit Agreement, our ability to declare and pay dividends and repurchase securities from equity holders is limited by a requirement that such payments are not to exceed, in the aggregate, 50% of net income, as adjusted, on a cumulative basis for all quarterly periods from the closing date and ending prior to the date of payment or repurchase. Adjustments to Consolidated Net Income, as defined in the Credit Agreement include, among other items, the exclusion of extraordinary items, specified severance costs, cumulative effect of a change in accounting principle, intangible asset amortization and impairment charges, non-cash compensation expense, cumulative effect of foreign currency translations, and gains or losses from discontinued operations. Further, we are unable to declare and pay dividends and repurchase securities from equity holders if our net leverage ratio (as defined in the Credit Agreement) would exceed 4.25 to 1.0. Financing costs of $9.7 million have been deferred and are being amortized over the terms of the Credit Agreement. | |||||||||||||
On January 26, 2015, we entered into the Second Amendment to the Credit Agreement (the "Second Amendment"), which increased the interest rate options for the senior secured term loan. Effective with the date of the Second Amendment, the senior secured term loan bears interest as follows (1) 2.75% plus prime rate subject to a 1.75% floor; or (2) 3.75% plus one, two, three or six month LIBOR subject to a 0.75% LIBOR floor. The Second Amendment also amended the definition of "Applicable Margin" increasing by 0.25% the margin determined by reference to our consolidated net leverage ratio (as defined in the Credit Agreement) for purposes of calculating the interest rate for base rate loans, Eurodollar loans and the fee applicable to letters of credit as specified therein. In addition, the Second Amendment amended the definitions of "Consolidated EBITDA", "Consolidated Net Income" and "Excess Cash Flow" to permit us to add back the following charges: (1) severance and reorganization costs and expenses incurred during any trailing twelve month period that includes a fiscal quarter ending on or after January 1, 2014 and on or prior to December 31, 2014; and (2) certain fees, costs and expenses incurred by us in connection with our previously announced review of certain strategic and financial alternatives, including potential proxy contests. Financing costs related to the Second Amendment were $0.6 million have been deferred and are being amortized over the terms of the Credit Agreement. | |||||||||||||
As of December 31, 2014, we were in compliance with all financial covenants as amended on January 26, 2015. | |||||||||||||
Derivative Instruments | |||||||||||||
Interest rate cap | |||||||||||||
In November 2013 we entered into a two-year 3% interest rate cap agreement for a notional amount of $150.0 million equal to the portion of the senior secured term loan being hedged. The interest rate cap agreement settles monthly and expires on August 31, 2015. It bears a strike rate of 3% with an underlying rate equal to one month USD LIBOR, which is consistent with the variable rate on our senior secured term loan. As the strike rate of 3% was greater than the underlying rate, the caplets for the years ended December 31, 2014 and 2013 expired with a $0 value. As of December 31, 2014, 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%. | |||||||||||||
All changes in the estimated fair value of the interest rate cap were included in accumulated other comprehensive income and represented a de minimis amount as of December 31, 2014 and 2013. The hedge was determined to be perfectly effective during the period from inception of the cash flow hedge through December 31, 2014 with no ineffectiveness recognized in earnings. The fair value of the interest rate cap as of December 31, 2014 was less than $1,000 and as of December 31, 2013 was $27,000 and was included in "Other noncurrent assets" on the Consolidated Balance Sheets. | |||||||||||||
Interest rate swap | |||||||||||||
In April 2014 we entered into a forward interest rate swap effective from August 31, 2015 through August 27, 2020, with a notional amount of approximately $73.7 million equal to the portion of the outstanding amortized principal amount of the senior secured term loan being hedged as of the effective date of the forward interest rate swap. Under the swap we will pay a fixed amount of interest of 2.81% on the notional amount and the swap counterparty will pay a floating amount of interest based on LIBOR with a one-month designated maturity subject to a floor of 0.75% which is consistent with the Company's obligation under the term loan. The interest rate swap contains a floor of 0.75% to ensure that the one-month LIBOR received on each settlement of the interest rate swap cannot go below 0.75%. | |||||||||||||
The objective of entering into this interest rate swap is to eliminate the variability of the cash flows in interest payments related to the portion of the debt being hedged. The interest rate swap qualifies as a cash flow hedge and, as such, is being accounted for at estimated fair value with changes in estimated fair value being deferred in accumulated other comprehensive income until such time as the hedged transaction is recognized in earnings. This cash flow hedge is expected to be highly effective and any ineffectiveness will be immediately recognized in earnings. | |||||||||||||
The fair value of the interest rate swap liability increased by $2.5 million for the period from the inception date in 2014 to December 31, 2014. Changes in the fair value of the interest rate swap are included in accumulated other comprehensive income. As the derivative will not begin settling until August 2015, there were no cash settlements during the period from inception of the swap to December 31, 2014. The hedge was determined to be highly effective during the period from inception of the cash flow hedge through December 31, 2014 with any ineffectiveness considered as de minimis. The fair value of the interest rate swap as of December 31, 2014 was a liability of $2.5 million and was included in "Other long-term liabilities" on the Consolidated Balance Sheets. | |||||||||||||
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. | |||||||||||||
Capital Leases | |||||||||||||
We lease certain equipment under capital leases that generally require monthly payments with final maturity dates during various periods through 2019. As of December 31, 2014, our capital leases had a weighted-average interest rate of approximately 3.1%. See Note 2 to the Consolidated Financial Statements for further discussion of assets acquired under capital leases. | |||||||||||||
Notes Payable | |||||||||||||
In November 2014 we entered into a note payable related to a software license and maintenance agreement that bears interest of approximately 3.85% and is payable quarterly through the third quarter of 2017, which comprises our outstanding balance at December 31, 2014. The note payable balance outstanding as of December 31, 2013 was repaid during 2014. | |||||||||||||
Acquisition-related Liabilities | |||||||||||||
Amounts recorded in connection with acquisition-related liabilities as of December 31, 2014 and 2013 are as follows: | |||||||||||||
December 31, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
(in thousands) | |||||||||||||
Minus 10 deferred acquisition price | $ | 43 | $ | — | |||||||||
Minus 10 contingent consideration | 1,116 | — | |||||||||||
De Novo contingent consideration | — | 2,580 | |||||||||||
| | | | | | | | ||||||
Total acquisition-related liabilities | $ | 1,159 | $ | 2,580 | |||||||||
| | | | | | | | ||||||
| | | | | | | | ||||||
Jupiter eSources LLC | |||||||||||||
In October 2010, we acquired Jupiter eSources LLC ("Jupiter eSources"). In connection with the acquisition, contingent consideration was potentially payable to the Jupiter eSources sellers based on revenue thresholds as defined in the purchase agreement from October 1, 2010 through December 31, 2014. The undiscounted amount of all potential future payments that could be required under the Jupiter eSources contingent consideration was between $0 and $10.0 million over the measurement period ending December 31, 2014. The revenue thresholds were not met and as of December 31, 2014, no additional purchase price consideration is owed to the sellers under this agreement. | |||||||||||||
De Novo Legal LLC | |||||||||||||
In December 2011, we acquired De Novo Legal LLC and its affiliated companies ("De Novo Legal"). In connection with the acquisition, contingent consideration was payable to the De Novo Legal sellers based on revenue-related thresholds related to our Technology segment for period beginning on January 1, 2013 through December 31, 2013. Therefore, in the first quarter of 2014, we provided an earn-out statement and paid the sellers $3.5 million as a result of our calculation of the performance measure for the earn-out period. The sellers disputed our calculation of the earn-out amount and alleged that the performance measure was higher, thereby triggering the next tier of contingent consideration. The Company and the sellers participated in the agreed dispute resolution process as specified under the acquisition agreement and in April 2014 agreed to settle this matter for a cash payment to the sellers of $1.5 million which was paid to the sellers in April 2014. As a result, we recorded a total adjustment of $1.5 million to the contingent consideration obligation as of March 31, 2014, of which $1.1 million is included in "Fair value adjustment to contingent consideration" and $0.4 million is included in "Selling, general and administrative expense" in the Consolidated Statements of Income (Loss). There are no further payments remaining under the contingent consideration obligation with respect to De Novo Legal. | |||||||||||||
Minus–10 Software, LLC | |||||||||||||
In connection with the April 2014 acquisition of Minus–10 Software, LLC ("Minus 10") we withheld approximately $43,000 of the purchase price as security for potential indemnification claims payable approximately 14 months following the closing date of the acquisition. Also, in connection with the acquisition of Minus 10, we incurred an obligation to pay certain contingent consideration which may be payable to the sellers based on future levels of qualifying profit and other measures as defined in the purchase agreement. This contingent consideration for the sellers would be payable, if earned, over seven discrete measurement periods through December 31, 2020. The Minus 10 contingent consideration obligation has been measured and recognized at a fair value of approximately $1.1 million as of December 31, 2014 which is included in "Long-term obligations" on the Consolidated Balance Sheets. A discount rate of 25.0% was applied to the contingent consideration liability which is reflective of the inherent risk attributable to this new product line given its status as an early-stage venture. Subsequent fair value changes, measured quarterly, up to the ultimate amount paid, will be recognized in earnings. See Note 13 of our Notes to Consolidated Financial Statements for further discussion of the Minus 10 acquisition. | |||||||||||||
Maturities of Long-Term Obligations | |||||||||||||
The annual maturities of long-term obligations for the next five fiscal years and thereafter are as follows: | |||||||||||||
Year Ending December 31, | (in thousands) | ||||||||||||
2015 | $ | 10,959 | |||||||||||
2016 | 7,892 | ||||||||||||
2017 | 6,770 | ||||||||||||
2018 | 3,071 | ||||||||||||
2019 | 3,000 | ||||||||||||
Thereafter | 281,789 | ||||||||||||
| | | | | |||||||||
Total | $ | 313,481 | |||||||||||
| | | | | |||||||||
| | | | | |||||||||
OPERATING_LEASES
OPERATING LEASES | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
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 2026. 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) | |||||
2015 | $ | 9,666 | |||
2016 | 7,226 | ||||
2017 | 5,402 | ||||
2018 | 5,238 | ||||
2019 | 5,265 | ||||
Thereafter | 24,958 | ||||
| | | | | |
Total minimum lease payments | $ | 57,755 | |||
| | | | | |
| | | | | |
Expense related to operating leases for the years ended December 31, 2014, 2013 and 2012 was approximately $11.4 million, $12.6 million and $11.5 million, respectively and is included in "Selling, general and administrative expense" in the Consolidated Statements of Income (Loss). | |||||
EQUITY
EQUITY | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
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. 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. 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. There were no repurchases of shares under the 2014 Share Repurchase Program during the year ended December 31, 2014. | |||||||||||
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, 2014, 2013, and 2012 we repurchased 323,090 shares for $4.0 million, 471,248 shares for $6.5 million, and 217,713 shares for $2.7 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. Shares of common stock surrendered to the Company as payment of the exercise price arising from the exercise of stock options are included in "Stock option exercises" in the Consolidated Statements of Changes in Equity. | |||||||||||
Dividends | |||||||||||
Total dividends declared in 2014 were $13.0 million or $0.36 per share of common stock and total dividends paid in 2014 totaled $12.8 million, or $0.36 per share of common stock. Total dividends declared in 2013 were $12.8 million or $0.36 per share of common stock and total dividends paid in 2013 totaled $12.9 million, or $0.36 per share of common stock. Total dividends declared in 2012 were $13.8 million or $0.385 per share of common stock and total dividends paid in 2012 totaled $12.4 million, or $0.345 per share of common stock. Dividends payable were approximately $3.4 million and $3.1 million at December 31, 2014 and 2013, respectively. | |||||||||||
Under our Credit Agreement, our ability to pay dividends and repurchase securities from equity holders is limited by a requirement that such payments are not to exceed, in the aggregate, 50% of net income, as adjusted, on a cumulative basis for all quarterly periods from the closing date of the Credit Facility and ending prior to the date of payment or repurchase. Adjustments to Consolidated Net Income (as defined in the Credit Agreement) include among other items, the exclusion of extraordinary items, cumulative effect of a change in accounting principle, intangible asset amortization and impairment charges, non-cash compensation expense, certain severance amounts incurred prior to December 31, 2014, cumulative effect of foreign currency translations, and gains or losses from discontinued operations. Further, we are unable to declare and pay dividends and repurchase securities from equity holders if our net leverage ratio (as defined in the Credit Agreement) would exceed 4.25 to 1.0. | |||||||||||
Accumulated Other Comprehensive Loss, Net | |||||||||||
Accumulated other comprehensive loss, net, is displayed as a separate component of Stockholders' equity in the accompanying Consolidated Balance Sheets. The following table presents the changes in the after-tax balances of each component of Accumulated other comprehensive income (loss), net for the years ended December 31, 2014, 2013, and 2012: | |||||||||||
Foreign | Unrealized | Accumulated | |||||||||
Currency | Loss on | Other | |||||||||
Translation | Cash Flow | Comprehensive | |||||||||
Hedges | Loss | ||||||||||
Balance at January 1, 2012 | $ | (1,987 | ) | — | $ | (1,987 | ) | ||||
Other comprehensive income | 555 | — | 555 | ||||||||
| | | | | | | | | | | |
Balance at December 31, 2012 | (1,432 | ) | — | (1,432 | ) | ||||||
Other comprehensive income | 891 | — | 891 | ||||||||
| | | | | | | | | | | |
Balance at December 31, 2013 | (541 | ) | — | (541 | ) | ||||||
Other comprehensive loss | (2,411 | ) | (1,410 | ) | (3,821 | ) | |||||
| | | | | | | | | | | |
Balance at December 31, 2014 | $ | (2,952 | ) | $ | (1,410 | ) | $ | (4,362 | ) | ||
| | | | | | | | | | | |
| | | | | | | | | | | |
There were no reclassifications of amounts from Accumulated other comprehensive income (loss) into the Consolidated Statement of Income (Loss) during the years ended December 31, 2014, 2013 and 2012. | |||||||||||
Shareholder Rights Agreement and Rights Dividend | |||||||||||
On September 18, 2014, we entered into a Rights Agreement (the "Rights Agreement") pursuant to which the Board declared a dividend of one preferred stock purchase right (a "Right") for each outstanding share of common stock of the Company. The dividend was paid on September 29, 2014, to holders of record as of the close of business on that date. The Rights will initially trade with, and will be inseparable from, the common stock. Each Right will allow its holder to receive from the Company one one-thousandth of a preferred share for $40.00 (or, in certain circumstances, alternative consideration which may include cash, property or other securities of the Company), subject to adjustment in accordance with the terms of the Rights Agreement, once the Rights become exercisable. This fraction of a preferred share will give the shareholder approximately the same dividend, voting, and liquidation rights as would one common share. | |||||||||||
