Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | Apr. 18, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'EPIQ SYSTEMS INC | ' |
Entity Central Index Key | '0001027207 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 35,683,748 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
REVENUE: | ' | ' |
Operating revenue | $116,220 | $102,908 |
Reimbursable expenses | 7,051 | 20,682 |
Total Revenue | 123,271 | 123,590 |
OPERATING EXPENSE: | ' | ' |
Direct cost of operating revenue (exclusive of depreciation and amortization shown separately below) | 57,635 | 52,496 |
Reimbursed direct costs | 6,803 | 19,542 |
Selling, general and administrative expense | 44,176 | 32,424 |
Depreciation and software and leasehold amortization | 8,700 | 6,999 |
Amortization of identifiable intangible assets | 3,120 | 4,966 |
Fair value adjustment to contingent consideration | 1,142 | ' |
Other operating expense | 69 | 47 |
Total Operating Expense | 121,645 | 116,474 |
INCOME FROM OPERATIONS | 1,626 | 7,116 |
INTEREST EXPENSE (INCOME): | ' | ' |
Interest expense | 4,877 | 1,839 |
Interest income | -4 | -4 |
Net Interest Expense | 4,873 | 1,835 |
INCOME (LOSS) BEFORE INCOME TAXES | -3,247 | 5,281 |
PROVISION FOR (BENEFIT FROM) INCOME TAXES | -949 | 1,344 |
NET INCOME (LOSS) | ($2,298) | $3,937 |
NET INCOME (LOSS) PER SHARE INFORMATION: | ' | ' |
Basic (in dollars per share) | ($0.07) | $0.11 |
Diluted (in dollars per share) | ($0.07) | $0.11 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ' | ' |
Basic (in shares) | 34,862 | 35,600 |
Diluted (in shares) | 34,862 | 36,547 |
Cash dividends declared per common share (in dollars per share) | $0.09 | $0.09 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ' | ' |
NET INCOME(LOSS) | ($2,298) | $3,937 |
Other comprehensive income: | ' | ' |
Foreign currency translation adjustment | 287 | -993 |
Interest rate cap | -18 | ' |
COMPREHENSIVE INCOME(LOSS) | ($2,029) | $2,944 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
CURRENT ASSETS: | ' | ' |
Cash and cash equivalents | $19,193 | $40,336 |
Trade accounts receivable, less allowance for doubtful accounts of $4,512 and $4,379, respectively | 141,884 | 145,134 |
Prepaid expenses | 12,451 | 10,617 |
Other current assets | 4,622 | 3,882 |
Total Current Assets | 178,150 | 199,969 |
LONG-TERM ASSETS: | ' | ' |
Property and equipment, net | 73,893 | 72,118 |
Internally developed software costs, net | 15,470 | 16,201 |
Goodwill | 404,344 | 404,302 |
Other intangibles, net of accumulated amortization of $112,052 and $108,933, respectively | 37,998 | 41,117 |
Other long-term assets | 13,732 | 14,074 |
Total Long-term Assets | 545,437 | 547,812 |
Total Assets | 723,587 | 747,781 |
CURRENT LIABILITIES: | ' | ' |
Current maturities of long-term obligations | 10,599 | 13,349 |
Accounts payable | 21,918 | 30,419 |
Accrued compensation | 8,972 | 17,932 |
Customer deposits | 2,573 | 2,717 |
Deferred revenue | 1,966 | 4,020 |
Dividends payable | 3,214 | 3,142 |
Other accrued liabilities | 6,879 | 6,985 |
Total Current Liabilities | 56,121 | 78,564 |
LONG-TERM LIABILITIES: | ' | ' |
Deferred income taxes | 32,893 | 35,558 |
Other long-term liabilities | 9,180 | 8,537 |
Long-term obligations, excluding current maturities | 298,628 | 299,108 |
Total Long-term Liabilities | 340,701 | 343,203 |
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 March 31, 2014 - 40,955,651 and 35,705,913 shares, respectively Issued and outstanding at December 31, 2013 - 40,298,852 and 34,991,629 shares, respectively | 410 | 403 |
Additional paid-in capital | 297,022 | 291,414 |
Accumulated other comprehensive loss | -272 | -541 |
Retained earnings | 97,233 | 102,754 |
Treasury stock, at cost - 5,249,738 and 5,307,223 shares, respectively | -67,628 | -68,016 |
Total Equity | 326,765 | 326,014 |
Total Liabilities and Equity | $723,587 | $747,781 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ' | ' |
Trade accounts receivable, allowance for doubtful accounts (in dollars) | $4,512 | $4,379 |
Other intangibles, accumulated amortization (in dollars) | $112,052 | $108,933 |
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 | 40,955,651 | 40,298,852 |
Common stock, shares outstanding | 35,705,913 | 34,991,629 |
Treasury stock, shares | 5,249,738 | 5,307,223 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net income (loss) | ($2,298) | $3,937 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ' | ' |
Depreciation and software and leasehold amortization | 8,700 | 6,999 |
Amortization of intangible assets | 3,120 | 4,966 |
Share-based compensation expense | 3,539 | 1,539 |
Fair value adjustment to contingent consideration | 1,142 | ' |
Provision for doubtful accounts | 348 | 682 |
Loan fee amortization | 1,117 | 179 |
Deferred income tax (benefit) expense | -452 | 352 |
Other, net | -6 | 32 |
Changes in operating assets and liabilities: | ' | ' |
Trade accounts receivable | 3,093 | -15,058 |
Prepaid expenses and other assets | -1,811 | -778 |
Accounts payable and other liabilities | -11,223 | 6,354 |
Customer deposits | -144 | -13,212 |
Deferred revenue | -2,057 | -133 |
Income taxes | -3,823 | -950 |
Excess tax benefit related to share-based compensation | -197 | -141 |
Other | 121 | -113 |
Net cash used in operating activities | -831 | -5,345 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Purchase of property and equipment | -9,464 | -3,694 |
Internally developed software costs | -1,437 | -1,530 |
Proceeds from sale of assets | 4 | ' |
Other investing activities, net | ' | 10 |
Net cash used in investing activities | -10,897 | -5,214 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from revolver borrowings | ' | 34,000 |
Payments to reduce revolver borrowings | ' | -19,000 |
Debt issuance costs | -837 | ' |
Payments under long-term obligations | -2,133 | -424 |
Payment of deferred acquisition consideration | -3,457 | ' |
Excess tax benefit related to share-based compensation | 197 | 141 |
Common stock repurchases (Note 8) | -3,214 | -2,181 |
Cash dividends paid (Note 8) | -3,152 | -3,233 |
Proceeds from exercise of stock options | 3,146 | 498 |
Net cash provided by (used in) financing activities | -9,450 | 9,801 |
Effect of exchange rate changes on cash | 35 | -283 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | -21,143 | -1,041 |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 40,336 | 3,808 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 19,193 | 2,767 |
Cash paid for: | ' | ' |
Interest | 3,669 | 1,627 |
Income taxes, net | 3,322 | 1,924 |
Non-cash investing and financing transactions: | ' | ' |
Property, equipment, and leasehold improvements accrued in accounts payable and other long-term liabilities | 6,805 | 6,949 |
Dividends declared but not yet paid | 3,214 | 3,251 |
Capitalized lease obligations incurred | $413 | $306 |
NATURE_OF_OPERATIONS_AND_SUMMA
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2014 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
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. 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, 2013, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2014. | |
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. 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. 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. | |
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 $404.3 million as of March 31, 2014. | |
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. | |
Income Taxes | |
Our effective tax rate for the three months ended March 31, 2014 was 29.2% compared to 25.9% for the comparable prior year period. The reduced 2013 rate reflected a discrete benefit related to the enactment of the 2012 American Taxpayer Relief Act which extended the federal research credit for both 2013 and 2012. We recognized approximately $0.4 million of tax benefit relating to the 2012 credits and a portion of our 2013 tax credits during the first quarter of 2013. While legislation has been introduced to retroactively reinstate the credit to the beginning of 2014, the federal research credit has not yet been extended past 2013 and our 2014 effective tax rate does not reflect any research credit benefit. Our effective tax rate is lower than the U.S. statutory rate because we earned income in international jurisdictions with lower tax rates and our income from these jurisdictions increased during the three months ended March 31, 2014 as compared to the three months ended March 31, 2013. | |
