Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Jan. 31, 2015 | Jul. 31, 2014 | Mar. 31, 2015 |
Entity Information [Line Items] | |||
Entity Registrant Name | QAD INC | ||
Entity Central Index Key | 1036188 | ||
Current Fiscal Year End Date | -30 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $107 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Jan-15 | ||
Common Class A [Member] | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 15,370,559 | ||
Common Class B [Member] | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 3,199,065 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Jan. 31, 2015 | Jan. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and equivalents | $120,526 | $75,984 |
Accounts receivable, net of allowances of $2,524 and $2,450 at January 31, 2015 and 2014, respectively | 78,887 | 71,337 |
Deferred tax assets, net | 9,313 | 8,133 |
Other current assets | 14,799 | 14,980 |
Total current assets | 223,525 | 170,434 |
Property and equipment, net | 33,154 | 33,085 |
Capitalized software costs, net | 2,485 | 3,315 |
Goodwill | 10,911 | 11,377 |
Deferred tax assets, net | 9,680 | 11,788 |
Other assets, net | 3,614 | 4,814 |
Total assets | 283,369 | 234,813 |
Current liabilities: | ||
Current portion of long-term debt | 406 | 389 |
Accounts payable | 12,872 | 11,042 |
Deferred revenue | 102,721 | 104,160 |
Other current liabilities | 35,765 | 34,199 |
Total current liabilities | 151,764 | 149,790 |
Long-term debt | 14,680 | 15,085 |
Other liabilities | 5,219 | 5,733 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value; Authorized 5,000,000 shares; none issued or outstanding | 0 | 0 |
Common stock: | ||
Additional paid-in capital | 185,546 | 150,837 |
Treasury stock, at cost (1,609,958 shares and 1,930,436 shares at January 31, 2015 and 2014, respectively) | -22,977 | -28,220 |
Accumulated deficit | -43,465 | -51,472 |
Accumulated other comprehensive loss | -7,418 | -6,958 |
Total stockholders' equity | 111,706 | 64,205 |
Total liabilities and stockholders' equity | 283,369 | 234,813 |
Common Class A [Member] | ||
Common stock: | ||
Common Stock Value | 16 | 14 |
Common Class B [Member] | ||
Common stock: | ||
Common Stock Value | $4 | $4 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Jan. 31, 2015 | Jan. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Current assets: | ||
Allowance for doubtful accounts | $2,524 | $2,450 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock: | ||
Treasury stock, at cost (in shares) | 1,609,958 | 1,930,436 |
Common Class A [Member] | ||
Common stock: | ||
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized (in shares) | 71,000,000 | 71,000,000 |
Common stock, shares issued (in shares) | 16,152,405 | 14,150,089 |
Common Class B [Member] | ||
Common stock: | ||
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized (in shares) | 4,000,000 | 4,000,000 |
Common stock, shares issued (in shares) | 3,537,298 | 3,537,029 |
CONSOLIDATED_STATEMENTS_OF_INC
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 |
Revenue: | |||
License fees | $40,917 | $36,176 | $31,260 |
Subscription fees | 28,217 | 19,406 | 14,838 |
Maintenance and other | 141,295 | 139,557 | 138,563 |
Professional services | 84,672 | 71,172 | 67,511 |
Total revenue | 295,101 | 266,311 | 252,172 |
Costs of revenue: | |||
License fees | 5,016 | 4,978 | 4,032 |
Subscription fees | 17,149 | 12,462 | 9,100 |
Maintenance and other | 32,511 | 32,485 | 31,255 |
Professional services | 76,954 | 67,081 | 63,206 |
Total cost of revenue | 131,630 | 117,006 | 107,593 |
Gross profit | 163,471 | 149,305 | 144,579 |
Operating expenses: | |||
Sales and marketing | 69,785 | 66,009 | 62,223 |
Research and development | 42,315 | 41,237 | 38,332 |
General and administrative | 34,680 | 31,946 | 31,952 |
Amortization of intangible assets from acquisitions | 706 | 710 | 264 |
Total operating expenses | 147,486 | 139,902 | 132,771 |
Operating income | 15,985 | 9,403 | 11,808 |
Other (income) expense: | |||
Interest income | -242 | -284 | -590 |
Interest expense | 811 | 829 | 990 |
Other (income) expense, net | -169 | -1,294 | 1,118 |
Total other (income) expense, net | 400 | -749 | 1,518 |
Income before income taxes | 15,585 | 10,152 | 10,290 |
Income tax expense | 2,639 | 3,766 | 3,651 |
Net income | 12,946 | 6,386 | 6,639 |
Diluted net income (loss) per share | |||
Net income | 12,946 | 6,386 | 6,639 |
Other comprehensive income (loss), net of tax | |||
Foreign currency translation adjustment | -460 | 1,078 | 2,018 |
Total comprehensive income | 12,486 | 7,464 | 8,657 |
Common Class A [Member] | |||
Other (income) expense: | |||
Net income | 10,729 | 5,282 | 5,483 |
Basic net income (loss) per share | |||
Earnings per share (in dollars per share) | $0.84 | $0.42 | $0.44 |
Diluted net income (loss) per share | |||
Earnings per share (in dollars per share) | $0.79 | $0.41 | $0.42 |
Net income | 10,729 | 5,282 | 5,483 |
Common Class B [Member] | |||
Other (income) expense: | |||
Net income | 2,217 | 1,104 | 1,156 |
Basic net income (loss) per share | |||
Earnings per share (in dollars per share) | $0.70 | $0.35 | $0.37 |
Diluted net income (loss) per share | |||
Earnings per share (in dollars per share) | $0.68 | $0.34 | $0.35 |
Net income | $2,217 | $1,104 | $1,156 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Common Class A [Member] | Common Class B [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
In Thousands, unless otherwise specified | |||||||
Balance at Jan. 31, 2012 | $14 | $4 | $148,993 | ($27,968) | ($48,974) | ($10,054) | $62,015 |
Balance (in shares) at Jan. 31, 2012 | 14,146 | 3,537 | -1,804 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 0 | 0 | 0 | 0 | 6,639 | 0 | 6,639 |
Foreign currency translation adjustments | 0 | 0 | 0 | 0 | 0 | 2,018 | 2,018 |
Stock award exercises | 0 | 0 | -1,322 | 985 | -138 | 0 | -475 |
Stock award exercises (in shares) | 1 | 0 | 63 | ||||
Stock-based compensation income tax benefits (deficiencies) | 0 | 0 | -312 | 0 | 0 | 0 | -312 |
Stock compensation expense | 0 | 0 | 4,608 | 0 | 0 | 0 | 4,608 |
Dividends declared | 0 | 0 | 0 | 0 | -8,677 | 0 | -8,677 |
Dividends paid in stock | 0 | 0 | 0 | 799 | -177 | 0 | 622 |
Dividends paid in stock (in shares) | 0 | 0 | 50 | ||||
Restricted stock | 0 | 0 | -2,190 | 2,621 | -1,141 | 0 | -710 |
Restricted stock (in shares) | 1 | 0 | 166 | ||||
Repurchase of common stock | 0 | 0 | 0 | -7,530 | 0 | 0 | -7,530 |
Repurchase of common stock (in shares) | 0 | 0 | -572 | ||||
Proceeds from stock issuance, net of costs | 0 | ||||||
Balance at Jan. 31, 2013 | 14 | 4 | 149,777 | -31,093 | -52,468 | -8,036 | 58,198 |
Balance (in shares) at Jan. 31, 2013 | 14,148 | 3,537 | -2,097 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 0 | 0 | 0 | 0 | 6,386 | 0 | 6,386 |
Foreign currency translation adjustments | 0 | 0 | 0 | 0 | 0 | 1,078 | 1,078 |
Stock award exercises | 0 | 0 | -2,023 | 1,473 | -160 | 0 | -710 |
Stock award exercises (in shares) | 2 | 0 | 91 | ||||
Stock-based compensation income tax benefits (deficiencies) | 0 | 0 | 52 | 0 | 0 | 0 | 52 |
Stock compensation expense | 0 | 0 | 4,680 | 0 | 0 | 0 | 4,680 |
Dividends declared | 0 | 0 | 0 | 0 | -4,362 | 0 | -4,362 |
Dividends paid in stock | 0 | 0 | 0 | 172 | -27 | 0 | 145 |
Dividends paid in stock (in shares) | 0 | 0 | 10 | ||||
Restricted stock | 0 | 0 | -1,649 | 1,914 | -841 | 0 | -576 |
Restricted stock (in shares) | 0 | 0 | 118 | ||||
Repurchase of common stock | 0 | 0 | 0 | -686 | 0 | 0 | -686 |
Repurchase of common stock (in shares) | 0 | 0 | -52 | ||||
Proceeds from stock issuance, net of costs | 0 | ||||||
Balance at Jan. 31, 2014 | 14 | 4 | 150,837 | -28,220 | -51,472 | -6,958 | 64,205 |
Balance (in shares) at Jan. 31, 2014 | 14,150 | 3,537 | -1,930 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 0 | 0 | 0 | 0 | 12,946 | 0 | 12,946 |
Foreign currency translation adjustments | 0 | 0 | 0 | 0 | 0 | -460 | -460 |
Stock award exercises | 0 | 0 | -5,188 | 3,749 | -138 | 0 | -1,577 |
Stock award exercises (in shares) | 1 | 0 | 199 | ||||
Stock-based compensation income tax benefits (deficiencies) | 0 | 0 | -15 | 0 | 0 | 0 | -15 |
Stock compensation expense | 0 | 0 | 4,993 | 0 | 0 | 0 | 4,993 |
Dividends declared | 0 | 0 | 0 | 0 | -4,452 | 0 | -4,452 |
Dividends paid in stock | 0 | ||||||
Restricted stock | 0 | 0 | -2,125 | 1,494 | -349 | 0 | -980 |
Restricted stock (in shares) | 1 | 0 | 121 | ||||
Proceeds from stock issuance, net of costs | 2 | 0 | 37,044 | 0 | 0 | 0 | 37,046 |
Proceeds from stock issuance, net of costs (in shares) | 2,000 | 0 | 0 | ||||
Balance at Jan. 31, 2015 | $16 | $4 | $185,546 | ($22,977) | ($43,465) | ($7,418) | $111,706 |
Balance (in shares) at Jan. 31, 2015 | 16,152 | 3,537 | -1,610 |
CONSOLIDATED_STATEMENTS_OF_STO1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) (USD $) | 12 Months Ended | ||
Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 | |
Common Class A [Member] | |||
Dividends declared, per share (in dollars per share) | $0.29 | $0.29 | $0.58 |
Common Class B [Member] | |||
Dividends declared, per share (in dollars per share) | $0.24 | $0.24 | $0.48 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 |
Cash flows from operating activities: | |||
Net income | $12,946 | $6,386 | $6,639 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 5,759 | 6,069 | 4,989 |
Provision for doubtful accounts and sales adjustments | 854 | 1,054 | 737 |
Tax benefit from reversal of deferred tax valuation allowance | 0 | 0 | -225 |
Loss on disposal of property and equipment | 8 | 0 | 7 |
Deferred income taxes | -905 | 623 | 458 |
Change in fair value of a derivative instrument | 877 | -634 | 384 |
Stock compensation expense | 4,993 | 4,680 | 4,608 |
Excess tax benefits from stock awards | -266 | -72 | -462 |
Adjustment of contingent liability associated with acquisitions | 42 | -279 | 0 |
Changes in assets and liabilities, net of effects from acquisitions: | |||
Accounts receivable | -11,236 | -1,247 | -6,767 |
Other assets | -431 | -197 | -1,668 |
Accounts payable | 2,568 | -1,260 | 2,142 |
Deferred revenue | 4,912 | 4,753 | 5,669 |
Other liabilities | 3,576 | 4,264 | -472 |
Net cash provided by operating activities | 23,697 | 24,140 | 16,039 |
Cash flows from investing activities: | |||
Purchase of property and equipment | -4,577 | -4,779 | -3,071 |
Acquisition of businesses, net of cash acquired | 0 | 0 | -7,817 |
Capitalized software costs | -311 | -366 | -492 |
Other, net | 9 | 33 | -1 |
Net cash used in investing activities | -4,879 | -5,112 | -11,381 |
Cash flows from financing activities: | |||
Repayments of debt | -388 | -372 | -312 |
Dividends paid | -4,452 | -5,304 | -8,076 |
Tax payments, net of proceeds, related to stock awards | -2,557 | -1,286 | -1,185 |
Payment of contingent liability associated with acquisitions | -471 | 0 | 0 |
Proceeds from issuance of common stock, net of issuance cost | 37,046 | 0 | 0 |
Excess tax benefits from stock awards | 266 | 72 | 462 |
Repurchase of common stock | 0 | -686 | -7,530 |
Net cash provided by (used in) financing activities | 29,444 | -7,576 | -16,641 |
Effect of exchange rates on cash and equivalents | -3,720 | -477 | 65 |
Net increase (decrease) in cash and equivalents | 44,542 | 10,975 | -11,918 |
Cash and equivalents at beginning of year | 75,984 | 65,009 | 76,927 |
Cash and equivalents at end of year | 120,526 | 75,984 | 65,009 |
Cash paid during the period for: | |||
Interest | 735 | 726 | 908 |
Income taxes, net of refunds | 3,284 | 2,869 | 5,552 |
Supplemental disclosure of non-cash activities: | |||
Obligations associated with dividend declaration | 0 | 0 | 1,087 |
Dividends paid in stock | 0 | 145 | 622 |
Obligations associated with acquisitions | $0 | $0 | $1,392 |
SUMMARY_OF_BUSINESS_AND_SIGNIF
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
BUSINESS | |||||||||||||
QAD is a global provider of vertically-oriented, mission-critical enterprise software solutions for global manufacturing companies across the automotive, life sciences, consumer products, food and beverage, high technology and industrial products industries. QAD Enterprise Applications enables measurement and control of key business processes and supports operational requirements, including financials, manufacturing, demand and supply chain planning, customer management, business intelligence and business process management. QAD delivers its software solutions to customers in a format that best meets their current and future needs - either in the cloud, on premise, or via blended deployment, which is a combination of on-premise and cloud-based software. QAD provides ongoing support to customers which ensures they always have access to the latest features of its software. QAD also provides professional services to assist customers in deploying, upgrading and optimizing the Company’s software so they can maximize the benefit they receive from QAD solutions in their operating environment. QAD was founded in 1979, incorporated in California in 1986 and reincorporated in Delaware in 1997. | |||||||||||||
In fiscal 2015, QAD successfully closed a public offering of 2 million shares of Class A stock resulting in net cash received of $37.0 after underwriting discounts and commissions and offering expenses. On February 18, 2015 the offering underwriters exercised in full an option to purchase additional shares. As a result, 450,000 shares of Class A common stock were issued generating approximately $8.4 million in additional proceeds. | |||||||||||||
PRINCIPLES OF CONSOLIDATION | |||||||||||||
The consolidated financial statements include the accounts of QAD Inc. and all of its subsidiaries. All subsidiaries are wholly-owned and all significant balances and transactions among the entities have been eliminated from the consolidated financial statements. | |||||||||||||
USE OF ESTIMATES | |||||||||||||
The financial statements have been prepared in conformity with U.S. generally accepted accounting principles and, accordingly, include amounts based on informed estimates and judgments of management that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Company’s financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. | |||||||||||||
The Company considers certain accounting policies related to revenue, accounts receivable allowances for doubtful accounts, capitalized software development costs, goodwill and intangible assets, business combinations, valuation of deferred tax assets and tax contingency reserves, and accounting for stock-based compensation to be critical policies due to the significance of these items to its operating results and the estimation processes and management judgment involved in each. | |||||||||||||
FOREIGN CURRENCY TRANSLATIONS AND TRANSACTIONS | |||||||||||||
The financial position and results of operations of the Company’s foreign subsidiaries are generally determined using the country’s local currency as the functional currency. Assets and liabilities recorded in foreign currencies are translated at the exchange rates on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to other comprehensive income (loss), which is included in “Accumulated other comprehensive loss” within the Consolidated Balance Sheets. | |||||||||||||
Gains and losses resulting from foreign currency transactions and remeasurement adjustments of monetary assets and liabilities not held in an entity’s functional currency are included in earnings. Foreign currency transaction and remeasurement (gains) losses for fiscal 2015, 2014 and 2013 totaled $(0.9) million, $(0.1) million and $1.2 million, respectively, and are included in “Other (income) expense, net” in the accompanying Consolidated Statements of Income and Comprehensive Income. | |||||||||||||
CASH AND EQUIVALENTS | |||||||||||||
Cash and equivalents consist of cash and short-term marketable securities with maturities of less than 90 days at the date of purchase. The Company considers all highly liquid investments purchased with an original maturity of 90 days or less to be cash equivalents. At January 31, 2015 and 2014, the Company’s cash and equivalents consisted of money market mutual funds invested in U.S. Treasury and government securities, deposit accounts and certificates of deposit. | |||||||||||||
ACCOUNTS RECEIVABLE, NET | |||||||||||||
Accounts receivable, net, consisted of the following as of January 31: | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Accounts receivable | $ | 81,411 | $ | 73,787 | |||||||||
Less allowance for: | |||||||||||||
Doubtful accounts | (1,194 | ) | (1,221 | ) | |||||||||
Sales adjustments | (1,330 | ) | (1,229 | ) | |||||||||
Accounts receivable, net | $ | 78,887 | $ | 71,337 | |||||||||
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The collectability of accounts receivable is reviewed each period by analyzing balances based on age. Specific allowances are recorded for any balances that the Company determines may not be fully collectible due to inability of the customers to pay. The Company also provides a general reserve based on historical data including analysis of write-offs and other known factors. Provisions to the allowance for bad debts are included as bad debt expense in “General and Administrative” expense. The determination to write-off specific accounts receivable balances is made based on likelihood of collection and past due status. Past due status is based on invoice date and terms specific to each customer. | |||||||||||||
The Company does not generally provide a contractual right of return; however, in the course of business sales returns and allowances may occur. A provision is recorded against revenue for estimated sales returns and allowances in the same period the related revenues are recorded or when current information indicates additional amounts are required. These estimates are based on historical experience, specifically identified customers and other known factors. | |||||||||||||
FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK | |||||||||||||
The carrying amounts of cash and equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturities of these instruments. The Company’s line of credit and note payable both bear a variable market interest rate, subject to certain minimum interest rates. Therefore, the carrying amounts outstanding under the line of credit and note payable reasonably approximate fair value. | |||||||||||||
Concentration of credit risk with respect to trade receivables is limited due to the large number of customers comprising our customer base, and their dispersion across many different industries and locations throughout the world. No single customer accounted for 10% or more of the Company’s total revenue in any of the last three fiscal years. In addition, no single customer accounted for 10% or more of accounts receivable at January 31, 2015 or January 31, 2014. | |||||||||||||
PROPERTY AND EQUIPMENT | |||||||||||||
Property and equipment are stated at cost. Additions and significant improvements to property and equipment are capitalized, while maintenance and repairs are expensed as incurred. For financial reporting purposes, depreciation is generally expensed via the straight-line method over the useful life of three years for computer equipment and software, five years for furniture and office equipment, 10 years for building improvements and 39 years for buildings. Leasehold improvements are depreciated over the shorter of the lease term or the useful life of five years. | |||||||||||||