Subject to certain exceptions, the Rights will separate from the common stock and become exercisable at the earlier to occur of the following dates (or such later date as the Board may determine under certain circumstances): (i) the tenth business day after the date of a public announcement, or public announcement of facts indicating, that a person or group has become a beneficial owner of 10% or more of the Company's outstanding common stock; or (ii) the tenth business day after the date that any person or group commences or announces an intention to commence a tender or exchange offer that, if consummated, would result in that person or group becoming beneficial owner of 10% or more of the Company's outstanding common stock. The Rights will expire on May 15, 2015, unless earlier redeemed or terminated by the Company as provided in the Rights Agreement. The Board may redeem the Rights for $0.001 per Right at any time prior to such time as any person or group triggers the Rights. The Rights have no voting or dividend privileges, and, unless and until they become exercisable, have no dilutive effect on the earnings of the Company. | |||||||||||
EMPLOYEE_BENEFIT_PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2014 | |
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 $3.0 million, $2.5 million and $2.0 million for the years ended December 31, 2014, 2013 and 2012, respectively. | |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
FAIR VALUE MEASUREMENTS | ||||||||||||||
FAIR VALUE MEASUREMENTS | NOTE 9: FAIR VALUE MEASUREMENTS | |||||||||||||
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. | ||||||||||||||
Recurring Fair Value Measurements | ||||||||||||||
Derivatives Instruments | ||||||||||||||
The estimated fair values of the Company's option based derivative instruments (as described in Note 5 to the Consolidated Financial Statements) were determined via the Black 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 terms of the agreements. The estimated fair value of the Company's interest rate swap, a derivative financial instrument, was determined via the income and market approaches utilizing certain observable inputs including the forward and spot curves for the underlying 1 month LIBOR over the remaining term of the agreement. Based on these characteristics these derivative instruments are classified as Level 2. The fair values of the derivative instruments are subject to material changes based upon changes in the forward curve for 1 month LIBOR and the volatility thereof. | ||||||||||||||
Contingent Consideration | ||||||||||||||
In connection with the acquisition of Minus 10 (as described in Notes 5 and 13 to the Consolidated Financial Statements) we established a contingent consideration liability that is considered to be a Level 3 liability. The estimated fair value of the Minus 10 contingent consideration was based on management's estimate of projected profit and loss over the measurement period and an applied discount rate of 25% which is reflective of the inherent risk attributable to this new product line given its status as an early-stage venture. Such unobservable inputs include financial forecasts prepared by management which include estimates of future cash flows, projected profit and loss information, and discount rates. | ||||||||||||||
In connection with the acquisition of De Novo Legal (as described in Note 5 to the Consolidated Financial Statements), contingent consideration was payable to the De Novo sellers based on revenue-related thresholds related to our Technology segment for the period beginning on January 1, 2013 through December 31, 2013. In the first quarter of 2014, we provided an earn-out statement and paid the sellers $3.5 million as a result of the Company's calculation of the performance measure for the earn-out period. The sellers disputed the Company's calculation of the earn-out amount and alleged that the performance measure was higher, thereby triggering the next tier of contingent consideration. The Company and the sellers participated in the agreed dispute resolution process as specified under the acquisition agreement and in April 2014 agreed to settle this matter for a cash payment to the sellers of $1.5 million which was paid to the sellers in April 2014. | ||||||||||||||
As of December 31, 2014 and 2013, 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 | Markets | Inputs | ||||||||||||
Items Measured at Fair Value on a Recurring | Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Basis | ||||||||||||||
(in thousands) | ||||||||||||||
December 31, 2014: | ||||||||||||||
Assets: | ||||||||||||||
Interest rate cap | $ | 1 | $ | — | $ | 1 | $ | — | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Liabilities: | ||||||||||||||
Interest rate swap | $ | 2,451 | $ | — | $ | 2,451 | $ | — | ||||||
Acquisition-related contingent consideration | 1,116 | — | — | 1,116 | ||||||||||
| | | | | | | | | | | | | | |
Total Liabilities | $ | 3,567 | $ | — | $ | 2,451 | $ | 1,116 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
December 31, 2013: | ||||||||||||||
Assets: | ||||||||||||||
Interest rate cap | $ | 27 | $ | — | $ | 27 | $ | — | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Liabilities: | ||||||||||||||
Acquisition-related contingent consideration | $ | 2,580 | $ | — | $ | — | $ | 2,580 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
The following table represents the change in the acquisition-related contingent consideration obligation during the year ended December 31, 2014: | ||||||||||||||
Fair Value | ||||||||||||||
Measurements | ||||||||||||||
Using Significant | ||||||||||||||
Unobservable Inputs | ||||||||||||||
(Level 3) | ||||||||||||||
(in thousands) | ||||||||||||||
Total | ||||||||||||||
Beginning balance December 31, 2013 | $ | 2,580 | ||||||||||||
Fair value related adjustments | 2,075 | |||||||||||||
Present value accretion | 189 | |||||||||||||
Payments | (3,728 | ) | ||||||||||||
| | | | | ||||||||||
Ending balance December 31, 2014 | $ | 1,116 | ||||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
Other Fair Value Disclosures | ||||||||||||||
The carrying amounts of cash and cash equivalents, short-term investments, receivables, accounts payable and accrued expenses approximate their fair values because of the relatively short-term maturities of these financial instruments. As of December 31, 2014 and 2013, the amounts outstanding under both our credit facility and notes payable approximated fair value due to the borrowing rates currently available to us for debt with similar terms and are classified as Level 2. | ||||||||||||||
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
INCOME TAXES | |||||||||||
INCOME TAXES | NOTE 10: INCOME TAXES | ||||||||||
Income (loss) before income taxes consisted of the following: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Income (loss) before income taxes | |||||||||||
United States | $ | (20,892 | ) | $ | 12,273 | $ | 32,148 | ||||
Foreign | 15,040 | 4,832 | 3,258 | ||||||||
| | | | | | | | | | | |
Total | $ | (5,852 | ) | $ | 17,105 | $ | 35,406 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Income tax expense (benefit) for 2014, 2013 and 2012 consists of the following: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Current: | |||||||||||
Federal | $ | (6,735 | ) | $ | 9,121 | $ | 9,447 | ||||
State | (362 | ) | 1,849 | 1,221 | |||||||
Foreign | 3,120 | 1,542 | 838 | ||||||||
| | | | | | | | | | | |
Total current | (3,977 | ) | 12,512 | 11,506 | |||||||
| | | | | | | | | | | |
Deferred: | |||||||||||
Federal | 2,599 | (4,687 | ) | 946 | |||||||
State | (3,270 | ) | (1,724 | ) | 619 | ||||||
Foreign | 133 | (106 | ) | (92 | ) | ||||||
| | | | | | | | | | | |
Total deferred | (538 | ) | (6,517 | ) | 1,473 | ||||||
| | | | | | | | | | | |
Total income tax expense (benefit) | $ | (4,515 | ) | $ | 5,995 | $ | 12,979 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The jurisdictions where we generate income (or loss) before income taxes have a significant effect on our effective tax rate. In 2014, we incurred a pre-tax loss in the U.S. and pre-tax income in our primary foreign jurisdictions. The income (or loss) earned in the United States will be subject to an approximate 42% combined statutory federal and state tax rate. Our foreign-sourced income (or loss), which is earned primarily in the United Kingdom, will be subject to a statutory rate of approximately 22%. In 2014, the significantly higher tax rate in computing the tax benefit on the U.S. losses than the tax rate used in computing the tax expense on the foreign income results in an overall effective tax rate that is not customary. | |||||||||||
The following is a summary of our income tax expense (benefit) and resulting effective tax rate by jurisdiction: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Income tax expense (benefit) by jurisdiction: | |||||||||||
United States | $ | (7,768 | ) | $ | 4,559 | $ | 12,233 | ||||
Foreign | 3,253 | 1,436 | 746 | ||||||||
| | | | | | | | | | | |
Consolidated income tax expense (benefit) | $ | (4,515 | ) | $ | 5,995 | $ | 12,979 | ||||
| | | | | | | | | | | |
Effective income tax rate by jurisdiction: | |||||||||||
United States | 37.2 | % | 37.1 | % | 38.1 | % | |||||
Foreign | 21.6 | % | 29.7 | % | 22.9 | % | |||||
Consolidated effective tax rate | 77.2 | % | 35 | % | 36.7 | % | |||||
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, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Income tax expense (benefit) at the statutory rate | $ | (2,048 | ) | $ | 5,987 | $ | 12,392 | ||||
Change in taxes resulting from: | |||||||||||
State income taxes, net of federal tax effect | (1,922 | ) | 81 | 1,136 | |||||||
Foreign tax and change in foreign valuation allowance | (2,032 | ) | (322 | ) | (394 | ) | |||||
Permanent differences | 1,189 | 797 | 578 | ||||||||
Uncertain tax positions | (112 | ) | 447 | — | |||||||
Research and development credits | (513 | ) | (676 | ) | (239 | ) | |||||
Nondeductible compensation | 411 | — | — | ||||||||
Share-based compensation | 469 | — | — | ||||||||
Domestic production activities deduction | (5 | ) | (422 | ) | (568 | ) | |||||
Other | 48 | 103 | 74 | ||||||||
| | | | | | | | | | | |
Total income tax expense (benefit) | $ | (4,515 | ) | $ | 5,995 | $ | 12,979 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
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, | |||||||||||
2014 | 2013 | ||||||||||
(in thousands) | |||||||||||
Deferred tax assets: | |||||||||||
Allowance for doubtful accounts | $ | 1,379 | $ | 1,661 | |||||||
Share-based compensation | 6,206 | 10,474 | |||||||||
Intangible assets | 2,408 | 2,653 | |||||||||
Deferred rent | 426 | 527 | |||||||||
Accrued liabilities | 4,765 | 2,094 | |||||||||
Cash flow hedges | 1,067 | — | |||||||||
Other | 195 | — | |||||||||
Foreign loss carryforwards | 831 | 639 | |||||||||
State net operating loss carryforwards | 3,579 | 838 | |||||||||
Valuation allowances | (1,903 | ) | (808 | ) | |||||||
| | | | | | | | ||||
Total deferred tax assets | 18,953 | 18,078 | |||||||||
| | | | | | | | ||||
Deferred tax liabilities: | |||||||||||
Prepaid expenses | (1,875 | ) | (2,199 | ) | |||||||
Intangible assets | (33,655 | ) | (33,300 | ) | |||||||
Property and equipment and software development costs | (11,324 | ) | (11,321 | ) | |||||||
Deferred debt discharge income | (1,985 | ) | (2,649 | ) | |||||||
Other | — | (100 | ) | ||||||||
| | | | | | | | ||||
Total deferred tax liabilities | (48,839 | ) | (49,569 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | $ | (29,886 | ) | $ | (31,491 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
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. | |||||||||||
In 2014, we generated a federal net operating loss of approximately $15.0 million, which we will carry back to our 2012 tax year. We have recorded a corresponding $5.0 million current federal income tax receivable. In February 2015, we filed for a $2.9 million refund for taxes which had been credited to our 2014 tax year. As of December 31, 2014, we have generated state operating loss carryforwards totaling $44.9 million which generated a deferred tax asset included above of $3.6 million. These carryforwards expire in varying amounts in years 2015 through 2034. Of these carryforwards, $4.7 million was generated in states in which management believes it is unlikely that we will be able to utilize these carry forwards. A $0.2 million valuation allowance was recorded relating to these losses. | |||||||||||
In 2014, we have recorded a $0.5 million tax expense relating to tax detriments which exceeded our available tax benefit pool. As a result of the realization requirements of ASC 718 "Compensation—Stock Compensation" for tax benefits relating to the exercise of stock options, the state net operating loss carryforward deferred tax asset presented in the table above excludes certain deferred tax assets relating to state net operating losses generated in 2014. These losses arose directly from tax deductions related to equity compensation in excess of compensation recognized for financial reporting. Equity will be increased by $0.2 million 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. | |||||||||||
As of December 31, 2014, we have recorded a $0.8 million valuation allowance relating to approximately $2.3 million of net operating losses generated in 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. | |||||||||||
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, 2014, $1.8 million of HPIP credits were available to offset our 2015 and future Kansas income tax. The credit may be carried forward for a period of sixteen years provided we continue to meet the HPIP certification requirements. Due to this uncertainty, we have recorded a $0.9 million valuation allowance against these credits. | |||||||||||
On December 19, 2014, the Tax Increase Prevention Act of 2014 was passed and is effective for the tax year ending December 31, 2014. Accordingly, a research tax benefit of approximately $0.5 million is reflected our 2014 results. The research credit was not extended beyond 2014 and if not extended, this would increase our effective tax rate in future tax periods. | |||||||||||
In March 2014, New York State passed comprehensive corporate income tax reform with most changes effective for years 2015 and beyond. We have substantial business presence within the state, but we do not expect the new law to have a material impact on our overall expected future tax expense. | |||||||||||
The net deferred tax liability is presented on the Consolidated Balance Sheets as follows: | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
(in thousands) | |||||||||||
Current deferred income taxes | $ | 4,625 | $ | 3,824 | |||||||
Other long-term assets | 139 | 243 | |||||||||
Long-term deferred income tax liability | (34,650 | ) | (35,558 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | $ | (29,886 | ) | $ | (31,491 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
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 $23.9 million at December 31, 2014. It is not practicable to estimate the amount of any deferred tax liability related to this amount. | |||||||||||
As of December 31, 2014, 2013 and 2012, the gross amount of unrecognized tax benefits, including penalty and interest, was approximately $6.3 million, $6.4 million and $5.4 million, respectively. If recognized, approximately $5.1 million, $5.2 million and $4.4 million would have affected our effective tax rate in 2014, 2013, and 2012, respectively. | |||||||||||
The following table summarizes the activity related to our gross unrecognized tax benefits excluding interest and penalties (in thousands): | |||||||||||
2014 | 2013 | 2012 | |||||||||
Unrecognized tax benefits as of January 1 | $ | 5,326 | $ | 4,639 | $ | 4,164 | |||||
Gross increases for prior year tax positions | 190 | 243 | 1,266 | ||||||||
Gross decreases for prior year tax positions | (60 | ) | (53 | ) | — | ||||||
Gross increase for current year tax positions | 197 | 530 | 323 | ||||||||
Settlements | — | (33 | ) | (755 | ) | ||||||
Lapse of statute of limitations | (533 | ) | — | (359 | ) | ||||||
| | | | | | | | | | | |
Unrecognized tax benefits at December 31 | $ | 5,120 | $ | 5,326 | $ | 4,639 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
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 and foreign jurisdictions in which we have not filed tax returns. | |||||||||||
As of December 31, 2014, the 2011 and subsequent federal, state and foreign tax returns are subject to examination. In addition, the 2010 statute of limitations remains open in certain state and foreign jurisdictions. It is reasonably possible that approximately $0.8 million of unrecognized tax benefits will be recognized in the next twelve months due to statute closings of which $0.6 million will affect our effective tax rate. | |||||||||||
During 2013, we were informed that our income tax returns for the years ended December 31, 2009, 2010 and 2011 would be audited by the State of New York. In addition, in January 2014, we were informed that our income tax returns for 2010 and 2011 would be audited by New York City. During 2014, we settled both the New York State and City audits for immaterial amounts. | |||||||||||
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 considered 2009 to be effectively settled and recognized $0.2 million of unrecognized tax benefits which affected our effective tax rate. | |||||||||||
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 2014, 2013, and 2012 totaled $0.2 million, $0.2 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 $1.0 million and $0.2 million, respectively, as of December 31, 2014. As of December 31, 2013, the accrued interest and penalties were $0.8 million and $0.2 million, respectively. | |||||||||||
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
NET INCOME PER SHARE | |||||||||||
NET INCOME PER SHARE | NOTE 11: EARNINGS PER SHARE | ||||||||||
Basic net income per share is computed on the basis of weighted average outstanding common shares. 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. | |||||||||||