On March 31, 2014, New York State passed comprehensive corporate income tax reform with most changes effective for years 2015 and beyond. We have substantial business presence within the state, but we do not expect the new law to have a material impact on our overall expected future tax expense. Because a change in tax law is accounted for in the period of enactment, our results for the three months ended March 31, 2014 reflect the impact of this state law change, however, the impact was not material. |
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | |||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | |||||||||||||
NOTE 2: GOODWILL AND INTANGIBLE ASSETS | ||||||||||||||
The change in the carrying amount of goodwill for the three months ended March 31, 2014 was as follows: | ||||||||||||||
Technology | Bankruptcy | Total | ||||||||||||
Segment | and Settlement | |||||||||||||
Administration | ||||||||||||||
Segment | ||||||||||||||
(in thousands) | ||||||||||||||
Balance as of December 31, 2013 | $ | 189,339 | $ | 214,963 | $ | 404,302 | ||||||||
Foreign currency translation | 42 | — | 42 | |||||||||||
Balance as of March 31, 2014 | $ | 189,381 | $ | 214,963 | $ | 404,344 | ||||||||
Identifiable intangible assets as of March 31, 2014 and December 31, 2013 consisted of the following: | ||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | |||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||
(in thousands) | ||||||||||||||
Amortizing intangible assets: | ||||||||||||||
Customer relationships | $ | 124,512 | $ | 92,899 | $ | 124,512 | $ | 90,274 | ||||||
Trade names | 6,591 | 2,686 | 6,591 | 2,481 | ||||||||||
Non-compete agreements | 18,947 | 16,467 | 18,947 | 16,178 | ||||||||||
Total | $ | 150,050 | $ | 112,052 | $ | 150,050 | $ | 108,933 | ||||||
Customer relationships, trade names, and non-compete agreements carry a weighted average life of approximately seven years, nine years, and five years, respectively. | ||||||||||||||
Amortization expense related to identifiable intangible assets was $3.1 million and $5.0 million for the three months ended March 31, 2014 and 2013, respectively. The following table outlines the estimated future amortization expense related to intangible assets at March 31, 2014: | ||||||||||||||
(in thousands) | ||||||||||||||
Year Ending December 31, | ||||||||||||||
2014 (from April 1, 2014 to December 31, 2014) | $ | 9,449 | ||||||||||||
2015 | 9,893 | |||||||||||||
2016 | 6,232 | |||||||||||||
2017 | 5,390 | |||||||||||||
2018 | 3,434 | |||||||||||||
2019 and thereafter | 3,600 | |||||||||||||
Total | $ | 37,998 |
LONGTERM_OBLIGATIONS
LONG-TERM OBLIGATIONS | 3 Months Ended | |||||||||||
Mar. 31, 2014 | ||||||||||||
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- | March 31, | December 31, | |||||||||
Maturity | Average | 2014 | 2013 | |||||||||
Date | Interest Rate | |||||||||||
(in thousands) | ||||||||||||
Senior secured term loan | August 2020 | 4.25 | % | $ | 298,500 | $ | 299,250 | |||||
Senior revolving loan | August 2018 | — | — | — | ||||||||
Capital leases | April 2017 | 4 | % | 6,535 | 6,548 | |||||||
Note payable | October 2014 | 2.1 | % | 3,067 | 4,079 | |||||||
Acquisition-related liabilities | April 2014 | — | 1,125 | 2,580 | ||||||||
Total long-term obligations, including current portion | 309,227 | 312,457 | ||||||||||
Current maturities of long-term obligations | ||||||||||||
Senior secured term loan | (3,000 | ) | (3,000 | ) | ||||||||
Capital leases | (3,407 | ) | (3,690 | ) | ||||||||
Notes payable | (3,067 | ) | (4,079 | ) | ||||||||
Acquisition-related liabilities | (1,125 | ) | (2,580 | ) | ||||||||
Total current maturities of long-term obligations | (10,599 | ) | (13,349 | ) | ||||||||
Total long-term obligations | $ | 298,628 | $ | 299,108 | ||||||||
2013 Secured Credit Agreement | ||||||||||||
On August 27, 2013, we entered into a $400 million senior secured credit facility consisting of a $100 million senior revolving loan commitment, maturing in August 2018, and a $300 million senior secured term loan, maturing in August 2020 (the “Credit Agreement”). | ||||||||||||
During the term of the Credit Agreement, we have the right, subject to compliance with the covenants specified in the Credit Agreement, to increase the amounts available under the Credit Agreement up to a maximum of $600 million in one or more tranches including increasing the total capacity under the senior revolving loan commitment from its original $100 million up to a maximum of $200 million. The Credit Agreement is secured by liens on our real property and a significant portion of our personal property. | ||||||||||||
On March 26, 2014, we entered into the First Amendment to the Credit Agreement (“First Amendment”) which amends our two senior secured term loan interest rate options and reduces the term loan interest rate by a total of 50 basis points as described below. | ||||||||||||
Prior to the First Amendment, the senior secured term loan bore interest as follows: (1) 2.75% plus prime rate subject to a 2% floor; or (2) 3.75% plus one, two, three or six month LIBOR rate subject to a 1% LIBOR floor. Effective with the date of the First Amendment, the senior secured loan bears interest as follows: (1) 2.50% plus prime rate subject to a 1.75% floor; or (2) 3.50% plus one, two, three or six month LIBOR rate subject to a 0.75% LIBOR floor. As of March 31, 2014, all outstanding borrowings under the term loan were based on LIBOR subject to a 0.75% LIBOR floor and the applicable margin was 3.50% for an aggregate floating rate of 4.25%. | ||||||||||||
Borrowings under the senior revolving loan bear interest at various rates based on our total net leverage ratio with two rate options as follows: (1) for base rate advances, borrowings bear interest at prime rate plus 200 to 300 basis points; and (2) for LIBOR rate advances, borrowings bear interest at LIBOR rate plus 300 to 400 basis points. As of March 31, 2014, there were no borrowings outstanding under the senior revolving loan and outstanding letters of credit were $1.0 million. | ||||||||||||
In 2013, we entered into a two-year 3% interest rate cap agreement for a notional amount of $150.0 million equal to the portion of the senior secured term loan being hedged. The interest rate cap agreement settles monthly and expires on August 31, 2015. It bears a strike rate of 3% with an underlying equal to one month USD LIBOR, which is consistent with the variable rate on the Company’s senior secured term loan. As of March 31, 2014, the hedge was determined to be highly effective and is expected to continue to be highly effective in mitigating the risk of increases in the Company’s expected interest expense payments related to its senior secured term loan consistent with LIBOR rising above 3%. | ||||||||||||
All changes in the fair value of the interest rate cap were included in accumulated other comprehensive income and represented a de minimis amount as of March 31, 2014. The hedge was determined to be perfectly effective during the period from inception of the cash flow hedge through March 31, 2014 with no ineffectiveness recognized in earnings. The fair value of the interest rate cap as of March 31, 2014 and December 31, 2013 was $9,000 and $27,000, respectively, and was included in “Other noncurrent assets” on the Condensed Consolidated Balance Sheets. We did not utilize any derivative instruments during the period ended March 31, 2013. | ||||||||||||
In April 2014 we entered into a forward interest rate swap through August 27, 2020 for approximately $73.7 million equal to the portion of the outstanding amortized principal amount of the senior secured term loan being hedged as of the effective date of the forward interest rate swap. The term of the forward interest rate swap is from August 31, 2015 through August 27, 2020. Under the swap we will pay a fixed amount of interest of 2.81% on the notional amount and the swap counterparty will pay a floating amount of interest based on LIBOR with a one-month designated maturity subject to a floor of 0.75% which is consistent with the company’s obligation under the term loan. This cash flow hedge is expected to be highly effective at inception and will be subject to fair value accounting. | ||||||||||||