Certain costs associated with software developed for internal use, including payroll costs for employees, are capitalized once the project has reached the application development stage and are included in property and equipment classified as software. These costs are amortized using the straight-line method over the expected useful life of the software, beginning when the asset is substantially ready for use. Costs incurred during the preliminary project stage, maintenance, training and research and development costs are expensed as incurred. | |||||||||||||
Property and equipment, net consisted of the following as of January 31: | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Buildings and building improvements | $ | 31,898 | $ | 32,298 | |||||||||
Computer equipment and software | 15,220 | 22,121 | |||||||||||
Furniture and office equipment | 7,783 | 10,856 | |||||||||||
Leasehold improvements | 5,856 | 6,033 | |||||||||||
Land | 3,850 | 3,850 | |||||||||||
Automobiles | 54 | 43 | |||||||||||
64,661 | 75,201 | ||||||||||||
Less accumulated depreciation and amortization | (31,507 | ) | (42,116 | ) | |||||||||
$ | 33,154 | $ | 33,085 | ||||||||||
The changes in property and equipment, net, for the fiscal years ended January 31were as follows: | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Cost | |||||||||||||
Balance at February 1 | $ | 75,201 | $ | 76,109 | |||||||||
Additions | 4,577 | 4,779 | |||||||||||
Disposals | (13,351 | ) | (5,145 | ) | |||||||||
Impact of foreign currency translation | (1,766 | ) | (542 | ) | |||||||||
Balance at January 31 | $ | 64,661 | $ | 75,201 | |||||||||
Accumulated depreciation | |||||||||||||
Balance at February 1 | $ | (42,116 | ) | $ | (43,583 | ) | |||||||
Depreciation | (3,816 | ) | (4,080 | ) | |||||||||
Disposals | 13,334 | 5,113 | |||||||||||
Impact of foreign currency translation | 1,091 | 434 | |||||||||||
Balance at January 31 | (31,507 | ) | (42,116 | ) | |||||||||
Property and equipment, net at January 31 | $ | 33,154 | $ | 33,085 | |||||||||
Depreciation and amortization expense of property and equipment for fiscal 2015, 2014 and 2013 was $3.8 million, $4.1 million and $4.0 million, respectively. There was no impairment of property and equipment assets during fiscal 2015, 2014 and 2013. | |||||||||||||
CAPITALIZED SOFTWARE COSTS | |||||||||||||
The Company capitalizes software development costs incurred in connection with the localization and translation of its products once technological feasibility has been achieved based on a working model. A working model is defined as an operative version of the computer software product that is completed in the same software language as the product to be ultimately marketed, performs all the major functions planned for the product and is ready for initial customer testing (usually identified as beta testing). In addition, the Company capitalizes software purchased from third parties or through business combinations as acquired software technology, if the related software under development has reached technological feasibility. | |||||||||||||
The amortization of capitalized software costs is the greater of the straight-line basis over three years, the expected useful life, or a computation using a ratio of current revenue for a product compared to the estimated total of current and future revenues for that product. The Company periodically compares the unamortized capitalized software costs to the estimated net realizable value of the associated product. The amount by which the unamortized capitalized software costs of a particular software product exceeds the estimated net realizable value of that asset would be reported as a charge to the Consolidated Statements of Income and Comprehensive Income. | |||||||||||||
Capitalized software costs and accumulated amortization at January 31 were as follows: | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Capitalized software costs: | |||||||||||||
Acquired software technology (1) | $ | 3,458 | $ | 3,577 | |||||||||
Capitalized software development costs (1) | 1,206 | 1,183 | |||||||||||
4,664 | 4,760 | ||||||||||||
Less accumulated amortization | (2,179 | ) | (1,445 | ) | |||||||||
Capitalized software costs, net | $ | 2,485 | $ | 3,315 | |||||||||
-1 | Acquired software technology and capitalized software development costs include the impact of foreign currency translation. | ||||||||||||
Acquired software technology costs relate to technology purchased from the Company’s fiscal 2013 acquisitions of DynaSys and CEBOS. In addition to the acquired software technology, the Company has capitalized costs related to translations and localizations of QAD Enterprise Applications. | |||||||||||||
It is the Company’s policy to write off capitalized software development costs once fully amortized. Accordingly, during fiscal 2015, approximately $0.4 million of costs and accumulated amortization was removed from the balance sheet. | |||||||||||||
Amortization of capitalized software costs for fiscal 2015, 2014 and 2013 was $1.1 million, $1.2 million and $0.6 million, respectively. Amortization of capitalized software costs is included in “Cost of license fees” in the accompanying Consolidated Statements of Income and Comprehensive Income. | |||||||||||||
The following table summarizes the estimated amortization expense relating to the Company’s capitalized software costs as of January 31, 2015: | |||||||||||||
Fiscal Years | (in thousands) | ||||||||||||
2016 | $ | 1,065 | |||||||||||
2017 | 903 | ||||||||||||
2018 | 512 | ||||||||||||
2019 | 5 | ||||||||||||
$ | 2,485 | ||||||||||||
GOODWILL AND INTANGIBLE ASSETS | |||||||||||||
Goodwill represents the excess of the purchase price over the fair value of net assets of purchased businesses. Goodwill is not amortized, but instead is subject to impairment tests on at least an annual basis and whenever circumstances suggest that goodwill may be impaired. The Company tests goodwill for impairment in the fourth quarter of each fiscal year. The Company performs a two-step impairment test. Under the first step of the goodwill impairment test, the Company is required to compare the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired and the second step is not performed. If the results of the first step of the impairment test indicate that the fair value of a reporting unit does not exceed its carrying amount, then the second step of the goodwill impairment test is required. The second step of the goodwill impairment test compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The impairment loss is measured by the excess of the carrying amount of the reporting unit goodwill over the implied fair value of that goodwill. | |||||||||||||
Management evaluates the Company as a single reporting unit for business and operating purposes as almost all of the Company’s revenue streams are generated by the same underlying technology whether acquired, purchased or developed. In addition, the majority of QAD’s costs are, by their nature, shared costs that are not specifically identifiable to a geography or product line but relate to almost all products. As a result, there is a high degree of interdependency among the Company’s revenues and cash flows for levels below the consolidated entity and identifiable cash flows for a reporting unit separate from the consolidated entity are not meaningful. Therefore, the Company’s impairment test considers the consolidated entity as a single reporting unit. | |||||||||||||
Judgments about the recoverability of purchased finite lived intangible assets are made whenever events or changes in circumstances indicate that an impairment may exist. Each fiscal year the Company evaluates the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization. Recoverability of finite-lived intangible assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. | |||||||||||||
Assumptions and estimates about future values and remaining useful lives of intangible assets are complex and subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends and internal factors such as changes in the Company’s business strategy or internal forecasts. | |||||||||||||
The changes in the carrying amount of goodwill for the fiscal years ended January 31, 2015, and 2014 were as follows: | |||||||||||||
Gross | Accumulated | Goodwill, Net | |||||||||||
Carrying | Impairment | ||||||||||||
Amount | |||||||||||||
(in thousands) | |||||||||||||
Balance at January 31, 2013 | $ | 27,020 | $ | (15,608 | ) | $ | 11,412 | ||||||
CEBOS adjustment (1) | 105 | — | 105 | ||||||||||
Impact of foreign currency translation | (140 | ) | — | (140 | ) | ||||||||
Balance at January 31, 2014 | 26,985 | (15,608 | ) | 11,377 | |||||||||
Impact of foreign currency translation | (466 | ) | — | (466 | ) | ||||||||
Balance at January 31, 2015 | $ | 26,519 | $ | (15,608 | ) | $ | 10,911 | ||||||
-1 | During the fourth quarter of fiscal 2014 the Company finalized the allocation of the purchase price and recorded an adjustment of $0.1 million related to a change in certain assumptions associated with accounts receivable. This adjustment increased the provisionally recognized goodwill by the same amount. | ||||||||||||
During each of the fourth quarters of fiscal 2015, 2014 and 2013, an impairment analysis was performed at the enterprise level which compared the Company’s market capitalization to its net assets as of the test date, November 30. As the market capitalization substantially exceeded the Company’s net assets, there was no indication of goodwill impairment for fiscal 2015, 2014 and 2013. | |||||||||||||
Intangible assets as of January 31 were as follows: | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Amortizable intangible assets | |||||||||||||
Customer relationships (1) | $ | 2,793 | $ | 3,048 | |||||||||
Trade name | 515 | 515 | |||||||||||
3,308 | 3,563 | ||||||||||||
Less: accumulated amortization | (1,558 | ) | (978 | ) | |||||||||
Net amortizable intangible assets | $ | 1,750 | $ | 2,585 | |||||||||
-1 | Customer relationships include the impact of foreign currency translation. | ||||||||||||
The Company’s intangible assets as of January 31, 2015 are related to the DynaSys and CEBOS acquisitions completed in fiscal 2013. Intangible assets are included in “Other assets, net” in the accompanying Consolidated Balance Sheets. As of January 31, 2015, all of the Company’s intangible assets were determined to have finite useful lives, and therefore were subject to amortization. | |||||||||||||
Amortization of intangible assets was $0.7 million, $0.7 million and $0.3 million for the fiscal years 2015, 2014 and 2013 respectively. The following table summarizes the estimated amortization expense relating to the Company’s intangible assets as of January 31, 2015: | |||||||||||||
Fiscal Years | (in thousands) | ||||||||||||
2016 | $ | 665 | |||||||||||
2017 | 665 | ||||||||||||
2018 | 420 | ||||||||||||
$ | 1,750 | ||||||||||||
BUSINESS COMBINATIONS | |||||||||||||
The Company allocates the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed, based upon their estimated fair values at the acquisition date. The purchase price allocation process requires management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets and deferred revenue obligations assumed. | |||||||||||||
These assumptions and estimates are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Examples of critical estimates in valuing certain of the intangible assets include but are not limited to discount rates, future expected cash flows from software license sales, subscriptions, support agreements, consulting contracts, acquired developed technologies and acquired trade names and trademarks as well as assumptions about the period of time the acquired trade names and trademarks will continue to be used in our combined product portfolio. | |||||||||||||
In connection with the purchase price allocations, the Company estimates the fair value of the deferred revenue obligations assumed. The estimated fair value of the obligations is determined utilizing a cost build-up approach. The cost build-up approach determines fair value by estimating the costs related to fulfilling the obligations plus a normal profit margin. The estimated costs to fulfill the obligations are based on the historical costs related to fulfilling the obligations. | |||||||||||||
CEBOS | |||||||||||||
On December 28, 2012, the Company acquired all of the outstanding stock of CEBOS, Ltd. ("CEBOS"), a provider of quality management and regulatory compliance software solutions. CEBOS was founded in 1998 and is headquartered in Michigan, USA. The Company completed the acquisition for the purpose of expanding its product offerings and driving revenue growth. The purchase price consisted of $3.5 million in cash and two future payments due April 2014 and April 2015. Each future payment consists of $0.3 million guaranteed and $0.5 million contingent upon achievement of certain development and earnings-based milestones. The contingent liability was estimated by assessing the probability of achieving each milestone and discounting the amount of each potential payment based on expected timing of the payment. The fair value of the liability-classified contingent consideration is remeasured at each reporting period with any changes in the fair value recorded as income or expense and is reported in “Other (income) expense” in the Consolidated Statements of Income and Comprehensive Income. During fiscal 2014 CEBOS accomplished all development related goals but did not meet certain earnings targets. This resulted in a reduction of the related contingent consideration by $0.3 million for a first year earn-out of $0.5 million, paid on April 1, 2014. During fiscal 2015 CEBOS achieved all of its development and earnings-based goals resulting in a payout of $0.8 million of the second earn-out paid on March 31, 2015. | |||||||||||||
DynaSys | |||||||||||||
On June 6, 2012, the Company acquired France-based DynaSys S.A. ("DynaSys"), a provider of demand and supply chain planning software solutions, for $7.5 million. During fiscal 2014 the Company finalized the allocation of the purchase price. There were no adjustments to the purchase price allocation. | |||||||||||||
The results of operations of DynaSys and CEBOS are included in the Consolidated Financial Statements from the date of acquisition. The acquisitions were not deemed material, thus pro forma supplemental information has not been provided. | |||||||||||||
DEFERRED TAX ASSETS AND LIABILITIES | |||||||||||||
The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of its assets and liabilities and expected benefits of utilizing net operating loss and credit carryforwards. In assessing whether there is a need for a valuation allowance on deferred tax assets, the Company determines whether it is more likely than not that it will realize tax benefits associated with deferred tax assets. In making this determination, the Company considers future taxable income and tax planning strategies that are both prudent and feasible. For deferred tax assets that cannot be recognized under the more-likely-than-not standard, the Company has established a valuation allowance. The impact on deferred taxes of changes in tax rates and laws, if any, are reflected in the financial statements in the period of enactment. No provision is made for taxes on unremitted earnings of foreign subsidiaries because they are considered to be reinvested indefinitely in such operations. | |||||||||||||
The Company records a liability for taxes to address potential exposures involving uncertain tax positions that could be challenged by taxing authorities, even though the Company believes that the positions taken are appropriate. The tax reserves are reviewed on a quarterly basis and adjusted as events occur that affect the Company’s potential liability for additional taxes. The Company is subject to income taxes in the U.S. and in various foreign jurisdictions, and in the ordinary course of business there are many transactions and calculations where the ultimate tax determination is uncertain. For tax positions that are more likely than not of being sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized upon ultimate settlement in the financial statements. For tax positions that do not meet the more-likely-than-not standard the entire balance is reserved. | |||||||||||||
STOCK-BASED COMPENSATION | |||||||||||||
The Company accounts for share-based payments (“equity awards”) to employees in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires that share-based payments (to the extent they are compensatory) be recognized in the Consolidated Statements of Income and Comprehensive Income based on the fair values of the equity awards as measured at the grant date. The fair value of an equity award is recognized as stock-based compensation expense ratably over the vesting period of the equity award. Determining the fair value of equity awards at the grant date requires judgment. | |||||||||||||
Fair Value of SARs | |||||||||||||
The fair value of stock-settled stock appreciation rights (“SARs”) is determined on the grant date of the award using the Black-Scholes-Merton valuation model. One of the inputs to the Black-Scholes-Merton valuation model is the fair market value of the Company’s stock on the date of grant. Judgment is required in determining the remaining inputs to the Black-Scholes-Merton valuation model. These inputs include the expected life, volatility, the risk-free interest rate and the dividend rate. The following describes the Company’s policies with respect to determining these valuation inputs: | |||||||||||||
Expected Life | |||||||||||||
The expected life valuation input includes a computation that is based on historical vested SAR exercises and post-vest expiration patterns and an estimate of the expected life for SARs that were fully vested and outstanding. Furthermore, based on the Company’s historical pattern of SAR exercises and post-vest expiration patterns the Company determined that there are two discernable populations which include the Company’s directors and officers (“D&O”) and all other QAD employees. The estimate of the expected life for SARs that were fully vested and outstanding is determined as the midpoint of a range as follows: the low end of the range assumes the fully vested and outstanding SARs are exercised or expire unexercised on the evaluation date and the high end of the range assumes that these SARs are exercised or expire unexercised upon contractual term. | |||||||||||||
Volatility | |||||||||||||
The volatility valuation input is based on the historical volatility of the Company’s common stock, which the Company believes is representative of the expected volatility over the expected life of SARs. | |||||||||||||
Risk-Free Interest Rate | |||||||||||||
The risk-free interest rate is based on the U.S. Treasury constant maturities in effect at the time of grant for the expected term of the SAR. | |||||||||||||
Dividend Rate | |||||||||||||
The dividend rate is based on the Company’s historical dividend payments per share. | |||||||||||||
Fair Value of RSUs | |||||||||||||