On June 11, 2014, our shareholders approved an amendment and restatement of the Epiq Systems, Inc. 2004 Equity Incentive Plan (the "Current Plan"), effective January 1, 2014. One of the amendments included in the Current Plan is to specify that dividends are no longer payable on nonvested share awards during the vesting period. Such dividends declared during the vesting period will be accrued and are payable only if and when the nonvested share awards vest. As a result of this amendment, nonvested share awards (also referred to as restricted stock awards) issued by the Company are no longer considered to be participating securities because they do not have non-forfeitable rights to dividends. Accordingly, for the year ended December 31, 2014 basic and diluted net income per share are calculated using the treasury stock method which does not require the allocation of net income to nonvested shares. | |||||||||||
For the years ended December 31, 2014 and 2013, 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 common share for the years ended December 31, 2014, 2013 and 2012 is as follows: | |||||||||||
2014 | 2013 | 2012 | |||||||||
(In thousands, except | |||||||||||
per share data) | |||||||||||
Net income (loss) | $ | (1,337 | ) | $ | 11,110 | $ | 22,427 | ||||
Less: amounts allocated to nonvested shares | — | (113 | ) | (268 | ) | ||||||
| | | | | | | | | | | |
Income available to common stockholders | $ | (1,337 | ) | $ | 10,997 | $ | 22,159 | ||||
Weighted average common shares outstanding—basic | 35,512 | 35,434 | 35,497 | ||||||||
Effect of dilutive securities | — | 868 | 876 | ||||||||
| | | | | | | | | | | |
Weighted average common shares outstanding—diluted | 35,512 | 36,302 | 36,373 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Basic income (loss) per common share | $ | (0.04 | ) | $ | 0.31 | $ | 0.62 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Diluted income (loss) per common share | $ | (0.04 | ) | $ | 0.3 | $ | 0.61 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
For the years ended December 31, 2014, 2013, and 2012 weighted average outstanding stock options totaling approximately 3.4 million, 2.0 million and 3.1 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, 2014 | ||||||||||||||
SHARE-BASED COMPENSATION. | ||||||||||||||
SHARE-BASED COMPENSATION | NOTE 12: SHARE-BASED COMPENSATION | |||||||||||||
The Company accounts for its share-based compensation by recognizing the grant date fair value of share-based awards, net of estimated forfeitures, as compensation expense over the underlying requisite service periods of the related awards. The following table presents total share-based compensation expense, which is a non-cash charge, included in the Consolidated Statements of Income (Loss): | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(in thousands) | ||||||||||||||
Direct cost of operating revenue | $ | 2,359 | $ | 660 | $ | 201 | ||||||||
Selling, general and administrative | 10,739 | 9,348 | 6,518 | |||||||||||
| | | | | | | | | | | ||||
Pre-tax share-based compensation expense | 13,098 | 10,008 | 6,719 | |||||||||||
Income tax benefit | (5,508 | ) | (4,135 | ) | (2,908 | ) | ||||||||
| | | | | | | | | | | ||||
Total share-based compensation expense, net of tax | $ | 7,590 | $ | 5,873 | $ | 3,811 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
As of December 31, 2014, there was $5.3 million and $1.8 million of total unrecognized compensation cost related to outstanding, unvested restricted stock and stock options, respectively, which will be recognized over a weighted-average period of approximately 2.5 years and 3.0 years. | ||||||||||||||
Included in share-based compensation expense for the year ended December 31, 2014 is $6.5 million of expense recognized with respect to executive officer and employee incentive compensation awards which, based on the closing share price as of December 31, 2014 of $17.08 (as reported by NASDAQ Global Markets), is equal to approximately 381,000 shares of common stock. The $6.5 million includes executive officer awards of $1.4 million which were approved by the Compensation Committee of the Company's Board of Directors on February 20, 2015. The accrual is recorded in "Accrued compensation" on the accompanying Consolidated Balance Sheets as of December 31, 2014. | ||||||||||||||
The Current 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 to 7,500,000 shares. Any grant under the Current Plan that expires or terminates unexercised, becomes unexercisable or is forfeited will be available for further grants. At December 31, 2014, there were approximately 1.1 million shares of common stock available for future equity-related grants under the Current Plan. The purpose of the Current Plan is to provide employees of the Company and members of our Board of Directors additional incentive and reward opportunities designed to enhance the profitable growth of the Company. Equity grants awarded under the Current Plan generally vest over four years based on continued employment. | ||||||||||||||
As part of certain acquisitions and as an inducement in hiring of certain new key executives, stock options are issued outside of the Current 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 Current Plan, through December 31, 2014, we have only issued incentive stock options, nonqualified stock options, and nonvested share awards. | ||||||||||||||
Stock Options | ||||||||||||||
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 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, | ||||||||||||||
2014 | 2012 | |||||||||||||
Expected life of stock option in years | 7.0 | 6.8 | ||||||||||||
Expected volatility | 36 | % | 39 | % | ||||||||||
Risk-free interest rate | 2.1 | % | 1.1 | % | ||||||||||
Dividend yield | 2.5 | % | 2.3 | % | ||||||||||
Weighted average grant-date fair value | $ | 4.33 | $ | 3.51 | ||||||||||
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, 2014 is presented below (shares and aggregate intrinsic value in thousands): | ||||||||||||||
Shares | Weighted | Weighted | Aggregate | |||||||||||
Average | Average | Intrinsic | ||||||||||||
Exercise Price | Contractual | Value | ||||||||||||
Term | ||||||||||||||
Outstanding, beginning of period | 3,825 | $ | 13.32 | |||||||||||
Granted | 143 | 14.38 | ||||||||||||
Exercised | (1,128 | ) | 11.7 | |||||||||||
Forfeited and expired | (489 | ) | 15.67 | |||||||||||
| | | | | | | | | | | | | | |
Outstanding, end of period | 2,351 | $ | 13.66 | 3.68 | $ | 8,117 | ||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Options vested and expected to vest, end of period | 2,304 | $ | 13.67 | 3.58 | $ | 7,937 | ||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Options exercisable, end of period | 1,888 | $ | 13.76 | 2.74 | $ | 6,346 | ||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Additional information regarding stock option exercises appears in the table below (in millions): | ||||||||||||||
As of December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
Intrinsic value of stock options exercised | $ | 3.7 | $ | 8.7 | $ | 2.2 | ||||||||
Cash received from option exercises | $ | 12.5 | $ | 3.0 | $ | 0.9 | ||||||||
Tax benefit realized from options exercised during the annual period | $ | 1.6 | $ | 6.7 | $ | 2.6 | ||||||||
Nonvested Share Awards | ||||||||||||||
Summary restricted stock activity is presented in the table below (shares in thousands): | ||||||||||||||
Shares | Weighted | |||||||||||||
Average Grant | ||||||||||||||
Date Fair | ||||||||||||||
Value | ||||||||||||||
Non-vested at December 31, 2013 | 364 | $ | 12.48 | |||||||||||
Granted | 1,109 | 15.05 | ||||||||||||
Vested | (670 | ) | 13.49 | |||||||||||
Forfeited/Canceled | (225 | ) | 15.01 | |||||||||||
| | | | | | | | |||||||
Non-vested at December 31, 2014 | 578 | $ | 15.23 | |||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
The fair value of nonvested share awards is based on the closing market price of our common stock on the date of grant. Nonvested share awards entitle the holder to shares of common stock when the award vests. | ||||||||||||||
During the year ended December 31, 2014, we granted 450,000 nonvested stock awards which can only vest upon certification by the compensation committee of the Company's Board of the achievement of certain Company financial performance criteria for the calendar year ending December 31, 2014 (the "2014 Performance-Based Share Award"). During the year ended December 31, 2014, 225,000 shares of the 2014 Performance-Based Share Awards were forfeited by two former executives in conjunction with their resignation from the Company in March 2014 and June 2014, respectively. The Company did not recognize any expense during 2014 for these forfeited awards. On February 20, 2015, the Compensation Committee of the Company's Board of Directors certified that the performance condition with respect to the remaining 225,000 shares was achieved and the restricted stock awards vested as of that date. | ||||||||||||||
Also granted during 2014 were 62,069 shares which vested in April 2014 upon the achievement of financial performance criteria. An additional 219,730 shares were granted in connection with the achievement of certain financial performance criteria for the year 2013 for executive performance-based annual incentive compensation awards, which vested upon issuance and the related expense was recognized in the Consolidated Statements of Income for the year ended December 31, 2013. In connection with the appointment of an executive officer, 100,000 shares were granted, of which 25,000 shares vested upon issuance and the remaining 75,000 shares vest over three years. The remaining 277,500 nonvested stock awards granted will vest one to three years from the grant date. | ||||||||||||||
During the year ended December 31, 2013, we granted 527,600 nonvested share awards of which 330,000 shares vested 12 months after the date of grant upon achievement of a performance condition for the calendar year ended December 31, 2013, 164,100 shares vested upon issuance and the remaining 33,500 nonvested stock awards vested one year from the grant date. | ||||||||||||||
During the year ended December 31, 2012, we granted 430,000 nonvested share awards. These awards vested 12 months after the date of grant upon achievement of a performance condition for the calendar year ended December 31, 2012. | ||||||||||||||
The weighted-average grant date fair value of nonvested share awards granted during 2014, 2013 and 2012 was $15.05, $12.90 and $11.85, respectively. | ||||||||||||||
ACQUISITIONS
ACQUISITIONS | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
ACQUISITIONS | |||||
ACQUISITIONS | NOTE 13: ACQUISITIONS | ||||
On April 1, 2014, we completed the acquisition of Minus 10, a company that develops and maintains software products and provides related services to its customers with respect to web-enabled bankruptcy preparation and case management and expanded our Chapter 11 restructuring service offerings. Minus 10 is included in our Bankruptcy and Settlement Administration segment. | |||||
The preliminary purchase price of Minus 10 was comprised of the following: | |||||
(in thousands) | |||||
Cash paid at closing | $ | 302 | |||
Net working capital liability | 17 | ||||
Deferred cash consideration | 43 | ||||
Fair value of contingent consideration | 933 | ||||
| | | | | |
Total purchase price | $ | 1,295 | |||
| | | | | |
| | | | | |
The cash consideration paid at closing was funded from our cash balances. | |||||
As a result of an earn-out opportunity the sellers of Minus 10 have the opportunity to receive contingent consideration based on a percentage of future qualifying profit and other measures, as defined in the purchase agreement. This contingent consideration opportunity for the sellers would be payable, if earned, over seven discrete measurement periods beginning with April 1, 2014 through December 31, 2014 and each annual period ending December 31, 2015 through December 31, 2020. | |||||
The fair value of the contingent consideration was determined by a present value calculation of the potential payouts based on financial projections over the earn-out period. Subsequent changes in fair value, which will be measured quarterly, will be recognized in earnings. We recognized fair value of approximately $1.1 million of the contingent consideration in "Long-term obligations" on the Consolidated Balance Sheet at December 31, 2014. | |||||
Transaction related costs, which were expensed during the period in which they were incurred, were not material related to this acquisition. | |||||
Total purchase consideration has been allocated to the identifiable intangible assets based on their respective fair values on the acquisition date. The preliminary purchase price allocations are summarized in the following table: | |||||
(in thousands) | |||||
Intangible assets: | |||||
Acquired technology | $ | 1,142 | |||
Goodwill | 153 | ||||
| | | | | |
Net assets acquired | $ | 1,295 | |||
| | | | | |
| | | | | |
We allocated approximately $1.1 million of the purchase price to acquired technology which is included in "Intangible assets" on the Consolidated Balance Sheets as of December 31, 2014. This intangible asset will be amortized on a straight-line basis over an amortization period of 10 years. The entire balances of goodwill and acquired technology related to this acquisition are amortizable for tax purposes. | |||||
The operating results of Minus 10 from the date of acquisition through December 31, 2014 were immaterial to our operating results. Pro-forma results of operations, assuming the Minus 10 acquisition was made at the beginning of the earliest period presented, have not been presented because the effect of this acquisition was not material to our operating results. | |||||
SEGMENT_REPORTING
SEGMENT REPORTING | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
SEGMENT REPORTING | ||||||||||||||
SEGMENT REPORTING | NOTE 14: SEGMENT REPORTING | |||||||||||||
We report our financial performance based on the following two reportable segments: the Technology segment and the Bankruptcy and Settlement Administration segment. | ||||||||||||||
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, other operating expense, and share-based compensation 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 reporting 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, certain 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 reporting segments, we do not allocate the related depreciation and amortization 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, 2014, 2013 and 2012. | ||||||||||||||
Year Ended December 31, 2014 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Operating revenues | $ | 297,679 | $ | 146,439 | $ | — | $ | 444,118 | ||||||
Intersegment revenue | 2,045 | — | (2,045 | ) | — | |||||||||
| | | | | | | | | | | | | | |
Operating revenues including intersegment revenue | 299,724 | 146,439 | (2,045 | ) | 444,118 | |||||||||
Reimbursable expenses | 2,540 | 27,812 | — | 30,352 | ||||||||||
| | | | | | | | | | | | | | |
Total revenues | 302,264 | 174,251 | (2,045 | ) | 474,470 | |||||||||
Direct costs, selling, general and administrative expenses | 218,255 | 121,085 | (2,045 | ) | 337,295 | |||||||||
| | | | | | | | | | | | | | |
Segment performance measure | $ | 84,009 | $ | 53,166 | $ | — | $ | 137,175 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
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, selling, general and administrative expenses | 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, selling, general and administrative expenses | 125,182 | 122,359 | (203 | ) | 247,338 | |||||||||
| | | | | | | | | | | | | | |
Segment performance measure | $ | 73,526 | $ | 52,221 | $ | — | $ | 125,747 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Following is a reconciliation of our segment performance measure to consolidated income (loss) before income taxes: | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(in thousands) | ||||||||||||||
Segment performance measure | $ | 137,175 | $ | 138,409 | $ | 125,747 | ||||||||
Corporate and unallocated expenses | (62,557 | ) | (47,587 | ) | (36,021 | ) | ||||||||
Share-based compensation expense | (13,098 | ) | (10,008 | ) | (6,719 | ) | ||||||||
Depreciation and software and leasehold amortization | (36,042 | ) | (30,971 | ) | (27,399 | ) | ||||||||
Amortization of identifiable intangible assets | (12,655 | ) | (18,834 | ) | (26,588 | ) | ||||||||
Fair value adjustment to contingent consideration | (1,142 | ) | (2,580 | ) | 17,188 | |||||||||
Intangible asset impairment expense | — | — | (1,777 | ) | ||||||||||
Other operating income (expense) | (880 | ) | 791 | 220 | ||||||||||
| | | | | | | | | | | ||||
Consolidated income from operations | 10,801 | 29,220 | 44,651 | |||||||||||
Interest expense, net | (16,653 | ) | (12,115 | ) | (9,245 | ) | ||||||||
| | | | | | | | | | | ||||
Income (loss) before income taxes | $ | (5,852 | ) | $ | 17,105 | $ | 35,406 | |||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Following are assets by segment: | ||||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
(in thousands) | ||||||||||||||
Assets | ||||||||||||||
Technology | $ | 342,596 | $ | 369,135 | ||||||||||
Bankruptcy and Settlement Administration | 286,889 | 281,073 | ||||||||||||
Corporate and unallocated | 108,767 | 97,573 | ||||||||||||
| | | | | | | | |||||||
Total assets | $ | 738,252 | $ | 747,781 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Following are capital expenditures (including software development costs) by segment: | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(in thousands) | ||||||||||||||
Capital Expenditures | ||||||||||||||
Technology | $ | 15,477 | $ | 22,234 | $ | 14,153 | ||||||||
Bankruptcy and Settlement Administration | 2,596 | 3,161 | 4,010 | |||||||||||