We manage exposure to counter-party credit risk related to our derivative positions by entering into contracts with various major financial institutions that can be expected to fully perform under the terms of such instruments. We do not anticipate non-performance by any of the counter—parties. Our exposure to credit risk in the event of non-performance by any of the counter-parties is limited to | ||||||||||||
those assets that have been recorded, but have not yet been received in cash. | ||||||||||||
The term loan facility under our Credit Agreement requires scheduled quarterly principal payments of $750,000, and a final installment equal to the remaining principal balance in August 2020. In addition, the Credit Agreement contains certain annual mandatory pre-payment terms based on a percentage of excess cash flow, commencing with measurement for the fiscal year ending December 31, 2014, and initial payment, if any, in fiscal year 2015. Excess cash flow, as defined in the Credit Agreement includes Consolidated EBITDA adjusted for capital expenditures, interest paid, income taxes paid, principal payments, certain acquisition-related obligations and working capital changes. Such annual mandatory prepayments are only required when the net leverage ratio exceeds 2.75 to 1.00. | ||||||||||||
The Credit Agreement contains a financial covenant related to a net leverage ratio (as defined in the Credit Agreement) which is not permitted to exceed 4.50 to 1.00 as well as other customary covenants related to limitations on (i) creating liens, debt, guarantees or other contingent obligations, (ii) engaging in mergers, acquisitions and consolidations, (iii) paying dividends or other distributions to, and redeeming and repurchasing securities from, equity holders, (iv) prepaying, redeeming or repurchasing subordinated or junior debt, and (v) engaging in certain transactions with affiliates, in each case, subject to customary exceptions. Under our Credit Agreement, our ability to pay dividends and repurchase securities from equity holders is limited by a requirement that such payments are not to exceed, in the aggregate, 50% of net income, as adjusted, on a cumulative basis for all quarterly periods from the closing date and ending prior to the date of payment or repurchase. Adjustments to Consolidated Net Income, as defined in the Credit Agreement include, among other items, the exclusion of extraordinary items, cumulative effect of a change in accounting principle, intangible asset amortization and impairment charges, non-cash compensation expense, cumulative effect of foreign currency translations, and gains or losses from discontinued operations. As of March 31, 2014, we were in compliance with all covenants. | ||||||||||||
The remaining 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, | ||||||||||||
2014 (April 1 - December 31) | $ | 2,250 | ||||||||||
2015 | 3,000 | |||||||||||
2016 | 3,000 | |||||||||||
2017 | 3,000 | |||||||||||
2018 and Thereafter | 287,250 | |||||||||||
Total | $ | 298,500 | ||||||||||
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 March 31, 2014, our capital lease obligations had a weighted-average interest rate of approximately 4.0%. | ||||||||||||
Note Payable | ||||||||||||
During 2011 we entered into a note payable related to a software license agreement that bears interest of approximately 2.1% and is payable quarterly through the fourth quarter of 2014. | ||||||||||||
Acquisition-related Liabilities | ||||||||||||
Amounts recorded in connection with acquisition-related liabilities as of March 31, 2014 and December 31, 2013 are as follows: | ||||||||||||
March 31, | December 31, | |||||||||||
2014 | 2013 | |||||||||||
(in thousands) | ||||||||||||
De Novo contingent consideration | ||||||||||||
Current portion | $ | 1,125 | $ | 2,580 | ||||||||
Total De Novo contingent consideration | $ | 1,125 | $ | 2,580 | ||||||||
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 was no liability recorded related to this contingent consideration as of March 31, 2014 or December 31, 2013. | ||||||||||||
De Novo Legal LLC | ||||||||||||
In December 2011, the Company acquired De Novo Legal LLC and its affiliated companies (“De Novo Legal”). In connection with the acquisition, certain contingent consideration was payable to the De Novo sellers relative to the January 1, 2013 to December 31, 2013 measurement period (the “Earn-out period”). Therefore, in the first quarter of 2014, we provided an earn-out statement and paid the sellers $3.5 million as a result of the Company’s calculation of the performance measure for the earn-out period. The sellers disputed the Company’s calculation of the earn-out amount and alleged that the performance measure was higher, thereby triggering the next tier of contingent consideration. The Company and the sellers participated in the agreed dispute resolution process as specified under the acquisition agreement and in April 2014 agreed to settle this matter for a cash payment to the sellers of $1.5 million which was paid to the sellers in April 2014. As a result, we recorded a total adjustment of $1.5 million to the contingent consideration obligation as of March 31, 2014 of which $1.1 million is included in “Current maturities of long-term obligations” related to non-employee sellers and $0.4 million is included in “Other accrued expense” related to sellers who are Epiq employees, on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2014. There are no further payments remaining under the contingent consideration obligation with respect to De Novo Legal. |
NET_INCOME_PER_SHARE
NET INCOME PER SHARE | 3 Months Ended | |||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||
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 the 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 months ended March 31, 2014 and 2013 is as follows: | ||||||||||||||||||
Three Months Ended March 31, 2014 | Three Months Ended March 31, 2013 | |||||||||||||||||
Net Loss | 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 (loss) | $ | (2,298 | ) | $ | 3,937 | |||||||||||||
Less: amounts allocated to nonvested shares | — | (39 | ) | |||||||||||||||
Basic net income (loss) available to common stockholders | (2,298 | ) | 34,862 | $ | (0.07 | ) | 3,898 | 35,600 | $ | 0.11 | ||||||||
Effect of dilutive securities: | ||||||||||||||||||
Stock options | — | — | — | 947 | ||||||||||||||
Add back: amounts allocated to nonvested shares | — | — | 39 | — | ||||||||||||||
Less: amounts re-allocated to nonvested shares | — | — | (39 | ) | — | |||||||||||||
Diluted net income (loss) available to common stockholders | $ | (2,298 | ) | 34,862 | $ | (0.07 | ) | $ | 3,898 | 36,547 | $ | 0.11 | ||||||
Due to the net loss incurred for the three months ended March 31, 2014, approximately 553,000 shares related to outstanding options or nonvested shares were not included in the diluted earnings per share calculation because they would be anti-dilutive. For the three months ended March 31, 2013, weighted-average outstanding stock options totaling approximately 2.6 million were anti-dilutive and therefore not included in the computation of diluted net income per share. |
SHAREBASED_COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
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 | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Direct cost of services | $ | 19 | $ | 19 | ||||
Selling, general and administrative | 3,520 | 1,520 | ||||||
Share-based compensation expense | 3,539 | 1,539 | ||||||
Income tax benefit | (1,541 | ) | (654 | ) | ||||
Total share-based compensation expense, net of tax | $ | 1,998 | $ | 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 up to 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. Awards granted under the 2004 Plan that expire, terminate or are forfeited are then available for reissuance as future awards. At March 31, 2014, there were approximately 659,000 shares available for future grants under the 2004 Plan, not considering the estimated number of shares reserved for the executive performance-based annual incentive compensation award as discussed below. | ||||||||