The fair value of restricted stock units (“RSUs”) is determined on the grant date of the award as the market price of the Company’s common stock on the date of grant, reduced by the present value of estimated dividends foregone during the vesting period. Judgment is required in determining the present value of estimated dividends foregone during the vesting period. The Company estimates the dividends for purposes of this calculation based on the Company’s historical dividend payments per share. | |||||||||||||
While the Company recognizes as stock-based compensation expense the entire amount of the fair value of a vested equity award once it has vested, during the periods in which the equity awards are vesting, the Company is required to estimate equity awards that are expected to cancel prior to vesting (“forfeitures”) and reduce the stock-based compensation expense recognized in a given period for the effects of estimated forfeitures over the expense recognition period (“forfeiture rate”). To determine the forfeiture rate, the Company examines the historical pattern of forfeitures which it believes is indicative of future forfeitures in an effort to determine if there were any discernible forfeiture patterns based on certain employee populations. From this analysis, the Company identified two employee populations that have different historical forfeiture rates. One population includes D&O and the other population includes all other QAD employees. The Company evaluates the forfeiture rate annually or more frequently when there have been any significant changes in forfeiture activity. | |||||||||||||
COMPREHENSIVE INCOME | |||||||||||||
Comprehensive income includes changes in the balances of items that are reported directly as a separate component of Stockholders’ Equity on the Consolidated Balance Sheets. The components of comprehensive income are net income and foreign currency translation adjustments. The Company does not provide for income taxes on foreign currency translation adjustments since it does not provide for taxes on the unremitted earnings of its foreign subsidiaries. The changes in “Accumulated other comprehensive loss” are included in the Company’s Consolidated Statements of Income and Comprehensive Income. | |||||||||||||
REVENUE | |||||||||||||
The Company offers its software using two models, a traditional on-premise licensing model and a cloud delivery model. The traditional model involves the sale or license of software on a perpetual basis to customers who take possession of the software and install and maintain the software on their own equipment. Under the cloud delivery model the Company provides access to its software on a hosted basis as a service and customers generally do not have the contractual right to take possession of the software; the Company sometimes refers to this as a SaaS model. The Company sells a majority of its software through its on-premise licensing model and recognizes revenue associated with these offerings in accordance with the accounting guidance contained in ASC 985-605, Software Revenue. Additionally, delivery of software and services under the SaaS model is typically over a contractual term of 12 to 36 months and the Company recognizes revenue associated with these offerings, which it calls subscription revenue, in the accompanying Consolidated Statements of Income and Comprehensive Income, in accordance with the accounting guidance contained in ASC 605-25, Revenue Recognition - Multiple-Deliverable Revenue Arrangements. Whether sales are made via an on-premise model or a SaaS model, the arrangement typically consists of multiple elements, including revenue from one or more of the following elements: license of software products, support services, hosting, consulting, development, training, or other professional services. The Company evaluates each element in a multiple-element arrangement to determine whether it represents a separate unit of accounting. An element constitutes a separate unit of accounting when the item has standalone value and delivery of any undelivered elements is probable and within the Company’s control. Subscription and support services have standalone value because they are routinely sold separately by the Company. Consulting services and other services have standalone value because the Company has sold consulting services separately and there are several third party vendors that routinely provide similar consulting services to its customers on a standalone basis. Software license arrangements that do not require significant modification or customization of the underlying software do not have standalone value but are recognized using the residual method. | |||||||||||||
Software Revenue Recognition (On-Premise Model) | |||||||||||||
The majority of the Company’s software is sold or licensed in multiple-element arrangements that include support services and often consulting services or other elements. For software license arrangements that do not require significant modification or customization of the underlying software, the Company recognizes revenue when persuasive evidence of an arrangement exists including a signed statement of work for any related consulting services engagements, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Delivery is considered to have occurred upon electronic transfer of the license key that provides immediate availability of the product to the purchaser. Determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can have a significant impact on the timing and amount of revenue the Company reports. Revenue is presented net of sales, use and value-added taxes collected from its customers. | |||||||||||||
The Company’s typical payment terms vary by region. Occasionally, payment terms of up to one year may be granted for software license fees to customers with an established history of collections without concessions. Should the Company grant payment terms greater than one year or terms that are not in accordance with established history for similar arrangements, revenue would be recognized as payments become due and payable assuming all other criteria for software revenue recognition have been met. | |||||||||||||
Provided all other revenue recognition criteria have been met, the Company recognizes license revenue on delivery using the residual method when vendor-specific objective evidence of fair value (“VSOE”) exists for all of the undelivered elements (for example, support services, consulting, or other services) in the arrangement. The Company allocates revenue to each undelivered element based on VSOE, which is the price charged when that element is sold separately or, for elements not yet sold separately, the price established by the Company’s management if it is probable that the price will not change before the element is sold separately. The Company allocates revenue to undelivered support services based on rates charged to renew the support services annually after an initial period, which demonstrates a consistent relationship of maintenance pricing as a percentage of the contractual license fee. The Company allocates revenue to undelivered consulting services based on time and materials rates of stand-alone services engagements by role and by country. The Company reviews VSOE at least annually. If the Company were to be unable to establish or maintain VSOE for one or more undelivered elements within a multiple-element software arrangement, it could adversely impact revenues, results of operations and financial position because the Company may have to defer all or a portion of the revenue or recognize revenue ratably from multiple-element software arrangements. | |||||||||||||
Multiple-element software arrangements for which VSOE does not exist for all undelivered elements typically occur when the Company introduces a new product or product bundles for which it has not established VSOE for support services or fixed fee consulting or other services. In these instances, revenue is deferred and recognized ratably over the longer of the support services (maintenance period) or consulting services engagement, assuming there are no specified future deliverables. In the instances in which it has been determined that revenue on these bundled arrangements will be recognized ratably due to lack of VSOE, at the time of recognition, the Company allocates revenue from these bundled arrangement fees to all of the non-license revenue categories based on VSOE of similar support services or consulting services. The remaining arrangement fees, if any, are then allocated to software license fee revenues. The associated costs primarily consist of payroll and related costs to perform both the consulting services and provide support services and royalty expense related to the license and maintenance revenue. These costs are expensed as incurred and included in cost of maintenance, subscription and other revenue, cost of professional services and cost of license fees. | |||||||||||||
Revenue from support services and product updates, referred to as maintenance revenue, is recognized ratably over the term of the maintenance period, which in most instances is one year. Software license updates provide customers with rights to unspecified software product updates, maintenance releases and patches released during the term of the support period on a when-and-if available basis. Product support includes Internet access to technical content, as well as Internet and telephone access to technical support personnel. The Company’s customers generally purchase both product support and license updates when they acquire new software licenses. In addition, a majority of customers renew their support services contracts annually. | |||||||||||||
Revenue from consulting services, which the Company calls professional services in the Consolidated Statements of Income and Comprehensive Income, are typically comprised of implementation, development, training or other consulting services. Consulting services are generally sold on a time-and-materials basis and can include services ranging from software installation to data conversion and building non-complex interfaces to allow the software to operate in integrated environments. Consulting engagements can range anywhere from one day to several months and are based strictly on the customer’s requirements and complexities and are independent of the functionality of the Company’s software. The Company’s software, as delivered, can generally be used by the customer for the customer’s purpose upon installation. Further, implementation and integration services provided are generally not essential to the functionality of the software, as delivered, and do not result in any material changes to the underlying software code. On occasion, the Company enters into fixed fee arrangements in which customer payments are tied to achievement of specific milestones. In fixed fee arrangements, revenue is recognized as services are performed as measured by costs incurred to date, as compared to total estimated costs to be incurred to complete the work. In milestone achievement arrangements, the Company recognizes revenue as the respective milestones are achieved. | |||||||||||||
The Company occasionally resells third party systems as part of an end-to-end solution requested by its customers. Hardware revenue is recognized on a gross basis in accordance with the guidance contained in ASC 605-45, Revenue Recognition – Principal Agent Considerations and when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collection is considered reasonably assured. The Company considers delivery to occur when the product is shipped and title and risk of loss have passed to the customer. | |||||||||||||
Although infrequent, when an arrangement does not qualify for separate unit of accounting of the software license and consulting transactions, the software license revenue is recognized together with the consulting services based on contract accounting using either the percentage-of-completion or completed-contract method. Arrangements that do not qualify for separate accounting of the software license fee and consulting services typically occur when the Company is requested to customize software or when the Company views the installation of its software as high risk in the customer’s environment. This requires the Company to make estimates about the total cost to complete the project and the stage of completion. The assumptions, estimates, and uncertainties inherent in determining the stage of completion affect the timing and amounts of revenues and expenses reported. Changes in estimates of progress toward completion and of contract revenues and contract costs are accounted for using the cumulative catch up approach. In certain arrangements, the Company does not have a sufficient basis to estimate the costs of providing support services. As a result, revenue is typically recognized on a percent completion basis up to the amount of costs incurred (zero margin). Once the consulting services are complete and support services are the only undelivered item, the remaining revenue is recognized evenly over the remaining support period. If the Company does not have a sufficient basis to measure the progress of completion or to estimate the total contract revenues and costs, revenue is recognized when the project is complete and, if applicable, final acceptance is received from the customer. The Company allocates these bundled arrangement fees to support services and consulting services revenues based on VSOE. The remaining arrangement fees are then allocated to software license fee revenues. The associated costs primarily consist of payroll and related costs to perform the consulting and support services and royalty expense. These costs are expensed as incurred and are included in cost of maintenance, subscription and other revenue, cost of professional services and cost of license fees. | |||||||||||||
The Company executes arrangements through indirect sales channels via sales agents and distributors in which the indirect sales channels are authorized to market its software products to end users. In arrangements with sales agents, revenue is recognized on a sell-through basis once an order is received from the end user, collectability from the end user is probable, a signed license agreement from the end user has been received by the Company, delivery has been made to the end user and all other revenue recognition criteria have been satisfied. Sales agents are compensated on a commission basis. Distributor arrangements are those in which the resellers are authorized to market and distribute the Company’s software products to end users in specified territories and the distributor bears the risk of collection from the end user customer. The Company recognizes revenue from transactions with distributors when the distributor submits a written purchase commitment, collectability from the distributor is probable, a signed license agreement is received from the distributor and delivery has occurred to the distributor, provided that all other revenue recognition criteria have been satisfied. Revenue from distributor transactions is recorded on a net basis (the amount actually received by the Company from the distributor). The Company does not offer rights of return, product rotation or price protection to any of its distributors. | |||||||||||||
Subscription Revenue Recognition | |||||||||||||
The Company recognizes the following fees in subscription revenue from the SaaS model: i) subscription fees from customers accessing our Cloud and our other subscription offerings, ii) fees for services such as set up, process mapping, configuration, database conversion and migration, and iii) support fees on hosted products. The Company’s subscription arrangements do not provide customers with the right to take possession of the subscribed software. | |||||||||||||
The Company commences revenue recognition when there is persuasive evidence of an arrangement, the service is being provided to the customer, the collection of the fees is reasonably assured and the amount of fees to be paid by the customer is fixed or determinable. | |||||||||||||
Subscription revenue is recognized ratably over the initial subscription period committed to by the customer commencing when the customer has been given access to the environment. The initial subscription period is typically 12 to 36 months. The Company’s subscription services are non-cancelable, though customers typically have the right to terminate their contracts if the Company materially fails to perform. The Company generally invoices its customers in advance in quarterly installments and typical payment terms provide that customers pay the Company within 30 days of invoice. | |||||||||||||
Other professional services are typically sold on a time-and-materials basis and consist of fees from consultation services such as configuration of features, implementing at various customer sites, testing and training. These services are considered to have stand-alone value to the customer because the Company has sold professional services separately and there are several third-party vendors that routinely provide similar professional services to the Company’s customers on a stand-alone basis. Accordingly, professional services are a separate unit of accounting and the associated services revenue is recognized as the services are performed and earned. | |||||||||||||
The Company may enter into multiple-element arrangements that may include a combination of the Company’s subscription offering and other professional services. The Company allocates revenue to each element in an arrangement based on a selling price hierarchy in accordance with ASC 605-25, Revenue Recognition - Multiple Deliverable Revenue Arrangements. In order to treat deliverables in a multiple-deliverable arrangement as separate units of accounting, the deliverables must have standalone value upon delivery. The Company determines the relative selling price for a deliverable based on its VSOE, if available, or Estimated Selling Price ("ESP"), if VSOE is not available. The Company has determined that third-party evidence (“TPE”) is not a practical alternative due to differences in the Company’s service offerings compared to other parties and the availability of relevant third-party pricing information. The determination for ESP is made through consultation with and approval by management taking into consideration the go-to-market strategy. As the Company’s go-to-market strategies evolve, there may be modifications of pricing practices in the future, which could result in changes in both VSOE and ESP. | |||||||||||||
For multiple-element arrangements that may include a combination of the Company’s subscription offerings and other professional services, the total arrangement fee is allocated to each element based on the VSOE / ESP value of each element. After allocation, the revenue associated with the subscription offering and other professional services are recognized as described above. | |||||||||||||
ADVERTISING EXPENSES | |||||||||||||
Advertising costs are expensed as incurred. Advertising expenses were $0.8 million, $0.6 million and $0.4 million for fiscal years 2015, 2014 and 2013, respectively. | |||||||||||||
RESEARCH AND DEVELOPMENT | |||||||||||||