Corporate and unallocated | 17,966 | 15,312 | 4,391 | |||||||||||
| | | | | | | | | | | ||||
Total capital expenditures | $ | 36,039 | $ | 40,707 | $ | 22,554 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Following is revenue, determined by the location providing the services, by geographical area: | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(in thousands) | ||||||||||||||
Revenue | ||||||||||||||
United States | $ | 410,768 | $ | 431,615 | $ | 346,454 | ||||||||
United Kingdom | 49,710 | 45,962 | 23,356 | |||||||||||
Other countries | 13,992 | 4,506 | 3,275 | |||||||||||
| | | | | | | | | | | ||||
Total revenue | $ | 474,470 | $ | 482,083 | $ | 373,085 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Following are long-lived assets, excluding intangible assets, by geographical area: | ||||||||||||||
Year Ended | ||||||||||||||
December 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
(in thousands) | ||||||||||||||
Long-lived assets | ||||||||||||||
United States | $ | 78,921 | $ | 84,384 | ||||||||||
Other countries | 6,371 | 3,935 | ||||||||||||
| | | | | | | | |||||||
Total long-lived assets | $ | 85,292 | $ | 88,319 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Significant Customer and Concentration of Credit Risk | ||||||||||||||
For the years ended December 31, 2014, 2013 and 2012, we had no customers which accounted for more than 10% of our consolidated revenue or consolidated accounts receivable as of December 31, 2014 and 2013. | ||||||||||||||
LEGAL_PROCEEDINGS
LEGAL PROCEEDINGS | 12 Months Ended |
Dec. 31, 2014 | |
LEGAL PROCEEDINGS | |
LEGAL PROCEEDINGS | NOTE 15: 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, financial condition or cash flows. | |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions | |
RELATED PARTY TRANSACTIONS | NOTE 16: RELATED PARTY TRANSACTIONS |
On November 1, 2014, we entered into a Director Appointment Agreement (the "Agreement") with St. Denis J. Villere & Company, L.L.C. ("Villere"), a beneficial shareholder of Company and Kevin L. Robert. As a result, we created a new directorship and appointed Mr. Robert as a new independent director to the board of directors of the Company, effective November 3, 2014, with a term expiring at our Annual Meeting of shareholders held in the year 2015. The Company has agreed to reimburse Villere's documented out-of-pocket expenses in connection with the nomination of Mr. Robert incurred prior to the execution of the Agreement up to an aggregate of $300,000. | |
Scott W. Olofson, the son of Tom W. Olofson, is the Company's Senior Vice-President, Corporate Relations and Business Development. The compensation committee of the Board approves all salary, bonus, equity incentive awards and perquisites for Scott W. Olofson. For 2014, Scott W. Olofson's compensation was $0.9 million. In February 2015, Scott W. Olofson was appointed head of the Company's corporate restructuring group. | |
SUPPLEMENTAL_QUARTERLY_FINANCI
SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Unaudited) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Quarterly Financial Data | |||||||||||||||||
Quarterly Financial Information | |||||||||||||||||
NOTE 17: SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Unaudited) | |||||||||||||||||
The following table sets forth the quarterly financial data for the quarters of the years ended December 31, 2014 and 2013. | |||||||||||||||||
First | Second | Third | Fourth | Total | |||||||||||||
(in thousands, except per share data) | |||||||||||||||||
Year ended December 31, 2014 | |||||||||||||||||
Operating revenue | $ | 116,220 | $ | 115,451 | $ | 103,955 | $ | 108,492 | $ | 444,118 | |||||||
Total revenue | $ | 123,271 | $ | 125,056 | $ | 111,006 | $ | 115,137 | $ | 474,470 | |||||||
Gross profit(1) | $ | 53,240 | $ | 51,970 | $ | 49,725 | $ | 50,546 | $ | 205,481 | |||||||
Net income (loss) | $ | (2,298 | ) | $ | (3,419 | ) | $ | 5,010 | $ | (630 | ) | $ | (1,337 | ) | |||
Net income (loss) per share—Basic(2) | $ | (0.07 | ) | $ | (0.10 | ) | $ | 0.14 | $ | (0.02 | ) | $ | (0.04 | ) | |||
Net income (loss) per share—Diluted(2) | $ | (0.07 | ) | $ | (0.10 | ) | $ | 0.14 | $ | (0.02 | ) | $ | (0.04 | ) | |||
Year ended December 31, 2013 | |||||||||||||||||
Operating revenue | $ | 102,908 | $ | 104,976 | $ | 109,837 | $ | 120,969 | $ | 438,690 | |||||||
Total revenue | $ | 123,590 | $ | 113,372 | $ | 115,684 | $ | 129,437 | $ | 482,083 | |||||||
Gross profit(1) | $ | 47,743 | $ | 51,933 | $ | 53,958 | $ | 60,208 | $ | 213,842 | |||||||
Net income | $ | 3,937 | $ | 2,842 | $ | 4,235 | $ | 96 | $ | 11,110 | |||||||
Net income per share—Basic(2) | $ | 0.11 | $ | 0.08 | $ | 0.12 | $ | 0 | $ | 0.31 | |||||||
Net income per share—Diluted(2) | $ | 0.11 | $ | 0.08 | $ | 0.11 | $ | 0 | $ | 0.3 | |||||||
-1 | Gross profit is calculated as total revenue less direct cost of operating revenue, reimbursed direct costs, and the portion of depreciation and software amortization attributable to direct costs of services. | ||||||||||||||||
-2 | The sum of the quarters' net income per share may not equal the total of the respective year's net income per share as each quarter is calculated independently. | ||||||||||||||||
SCHEDULE_II_VALUATION_AND_QUAL
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
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, 2014 | 4,379 | 3,552 | (3,945 | 3,986 | |||||||||||||
$ | $ | $ | — | $ | ) | $ | |||||||||||
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 | |||||||||||||
$ | $ | $ | — | $ | ) | $ | |||||||||||
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, 2014 | 808 | 1,127 | (32 | 1,903 | |||||||||||||
$ | $ | $ | — | $ | ) | $ | |||||||||||
For the year ended December 31, 2013 | 101 | 776 | (69 | 808 | |||||||||||||
$ | $ | $ | — | $ | ) | $ | |||||||||||
For the year ended December 31, 2012 | 172 | (71 | 101 | ||||||||||||||
$ | $ | — | $ | — | $ | ) | $ | ||||||||||
NATURE_OF_OPERATIONS_AND_SUMMA1
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |
Dec. 31, 2014 | ||
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," "the Company," "we," "us," or "our") and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. | ||
Use of Estimates | Use of Estimates | |
The preparation of the consolidated 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, and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include the carrying amount of intangibles, goodwill, and valuation allowances for receivables, contingencies and deferred income tax assets. Actual results can, and often do, differ from those assumed in our 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. | ||
Property and Equipment, Software and Leasehold Improvements | Property and Equipment, Software and Leasehold Improvements | |
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 loss recognized is the amount by which the carrying amount exceeds the fair value. | ||
Depreciation and software and leasehold amortization for the years ended December 31, 2014, 2013 and 2012, was $36.0 million, $31.0 million and $27.4 million, respectively. The caption "Depreciation and software and leasehold amortization" in the accompanying Consolidated Statements of Income (Loss) includes costs that are directly related to services of approximately $23.1 million, $16.0 million and $12.8 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||
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. | ||
Purchase Price Allocation | Purchase Price Allocation | |
We have acquired a number of businesses in past years, and we may acquire additional businesses in the future. Accounting for the acquisition of a business requires us to determine the fair value of all assets acquired, including identifiable intangible assets, liabilities assumed, and contingent consideration obligations. The cost of the acquisition is allocated to these assets and liabilities in amounts equal to the estimated fair value of each asset and liability, and any remaining acquisition cost is classified as goodwill. This allocation process requires the use of estimates and assumptions, including quoted market prices and estimates of future cash flows to be generated by the acquired assets. Acquisition-related costs for potential and completed acquisitions are expensed, as incurred, and are included in "Other operating expense" in our Consolidated Statements of Income (Loss). Accordingly, the acquisition cost allocation has had, and will continue to have, a significant impact on our current operating results. | ||
Determining the fair value of contingent consideration requires an assessment of the projected revenue over the measurement period and applying an appropriate discount rate based upon the weighted average cost of capital. This fair value assessment is also required in periods subsequent to a business combination. Such estimates are inherently difficult and subjective and variances from such estimates could have a material impact on our Consolidated Financial Statements. | ||
Although we believe the assumptions and estimates we have made are reasonable, because they are based on estimates and judgment, they are inherently uncertain. Examples of critical estimates included in business combination accounting may include but are not limited to: future expected cash flows from projected revenues; the acquired company's trade name and trademarks as well as assumptions about the period of time the acquired trade name and trademarks will continue to be used in the combined company's product portfolio; customer attrition rates, new client acquisition rates, effectiveness of sales and marketing programs, pricing for products and services, long-term growth rates and discount rates. | ||
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 at least an annual basis at a reporting unit level and have identified our operating segments (Technology and Bankruptcy and Settlement Administration) as our reporting units for purposes of testing for goodwill impairment. | ||
The goodwill impairment test consists of a two-step process, if necessary. The first step is to compare the fair value of a reporting unit to its carrying value, including goodwill. 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. | ||
The second step compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. The loss recognized cannot exceed the carrying amount of goodwill. As of July 31, 2014, 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. | ||
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. As of December 31, 2014, there have been no events since our last annual test to indicate that it is more likely than not that the recorded goodwill balance had become impaired. Our consolidated goodwill totaled $404.2 million as of December 31, 2014. | ||
Intangible Assets | Intangible Assets | |
Identifiable intangible assets, resulting from various business acquisitions, consist of customer relationships, agreements not to compete, technology, 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 to the Consolidated Financial Statements for further detail. | ||
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 (Loss). | ||
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. The fair value of our stock option grants is estimated on the grant date using a Black-Scholes option-pricing model. We recognize compensation expense related to stock option grants on a straight-line basis over the period the grant is earned by the employee. | ||
The fair value of our restricted stock awards is the quoted market value of Epiq's stock on the grant date. In the period it becomes probable that the minimum performance criteria specified in the restricted stock award agreement will be achieved, we recognize expense for the proportionate share of the total fair value of the award related to the vesting period that has already lapsed. The remaining cost of the award is expensed on a straight-line basis over the balance of the vesting period. In the event we determine it is no longer probable that we will achieve the minimum performance criteria specified in the restricted stock award agreement, we reverse all of the previously recognized compensation expense in the period such a determination is made. | ||
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 (Loss). 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 (Loss). | ||
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 to the Consolidated Financial Statements. | ||
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 is 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 we elect, 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. See Note 5 to the Consolidated Financial Statements for more information on our hedging activities. | ||
Revenue Recognition | Revenue Recognition | |
We have agreements with clients pursuant to which we deliver various services. Our significant sources of revenue are: | ||
• | 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. | |
• | Deposit-based fees earned for the provision of software licenses, limited hardware and hardware maintenance, and post-contract customer support services to our trustee clients are based on a percentage of Chapter 7 assets placed on deposit with designated financial institutions by our trustee clients. Our trustee clients do not directly pay fees in connection with these 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. | |
• | Data hosting fees and volume-based fees. | |
• | 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 and other pass-through expenses. | |
Non-Software Arrangements | ||
Certain of our services, such as data hosting, processing and professional 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 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 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 for the software license, hardware lease, hardware maintenance, and post-contract customer support services provided to our trustee clients based on the average dollar amount of deposits held by the trustees with that financial institution. The monthly deposit fees have two components consisting of an interest-based component and a non-interest based service fee. 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 future 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. 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, are accounted for as contingent rentals, which require 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 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 represents less than ten percent of our total revenue for the years ended December 31, 2014, 2013 and 2012, is included in the Consolidated Statements of Income (Loss) as a component of "Operating revenue." | ||
Reimbursements | ||
We have revenue related to reimbursable expenses, primarily postage. Reimbursable postage and other reimbursable expenses are recorded gross in the Consolidated Statements of Income (Loss) as "Reimbursable expenses" in the revenue and operating expenses sections. | ||
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. | ||
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, 2014, 2013, and 2012, cumulative translation adjustments included in accumulated other comprehensive loss were $3.0 million, $0.5 million and $1.4 million, respectively. | ||
Contingencies | 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 Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements | |
In August 2014, the Financial Accounting Standards Board (the "FASB") issued new guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements which is intended to enhance the timeliness, clarity and consistency of disclosure concerning such uncertainties. The new guidance requires management to perform assessments, on an interim and annual basis, of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's interim or annual financial statements, as applicable. In addition, entities must provide certain disclosures if there is substantial doubt about the entity's ability to continue as a going concern. The guidance is effective for us beginning January 1, 2017. We do not expect this new guidance to have a material effect on our consolidated financial position, results of operations or cash flows. | ||
In June 2014, the FASB issued new guidance related to share-based payment awards with performance targets attainable after the requisite service period. The new guidance clarifies that companies should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, no compensation expense should be recorded related to an award for which the transfer to the employee is contingent on the attainment of a performance target until it becomes probable that the performance target will be met. The new guidance does not require any new or additional disclosures. This guidance will be effective for us beginning January 1, 2016. We do not expect this new guidance to have a material effect on our consolidated financial position, results of operations or cash flows. | ||
In May 2014, the FASB and the International Accounting Standards Board issued their final standard on revenue from contracts with customers. This standard outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most of the current revenue recognition guidance. The new guidance requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, an entity should apply the following steps: (1) identify the contract with a customer, (2) identify the performance obligations under the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations under the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance also provides for additional disclosures with respect to revenues and cash flows arising from contracts with customers. This new revenue guidance will be effective for us beginning in the first quarter of fiscal 2017 and early adoption is not permitted. Entities have the option of using either a full retrospective or a modified approach (cumulative effect adjustment in period of adoption) to adopt the new guidance. We are currently assessing the impact of this new revenue guidance on our consolidated financial position, results of operations and cash flows. | ||