During the three months ended March 31, 2014, we granted 756,799 restricted stock awards at a weighted-average grant date price of $14.94 per share of which 450,000 shares granted 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, 2014 (the “2014 Performance-Based Share Award). During the three months ended March 31, 2014, 100,000 shares of the 2014 Performance-Based Share Awards were forfeited by a former executive in conjunction with that individual’s resignation from the Company. The Company did not recognize any expense during the quarter for these forfeited awards. As of March 31, 2014, we have assessed the likelihood that the performance condition related to the remaining 350,000 shares of the 2014 Performance-Based Share Award will be met and accordingly have recorded the related expense based on the estimated outcome. | ||||||||
Also granted during the first quarter of 2014 were 62,069 shares which vested in April 2014 upon the achievement of financial performance criteria. An additional 219,730 shares were granted related to 2013 financial performance criteria, which vested upon issuance and the related expense was recognized in the Consolidated Statements of Income for the year ended December 31, 2013. The remaining 25,000 restricted stock awards will vest one year from the grant date. | ||||||||
Included in share-based compensation expense for the three months ended March 31, 2014 is $0.6 million of expense recognized with respect to executive performance-based annual incentive compensation awards which, based on our March 31, 2014 share price is equal to approximately 171,000 shares for the annual award. The accrual is recorded in “Accrued compensation” on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2014. As of March 31, 2014, we have assessed the likelihood that the performance condition related to this award will be met and have accrued the related expense based on the estimated outcome. | ||||||||
No options were granted during the three months ended March 31, 2014. As of March 31, 2014 there was $6.6 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 approximately 19 months. |
SEGMENT_REPORTING
SEGMENT REPORTING | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
SEGMENT REPORTING | ' | |||||||||||||
SEGMENT REPORTING | ' | |||||||||||||
NOTE 6: SEGMENT REPORTING | ||||||||||||||
We report our financial performance based on the following two reportable segments: the Technology segment and the Bankruptcy and Settlement Administration segment. | ||||||||||||||
Our Technology segment provides eDiscovery managed services and technology solutions comprised of consulting, collections and forensics, processing, search and review, and document review to companies and law firms. Produced documents are made available primarily through a hosted environment utilizing our proprietary software DocuMatrix®, and third-party software which allows for efficient attorney review and data requests. Our Bankruptcy and Settlement Administration segment provides managed services and technology solutions that address the needs of our customers with respect to litigation, claims and project administration, compliance matters, controlled disbursements, corporate restructuring, bankruptcy and class action proceedings. | ||||||||||||||
The segment performance measure is based on earnings before interest, taxes, depreciation and amortization, other operating expense, and share-based compensation expense. In management’s evaluation of performance, certain costs, such as compensation for administrative staff and executive management, are not allocated by segment and, accordingly, the following reporting segment results do not include such unallocated costs. | ||||||||||||||
Assets reported within a segment are those assets that can be identified to a segment and primarily consist of trade receivables, property, equipment and leasehold improvements, software, identifiable intangible assets and goodwill. Cash, certain tax-related assets, and certain prepaid assets and other assets are not allocated to our segments. Although we can and do identify long-lived assets such as property, equipment and leasehold improvements, software, and identifiable intangible assets to reporting segments, we do not allocate the related depreciation and amortization to the segment as management evaluates segment performance exclusive of these non-cash charges. | ||||||||||||||
Following is a summary of segment information for the three months ended March 31, 2014. | ||||||||||||||
Three Months Ended March 31, 2014 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 81,169 | $ | 35,051 | $ | — | $ | 116,220 | ||||||
Intersegment revenues | 180 | — | (180 | ) | — | |||||||||
Operating revenues including intersegment revenue | 81,349 | 35,051 | (180 | ) | 116,220 | |||||||||
Reimbursable expenses | 1,107 | 5,944 | — | 7,051 | ||||||||||
Total revenues | 82,456 | 40,995 | (180 | ) | 123,271 | |||||||||
Direct costs, selling, general and administrative costs | 60,158 | 29,044 | (180 | ) | 89,022 | |||||||||
Segment performance measure | $ | 22,298 | $ | 11,951 | $ | — | $ | 34,249 | ||||||
Following is a summary of segment information for the three months ended March 31, 2013. | ||||||||||||||
Three Months Ended March 31, 2013 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 54,787 | $ | 48,121 | $ | — | $ | 102,908 | ||||||
Intersegment revenues | 5 | — | (5 | ) | — | |||||||||
Operating revenues including intersegment revenue | 54,792 | 48,121 | (5 | ) | 102,908 | |||||||||
Reimbursable expenses | 287 | 20,395 | — | 20,682 | ||||||||||
Total revenues | 55,079 | 68,516 | (5 | ) | 123,590 | |||||||||
Direct costs, selling, general and administrative costs | 38,687 | 53,917 | (5 | ) | 92,599 | |||||||||
Segment performance measure | $ | 16,392 | $ | 14,599 | $ | — | $ | 30,991 | ||||||
Following is a reconciliation of our segment performance measure to income (loss) before income taxes. | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
(in thousands) | ||||||||||||||
Segment performance measure | $ | 34,249 | $ | 30,991 | ||||||||||
Unallocated corporate expenses | (16,053 | ) | (10,324 | ) | ||||||||||
Share-based compensation expense | (3,539 | ) | (1,539 | ) | ||||||||||
Depreciation and software and leasehold amortization | (8,700 | ) | (6,999 | ) | ||||||||||
Amortization of intangible assets | (3,120 | ) | (4,966 | ) | ||||||||||
Fair value adjustment to contingent consideration | (1,142 | ) | — | |||||||||||
Other operating expense | (69 | ) | (47 | ) | ||||||||||
Income from operations | 1,626 | 7,116 | ||||||||||||
Interest expense, net | (4,873 | ) | (1,835 | ) | ||||||||||
Income (loss) before income taxes | $ | (3,247 | ) | $ | 5,281 | |||||||||
Following are total assets by segment. | ||||||||||||||
March 31, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
(in thousands) | ||||||||||||||
Assets | ||||||||||||||
Technology | $ | 372,423 | $ | 369,135 | ||||||||||
Bankruptcy and Settlement Administration | 273,499 | 281,073 | ||||||||||||
Unallocated corporate | 77,665 | 97,573 | ||||||||||||
Total consolidated assets | $ | 723,587 | $ | 747,781 |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
NOTE 7: FAIR VALUE MEASUREMENTS | ||||||||||||||
Accounting standards establish a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The hierarchy requires us to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are listed below. | ||||||||||||||
Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities. | ||||||||||||||
Level 2 — Observable inputs other than those included in Level 1, such as quoted market prices for similar assets and liabilities in active markets or quoted prices for identical assets in inactive markets. | ||||||||||||||
Level 3 — Unobservable inputs reflecting our own assumptions and best estimate of what inputs market participants would use in pricing an asset or liability. | ||||||||||||||
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 three months ended March 31, 2014. 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. | ||||||||||||||
