Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 18, 2013 | |
Document and Entity Information | ||
Entity Registrant Name | EPIQ SYSTEMS INC | |
Entity Central Index Key | 1027207 | |
Document Type | 10-Q | |
Document Period End Date | 30-Sep-13 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 34,761,564 | |
Document Fiscal Year Focus | 2013 | |
Document Fiscal Period Focus | Q3 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
REVENUE: | ||||
Operating revenue | $109,837 | $83,865 | $317,721 | $256,529 |
Reimbursable expenses | 5,847 | 7,122 | 34,925 | 20,825 |
Total Revenue | 115,684 | 90,987 | 352,646 | 277,354 |
OPERATING EXPENSE: | ||||
Direct cost of operating revenue (exclusive of depreciation and amortization shown separately below) | 52,126 | 34,346 | 154,150 | 107,425 |
Reimbursed direct costs | 5,565 | 6,891 | 33,179 | 20,179 |
Selling, general and administrative expense | 35,162 | 26,988 | 104,521 | 87,252 |
Depreciation and software and leasehold amortization | 8,192 | 6,755 | 22,582 | 20,006 |
Amortization of identifiable intangible assets | 4,761 | 6,804 | 14,463 | 20,325 |
Fair value adjustment to contingent consideration | -11,717 | -17,188 | ||
Intangible asset impairment expense | 1,777 | |||
Other operating income | -855 | -759 | -225 | |
Total Operating Expense | 104,951 | 70,067 | 328,136 | 239,551 |
INCOME FROM OPERATIONS | 10,733 | 20,920 | 24,510 | 37,803 |
INTEREST EXPENSE (INCOME): | ||||
Interest expense | 4,101 | 1,926 | 7,944 | 7,365 |
Interest income | -2 | -5 | -14 | -12 |
Net Interest Expense | 4,099 | 1,921 | 7,930 | 7,353 |
INCOME BEFORE INCOME TAXES | 6,634 | 18,999 | 16,580 | 30,450 |
PROVISION FOR INCOME TAXES | 2,399 | 7,733 | 5,566 | 11,988 |
NET INCOME | $4,235 | $11,266 | $11,014 | $18,462 |
NET INCOME PER SHARE INFORMATION: | ||||
Basic (in dollars per share) | $0.12 | $0.31 | $0.31 | $0.51 |
Diluted (in dollars per share) | $0.11 | $0.31 | $0.30 | $0.50 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||
Basic (in shares) | 35,684 | 35,438 | 35,738 | 35,505 |
Diluted (in shares) | 36,497 | 36,344 | 36,634 | 36,427 |
Cash dividends declared per common share (in dollars per share) | $0.09 | $0.09 | $0.27 | $0.21 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
NET INCOME | $4,235 | $11,266 | $11,014 | $18,462 |
Other comprehensive income: | ||||
Foreign currency translation adjustment, net of tax | 1,437 | 485 | 412 | 572 |
COMPREHENSIVE INCOME | $5,672 | $11,751 | $11,426 | $19,034 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
CURRENT ASSETS: | ||
Cash and cash equivalents | $37,520 | $3,808 |
Trade accounts receivable, less allowance for doubtful accounts of $5,721 and $4,825, respectively | 142,352 | 103,415 |
Prepaid expenses | 8,654 | 9,967 |
Other current assets | 1,140 | 3,414 |
Total Current Assets | 189,666 | 120,604 |
LONG-TERM ASSETS: | ||
Property and equipment, net | 67,375 | 44,552 |
Internally developed software costs, net | 17,233 | 18,905 |
Goodwill | 404,204 | 404,211 |
Other intangibles, net of accumulated amortization of $104,562 and $90,099, respectively | 45,488 | 59,951 |
Other long-term assets | 12,724 | 6,493 |
Total Long-term Assets | 547,024 | 534,112 |
Total Assets | 736,690 | 654,716 |
CURRENT LIABILITIES: | ||
Current maturities of long-term obligations | 11,059 | 9,151 |
Accounts payable | 17,112 | 17,351 |
Accrued compensation | 12,041 | 5,086 |
Customer deposits | 2,147 | 16,094 |
Deferred revenue | 4,544 | 3,131 |
Dividends payable | 3,170 | 3,231 |
Other accrued liabilities | 7,375 | 6,905 |
Total Current Liabilities | 57,448 | 60,949 |
LONG-TERM LIABILITIES: | ||
Deferred income taxes | 38,773 | 41,409 |
Other long-term liabilities | 5,454 | 5,700 |
Long-term obligations, excluding current maturities | 300,969 | 203,288 |
Total Long-term Liabilities | 345,196 | 250,397 |
COMMITMENTS AND CONTINGENCIES | ||
EQUITY: | ||
Preferred stock - $1 par value; 2,000,000 shares authorized; none issued and outstanding | ||
Common stock - $0.01 par value; 100,000,000 shares authorized; Issued and outstanding at September 30, 2013 - 40,298,852 and 35,296,518 shares, respectively Issued and outstanding at December 31, 2012 - 39,923,852 and 35,922,509 shares, respectively | 403 | 399 |
Additional paid-in capital | 292,580 | 291,065 |
Accumulated other comprehensive loss | -1,020 | -1,432 |
Retained earnings | 105,749 | 104,445 |
Treasury stock, at cost - 5,002,334 and 4,001,343 shares, respectively | -63,666 | -51,107 |
Total Equity | 334,046 | 343,370 |
Total Liabilities and Equity | $736,690 | $654,716 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Trade accounts receivable, allowance for doubtful accounts (in dollars) | $5,721 | $4,825 |
Other intangibles, accumulated amortization (in dollars) | $104,562 | $90,099 |
Preferred stock, par value (in dollars per share) | $1 | $1 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 40,298,852 | 39,923,852 |
Common stock, shares outstanding | 35,296,518 | 35,922,509 |
Treasury stock, shares | 5,002,334 | 4,001,343 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $11,014 | $18,462 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation and software and leasehold amortization | 22,582 | 20,006 |
Amortization of intangible assets | 14,463 | 20,325 |
Share-based compensation expense | 5,696 | 5,134 |
Provision for doubtful accounts | 1,632 | 1,776 |
Loan fee amortization and write-off | 1,559 | 537 |
Fair value adjustment to contingent consideration | -17,188 | |
Intangible asset impairment expense | 1,777 | |
Accretion of discount | 1,138 | |
Deferred income tax (benefit) expense | -1,538 | 4,614 |
Other, net | -796 | -112 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | -40,268 | -16,698 |
Prepaid expenses and other assets | 1,490 | 3,448 |
Accounts payable and other liabilities | 5,742 | -2,746 |
Customer deposits | -13,947 | 2,275 |
Deferred revenue | 1,413 | 303 |
Excess tax benefit related to share-based compensation | -322 | |
Other | -128 | -474 |
Net cash provided by operating activities | 8,592 | 42,577 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | -28,087 | -12,591 |
Internally developed software costs | -4,875 | -4,843 |
Proceeds from sale of assets | 5 | 491 |
Other investing activities, net | 187 | |
Net cash used in investing activities | -32,957 | -16,756 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from the issuance of long-term debt | 300,000 | |
Proceeds from revolver borrowings | 88,000 | 59,000 |
Payments to reduce revolver borrowings | -287,000 | -59,000 |
Debt issuance costs | -8,105 | |
Payments under long-term obligations | -5,761 | -5,736 |
Payment of deferred acquisition consideration | -3,139 | -8,400 |
Excess tax benefit related to share-based compensation | 322 | |
Common stock repurchases (Note 9) | -17,793 | -5,939 |
Cash dividends paid (Note 9) | -9,771 | -5,925 |
Proceeds from exercise of stock options | 969 | 617 |
Net cash provided by (used in) financing activities | 57,722 | -25,383 |
Effect of exchange rate changes on cash | 355 | 69 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 33,712 | 507 |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 3,808 | 2,838 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $37,520 | $3,345 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS | 9 Months Ended |
Sep. 30, 2013 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS | NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS |
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America, and with the rules and regulations for reporting on Form 10-Q for interim financial statements. Accordingly, the financial statements do not include certain disclosures required for comprehensive annual financial statements. | |
The unaudited financial information reflects all adjustments, which are, in the opinion of management, necessary to present fairly our results of operations, financial position, and cash flows for the periods presented. Prior year amounts have been reclassified to conform to the current year presentation. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related Notes included in the Epiq Systems, Inc. (“Epiq,” “we,” “us,” or “our”) Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission (“SEC”) on March 5, 2013. | |
The results of operations for any quarter or a partial fiscal year period are not necessarily indicative of the results to be expected for other periods or the entire year. | |
Principles of Consolidation | |
The Condensed Consolidated Financial Statements include the accounts of Epiq and our wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. | |
Nature of Operations | |
We provide integrated technology solutions for the legal profession. Our solutions are designed to streamline the administration of bankruptcy, litigation, investigations, financial transactions and regulatory compliance matters. We offer innovative managed technology solutions for eDiscovery, document review, legal notification, claims administration and controlled disbursement of funds. Our clients include leading law firms, corporate legal departments, bankruptcy trustees, government agencies, mortgage processors, and financial institutions. | |
Revenue Recognition | |
We have agreements with clients pursuant to which we deliver various services each month. | |
Following is a description of significant sources of revenue: | |
· Fees contingent upon the month-to-month delivery of services defined by client contracts, such as claims processing, claims reconciliation, professional services, call center support, disbursement services, project management, collection and forensic services, consulting services, document review services and conversion of data into an organized, searchable electronic database. The amount we earn varies based primarily on the size and complexity of the engagement, the number of hours of professional services provided and the number of documents or volume of data processed or reviewed. | |
· Data hosting fees and volume-based fees. | |
· Deposit-based and service fees. Deposit-based fees are earned based on a percentage of Chapter 7 assets placed on deposit with designated financial institutions by our trustee clients to whom we provide, at no charge, software licenses, limited hardware and hardware maintenance, and postcontract customer support services. The fees earned based on assets placed on deposit by our trustee clients may vary based on fluctuations in short-term interest rates and changes in service fees assessed on such deposits. | |
· Legal noticing services to parties of interest in bankruptcy, class action and other administrative matters including direct notification and media campaign and advertising management in which we coordinate notification, primarily through print media outlets to potential parties of interest for a particular client engagement. | |
· Monitoring and noticing fees earned based on monthly or on-demand requests for information provided through our AACER® software product. | |
· Reimbursed expenses, primarily related to postage on mailing services and other pass-through expenses. | |
Non-Software Arrangements | |