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
PROPERTY AND EQUIPMENT | |||||||||
Schedule of classification of property and equipment and the related estimated useful lives | |||||||||
December 31, | |||||||||
Estimated | |||||||||
2014 | 2013 | Useful Life | |||||||
(in thousands) | |||||||||
Land | $ | 1,247 | $ | 1,247 | |||||
Building and building and leasehold improvements | 23,428 | 22,127 | 3 - 30 years | ||||||
Furniture and fixtures | 8,796 | 7,712 | 5 years | ||||||
Computer equipment and purchased software | 131,229 | 110,449 | 2 - 5 years | ||||||
Transportation equipment | 5,027 | 7,522 | 3 - 5 years | ||||||
Operations equipment | 6,267 | 6,122 | 3 - 5 years | ||||||
Construction in progress | 4,402 | 18,295 | |||||||
| | | | | | | | | |
180,396 | 173,474 | ||||||||
Accumulated depreciation and amortization | (109,817 | ) | (101,356 | ) | |||||
| | | | | | | | | |
Property and equipment, net | $ | 70,579 | $ | 72,118 | |||||
| | | | | | | | | |
| | | | | | | | | |
INTERNALLY_DEVELOPED_SOFTWARE_
INTERNALLY DEVELOPED SOFTWARE (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
INTERNALLY DEVELOPED SOFTWARE | ||||||||
Summary of internally developed software | ||||||||
Year Ended | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
(in thousands) | ||||||||
Amounts capitalized, beginning of year | $ | 68,862 | $ | 62,962 | ||||
Development costs capitalized | 7,154 | 6,061 | ||||||
Dispositions | (44 | ) | (161 | ) | ||||
| | | | | | | | |
Amounts capitalized, end of year | 75,972 | 68,862 | ||||||
Accumulated amortization, end of year | (61,259 | ) | (52,661 | ) | ||||
| | | | | | | | |
Internally developed software, net | $ | 14,713 | $ | 16,201 | ||||
| | | | | | | | |
| | | | | | | | |
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ||||||||||||||
Schedule of change in the carrying amount of goodwill | ||||||||||||||
Technology | Bankruptcy | Total | ||||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Balance as of January 1, 2013 | $ | 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 | ||||||||
Acquisition | — | 153 | 153 | |||||||||||
Foreign currency translation and other | (268 | ) | — | (268 | ) | |||||||||
| | | | | | | | | | | ||||
Balance as of December 31, 2014 | $ | 189,071 | $ | 215,116 | $ | 404,187 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Schedule of Identifiable intangible assets | ||||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | |||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||
(in thousands) | ||||||||||||||
Amortizing intangible assets: | ||||||||||||||
Customer relationships | $ | 124,512 | $ | 100,840 | $ | 124,512 | $ | 90,274 | ||||||
Trade names | 6,591 | 3,312 | 6,591 | 2,481 | ||||||||||
Technology | 1,142 | 86 | — | — | ||||||||||
Non-compete agreements | 18,947 | 17,349 | 18,947 | 16,178 | ||||||||||
| | | | | | | | | | | | | | |
Total | $ | 151,192 | $ | 121,587 | $ | 150,050 | $ | 108,933 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Schedule of estimated future amortization expense related to intangible assets | ||||||||||||||
Year Ending December 31, | (in thousands) | |||||||||||||
2015 | $ | 10,007 | ||||||||||||
2016 | 6,346 | |||||||||||||
2017 | 5,504 | |||||||||||||
2018 | 3,548 | |||||||||||||
2019 | 2,870 | |||||||||||||
2020 and thereafter | 1,330 | |||||||||||||
| | | | | ||||||||||
Total | $ | 29,605 | ||||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
LONGTERM_OBLIGATIONS_Tables
LONG-TERM OBLIGATIONS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
LONG-TERM OBLIGATIONS | |||||||||||||
Summary of long-term debt | |||||||||||||
Final | Weighted-Average | December 31, | December 31, | ||||||||||
Maturity Date | Interest Rate(1) | 2014 | 2013 | ||||||||||
(in thousands) | |||||||||||||
Senior secured term loan | Aug-20 | 4.25 | % | $ | 296,250 | $ | 299,250 | ||||||
Senior revolving loan | Aug-18 | n/a | — | — | |||||||||
Capital leases | Jan-19 | 3.1 | % | 3,177 | 6,548 | ||||||||
Notes payable | Sep-17 | 2.2 | % | 12,895 | 4,079 | ||||||||
Acquisition-related liabilities | May-21 | n/a | 1,159 | 2,580 | |||||||||
| | | | | | | | | | | | | |
Total long-term obligations, including current portion | 313,481 | 312,457 | |||||||||||
| | | | | | | | | | | | | |
Current maturities of long-term obligations | |||||||||||||
Senior secured term loan | (3,574 | ) | (3,000 | ) | |||||||||
Capital leases | (2,749 | ) | (3,690 | ) | |||||||||
Notes payable | (4,593 | ) | (4,079 | ) | |||||||||
Acquisition-related liabilities | (43 | ) | (2,580 | ) | |||||||||
| | | | | | | | | | | | | |
Total current maturities of long-term obligations | (10,959 | ) | (13,349 | ) | |||||||||
| | | | | | | | | | | | | |
Total Long-term obligations | $ | 302,522 | $ | 299,108 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
-1 | Weighted average interest rate as of December 31, 2014. | ||||||||||||
Schedule of amounts recorded in connection with acquisition-related liabilities | |||||||||||||
December 31, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
(in thousands) | |||||||||||||
Minus 10 deferred acquisition price | $ | 43 | $ | — | |||||||||
Minus 10 contingent consideration | 1,116 | — | |||||||||||
De Novo contingent consideration | — | 2,580 | |||||||||||
| | | | | | | | ||||||
Total acquisition-related liabilities | $ | 1,159 | $ | 2,580 | |||||||||
| | | | | | | | ||||||
| | | | | | | | ||||||
Schedule of maturity of long-term obligations | |||||||||||||
Year Ending December 31, | (in thousands) | ||||||||||||
2015 | $ | 10,959 | |||||||||||
2016 | 7,892 | ||||||||||||
2017 | 6,770 | ||||||||||||
2018 | 3,071 | ||||||||||||
2019 | 3,000 | ||||||||||||
Thereafter | 281,789 | ||||||||||||
| | | | | |||||||||
Total | $ | 313,481 | |||||||||||
| | | | | |||||||||
| | | | | |||||||||
OPERATING_LEASES_Tables
OPERATING LEASES (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
OPERATING LEASES | |||||
Schedule of future minimum lease payments | |||||
Total Future | |||||
Minimum Lease | |||||
Payments | |||||
(in thousands) | |||||
2015 | $ | 9,666 | |||
2016 | 7,226 | ||||
2017 | 5,402 | ||||
2018 | 5,238 | ||||
2019 | 5,265 | ||||
Thereafter | 24,958 | ||||
| | | | | |
Total minimum lease payments | $ | 57,755 | |||
| | | | | |
| | | | | |
Equity_Tables
Equity (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Dividends | |||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | |||||||||||
Foreign | Unrealized | Accumulated | |||||||||
Currency | Loss on | Other | |||||||||
Translation | Cash Flow | Comprehensive | |||||||||
Hedges | Loss | ||||||||||
Balance at January 1, 2012 | $ | (1,987 | ) | — | $ | (1,987 | ) | ||||
Other comprehensive income | 555 | — | 555 | ||||||||
| | | | | | | | | | | |
Balance at December 31, 2012 | (1,432 | ) | — | (1,432 | ) | ||||||
Other comprehensive income | 891 | — | 891 | ||||||||
| | | | | | | | | | | |
Balance at December 31, 2013 | (541 | ) | — | (541 | ) | ||||||
Other comprehensive loss | (2,411 | ) | (1,410 | ) | (3,821 | ) | |||||
| | | | | | | | | | | |
Balance at December 31, 2014 | $ | (2,952 | ) | $ | (1,410 | ) | $ | (4,362 | ) | ||
| | | | | | | | | | | |
| | | | | | | | | | | |
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
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 | Markets | Inputs | ||||||||||||
Items Measured at Fair Value on a Recurring | Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||
Basis | ||||||||||||||
(in thousands) | ||||||||||||||
December 31, 2014: | ||||||||||||||
Assets: | ||||||||||||||
Interest rate cap | $ | 1 | $ | — | $ | 1 | $ | — | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Liabilities: | ||||||||||||||
Interest rate swap | $ | 2,451 | $ | — | $ | 2,451 | $ | — | ||||||
Acquisition-related contingent consideration | 1,116 | — | — | 1,116 | ||||||||||
| | | | | | | | | | | | | | |
Total Liabilities | $ | 3,567 | $ | — | $ | 2,451 | $ | 1,116 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
December 31, 2013: | ||||||||||||||
Assets: | ||||||||||||||
Interest rate cap | $ | 27 | $ | — | $ | 27 | $ | — | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Liabilities: | ||||||||||||||
Acquisition-related contingent consideration | $ | 2,580 | $ | — | $ | — | $ | 2,580 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Schedule of changes in the fair value of contingent consideration related to acquisitions | ||||||||||||||
Fair Value | ||||||||||||||
Measurements | ||||||||||||||
Using Significant | ||||||||||||||
Unobservable Inputs | ||||||||||||||
(Level 3) | ||||||||||||||
(in thousands) | ||||||||||||||
Total | ||||||||||||||
Beginning balance December 31, 2013 | $ | 2,580 | ||||||||||||
Fair value related adjustments | 2,075 | |||||||||||||
Present value accretion | 189 | |||||||||||||
Payments | (3,728 | ) | ||||||||||||
| | | | | ||||||||||
Ending balance December 31, 2014 | $ | 1,116 | ||||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
INCOME TAXES | |||||||||||
Schedule of income (loss) before income taxes | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Income (loss) before income taxes | |||||||||||
United States | $ | (20,892 | ) | $ | 12,273 | $ | 32,148 | ||||
Foreign | 15,040 | 4,832 | 3,258 | ||||||||
| | | | | | | | | | | |
Total | $ | (5,852 | ) | $ | 17,105 | $ | 35,406 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of income tax expense (benefit) | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Current: | |||||||||||
Federal | $ | (6,735 | ) | $ | 9,121 | $ | 9,447 | ||||
State | (362 | ) | 1,849 | 1,221 | |||||||
Foreign | 3,120 | 1,542 | 838 | ||||||||
| | | | | | | | | | | |
Total current | (3,977 | ) | 12,512 | 11,506 | |||||||
| | | | | | | | | | | |
Deferred: | |||||||||||
Federal | 2,599 | (4,687 | ) | 946 | |||||||
State | (3,270 | ) | (1,724 | ) | 619 | ||||||
Foreign | 133 | (106 | ) | (92 | ) | ||||||
| | | | | | | | | | | |
Total deferred | (538 | ) | (6,517 | ) | 1,473 | ||||||
| | | | | | | | | | | |
Total income tax expense (benefit) | $ | (4,515 | ) | $ | 5,995 | $ | 12,979 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of income tax expense (benefit) and resulting effective tax rate by jurisdiction | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Income tax expense (benefit) by jurisdiction: | |||||||||||
United States | $ | (7,768 | ) | $ | 4,559 | $ | 12,233 | ||||
Foreign | 3,253 | 1,436 | 746 | ||||||||
| | | | | | | | | | | |
Consolidated income tax expense (benefit) | $ | (4,515 | ) | $ | 5,995 | $ | 12,979 | ||||
| | | | | | | | | | | |
Effective income tax rate by jurisdiction: | |||||||||||
United States | 37.2 | % | 37.1 | % | 38.1 | % | |||||
Foreign | 21.6 | % | 29.7 | % | 22.9 | % | |||||
Consolidated effective tax rate | 77.2 | % | 35 | % | 36.7 | % | |||||
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, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Income tax expense (benefit) at the statutory rate | $ | (2,048 | ) | $ | 5,987 | $ | 12,392 | ||||
Change in taxes resulting from: | |||||||||||
State income taxes, net of federal tax effect | (1,922 | ) | 81 | 1,136 | |||||||
Foreign tax and change in foreign valuation allowance | (2,032 | ) | (322 | ) | (394 | ) | |||||
Permanent differences | 1,189 | 797 | 578 | ||||||||
Uncertain tax positions | (112 | ) | 447 | — | |||||||
Research and development credits | (513 | ) | (676 | ) | (239 | ) | |||||
Nondeductible compensation | 411 | — | — | ||||||||
Share-based compensation | 469 | — | — | ||||||||
Domestic production activities deduction | (5 | ) | (422 | ) | (568 | ) | |||||
Other | 48 | 103 | 74 | ||||||||
| | | | | | | | | | | |
Total income tax expense (benefit) | $ | (4,515 | ) | $ | 5,995 | $ | 12,979 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
(in thousands) | |||||||||||
Deferred tax assets: | |||||||||||
Allowance for doubtful accounts | $ | 1,379 | $ | 1,661 | |||||||
Share-based compensation | 6,206 | 10,474 | |||||||||
Intangible assets | 2,408 | 2,653 | |||||||||
Deferred rent | 426 | 527 | |||||||||
Accrued liabilities | 4,765 | 2,094 | |||||||||
Cash flow hedges | 1,067 | — | |||||||||
Other | 195 | — | |||||||||
Foreign loss carryforwards | 831 | 639 | |||||||||
State net operating loss carryforwards | 3,579 | 838 | |||||||||
Valuation allowances | (1,903 | ) | (808 | ) | |||||||
| | | | | | | | ||||
Total deferred tax assets | 18,953 | 18,078 | |||||||||
| | | | | | | | ||||
Deferred tax liabilities: | |||||||||||
Prepaid expenses | (1,875 | ) | (2,199 | ) | |||||||
Intangible assets | (33,655 | ) | (33,300 | ) | |||||||
Property and equipment and software development costs | (11,324 | ) | (11,321 | ) | |||||||
Deferred debt discharge income | (1,985 | ) | (2,649 | ) | |||||||
Other | — | (100 | ) | ||||||||
| | | | | | | | ||||
Total deferred tax liabilities | (48,839 | ) | (49,569 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | $ | (29,886 | ) | $ | (31,491 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
Schedule of net deferred tax liability | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
(in thousands) | |||||||||||
Current deferred income taxes | $ | 4,625 | $ | 3,824 | |||||||
Other long-term assets | 139 | 243 | |||||||||
Long-term deferred income tax liability | (34,650 | ) | (35,558 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | $ | (29,886 | ) | $ | (31,491 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
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): | ||||||||||
2014 | 2013 | 2012 | |||||||||
Unrecognized tax benefits as of January 1 | $ | 5,326 | $ | 4,639 | $ | 4,164 | |||||
Gross increases for prior year tax positions | 190 | 243 | 1,266 | ||||||||
Gross decreases for prior year tax positions | (60 | ) | (53 | ) | — | ||||||
Gross increase for current year tax positions | 197 | 530 | 323 | ||||||||
Settlements | — | (33 | ) | (755 | ) | ||||||
Lapse of statute of limitations | (533 | ) | — | (359 | ) | ||||||
| | | | | | | | | | | |
Unrecognized tax benefits at December 31 | $ | 5,120 | $ | 5,326 | $ | 4,639 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
NET INCOME PER SHARE | |||||||||||
Schedule of computation of basic and diluted net income per share | |||||||||||
2014 | 2013 | 2012 | |||||||||
(In thousands, except | |||||||||||
per share data) | |||||||||||
Net income (loss) | $ | (1,337 | ) | $ | 11,110 | $ | 22,427 | ||||
Less: amounts allocated to nonvested shares | — | (113 | ) | (268 | ) | ||||||
| | | | | | | | | | | |
Income available to common stockholders | $ | (1,337 | ) | $ | 10,997 | $ | 22,159 | ||||
Weighted average common shares outstanding—basic | 35,512 | 35,434 | 35,497 | ||||||||
Effect of dilutive securities | — | 868 | 876 | ||||||||
| | | | | | | | | | | |
Weighted average common shares outstanding—diluted | 35,512 | 36,302 | 36,373 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Basic income (loss) per common share | $ | (0.04 | ) | $ | 0.31 | $ | 0.62 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Diluted income (loss) per common share | $ | (0.04 | ) | $ | 0.3 | $ | 0.61 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
SHAREBASED_COMPENSATION_Tables
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
SHARE-BASED COMPENSATION. | ||||||||||||||
Schedule of share-based compensation expense | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(in thousands) | ||||||||||||||
Direct cost of operating revenue | $ | 2,359 | $ | 660 | $ | 201 | ||||||||
Selling, general and administrative | 10,739 | 9,348 | 6,518 | |||||||||||
| | | | | | | | | | | ||||
Pre-tax share-based compensation expense | 13,098 | 10,008 | 6,719 | |||||||||||
Income tax benefit | (5,508 | ) | (4,135 | ) | (2,908 | ) | ||||||||
| | | | | | | | | | | ||||
Total share-based compensation expense, net of tax | $ | 7,590 | $ | 5,873 | $ | 3,811 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Schedule of weighted-average assumptions used and the weighted-average fair value per option granted | ||||||||||||||
Year Ended | ||||||||||||||
December 31, | ||||||||||||||
2014 | 2012 | |||||||||||||
Expected life of stock option in years | 7.0 | 6.8 | ||||||||||||
Expected volatility | 36 | % | 39 | % | ||||||||||
Risk-free interest rate | 2.1 | % | 1.1 | % | ||||||||||
Dividend yield | 2.5 | % | 2.3 | % | ||||||||||
Weighted average grant-date fair value | $ | 4.33 | $ | 3.51 | ||||||||||
Summary of option activity | A summary of option activity during the year ended December 31, 2014 is presented below (shares and aggregate intrinsic value in thousands): | |||||||||||||
Shares | Weighted | Weighted | Aggregate | |||||||||||
Average | Average | Intrinsic | ||||||||||||
Exercise Price | Contractual | Value | ||||||||||||
Term | ||||||||||||||
Outstanding, beginning of period | 3,825 | $ | 13.32 | |||||||||||
Granted | 143 | 14.38 | ||||||||||||
Exercised | (1,128 | ) | 11.7 | |||||||||||
Forfeited and expired | (489 | ) | 15.67 | |||||||||||
| | | | | | | | | | | | | | |
Outstanding, end of period | 2,351 | $ | 13.66 | 3.68 | $ | 8,117 | ||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Options vested and expected to vest, end of period | 2,304 | $ | 13.67 | 3.58 | $ | 7,937 | ||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Options exercisable, end of period | 1,888 | $ | 13.76 | 2.74 | $ | 6,346 | ||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Summary of information about stock options outstanding | Additional information regarding stock option exercises appears in the table below (in millions): | |||||||||||||
As of December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