For fair value measurements categorized within Level 3 of the fair value hierarchy, our accounting and finance management, who report to executive management, 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 principal 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 March 31, 2014 our assets or liabilities that were measured and recorded at fair value on a recurring basis are as follows: | ||||||||||||||
Estimated Fair Value Measurements | ||||||||||||||
Items Measured at Fair Value on a Recurring | Carrying | Quoted Prices | Significant | Significant | ||||||||||
in Active | Other | Unobservable | ||||||||||||
Markets | Observable | Inputs | ||||||||||||
Inputs | ||||||||||||||
Basis | Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||
(in thousands) | ||||||||||||||
March 31, 2014: | ||||||||||||||
Assets: | ||||||||||||||
Interest rate cap | $ | 9 | $ | — | $ | 9 | $ | — | ||||||
December 31, 2013: | ||||||||||||||
Assets: | ||||||||||||||
Interest rate cap | $ | 27 | $ | — | $ | 27 | $ | — | ||||||
Fair Value of Financial Assets and Liabilities | ||||||||||||||
As of March 31, 2014 and December 31, 2013, the carrying value of our trade accounts receivable, accounts payable, certain other liabilities, deferred acquisition price liabilities and capital leases approximated fair value. The amounts outstanding under our Credit Agreement as of March 31, 2014 and December 31, 2013 approximated fair value due to the borrowing rates currently available to us for debt with similar terms and are classified as Level 2. The fair value of the amount outstanding under our Credit Agreement as of December 31, 2013 of $299.3 million was previously disclosed as $302.3 million. | ||||||||||||||
The estimated fair value of the Company’s interest rate cap was determined via the Black-Scholes option pricing model which utilizes certain observable inputs including the forward and spot curves for the underlying 1 month LIBOR and the estimated volatility for the 1 month LIBOR over the remaining term of the interest rate cap agreement. Based on these characteristics the interest rate cap is classified as a level 2. The fair value of the interest rate cap is subject to material change based upon changes in the forward curve for 1 month LIBOR and the volatility thereof. |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2014 | |
EQUITY | ' |
EQUITY | ' |
NOTE 8: EQUITY | |
Share Repurchases | |
On November 6, 2013, our Board approved and authorized the repurchase, on or prior to December 31, 2015, of our outstanding shares of common stock up to an aggregate of $35.0 million (the “2014 Share Repurchase Program”) There were no repurchases of shares under the 2014 Share Repurchase Program during the three months ended March 31, 2014 and no repurchases during the three months ended March 31, 2013 under our prior share repurchase program which expired on December 31, 2013. | |
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 March 31, 2014 and 2013, we repurchased 222,235 shares and 175,295 shares, respectively, for approximately $3.2 million and $2.2 million, respectively, to satisfy employee tax withholding obligations upon the vesting of restricted stock awards. | |
Dividends | |
On March 6, 2014, the Board declared a cash dividend of $0.09 per outstanding share of common stock, which will be paid on June 3, 2014 to shareholders of record as of the close of business on May 1, 2014. | |
Dividends payable were approximately $3.2 million and $3.1 million at March 31, 2014 and December 31, 2013, respectively. |
LEGAL_PROCEEDINGS
LEGAL PROCEEDINGS | 3 Months Ended |
Mar. 31, 2014 | |
LEGAL PROCEEDINGS | ' |
LEGAL PROCEEDINGS | ' |
NOTE 9: 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. |
NATURE_OF_OPERATIONS_AND_SUMMA1
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
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. 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. 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. | |
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 $404.3 million as of March 31, 2014. | |
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. | |
Income Taxes | ' |
Income Taxes | |
Our effective tax rate for the three months ended March 31, 2014 was 29.2% compared to 25.9% for the comparable prior year period. The reduced 2013 rate reflected a discrete benefit related to the enactment of the 2012 American Taxpayer Relief Act which extended the federal research credit for both 2013 and 2012. We recognized approximately $0.4 million of tax benefit relating to the 2012 credits and a portion of our 2013 tax credits during the first quarter of 2013. While legislation has been introduced to retroactively reinstate the credit to the beginning of 2014, the federal research credit has not yet been extended past 2013 and our 2014 effective tax rate does not reflect any research credit benefit. Our effective tax rate is lower than the U.S. statutory rate because we earned income in international jurisdictions with lower tax rates and our income from these jurisdictions increased during the three months ended March 31, 2014 as compared to the three months ended March 31, 2013. | |
On March 31, 2014, New York State passed comprehensive corporate income tax reform with most changes effective for years 2015 and beyond. We have substantial business presence within the state, but we do not expect the new law to have a material impact on our overall expected future tax expense. Because a change in tax law is accounted for in the period of enactment, our results for the three months ended March 31, 2014 reflect the impact of this state law change, however, the impact was not material. |
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
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, 2013 | $ | 189,339 | $ | 214,963 | $ | 404,302 | ||||||||
Foreign currency translation | 42 | — | 42 | |||||||||||
Balance as of March 31, 2014 | $ | 189,381 | $ | 214,963 | $ | 404,344 | ||||||||
Schedule of Identifiable intangible assets | ' | |||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | |||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||
(in thousands) | ||||||||||||||
Amortizing intangible assets: | ||||||||||||||
Customer relationships | $ | 124,512 | $ | 92,899 | $ | 124,512 | $ | 90,274 | ||||||
Trade names | 6,591 | 2,686 | 6,591 | 2,481 | ||||||||||
Non-compete agreements | 18,947 | 16,467 | 18,947 | 16,178 | ||||||||||
Total | $ | 150,050 | $ | 112,052 | $ | 150,050 | $ | 108,933 | ||||||
Schedule of estimated future amortization expense related to intangible assets | ' | |||||||||||||
(in thousands) | ||||||||||||||
Year Ending December 31, | ||||||||||||||
2014 (from April 1, 2014 to December 31, 2014) | $ | 9,449 | ||||||||||||
2015 | 9,893 | |||||||||||||
2016 | 6,232 | |||||||||||||
2017 | 5,390 | |||||||||||||
2018 | 3,434 | |||||||||||||
2019 and thereafter | 3,600 | |||||||||||||
Total | $ | 37,998 |
LONGTERM_OBLIGATIONS_Tables
LONG-TERM OBLIGATIONS (Tables) | 3 Months Ended | |||||||||||
Mar. 31, 2014 | ||||||||||||
LONG-TERM OBLIGATIONS | ' | |||||||||||
Summary of long-term debt and other long-term obligations outstanding | ' | |||||||||||
Final | Weighted- | March 31, | December 31, | |||||||||
Maturity | Average | 2014 | 2013 | |||||||||
Date | Interest Rate | |||||||||||
(in thousands) | ||||||||||||
Senior secured term loan | August 2020 | 4.25 | % | $ | 298,500 | $ | 299,250 | |||||
Senior revolving loan | August 2018 | — | — | — | ||||||||
Capital leases | April 2017 | 4 | % | 6,535 | 6,548 | |||||||
Note payable | October 2014 | 2.1 | % | 3,067 | 4,079 | |||||||
Acquisition-related liabilities | April 2014 | — | 1,125 | 2,580 | ||||||||
Total long-term obligations, including current portion | 309,227 | 312,457 | ||||||||||
Current maturities of long-term obligations | ||||||||||||
Senior secured term loan | (3,000 | ) | (3,000 | ) | ||||||||
Capital leases | (3,407 | ) | (3,690 | ) | ||||||||
Notes payable | (3,067 | ) | (4,079 | ) | ||||||||
Acquisition-related liabilities | (1,125 | ) | (2,580 | ) | ||||||||
Total current maturities of long-term obligations | (10,599 | ) | (13,349 | ) | ||||||||
Total long-term obligations | $ | 298,628 | $ | 299,108 | ||||||||
Schedule of remaining annual maturities under the senior secured term loan, due August 2020 | ' | |||||||||||
(in thousands) | ||||||||||||