Certain of our services are billed based on unit prices and volumes for which we have identified each deliverable service element. Based on our evaluation of each element, we have determined that each element delivered has standalone value to our customers because we or other vendors sell such services separately from any other services and deliverables. For certain of these services we have obtained objective and reliable evidence of the fair value of each element based either on the price we charge when we sell an element on a standalone basis or on third-party evidence of fair value of such similar services. For elements where evidence cannot be established, the best estimate of sales price has been used. Our arrangements do not include general rights of return. Accordingly, each of the service elements in our multiple element case and document management arrangements qualifies as a separate unit of accounting. We allocate revenue to the various units of accounting in our arrangements based on the fair value or best estimated selling price of each unit of accounting, which is generally consistent with the stated prices in our arrangements. In instances when revenue recognition is deferred, we utilize the relative selling price method to calculate the revenue recognized for each period. As we have evidence of an arrangement, revenue for each separate unit of accounting is recognized each period. Revenue is recognized as the services are rendered, our fee becomes fixed and determinable, and collectability is reasonably assured. Payments received in advance of satisfaction of the related revenue recognition criteria are recognized as a customer deposit 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 postcontract customer support services, all at no charge to the trustee. The trustees place their liquidated estate deposits with a financial institution with which we have an arrangement. We earn contingent monthly fees from the financial institutions based on the average dollar amount of deposits held by the trustees with that financial institution related to the software license, hardware lease, hardware maintenance, and postcontract customer support services provided to our trustee clients. The monthly deposit fees have two components consisting of an interest-based component and a non-interest based service fee. 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 postcontract customer support services. Revenue related to postcontract customer support is entirely contingent on the placement of liquidated estate deposits by the trustee with the financial institution. Accordingly, we recognize this contingent usage based revenue as the fee becomes fixed or determinable at the time actual usage occurs and collectability is probable. This occurs monthly as a result of the computation, billing and collection of monthly deposit fees contractually agreed to. At that time, we have also satisfied the other revenue recognition criteria since we have persuasive evidence that an arrangement exists, services have been rendered, the price is fixed and determinable, and collectability is reasonably assured. | |
We also provide our trustee clients with certain hardware, such as desktop computers, monitors, and printers as well as hardware maintenance. We retain ownership of all hardware provided and we account for this hardware as a lease. As the hardware maintenance arrangement is an executory contract similar to an operating lease, we use guidance related to contingent rentals in operating lease arrangements for hardware maintenance as well as for the hardware lease. Since the payments under all of our arrangements are contingent upon the level of trustee deposits and the delivery of upgrades and other services, and there remain important uncertainties regarding the amount of unreimbursable costs yet to be incurred by us, we account for the hardware lease as an operating lease. Therefore, all lease payments, based on the estimated fair value of hardware provided, were accounted for as contingent rentals, which requires that we recognize rental income when the changes in the factor on which the contingent lease payment is based actually occur. This occurs at the end of each period as we achieve our target when deposits are held at the 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. | |
Reimbursements | |
We have revenue related to reimbursed expenses, primarily postage. Reimbursed postage and other reimbursable direct costs are recorded gross in the Condensed Consolidated Statements of Income as “Reimbursable expenses” and “Reimbursed direct costs”, in the revenue and operating expenses sections, respectively. | |
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. In the first quarter of 2013, we reorganized our internal management reporting structure. Under the new structure, we began reporting our financial performance for our two reportable segments: the Technology segment and the Bankruptcy and Settlement Administration segment. The composition of the segment previously called eDiscovery remains unchanged and is now referred to as the Technology segment (“Technology”). The former Bankruptcy segment and Settlement Administration segment were combined and are now reported as the Bankruptcy and Settlement Administration segment (“Bankruptcy and Settlement Administration”). We assess goodwill for impairment on 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. At the time of the prior year’s goodwill impairment testing, we had identified our three operating segments as our reporting units (eDiscovery, Bankruptcy, and Settlement Administration). At the time of the change in reporting units during the first quarter of 2013, we evaluated our goodwill balance and determined that there was no impairment of goodwill as a result of the change in reporting units. | |
Goodwill is assessed between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, a change in strategic direction, legal factors, operating performance indicators, a change in the competitive environment, the sale or disposition of a significant portion of a reporting unit, or future economic factors such as unfavorable changes in our stock price and market capitalization or unfavorable changes in the estimated future discounted cash flows of our reporting units. Our annual test is performed as of July 31 each year, and there have been no events since our last annual test to indicate that it is more likely than not that the recorded goodwill balance had become impaired. As of July 31, 2013, which is the date of our most recent impairment test, the fair value of each of our reporting units was in excess of the carrying value of the reporting unit. Our consolidated goodwill totaled $404.2 million as of September 30, 2013. | |
Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. We considered both a market approach and an income approach in order to develop an estimate of the fair value of each reporting unit for purposes of our annual impairment test. When available, and as appropriate, we used 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 estimated 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 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, which is used to determine our discount rate, and through our stock price, which is used to determine our market capitalization. We may be required to recognize impairment of goodwill based on future economic factors such as unfavorable changes in our stock price and market capitalization or unfavorable changes in the estimated future discounted cash flows of our reporting units. | |
If we determine that the estimated fair value of any reporting unit is less than the reporting unit’s carrying value, then we proceed to the second step of the goodwill impairment analysis to measure the potential impairment charge. An impairment loss is recognized for any excess of the carrying value of the reporting unit’s goodwill over the implied fair value. If goodwill on our Condensed Consolidated Balance Sheet or Consolidated Balance Sheet becomes impaired during a future period, the resulting impairment charge could have a material impact on our results of operations and financial condition. | |
The application of judgment, such as is required to complete a goodwill impairment test, inherently involves uncertainties and as such there can be no assurances that the estimates and assumptions made for purposes of our annual goodwill impairment test will prove to be accurate predictions of the future. If assumptions regarding forecasted revenues or margins of certain of our reporting units are not achieved, we may be required to record goodwill impairment losses in future periods. It is not possible at this time to determine if any such future impairment loss would occur, and if it does occur whether such charge would be material. | |
Income Taxes | |
Our effective income tax rate for the nine months ending September 30, 2013 is lower than the U.S. federal statutory income tax rate. The lower effective tax rate is primarily due to the enactment of the 2012 American Taxpayer Relief Act which extended the federal research credit for both the 2013 and 2012 tax years. Since this law was not enacted until January 2, 2013, we have recognized approximately $0.4 million of tax benefit relating to the 2012 credits and a portion of our 2013 tax credits during 2013. In addition, we generate taxable income in foreign jurisdictions that have income tax rates lower than the U.S federal statutory income tax rate. | |
For the three month period ending September 30, 2013 and September 2012 and the nine month period ending September 30, 2012, our effective income tax rate approximated the U.S federal statutory income tax rate. | |
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | NOTE 2: GOODWILL AND INTANGIBLE ASSETS | |||||||||||||
The change in the carrying amount of goodwill for the nine months ended September 30, 2013 was as follows: | ||||||||||||||
Technology | Bankruptcy | Total | ||||||||||||
Segment | and Settlement | |||||||||||||
Administration | ||||||||||||||
Segment | ||||||||||||||
(in thousands) | ||||||||||||||
Balance as of December 31, 2012 | $ | 189,248 | $ | 214,963 | $ | 404,211 | ||||||||
Foreign currency translation | (7 | ) | — | (7 | ) | |||||||||
Balance as of September 30, 2013 | $ | 189,241 | $ | 214,963 | $ | 404,204 | ||||||||
Identifiable intangible assets as of September 30, 2013 and December 31, 2012 consisted of the following: | ||||||||||||||
September 30, 2013 | December 31, 2012 | |||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | |||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||
(in thousands) | ||||||||||||||
Amortizing intangible assets: | ||||||||||||||
Customer relationships | $ | 124,512 | $ | 86,407 | $ | 124,512 | $ | 73,713 | ||||||
Trade names | 6,591 | 2,272 | 6,591 | 1,650 | ||||||||||
Non-compete agreements | 18,947 | 15,883 | 18,947 | 14,736 | ||||||||||
Total | $ | 150,050 | $ | 104,562 | $ | 150,050 | $ | 90,099 | ||||||
Customer relationships, trade names, and non-compete agreements carry a weighted average life of seven years, eight years, and five years, respectively. | ||||||||||||||
Amortization expense related to identifiable intangible assets was $4.8 million and $6.8 million for the three months ended September 30, 2013 and 2012, respectively, and $14.5 million and $20.3 million for the nine months ended September 30, 2013 and 2012, respectively. The following table outlines the estimated future amortization expense related to intangible assets at September 30, 2013: | ||||||||||||||
(in thousands) | ||||||||||||||
Year Ending December 31, | ||||||||||||||
2013 (from October 1, 2013 to December 31, 2013) | $ | 4,371 | ||||||||||||
2014 | 12,569 | |||||||||||||
2015 | 9,893 | |||||||||||||
2016 | 6,232 | |||||||||||||
2017 | 5,390 | |||||||||||||
2018 and thereafter | 7,033 | |||||||||||||
Total | $ | 45,488 |
LONGTERM_OBLIGATIONS
LONG-TERM OBLIGATIONS | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
LONG-TERM OBLIGATIONS | ||||||||||||