Intrinsic value of stock options exercised | $ | 3.7 | $ | 8.7 | $ | 2.2 | ||||||||
Cash received from option exercises | $ | 12.5 | $ | 3.0 | $ | 0.9 | ||||||||
Tax benefit realized from options exercised during the annual period | $ | 1.6 | $ | 6.7 | $ | 2.6 | ||||||||
Summary of nonvested share activity | Summary restricted stock activity is presented in the table below (shares in thousands): | |||||||||||||
Shares | Weighted | |||||||||||||
Average Grant | ||||||||||||||
Date Fair | ||||||||||||||
Value | ||||||||||||||
Non-vested at December 31, 2013 | 364 | $ | 12.48 | |||||||||||
Granted | 1,109 | 15.05 | ||||||||||||
Vested | (670 | ) | 13.49 | |||||||||||
Forfeited/Canceled | (225 | ) | 15.01 | |||||||||||
| | | | | | | | |||||||
Non-vested at December 31, 2014 | 578 | $ | 15.23 | |||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
ACQUISITIONS_Tables
ACQUISITIONS (Tables) (Minus - 10) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Minus - 10 | |||||
Acquisitions | |||||
Schedule of the purchase price of acquisition | |||||
(in thousands) | |||||
Cash paid at closing | $ | 302 | |||
Net working capital liability | 17 | ||||
Deferred cash consideration | 43 | ||||
Fair value of contingent consideration | 933 | ||||
| | | | | |
Total purchase price | $ | 1,295 | |||
| | | | | |
| | | | | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | |||||
(in thousands) | |||||
Intangible assets: | |||||
Acquired technology | $ | 1,142 | |||
Goodwill | 153 | ||||
| | | | | |
Net assets acquired | $ | 1,295 | |||
| | | | | |
| | | | | |
SEGMENT_REPORTING_Tables
SEGMENT REPORTING (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
SEGMENT REPORTING | ||||||||||||||
Summary of segment information | ||||||||||||||
Year Ended December 31, 2014 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Operating revenues | $ | 297,679 | $ | 146,439 | $ | — | $ | 444,118 | ||||||
Intersegment revenue | 2,045 | — | (2,045 | ) | — | |||||||||
| | | | | | | | | | | | | | |
Operating revenues including intersegment revenue | 299,724 | 146,439 | (2,045 | ) | 444,118 | |||||||||
Reimbursable expenses | 2,540 | 27,812 | — | 30,352 | ||||||||||
| | | | | | | | | | | | | | |
Total revenues | 302,264 | 174,251 | (2,045 | ) | 474,470 | |||||||||
Direct costs, selling, general and administrative expenses | 218,255 | 121,085 | (2,045 | ) | 337,295 | |||||||||
| | | | | | | | | | | | | | |
Segment performance measure | $ | 84,009 | $ | 53,166 | $ | — | $ | 137,175 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
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, selling, general and administrative expenses | 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, selling, general and administrative expenses | 125,182 | 122,359 | (203 | ) | 247,338 | |||||||||
| | | | | | | | | | | | | | |
Segment performance measure | $ | 73,526 | $ | 52,221 | $ | — | $ | 125,747 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Schedule of reconciliation of segment performance measure to income (loss) before income taxes | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(in thousands) | ||||||||||||||
Segment performance measure | $ | 137,175 | $ | 138,409 | $ | 125,747 | ||||||||
Corporate and unallocated expenses | (62,557 | ) | (47,587 | ) | (36,021 | ) | ||||||||
Share-based compensation expense | (13,098 | ) | (10,008 | ) | (6,719 | ) | ||||||||
Depreciation and software and leasehold amortization | (36,042 | ) | (30,971 | ) | (27,399 | ) | ||||||||
Amortization of identifiable intangible assets | (12,655 | ) | (18,834 | ) | (26,588 | ) | ||||||||
Fair value adjustment to contingent consideration | (1,142 | ) | (2,580 | ) | 17,188 | |||||||||
Intangible asset impairment expense | — | — | (1,777 | ) | ||||||||||
Other operating income (expense) | (880 | ) | 791 | 220 | ||||||||||
| | | | | | | | | | | ||||
Consolidated income from operations | 10,801 | 29,220 | 44,651 | |||||||||||
Interest expense, net | (16,653 | ) | (12,115 | ) | (9,245 | ) | ||||||||
| | | | | | | | | | | ||||
Income (loss) before income taxes | $ | (5,852 | ) | $ | 17,105 | $ | 35,406 | |||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Schedule of total assets by segment | ||||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
(in thousands) | ||||||||||||||
Assets | ||||||||||||||
Technology | $ | 342,596 | $ | 369,135 | ||||||||||
Bankruptcy and Settlement Administration | 286,889 | 281,073 | ||||||||||||
Corporate and unallocated | 108,767 | 97,573 | ||||||||||||
| | | | | | | | |||||||
Total assets | $ | 738,252 | $ | 747,781 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Schedule of capital expenditures (including software development costs) by segment | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(in thousands) | ||||||||||||||
Capital Expenditures | ||||||||||||||
Technology | $ | 15,477 | $ | 22,234 | $ | 14,153 | ||||||||
Bankruptcy and Settlement Administration | 2,596 | 3,161 | 4,010 | |||||||||||
Corporate and unallocated | 17,966 | 15,312 | 4,391 | |||||||||||
| | | | | | | | | | | ||||
Total capital expenditures | $ | 36,039 | $ | 40,707 | $ | 22,554 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Schedule of revenue, determined by the location providing the services, by geographical area | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(in thousands) | ||||||||||||||
Revenue | ||||||||||||||
United States | $ | 410,768 | $ | 431,615 | $ | 346,454 | ||||||||
United Kingdom | 49,710 | 45,962 | 23,356 | |||||||||||
Other countries | 13,992 | 4,506 | 3,275 | |||||||||||
| | | | | | | | | | | ||||
Total revenue | $ | 474,470 | $ | 482,083 | $ | 373,085 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Schedule of long-lived assets, excluding intangible assets, by geographical area | ||||||||||||||
Year Ended | ||||||||||||||
December 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
(in thousands) | ||||||||||||||
Long-lived assets | ||||||||||||||
United States | $ | 78,921 | $ | 84,384 | ||||||||||
Other countries | 6,371 | 3,935 | ||||||||||||
| | | | | | | | |||||||
Total long-lived assets | $ | 85,292 | $ | 88,319 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
SUPPLEMENTAL_QUARTERLY_FINANCI1
SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Quarterly Financial Data | |||||||||||||||||
Schedule of Quarterly Financial Information | |||||||||||||||||
First | Second | Third | Fourth | Total | |||||||||||||
(in thousands, except per share data) | |||||||||||||||||
Year ended December 31, 2014 | |||||||||||||||||
Operating revenue | $ | 116,220 | $ | 115,451 | $ | 103,955 | $ | 108,492 | $ | 444,118 | |||||||
Total revenue | $ | 123,271 | $ | 125,056 | $ | 111,006 | $ | 115,137 | $ | 474,470 | |||||||
Gross profit(1) | $ | 53,240 | $ | 51,970 | $ | 49,725 | $ | 50,546 | $ | 205,481 | |||||||
Net income (loss) | $ | (2,298 | ) | $ | (3,419 | ) | $ | 5,010 | $ | (630 | ) | $ | (1,337 | ) | |||
Net income (loss) per share—Basic(2) | $ | (0.07 | ) | $ | (0.10 | ) | $ | 0.14 | $ | (0.02 | ) | $ | (0.04 | ) | |||
Net income (loss) per share—Diluted(2) | $ | (0.07 | ) | $ | (0.10 | ) | $ | 0.14 | $ | (0.02 | ) | $ | (0.04 | ) | |||
Year ended December 31, 2013 | |||||||||||||||||
Operating revenue | $ | 102,908 | $ | 104,976 | $ | 109,837 | $ | 120,969 | $ | 438,690 | |||||||
Total revenue | $ | 123,590 | $ | 113,372 | $ | 115,684 | $ | 129,437 | $ | 482,083 | |||||||
Gross profit(1) | $ | 47,743 | $ | 51,933 | $ | 53,958 | $ | 60,208 | $ | 213,842 | |||||||
Net income | $ | 3,937 | $ | 2,842 | $ | 4,235 | $ | 96 | $ | 11,110 | |||||||
Net income per share—Basic(2) | $ | 0.11 | $ | 0.08 | $ | 0.12 | $ | 0 | $ | 0.31 | |||||||
Net income per share—Diluted(2) | $ | 0.11 | $ | 0.08 | $ | 0.11 | $ | 0 | $ | 0.3 | |||||||
-1 | Gross profit is calculated as total revenue less direct cost of operating revenue, reimbursed direct costs, and the portion of depreciation and software amortization attributable to direct costs of services. | ||||||||||||||||
-2 | The sum of the quarters' net income per share may not equal the total of the respective year's net income per share as each quarter is calculated independently. | ||||||||||||||||
NATURE_OF_OPERATIONS_AND_SUMMA2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 01, 2013 | |
item | ||||
Goodwill | ||||
Number of events indicating impairment of goodwill | 0 | |||
Goodwill | $404,187,000 | $404,302,000 | $404,211,000 | |
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, Internally Developed Software, Amortization and Leasehold Amortization | 36,042,000 | 30,971,000 | 27,399,000 | |
Foreign Currency Translation | ||||
Cumulative translation adjustments included in accumulated other comprehensive loss | $3,000,000 | $500,000 | $1,400,000 | |
Minimum | ||||
Intangible Assets | ||||
Useful lives of intangible assets | 5 years | |||
Maximum | ||||
Intangible Assets | ||||
Useful lives of intangible assets | 10 years |
PROPERTY_AND_EQUIPMENT_Details
PROPERTY AND EQUIPMENT (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | $180,396,000 | $173,474,000 |
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Accumulated Depreciation | -109,817,000 | -101,356,000 |
Property and equipment, net | 70,579,000 | 72,118,000 |
Land | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 1,247,000 | 1,247,000 |
Building and building and leasehold improvements | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 23,428,000 | 22,127,000 |
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 | 8,796,000 | 7,712,000 |
Estimated Useful Life | 5 years | |
Computer equipment and purchased software | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 131,229,000 | 110,449,000 |
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Accumulated Depreciation | -4,000,000 | -5,700,000 |
Assets acquired under capital leases | 4,400,000 | 8,200,000 |
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 | 5,027,000 | 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 | 6,267,000 | 6,122,000 |
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 | $4,402,000 | $18,295,000 |
INTERNALLY_DEVELOPED_SOFTWARE_1
INTERNALLY DEVELOPED SOFTWARE (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Capitalized software development costs | |||
Amounts capitalized, beginning of year | $68,862,000 | $62,962,000 | |
Development costs capitalized | 7,154,000 | 6,061,000 | |
Dispositions | -44,000 | -161,000 | |
Amounts capitalized, end of year | 75,972,000 | 68,862,000 | |
Accumulated amortization, end of year | -61,259,000 | -52,661,000 | |
Internally developed software, net | 14,713,000 | 16,201,000 | |
Capitalized software development costs for projects in progress | 1,000,000 | 3,700,000 | |
Amortization expense recognized related to capitalized software development costs | $8,600,000 | $8,800,000 | $8,600,000 |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Jan. 01, 2013 |
Change in the carrying amount of goodwill | |||
Balance at the beginning of period | $404,302 | $404,211 | |
Purchase price adjustments | 153 | ||
Foreign currency translation | -268 | 91 | |
Balance at the end of period | 404,187 | 404,302 | |
Technology | |||
Change in the carrying amount of goodwill | |||
Balance at the beginning of period | 189,339 | 189,248 | |
Foreign currency translation | -268 | 91 | |
Balance at the end of period | 189,071 | 189,339 | |
Bankruptcy and Settlement Administration Segment | |||
Change in the carrying amount of goodwill | |||
Balance at the beginning of period | 214,963 | 214,963 | 214,963 |
Purchase price adjustments | 153 | ||
Balance at the end of period | $215,116 | $214,963 |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Amortizing and Non-amortizing intangible assets | |||
Gross Carrying Amount | $151,192 | $150,050 | |
Accumulated Amortization | 121,587 | 108,933 | |
Intangible asset impairment expense | 1,777 | ||
Amortization of identifiable intangible assets | 12,655 | 18,834 | 26,588 |
Customer relationships | |||
Amortizing and Non-amortizing intangible assets | |||
Gross Carrying Amount | 124,512 | 124,512 | |
Accumulated Amortization | 100,840 | 90,274 | |
Customer relationships | Weighted Average | |||
Amortizing and Non-amortizing intangible assets | |||
Weighted average life | 6 years 10 months 24 days | ||
Trade names | |||
Amortizing and Non-amortizing intangible assets | |||
Gross Carrying Amount | 6,591 | 6,591 | |
Accumulated Amortization | 3,312 | 2,481 | |
Weighted average life | 7 years 10 months 24 days | ||
Technology | |||
Amortizing and Non-amortizing intangible assets | |||
Gross Carrying Amount | 1,142 | ||
Accumulated Amortization | 86 | ||
Weighted average life | 10 years | ||
Non-compete agreements | |||
Amortizing and Non-amortizing intangible assets | |||
Gross Carrying Amount | 18,947 | 18,947 | |
Accumulated Amortization | $17,349 | $16,178 | |
Weighted average life | 5 years |
GOODWILL_AND_INTANGIBLE_ASSETS4
GOODWILL AND INTANGIBLE ASSETS (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Estimated future amortization expense related to intangible assets | ||
2015 | $10,007 | |
2016 | 6,346 | |
2017 | 5,504 | |
2018 | 3,548 | |
2019 | 2,870 | |
2020 and thereafter | 1,330 | |
Total | $29,605 | $41,117 |
LONGTERM_OBLIGATIONS_Details
LONG-TERM OBLIGATIONS (Details) (USD $) | 3 Months Ended | 9 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | |||
Mar. 31, 2014 | Dec. 31, 2014 | Apr. 30, 2014 | Dec. 31, 2014 | Apr. 01, 2014 | Mar. 26, 2014 | Aug. 27, 2013 | Dec. 31, 2013 | Mar. 25, 2014 | Jan. 26, 2015 | Nov. 30, 2014 | |
item | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Total long-term obligations, including current portion | $313,481,000 | $313,481,000 | $312,457,000 | ||||||||
Total current maturities of long-term obligations | -10,959,000 | -10,959,000 | -13,349,000 | ||||||||
Long-term obligations (excluding current maturities) | 302,522,000 | 302,522,000 | 299,108,000 | ||||||||
Contingent consideration paid | 3,500,000 | ||||||||||
Interest rate cap | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Fair value of derivative | 27,000 | ||||||||||
Interest rate swap | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Changes in fair value of derivative included in accumulated other comprehensive income | 2,500,000 | ||||||||||
Fair value of the interest rate swap, liability | 2,500,000 | 2,500,000 | |||||||||
Proceeds received on settlement | 0 | ||||||||||
Jupiter eSources LLC | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Potential undiscounted amount of all future payments, minimum | 0 | 0 | |||||||||
Potential undiscounted amount of all future payments, maximum | 10,000,000 | 10,000,000 | |||||||||
Amount of potential contingent consideration recorded | 0 | 0 | |||||||||
De Novo Legal LLC | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Cash payment made to sellers on settlement of dispute | 1,500,000 | ||||||||||
Adjustment to contingent consideration liability | 1,500,000 | ||||||||||
De Novo Legal LLC | Current maturities of long-term obligations | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Adjustment to contingent consideration liability | 1,100,000 | ||||||||||
De Novo Legal LLC | Other Accrued Liabilities Current | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Adjustment to contingent consideration liability | 400,000 | ||||||||||
De Novo Legal LLC | Contingent consideration - purchase price consideration | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Contingent consideration paid | 3,500,000 | ||||||||||
Amount of potential contingent consideration recorded | 0 | 0 | |||||||||
Minus - 10 | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Amount withheld as security at the acquisition date for potential indemnification claims | 43,000 | ||||||||||
Period for payment of potential indemnification claims | 14 months | ||||||||||
Number of discrete measurement periods | 7 | ||||||||||
Fair value of contingent consideration | 1,100,000 | 1,100,000 | 933,000 | ||||||||
Contingent consideration liability, discount rate (as a percent) | 25.00% | ||||||||||
Maximum | Interest rate cap | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Fair value of derivative | 1,000 | 1,000 | |||||||||
Credit Facility | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Aggregate amount of funds available | 400,000,000 | ||||||||||
Maximum borrowing capacity subject at the entity's option, subject to compliance with covenants | 600,000,000 | ||||||||||
Reduction in term loan interest rate (as a percent) | 0.50% | ||||||||||
Threshold leverage ratio for determination of annual mandatory prepayments | 2.75 | ||||||||||
Net leverage ratio, maximum | 4.5 | 4.5 | |||||||||
Net leverage ratio, maximum | 4.25 | 4.25 | |||||||||
Maximum percentage of net income that can be paid as dividends and repurchase securities | 50.00% | ||||||||||
Deferred financing costs | 9,700,000 | 9,700,000 | |||||||||
Senior secured term loan | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Total long-term obligations, including current portion | 296,250,000 | 296,250,000 | 299,250,000 | ||||||||
Total current maturities of long-term obligations | -3,574,000 | -3,574,000 | -3,000,000 | ||||||||
Weighted average interest rate (as a percent) | 4.25% | 4.25% | |||||||||
Principal amount of debt issued | 300,000,000 | ||||||||||
Maximum borrowing capacity subject at the entity's option, subject to compliance with covenants | 500,000,000 | ||||||||||
Payments of the principal amount of debt quarterly | 750,000 | ||||||||||
Senior secured term loan | Interest rate cap | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Term of derivative contract | 2 years | ||||||||||
Notional amount | 150,000,000 | ||||||||||
Strike rate (as a percent) | 3.00% | ||||||||||
Ineffectiveness gain (loss) recognized in earnings | 0 | ||||||||||
Senior secured term loan | Interest rate swap | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Value of caplets expired | 0 | ||||||||||