Year Ending December 31, | ||||||||||||
2014 (April 1 - December 31) | $ | 2,250 | ||||||||||
2015 | 3,000 | |||||||||||
2016 | 3,000 | |||||||||||
2017 | 3,000 | |||||||||||
2018 and Thereafter | 287,250 | |||||||||||
Total | $ | 298,500 | ||||||||||
Schedule of amounts recorded in connection with acquisition-related liabilities | ' | |||||||||||
March 31, | December 31, | |||||||||||
2014 | 2013 | |||||||||||
(in thousands) | ||||||||||||
De Novo contingent consideration | ||||||||||||
Current portion | $ | 1,125 | $ | 2,580 | ||||||||
Total De Novo contingent consideration | $ | 1,125 | $ | 2,580 |
NET_INCOME_PER_SHARE_Tables
NET INCOME PER SHARE (Tables) | 3 Months Ended | |||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||
NET INCOME PER SHARE | ' | |||||||||||||||||
Schedule of computation of basic and diluted net income per share | ' | |||||||||||||||||
Three Months Ended March 31, 2014 | Three Months Ended March 31, 2013 | |||||||||||||||||
Net Loss | 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 (loss) | $ | (2,298 | ) | $ | 3,937 | |||||||||||||
Less: amounts allocated to nonvested shares | — | (39 | ) | |||||||||||||||
Basic net income (loss) available to common stockholders | (2,298 | ) | 34,862 | $ | (0.07 | ) | 3,898 | 35,600 | $ | 0.11 | ||||||||
Effect of dilutive securities: | ||||||||||||||||||
Stock options | — | — | — | 947 | ||||||||||||||
Add back: amounts allocated to nonvested shares | — | — | 39 | — | ||||||||||||||
Less: amounts re-allocated to nonvested shares | — | — | (39 | ) | — | |||||||||||||
Diluted net income (loss) available to common stockholders | $ | (2,298 | ) | 34,862 | $ | (0.07 | ) | $ | 3,898 | 36,547 | $ | 0.11 |
SHAREBASED_COMPENSATION_Tables
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
SHARE-BASED COMPENSATION. | ' | |||||||
Schedule of share-based compensation expense | ' | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Direct cost of services | $ | 19 | $ | 19 | ||||
Selling, general and administrative | 3,520 | 1,520 | ||||||
Share-based compensation expense | 3,539 | 1,539 | ||||||
Income tax benefit | (1,541 | ) | (654 | ) | ||||
Total share-based compensation expense, net of tax | $ | 1,998 | $ | 885 |
SEGMENT_REPORTING_Tables
SEGMENT REPORTING (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
SEGMENT REPORTING | ' | |||||||||||||
Summary of segment information | ' | |||||||||||||
Three Months Ended March 31, 2014 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 81,169 | $ | 35,051 | $ | — | $ | 116,220 | ||||||
Intersegment revenues | 180 | — | (180 | ) | — | |||||||||
Operating revenues including intersegment revenue | 81,349 | 35,051 | (180 | ) | 116,220 | |||||||||
Reimbursable expenses | 1,107 | 5,944 | — | 7,051 | ||||||||||
Total revenues | 82,456 | 40,995 | (180 | ) | 123,271 | |||||||||
Direct costs, selling, general and administrative costs | 60,158 | 29,044 | (180 | ) | 89,022 | |||||||||
Segment performance measure | $ | 22,298 | $ | 11,951 | $ | — | $ | 34,249 | ||||||
Three Months Ended March 31, 2013 | ||||||||||||||
Technology | Bankruptcy | Eliminations | Total | |||||||||||
and Settlement | ||||||||||||||
Administration | ||||||||||||||
(in thousands) | ||||||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 54,787 | $ | 48,121 | $ | — | $ | 102,908 | ||||||
Intersegment revenues | 5 | — | (5 | ) | — | |||||||||
Operating revenues including intersegment revenue | 54,792 | 48,121 | (5 | ) | 102,908 | |||||||||
Reimbursable expenses | 287 | 20,395 | — | 20,682 | ||||||||||
Total revenues | 55,079 | 68,516 | (5 | ) | 123,590 | |||||||||
Direct costs, selling, general and administrative costs | 38,687 | 53,917 | (5 | ) | 92,599 | |||||||||
Segment performance measure | $ | 16,392 | $ | 14,599 | $ | — | $ | 30,991 | ||||||
Schedule of reconciliation of segment performance measure to income (loss) before income taxes | ' | |||||||||||||
Three Months Ended March 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
(in thousands) | ||||||||||||||
Segment performance measure | $ | 34,249 | $ | 30,991 | ||||||||||
Unallocated corporate expenses | (16,053 | ) | (10,324 | ) | ||||||||||
Share-based compensation expense | (3,539 | ) | (1,539 | ) | ||||||||||
Depreciation and software and leasehold amortization | (8,700 | ) | (6,999 | ) | ||||||||||
Amortization of intangible assets | (3,120 | ) | (4,966 | ) | ||||||||||
Fair value adjustment to contingent consideration | (1,142 | ) | — | |||||||||||
Other operating expense | (69 | ) | (47 | ) | ||||||||||
Income from operations | 1,626 | 7,116 | ||||||||||||
Interest expense, net | (4,873 | ) | (1,835 | ) | ||||||||||
Income (loss) before income taxes | $ | (3,247 | ) | $ | 5,281 | |||||||||
Schedule of total assets by segment | ' | |||||||||||||
March 31, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
(in thousands) | ||||||||||||||
Assets | ||||||||||||||
Technology | $ | 372,423 | $ | 369,135 | ||||||||||
Bankruptcy and Settlement Administration | 273,499 | 281,073 | ||||||||||||
Unallocated corporate | 77,665 | 97,573 | ||||||||||||
Total consolidated assets | $ | 723,587 | $ | 747,781 |
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
Schedule of assets or liabilities measured and recorded at fair value on a recurring basis | ' | |||||||||||||
Estimated Fair Value Measurements | ||||||||||||||
Items Measured at Fair Value on a Recurring | Carrying | Quoted Prices | Significant | Significant | ||||||||||
in Active | Other | Unobservable | ||||||||||||
Markets | Observable | Inputs | ||||||||||||
Inputs | ||||||||||||||
Basis | Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||
(in thousands) | ||||||||||||||
March 31, 2014: | ||||||||||||||
Assets: | ||||||||||||||
Interest rate cap | $ | 9 | $ | — | $ | 9 | $ | — | ||||||
December 31, 2013: | ||||||||||||||
Assets: | ||||||||||||||
Interest rate cap | $ | 27 | $ | — | $ | 27 | $ | — |
NATURE_OF_OPERATIONS_AND_SUMMA2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | |
item | ||
Revenue Recognition | ' | ' |
Amount charged from trustee clients for support services | $0 | ' |
Number of components of monthly deposit fees | 2 | ' |
Goodwill | ' | ' |
Number of events indicating impairment of goodwill | 0 | ' |
Goodwill | $404,344,000 | $404,302,000 |
NATURE_OF_OPERATIONS_AND_SUMMA3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ' |
Effective tax rate (as a percent) | 29.20% | 25.90% |
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 $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
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 | $404,302 | $189,339 | $214,963 | $214,963 |
Foreign currency translation | 42 | 42 | ' | ' |
Balance at the end of period | $404,344 | $189,381 | $214,963 | $214,963 |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS (Details 2) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Amortizing and Non-amortizing intangible assets | ' | ' | ' |
Gross Carrying Amount | $150,050 | ' | $150,050 |
Accumulated Amortization | 112,052 | ' | 108,933 |
Amortization of identifiable intangible assets | 3,120 | 4,966 | ' |
Customer relationships | ' | ' | ' |
Amortizing and Non-amortizing intangible assets | ' | ' | ' |
Gross Carrying Amount | 124,512 | ' | 124,512 |
Accumulated Amortization | 92,899 | ' | 90,274 |
Customer relationships | Weighted Average | ' | ' | ' |
Amortizing and Non-amortizing intangible assets | ' | ' | ' |
Weighted average life | '7 years | ' | ' |
Trade names | ' | ' | ' |
Amortizing and Non-amortizing intangible assets | ' | ' | ' |
Gross Carrying Amount | 6,591 | ' | 6,591 |
Accumulated Amortization | 2,686 | ' | 2,481 |
Trade names | Weighted Average | ' | ' | ' |
Amortizing and Non-amortizing intangible assets | ' | ' | ' |
Weighted average life | '9 years | ' | ' |
Non-compete agreements | ' | ' | ' |
Amortizing and Non-amortizing intangible assets | ' | ' | ' |
Gross Carrying Amount | 18,947 | ' | 18,947 |
Accumulated Amortization | $16,467 | ' | $16,178 |
Non-compete agreements | Weighted Average | ' | ' | ' |
Amortizing and Non-amortizing intangible assets | ' | ' | ' |
Weighted average life | '5 years | ' | ' |
GOODWILL_AND_INTANGIBLE_ASSETS4
GOODWILL AND INTANGIBLE ASSETS (Details 3) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Estimated future amortization expense related to intangible assets | ' | ' |