LONG-TERM OBLIGATIONS | NOTE 3: LONG-TERM OBLIGATIONS | |||||||||||
The following is a summary of long-term debt and other long-term obligations outstanding (in thousands): | ||||||||||||
Final | Weighted- | September 30, | December 31, | |||||||||
Maturity | Average | 2013 | 2012 | |||||||||
Date | Interest Rate | |||||||||||
(in thousands) | ||||||||||||
Senior secured term loan | August 2020 | 4.75 | % | $ | 300,000 | $ | — | |||||
Senior revolving loan | August 2018 | — | — | 199,000 | ||||||||
Capital leases | April 2017 | 6 | % | 6,943 | 2,860 | |||||||
Note payable | October 2014 | 2.2 | % | 5,085 | 7,080 | |||||||
Acquisition-related liabilities | July 2013 | — | — | 3,499 | ||||||||
Total long-term obligations, including current portion | 312,028 | 212,439 | ||||||||||
Current maturities of long-term obligations | ||||||||||||
Senior secured term loan | 3,000 | — | ||||||||||
Capital leases | 4,002 | 1,640 | ||||||||||
Notes payable | 4,057 | 4,012 | ||||||||||
Acquisition-related liabilities | — | 3,499 | ||||||||||
Total current maturities of long-term obligations | 11,059 | 9,151 | ||||||||||
Total long-term obligations | $ | 300,969 | $ | 203,288 | ||||||||
2013 Secured Credit Facility | ||||||||||||
On August 27, 2013, we entered into a $400 million senior secured credit facility consisting of a senior revolving loan in a principal amount equal to $100 million, maturing in August 2018, and a senior secured term loan in a principal amount equal to $300 million, maturing in August 2020 (the “Credit Facility”). The Credit Facility replaces the Fourth Amended and Restated Credit and Security Agreement, dated as of April 25, 2011 (the “Former Credit Facility”). | ||||||||||||
During the term of the Credit Facility, Epiq has the right, subject to compliance with the covenants specified in the Credit Facility, to increase the Credit Facility to a maximum of $600 million including increasing the total borrowing capacity under the senior revolving loan up to a maximum of $200 million. The Credit Facility is secured by liens on our real property and a significant portion of our personal property. | ||||||||||||
Proceeds from the senior secured term loan were used to pay for, among other items, fees and expenses of approximately $8.1 million associated with the Credit Facility, and the repayment of the outstanding balance under the Former Credit Facility, which was then terminated. During the three months ended September 30, 2013, approximately $1.0 million was included in interest expense on the accompanying Condensed Consolidated Statements of Income, related to the write-off of a portion of the unamortized deferred debt issuance costs for the Former Credit Facility. Within 90 days following the August 27, 2013 closing date of the Credit Facility, we are required, under terms specified in the Credit Facility, to enter into a hedging arrangement related to protection against interest rate fluctuations. As of the filing date these financial statements were issued we have not yet entered into any hedging arrangements. | ||||||||||||
The senior secured term loan bears interest as follows: (1) 2.75% plus prime rate subject to a 2% floor; or (2) 3.75% plus one, two, three or six month LIBOR rate subject to a 1% LIBOR floor. As of September 30, 2013, all outstanding borrowings under the term loan were based on LIBOR subject to a 1% LIBOR floor and the applicable margin was 3.75%. | ||||||||||||
Borrowings under the senior revolving loan bear interest at various rates based on our total net leverage ratio with two rate options as follows: (1) for base rate advances, borrowings bear interest at prime rate plus 200 to 300 basis points; and (2) for LIBOR rate advances, borrowings bear interest at LIBOR rate plus 300 to 400 basis points. As of September 30, 2013, there were no borrowings outstanding under the senior revolving loan. | ||||||||||||
Commencing on December 31, 2013, the term loan facility requires quarterly payments of principal, in equal installments, in an aggregate principal amount equal to 0.25% per quarter, or approximately $3.0 million annually, of the original aggregate principal amount of the term loan facility and a final installment equal to the remaining principal balance in August 2020. | ||||||||||||
The Credit Facility contains a financial covenant related to a net leverage ratio (as defined in the Credit Facility) which is not permitted to exceed 4.50 to 1.00 as well as other customary covenants related to limitations on (i) creating liens, debt, guarantees or other contingent obligations, (ii) engaging in mergers, acquisitions and consolidations, (iii) paying dividends or other distributions to, and redeeming and repurchasing securities from, equity holders, (iv) prepaying, redeeming or repurchasing subordinated or junior debt, and (v) engaging in certain transactions with affiliates, in each case, subject to customary exceptions. As of September 30, 2013, we were in compliance with all covenants. | ||||||||||||
The annual maturities under the senior secured term loan, due August 2020, for the next five fiscal years and thereafter are: | ||||||||||||
(in thousands) | ||||||||||||
Year Ending December 31, | ||||||||||||
2013 | $ | 750 | ||||||||||
2014 | 3,000 | |||||||||||
2015 | 3,000 | |||||||||||
2016 | 3,000 | |||||||||||
2017 | 3,000 | |||||||||||
2018 and Thereafter | 287,250 | |||||||||||
Total | $ | 300,000 | ||||||||||
Capital Leases | ||||||||||||
We lease certain equipment under capital leases that generally require monthly payments with final maturity dates during various periods through 2017. As of September 30, 2013, our capital lease obligations had a weighted-average interest rate of approximately 6.0%. | ||||||||||||
Note Payable | ||||||||||||
During 2011 we entered into a note payable related to a software license agreement that bears interest of approximately 2.2% and is payable quarterly through October 2014. | ||||||||||||
Acquisition-related Liabilities | ||||||||||||
Amounts recorded in connection with acquisition-related liabilities as of September 30, 2013 and December 31, 2012 are as follows: | ||||||||||||
September 30, | December 31, | |||||||||||
2013 | 2012 | |||||||||||
(in thousands) | ||||||||||||
De Novo deferred acquisition price | ||||||||||||
Current portion | $ | — | $ | 3,499 | ||||||||
Total De Novo deferred acquisition price | $ | — | $ | 3,499 | ||||||||
De Novo Legal LLC | ||||||||||||
In connection with the acquisition of De Novo Legal LLC (“De Novo”) on December 28, 2011, a portion of the purchase price was deferred and was being held for potential indemnification claims. During the third quarter of 2013 we paid $3.1 million of the deferred purchase price, adjusted for indemnification claims, to the sellers. The balance remaining after payment to the sellers of $0.8 million was written off as a credit to operating expense, which is included in Other Operating Income on the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2013. | ||||||||||||
The undiscounted amount of all potential future payments that could be required under the De Novo contingent consideration opportunity is between $0 and $29.1 million over the remaining measurement period which ends on December 31, 2013. Based on our assessments of projected revenue over the remainder of the measurement period, we determined that it is not likely that any contingent consideration for De Novo will be realized and as such there is no liability recorded related to this contingent consideration as of September 30, 2013 and December 31, 2012. | ||||||||||||
Jupiter eSources LLC | ||||||||||||
The undiscounted amount of all potential future payments that could be required under the Jupiter eSources LLC (“Jupiter eSources”) contingent consideration is between $0 and $10.0 million over the remaining measurement period through December 2014. Based on our assessments of projected revenue over the remainder of the measurement period, we determined that it is not likely that any contingent consideration for Jupiter eSources will be realized and as such there is no liability recorded related to this contingent consideration as of September 30, 2013 and December 31, 2012. | ||||||||||||
In connection with the acquisition of Jupiter eSources we withheld a portion of the purchase price for potential claims for indemnification and purchase price adjustments in the amount of $8.4 million that was paid in May 2012. The $8.4 million payment was previously misclassified as an investment activity and has been reclassified as a financing activity in the unaudited Condensed Consolidated Statement of Cash Flows for the nine month period ended September 30, 2012. | ||||||||||||
NET_INCOME_PER_SHARE
NET INCOME PER SHARE | 9 Months Ended | |||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||
NET INCOME PER SHARE | ||||||||||||||||||
NET INCOME PER SHARE | NOTE 4: NET INCOME PER SHARE | |||||||||||||||||
Basic net income per share is computed on the basis of weighted average outstanding common shares. We have determined that certain nonvested share awards (also referred to as restricted stock awards) issued by the Company are participating securities because they have non-forfeitable rights to dividends. Accordingly, basic net income per share is calculated under the two-class method calculation. | ||||||||||||||||||
Diluted net income per share is computed on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect, if any, of outstanding stock options. The numerator of the diluted net income per share calculation is decreased by the allocation of net income and dividends declared to nonvested shares, if the impact is dilutive. | ||||||||||||||||||
In determining diluted earnings per share, we use the more dilutive earnings per share result between two-class method calculation and the treasury stock method calculation applied to our outstanding nonvested share awards. | ||||||||||||||||||
The computation of basic and diluted net income per share for the three and nine months ended September 30, 2013 is as follows: | ||||||||||||||||||
Three Months Ended September 30, 2013 | Nine Months Ended September 30, 2013 | |||||||||||||||||
Net Income | Weighted | Per Share | Net Income | Weighted | Per Share | |||||||||||||
(Numerator) | Average | Amount | (Numerator) | Average | Amount | |||||||||||||
Common | Common | |||||||||||||||||
Shares | Shares | |||||||||||||||||
Outstanding | Outstanding | |||||||||||||||||
(Denominator) | (Denominator) | |||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||
Net income | $ | 4,235 | $ | 11,014 | ||||||||||||||
Less: amounts allocated to nonvested shares | (43 | ) | (111 | ) | ||||||||||||||
Basic net income available to common stockholders | 4,192 | 35,684 | $ | 0.12 | 10,903 | 35,738 | $ | 0.31 | ||||||||||
Effect of dilutive securities: | ||||||||||||||||||
Stock options | — | 813 | — | 896 | ||||||||||||||
Add back: amounts allocated to nonvested shares | 43 | — | 111 | — | ||||||||||||||
Less: amounts re-allocated to nonvested shares | (43 | ) | — | (111 | ) | — | ||||||||||||
Diluted net income available to common stockholders | $ | 4,192 | 36,497 | $ | 0.11 | $ | 10,903 | 36,634 | $ | 0.3 | ||||||||
The computation of basic and diluted net income per share for the three and nine months ended September 30, 2012 is as follows: | ||||||||||||||||||
Three Months Ended September 30, 2012 | Nine Months Ended September 30, 2012 | |||||||||||||||||
Net Income | Weighted | Per Share | Net Income | Weighted | Per Share | |||||||||||||
(Numerator) | Average | Amount | (Numerator) | Average | Amount | |||||||||||||