All costs incurred to establish the technological feasibility of the Company’s software products are expensed to research and development as incurred. | |||||||||||||
OTHER (INCOME) EXPENSE, NET | |||||||||||||
The components of other (income) expense, net for fiscal 2015, 2014 and 2013 were as follows: | |||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Interest income | $ | (242 | ) | $ | (284 | ) | $ | (590 | ) | ||||
Interest expense | 811 | 829 | 990 | ||||||||||
Foreign exchange (gains) losses | (878 | ) | (67 | ) | 1,180 | ||||||||
Change in fair value of interest rate swap | 877 | (634 | ) | 384 | |||||||||
Other income, net | (168 | ) | (593 | ) | (446 | ) | |||||||
Total other (income) expense, net | $ | 400 | $ | (749 | ) | $ | 1,518 | ||||||
COMPUTATION OF NET INCOME PER SHARE | |||||||||||||
Net income per share of Class A common stock and Class B common stock is computed using the two-class method. Holders of Class A common stock are entitled to cash or stock dividends equal to 120% of the amount of such dividend payable with respect to a share of Class B Common Stock. | |||||||||||||
The following table sets forth the computation of basic and diluted net income per share: | |||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands, except per share data) | |||||||||||||
Net income | $ | 12,946 | $ | 6,386 | $ | 6,639 | |||||||
Less: dividends declared | (4,452 | ) | (4,362 | ) | (8,677 | ) | |||||||
Undistributed net income (loss) | $ | 8,494 | $ | 2,024 | $ | (2,038 | ) | ||||||
Net income per share – Class A Common Stock | |||||||||||||
Dividends declared | $ | 3,688 | $ | 3,606 | $ | 7,166 | |||||||
Allocation of undistributed net income (loss) | 7,041 | 1,676 | (1,683 | ) | |||||||||
Net income attributable to Class A common stock | $ | 10,729 | $ | 5,282 | $ | 5,483 | |||||||
Weighted average shares of Class A common stock outstanding—basic | 12,841 | 12,501 | 12,596 | ||||||||||
Weighted average potential shares of Class A common stock | 712 | 484 | 467 | ||||||||||
Weighted average shares of Class A common stock and potential common shares outstanding—diluted | 13,553 | 12,985 | 13,063 | ||||||||||
Basic net income per Class A common share | $ | 0.84 | $ | 0.42 | $ | 0.44 | |||||||
Diluted net income per Class A common share | $ | 0.79 | $ | 0.41 | $ | 0.42 | |||||||
Net income per share – Class B Common Stock | |||||||||||||
Dividends declared | $ | 764 | $ | 756 | $ | 1,511 | |||||||
Allocation of undistributed net income (loss) | 1,453 | 348 | (355 | ) | |||||||||
Net income attributable to Class B common stock | $ | 2,217 | $ | 1,104 | $ | 1,156 | |||||||
Weighted average shares of Class B common stock outstanding—basic | 3,183 | 3,149 | 3,160 | ||||||||||
Weighted average potential shares of Class B common stock | 88 | 89 | 106 | ||||||||||
Weighted average shares of Class B common stock and potential common shares outstanding—diluted | 3,271 | 3,238 | 3,266 | ||||||||||
Basic net income per Class B common share | $ | 0.7 | $ | 0.35 | $ | 0.37 | |||||||
Diluted net income per Class B common share | $ | 0.68 | $ | 0.34 | $ | 0.35 | |||||||
Potential common shares consist of the shares issuable upon the release of restricted stock units ("RSUs") and the exercise of stock options and stock appreciation rights ("SARs"). The Company’s unvested RSUs, unexercised stock options and unexercised SARs are not considered participating securities as they do not have rights to dividends or dividend equivalents prior to release or exercise. | |||||||||||||
The following table sets forth the number of potential common shares not included in the calculation of diluted earnings per share because their effects were anti-dilutive: | |||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Class A | 211 | 1,179 | 1,124 | ||||||||||
Class B | 45 | 184 | 151 | ||||||||||
RECENT ACCOUNTING PRONOUNCEMENTS | |||||||||||||
In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ("ASU 2013-11"), which requires an unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, similar tax loss, or a tax credit carryforward. To the extent the tax benefit is not available at the reporting date under the governing tax law or if the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented as a liability and not combined with deferred tax assets. ASU 2013-11 was effective for and adopted by the Company in the first quarter of fiscal 2015 and was applied prospectively to unrecognized tax benefits that existed at the effective date. The adoption of ASU 2013-11 impacted the Company’s financial statement presentation and disclosures, but otherwise did not impact the Company’s condensed consolidated results of operations or cash flows. | |||||||||||||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 will be effective for the Company’s fiscal year beginning February 1, 2017. At its April 1, 2015 meeting the FASB agreed to propose a one-year deferral of the effective date for all entities. If approved, this proposal would make ASU 2014-09 effective for the Company's fiscal year beginning February 1, 2018. Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative transition method. The Company is currently evaluating the accounting, transition and disclosure requirements of the standard and cannot currently estimate the financial statement impact of adoption. |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
FAIR VALUE MEASUREMENTS [Abstract] | |||||||||||||
FAIR VALUE MEASUREMENTS | 2. FAIR VALUE MEASUREMENTS | ||||||||||||
When determining fair value, the Company uses a three-tier value hierarchy which prioritizes the inputs used in measuring fair value. Whenever possible, the Company uses observable market data. The Company relies on unobservable inputs only when observable market data is not available. Classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. | |||||||||||||
· | Level 1 - Money market mutual funds are recorded at fair value based upon quoted market prices. | ||||||||||||
· | Level 2 - The asset or liability related to the interest rate swap is recorded at fair value based upon a valuation model that uses relevant observable market inputs at quoted intervals, such as forward yield curves. | ||||||||||||
· | Level 3 - The contingent liability associated with the acquisition of CEBOS is recorded at fair value based on significant inputs that are not observable in the market. This measure includes an assessment of the probability of achieving certain milestones and discounting the amount of each potential payment based on expected timing of the payment. Key assumptions include a discount rate of 4.6%, probability of achieving profitability and probability of achieving product development goals. The final payment was made on March 31, 2015 for $0.8 million. | ||||||||||||
The following table sets forth the financial assets, measured at fair value, as of January 31, 2015 and January 31, 2014: | |||||||||||||
Fair value measurement at reporting date using | |||||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||
(in thousands) | |||||||||||||
Money market mutual funds as of January 31, 2015 | $ | 98,294 | |||||||||||
Money market mutual funds as of January 31, 2014 | $ | 57,204 | |||||||||||
Liability related to the interest rate swap as of January 31, 2015 | $ | (626 | ) | ||||||||||
Asset related to the interest rate swap as of January 31, 2014 | $ | 250 | |||||||||||
Contingent liability associated with acquisitions as of January 31, 2015 | $ | (750 | ) | ||||||||||
Contingent liability associated with acquisitions as of January 31, 2014 | $ | (1,178 | ) | ||||||||||
Money market mutual funds are classified as part of “Cash and equivalents” in the accompanying Condensed Consolidated Balance Sheets. In addition, the amount of cash and equivalents, including cash deposited with commercial banks, was $22 million and $19 million as of January 31, 2015 and January 31, 2014, respectively. | |||||||||||||
The Company’s line of credit and notes payable both bear a variable market interest rate commensurate with the Company’s credit standing. Therefore, the carrying amounts outstanding under the line of credit and note payable reasonably approximate fair value based on Level 2 inputs. | |||||||||||||
There have been no transfers between fair value measurements levels during the 12 months ended January 31, 2015. | |||||||||||||
Derivative Instruments | |||||||||||||
The Company entered into an interest rate swap in May 2012 to mitigate the exposure to the variability of one month LIBOR for its floating rate debt described in Note 8 “Debt” within these Notes to Consolidated Financial Statements. The instrument is accounted for in accordance with ASC 815, Derivatives and Hedging, which requires that every derivative be recorded on the balance sheet as either an asset or liability measured at its fair value as of the reporting date. ASC 815 also requires that changes in the fair value of derivative instruments be recognized in earnings unless specific hedge accounting and documentation criteria are met. The fair value of the interest rate swap is reflected as an asset or liability in the Consolidated Balance Sheets and the change in fair value is reported in “Other (income) expense, net” in the Consolidated Statements of Income and Comprehensive Income. The fair value of the interest rate swap is estimated as the net present value of projected cash flows based upon forward interest rates at the balance sheet date. | |||||||||||||
The fair values of the derivative instrument at January 31, 2015 and January 31, 2014 were as follows (in thousands): | |||||||||||||
(Liability) / Asset Derivative | |||||||||||||
Fair Value | |||||||||||||
Balance Sheet | January 31, | January 31, | |||||||||||
Location | 2015 | 2014 | |||||||||||
Derivative instrument: | |||||||||||||
Interest rate swap | Other (liabilities) assets | $ | (626 | ) | $ | 250 | |||||||
Total | $ | (626 | ) | $ | 250 | ||||||||
The change in fair value of the interest rate swap recognized in the Consolidated Statement of Income and Comprehensive Income for the twelve months ended January 31, 2015, 2014 and 2013 was $(0.9) million, $0.6 million and $(0.4) million, respectively. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
INCOME TAXES [Abstract] | |||||||||||||
INCOME TAXES | 3. INCOME TAXES | ||||||||||||
Income tax expense (benefit) is summarized as follows: | |||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Current: | |||||||||||||
Federal | $ | 174 | $ | 303 | $ | 684 | |||||||
State | 109 | 33 | 25 | ||||||||||
Foreign | 3,010 | 2,703 | 2,569 | ||||||||||
Subtotal | 3, 293 | 3,039 | 3,278 | ||||||||||
Deferred: | |||||||||||||
Federal | (786 | ) | 20 | 942 | |||||||||
State | 229 | 306 | 220 | ||||||||||
Foreign | (348 | ) | 297 | (929 | ) | ||||||||
Subtotal | (905 | ) | 623 | 233 | |||||||||
Equity adjustment | 251 | 104 | 140 | ||||||||||
Total | $ | 2,639 | $ | 3,766 | $ | 3,651 | |||||||
Actual income tax expense (benefit) differs from that obtained by applying the statutory federal income tax rate of 34% to income before income taxes as follows: | |||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Computed expected tax expense | $ | 5,299 | $ | 3,452 | $ | 3,499 | |||||||
State income taxes, net of federal income tax expense | 253 | 330 | 208 | ||||||||||
Incremental tax benefit from foreign operations | (5,220 | ) | (2,676 | ) | (1,355 | ) | |||||||
Non-deductible equity compensation | 258 | 1,176 | 913 | ||||||||||
Foreign withholding taxes | 1,256 | 1,171 | 928 | ||||||||||
Net change in valuation allowance | 1,657 | (108 | ) | (826 | ) | ||||||||
Net change in contingency reserve | (594 | ) | 45 | (68 | ) | ||||||||
Non-deductible expenses | 742 | 1,084 | 296 | ||||||||||
Benefit of tax credits | (1,345 | ) | (1,624 | ) | (446 | ) | |||||||
Subpart F Income | 283 | 198 | 313 | ||||||||||
Rate change impact | 54 | (88 | ) | 164 | |||||||||
Other | (4 | ) | 806 | 25 | |||||||||
Total | $ | 2,639 | $ | 3,766 | $ | 3,651 | |||||||
Consolidated U.S. income (loss) before income taxes was $(2.4) million, $(1.2) million and $2.3 million for the fiscal years ended January 31, 2015, 2014 and 2013, respectively. The corresponding income before income taxes for foreign operations was $18.0 million, $11.4 million and $8.0 million for the fiscal years ended January 31, 2015, 2014 and 2013, respectively. | |||||||||||||
The Company files U.S. federal, state, and foreign tax returns that are subject to audit by various tax authorities. The Company is currently under audit in: | |||||||||||||
· | India for fiscal years ended March 31, 2008, 2009, 2010, 2012 and 2013 | ||||||||||||
· | California for fiscal years ended 2004 | ||||||||||||
· | State of Minnesota for fiscal years ended 2010, 2011, 2012 and 2013 | ||||||||||||
U.S. income and foreign withholding taxes have not been recorded on permanently reinvested earnings of our foreign subsidiaries. These permanently reinvested earnings are approximately $76.1 million at January 31, 2015. It is not practicable for the Company to determine the amount of the related unrecognized deferred income tax liability. Such earnings would likely become taxable upon the sale or liquidation of these subsidiaries or upon the remittance of dividends. | |||||||||||||
Deferred income taxes reflect the net effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. | |||||||||||||
Significant components of the Company’s deferred tax assets and liabilities are as follows: | |||||||||||||
January 31, | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Deferred tax assets: | |||||||||||||
Allowance for doubtful accounts and sales adjustments | $ | 452 | $ | 492 | |||||||||
Accrued vacation | 2,015 | 1,923 | |||||||||||
Tax credits | 8,584 | 7,911 | |||||||||||
Deferred revenue | 3,666 | 3,467 | |||||||||||
Net operating loss carry forwards | 9,646 | 10,608 | |||||||||||
Accrued expenses - other | 2,478 | 2,076 | |||||||||||
Section 263(a) interest capitalization | 353 | 368 | |||||||||||
Equity compensation | 3,673 | 4,306 | |||||||||||
Other | 1,824 | 1,423 | |||||||||||
Total deferred tax assets | 32,691 | 32,574 | |||||||||||
Less valuation allowance | (10,684 | ) | (10,293 | ) | |||||||||
Less netting of unrecognized tax benefits against deferred tax assets | (1,406 | ) | — | ||||||||||
Deferred tax assets, net of valuation allowance | $ | 20,601 | $ | 22,281 | |||||||||
Deferred tax liabilities: | |||||||||||||
Unrecognized capital gain | (863 | ) | (1,033 | ) | |||||||||
Depreciation and amortization | (379 | ) | (654 | ) | |||||||||
Other comprehensive income | (20 | ) | (295 | ) | |||||||||
Other | (346 | ) | (378 | ) | |||||||||
Total deferred tax liabilities | (1,608 | ) | (2,360 | ) | |||||||||
Total net deferred tax assets | $ | 18,993 | $ | 19,921 | |||||||||
Recorded as: | |||||||||||||
Current portion of deferred tax assets | 9,434 | 8,242 | |||||||||||
Non-current portion of deferred tax assets | 11,229 | 13,110 | |||||||||||
Current portion of deferred tax liabilities (in current deferred tax assets) | (121 | ) | (109 | ) | |||||||||
Non-current portion of deferred tax liabilities (in non-current deferred tax assets) | (1,549 | ) | (1,322 | ) | |||||||||
Total net deferred tax assets | $ | 18,993 | $ | 19,921 | |||||||||
The Company reviews its net deferred tax assets by jurisdiction on a quarterly basis to determine whether a valuation allowance is necessary based on the more-likely-than-not standard. If and when the Company’s operating performance improves on a sustained basis, the conclusion regarding the need for a valuation allowance could change, resulting in the reversal of some or all of the valuation allowance in the future. At January 31, 2015 and 2014, the valuation allowance attributable to deferred tax assets was $10.7 million and $10.3 million, respectively. | |||||||||||||
Deferred tax assets at January 31, 2015 and 2014 do not include $2.1 million and $1.2 million, respectively, of excess tax benefits from employee stock exercises. During fiscal 2015, the Company was able to recognize $0.1 million of deferred excess tax benefits. Equity will be increased by an additional $2.1 million when such excess tax benefits are ultimately realized. | |||||||||||||
The Company has gross net operating loss carryforwards of $35.2 million and tax credit carryforwards of $10.8 million as of January 31, 2015. The majority of the Company’s net operating loss carryforwards do not expire, the remaining begin to expire in fiscal year 2016. The majority of the Company’s tax credit carryforwards do not expire, the remaining begin to expire in fiscal year 2020. | |||||||||||||
During the fiscal year ended January 31, 2015, the Company decreased its reserves for uncertain tax positions by $0.7 million. Interest and penalties on accrued but unpaid taxes are classified in the Consolidated Statements of Income and Comprehensive Income as income tax expense. The liability for unrecognized tax benefits that may be recognized in the next twelve months is classified as short-term in the Company’s Consolidated Balance Sheet while the remainder is classified as long-term. | |||||||||||||
The following table reconciles the gross amounts of unrecognized tax benefits at the beginning and end of the period: | |||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Unrecognized tax benefits at beginning of the year | $ | 2,626 | $ | 2,581 | |||||||||
Increases as a result of tax positions taken in a prior period | 85 | 45 | |||||||||||
Increases as a result of tax positions taken in the current period | 27 | — | |||||||||||
Reduction as a result of a lapse of the statute of limitations | (649 | ) | — | ||||||||||
Decreases as a result of tax settlements | (165 | ) | — | ||||||||||
Unrecognized tax benefit at end of year | $ | 1,924 | $ | 2,626 | |||||||||
All of the unrecognized tax benefits included in the balance sheet at January 31, 2015 would impact the effective tax rate on income from continuing operations, if recognized. | |||||||||||||
The total amount of interest recognized in the Consolidated Statement of Income and Comprehensive Income for unpaid taxes was $37,000 for the year ended January 31, 2015. The total amount of interest and penalties recognized in the Consolidated Balance Sheet at January 31, 2015 was $0.2 million. | |||||||||||||
In the next twelve months, due to a potential tax credit settlement an estimated $0.1 million of gross unrecognized tax benefits may be recognized. | |||||||||||||
The Company files U.S. federal, state, and foreign income tax returns in jurisdictions with varying statute of limitations. The years that may be subject to examination will vary by jurisdiction. Below is a list of our material jurisdictions and the years open for audit as of fiscal 2015: | |||||||||||||
Jurisdiction | Years Open for Audit | ||||||||||||
U.S. Federal | FY12 and beyond | ||||||||||||
California | FY11 and beyond | ||||||||||||
Michigan | FY11 and beyond | ||||||||||||
New Jersey | FY11 and beyond | ||||||||||||
Australia | FY11 and beyond | ||||||||||||
France | FY12 and beyond | ||||||||||||
India | FY99 and beyond | ||||||||||||
Ireland | FY11 and beyond | ||||||||||||
United Kingdom | FY12 and beyond |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended | ||||||||||||||
Jan. 31, 2015 | |||||||||||||||
STOCKHOLDERS' EQUITY [Abstract] | |||||||||||||||