2014 (from April 1, 2014 to December 31, 2014) | $9,449 | ' |
2015 | 9,893 | ' |
2016 | 6,232 | ' |
2017 | 5,390 | ' |
2018 | 3,434 | ' |
2019 and thereafter | 3,600 | ' |
Total | $37,998 | $41,117 |
LONGTERM_OBLIGATIONS_Details
LONG-TERM OBLIGATIONS (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 26, 2014 | Aug. 27, 2013 | Mar. 31, 2014 | Aug. 27, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Apr. 30, 2014 | Mar. 25, 2014 | Mar. 26, 2014 | Mar. 25, 2014 | Mar. 26, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Aug. 27, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 |
Interest rate cap | Interest rate cap | Jupiter eSources LLC | Jupiter eSources LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | De Novo Legal LLC | Credit Agreement | Credit Agreement | Credit Agreement | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior secured term loan | Senior 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 | Capital leases | Capital leases | Notes payable | Notes payable | Acquisition-related liabilities | Acquisition-related liabilities | Contingent consideration | Contingent consideration | Letters of credit | |||
Current maturities of long-term obligations | Other accrued expenses | Contingent consideration - purchase price consideration | item | item | Interest rate cap | Interest rate cap | Interest rate swap | Prime rate | Prime rate | LIBOR | LIBOR | LIBOR | LIBOR | item | Prime rate | Prime rate | Prime rate | LIBOR | LIBOR | LIBOR | De Novo Legal LLC | De Novo Legal LLC | ||||||||||||||||||||
Forward | Interest rate cap | Minimum | Maximum | Minimum | Maximum | |||||||||||||||||||||||||||||||||||||
LONG-TERM OBLIGATIONS | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total long-term obligations, including current portion | $309,227,000 | $312,457,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $298,500,000 | $299,250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $6,535,000 | $6,548,000 | $3,067,000 | $4,079,000 | $1,125,000 | $2,580,000 | $1,125,000 | $2,580,000 | $1,000,000 |
Total current maturities of long-term obligations | -10,599,000 | -13,349,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -3,000,000 | -3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -3,407,000 | -3,690,000 | -3,067,000 | -4,079,000 | -1,125,000 | -2,580,000 | ' | ' | ' |
Total Long-term obligations | 298,628,000 | 299,108,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4.25% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4.00% | ' | 2.10% | ' | ' | ' | ' | ' | ' |
Aggregate amount of funds available | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 400,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal amount of debt issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 300,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity subject at the entity's option, subject to compliance with covenants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 600,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 200,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum number of tranches | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of term loan interest rate options amended | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reduction in term loan interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basis points added to reference rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.75% | 2.50% | 3.75% | 3.50% | 3.50% | ' | ' | ' | ' | 2.00% | 3.00% | ' | 3.00% | 4.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Variable interest rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'prime rate | 'prime rate | 'one, two, three or six month LIBOR rate | 'one, two, three or six month LIBOR rate | 'LIBOR | ' | ' | ' | 'Prime rate | ' | ' | 'LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate, variable interest rate floor | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.00% | 1.75% | 1.00% | 0.75% | 0.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate floating rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4.25% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of rate options | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term of derivative contract | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '2 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notional amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 150,000,000 | 73,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Variable rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'LIBOR with a one-month designated maturity | ' | ' | ' | ' | ' | '1 month LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Strike rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.00% | 2.81% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ineffectiveness gain (loss) recognized in earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of derivative | ' | ' | 9,000 | 27,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basis spread on variable rate basis, floor | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Payments of the principal amount of debt quarterly | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 750,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Threshold leverage ratio for determination of annual mandatory prepayments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.75 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net leverage ratio, maximum | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4.5 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum percentage of net income that can be paid as dividends and repurchase securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maturity of long-term obligations consisting of senior secured term loan, acquisition-related liabilities, and capitalized leases | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2014 (April 1 - December 31) | 2,250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2015 | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2016 | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2017 | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2018 and thereafter | 287,250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total | 309,227,000 | 312,457,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 298,500,000 | 299,250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6,535,000 | 6,548,000 | 3,067,000 | 4,079,000 | 1,125,000 | 2,580,000 | 1,125,000 | 2,580,000 | 1,000,000 |
Interest rate bearing notes payable (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.10% | ' | ' | ' | ' | ' | ' |
Potential undiscounted amount of all future payments, minimum | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Potential undiscounted amount of all future payments, maximum | ' | ' | ' | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contingent consideration paid | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of potential contingent consideration recorded | ' | ' | ' | ' | 0 | 0 | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash payment made to sellers on settlement of dispute | ' | ' | ' | ' | ' | ' | 1,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Adjustment to contingent consideration liability | ' | ' | ' | ' | ' | ' | $1,500,000 | $1,100,000 | $400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
NET_INCOME_PER_SHARE_Details
NET INCOME PER SHARE (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
NET INCOME PER SHARE | ' | ' |
Net income (loss) | ($2,298) | $3,937 |
Less: amounts allocated to nonvested shares | ' | -39 |
Basic net income (loss) available to common stockholders | -2,298 | 3,898 |
Computation of basic and diluted net income per share | ' | ' |
Add back: amounts allocated to nonvested shares | ' | 39 |
Less: amounts re-allocated to nonvested shares | ' | -39 |
Diluted net income (loss) available to common stockholders | ($2,298) | $3,898 |
Weighted Average Common Shares Outstanding (Denominator) | ' | ' |
Weighted Average Common Shares Outstanding Basic | 34,862,000 | 35,600,000 |
Weighted Average Common Shares Outstanding Diluted | 34,862,000 | 36,547,000 |
Per Share Amount | ' | ' |
Basic net income (loss) available to common stockholders (in dollars per share) | ($0.07) | $0.11 |