Senior secured term loan | Interest rate swap | Forward | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Notional amount | 73,700,000 | ||||||||||
Strike rate (as a percent) | 2.81% | ||||||||||
Basis spread on variable rate basis, floor | 0.75% | ||||||||||
Senior secured term loan | Subsequent event | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Deferred financing costs | 600,000 | ||||||||||
Senior secured term loan | Prime rate | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Basis points added to reference rate (as a percent) | 2.50% | 2.75% | |||||||||
Variable interest rate basis | prime rate | prime rate | |||||||||
Interest rate, variable interest rate floor | 1.75% | 2.00% | |||||||||
Senior secured term loan | Prime rate | Subsequent event | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Basis points added to reference rate (as a percent) | 2.75% | ||||||||||
Variable interest rate basis | prime rate | ||||||||||
Interest rate, variable interest rate floor | 1.75% | ||||||||||
Senior secured term loan | LIBOR | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Basis points added to reference rate (as a percent) | 3.50% | 3.50% | 3.75% | ||||||||
Variable interest rate basis | one, two, three or six month LIBOR | one, two, three or six month LIBOR | |||||||||
Interest rate, variable interest rate floor | 0.75% | 0.75% | 1.00% | ||||||||
Aggregate floating rate (as a percent) | 4.25% | 4.25% | |||||||||
Senior secured term loan | LIBOR | Subsequent event | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Basis points added to reference rate (as a percent) | 3.75% | ||||||||||
Variable interest rate basis | one, two, three or six month LIBOR | ||||||||||
Interest rate, variable interest rate floor | 0.75% | ||||||||||
Increase in applicable margin | 0.25 | ||||||||||
Senior revolving loan | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Total long-term obligations, including current portion | 0 | 0 | |||||||||
Aggregate amount of funds available | 100,000,000 | ||||||||||
Maximum borrowing capacity subject at the entity's option, subject to compliance with covenants | 200,000,000 | ||||||||||
Number of rate options | 2 | ||||||||||
Senior revolving loan | Prime rate | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Variable interest rate basis | prime rate | ||||||||||
Senior revolving loan | Prime rate | Minimum | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Basis points added to reference rate (as a percent) | 2.00% | ||||||||||
Senior revolving loan | Prime rate | Maximum | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Basis points added to reference rate (as a percent) | 3.00% | ||||||||||
Senior revolving loan | LIBOR | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Variable interest rate basis | LIBOR | ||||||||||
Senior revolving loan | LIBOR | Minimum | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Basis points added to reference rate (as a percent) | 3.00% | ||||||||||
Senior revolving loan | LIBOR | Maximum | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Basis points added to reference rate (as a percent) | 4.00% | ||||||||||
Capital leases | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Total long-term obligations, including current portion | 3,177,000 | 3,177,000 | 6,548,000 | ||||||||
Total current maturities of long-term obligations | -2,749,000 | -2,749,000 | -3,690,000 | ||||||||
Weighted average interest rate (as a percent) | 3.10% | 3.10% | |||||||||
Notes payable | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Total long-term obligations, including current portion | 12,895,000 | 12,895,000 | 4,079,000 | ||||||||
Total current maturities of long-term obligations | -4,593,000 | -4,593,000 | -4,079,000 | ||||||||
Weighted average interest rate (as a percent) | 2.20% | 2.20% | |||||||||
Interest rate bearing notes payable (as a percent) | 3.85% | ||||||||||
Acquisition-related liabilities | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Total long-term obligations, including current portion | 1,159,000 | 1,159,000 | 2,580,000 | ||||||||
Total current maturities of long-term obligations | -43,000 | -43,000 | -2,580,000 | ||||||||
Contingent consideration | Minus - 10 | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Total long-term obligations, including current portion | 43,000 | 43,000 | |||||||||
Deferred acquisition price | De Novo Legal LLC | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Total long-term obligations, including current portion | 2,580,000 | ||||||||||
Deferred acquisition price | Minus - 10 | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Total current maturities of long-term obligations | -1,116,000 | -1,116,000 | |||||||||
Letters of credit | |||||||||||
LONG-TERM OBLIGATIONS | |||||||||||
Total long-term obligations, including current portion | $1,000,000 | $1,000,000 |
LONGTERM_OBLIGATIONS_Details_2
LONG-TERM OBLIGATIONS (Details 2) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Maturity of long-term obligations consisting of senior secured term loan, acquisition-related liabilities, and capitalized leases | |
2015 | $10,959 |
2016 | 7,892 |
2017 | 6,770 |
2018 | 3,071 |
2019 | 3,000 |
Thereafter | 281,789 |
Total | $313,481 |
OPERATING_LEASES_Details
OPERATING LEASES (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Total Future Minimum Lease Payments | |||
2015 | $9,666,000 | ||
2016 | 7,226,000 | ||
2017 | 5,402,000 | ||
2018 | 5,238,000 | ||
2019 | 5,265,000 | ||
Thereafter | 24,958,000 | ||
Total minimum lease payments | 57,755,000 | ||
Expense related to operating leases | $11,400,000 | $12,600,000 | $11,500,000 |
EQUITY_Details
EQUITY (Details) (USD $) | 0 Months Ended | 12 Months Ended | ||||
Sep. 18, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 01, 2012 | Nov. 06, 2013 | |
Share Repurchases | ||||||
Value of shares of common stock repurchased under stock repurchase program | $22,881,000 | $3,299,000 | ||||
Number of common stock repurchased to satisfy employee tax withholding obligations (in Shares) | 323,090 | 471,248 | 217,713 | |||
Value of common stock repurchased to satisfy employee tax withholding obligations | 3,982,000 | 6,515,000 | 2,689,000 | |||
Dividend | ||||||
Cash dividends declared on outstanding shares of common stock (in dollars per share) | $0.36 | $0.36 | $0.39 | |||
Total dividends declared | 13,000,000 | 12,800,000 | 13,800,000 | |||
Cash dividends paid on outstanding shares of common stock (in dollars per share) | $0.36 | $0.36 | $0.35 | |||
Total dividends paid | 12,793,000 | 12,891,000 | 12,386,000 | |||
Shareholder Rights Agreement | ||||||
Preferred stock purchase right dividend declared | 1 | |||||
Number of preferred shares callable by each right | 0.001 | |||||
Preferred stock purchase right consideration | $40 | |||||
Preferred stock purchace rights the Board may reedem per right | 0.001 | |||||
Minimum percent of beneficial ownership of common stock acquired for preferred stock rights to become exercisable under the agreement | 10.00% | |||||
Preferred stock purchase right dilutive effect on earnings | 0 | |||||
2012 Program | ||||||
Share Repurchases | ||||||
Authorized amount under stock repurchase program | 35,000,000 | |||||
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 | 22,900,000 | 3,300,000 | ||||
Weighted average cost of common stock repurchased (in dollars per share) | $12.94 | $11.62 | ||||
2014 Share Repurchase Program | ||||||
Share Repurchases | ||||||
Authorized amount under stock repurchase program | $35,000,000 | |||||
Number of shares of common stock repurchased under stock repurchase program | 0 | |||||
Minimum number of plans to be utilized with brokers or banks for pre-authorized purchases | 1 |
EQUITY_Details_2
EQUITY (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Balance | ($541) | ($1,432) | ($1,987) |
Other comprehensive income (loss) | -3,821 | 891 | 555 |
Balance | -4,362 | -541 | -1,432 |
Reclassifications from Accumulated other comprehensive income (loss) | 0 | 0 | 0 |
Foreign Currency Translation | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Balance | -541 | -1,432 | -1,987 |
Other comprehensive income (loss) | -2,411 | 891 | 555 |
Balance | -2,952 | -541 | -1,432 |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Other comprehensive income (loss) | -1,410 | ||
Balance | ($1,410) |
EMPLOYEE_BENEFIT_PLANS_Details
EMPLOYEE BENEFIT PLANS (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
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 | $3 | $2.50 | $2 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 3 Months Ended | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Assets and liabilities measured and recorded at fair value on a recurring basis | |||||
Contingent consideration paid | $3,500,000 | ||||
Acquisition-related contingent consideration | 313,481,000 | 312,457,000 | |||
De Novo Legal LLC | |||||
Assets and liabilities measured and recorded at fair value on a recurring basis | |||||
Cash payment made to sellers on settlement of dispute | 1,500,000 | ||||
Contingent consideration - purchase price consideration | De Novo Legal LLC | |||||
Assets and liabilities measured and recorded at fair value on a recurring basis | |||||
Contingent consideration paid | 3,500,000 | ||||
Interest rate swap | |||||
Assets and liabilities measured and recorded at fair value on a recurring basis | |||||
Variable rate basis | 1 month LIBOR | ||||
Significant Other Observable Inputs (Level 2) | |||||
Assets and liabilities measured and recorded at fair value on a recurring basis | |||||
Total Liabilities | 2,451,000 | ||||
Recurring Basis | Carrying Value | |||||
Assets and liabilities measured and recorded at fair value on a recurring basis | |||||
Derivative asset | 27,000 | ||||
Acquisition-related liability | 1,116,000 | ||||
Total Liabilities | 3,567,000 | ||||
Acquisition-related contingent consideration | 2,580,000 | ||||
Recurring Basis | Carrying Value | Interest rate cap | |||||
Assets and liabilities measured and recorded at fair value on a recurring basis | |||||
Derivative asset | 1,000 | ||||
Recurring Basis | Carrying Value | Interest rate swap | |||||
Assets and liabilities measured and recorded at fair value on a recurring basis | |||||
Interest rate swap | 2,451,000 | ||||
Recurring Basis | Significant Other Observable Inputs (Level 2) | |||||
Assets and liabilities measured and recorded at fair value on a recurring basis | |||||
Interest rate swap | 2,451,000 | ||||
Recurring Basis | Significant Other Observable Inputs (Level 2) | Interest rate cap | |||||
Assets and liabilities measured and recorded at fair value on a recurring basis | |||||
Derivative asset | 1,000 | 27,000 | |||
Recurring Basis | Significant Unobservable Inputs (Level 3) | |||||
Assets and liabilities measured and recorded at fair value on a recurring basis | |||||
Acquisition-related liability | 1,116,000 | ||||
Total Liabilities | 1,116,000 | ||||
Acquisition-related contingent consideration | $2,580,000 |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details 2) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2014 |
Minus - 10 | |
Change in the acquisition-related contingent consideration obligation | |
Contingent consideration liability, discount rate (as a percent) | 25.00% |
Contingent consideration | |
Change in the acquisition-related contingent consideration obligation | |
Balance at the beginning of period | 2,580 |
Increase in fair value related to Minus 10 acquisition | 2,075 |
Increase in fair value related to accretion of obligation | 189 |
Payments | -3,728 |
Balance at the end of period | 1,116 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income before income taxes | |||
United States | ($20,892) | $12,273 | $32,148 |
Foreign | 15,040 | 4,832 | 3,258 |
Total | -5,852 | 17,105 | 35,406 |
Currently payable income taxes | |||
Federal | -6,735 | 9,121 | 9,447 |
State | -362 | 1,849 | 1,221 |
Foreign | 3,120 | 1,542 | 838 |
Total | -3,977 | 12,512 | 11,506 |
Deferred income taxes | |||
Federal | 2,599 | -4,687 | 946 |
State | -3,270 | -1,724 | 619 |
Foreign | 133 | -106 | -92 |
Total | -538 | -6,517 | 1,473 |
Reconciliation of the provision for income taxes at the statutory rate to the provision for income taxes at effective rate | |||
Income before income taxes | -5,852 | 17,105 | 35,406 |
Provision for income taxes | -4,515 | 5,995 | 12,979 |
Summary effective tax rate, domestic | 35.00% | ||
Summary effective tax rate, consolidated | 77.20% | 35.00% | 36.70% |
Computed at the statutory rate | -2,048 | 5,987 | 12,392 |
State income taxes, net of federal tax effect | -1,922 | 81 | 1,136 |
Foreign tax and change in foreign valuation allowance | -2,032 | -322 | -394 |
Permanent differences | 1,189 | 797 | 578 |
Uncertain tax positions | -112 | 447 | |
Research and development credits | -513 | -676 | -239 |
Nondeductible compensation | 411 | ||
Share-based compensation | 469 | ||
Domestic production activities deduction | -5 | -422 | -568 |
Other | 48 | 103 | 74 |
Deferred tax assets: | |||
Allowance for doubtful accounts | 1,379 | 1,661 | |
Share-based compensation | 6,206 | 10,474 | |
Intangible assets | 2,408 | 2,653 | |
Deferred rent | 426 | 527 | |
Accrued liabilities | 4,765 | 2,094 | |
Cash flow hedges | 1,067 | ||
Other | 195 | ||
Foreign loss carryforwards | 831 | 639 | |
State net operating loss carryforwards | 3,579 | 838 | |
Valuation allowances | -1,903 | -808 | |
Total deferred tax assets | 18,953 | 18,078 | |
Deferred tax liabilities: | |||
Prepaid expenses | -1,875 | -2,199 | |
Intangible assets | -33,655 | -33,300 | |
Property and equipment and software development costs | -11,324 | -11,321 | |
Deferred debt discharge income | -1,985 | -2,649 | |
Other | -100 | ||
Total deferred tax liabilities | -48,839 | -49,569 | |
Net deferred tax liability | -29,886 | -31,491 | |
United Kingdom | |||
Reconciliation of the provision for income taxes at the statutory rate to the provision for income taxes at effective rate | |||
Combined statutory federal and state income tax rate | 22.00% | ||
United States. | |||
Reconciliation of the provision for income taxes at the statutory rate to the provision for income taxes at effective rate | |||
Provision for income taxes | -7,768 | 4,559 | 12,233 |
Combined statutory federal and state income tax rate | 42.00% | ||
Summary effective tax rate, domestic | 37.20% | 37.10% | 38.10% |
Foreign | |||
Reconciliation of the provision for income taxes at the statutory rate to the provision for income taxes at effective rate | |||
Provision for income taxes | $3,253 | $1,436 | $746 |
Summary effective tax rate, foreign | 21.60% | 29.70% | 22.90% |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2009 | |
Deferred debt discharge income included in taxable income | ||||
Tax expense related to tax detriments exceeding available tax benefit pool of stock option plans | $500,000 | |||
Increase in equity on realization of deferred tax assets | 200,000 | |||
Tax benefit related to prior period | 200,000 | |||
Net deferred tax liability | ||||
Current deferred income taxes | 4,625,000 | 3,824,000 | ||
Other long-term assets | 139,000 | 243,000 | ||
Long-term deferred income tax liability | -34,650,000 | -35,558,000 | ||
Net deferred tax liability | -29,886,000 | -31,491,000 | ||
Undistributed amount of foreign subsidiaries | 23,900,000 | |||
Research credits | ||||
Deferred debt discharge income included in taxable income | ||||
Amount of tax credit carryforward | 500,000 | 500,000 | ||
HPIP tax credit | ||||
Deferred debt discharge income included in taxable income | ||||
Amount of tax credit carryforward | 1,800,000 | |||
Period of carry forward of tax credit | 16 years | |||
Valuation allowance against tax credits | 900,000 | |||
Federal | ||||
Net operating loss | ||||
Operating loss carryforwards | 15,000,000 | |||
Income tax receivable from prior tax period | 5,000,000 | |||
Income tax receivable from current tax period | 2,900,000 | |||
State | ||||
Net operating loss | ||||
Operating loss carryforwards | 44,900,000 | |||
Operating loss carryforwards generated in state in which entity no longer maintains a presence or a filing obligation | 4,700,000 | |||
Valuation allowance relating to operating loss carryforwards | 200,000 | |||
New international | ||||
Net operating loss | ||||
Operating loss carryforwards | 2,300,000 | |||
Valuation allowance relating to operating loss carryforwards | 800,000 | |||
Encore Discovery Solutions | ||||
Net operating loss | ||||
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 |
INCOME_TAXES_Details_3
INCOME TAXES (Details 3) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
INCOME TAXES | |||
Unrecognized tax benefits including penalty and interest | $6,300,000 | $6,400,000 | $5,400,000 |
Unrecognized tax benefits, which if recognized would affect effective tax rate | 5,100,000 | 5,200,000 | 4,400,000 |
Activity related to gross unrecognized tax benefits excluding interest and penalties | |||
Unrecognized Tax Benefits at the beginning of the period | 5,326,000 | 4,639,000 | 4,164,000 |
Gross increases for prior year tax positions | 190,000 | 243,000 | 1,266,000 |
Gross decreases for prior year tax positions | -60,000 | -53,000 | |
Gross increase for current year tax positions | 197,000 | 530,000 | 323,000 |
Settlements | -33,000 | -755,000 | |
Lapse of statute of limitations | -533,000 | -359,000 | |
Unrecognized Tax Benefits at the end of the period | $5,120,000 | $5,326,000 | $4,639,000 |
INCOME_TAXES_Details_4
INCOME TAXES (Details 4) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | |||
INCOME TAXES | |||
Unrecognized tax benefits that will affect the effective tax rate | $5.10 | $5.20 | $4.40 |
State | |||
INCOME TAXES | |||
Unrecognized tax benefits that will affect the effective tax rate | 0.8 | ||