Common | Common | |||||||||||||||||
Shares | Shares | |||||||||||||||||
Outstanding | Outstanding | |||||||||||||||||
(Denominator) | (Denominator) | |||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||
Net income | $ | 11,266 | $ | 18,462 | ||||||||||||||
Less: amounts allocated to nonvested shares | (135 | ) | (221 | ) | ||||||||||||||
Basic net income available to common stockholders | 11,131 | 35,438 | $ | 0.31 | 18,241 | 35,505 | $ | 0.51 | ||||||||||
Effect of dilutive securities: | ||||||||||||||||||
Stock options | — | 906 | — | 922 | ||||||||||||||
Add back: amounts allocated to nonvested shares | 135 | — | 221 | — | ||||||||||||||
Less: amounts re-allocated to nonvested shares | (135 | ) | — | (221 | ) | — | ||||||||||||
Diluted net income available to common stockholders | $ | 11,131 | 36,344 | $ | 0.31 | $ | 18,241 | 36,427 | $ | 0.5 | ||||||||
For the three months ended September 30, 2013 and 2012, weighted-average outstanding stock options totaling approximately 2.3 million and 3.1 million, respectively, were anti-dilutive and for the nine months ended September 30, 2013 and 2012, weighted-average outstanding stock options totaling approximately 2.4 million and 3.1 million, respectively, were anti-dilutive and therefore not included in the computation of diluted net income per share. | ||||||||||||||||||
SHAREBASED_COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
SHARE-BASED COMPENSATION. | ||||||||||||||
SHARE-BASED COMPENSATION | NOTE 5: SHARE-BASED COMPENSATION | |||||||||||||
The fair value of the share-based awards is measured at grant date and the resulting compensation expense is recognized on a straight-line basis over the requisite service period. The following table presents share-based compensation expense, which is a non-cash charge, included in the below noted captions within the Condensed Consolidated Statements of Income: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Direct cost of services | $ | 20 | $ | 65 | $ | 640 | $ | 186 | ||||||
Selling, general and administrative | 1,312 | 1,666 | 5,056 | 4,948 | ||||||||||
Share-based compensation expense | 1,332 | 1,731 | 5,696 | 5,134 | ||||||||||
Income tax benefit | (575 | ) | (762 | ) | (2,216 | ) | (2,249 | ) | ||||||
Total share-based compensation expense, net of tax | $ | 757 | $ | 969 | $ | 3,480 | $ | 2,885 | ||||||
We grant stock options, stock appreciation rights, and restricted stock awards under our 2004 Equity Incentive Plan, as amended (the “2004 Plan”), which allows for the issuance of 7,500,000 shares. We settle stock option exercises and the vesting of restricted stock awards with newly issued authorized shares or the reissuance of treasury stock. Shares granted that expire, terminate or are forfeited are then available for reissuance as future grants. At September 30, 2013, there were approximately 575,000 shares available for future grants under the 2004 Plan. | ||||||||||||||
During the nine months ended September 30, 2013, we granted 527,600 restricted stock awards at a weighted-average grant date price of $12.90 per share of which 330,000 shares will vest upon certification by the compensation committee of the Company’s Board of directors (the “Board”) of the achievement of certain company financial performance criteria for the calendar year ending December 31, 2013 and 164,100 shares vested upon issuance. The remaining 33,500 restricted stock awards vest one year from the grant date. As of September 30, 2013, we have assessed the likelihood that the performance condition will be met and have recorded the related expense based on the estimated outcome. | ||||||||||||||
No options were granted during the nine months ended September 30, 2013. As of September 30, 2013 there was $4.1 million of unrecognized compensation cost, net of estimated forfeitures, related to nonvested share-based awards, which will be recognized over a weighted-average period of 2.1 years. | ||||||||||||||
SEGMENT_REPORTING
SEGMENT REPORTING | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
SEGMENT REPORTING | ||||||||||||||
SEGMENT REPORTING | NOTE 6: SEGMENT REPORTING | |||||||||||||
In the first quarter of 2013, we reorganized our internal management reporting structure. Under the new structure, we began reporting our financial performance based on the following two reportable segments: the Technology segment and the Bankruptcy and Settlement Administration segment. The composition of the segment previously called eDiscovery remains unchanged and is now referred to as the Technology segment. The former Bankruptcy segment and Settlement Administration segment were combined and will now be reported as the Bankruptcy and Settlement Administration segment. Although our consolidated results of operations, financial position and cash flows were not impacted, we have updated the segment disclosures for prior periods to reflect our new internal management reporting structure. | ||||||||||||||
Our Technology segment provides eDiscovery managed services and technology solutions comprised of consulting, collections and forensics, processing, search and review, and document review to companies and law firms. Produced documents are made available primarily through a hosted environment utilizing our proprietary software DocuMatrix™, and third-party software which allows for efficient attorney review and data requests. Our Bankruptcy and Settlement Administration segment provides managed services and technology solutions that address the needs of our customers with respect to litigation, claims and project administration, compliance matters, controlled disbursements, corporate restructuring, bankruptcy and class action proceedings. | ||||||||||||||
The segment performance measure is based on earnings before interest, taxes, depreciation and amortization, 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 three months ended September 30, 2013. | ||||||||||||||
Three Months Ended September 30, 2013 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 75,624 | $ | 34,213 | $ | — | $ | 109,837 | ||||||
Intersegment revenues | 154 | — | (154 | ) | — | |||||||||
Operating revenues including intersegment revenue | 75,778 | 34,213 | (154 | ) | 109,837 | |||||||||
Reimbursable expenses | 676 | 5,171 | — | 5,847 | ||||||||||
Total revenues | 76,454 | 39,384 | (154 | ) | 115,684 | |||||||||
Direct costs, selling, general and administrative costs | 50,857 | 28,589 | (154 | ) | 79,292 | |||||||||
Segment performance measure | $ | 25,597 | $ | 10,795 | $ | — | $ | 36,392 | ||||||
Following is a summary of segment information for the three months ended September 30, 2012. | ||||||||||||||
Three Months Ended September 30, 2012 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 50,896 | $ | 32,969 | $ | — | $ | 83,865 | ||||||
Intersegment revenues | 42 | — | (42 | ) | — | |||||||||
Operating revenues including intersegment revenue | 50,938 | 32,969 | (42 | ) | 83,865 | |||||||||
Reimbursable expenses | 441 | 6,681 | — | 7,122 | ||||||||||
Total revenues | 51,379 | 39,650 | (42 | ) | 90,987 | |||||||||
Direct costs, selling, general and administrative costs | 31,584 | 28,420 | (42 | ) | 59,962 | |||||||||
Segment performance measure | $ | 19,795 | $ | 11,230 | $ | — | $ | 31,025 | ||||||
Following is a reconciliation of our segment performance measure to income before income taxes. | ||||||||||||||
Three Months Ended September 30, | ||||||||||||||
2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||
Segment performance measure | $ | 36,392 | $ | 31,025 | ||||||||||
Unallocated corporate expenses | (12,229 | ) | (6,532 | ) | ||||||||||
Share-based compensation expense | (1,332 | ) | (1,731 | ) | ||||||||||
Depreciation and software and leasehold amortization | (8,192 | ) | (6,755 | ) | ||||||||||
Amortization of intangible assets | (4,761 | ) | (6,804 | ) | ||||||||||
Fair value adjustment to contingent consideration | — | 11,717 | ||||||||||||
Other operating income | 855 | — | ||||||||||||
Income from operations | 10,733 | 20,920 | ||||||||||||
Interest expense, net | (4,099 | ) | (1,921 | ) | ||||||||||
Income before income taxes | $ | 6,634 | $ | 18,999 | ||||||||||
Following is a summary of segment information for the nine months ended September 30, 2013. | ||||||||||||||
Nine Months Ended September 30, 2013 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 200,537 | $ | 117,184 | $ | — | $ | 317,721 | ||||||
Intersegment revenues | 237 | — | (237 | ) | — | |||||||||
Operating revenues including intersegment revenue | 200,774 | 117,184 | (237 | ) | 317,721 | |||||||||
Reimbursable expenses | 1,498 | 33,427 | — | 34,925 | ||||||||||
Total revenues | 202,272 | 150,611 | (237 | ) | 352,646 | |||||||||
Direct costs, selling, general and administrative costs | 138,523 | 114,294 | (237 | ) | 252,580 | |||||||||
Segment performance measure | $ | 63,749 | $ | 36,317 | $ | — | 100,066 | |||||||
Following is a summary of segment information for the nine months ended September 30, 2012. | ||||||||||||||
Nine Months Ended September 30, 2012 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 142,455 | $ | 114,074 | $ | — | $ | 256,529 | ||||||
Intersegment revenues | 194 | — | (194 | ) | — | |||||||||
Operating revenues including intersegment revenue | 142,649 | 114,074 | (194 | ) | 256,529 | |||||||||
Reimbursable expenses | 1,163 | 19,662 | — | 20,825 | ||||||||||
Total revenues | 143,812 | 133,736 | (194 | ) | 277,354 | |||||||||
Direct costs, selling, general and administrative costs | 90,402 | 92,810 | (194 | ) | 183,018 | |||||||||
Segment performance measure | $ | 53,410 | $ | 40,926 | $ | — | $ | 94,336 | ||||||
Following is a reconciliation of our segment performance measure to income before income taxes. | ||||||||||||||
Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||
Segment performance measure | $ | 100,066 | $ | 94,336 | ||||||||||
Unallocated corporate expenses | (33,574 | ) | (26,704 | ) | ||||||||||
Share-based compensation expense | (5,696 | ) | (5,134 | ) | ||||||||||
Depreciation and software and leasehold amortization | (22,582 | ) | (20,006 | ) | ||||||||||
Amortization of intangible assets | (14,463 | ) | (20,325 | ) | ||||||||||
Fair value adjustment to contingent consideration | — | 17,188 | ||||||||||||
Intangible asset impairment expense | — | (1,777 | ) | |||||||||||
Other operating income | 759 | 225 | ||||||||||||
Income from operations | 24,510 | 37,803 | ||||||||||||
Interest expense, net | (7,930 | ) | (7,353 | ) | ||||||||||
Income before income taxes | $ | 16,580 | $ | 30,450 | ||||||||||
Following are total assets by segment. | ||||||||||||||
September 30, | December 31, | |||||||||||||
2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||
Assets | ||||||||||||||
Technology | $ | 367,736 | $ | 335,051 | ||||||||||
Bankruptcy and Settlement Administration | 277,707 | 296,811 | ||||||||||||
Unallocated corporate | 91,247 | 22,854 | ||||||||||||
Total consolidated assets | $ | 736,690 | $ | 654,716 |
FAIR_VALUES_OF_ASSETS_AND_LIAB
FAIR VALUES OF ASSETS AND LIABILITIES | 9 Months Ended |
Sep. 30, 2013 | |
FAIR VALUES OF ASSETS AND LIABILITIES | |
FAIR VALUES OF ASSETS AND LIABILITIES | NOTE 7: FAIR VALUES OF ASSETS AND LIABILITIES |
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. | |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | |
The carrying value and estimated fair value of our cash equivalents, which consist of short-term money market funds, are classified as Level 1. There have been no transfers between Level 1 and Level 2 during the nine months ended September 30, 2013. In connection with the acquisitions of De Novo and Jupiter eSources, we established liabilities related to potential contingent consideration that were considered to be Level 3 liabilities. These liabilities were valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value. As of September 30, 2013 and December 31, 2012, the value of these liabilities was $0. | |
For fair value measurements categorized within Level 3 of the fair value hierarchy, our accounting and finance management, who report to the chief financial officer, determine our valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of our accounting and finance management and are approved by the chief financial officer. Fair value calculations are generally prepared with the assistance of third-party valuation experts who rely on discussions with management in addition to the use of management’s assumptions and estimates as they relate to the assets or liabilities in Level 3. Such assumptions and estimates include such inputs as estimates of future cash flows, projected profit and loss information, discount rates, and assumptions as they relate to future pertinent events. Through regular interaction with the third-party valuation experts, finance and accounting management determine that the valuation techniques used and inputs and outputs of the models reflect the requirements of accounting standards as they relate to fair value measurements. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. As of September 30, 2013 there were no assets or liabilities that were measured and recorded at fair value on a recurring basis. | |
Fair Value of Financial Assets and Liabilities | |
As of September 30, 2013 and December 31, 2012, the carrying value of our trade accounts receivable, accounts payable, certain other liabilities, and capital leases approximated fair value. The amount outstanding under our Credit Facility was $300.0 million as of September 30, 2013 and the amount outstanding under our Former Credit Facility was $199.0 million at December 31, 2012, respectively, both of which approximated fair value due to the borrowing rates currently available to us for debt with similar terms and are classified as Level 2. | |
SUPPLEMENTAL_CASH_FLOW_INFORMA
SUPPLEMENTAL CASH FLOW INFORMATION | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | NOTE 8: SUPPLEMENTAL CASH FLOW INFORMATION | |||||||
Supplemental cash flow information is as follows (in thousands): | ||||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2013 | 2012 | |||||||
Cash paid for: | ||||||||
Interest | $ | 7,321 | $ | 5,677 | ||||
Income taxes, net | 4,869 | 4,959 | ||||||
Non-cash investing and financing transactions: | ||||||||
Property, equipment, and leasehold improvements accrued in accounts payable and other long-term liabilities | 5,923 | 1,191 | ||||||
Dividends declared but not yet paid | 3,170 | 3,233 | ||||||
Capitalized lease obligations incurred | 7,902 | 176 | ||||||
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2013 | |
EQUITY | |
EQUITY | NOTE 9: 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”). Through June 30, 2013, approximately $31.7 million remained outstanding under the 2012 Program, and on September 5, 2013, we announced that we reactivated the 2012 Program. As of September 30, 2013 we had purchased 1,132,040 shares under the 2012 Program during the nine months ended September 30, 2013 at an average cost of $12.62 per share. As of September 30, 2012, we had 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. | |
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 three months ended September 30, 2013 and 2012, we repurchased 60,198 shares and 44,588 shares, respectively, for approximately $0.8 million and $0.6 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. During the nine months ended September 30, 2013 and September 30, 2012, we repurchased 332,027 shares and 213,681 shares, respectively, for approximately $4.3 million and $2.6 million, respectively, to satisfy employee tax withholding obligations upon the vesting of restricted stock awards and the net share settlement of certain stock options exercises. | |
Dividends | |
On February 28, 2013, the Board declared a cash dividend of $0.09 per outstanding share of common stock, which was paid on June 3, 2013 to shareholders of record as of the close of business on May 1, 2013. | |
On June 13, 2013, the Board declared a cash dividend of $0.09 per outstanding share of common stock, which was paid on September 9, 2013 to shareholders of record as of the close of business on August 1, 2013. | |
On September 5, 2013, the Board declared a cash dividend of $0.09 per outstanding share of common stock, which is payable on December 9, 2013 to shareholders of record as of the close of business on November 1, 2013. | |
Dividends payable were approximately $3.2 million at September 30, 2013 and December 31, 2012. | |
LEGAL_PROCEEDINGS
LEGAL PROCEEDINGS | 9 Months Ended |
Sep. 30, 2013 | |
LEGAL PROCEEDINGS | |
LEGAL PROCEEDINGS | NOTE 10: LEGAL PROCEEDINGS |
We are at times involved in litigation and other legal claims in the ordinary course of business. When appropriate in management’s estimation, we may record reserves in our financial statements for pending litigation and other claims. Although it is not possible to predict with certainty the outcome of litigation, we do not believe that any of the current pending legal proceedings to which we are a party will have a material impact on our results of operations or financial condition. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS | |
Principles of Consolidation | Principles of Consolidation |
The Condensed Consolidated Financial Statements include the accounts of Epiq and our wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. | |
Revenue Recognition | Revenue Recognition |
We have agreements with clients pursuant to which we deliver various services each month. | |
Following is a description of significant sources of revenue: | |
· Fees contingent upon the month-to-month delivery of services defined by client contracts, such as claims processing, claims reconciliation, professional services, call center support, disbursement services, project management, collection and forensic services, consulting services, document review services and conversion of data into an organized, searchable electronic database. The amount we earn varies based primarily on the size and complexity of the engagement, the number of hours of professional services provided and the number of documents or volume of data processed or reviewed. | |
· Data hosting fees and volume-based fees. | |
· Deposit-based and service fees. Deposit-based fees are earned based on a percentage of Chapter 7 assets placed on deposit with designated financial institutions by our trustee clients to whom we provide, at no charge, software licenses, limited hardware and hardware maintenance, and postcontract customer support services. The fees earned based on assets placed on deposit by our trustee clients may vary based on fluctuations in short-term interest rates and changes in service fees assessed on such deposits. | |
· Legal noticing services to parties of interest in bankruptcy, class action and other administrative matters including direct notification and media campaign and advertising management in which we coordinate notification, primarily through print media outlets to potential parties of interest for a particular client engagement. | |
· Monitoring and noticing fees earned based on monthly or on-demand requests for information provided through our AACER® software product. | |
· Reimbursed expenses, primarily related to postage on mailing services and other pass-through expenses. | |
Non-Software Arrangements | |
Certain of our services are billed based on unit prices and volumes for which we have identified each deliverable service element. Based on our evaluation of each element, we have determined that each element delivered has standalone value to our customers because we or other vendors sell such services separately from any other services and deliverables. For certain of these services we have obtained objective and reliable evidence of the fair value of each element based either on the price we charge when we sell an element on a standalone basis or on third-party evidence of fair value of such similar services. For elements where evidence cannot be established, the best estimate of sales price has been used. Our arrangements do not include general rights of return. Accordingly, each of the service elements in our multiple element case and document management arrangements qualifies as a separate unit of accounting. We allocate revenue to the various units of accounting in our arrangements based on the fair value or best estimated selling price of each unit of accounting, which is generally consistent with the stated prices in our arrangements. In instances when revenue recognition is deferred, we utilize the relative selling price method to calculate the revenue recognized for each period. As we have evidence of an arrangement, revenue for each separate unit of accounting is recognized each period. Revenue is recognized as the services are rendered, our fee becomes fixed and determinable, and collectability is reasonably assured. Payments received in advance of satisfaction of the related revenue recognition criteria are recognized as a customer deposit 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 postcontract customer support services, all at no charge to the trustee. The trustees place their liquidated estate deposits with a financial institution with which we have an arrangement. We earn contingent monthly fees from the financial institutions based on the average dollar amount of deposits held by the trustees with that financial institution related to the software license, hardware lease, hardware maintenance, and postcontract customer support services provided to our trustee clients. The monthly deposit fees have two components consisting of an interest-based component and a non-interest based service fee. 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 postcontract customer support services. Revenue related to postcontract customer support is entirely contingent on the placement of liquidated estate deposits by the trustee with the financial institution. Accordingly, we recognize this contingent usage based revenue as the fee becomes fixed or determinable at the time actual usage occurs and collectability is probable. This occurs monthly as a result of the computation, billing and collection of monthly deposit fees contractually agreed to. At that time, we have also satisfied the other revenue recognition criteria since we have persuasive evidence that an arrangement exists, services have been rendered, the price is fixed and determinable, and collectability is reasonably assured. | |
We also provide our trustee clients with certain hardware, such as desktop computers, monitors, and printers as well as hardware maintenance. We retain ownership of all hardware provided and we account for this hardware as a lease. As the hardware maintenance arrangement is an executory contract similar to an operating lease, we use guidance related to contingent rentals in operating lease arrangements for hardware maintenance as well as for the hardware lease. Since the payments under all of our arrangements are contingent upon the level of trustee deposits and the delivery of upgrades and other services, and there remain important uncertainties regarding the amount of unreimbursable costs yet to be incurred by us, we account for the hardware lease as an operating lease. Therefore, all lease payments, based on the estimated fair value of hardware provided, were accounted for as contingent rentals, which requires that we recognize rental income when the changes in the factor on which the contingent lease payment is based actually occur. This occurs at the end of each period as we achieve our target when deposits are held at the 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. | |