Diluted net income (loss) available to common stockholders (in dollars per share) | ($0.07) | $0.11 |
Antidilutive securities excluded from computation of diluted net income per share | ' | ' |
Weighted-average outstanding stock options that were anti-dilutive (in Shares) | 553,000 | 2,600,000 |
Stock options | ' | ' |
Weighted Average Common Shares Outstanding (Denominator) | ' | ' |
Effect on weighted average common shares outstanding from dilutive securities | ' | 947,000 |
SHAREBASED_COMPENSATION_Detail
SHARE-BASED COMPENSATION (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
SHARE-BASED COMPENSATION | ' | ' |
Share-based compensation expense | $3,539 | $1,539 |
Income tax benefit | -1,541 | -654 |
Total share-based compensation expense, net of tax | 1,998 | 885 |
Direct cost of services | ' | ' |
SHARE-BASED COMPENSATION | ' | ' |
Share-based compensation expense | 19 | 19 |
Selling, general and administrative | ' | ' |
SHARE-BASED COMPENSATION | ' | ' |
Share-based compensation expense | $3,520 | $1,520 |
SHAREBASED_COMPENSATION_Detail1
SHARE-BASED COMPENSATION (Details 2) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
SHARE-BASED COMPENSATION | ' | ' |
Share-based compensation expense | $3,539,000 | $1,539,000 |
Unrecognized compensation cost related to outstanding, unvested stock options and restricted stock | 6,600,000 | ' |
Weighted average recognition period of unrecognized compensation cost | '19 months | ' |
Nonvested share awards | ' | ' |
SHARE-BASED COMPENSATION | ' | ' |
Restricted stock granted (in shares) | 756,799 | ' |
Weighted-average grant date price (in dollars per share) | $14.94 | ' |
Options granted (in shares) | 0 | ' |
Nonvested share awards | Vest one year after and upon certification of achievement of performance criteria by the compensation committee of the Board | ' | ' |
SHARE-BASED COMPENSATION | ' | ' |
Restricted stock granted (in shares) | 62,069 | ' |
Nonvested share awards | Vest in one year | ' | ' |
SHARE-BASED COMPENSATION | ' | ' |
Restricted stock granted (in shares) | 25,000 | ' |
Vesting period | '1 year | ' |
Performance Shares | ' | ' |
SHARE-BASED COMPENSATION | ' | ' |
Remaining restricted stock (in shares) | 350,000 | ' |
Performance Shares | Former employee | ' | ' |
SHARE-BASED COMPENSATION | ' | ' |
Awards forfeited (in shares) | 100,000 | ' |
2004 Plan | ' | ' |
SHARE-BASED COMPENSATION | ' | ' |
Grants of awards for the issuance (in shares) | 7,500,000 | ' |
Number of shares available for future grants | 659,000 | ' |
Strategic Executive Incentive Plan | ' | ' |
SHARE-BASED COMPENSATION | ' | ' |
Shares outstanding | 171,000 | ' |
Strategic Executive Incentive Plan | Nonvested share awards | Vest one year after and upon certification of achievement of performance criteria by the compensation committee of the Board | ' | ' |
SHARE-BASED COMPENSATION | ' | ' |
Restricted stock granted (in shares) | 219,730 | ' |
Qualified Executive Performance Plan | Performance Shares | ' | ' |
SHARE-BASED COMPENSATION | ' | ' |
Restricted stock granted (in shares) | 450,000 | ' |
Executive performance-based annual incentive compensation awards | ' | ' |
SHARE-BASED COMPENSATION | ' | ' |
Share-based compensation expense | $600,000 | ' |
SEGMENT_REPORTING_Details
SEGMENT REPORTING (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
segment | ||
SEGMENT REPORTING | ' | ' |
Number of reporting segments | 2 | ' |
Revenues: | ' | ' |
Operating revenues | $116,220 | $102,908 |
Reimbursable expenses | 7,051 | 20,682 |
Total Revenue | 123,271 | 123,590 |
Technology | ' | ' |
Revenues: | ' | ' |
Operating revenues | 81,169 | 54,787 |
Bankruptcy and Settlement Administration | ' | ' |
Revenues: | ' | ' |
Operating revenues | 35,051 | 48,121 |
Operating segment | ' | ' |
Revenues: | ' | ' |
Direct costs, selling, general and administrative costs | 89,022 | 92,599 |
Segment performance measure | 34,249 | 30,991 |
Operating segment | Technology | ' | ' |
Revenues: | ' | ' |
Operating revenues | 81,349 | 54,792 |
Reimbursable expenses | 1,107 | 287 |
Total Revenue | 82,456 | 55,079 |
Direct costs, selling, general and administrative costs | 60,158 | 38,687 |
Segment performance measure | 22,298 | 16,392 |
Operating segment | Bankruptcy and Settlement Administration | ' | ' |
Revenues: | ' | ' |
Operating revenues | 35,051 | 48,121 |
Reimbursable expenses | 5,944 | 20,395 |
Total Revenue | 40,995 | 68,516 |
Direct costs, selling, general and administrative costs | 29,044 | 53,917 |
Segment performance measure | 11,951 | 14,599 |
Eliminations | ' | ' |
Revenues: | ' | ' |
Operating revenues | -180 | -5 |
Total Revenue | -180 | -5 |
Direct costs, selling, general and administrative costs | -180 | -5 |
Eliminations | Technology | ' | ' |
Revenues: | ' | ' |
Operating revenues | $180 | $5 |
SEGMENT_REPORTING_Details_2
SEGMENT REPORTING (Details 2) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Reconciliation of our segment performance measure to income (loss) before income taxes | ' | ' |
Unallocated corporate expenses | ($16,053) | ($10,324) |
Share-based compensation expense | -3,539 | -1,539 |
Depreciation and software and leasehold amortization | -8,700 | -6,999 |
Amortization of intangible assets | -3,120 | -4,966 |
Fair value adjustment to contingent consideration | -1,142 | ' |
Other operating expense | -69 | -47 |
INCOME FROM OPERATIONS | 1,626 | 7,116 |
Interest expense, net | -4,873 | -1,835 |
INCOME (LOSS) BEFORE INCOME TAXES | -3,247 | 5,281 |
Operating segment | ' | ' |
Reconciliation of our segment performance measure to income (loss) before income taxes | ' | ' |
Segment performance measure | $34,249 | $30,991 |
SEGMENT_REPORTING_Details_3
SEGMENT REPORTING (Details 3) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets | ' | ' |
Total consolidated assets | $723,587 | $747,781 |
Unallocated corporate | ' | ' |
Assets | ' | ' |
Total consolidated assets | 77,665 | 97,573 |
Technology | ' | ' |
Assets | ' | ' |
Total consolidated assets | 372,423 | 369,135 |
Bankruptcy and Settlement Administration | ' | ' |
Assets | ' | ' |
Total consolidated assets | $273,499 | $281,073 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 3 Months Ended | |||||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 |
Interest rate cap | Recurring Basis | Recurring Basis | Recurring Basis | Recurring Basis | Recurring Basis | |
Carrying Value | Carrying Value | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | |||
Interest rate cap | Interest rate cap | Interest rate cap | Interest rate cap | |||
Assets and liabilities measured and recorded at fair value on a recurring basis | ' | ' | ' | ' | ' | ' |
Amount transferred from Level 1 to Level 2 | ' | $0 | ' | ' | ' | ' |
Amount transferred from Level 2 to Level 1 | ' | 0 | ' | ' | ' | ' |
Derivative asset | ' | ' | $9 | $27 | $9 | $27 |
Variable rate basis | '1 month LIBOR | ' | ' | ' | ' | ' |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details 2) (Credit Agreement, USD $) | Dec. 31, 2013 |
In Millions, unless otherwise specified | |
Previously disclosed | ' |
Fair value of Financial Assets and Liabilities | ' |
Amount outstanding under credit facility, which approximated fair value | $302.30 |
Revised disclosure | ' |
Fair value of Financial Assets and Liabilities | ' |
Amount outstanding under credit facility, which approximated fair value | $299.30 |
EQUITY_Details
EQUITY (Details) (USD $) | 0 Months Ended | 3 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | ||
Mar. 06, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2013 | Nov. 06, 2013 | Mar. 31, 2014 | |
2012 Program | 2014 Share Repurchase Program | 2014 Share Repurchase Program | |||||
Share Repurchases | ' | ' | ' | ' | ' | ' | ' |
Authorized amount under stock repurchase program | ' | ' | ' | ' | ' | $35,000,000 | ' |
Number of shares of common stock repurchased under stock repurchase program | ' | 222,235 | 175,295 | ' | 0 | ' | 0 |
Value of shares of common stock repurchased under stock repurchase program | ' | 3,200,000 | 2,200,000 | ' | ' | ' | ' |
Dividend | ' | ' | ' | ' | ' | ' | ' |
Cash dividends declared on outstanding shares of common stock (in dollars per share) | $0.09 | $0.09 | $0.09 | ' | ' | ' | ' |
Dividends payable | ' | $3,214,000 | ' | $3,142,000 | ' | ' | ' |