Unrecognized tax benefits that will be recognized in next twelve months | 0.6 | ||
Federal | |||
INCOME TAXES | |||
Unrecognized tax benefits that will affect the effective tax rate | $0.20 |
INCOME_TAXES_Details_5
INCOME TAXES (Details 5) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
INCOME TAXES | |||
Interest and penalties on income tax | $0.20 | $0.20 | $0.10 |
Accrued interest | 1 | 0.8 | |
Accrued penalties | $0.20 | $0.20 |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
NET INCOME PER SHARE | |||||||||||
Net income (loss) | ($630) | $5,010 | ($3,419) | ($2,298) | $96 | $4,235 | $2,842 | $3,937 | ($1,337) | $11,110 | $22,427 |
Less: amounts allocated to nonvested shares | -113 | -268 | |||||||||
Basic net income (loss) available to common stockholders | ($1,337) | $10,997 | $22,159 | ||||||||
Weighted Average Common Shares Outstanding (Denominator) | |||||||||||
Weighted Average Common Shares Outstanding Basic | 35,512,000 | 35,434,000 | 35,497,000 | ||||||||
Effect on weighted average common shares outstanding from dilutive securities | 868,000 | 876,000 | |||||||||
Weighted Average Common Shares Outstanding Diluted | 35,512,000 | 36,302,000 | 36,373,000 | ||||||||
Per Share Amount | |||||||||||
Basic net income (loss) available to common stockholders (in dollars per share) | ($0.02) | $0.14 | ($0.10) | ($0.07) | $0 | $0.12 | $0.08 | $0.11 | ($0.04) | $0.31 | $0.62 |
Diluted net income (loss) available to common stockholders (in dollars per share) | ($0.02) | $0.14 | ($0.10) | ($0.07) | $0 | $0.11 | $0.08 | $0.11 | ($0.04) | $0.30 | $0.61 |
Antidilutive securities excluded from computation of diluted net income per share | |||||||||||
Anti-dilutive securities (in shares) | 3,400,000 | 2,000,000 | 3,100,000 |
SHAREBASED_COMPENSATION_Detail
SHARE-BASED COMPENSATION (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
SHARE-BASED COMPENSATION | |||
Pre-tax share-based compensation expense | $13,098 | $10,008 | $6,719 |
Income tax benefit | -5,508 | -4,135 | -2,908 |
Total share-based compensation expense, net of tax | 7,590 | 5,873 | 3,811 |
Direct cost of services | |||
SHARE-BASED COMPENSATION | |||
Pre-tax share-based compensation expense | 2,359 | 660 | 201 |
Selling, general and administrative expense | |||
SHARE-BASED COMPENSATION | |||
Pre-tax share-based compensation expense | $10,739 | $9,348 | $6,518 |
SHAREBASED_COMPENSATION_Detail1
SHARE-BASED COMPENSATION (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
SHARE-BASED COMPENSATION | |||
Share-based compensation expense | $13,098,000 | $10,008,000 | $6,719,000 |
Accrued compensation | 18,673,000 | 17,932,000 | |
Stock options | |||
SHARE-BASED COMPENSATION | |||
Vesting period | 7 years | ||
Granted (in shares) | 143,000 | 0 | |
Outstanding, end of period (in dollars per share) | $13.66 | ||
Unrecognized compensation cost related to outstanding, unvested stock options and restricted stock | 1,800,000 | ||
Weighted average recognition period of unrecognized compensation cost | 2 years 6 months | ||
Expiration period of stock options | 10 years | ||
Weighted-average assumptions used and the weighted-average fair value per option granted | |||
Expected life of stock option | 7 years | 6 years 9 months 18 days | |
Expected volatility (as a percent) | 36.00% | 39.00% | |
Risk-free interest rate (as a percent) | 2.10% | 1.10% | |
Dividend yield (as a percent) | 2.50% | 2.30% | |
Weighted average grant-date fair value (in dollars per share) | $4.33 | $3.51 | |
Shares | |||
Outstanding, beginning of period (in shares) | 3,825,000 | ||
Granted (in shares) | 143,000 | 0 | |
Exercised (in shares) | -1,128,000 | ||
Forfeited and expired (in shares) | -489,000 | ||
Outstanding, end of period (in shares) | 2,351,000 | ||
Number of shares expected to vest | 2,304,000 | ||
Options exercisable, end of period (in shares) | 1,888,000 | ||
Weighted Average Exercise Price | |||
Outstanding, beginning of period (in dollars per share) | $13.32 | ||
Granted (in dollars per share) | $14.38 | ||
Exercised (in dollars per share) | $11.70 | ||
Forfeited and expired (in dollars per share) | $15.67 | ||
Outstanding, end of period (in dollars per share) | $13.66 | ||
Options vested and expected to vest, end of period (in dollars per share) | $13.67 | ||
Options exercisable, end of period (in dollars per share) | $13.76 | ||
Weighted Average Contractual Term | |||
Outstanding, end of period | 3 years 8 months 5 days | ||
Options vested and expected to vest, end of period | 3 years 6 months 29 days | ||
Options exercisable, end of period | 2 years 8 months 27 days | ||
Aggregate Intrinsic Value | |||
Outstanding, end of period | 8,117,000 | ||
Options vested and expected to vest, end of period | 7,937,000 | ||
Options exercisable, end of period | 6,346,000 | ||
Nonvested share awards | |||
SHARE-BASED COMPENSATION | |||
Restricted stock granted (in shares) | 1,109,000 | 527,600 | 430,000 |
Weighted-average grant date price (in dollars per share) | $15.05 | $12.90 | $11.85 |
Awards forfeited (in shares) | 225,000 | ||
Remaining restricted stock (in shares) | 578,000 | 364,000 | |
Vesting period | 12 months | ||
Unrecognized compensation cost related to outstanding, unvested stock options and restricted stock | 5,300,000 | ||
Weighted average recognition period of unrecognized compensation cost | 3 years | ||
Aggregate Intrinsic Value | |||
Number of shares that vested one year from the grant date | 670,000 | ||
Nonvested share awards | Vest one year after and upon certification of achievement of performance criteria by the compensation committee of the Board | |||
SHARE-BASED COMPENSATION | |||
Restricted stock granted (in shares) | 62,069 | ||
Nonvested share awards | Vest one to three years | Maximum | |||
SHARE-BASED COMPENSATION | |||
Vesting period | 3 years | ||
Nonvested share awards | Vest one to three years | Minimum | |||
SHARE-BASED COMPENSATION | |||
Vesting period | 1 year | ||
2004 Plan | |||
SHARE-BASED COMPENSATION | |||
Limits in the grants of awards (in shares) | 7,500,000 | ||
Number of shares available for future grants | 1,100,000 | ||
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% | ||
Strategic Executive Incentive Plan | Nonvested share awards | Vest one year after and upon certification of achievement of performance criteria by the compensation committee of the Board | |||
SHARE-BASED COMPENSATION | |||
Restricted stock granted (in shares) | 219,730 | ||
Employee performance-based annual incentive compensation awards | Performance-based awards | |||
SHARE-BASED COMPENSATION | |||
Share-based compensation expense | 6,500,000 | ||
Share Price | $17.08 | ||
Number of shares which are equivalent to the award made during the period | 381,000 | ||
Accrued compensation | $1,400,000 |
SHAREBASED_COMPENSATION_Detail2
SHARE-BASED COMPENSATION (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Exercises of Stock Options | |||
Intrinsic value of stock options exercised | $3.70 | $8.70 | $2.20 |
Cash received from option exercises | 12.5 | 3 | 0.9 |
Tax benefit realized from options exercised during the annual period | $1.60 | $6.70 | $2.60 |
SHAREBASED_COMPENSATION_Detail3
SHARE-BASED COMPENSATION (Details 4) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Year ended December 31, 2013 grants | Vest upon issuance | |||
Shares | |||
Granted (in shares) | 164,100 | ||
Year ended December 31, 2013 grants | Vest in one year | |||
Shares | |||
Granted (in shares) | 33,500 | ||
Weighted Average Grant Date Fair Value | |||
Vesting period | 1 year | ||
Nonvested share awards | |||
Shares | |||
Nonvested, beginning of period (in shares) | 364,000 | ||
Granted (in shares) | 1,109,000 | 527,600 | 430,000 |
Vested (in shares) | -670,000 | ||
Forfeited/Canceled | -225,000 | ||
Outstanding, end of period (in shares) | 578,000 | 364,000 | |
Weighted Average Grant Date Fair Value | |||
Nonvested, beginning of period (in dollars per shares) | $12.48 | ||
Weighted-average grant date price (in dollars per share) | $15.05 | $12.90 | $11.85 |
Vested (in dollars per shares) | $13.49 | ||
Forfeited/Canceled | $15.01 | ||
Outstanding, end of period (in dollars per shares) | $15.23 | $12.48 | |
Vesting period | 12 months | ||
Nonvested share awards | Vest one year after and upon certification of achievement of performance criteria by the compensation committee of the Board | |||
Shares | |||
Granted (in shares) | 62,069 | ||
Nonvested share awards | Vest in one to three years | |||
Shares | |||
Granted (in shares) | 277,500 | ||
Nonvested share awards | Year ended December 31, 2013 grants | Vest one year after and upon certification of achievement of performance criteria by the compensation committee of the Board | |||
Shares | |||
Granted (in shares) | 330,000 | ||
Strategic Executive Incentive Plan | Nonvested share awards | Vest one year after and upon certification of achievement of performance criteria by the compensation committee of the Board | |||
Shares | |||
Granted (in shares) | 219,730 | ||
Appointment Of Executive Officer | |||
Shares | |||
Granted (in shares) | 100,000 | ||
Weighted Average Grant Date Fair Value | |||
Vesting period | 3 years | ||
Appointment Of Executive Officer | Nonvested share awards | |||
Shares | |||
Granted (in shares) | 75,000 | ||
Appointment Of Executive Officer | Nonvested share awards | Vest upon issuance | |||
Shares | |||
Granted (in shares) | 25,000 |
ACQUISITIONS_Details
ACQUISITIONS (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||
Dec. 31, 2014 | Apr. 01, 2014 | Dec. 31, 2013 | Jan. 01, 2013 | |
item | ||||
Intangible assets: | ||||
Goodwill | 404,187,000 | $404,302,000 | $404,211,000 | |
Non-compete agreements | ||||
Intangible assets: | ||||
Amortization period | 5 years | |||
Minus - 10 | ||||
Acquisitions | ||||
Cash paid at closing | 302,000 | |||
Net working capital liability | 17,000 | |||
Deferred cash consideration | 43,000 | |||
Fair value of contingent consideration | 1,100,000 | 933,000 | ||
Total purchase price | 1,295,000 | |||
Number of discrete measurement periods | 7 | |||
Amount withheld as security at the acquisition date for potential indemnification claims | 43,000 | |||
Fair value of contingent consideration in Long-term obligations | 1,100,000 | |||
Intangible assets: | ||||
Acquired technology | 1,142,000 | |||
Goodwill | 153,000 | |||
Net assets acquired | $1,295,000 | |||
Amortization period | 10 years |
SEGMENT_REPORTING_Details
SEGMENT REPORTING (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
segment | ||||||||||||
SEGMENT REPORTING | ||||||||||||
Number of reporting segments | 2 | |||||||||||
Revenues: | ||||||||||||
Operating revenues | $108,492 | $103,955 | $115,451 | $116,220 | $120,969 | $109,837 | $104,976 | $102,908 | $444,118 | $438,690 | $344,750 | |
Reimbursable expenses | 30,352 | 43,393 | 28,335 | |||||||||
Total Revenue | 115,137 | 111,006 | 125,056 | 123,271 | 129,437 | 115,684 | 113,372 | 123,590 | 474,470 | 482,083 | 373,085 | |
Segment performance measure | 137,175 | 138,409 | 125,747 | |||||||||
Technology | ||||||||||||
Revenues: | ||||||||||||
Operating revenues | 297,679 | 284,929 | 196,959 | |||||||||
Intersegment revenue | 2,045 | 384 | 203 | |||||||||
Bankruptcy and Settlement Administration Segment | ||||||||||||
Revenues: | ||||||||||||
Operating revenues | 146,439 | 153,761 | 147,791 | |||||||||
Operating segment | ||||||||||||
Revenues: | ||||||||||||
Direct costs, selling, general and administrative costs | 337,295 | 343,674 | 247,338 | |||||||||
Segment performance measure | 137,175 | 138,409 | 125,747 | |||||||||
Operating segment | Technology | ||||||||||||
Revenues: | ||||||||||||
Operating revenues | 299,724 | 285,313 | 197,162 | |||||||||
Reimbursable expenses | 2,540 | 2,488 | 1,546 | |||||||||
Total Revenue | 302,264 | 287,801 | 198,708 | |||||||||
Direct costs, selling, general and administrative costs | 218,255 | 198,462 | 125,182 | |||||||||
Segment performance measure | 84,009 | 89,339 | 73,526 | |||||||||
Operating segment | Bankruptcy and Settlement Administration Segment | ||||||||||||
Revenues: | ||||||||||||
Operating revenues | 146,439 | 153,761 | 147,791 | |||||||||
Reimbursable expenses | 27,812 | 40,905 | 26,789 | |||||||||
Total Revenue | 174,251 | 194,666 | 174,580 | |||||||||
Direct costs, selling, general and administrative costs | 121,085 | 145,596 | 122,359 | |||||||||
Segment performance measure | 53,166 | 49,070 | 52,221 | |||||||||
Eliminations | ||||||||||||
Revenues: | ||||||||||||
Operating revenues | -2,045 | -384 | -203 | |||||||||
Intersegment revenue | -2,045 | -384 | -203 | |||||||||
Total Revenue | -2,045 | -384 | -203 | |||||||||
Direct costs, selling, general and administrative costs | ($2,045) | ($384) | ($203) |
SEGMENT_REPORTING_Details_2
SEGMENT REPORTING (Details 2) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Reconciliation of our segment performance measure to income (loss) before income taxes | ||||
Segment performance measure | $137,175 | $138,409 | $125,747 | |
Corporate and unallocated expenses | -62,557 | -47,587 | -36,021 | |
Share-based compensation expense | -13,098 | -10,008 | -6,719 | |
Depreciation and software and leasehold amortization | -36,042 | -30,971 | -27,399 | |
Amortization of intangible assets | -12,655 | -18,834 | -26,588 | |
Fair value adjustment to contingent consideration | -1,142 | -2,580 | 17,188 | |
Other operating expense | -880 | 791 | 220 | |
INCOME FROM OPERATIONS | 10,801 | 29,220 | 44,651 | |
Interest expense, net | -16,653 | -12,115 | -9,245 | |
INCOME (LOSS) BEFORE INCOME TAXES | -5,852 | 17,105 | 35,406 | |
Intangible asset impairment expense | -1,777 | |||
Operating segment | ||||
Reconciliation of our segment performance measure to income (loss) before income taxes | ||||
Segment performance measure | $137,175 | $138,409 | $125,747 |
SEGMENT_REPORTING_Details_3
SEGMENT REPORTING (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets | ||
Total consolidated assets | $738,252 | $747,781 |
Unallocated corporate | ||
Assets | ||
Total consolidated assets | 108,767 | 97,573 |
Technology | ||
Assets | ||
Total consolidated assets | 342,596 | 369,135 |
Bankruptcy and Settlement Administration Segment | ||
Assets | ||
Total consolidated assets | $286,889 | $281,073 |
SEGMENT_REPORTING_Details_4
SEGMENT REPORTING (Details 4) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Capital Expenditures | |||
Total consolidated capital expenditures | $36,039 | $40,707 | $22,554 |
Technology | |||
Capital Expenditures | |||
Total consolidated capital expenditures | 15,477 | 22,234 | 14,153 |
Bankruptcy and Settlement Administration Segment | |||
Capital Expenditures | |||
Total consolidated capital expenditures | 2,596 | 3,161 | 4,010 |
Unallocated corporate | |||
Capital Expenditures | |||
Total consolidated capital expenditures | $17,966 | $15,312 | $4,391 |
SEGMENT_REPORTING_Details_5
SEGMENT REPORTING (Details 5) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenue and long-lived assets excluding intangible assets, by geographical area | |||
Revenue | $474,470 | $482,083 | $373,085 |
Long-lived assets | 85,292 | 88,319 | |
United States | |||
Revenue and long-lived assets excluding intangible assets, by geographical area | |||
Revenue | 410,768 | 431,615 | 346,454 |
Long-lived assets | 78,921 | 84,384 | |
United Kingdom | |||
Revenue and long-lived assets excluding intangible assets, by geographical area | |||
Revenue | 49,710 | 45,962 | 23,356 |
Other countries | |||
Revenue and long-lived assets excluding intangible assets, by geographical area | |||
Revenue | 13,992 | 4,506 | 3,275 |
Long-lived assets | $6,371 | $3,935 |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Nov. 01, 2014 | |
Independent Director To Board of Directors | ||
Related Party Transaction [Line Items] | ||
Maximum reimbursement of out-of-pocket costs | $300,000 | |
Senior Vice President Corporate Relations And Business Development | ||
Related Party Transaction [Line Items] | ||
Cash compensation | $900,000 |
SUPPLEMENTAL_QUARTERLY_FINANCI2
SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Quarterly Financial Data | |||||||||||
Operating revenues | $108,492 | $103,955 | $115,451 | $116,220 | $120,969 | $109,837 | $104,976 | $102,908 | $444,118 | $438,690 | $344,750 |
Total Revenue | 115,137 | 111,006 | 125,056 | 123,271 | 129,437 | 115,684 | 113,372 | 123,590 | 474,470 | 482,083 | 373,085 |
Gross profit | 50,546 | 49,725 | 51,970 | 53,240 | 60,208 | 53,958 | 51,933 | 47,743 | 205,481 | 213,842 | |
Net income (loss) | ($630) | $5,010 | ($3,419) | ($2,298) | $96 | $4,235 | $2,842 | $3,937 | ($1,337) | $11,110 | $22,427 |
Basic | ($0.02) | $0.14 | ($0.10) | ($0.07) | $0 | $0.12 | $0.08 | $0.11 | ($0.04) | $0.31 | $0.62 |
Diluted | ($0.02) | $0.14 | ($0.10) | ($0.07) | $0 | $0.11 | $0.08 | $0.11 | ($0.04) | $0.30 | $0.61 |
SCHEDULE_II_VALUATION_AND_QUAL1
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Allowance for doubtful receivables | |||
VALUATION AND QUALIFYING ACCOUNTS | |||
Balance at the beginning of the period | $4,379 | $4,825 | $4,514 |
Additions, Charged to costs and expenses | 3,552 | 2,411 | 2,223 |
Deductions from reserves | -3,945 | -2,857 | -1,912 |
Balance at the end of the period | 3,986 | 4,379 | 4,825 |
Deferred tax valuation allowance | |||
VALUATION AND QUALIFYING ACCOUNTS | |||
Balance at the beginning of the period | 808 | 101 | 172 |
Additions, Charged to costs and expenses | 1,127 | 776 | |
Deductions from reserves | -32 | -69 | -71 |
Balance at the end of the period | $1,903 | $808 | $101 |
Uncategorized_Items
Uncategorized Items | 1/1/14 | 1/1/13 | ||||
USD ($) | USD ($) | |||||
[us-gaap_CapitalizedComputerSoftwareGross] | 68,862,000 | |||||
[us-gaap_UnrecognizedTaxBenefits] | 5,326,000 | 4,639,000 | ||||
[us-gaap_ValuationAllowancesAndReservesBalance] | 4,825,000 | 101,000 | 4,379,000 | 808,000 |