STOCKHOLDERS' EQUITY | 4. STOCKHOLDERS’ EQUITY | ||||||||||||||
Common Stock | |||||||||||||||
The Company has two classes of common stock. Each share of Class B Common Stock entitles the holder to one vote and each share of Class A Common Stock entitles the holder to 1/20th of one vote. On all matters, the Class A Common Stock and the Class B Common Stock will vote as a single class, except as otherwise required by applicable law or the articles of incorporation. Neither the Class A Common Stock nor the Class B Common Stock will be convertible into the other, and there will be no restrictions on the transferability of either class. | |||||||||||||||
The amount of any dividend payable in cash or non-cash property of the Company (other than a dividend payable solely in the Company’s capital stock) with respect to each share of Class A Common Stock is equal to 120% of the value of any such dividend payable with respect to a share of Class B Common Stock, except for dividends declared for the purpose of distributing all or some of the proceeds received by the Company from any transaction determined by the Board to be a material transaction not in the ordinary course of business or for the purpose of effecting a spin-off of a subsidiary of the Company (in either case, such dividend will be paid ratably, on a per share basis, to all holders of Common Stock). | |||||||||||||||
Issuance of Common Stock | |||||||||||||||
On January 22, 2015, the Company closed an offering of 2,000,000 shares of Class A common stock. The net proceeds to the Company from the sale of the stock were $37.0 million after deducting underwriting discounts and commissions and offering expenses. | |||||||||||||||
On February 18, 2015 the offering underwriters exercised in full an option to purchase additional shares. As a result, 450,000 shares of Class A common stock were issued generating approximately $8.4 million in additional net proceeds. | |||||||||||||||
Dividends | |||||||||||||||
The following table sets forth the dividends declared and paid by the Company during fiscal 2015: | |||||||||||||||
Declaration | Record Date | Payable | Dividend | Dividend | Amount | ||||||||||
Date | Class A | Class B | |||||||||||||
11/28/14 | 12/23/14 | 1/6/15 | $ | 0.072 | $ | 0.06 | $ | 1,118,000 | |||||||
9/9/14 | 9/23/14 | 9/30/14 | $ | 0.072 | $ | 0.06 | $ | 1,118,000 | |||||||
6/11/14 | 6/25/14 | 7/2/14 | $ | 0.072 | $ | 0.06 | $ | 1,113,000 | |||||||
4/16/14 | 4/30/14 | 5/7/14 | $ | 0.072 | $ | 0.06 | $ | 1,103,000 | |||||||
Stock Repurchase Activity | |||||||||||||||
In September 2011, the Company’s Board of Directors approved a stock repurchase plan in which up to one million shares could be repurchased. Since the inception of the plan, the Company has repurchased 897,000 and 103,000 shares of the Company’s Class A and Class B common stock, respectively, for total cash consideration of $12.5 million including fees. As of March 2013, all shares authorized under the plan have been repurchased and the plan was closed. |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended | |||||||||||||
Jan. 31, 2015 | ||||||||||||||
STOCK-BASED COMPENSATION [Abstract] | ||||||||||||||
STOCK-BASED COMPENSATION | 5. STOCK-BASED COMPENSATION | |||||||||||||
Stock Plans | ||||||||||||||
On June 7, 2006, the stockholders approved the QAD Inc. 2006 Stock Incentive Program (“2006 Program”). The 2006 Program replaced the QAD 1997 Stock Incentive Program (“1997 Program”). The 2006 Program allows for equity awards in the form of incentive stock options, non-statutory stock options, restricted shares, rights to purchase stock, stock appreciation rights (“SARs”) and other stock rights. The stockholders authorized a maximum of 4,150,000 shares to be issued under the 2006 Program, of which 3,320,000 are reserved for issuance as Class A Common Stock and 830,000 are reserved for issuance as Class B Common Stock. On June 12, 2012, the Company's stockholders approved an amendment to the 2006 Stock Incentive Program to provide for an increase in the number of shares of Class A Common Stock reserved for issuance by 2,000,000 shares. As of January 31, 2015, 1,670,000 Class A Common Shares and 345,000 Class B Common Shares were available for issuance. | ||||||||||||||
After the 2006 Program was adopted, the Company began issuing equity awards in the form of stock-settled SARs. A SAR is a contractual right to receive value tied to the post-grant appreciation of the underlying stock. Although the Company has the ability to grant stock-settled or cash-settled SARs, the Company has only granted stock-settled SARs. Upon vesting, a holder of a stock-settled SAR receives shares in the Company’s common stock equal to the intrinsic value of the SAR at time of exercise. Under the 2006 Program, SARs have generally been granted for a term of eight years, they generally vest 25% after each year of service for four years and are contingent upon employment with the Company on the vesting date. Economically, a stock-settled SAR provides the same compensation value as a stock option, but the employee is not required to pay an exercise price upon exercise of the SAR. Stock compensation expense, as required under ASC 718, is the same for stock-settled SARs and stock options. At January 31, 2015, outstanding under the 2006 Program, there were 2,174,000 SARs to purchase Class A Common Stock and 325,000 SARs to purchase Class B Common Stock. | ||||||||||||||
The Company also began issuing restricted stock units (“RSUs”) in fiscal 2008. RSUs granted to employees under the 2006 Program are generally released 25% after each year of service for four years and are contingent upon employment with the Company on the release date. Under the 2006 Program, RSUs granted to non-employee directors generally vest immediately and are contingent upon providing services to the Company. Stock based compensation is typically issued out of treasury shares. At January 31, 2015, outstanding under the 2006 Program, there were 503,000 RSUs to purchase Class A Common Stock. | ||||||||||||||
Beginning in fiscal 2015 the Company began issuing only RSUs to employees with the exception of the CEO and President of the Company. | ||||||||||||||
Under both programs, officers, directors, employees, consultants and other independent contractors or agents of the Company or subsidiaries of the Company who are responsible for or contribute to the management, growth or profitability of its business are eligible for selection by the program administrators to participate. However, incentive stock options granted under the programs may only be granted to a person who is an employee of the Company or one of its subsidiaries. | ||||||||||||||
Stock- Based Compensation | ||||||||||||||
The following table sets forth reported stock compensation expense included in the Company’s Consolidated Statements of Income and Comprehensive Income for the fiscal years ended January 31, 2015, 2014 and 2013: | ||||||||||||||
Years Ended January 31, | ||||||||||||||
2015 | 2014 | 2013 | ||||||||||||
(in thousands) | ||||||||||||||
Stock-based compensation expense: | ||||||||||||||
Cost of maintenance, subscription and other revenue | $ | 197 | $ | 201 | $ | 197 | ||||||||
Cost of professional services | 492 | 476 | 482 | |||||||||||
Sales and marketing | 790 | 858 | 835 | |||||||||||
Research and development | 518 | 628 | 658 | |||||||||||
General and administrative | 2,996 | 2,517 | 2,436 | |||||||||||
Total stock-based compensation expense | $ | 4,993 | $ | 4,680 | $ | 4,608 | ||||||||
The Company presents any benefits of realized tax deductions in excess of recognized compensation expense as cash flow from financing activities in the accompanying Consolidated Statement of Cash Flows. There were $266,000, $72,000 and $462,000 excess tax benefits recorded for equity awards exercised in the fiscal years ended January 31, 2015, 2014 and 2013, respectively. | ||||||||||||||
SAR Information | ||||||||||||||
The weighted average assumptions used to value SARs are shown in the following table. | ||||||||||||||
Years Ended January 31, | ||||||||||||||
2015 | 2014 | 2013 | ||||||||||||
Expected life in years | 4.98 | 4.57 | 4.61 | |||||||||||
Risk free interest rate | 1.58 | % | 1 | % | 0.69 | % | ||||||||
Volatility | 47 | % | 53 | % | 61 | % | ||||||||
Dividend rate | 1.32 | % | 2.42 | % | 2.25 | % | ||||||||
The following table summarizes the activity for outstanding options and SARs for the fiscal years ended January 31, 2015, 2014 and 2013: | ||||||||||||||
Options/ | Weighted | Weighted | Aggregate | |||||||||||
SARs | Average | Average | Intrinsic | |||||||||||
(in thousands) | Exercise | Remaining | Value | |||||||||||
Price per | Contractual | (in thousands) | ||||||||||||
Share | Term | |||||||||||||
(years) | ||||||||||||||
Outstanding at January 31, 2012 | 2,871 | $ | 11.34 | |||||||||||
Granted | 570 | 12.9 | ||||||||||||
Exercised | (272 | ) | 8.34 | |||||||||||
Expired | (222 | ) | 22.26 | |||||||||||
Forfeited | (27 | ) | 9.49 | |||||||||||
Outstanding at January 31, 2013 | 2,920 | $ | 11.11 | |||||||||||
Granted | 599 | 11.73 | ||||||||||||
Exercised | (404 | ) | 9.21 | |||||||||||
Expired | (230 | ) | 15.16 | |||||||||||
Forfeited | (43 | ) | 10.68 | |||||||||||
Outstanding at January 31, 2014 | 2,842 | $ | 11.19 | |||||||||||
Granted | 387 | 21.61 | ||||||||||||
Exercised | (655 | ) | 11.47 | |||||||||||
Expired | (22 | ) | 12.68 | |||||||||||
Forfeited | (53 | ) | 12.31 | |||||||||||
Outstanding at January 31, 2015 | 2,499 | $ | 12.69 | 5.1 | $ | 16,964 | ||||||||
Vested and expected to vest at January 31, 2015 (1) | 2,483 | $ | 12.69 | 5.1 | $ | 16,855 | ||||||||
Vested and exercisable at January 31, 2015 | 1,323 | $ | 10.55 | 4 | $ | 11,246 | ||||||||
-1 | The expected-to-vest options and SARs are the result of applying the pre-vesting forfeiture rate assumptions to total outstanding options and SARs. | |||||||||||||
The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the aggregate difference between the closing stock price of the Company’s common stock based on the last trading day as of January 31, 2015 and the exercise price for in-the-money stock options and SARs) that would have been received by the holders if all stock options and SARs had been exercised on January 31, 2015. The total intrinsic value of stock options or SARs exercised in the years ended January 31, 2015, 2014 and 2013 was $5.7 million, $2.1 million and $1.4 million, respectively. The weighted average grant date fair value per share of SARs granted in the years ended January 31, 2015, 2014 and 2013 was $8.18, $4.24 and $5.37, respectively. | ||||||||||||||
The number of SARs exercised includes shares withheld on behalf of employees to satisfy minimum statutory tax withholding requirements. During the fiscal years ended January 31, 2015, 2014 and 2013, the Company withheld 88,000 shares, 49,000 shares and 35,000 shares for payment of these taxes. The value of the withheld shares for the fiscal years ended January 31, 2015, 2014 and 2013 were $1.8 million, $0.7 million and $0.5 million, respectively. | ||||||||||||||
At January 31, 2015, there was approximately $5.4 million of total unrecognized compensation cost related to unvested SARs. This cost is expected to be recognized over a weighted average period of approximately 2.6 years. | ||||||||||||||
RSU Information | ||||||||||||||
The following table summarizes the activity for RSUs for the fiscal years ended January 31, 2015, 2014 and 2013: | ||||||||||||||
RSUs | Weighted | |||||||||||||
Average | ||||||||||||||
Grant Date | ||||||||||||||
Fair Value | ||||||||||||||
(in thousands) | ||||||||||||||
Restricted stock at January 31, 2012 | 414 | $ | 9.32 | |||||||||||
Granted | 200 | 12.2 | ||||||||||||
Released (1) | (223 | ) | 9.84 | |||||||||||
Forfeited | (6 | ) | 10.99 | |||||||||||
Restricted stock at January 31, 2013 | 385 | $ | 10.49 | |||||||||||
Granted | 231 | 11.2 | ||||||||||||
Released (1) | (165 | ) | 10.05 | |||||||||||
Forfeited | (21 | ) | 11.14 | |||||||||||
Restricted stock at January 31, 2014 | 430 | $ | 11.02 | |||||||||||
Granted | 287 | 21.25 | ||||||||||||
Released (1) | (167 | ) | 11.92 | |||||||||||
Forfeited | (47 | ) | 14 | |||||||||||
Restricted stock at January 31, 2015 | 503 | $ | 16.27 | |||||||||||
-1 | The number of RSUs released includes shares withheld on behalf of employees to satisfy minimum statutory tax withholding requirements. During the fiscal years ended January 31, 2015, 2014 and 2013, the Company withheld 45,000 shares, 47,000 shares and 57,000 shares, respectively, for payment of these taxes. The value of the withheld shares for the fiscal years ended January 31, 2015, 2014 and 2013 were $1.0 million, $0.6 million and $0.7 million, respectively. | |||||||||||||
Total unrecognized compensation cost related to RSUs was approximately $6.2 million as of January 31, 2015. This cost is expected to be recognized over a period of approximately 2.9 years. |
DEFERRED_REVENUES
DEFERRED REVENUES | 12 Months Ended | ||||||||
Jan. 31, 2015 | |||||||||
DEFERRED REVENUES [Abstract] | |||||||||
DEFERRED REVENUES | 6. DEFERRED REVENUES | ||||||||
Deferred revenues consisted of the following: | |||||||||
January 31, | |||||||||
2015 | 2014 | ||||||||
(in thousands) | |||||||||
Deferred maintenance revenue | $ | 86,381 | $ | 87,288 | |||||
Deferred subscription revenue | 11,563 | 7,590 | |||||||
Deferred services revenue | 2,813 | 5,261 | |||||||
Deferred license revenue | 1,890 | 3,967 | |||||||
Deferred other revenue | 74 | 54 | |||||||
Deferred revenues, current | 102,721 | 104,160 | |||||||
Deferred revenues, non-current (in Other liabilities) | 2,361 | 606 | |||||||
Total deferred revenues | $ | 105,082 | $ | 104,766 | |||||
Deferred maintenance and subscription revenues represent customer payments made in advance for support and subscription contracts. Support and subscription are billed in advance with corresponding revenues being recognized ratably over the support and subscription periods. Support is typically billed annually while subscription is typically billed quarterly. Deferred license revenues result from undelivered products or specified enhancements, customer specific acceptance provisions and software license transactions that cannot be segmented from undelivered consulting or other services. Deferred services revenues represent both prepayments for our professional services where revenues for these services are generally recognized as the Company completes the performance obligations for the prepaid services; and services already provided but deferred due to software revenue recognition rules. | |||||||||
During fiscal 2015, the foreign currency impact to deferred maintenance revenue was significant. On a constant currency basis, converting at the prior year exchange rates, fiscal 2015 deferred maintenance revenue would have been $5.8 million higher. |
OTHER_BALANCE_SHEET_ACCOUNTS
OTHER BALANCE SHEET ACCOUNTS | 12 Months Ended | ||||||||
Jan. 31, 2015 | |||||||||
OTHER BALANCE SHEET ACCOUNTS [Abstract] | |||||||||
OTHER BALANCE SHEET ACCOUNTS | 7. OTHER BALANCE SHEET ACCOUNTS | ||||||||
January 31, | |||||||||
2015 | 2014 | ||||||||
(in thousands) | |||||||||
Other current assets | |||||||||
Deferred cost of revenues | $ | 8,363 | $ | 8,143 | |||||
Prepaid expenses | 4,589 | 4,275 | |||||||
Income tax receivable, net of payables | 465 | 1,620 | |||||||
Other | 1,382 | 942 | |||||||
$ | 14,799 | $ | 14,980 | ||||||
Other assets, net | |||||||||
Other intangibles, net | $ | 1,750 | $ | 2,585 | |||||
Security deposits | 1,416 | 1,504 | |||||||
Fair value of interest rate swap | — | 250 | |||||||
Other long-term assets | 448 | 475 | |||||||
$ | 3,614 | $ | 4,814 | ||||||
Accounts payable | |||||||||
Trade payables | $ | 8,164 | $ | 7,049 | |||||
VAT payable | 4,708 | 3,993 | |||||||
$ | 12,872 | $ | 11,042 | ||||||
Other current liabilities | |||||||||
Accrued commissions and bonus | $ | 14,585 | $ | 13,322 | |||||
Accrued compensated absences | 8,072 | 8,598 | |||||||
Other accrued payroll | 4,805 | 3,647 | |||||||
Accrued professional fees | 1,733 | 1,770 | |||||||
Accrued travel | 1,580 | 1,421 | |||||||
Accrued contract labor | 908 | 849 | |||||||
Contingent liability related to acquisition of CEBOS | 750 | 471 | |||||||
Other current liabilities | 3,332 | 4,121 | |||||||
$ | 35,765 | $ | 34,199 | ||||||
Other liabilities | |||||||||
Long-term deferred revenue | $ | 2,361 | $ | 606 | |||||
Fair value of interest rate swap | 626 | — | |||||||
Long-term tax contingency reserve | 518 | 2,419 | |||||||
Contingent liability related to acquisition of CEBOS | — | 707 | |||||||
Other | 1,714 | 2,001 | |||||||
$ | 5,219 | $ | 5,733 |
DEBT
DEBT | 12 Months Ended | ||||||||
Jan. 31, 2015 | |||||||||
DEBT [Abstract] | |||||||||
DEBT | 8. DEBT | ||||||||
January 31, | January 31, | ||||||||
2015 | 2014 | ||||||||
(in thousands) | |||||||||
Note payable | $ | 15,086 | $ | 15,474 | |||||
Less current maturities | (406 | ) | (389 | ) | |||||
Long-term debt | $ | 14,680 | $ | 15,085 | |||||
Note Payable | |||||||||
Effective May 30, 2012, QAD Ortega Hill, LLC entered into a variable rate credit agreement (the “2012 Mortgage”) with Rabobank, N.A., to refinance a pre-existing mortgage. The 2012 Mortgage has an original principal balance of $16.1 million and bears interest at the one month LIBOR rate plus 2.25%. One month LIBOR was 0.17% at January 31, 2015. The 2012 Mortgage matures in June 2022 and is secured by the Company’s headquarters located in Santa Barbara, California. In conjunction with the 2012 Mortgage, QAD Ortega Hill, LLC entered into an interest rate swap with Rabobank, N.A. The swap agreement has an initial notional amount of $16.1 million and a schedule matching that of the underlying loan that synthetically fixes the interest rate on the debt at 4.31% for the entire term of the 2012 Mortgage. The terms of the 2012 Mortgage provide for QAD Ortega Hill, LLC to make net monthly payments of $88,100 consisting of principal and interest and one final payment of $11.7 million. The unpaid balance as of January 31, 2015 was $15.1 million. | |||||||||
Credit Facility | |||||||||
The Company has an unsecured credit agreement with Rabobank, N.A. (the “Facility”). The Facility provides a commitment through July 15, 2017 for a $20 million line of credit for working capital or other business needs. The Company pays a commitment fee of 0.25% per annum of the daily average of the unused portion of the $20 million Facility. Borrowings under the Facility bore interest at a rate equal to one month LIBOR plus 0.75%. At January 31, 2015, the effective borrowing rate would have been 0.92%. | |||||||||
The Facility provides that the Company maintain certain financial and operating ratios which include, among other provisions, minimum liquidity on a consolidated basis of $25 million in cash and equivalents at all times, a current ratio (calculated using current liabilities excluding deferred revenue) of not less than 1.3 to 1.0 determined at the end of each fiscal quarter, a leverage ratio of not more than 1.5 to 1.0 determined at the end of each fiscal quarter, and a debt service coverage ratio of not less than 1.5 to 1.0 determined at the end of each fiscal year. The Facility also contains customary covenants that could restrict the Company’s ability to incur additional indebtedness. | |||||||||