Reimbursements | |
We have revenue related to reimbursed expenses, primarily postage. Reimbursed postage and other reimbursable direct costs are recorded gross in the Condensed Consolidated Statements of Income as “Reimbursable expenses” and “Reimbursed direct costs”, in the revenue and operating expenses sections, respectively. | |
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. In the first quarter of 2013, we reorganized our internal management reporting structure. Under the new structure, we began reporting our financial performance for our two reportable segments: the Technology segment and the Bankruptcy and Settlement Administration segment. The composition of the segment previously called eDiscovery remains unchanged and is now referred to as the Technology segment (“Technology”). The former Bankruptcy segment and Settlement Administration segment were combined and are now reported as the Bankruptcy and Settlement Administration segment (“Bankruptcy and Settlement Administration”). We assess goodwill for impairment on 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. At the time of the prior year’s goodwill impairment testing, we had identified our three operating segments as our reporting units (eDiscovery, Bankruptcy, and Settlement Administration). At the time of the change in reporting units during the first quarter of 2013, we evaluated our goodwill balance and determined that there was no impairment of goodwill as a result of the change in reporting units. | |
Goodwill is assessed between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, a change in strategic direction, legal factors, operating performance indicators, a change in the competitive environment, the sale or disposition of a significant portion of a reporting unit, or future economic factors such as unfavorable changes in our stock price and market capitalization or unfavorable changes in the estimated future discounted cash flows of our reporting units. Our annual test is performed as of July 31 each year, and there have been no events since our last annual test to indicate that it is more likely than not that the recorded goodwill balance had become impaired. As of July 31, 2013, which is the date of our most recent impairment test, the fair value of each of our reporting units was in excess of the carrying value of the reporting unit. Our consolidated goodwill totaled $404.2 million as of September 30, 2013. | |
Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. We considered both a market approach and an income approach in order to develop an estimate of the fair value of each reporting unit for purposes of our annual impairment test. When available, and as appropriate, we used 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 estimated 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 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, which is used to determine our discount rate, and through our stock price, which is used to determine our market capitalization. We may be required to recognize impairment of goodwill based on future economic factors such as unfavorable changes in our stock price and market capitalization or unfavorable changes in the estimated future discounted cash flows of our reporting units. | |
If we determine that the estimated fair value of any reporting unit is less than the reporting unit’s carrying value, then we proceed to the second step of the goodwill impairment analysis to measure the potential impairment charge. An impairment loss is recognized for any excess of the carrying value of the reporting unit’s goodwill over the implied fair value. If goodwill on our Condensed Consolidated Balance Sheet or Consolidated Balance Sheet becomes impaired during a future period, the resulting impairment charge could have a material impact on our results of operations and financial condition. | |
The application of judgment, such as is required to complete a goodwill impairment test, inherently involves uncertainties and as such there can be no assurances that the estimates and assumptions made for purposes of our annual goodwill impairment test will prove to be accurate predictions of the future. If assumptions regarding forecasted revenues or margins of certain of our reporting units are not achieved, we may be required to record goodwill impairment losses in future periods. It is not possible at this time to determine if any such future impairment loss would occur, and if it does occur whether such charge would be material. | |
Income Taxes | Income Taxes |
Our effective income tax rate for the nine months ending September 30, 2013 is lower than the U.S. federal statutory income tax rate. The lower effective tax rate is primarily due to the enactment of the 2012 American Taxpayer Relief Act which extended the federal research credit for both the 2013 and 2012 tax years. Since this law was not enacted until January 2, 2013, we have recognized approximately $0.4 million of tax benefit relating to the 2012 credits and a portion of our 2013 tax credits during 2013. In addition, we generate taxable income in foreign jurisdictions that have income tax rates lower than the U.S federal statutory income tax rate. | |
For the three month period ending September 30, 2013 and September 2012 and the nine month period ending September 30, 2012, our effective income tax rate approximated the U.S federal statutory income tax rate. | |
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ||||||||||||||
Schedule of change in the carrying amount of goodwill | ||||||||||||||
Technology | Bankruptcy | Total | ||||||||||||
Segment | and Settlement | |||||||||||||
Administration | ||||||||||||||
Segment | ||||||||||||||
(in thousands) | ||||||||||||||
Balance as of December 31, 2012 | $ | 189,248 | $ | 214,963 | $ | 404,211 | ||||||||
Foreign currency translation | (7 | ) | — | (7 | ) | |||||||||
Balance as of September 30, 2013 | $ | 189,241 | $ | 214,963 | $ | 404,204 | ||||||||
Schedule of Identifiable intangible assets | ||||||||||||||
September 30, 2013 | December 31, 2012 | |||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | |||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||
(in thousands) | ||||||||||||||
Amortizing intangible assets: | ||||||||||||||
Customer relationships | $ | 124,512 | $ | 86,407 | $ | 124,512 | $ | 73,713 | ||||||
Trade names | 6,591 | 2,272 | 6,591 | 1,650 | ||||||||||
Non-compete agreements | 18,947 | 15,883 | 18,947 | 14,736 | ||||||||||
Total | $ | 150,050 | $ | 104,562 | $ | 150,050 | $ | 90,099 | ||||||
Schedule of estimated future amortization expense related to intangible assets | The following table outlines the estimated future amortization expense related to intangible assets at September 30, 2013: | |||||||||||||
(in thousands) | ||||||||||||||
Year Ending December 31, | ||||||||||||||
2013 (from October 1, 2013 to December 31, 2013) | $ | 4,371 | ||||||||||||
2014 | 12,569 | |||||||||||||
2015 | 9,893 | |||||||||||||
2016 | 6,232 | |||||||||||||
2017 | 5,390 | |||||||||||||
2018 and thereafter | 7,033 | |||||||||||||
Total | $ | 45,488 |
LONGTERM_OBLIGATIONS_Tables
LONG-TERM OBLIGATIONS (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
LONG-TERM OBLIGATIONS | ||||||||||||
Summary of long-term debt and other long-term obligations outstanding | ||||||||||||
Final | Weighted- | September 30, | December 31, | |||||||||
Maturity | Average | 2013 | 2012 | |||||||||
Date | Interest Rate | |||||||||||
(in thousands) | ||||||||||||
Senior secured term loan | August 2020 | 4.75 | % | $ | 300,000 | $ | — | |||||
Senior revolving loan | August 2018 | — | — | 199,000 | ||||||||
Capital leases | April 2017 | 6 | % | 6,943 | 2,860 | |||||||
Note payable | October 2014 | 2.2 | % | 5,085 | 7,080 | |||||||
Acquisition-related liabilities | July 2013 | — | — | 3,499 | ||||||||
Total long-term obligations, including current portion | 312,028 | 212,439 | ||||||||||
Current maturities of long-term obligations | ||||||||||||
Senior secured term loan | 3,000 | — | ||||||||||
Capital leases | 4,002 | 1,640 | ||||||||||
Notes payable | 4,057 | 4,012 | ||||||||||
Acquisition-related liabilities | — | 3,499 | ||||||||||
Total current maturities of long-term obligations | 11,059 | 9,151 | ||||||||||
Total long-term obligations | $ | 300,969 | $ | 203,288 | ||||||||
Schedule of annual maturities under the senior secured term loan, due August 2020 | ||||||||||||
(in thousands) | ||||||||||||
Year Ending December 31, | ||||||||||||
2013 | $ | 750 | ||||||||||
2014 | 3,000 | |||||||||||
2015 | 3,000 | |||||||||||
2016 | 3,000 | |||||||||||
2017 | 3,000 | |||||||||||
2018 and Thereafter | 287,250 | |||||||||||
Total | $ | 300,000 | ||||||||||
Schedule of amounts recorded in connection with acquisition-related liabilities | ||||||||||||
September 30, | December 31, | |||||||||||
2013 | 2012 | |||||||||||
(in thousands) | ||||||||||||
De Novo deferred acquisition price | ||||||||||||
Current portion | $ | — | $ | 3,499 | ||||||||
Total De Novo deferred acquisition price | $ | — | $ | 3,499 |
NET_INCOME_PER_SHARE_Tables
NET INCOME PER SHARE (Tables) | 9 Months Ended | |||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||
NET INCOME PER SHARE | ||||||||||||||||||
Schedule of computation of basic and diluted net income per share | ||||||||||||||||||
Three Months Ended September 30, 2013 | Nine Months Ended September 30, 2013 | |||||||||||||||||
Net Income | Weighted | Per Share | Net Income | Weighted | Per Share | |||||||||||||
(Numerator) | Average | Amount | (Numerator) | Average | Amount | |||||||||||||
Common | Common | |||||||||||||||||
Shares | Shares | |||||||||||||||||
Outstanding | Outstanding | |||||||||||||||||
(Denominator) | (Denominator) | |||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||
Net income | $ | 4,235 | $ | 11,014 | ||||||||||||||
Less: amounts allocated to nonvested shares | (43 | ) | (111 | ) | ||||||||||||||
Basic net income available to common stockholders | 4,192 | 35,684 | $ | 0.12 | 10,903 | 35,738 | $ | 0.31 | ||||||||||
Effect of dilutive securities: | ||||||||||||||||||
Stock options | — | 813 | — | 896 | ||||||||||||||
Add back: amounts allocated to nonvested shares | 43 | — | 111 | — | ||||||||||||||
Less: amounts re-allocated to nonvested shares | (43 | ) | — | (111 | ) | — | ||||||||||||
Diluted net income available to common stockholders | $ | 4,192 | 36,497 | $ | 0.11 | $ | 10,903 | 36,634 | $ | 0.3 | ||||||||
Three Months Ended September 30, 2012 | Nine Months Ended September 30, 2012 | |||||||||||||||||
Net Income | Weighted | Per Share | Net Income | Weighted | Per Share | |||||||||||||
(Numerator) | Average | Amount | (Numerator) | Average | Amount | |||||||||||||
Common | Common | |||||||||||||||||
Shares | Shares | |||||||||||||||||
Outstanding | Outstanding | |||||||||||||||||
(Denominator) | (Denominator) | |||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||
Net income | $ | 11,266 | $ | 18,462 | ||||||||||||||
Less: amounts allocated to nonvested shares | (135 | ) | (221 | ) | ||||||||||||||
Basic net income available to common stockholders | 11,131 | 35,438 | $ | 0.31 | 18,241 | 35,505 | $ | 0.51 | ||||||||||
Effect of dilutive securities: | ||||||||||||||||||
Stock options | — | 906 | — | 922 | ||||||||||||||
Add back: amounts allocated to nonvested shares | 135 | — | 221 | — | ||||||||||||||
Less: amounts re-allocated to nonvested shares | (135 | ) | — | (221 | ) | — | ||||||||||||
Diluted net income available to common stockholders | $ | 11,131 | 36,344 | $ | 0.31 | $ | 18,241 | 36,427 | $ | 0.5 |
SHAREBASED_COMPENSATION_Tables
SHARE-BASED COMPENSATION (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
SHARE-BASED COMPENSATION. | ||||||||||||||
Schedule of share-based compensation expense | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Direct cost of services | $ | 20 | $ | 65 | $ | 640 | $ | 186 | ||||||
Selling, general and administrative | 1,312 | 1,666 | 5,056 | 4,948 | ||||||||||
Share-based compensation expense | 1,332 | 1,731 | 5,696 | 5,134 | ||||||||||
Income tax benefit | (575 | ) | (762 | ) | (2,216 | ) | (2,249 | ) | ||||||
Total share-based compensation expense, net of tax | $ | 757 | $ | 969 | $ | 3,480 | $ | 2,885 |
SEGMENT_REPORTING_Tables
SEGMENT REPORTING (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
SEGMENT REPORTING | ||||||||||||||
Summary of segment information | ||||||||||||||
Three Months Ended September 30, 2013 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 75,624 | $ | 34,213 | $ | — | $ | 109,837 | ||||||
Intersegment revenues | 154 | — | (154 | ) | — | |||||||||
Operating revenues including intersegment revenue | 75,778 | 34,213 | (154 | ) | 109,837 | |||||||||
Reimbursable expenses | 676 | 5,171 | — | 5,847 | ||||||||||
Total revenues | 76,454 | 39,384 | (154 | ) | 115,684 | |||||||||
Direct costs, selling, general and administrative costs | 50,857 | 28,589 | (154 | ) | 79,292 | |||||||||
Segment performance measure | $ | 25,597 | $ | 10,795 | $ | — | $ | 36,392 | ||||||
Three Months Ended September 30, 2012 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 50,896 | $ | 32,969 | $ | — | $ | 83,865 | ||||||
Intersegment revenues | 42 | — | (42 | ) | — | |||||||||
Operating revenues including intersegment revenue | 50,938 | 32,969 | (42 | ) | 83,865 | |||||||||
Reimbursable expenses | 441 | 6,681 | — | 7,122 | ||||||||||
Total revenues | 51,379 | 39,650 | (42 | ) | 90,987 | |||||||||
Direct costs, selling, general and administrative costs | 31,584 | 28,420 | (42 | ) | 59,962 | |||||||||
Segment performance measure | $ | 19,795 | $ | 11,230 | $ | — | $ | 31,025 | ||||||
Nine Months Ended September 30, 2013 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 200,537 | $ | 117,184 | $ | — | $ | 317,721 | ||||||
Intersegment revenues | 237 | — | (237 | ) | — | |||||||||
Operating revenues including intersegment revenue | 200,774 | 117,184 | (237 | ) | 317,721 | |||||||||
Reimbursable expenses | 1,498 | 33,427 | — | 34,925 | ||||||||||
Total revenues | 202,272 | 150,611 | (237 | ) | 352,646 | |||||||||
Direct costs, selling, general and administrative costs | 138,523 | 114,294 | (237 | ) | 252,580 | |||||||||
Segment performance measure | $ | 63,749 | $ | 36,317 | $ | — | 100,066 | |||||||
Nine Months Ended September 30, 2012 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 142,455 | $ | 114,074 | $ | — | $ | 256,529 | ||||||
Intersegment revenues | 194 | — | (194 | ) | — | |||||||||
Operating revenues including intersegment revenue | 142,649 | 114,074 | (194 | ) | 256,529 | |||||||||
Reimbursable expenses | 1,163 | 19,662 | — | 20,825 | ||||||||||
Total revenues | 143,812 | 133,736 | (194 | ) | 277,354 | |||||||||
Direct costs, selling, general and administrative costs | 90,402 | 92,810 | (194 | ) | 183,018 | |||||||||
Segment performance measure | $ | 53,410 | $ | 40,926 | $ | — | $ | 94,336 | ||||||
Schedule of reconciliation of segment performance measure to income before income taxes | Three Months Ended September 30, | |||||||||||||
2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||
Segment performance measure | $ | 36,392 | $ | 31,025 | ||||||||||
Unallocated corporate expenses | (12,229 | ) | (6,532 | ) | ||||||||||
Share-based compensation expense | (1,332 | ) | (1,731 | ) | ||||||||||
Depreciation and software and leasehold amortization | (8,192 | ) | (6,755 | ) | ||||||||||
Amortization of intangible assets | (4,761 | ) | (6,804 | ) | ||||||||||
Fair value adjustment to contingent consideration | — | 11,717 | ||||||||||||
Other operating income | 855 | — | ||||||||||||
Income from operations | 10,733 | 20,920 | ||||||||||||
Interest expense, net | (4,099 | ) | (1,921 | ) | ||||||||||
Income before income taxes | $ | 6,634 | $ | 18,999 | ||||||||||
Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||
Segment performance measure | $ | 100,066 | $ | 94,336 | ||||||||||
Unallocated corporate expenses | (33,574 | ) | (26,704 | ) | ||||||||||
Share-based compensation expense | (5,696 | ) | (5,134 | ) | ||||||||||
Depreciation and software and leasehold amortization | (22,582 | ) | (20,006 | ) | ||||||||||
Amortization of intangible assets | (14,463 | ) | (20,325 | ) | ||||||||||
Fair value adjustment to contingent consideration | — | 17,188 | ||||||||||||
Intangible asset impairment expense | — | (1,777 | ) | |||||||||||
Other operating income | 759 | 225 | ||||||||||||
Income from operations | 24,510 | 37,803 | ||||||||||||
Interest expense, net | (7,930 | ) | (7,353 | ) | ||||||||||
Income before income taxes | $ | 16,580 | $ | 30,450 | ||||||||||
Schedule of total assets by segment | ||||||||||||||
September 30, | December 31, | |||||||||||||
2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||
Assets | ||||||||||||||
Technology | $ | 367,736 | $ | 335,051 | ||||||||||
Bankruptcy and Settlement Administration | 277,707 | 296,811 | ||||||||||||
Unallocated corporate | 91,247 | 22,854 | ||||||||||||
Total consolidated assets | $ | 736,690 | $ | 654,716 |
SUPPLEMENTAL_CASH_FLOW_INFORMA1
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
Schedule of supplemental cash flow information | Supplemental cash flow information is as follows (in thousands): | |||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2013 | 2012 | |||||||
Cash paid for: | ||||||||
Interest | $ | 7,321 | $ | 5,677 | ||||
Income taxes, net | 4,869 | 4,959 | ||||||
Non-cash investing and financing transactions: | ||||||||
Property, equipment, and leasehold improvements accrued in accounts payable and other long-term liabilities | 5,923 | 1,191 | ||||||
Dividends declared but not yet paid | 3,170 | 3,233 | ||||||
Capitalized lease obligations incurred | 7,902 | 176 | ||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Mar. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | |
segment | segment | ||
item | |||
Revenue Recognition | |||
Amount charged from trustee clients for support services | $0 | ||
Number of components of monthly deposit fees | 2 | ||
Goodwill | |||
Number of reporting segments | 2 | ||
Number of operating segments | 3 | ||
Number of events indicating impairment of goodwill | 0 | ||
Impairment of goodwill | 0 | ||
Goodwill | $404,204,000 | $404,211,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS (Details 2) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 |
Income Taxes | |
Tax benefit relating to the 2012 credits and a portion of 2013 tax credits | $0.40 |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS (Details) (USD $) | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 |
Technology Segment | Bankruptcy and Settlement Administration Segment | Bankruptcy and Settlement Administration Segment | ||
Change in the carrying amount of goodwill | ||||
Balance at the beginning of period | $404,211 | $189,248 | $214,963 | $214,963 |
Foreign currency translation | -7 | -7 | ||
Balance at the end of period | $404,204 | $189,241 | $214,963 | $214,963 |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Amortizing and Non-amortizing intangible assets | |||||
Gross Carrying Amount | $150,050 | $150,050 | $150,050 | ||
Accumulated Amortization | 104,562 | 104,562 | 90,099 | ||
Amortization of identifiable intangible assets | 4,761 | 6,804 | 14,463 | 20,325 | |
Customer relationships | |||||
Amortizing and Non-amortizing intangible assets | |||||
Gross Carrying Amount | 124,512 | 124,512 | 124,512 | ||
Accumulated Amortization | 86,407 | 86,407 | 73,713 | ||
Weighted average life | 7 years | ||||
Trade names | |||||
Amortizing and Non-amortizing intangible assets | |||||
Gross Carrying Amount | 6,591 | 6,591 | 6,591 | ||
Accumulated Amortization | 2,272 | 2,272 | 1,650 | ||
Weighted average life | 8 years | ||||
Non-compete agreements | |||||
Amortizing and Non-amortizing intangible assets | |||||
Gross Carrying Amount | 18,947 | 18,947 | 18,947 | ||
Accumulated Amortization | $15,883 | $15,883 | $14,736 | ||
Weighted average life | 5 years |
GOODWILL_AND_INTANGIBLE_ASSETS4
GOODWILL AND INTANGIBLE ASSETS (Details 3) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Estimated future amortization expense related to intangible assets | ||
2013 (from October 1, 2013 to December 31, 2013) | $4,371 | |
2014 | 12,569 | |
2015 | 9,893 | |
2016 | 6,232 | |
2017 | 5,390 | |
2018 and thereafter | 7,033 | |
Total | $45,488 | $59,951 |
LONGTERM_OBLIGATIONS_Details
LONG-TERM OBLIGATIONS (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | ||||||||||||||||||
Aug. 27, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | 31-May-12 | Sep. 30, 2013 | Dec. 31, 2012 | Aug. 27, 2013 | Sep. 30, 2013 | Aug. 27, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Aug. 27, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | |
De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | Jupiter eSources LLC | Jupiter eSources LLC | Jupiter eSources LLC | Credit Facility | Credit Facility | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Senior revolving loan | Capital leases | Capital leases | Notes payable | Notes payable | Acquisition-related liabilities | Deferred acquisition price | ||||
Prime rate | LIBOR | item | Prime rate | Prime rate | Prime rate | LIBOR | LIBOR | LIBOR | De Novo Legal LLC | |||||||||||||||||||||
Minimum | Maximum | Minimum | Maximum | |||||||||||||||||||||||||||
LONG-TERM OBLIGATIONS | ||||||||||||||||||||||||||||||
Total long-term obligations, including current portion | $312,028,000 | $212,439,000 | $300,000,000 | $0 | $199,000,000 | $6,943,000 | $2,860,000 | $5,085,000 | $7,080,000 | $3,499,000 | $3,499,000 | |||||||||||||||||||
Total current maturities of long-term obligations | 11,059,000 | 9,151,000 | 3,000,000 | 4,002,000 | 1,640,000 | 4,057,000 | 4,012,000 | 3,499,000 | ||||||||||||||||||||||
Total long-term obligations | 300,969,000 | 203,288,000 | 3,499,000 | |||||||||||||||||||||||||||
Weighted average interest rate (as a percent) | 4.75% | 6.00% | 2.20% | |||||||||||||||||||||||||||
Aggregate amount of funds available | 400,000,000 | 100,000,000 | ||||||||||||||||||||||||||||
Principal amount of debt issued | 300,000,000 | |||||||||||||||||||||||||||||
Maximum borrowing capacity subject at the entity's option, subject to compliance with covenants | 600,000,000 | 200,000,000 | ||||||||||||||||||||||||||||
Fees and expenses associated with the repayment of the Credit Facility, and the repayment of the outstanding balance under the Former Credit Facility | 8,100,000 | |||||||||||||||||||||||||||||
Write-off of a portion of the unamortized deferred debt issuance costs for the Former Credit Facility | 1,000,000 | |||||||||||||||||||||||||||||
Days followiing the closing date required, as specified within the credit agreement, to enter into a hedging arrangement related to protection against interest rate fluctuations | 90 days | |||||||||||||||||||||||||||||