As of January 31, 2015, there were no borrowings under the Facility and the Company was in compliance with all financial covenants. |
ACCUMULATED_OTHER_COMPREHENSIV
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12 Months Ended | ||||
Jan. 31, 2015 | |||||
ACCUMULATED OTHER COMPREHENSIVE LOSS [Abstract] | |||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | 9. ACCUMULATED OTHER COMPREHENSIVE LOSS | ||||
The components of accumulated other comprehensive loss, net of taxes, were as follows: | |||||
Foreign Currency | |||||
Translation | |||||
Adjustments | |||||
(in thousands) | |||||
Balance as of January 31, 2014 | $ | (6,958 | ) | ||
Other comprehensive income before reclassifications | (460 | ) | |||
Amounts reclassified from accumulated other comprehensive loss | — | ||||
Net current period other comprehensive income | (460 | ) | |||
Balance as of January 31, 2015 | $ | (7,418 | ) | ||
During fiscal 2015 there were no reclassifications from accumulated other comprehensive loss. |
EMPLOYEE_BENEFIT_PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Jan. 31, 2015 | |
EMPLOYEE BENEFIT PLANS [Abstract] | |
EMPLOYEE BENEFIT PLANS | 10. EMPLOYEE BENEFIT PLANS |
The Company has a defined contribution 401(k) plan which is available to U.S. employees after 30 days of employment. Employees may contribute up to the maximum allowable by the Internal Revenue Code. The Company voluntarily matches 75% of the employees’ contributions up to the first four percent of the employee’s eligible contribution. In addition, the Company can make additional contributions at the discretion of the board of directors. Participants are immediately vested in their employee contributions. Employer contributions vest over a five-year period. The Company’s contributions for fiscal years 2015, 2014 and 2013 were $1.8 million, $1.5 million and $1.5 million, respectively. | |
Various QAD foreign subsidiaries also contribute to what can be considered defined contribution pension plans. Employer contributions in these plans are generally based on employee salary and range from 3% to 22%. These plans are funded at various times throughout the year according to plan provisions, with aggregate employer contributions of $5.0 million, $4.6 million and $4.2 million during fiscal years 2015, 2014 and 2013, respectively. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||
Jan. 31, 2015 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||||
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES | ||||
Lease Obligations | |||||
The Company leases certain office facilities, office equipment and automobiles under operating lease agreements. The leases generally provide that QAD pays taxes, insurance and maintenance expenses related to the leased assets. Total rent expense for fiscal years 2015, 2014 and 2013 was $5.6 million, $5.8 million and $6.0 million, respectively. Future minimum rental payments under non-cancelable operating lease commitments with terms of more than one year as of January 31, 2015 are as follows (in millions): | |||||
2016 | $ | 5.5 | |||
2017 | 4.4 | ||||
2018 | 3.4 | ||||
2019 | 2.6 | ||||
2020 | 1.2 | ||||
Thereafter | 0.6 | ||||
$ | 17.7 | ||||
Purchase Obligations | |||||
At January 31, 2015, the Company had $8.7 million of other non-cancelable contractual obligations, related to the purchase of goods and services not included in the table above. | |||||
Indemnifications | |||||
The Company sells software licenses and services to its customers under written agreements. Each agreement contains the relevant terms of the contractual arrangement with the customer and generally includes certain provisions for indemnifying the customer against losses, expenses and liabilities from damages that may be awarded against the customer in the event the Company’s software is found to infringe upon certain intellectual property rights of a third party. The agreements generally limit the scope of and remedies for such indemnification obligations in a variety of industry-standard respects. | |||||
The Company believes its internal development processes and other policies and practices limit its exposure related to the indemnification provisions of the agreements. For several reasons, including the lack of prior indemnification claims and the lack of a monetary liability limit for certain infringement cases under the agreements, the Company cannot determine the maximum amount of potential future payments, if any, related to such indemnification provisions. | |||||
Legal Actions | |||||
The Company is subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe that the outcome of any of these legal matters will have a material adverse effect on the Company’s consolidated results of operations, financial position or liquidity. |
BUSINESS_SEGMENT_INFORMATION
BUSINESS SEGMENT INFORMATION | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
BUSINESS SEGMENT INFORMATION [Abstract] | |||||||||||||
BUSINESS SEGMENT INFORMATION | 12. BUSINESS SEGMENT INFORMATION | ||||||||||||
The Company markets its products and services worldwide, primarily to companies in the manufacturing industry, including automotive, industrial, high technology, food and beverage, consumer products and life sciences. The Company sells and licenses its products through its direct sales force in four geographic regions: North America, EMEA, Asia Pacific and Latin America and through distributors where third parties can extend sales reach more effectively or efficiently. The North America region includes the United States and Canada. The EMEA region includes Europe, the Middle East and Africa. The Asia Pacific region includes Asia and Australia. The Latin America region includes South America, Central America and Mexico. The Company’s Chief Operating Decision Maker, the Chief Executive Officer, reviews the consolidated results within one operating segment. | |||||||||||||
License and subscription revenues are assigned to the geographic regions based on both the proportion of users in each region and sales effort. Maintenance revenue is allocated to the region where the end user customer is located. Services revenue is assigned based on the region where the services are performed. | |||||||||||||
Capital expenditures and property and equipment, net are assigned by geographic region based on the location of each legal entity. | |||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Revenue: | |||||||||||||
North America (1) | $ | 129,693 | $ | 113,937 | $ | 109,388 | |||||||
EMEA | 98,279 | 89,133 | 76,182 | ||||||||||
Asia Pacific | 48,292 | 46,391 | 48,346 | ||||||||||
Latin America | 18,837 | 16,850 | 18,256 | ||||||||||
$ | 295,101 | $ | 266,311 | $ | 252,172 | ||||||||
Capital expenditures: | |||||||||||||
North America | $ | 3,468 | $ | 2,440 | $ | 1,664 | |||||||
EMEA | 482 | 1,224 | 1,071 | ||||||||||
Asia Pacific | 576 | 1,029 | 264 | ||||||||||
Latin America | 51 | 86 | 72 | ||||||||||
$ | 4,577 | $ | 4,779 | $ | 3,071 | ||||||||
January 31, | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Property and equipment, net: | |||||||||||||
North America | $ | 27,967 | $ | 26,861 | |||||||||
EMEA | 3,617 | 4,677 | |||||||||||
Asia Pacific | 1,455 | 1,394 | |||||||||||
Latin America | 115 | 153 | |||||||||||
$ | 33,154 | $ | 33,085 | ||||||||||
-1 | Sales into Canada accounted for 2%, 2% and 3% of North America total revenue 2015, 2014 and 2013, respectively. |
QUARTERLY_INFORMATION_Unaudite
QUARTERLY INFORMATION (Unaudited) | 12 Months Ended | ||||||||||||||||
Jan. 31, 2015 | |||||||||||||||||
QUARTERLY INFORMATION (Unaudited) [Abstract] | |||||||||||||||||
QUARTERLY INFORMATION (Unaudited) | 13. QUARTERLY INFORMATION (Unaudited) | ||||||||||||||||
Quarters Ended | |||||||||||||||||
30-Apr | 31-Jul | Oct. 31 | Jan. 31 | ||||||||||||||
(in thousands, except per share data) | |||||||||||||||||
Fiscal 2015 | |||||||||||||||||
Total revenue | $ | 68,485 | $ | 73,050 | $ | 74,004 | $ | 79,562 | |||||||||
Total costs and expenses | 68,187 | 70,986 | 68,115 | 71,828 | |||||||||||||
Gross margin | 37,054 | 39,831 | 40,933 | 45,653 | |||||||||||||
Operating income | 298 | 2,064 | 5,889 | 7,734 | |||||||||||||
Net (loss) income | (76 | ) | 985 | 5,090 | 6,947 | ||||||||||||
Basic net (loss) income per share | |||||||||||||||||
Class A | $ | (0.01 | ) | $ | 0.06 | $ | 0.33 | $ | 0.44 | ||||||||
Class B | (0.00 | ) | 0.05 | 0.27 | 0.37 | ||||||||||||
Diluted net (loss) income per share | |||||||||||||||||
Class A | $ | (0.01 | ) | $ | 0.06 | $ | 0.31 | $ | 0.42 | ||||||||
Class B | (0.00 | ) | 0.05 | 0.27 | 0.36 | ||||||||||||
Fiscal 2014 | |||||||||||||||||
Total revenue | $ | 61,927 | $ | 65,194 | $ | 65,660 | $ | 73,530 | |||||||||
Total costs and expenses | 63,648 | 63,704 | 61,859 | 67,697 | |||||||||||||
Gross margin | 33,302 | 36,417 | 36,755 | 42,831 | |||||||||||||
Operating (loss) income | (1,721 | ) | 1,490 | 3,801 | 5,833 | ||||||||||||
Net ( loss) income | (1,263 | ) | 1,254 | 2,049 | 4,346 | ||||||||||||
Basic net ( loss) income per share | |||||||||||||||||
Class A | $ | (0.08 | ) | $ | 0.08 | $ | 0.14 | $ | 0.29 | ||||||||
Class B | (0.07 | ) | 0.07 | 0.11 | 0.24 | ||||||||||||
Diluted net (loss) income per share | |||||||||||||||||
Class A | $ | (0.08 | ) | $ | 0.08 | $ | 0.13 | $ | 0.27 | ||||||||
Class B | (0.07 | ) | 0.07 | 0.11 | 0.23 |
SCHEDULE_II_SCHEDULE_OF_VALUAT
SCHEDULE II SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended | ||||||||||||||||||||
Jan. 31, 2015 | |||||||||||||||||||||
SCHEDULE II - SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS [Abstract] | |||||||||||||||||||||
SCHEDULE II - SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II | ||||||||||||||||||||
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Balance at | Charged | Write- | Impact of | Balance at | |||||||||||||||||
Beginning | to | Offs, Net | Foreign | End of | |||||||||||||||||
of Period | Statements | of | Currency | Period | |||||||||||||||||
of Income | Recoveries | Translation | |||||||||||||||||||
Year ended January 31, 2013 | |||||||||||||||||||||
Allowance for bad debt | 1,283 | 324 | (131 | ) | (2 | ) | 1,474 | ||||||||||||||
Allowance for sales returns | 1,184 | 413 | (548 | ) | (13 | ) | 1,036 | ||||||||||||||
Total allowance for doubtful accounts | $ | 2,467 | $ | 737 | $ | (679 | ) | $ | (15 | ) | $ | 2,510 | |||||||||
Year ended January 31, 2014 | |||||||||||||||||||||
Allowance for bad debt | 1,474 | 72 | (313 | ) | (12 | ) | 1,221 | ||||||||||||||
Allowance for sales returns | 1,036 | 982 | (729 | ) | (60 | ) | 1,229 | ||||||||||||||
Total allowance for doubtful accounts | $ | 2,510 | $ | 1,054 | $ | (1,042 | ) | $ | (72 | ) | $ | 2,450 | |||||||||
Year ended January 31, 2015 | |||||||||||||||||||||
Allowance for bad debt | 1,221 | 86 | (39 | ) | (74 | ) | 1,194 | ||||||||||||||
Allowance for sales returns | 1,229 | 768 | (574 | ) | (93 | ) | 1,330 | ||||||||||||||
Total allowance for doubtful accounts | $ | 2,450 | $ | 854 | $ | (613 | ) | $ | (167 | ) | $ | 2,524 | |||||||||
See accompanying report of independent registered public accounting firm. |
SUMMARY_OF_BUSINESS_AND_SIGNIF1
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||
BUSINESS | BUSINESS | ||||||||||||
QAD is a global provider of vertically-oriented, mission-critical enterprise software solutions for global manufacturing companies across the automotive, life sciences, consumer products, food and beverage, high technology and industrial products industries. QAD Enterprise Applications enables measurement and control of key business processes and supports operational requirements, including financials, manufacturing, demand and supply chain planning, customer management, business intelligence and business process management. QAD delivers its software solutions to customers in a format that best meets their current and future needs - either in the cloud, on premise, or via blended deployment, which is a combination of on-premise and cloud-based software. QAD provides ongoing support to customers which ensures they always have access to the latest features of its software. QAD also provides professional services to assist customers in deploying, upgrading and optimizing the Company’s software so they can maximize the benefit they receive from QAD solutions in their operating environment. QAD was founded in 1979, incorporated in California in 1986 and reincorporated in Delaware in 1997. | |||||||||||||
In fiscal 2015, QAD successfully closed a public offering of 2 million shares of Class A stock resulting in net cash received of $37.0 after underwriting discounts and commissions and offering expenses. On February 18, 2015 the offering underwriters exercised in full an option to purchase additional shares. As a result, 450,000 shares of Class A common stock were issued generating approximately $8.4 million in additional proceeds | |||||||||||||
PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION | ||||||||||||
The consolidated financial statements include the accounts of QAD Inc. and all of its subsidiaries. All subsidiaries are wholly-owned and all significant balances and transactions among the entities have been eliminated from the consolidated financial statements. | |||||||||||||
USE OF ESTIMATES | USE OF ESTIMATES | ||||||||||||
The financial statements have been prepared in conformity with U.S. generally accepted accounting principles and, accordingly, include amounts based on informed estimates and judgments of management that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Company’s financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. | |||||||||||||
The Company considers certain accounting policies related to revenue, accounts receivable allowances for doubtful accounts, capitalized software development costs, goodwill and intangible assets, business combinations, valuation of deferred tax assets and tax contingency reserves, and accounting for stock-based compensation to be critical policies due to the significance of these items to its operating results and the estimation processes and management judgment involved in each. | |||||||||||||
FOREIGN CURRENCY TRANSLATIONS AND TRANSACTIONS | FOREIGN CURRENCY TRANSLATIONS AND TRANSACTIONS | ||||||||||||
The financial position and results of operations of the Company’s foreign subsidiaries are generally determined using the country’s local currency as the functional currency. Assets and liabilities recorded in foreign currencies are translated at the exchange rates on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to other comprehensive income (loss), which is included in “Accumulated other comprehensive loss” within the Consolidated Balance Sheets. | |||||||||||||
Gains and losses resulting from foreign currency transactions and remeasurement adjustments of monetary assets and liabilities not held in an entity’s functional currency are included in earnings. Foreign currency transaction and remeasurement (gains) losses for fiscal 2015, 2014 and 2013 totaled $(0.9) million, $(0.1) million and $1.2 million, respectively, and are included in “Other (income) expense, net” in the accompanying Consolidated Statements of Income and Comprehensive Income. | |||||||||||||
CASH AND EQUIVALENTS | CASH AND EQUIVALENTS | ||||||||||||
Cash and equivalents consist of cash and short-term marketable securities with maturities of less than 90 days at the date of purchase. The Company considers all highly liquid investments purchased with an original maturity of 90 days or less to be cash equivalents. At January 31, 2015 and 2014, the Company’s cash and equivalents consisted of money market mutual funds invested in U.S. Treasury and government securities, deposit accounts and certificates of deposit. | |||||||||||||
ACCOUNTS RECEIVABLE, NET | ACCOUNTS RECEIVABLE, NET | ||||||||||||
Accounts receivable, net, consisted of the following as of January 31: | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Accounts receivable | $ | 81,411 | $ | 73,787 | |||||||||
Less allowance for: | |||||||||||||
Doubtful accounts | (1,194 | ) | (1,221 | ) | |||||||||
Sales adjustments | (1,330 | ) | (1,229 | ) | |||||||||
Accounts receivable, net | $ | 78,887 | $ | 71,337 | |||||||||
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The collectability of accounts receivable is reviewed each period by analyzing balances based on age. Specific allowances are recorded for any balances that the Company determines may not be fully collectible due to inability of the customers to pay. The Company also provides a general reserve based on historical data including analysis of write-offs and other known factors. Provisions to the allowance for bad debts are included as bad debt expense in “General and Administrative” expense. The determination to write-off specific accounts receivable balances is made based on likelihood of collection and past due status. Past due status is based on invoice date and terms specific to each customer. | |||||||||||||
The Company does not generally provide a contractual right of return; however, in the course of business sales returns and allowances may occur. A provision is recorded against revenue for estimated sales returns and allowances in the same period the related revenues are recorded or when current information indicates additional amounts are required. These estimates are based on historical experience, specifically identified customers and other known factors. | |||||||||||||
FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK | FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK | ||||||||||||
The carrying amounts of cash and equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturities of these instruments. The Company’s line of credit and note payable both bear a variable market interest rate, subject to certain minimum interest rates. Therefore, the carrying amounts outstanding under the line of credit and note payable reasonably approximate fair value. | |||||||||||||
Concentration of credit risk with respect to trade receivables is limited due to the large number of customers comprising our customer base, and their dispersion across many different industries and locations throughout the world. No single customer accounted for 10% or more of the Company’s total revenue in any of the last three fiscal years. In addition, no single customer accounted for 10% or more of accounts receivable at January 31, 2015 or January 31, 2014. | |||||||||||||
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT | ||||||||||||
Property and equipment are stated at cost. Additions and significant improvements to property and equipment are capitalized, while maintenance and repairs are expensed as incurred. For financial reporting purposes, depreciation is generally expensed via the straight-line method over the useful life of three years for computer equipment and software, five years for furniture and office equipment, 10 years for building improvements and 39 years for buildings. Leasehold improvements are depreciated over the shorter of the lease term or the useful life of five years. | |||||||||||||