Basis points added to reference rate (as a percent) | 2.75% | 3.75% | 2.00% | 3.00% | 3.00% | 4.00% | ||||||||||||||||||||||||
Variable interest rate basis | prime rate | one, two, three or six month LIBOR rate | Prime rate | LIBOR | ||||||||||||||||||||||||||
Interest rate, variable interest rate floor | 2.00% | 1.00% | ||||||||||||||||||||||||||||
Number of rate options | 2 | |||||||||||||||||||||||||||||
First date of required quarterly payments of principal | 31-Dec-13 | |||||||||||||||||||||||||||||
Percentage of payments of the principal amount of debt per quarter | 0.25% | |||||||||||||||||||||||||||||
Payments of the principal amount of debt annually | 3,000,000 | |||||||||||||||||||||||||||||
Net leverage ratio, maximum | 4.5 | |||||||||||||||||||||||||||||
Annual maturities under the senior secured term loan, due August 2020 | ||||||||||||||||||||||||||||||
2013 | 750,000 | |||||||||||||||||||||||||||||
2014 | 3,000,000 | |||||||||||||||||||||||||||||
2015 | 3,000,000 | |||||||||||||||||||||||||||||
2016 | 3,000,000 | |||||||||||||||||||||||||||||
2017 | 3,000,000 | |||||||||||||||||||||||||||||
2018 and Thereafter | 287,250,000 | |||||||||||||||||||||||||||||
Total | 312,028,000 | 212,439,000 | 300,000,000 | 0 | 199,000,000 | 6,943,000 | 2,860,000 | 5,085,000 | 7,080,000 | 3,499,000 | 3,499,000 | |||||||||||||||||||
Interest rate bearing notes payable (as a percent) | 2.20% | |||||||||||||||||||||||||||||
Contingent consideration paid | 3,100,000 | |||||||||||||||||||||||||||||
Balance amount written off as a credit to operating expenses | 800,000 | 800,000 | ||||||||||||||||||||||||||||
Potential undiscounted amount of all future payments, minimum | 0 | 0 | 0 | |||||||||||||||||||||||||||
Potential undiscounted amount of all future payments, maximum | 29,100,000 | 29,100,000 | 10,000,000 | |||||||||||||||||||||||||||
Amount of potential contingent consideration recorded | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
Payment of deferred acquisition consideration | 8,400,000 | |||||||||||||||||||||||||||||
Payment of deferred acquisition consideration reclassified from investing activities to financing activities | $8,400,000 |
NET_INCOME_PER_SHARE_Details
NET INCOME PER SHARE (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
NET INCOME PER SHARE | ||||
Net income | $4,235 | $11,266 | $11,014 | $18,462 |
Less: amounts allocated to nonvested shares | -43 | -135 | -111 | -221 |
Basic net income available to common stockholders | 4,192 | 11,131 | 10,903 | 18,241 |
Computation of basic and diluted net income per share | ||||
Add back: amounts allocated to nonvested shares | 43 | 135 | 111 | 221 |
Less: amounts re-allocated to nonvested shares | -43 | -135 | -111 | -221 |
Diluted net income available to common stockholders | $4,192 | $11,131 | $10,903 | $18,241 |
Weighted Average Common Shares Outstanding (Denominator) | ||||
Weighted Average Common Shares Outstanding Basic | 35,684,000 | 35,438,000 | 35,738,000 | 35,505,000 |
Weighted Average Common Shares Outstanding Diluted | 36,497,000 | 36,344,000 | 36,634,000 | 36,427,000 |
Per Share Amount | ||||
Basic net income available to common stockholders (in dollars per share) | $0.12 | $0.31 | $0.31 | $0.51 |
Diluted net income available to common stockholders (in dollars per share) | $0.11 | $0.31 | $0.30 | $0.50 |
Antidilutive securities excluded from computation of diluted net income per share | ||||
Weighted-average outstanding stock options that were anti-dilutive (in Shares) | 2,300,000 | 3,100,000 | 2,400,000 | 3,100,000 |
Stock options | ||||
Weighted Average Common Shares Outstanding (Denominator) | ||||
Effect on weighted average common shares outstanding from dilutive securities | 813,000 | 906,000 | 896,000 | 922,000 |
SHAREBASED_COMPENSATION_Detail
SHARE-BASED COMPENSATION (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
SHARE-BASED COMPENSATION | ||||
Share-based compensation expense | $1,332 | $1,731 | $5,696 | $5,134 |
Income tax benefit | -575 | -762 | -2,216 | -2,249 |
Total share-based compensation expense, net of tax | 757 | 969 | 3,480 | 2,885 |
Direct cost of services | ||||
SHARE-BASED COMPENSATION | ||||
Share-based compensation expense | 20 | 65 | 640 | 186 |
Selling, general and administrative | ||||
SHARE-BASED COMPENSATION | ||||
Share-based compensation expense | $1,312 | $1,666 | $5,056 | $4,948 |
SHAREBASED_COMPENSATION_Detail1
SHARE-BASED COMPENSATION (Details 2) (USD $) | 9 Months Ended |
In Millions, except Share data, unless otherwise specified | Sep. 30, 2013 |
SHARE-BASED COMPENSATION | |
Unrecognized compensation cost, net of estimated forfeitures | $4.10 |
Weighted average recognition period of unrecognized compensation cost | 2 years 1 month 6 days |
Stock options | |
SHARE-BASED COMPENSATION | |
Options granted (in shares) | 0 |
Nonvested share awards | |
SHARE-BASED COMPENSATION | |
Restricted stock granted | 527,600 |
Weighted-average grant date price (in dollars per share) | $12.90 |
Number of shares vesting with certification by the compensation committee on the achievement of certain financial performance criteria | 330,000 |
Number of shares that vested upon issuance | 164,100 |
Number of shares that vested one year from the grant date | 33,500 |
Vesting period | 1 year |
2004 Plan | |
SHARE-BASED COMPENSATION | |
Grants of awards for the issuance (in shares) | 7,500,000 |
Number of shares available for future grants | 575,000 |
SEGMENT_REPORTING_Details
SEGMENT REPORTING (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
segment | ||||
SEGMENT REPORTING | ||||
Number of reporting segments | 2 | |||
Revenues: | ||||
Operating revenues | $109,837 | $83,865 | $317,721 | $256,529 |
Operating revenues including intersegment revenue | 109,837 | 83,865 | 317,721 | 256,529 |
Reimbursable expenses | 5,847 | 7,122 | 34,925 | 20,825 |
Total Revenue | 115,684 | 90,987 | 352,646 | 277,354 |
Direct costs, selling, general and administrative costs | 79,292 | 59,962 | 252,580 | 183,018 |
Segment performance measure | 36,392 | 31,025 | 100,066 | 94,336 |
Technology | ||||
Revenues: | ||||
Operating revenues | 75,624 | 50,896 | 200,537 | 142,455 |
Intersegment revenues | 154 | 42 | 237 | 194 |
Operating revenues including intersegment revenue | 75,778 | 50,938 | 200,774 | 142,649 |
Reimbursable expenses | 676 | 441 | 1,498 | 1,163 |
Total Revenue | 76,454 | 51,379 | 202,272 | 143,812 |
Direct costs, selling, general and administrative costs | 50,857 | 31,584 | 138,523 | 90,402 |
Segment performance measure | 25,597 | 19,795 | 63,749 | 53,410 |
Bankruptcy and Settlement Administration Segment | ||||
Revenues: | ||||
Operating revenues | 34,213 | 32,969 | 117,184 | 114,074 |
Operating revenues including intersegment revenue | 34,213 | 32,969 | 117,184 | 114,074 |
Reimbursable expenses | 5,171 | 6,681 | 33,427 | 19,662 |
Total Revenue | 39,384 | 39,650 | 150,611 | 133,736 |
Direct costs, selling, general and administrative costs | 28,589 | 28,420 | 114,294 | 92,810 |
Segment performance measure | 10,795 | 11,230 | 36,317 | 40,926 |
Eliminations | ||||
Revenues: | ||||
Intersegment revenues | -154 | -42 | -237 | -194 |
Operating revenues including intersegment revenue | -154 | -42 | -237 | -194 |
Total Revenue | -154 | -42 | -237 | -194 |
Direct costs, selling, general and administrative costs | ($154) | ($42) | ($237) | ($194) |
SEGMENT_REPORTING_Details_2
SEGMENT REPORTING (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Reconciliation of our segment performance measure to income before income taxes | ||||
Segment performance measure | $36,392 | $31,025 | $100,066 | $94,336 |
Unallocated corporate expenses | -12,229 | -6,532 | -33,574 | -26,704 |
Share-based compensation expense | -1,332 | -1,731 | -5,696 | -5,134 |
Depreciation and software and leasehold amortization | -8,192 | -6,755 | -22,582 | -20,006 |
Amortization of intangible assets | -4,761 | -6,804 | -14,463 | -20,325 |
Fair value adjustment to contingent consideration | 11,717 | 17,188 | ||
Intangible asset impairment expense | -1,777 | |||
Other operating income | 855 | 759 | 225 | |
INCOME FROM OPERATIONS | 10,733 | 20,920 | 24,510 | 37,803 |
Interest expense, net | -4,099 | -1,921 | -7,930 | -7,353 |
INCOME BEFORE INCOME TAXES | $6,634 | $18,999 | $16,580 | $30,450 |
SEGMENT_REPORTING_Details_3
SEGMENT REPORTING (Details 3) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Assets | ||
Total consolidated assets | $736,690 | $654,716 |
Technology | ||
Assets | ||
Total consolidated assets | 367,736 | 335,051 |
Bankruptcy and Settlement Administration | ||
Assets | ||
Total consolidated assets | 277,707 | 296,811 |
Unallocated corporate | ||
Assets | ||
Total consolidated assets | $91,247 | $22,854 |
FAIR_VALUES_OF_ASSETS_AND_LIAB1
FAIR VALUES OF ASSETS AND LIABILITIES (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Assets and liabilities measured and recorded at fair value on a recurring basis | ||
Asset measured and recorded at fair value on a recurring basis | $0 | |
Liabilities measured and recorded at fair value on a recurring basis | 0 | |
Significant Unobservable Inputs (Level 3) | ||
Assets and liabilities measured and recorded at fair value on a recurring basis | ||
Potential contingent consideration | 0 | 0 |
Recurring Basis | ||
Assets and liabilities measured and recorded at fair value on a recurring basis | ||
Amount transferred from Level 1 to Level 2 | 0 | |
Amount transferred from Level 2 to Level 1 | $0 |
FAIR_VALUES_OF_ASSETS_AND_LIAB2
FAIR VALUES OF ASSETS AND LIABILITIES (Details 2) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | Credit Facility | Former Credit Facility |
Fair value of Financial Assets and Liabilities | ||
Amount outstanding under credit facility, which approximated fair value | $300 | $199 |
SUPPLEMENTAL_CASH_FLOW_INFORMA2
SUPPLEMENTAL CASH FLOW INFORMATION (Details) (USD $) | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Cash paid for: | |||
Interest | $7,321 | $5,677 | |
Income taxes, net | 4,869 | 4,959 | |
Non-cash investing and financing transactions: | |||
Property, equipment, and leasehold improvements accrued in accounts payable and other long-term liabilities | 5,923 | 1,191 | |
Dividends declared but not yet paid | 3,170 | 3,233 | 3,231 |
Capitalized lease obligations incurred | $7,902 | $176 |
EQUITY_Details
EQUITY (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | |||||||
Sep. 05, 2013 | Jun. 13, 2013 | Feb. 28, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Jun. 30, 2013 | Jun. 02, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
2012 Program | 2012 Program | 2012 Program | 2012 Program | |||||||||
Share Repurchases | ||||||||||||
Authorized amount under stock repurchase program | $35,000,000 | |||||||||||
Remaining authorized repurchase amount | 31,700,000 | |||||||||||
Number of shares of common stock repurchased under stock repurchase program | 1,132,040 | 283,980 | ||||||||||
Value of shares of common stock repurchased under stock repurchase program | 3,300,000 | |||||||||||
Weighted average cost of common stock repurchased (in dollars per share) | $12.62 | $11.62 | ||||||||||
Number of common stock repurchased to satisfy employee tax withholding obligations (in Shares) | 60,198 | 44,588 | 332,027 | 213,681 | ||||||||
Value of common stock repurchased to satisfy employee tax withholding obligations | 800,000 | 600,000 | 4,300,000 | 2,600,000 | ||||||||
Dividend | ||||||||||||
Dividends declared (in dollars per share) | $0.09 | $0.09 | $0.09 | $0.09 | $0.09 | $0.27 | $0.21 | |||||
Dividends payable | $3,170,000 | $3,233,000 | $3,170,000 | $3,233,000 | $3,231,000 |