Certain costs associated with software developed for internal use, including payroll costs for employees, are capitalized once the project has reached the application development stage and are included in property and equipment classified as software. These costs are amortized using the straight-line method over the expected useful life of the software, beginning when the asset is substantially ready for use. Costs incurred during the preliminary project stage, maintenance, training and research and development costs are expensed as incurred. | |||||||||||||
Property and equipment, net consisted of the following as of January 31: | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Buildings and building improvements | $ | 31,898 | $ | 32,298 | |||||||||
Computer equipment and software | 15,220 | 22,121 | |||||||||||
Furniture and office equipment | 7,783 | 10,856 | |||||||||||
Leasehold improvements | 5,856 | 6,033 | |||||||||||
Land | 3,850 | 3,850 | |||||||||||
Automobiles | 54 | 43 | |||||||||||
64,661 | 75,201 | ||||||||||||
Less accumulated depreciation and amortization | (31,507 | ) | (42,116 | ) | |||||||||
$ | 33,154 | $ | 33,085 | ||||||||||
The changes in property and equipment, net, for the fiscal years ended January 31were as follows: | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Cost | |||||||||||||
Balance at February 1 | $ | 75,201 | $ | 76,109 | |||||||||
Additions | 4,577 | 4,779 | |||||||||||
Disposals | (13,351 | ) | (5,145 | ) | |||||||||
Impact of foreign currency translation | (1,766 | ) | (542 | ) | |||||||||
Balance at January 31 | $ | 64,661 | $ | 75,201 | |||||||||
Accumulated depreciation | |||||||||||||
Balance at February 1 | $ | (42,116 | ) | $ | (43,583 | ) | |||||||
Depreciation | (3,816 | ) | (4,080 | ) | |||||||||
Disposals | 13,334 | 5,113 | |||||||||||
Impact of foreign currency translation | 1,091 | 434 | |||||||||||
Balance at January 31 | (31,507 | ) | (42,116 | ) | |||||||||
Property and equipment, net at January 31 | $ | 33,154 | $ | 33,085 | |||||||||
Depreciation and amortization expense of property and equipment for fiscal 2015, 2014 and 2013 was $3.8 million, $4.1 million and $4.0 million, respectively. There was no impairment of property and equipment assets during fiscal 2015, 2014 and 2013. | |||||||||||||
CAPITALIZED SOFTWARE COSTS | CAPITALIZED SOFTWARE COSTS | ||||||||||||
The Company capitalizes software development costs incurred in connection with the localization and translation of its products once technological feasibility has been achieved based on a working model. A working model is defined as an operative version of the computer software product that is completed in the same software language as the product to be ultimately marketed, performs all the major functions planned for the product and is ready for initial customer testing (usually identified as beta testing). In addition, the Company capitalizes software purchased from third parties or through business combinations as acquired software technology, if the related software under development has reached technological feasibility. | |||||||||||||
The amortization of capitalized software costs is the greater of the straight-line basis over three years, the expected useful life, or a computation using a ratio of current revenue for a product compared to the estimated total of current and future revenues for that product. The Company periodically compares the unamortized capitalized software costs to the estimated net realizable value of the associated product. The amount by which the unamortized capitalized software costs of a particular software product exceeds the estimated net realizable value of that asset would be reported as a charge to the Consolidated Statements of Income and Comprehensive Income. | |||||||||||||
Capitalized software costs and accumulated amortization at January 31 were as follows: | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Capitalized software costs: | |||||||||||||
Acquired software technology (1) | $ | 3,458 | $ | 3,577 | |||||||||
Capitalized software development costs (1) | 1,206 | 1,183 | |||||||||||
4,664 | 4,760 | ||||||||||||
Less accumulated amortization | (2,179 | ) | (1,445 | ) | |||||||||
Capitalized software costs, net | $ | 2,485 | $ | 3,315 | |||||||||
-1 | Acquired software technology and capitalized software development costs include the impact of foreign currency translation. | ||||||||||||
Acquired software technology costs relate to technology purchased from the Company’s fiscal 2013 acquisitions of DynaSys and CEBOS. In addition to the acquired software technology, the Company has capitalized costs related to translations and localizations of QAD Enterprise Applications. | |||||||||||||
It is the Company’s policy to write off capitalized software development costs once fully amortized. Accordingly, during fiscal 2015, approximately $0.4 million of costs and accumulated amortization was removed from the balance sheet. | |||||||||||||
Amortization of capitalized software costs for fiscal 2015, 2014 and 2013 was $1.1 million, $1.2 million and $0.6 million, respectively. Amortization of capitalized software costs is included in “Cost of license fees” in the accompanying Consolidated Statements of Income and Comprehensive Income. | |||||||||||||
The following table summarizes the estimated amortization expense relating to the Company’s capitalized software costs as of January 31, 2015: | |||||||||||||
Fiscal Years | (in thousands) | ||||||||||||
2016 | $ | 1,065 | |||||||||||
2017 | 903 | ||||||||||||
2018 | 512 | ||||||||||||
2019 | 5 | ||||||||||||
$ | 2,485 | ||||||||||||
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS | ||||||||||||
Goodwill represents the excess of the purchase price over the fair value of net assets of purchased businesses. Goodwill is not amortized, but instead is subject to impairment tests on at least an annual basis and whenever circumstances suggest that goodwill may be impaired. The Company tests goodwill for impairment in the fourth quarter of each fiscal year. The Company performs a two-step impairment test. Under the first step of the goodwill impairment test, the Company is required to compare the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired and the second step is not performed. If the results of the first step of the impairment test indicate that the fair value of a reporting unit does not exceed its carrying amount, then the second step of the goodwill impairment test is required. The second step of the goodwill impairment test compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The impairment loss is measured by the excess of the carrying amount of the reporting unit goodwill over the implied fair value of that goodwill. | |||||||||||||
Management evaluates the Company as a single reporting unit for business and operating purposes as almost all of the Company’s revenue streams are generated by the same underlying technology whether acquired, purchased or developed. In addition, the majority of QAD’s costs are, by their nature, shared costs that are not specifically identifiable to a geography or product line but relate to almost all products. As a result, there is a high degree of interdependency among the Company’s revenues and cash flows for levels below the consolidated entity and identifiable cash flows for a reporting unit separate from the consolidated entity are not meaningful. Therefore, the Company’s impairment test considers the consolidated entity as a single reporting unit. | |||||||||||||
Judgments about the recoverability of purchased finite lived intangible assets are made whenever events or changes in circumstances indicate that an impairment may exist. Each fiscal year the Company evaluates the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization. Recoverability of finite-lived intangible assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. | |||||||||||||
Assumptions and estimates about future values and remaining useful lives of intangible assets are complex and subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends and internal factors such as changes in the Company’s business strategy or internal forecasts. | |||||||||||||
The changes in the carrying amount of goodwill for the fiscal years ended January 31, 2015, and 2014 were as follows: | |||||||||||||
Gross | Accumulated | Goodwill, Net | |||||||||||
Carrying | Impairment | ||||||||||||
Amount | |||||||||||||
(in thousands) | |||||||||||||
Balance at January 31, 2013 | $ | 27,020 | $ | (15,608 | ) | $ | 11,412 | ||||||
CEBOS adjustment (1) | 105 | — | 105 | ||||||||||
Impact of foreign currency translation | (140 | ) | — | (140 | ) | ||||||||
Balance at January 31, 2014 | 26,985 | (15,608 | ) | 11,377 | |||||||||
Impact of foreign currency translation | (466 | ) | — | (466 | ) | ||||||||
Balance at January 31, 2015 | $ | 26,519 | $ | (15,608 | ) | $ | 10,911 | ||||||
-1 | During the fourth quarter of fiscal 2014 the Company finalized the allocation of the purchase price and recorded an adjustment of $0.1 million related to a change in certain assumptions associated with accounts receivable. This adjustment increased the provisionally recognized goodwill by the same amount. | ||||||||||||
During each of the fourth quarters of fiscal 2015, 2014 and 2013, an impairment analysis was performed at the enterprise level which compared the Company’s market capitalization to its net assets as of the test date, November 30. As the market capitalization substantially exceeded the Company’s net assets, there was no indication of goodwill impairment for fiscal 2015, 2014 and 2013. | |||||||||||||
Intangible assets as of January 31 were as follows: | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Amortizable intangible assets | |||||||||||||
Customer relationships (1) | $ | 2,793 | $ | 3,048 | |||||||||
Trade name | 515 | 515 | |||||||||||
3,308 | 3,563 | ||||||||||||
Less: accumulated amortization | (1,558 | ) | (978 | ) | |||||||||
Net amortizable intangible assets | $ | 1,750 | $ | 2,585 | |||||||||
-1 | Customer relationships include the impact of foreign currency translation. | ||||||||||||
The Company’s intangible assets as of January 31, 2015 are related to the DynaSys and CEBOS acquisitions completed in fiscal 2013. Intangible assets are included in “Other assets, net” in the accompanying Consolidated Balance Sheets. As of January 31, 2015, all of the Company’s intangible assets were determined to have finite useful lives, and therefore were subject to amortization. | |||||||||||||
Amortization of intangible assets was $0.7 million, $0.7 million and $0.3 million for the fiscal years 2015, 2014 and 2013 respectively. The following table summarizes the estimated amortization expense relating to the Company’s intangible assets as of January 31, 2015: | |||||||||||||
Fiscal Years | (in thousands) | ||||||||||||
2016 | $ | 665 | |||||||||||
2017 | 665 | ||||||||||||
2018 | 420 | ||||||||||||
$ | 1,750 | ||||||||||||
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS | ||||||||||||
The Company allocates the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed, based upon their estimated fair values at the acquisition date. The purchase price allocation process requires management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets and deferred revenue obligations assumed. | |||||||||||||
These assumptions and estimates are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Examples of critical estimates in valuing certain of the intangible assets include but are not limited to discount rates, future expected cash flows from software license sales, subscriptions, support agreements, consulting contracts, acquired developed technologies and acquired trade names and trademarks as well as assumptions about the period of time the acquired trade names and trademarks will continue to be used in our combined product portfolio. | |||||||||||||
In connection with the purchase price allocations, the Company estimates the fair value of the deferred revenue obligations assumed. The estimated fair value of the obligations is determined utilizing a cost build-up approach. The cost build-up approach determines fair value by estimating the costs related to fulfilling the obligations plus a normal profit margin. The estimated costs to fulfill the obligations are based on the historical costs related to fulfilling the obligations. | |||||||||||||
CEBOS | |||||||||||||
On December 28, 2012, the Company acquired all of the outstanding stock of CEBOS, Ltd. ("CEBOS"), a provider of quality management and regulatory compliance software solutions. CEBOS was founded in 1998 and is headquartered in Michigan, USA. The Company completed the acquisition for the purpose of expanding its product offerings and driving revenue growth. The purchase price consisted of $3.5 million in cash and two future payments due April 2014 and April 2015. Each future payment consists of $0.3 million guaranteed and $0.5 million contingent upon achievement of certain development and earnings-based milestones. The contingent liability was estimated by assessing the probability of achieving each milestone and discounting the amount of each potential payment based on expected timing of the payment. The fair value of the liability-classified contingent consideration is remeasured at each reporting period with any changes in the fair value recorded as income or expense and is reported in “Other (income) expense” in the Consolidated Statements of Income and Comprehensive Income. During fiscal 2014 CEBOS accomplished all development related goals but did not meet certain earnings targets. This resulted in a reduction of the related contingent consideration by $0.3 million for a first year earn-out of $0.5 million, paid on April 1, 2014. During fiscal 2015 CEBOS achieved all of its development and earnings-based goals resulting in a payout of $0.8 million of the second earn-out paid on March 31, 2015. | |||||||||||||
DynaSys | |||||||||||||
On June 6, 2012, the Company acquired France-based DynaSys S.A. ("DynaSys"), a provider of demand and supply chain planning software solutions, for $7.5 million. During fiscal 2014 the Company finalized the allocation of the purchase price. There were no adjustments to the purchase price allocation. | |||||||||||||
The results of operations of DynaSys and CEBOS are included in the Consolidated Financial Statements from the date of acquisition. The acquisitions were not deemed material, thus pro forma supplemental information has not been provided. | |||||||||||||
DEFERRED TAX ASSETS AND LIABILITIES | DEFERRED TAX ASSETS AND LIABILITIES | ||||||||||||
The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of its assets and liabilities and expected benefits of utilizing net operating loss and credit carryforwards. In assessing whether there is a need for a valuation allowance on deferred tax assets, the Company determines whether it is more likely than not that it will realize tax benefits associated with deferred tax assets. In making this determination, the Company considers future taxable income and tax planning strategies that are both prudent and feasible. For deferred tax assets that cannot be recognized under the more-likely-than-not standard, the Company has established a valuation allowance. The impact on deferred taxes of changes in tax rates and laws, if any, are reflected in the financial statements in the period of enactment. No provision is made for taxes on unremitted earnings of foreign subsidiaries because they are considered to be reinvested indefinitely in such operations. | |||||||||||||
The Company records a liability for taxes to address potential exposures involving uncertain tax positions that could be challenged by taxing authorities, even though the Company believes that the positions taken are appropriate. The tax reserves are reviewed on a quarterly basis and adjusted as events occur that affect the Company’s potential liability for additional taxes. The Company is subject to income taxes in the U.S. and in various foreign jurisdictions, and in the ordinary course of business there are many transactions and calculations where the ultimate tax determination is uncertain. For tax positions that are more likely than not of being sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized upon ultimate settlement in the financial statements. For tax positions that do not meet the more-likely-than-not standard the entire balance is reserved. | |||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION | ||||||||||||
The Company accounts for share-based payments (“equity awards”) to employees in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires that share-based payments (to the extent they are compensatory) be recognized in the Consolidated Statements of Income and Comprehensive Income based on the fair values of the equity awards as measured at the grant date. The fair value of an equity award is recognized as stock-based compensation expense ratably over the vesting period of the equity award. Determining the fair value of equity awards at the grant date requires judgment. | |||||||||||||
Fair Value of SARs | |||||||||||||
The fair value of stock-settled stock appreciation rights (“SARs”) is determined on the grant date of the award using the Black-Scholes-Merton valuation model. One of the inputs to the Black-Scholes-Merton valuation model is the fair market value of the Company’s stock on the date of grant. Judgment is required in determining the remaining inputs to the Black-Scholes-Merton valuation model. These inputs include the expected life, volatility, the risk-free interest rate and the dividend rate. The following describes the Company’s policies with respect to determining these valuation inputs: | |||||||||||||
Expected Life | |||||||||||||
The expected life valuation input includes a computation that is based on historical vested SAR exercises and post-vest expiration patterns and an estimate of the expected life for SARs that were fully vested and outstanding. Furthermore, based on the Company’s historical pattern of SAR exercises and post-vest expiration patterns the Company determined that there are two discernable populations which include the Company’s directors and officers (“D&O”) and all other QAD employees. The estimate of the expected life for SARs that were fully vested and outstanding is determined as the midpoint of a range as follows: the low end of the range assumes the fully vested and outstanding SARs are exercised or expire unexercised on the evaluation date and the high end of the range assumes that these SARs are exercised or expire unexercised upon contractual term. | |||||||||||||
Volatility | |||||||||||||
The volatility valuation input is based on the historical volatility of the Company’s common stock, which the Company believes is representative of the expected volatility over the expected life of SARs. | |||||||||||||
Risk-Free Interest Rate | |||||||||||||
The risk-free interest rate is based on the U.S. Treasury constant maturities in effect at the time of grant for the expected term of the SAR. | |||||||||||||
Dividend Rate | |||||||||||||
The dividend rate is based on the Company’s historical dividend payments per share. | |||||||||||||
Fair Value of RSUs | |||||||||||||
The fair value of restricted stock units (“RSUs”) is determined on the grant date of the award as the market price of the Company’s common stock on the date of grant, reduced by the present value of estimated dividends foregone during the vesting period. Judgment is required in determining the present value of estimated dividends foregone during the vesting period. The Company estimates the dividends for purposes of this calculation based on the Company’s historical dividend payments per share. | |||||||||||||
While the Company recognizes as stock-based compensation expense the entire amount of the fair value of a vested equity award once it has vested, during the periods in which the equity awards are vesting, the Company is required to estimate equity awards that are expected to cancel prior to vesting (“forfeitures”) and reduce the stock-based compensation expense recognized in a given period for the effects of estimated forfeitures over the expense recognition period (“forfeiture rate”). To determine the forfeiture rate, the Company examines the historical pattern of forfeitures which it believes is indicative of future forfeitures in an effort to determine if there were any discernible forfeiture patterns based on certain employee populations. From this analysis, the Company identified two employee populations that have different historical forfeiture rates. One population includes D&O and the other population includes all other QAD employees. The Company evaluates the forfeiture rate annually or more frequently when there have been any significant changes in forfeiture activity. | |||||||||||||
COMPREHENSIVE INCOME | COMPREHENSIVE INCOME | ||||||||||||
Comprehensive income includes changes in the balances of items that are reported directly as a separate component of Stockholders’ Equity on the Consolidated Balance Sheets. The components of comprehensive income are net income and foreign currency translation adjustments. The Company does not provide for income taxes on foreign currency translation adjustments since it does not provide for taxes on the unremitted earnings of its foreign subsidiaries. The changes in “Accumulated other comprehensive loss” are included in the Company’s Consolidated Statements of Income and Comprehensive Income. | |||||||||||||
REVENUE | REVENUE | ||||||||||||
The Company offers its software using two models, a traditional on-premise licensing model and a cloud delivery model. The traditional model involves the sale or license of software on a perpetual basis to customers who take possession of the software and install and maintain the software on their own equipment. Under the cloud delivery model the Company provides access to its software on a hosted basis as a service and customers generally do not have the contractual right to take possession of the software; the Company sometimes refers to this as a SaaS model. The Company sells a majority of its software through its on-premise licensing model and recognizes revenue associated with these offerings in accordance with the accounting guidance contained in ASC 985-605, Software Revenue. Additionally, delivery of software and services under the SaaS model is typically over a contractual term of 12 to 36 months and the Company recognizes revenue associated with these offerings, which it calls subscription revenue, in the accompanying Consolidated Statements of Income and Comprehensive Income, in accordance with the accounting guidance contained in ASC 605-25, Revenue Recognition - Multiple-Deliverable Revenue Arrangements. Whether sales are made via an on-premise model or a SaaS model, the arrangement typically consists of multiple elements, including revenue from one or more of the following elements: license of software products, support services, hosting, consulting, development, training, or other professional services. The Company evaluates each element in a multiple-element arrangement to determine whether it represents a separate unit of accounting. An element constitutes a separate unit of accounting when the item has standalone value and delivery of any undelivered elements is probable and within the Company’s control. Subscription and support services have standalone value because they are routinely sold separately by the Company. Consulting services and other services have standalone value because the Company has sold consulting services separately and there are several third party vendors that routinely provide similar consulting services to its customers on a standalone basis. Software license arrangements that do not require significant modification or customization of the underlying software do not have standalone value but are recognized using the residual method. | |||||||||||||
Software Revenue Recognition (On-Premise Model) | |||||||||||||
The majority of the Company’s software is sold or licensed in multiple-element arrangements that include support services and often consulting services or other elements. For software license arrangements that do not require significant modification or customization of the underlying software, the Company recognizes revenue when persuasive evidence of an arrangement exists including a signed statement of work for any related consulting services engagements, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Delivery is considered to have occurred upon electronic transfer of the license key that provides immediate availability of the product to the purchaser. Determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can have a significant impact on the timing and amount of revenue the Company reports. Revenue is presented net of sales, use and value-added taxes collected from its customers. | |||||||||||||
The Company’s typical payment terms vary by region. Occasionally, payment terms of up to one year may be granted for software license fees to customers with an established history of collections without concessions. Should the Company grant payment terms greater than one year or terms that are not in accordance with established history for similar arrangements, revenue would be recognized as payments become due and payable assuming all other criteria for software revenue recognition have been met. | |||||||||||||
Provided all other revenue recognition criteria have been met, the Company recognizes license revenue on delivery using the residual method when vendor-specific objective evidence of fair value (“VSOE”) exists for all of the undelivered elements (for example, support services, consulting, or other services) in the arrangement. The Company allocates revenue to each undelivered element based on VSOE, which is the price charged when that element is sold separately or, for elements not yet sold separately, the price established by the Company’s management if it is probable that the price will not change before the element is sold separately. The Company allocates revenue to undelivered support services based on rates charged to renew the support services annually after an initial period, which demonstrates a consistent relationship of maintenance pricing as a percentage of the contractual license fee. The Company allocates revenue to undelivered consulting services based on time and materials rates of stand-alone services engagements by role and by country. The Company reviews VSOE at least annually. If the Company were to be unable to establish or maintain VSOE for one or more undelivered elements within a multiple-element software arrangement, it could adversely impact revenues, results of operations and financial position because the Company may have to defer all or a portion of the revenue or recognize revenue ratably from multiple-element software arrangements. | |||||||||||||
Multiple-element software arrangements for which VSOE does not exist for all undelivered elements typically occur when the Company introduces a new product or product bundles for which it has not established VSOE for support services or fixed fee consulting or other services. In these instances, revenue is deferred and recognized ratably over the longer of the support services (maintenance period) or consulting services engagement, assuming there are no specified future deliverables. In the instances in which it has been determined that revenue on these bundled arrangements will be recognized ratably due to lack of VSOE, at the time of recognition, the Company allocates revenue from these bundled arrangement fees to all of the non-license revenue categories based on VSOE of similar support services or consulting services. The remaining arrangement fees, if any, are then allocated to software license fee revenues. The associated costs primarily consist of payroll and related costs to perform both the consulting services and provide support services and royalty expense related to the license and maintenance revenue. These costs are expensed as incurred and included in cost of maintenance, subscription and other revenue, cost of professional services and cost of license fees. | |||||||||||||
Revenue from support services and product updates, referred to as maintenance revenue, is recognized ratably over the term of the maintenance period, which in most instances is one year. Software license updates provide customers with rights to unspecified software product updates, maintenance releases and patches released during the term of the support period on a when-and-if available basis. Product support includes Internet access to technical content, as well as Internet and telephone access to technical support personnel. The Company’s customers generally purchase both product support and license updates when they acquire new software licenses. In addition, a majority of customers renew their support services contracts annually. | |||||||||||||
Revenue from consulting services, which the Company calls professional services in the Consolidated Statements of Income and Comprehensive Income, are typically comprised of implementation, development, training or other consulting services. Consulting services are generally sold on a time-and-materials basis and can include services ranging from software installation to data conversion and building non-complex interfaces to allow the software to operate in integrated environments. Consulting engagements can range anywhere from one day to several months and are based strictly on the customer’s requirements and complexities and are independent of the functionality of the Company’s software. The Company’s software, as delivered, can generally be used by the customer for the customer’s purpose upon installation. Further, implementation and integration services provided are generally not essential to the functionality of the software, as delivered, and do not result in any material changes to the underlying software code. On occasion, the Company enters into fixed fee arrangements in which customer payments are tied to achievement of specific milestones. In fixed fee arrangements, revenue is recognized as services are performed as measured by costs incurred to date, as compared to total estimated costs to be incurred to complete the work. In milestone achievement arrangements, the Company recognizes revenue as the respective milestones are achieved. | |||||||||||||
The Company occasionally resells third party systems as part of an end-to-end solution requested by its customers. Hardware revenue is recognized on a gross basis in accordance with the guidance contained in ASC 605-45, Revenue Recognition – Principal Agent Considerations and when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collection is considered reasonably assured. The Company considers delivery to occur when the product is shipped and title and risk of loss have passed to the customer. | |||||||||||||
Although infrequent, when an arrangement does not qualify for separate unit of accounting of the software license and consulting transactions, the software license revenue is recognized together with the consulting services based on contract accounting using either the percentage-of-completion or completed-contract method. Arrangements that do not qualify for separate accounting of the software license fee and consulting services typically occur when the Company is requested to customize software or when the Company views the installation of its software as high risk in the customer’s environment. This requires the Company to make estimates about the total cost to complete the project and the stage of completion. The assumptions, estimates, and uncertainties inherent in determining the stage of completion affect the timing and amounts of revenues and expenses reported. Changes in estimates of progress toward completion and of contract revenues and contract costs are accounted for using the cumulative catch up approach. In certain arrangements, the Company does not have a sufficient basis to estimate the costs of providing support services. As a result, revenue is typically recognized on a percent completion basis up to the amount of costs incurred (zero margin). Once the consulting services are complete and support services are the only undelivered item, the remaining revenue is recognized evenly over the remaining support period. If the Company does not have a sufficient basis to measure the progress of completion or to estimate the total contract revenues and costs, revenue is recognized when the project is complete and, if applicable, final acceptance is received from the customer. The Company allocates these bundled arrangement fees to support services and consulting services revenues based on VSOE. The remaining arrangement fees are then allocated to software license fee revenues. The associated costs primarily consist of payroll and related costs to perform the consulting and support services and royalty expense. These costs are expensed as incurred and are included in cost of maintenance, subscription and other revenue, cost of professional services and cost of license fees. | |||||||||||||
The Company executes arrangements through indirect sales channels via sales agents and distributors in which the indirect sales channels are authorized to market its software products to end users. In arrangements with sales agents, revenue is recognized on a sell-through basis once an order is received from the end user, collectability from the end user is probable, a signed license agreement from the end user has been received by the Company, delivery has been made to the end user and all other revenue recognition criteria have been satisfied. Sales agents are compensated on a commission basis. Distributor arrangements are those in which the resellers are authorized to market and distribute the Company’s software products to end users in specified territories and the distributor bears the risk of collection from the end user customer. The Company recognizes revenue from transactions with distributors when the distributor submits a written purchase commitment, collectability from the distributor is probable, a signed license agreement is received from the distributor and delivery has occurred to the distributor, provided that all other revenue recognition criteria have been satisfied. Revenue from distributor transactions is recorded on a net basis (the amount actually received by the Company from the distributor). The Company does not offer rights of return, product rotation or price protection to any of its distributors. | |||||||||||||
Subscription Revenue Recognition | |||||||||||||
The Company recognizes the following fees in subscription revenue from the SaaS model: i) subscription fees from customers accessing our Cloud and our other subscription offerings, ii) fees for services such as set up, process mapping, configuration, database conversion and migration, and iii) support fees on hosted products. The Company’s subscription arrangements do not provide customers with the right to take possession of the subscribed software. | |||||||||||||
The Company commences revenue recognition when there is persuasive evidence of an arrangement, the service is being provided to the customer, the collection of the fees is reasonably assured and the amount of fees to be paid by the customer is fixed or determinable. | |||||||||||||
Subscription revenue is recognized ratably over the initial subscription period committed to by the customer commencing when the customer has been given access to the environment. The initial subscription period is typically 12 to 36 months. The Company’s subscription services are non-cancelable, though customers typically have the right to terminate their contracts if the Company materially fails to perform. The Company generally invoices its customers in advance in quarterly installments and typical payment terms provide that customers pay the Company within 30 days of invoice. | |||||||||||||
Other professional services are typically sold on a time-and-materials basis and consist of fees from consultation services such as configuration of features, implementing at various customer sites, testing and training. These services are considered to have stand-alone value to the customer because the Company has sold professional services separately and there are several third-party vendors that routinely provide similar professional services to the Company’s customers on a stand-alone basis. Accordingly, professional services are a separate unit of accounting and the associated services revenue is recognized as the services are performed and earned. | |||||||||||||
The Company may enter into multiple-element arrangements that may include a combination of the Company’s subscription offering and other professional services. The Company allocates revenue to each element in an arrangement based on a selling price hierarchy in accordance with ASC 605-25, Revenue Recognition - Multiple Deliverable Revenue Arrangements. In order to treat deliverables in a multiple-deliverable arrangement as separate units of accounting, the deliverables must have standalone value upon delivery. The Company determines the relative selling price for a deliverable based on its VSOE, if available, or Estimated Selling Price ("ESP"), if VSOE is not available. The Company has determined that third-party evidence (“TPE”) is not a practical alternative due to differences in the Company’s service offerings compared to other parties and the availability of relevant third-party pricing information. The determination for ESP is made through consultation with and approval by management taking into consideration the go-to-market strategy. As the Company’s go-to-market strategies evolve, there may be modifications of pricing practices in the future, which could result in changes in both VSOE and ESP. | |||||||||||||
For multiple-element arrangements that may include a combination of the Company’s subscription offerings and other professional services, the total arrangement fee is allocated to each element based on the VSOE / ESP value of each element. After allocation, the revenue associated with the subscription offering and other professional services are recognized as described above. | |||||||||||||
ADVERTISING EXPENSES | ADVERTISING EXPENSES | ||||||||||||
Advertising costs are expensed as incurred. Advertising expenses were $0.8 million, $0.6 million and $0.4 million for fiscal years 2015, 2014 and 2013, respectively. | |||||||||||||
RESEARCH AND DEVELOPMENT | RESEARCH AND DEVELOPMENT | ||||||||||||
All costs incurred to establish the technological feasibility of the Company’s software products are expensed to research and development as incurred. | |||||||||||||
OTHER (INCOME) EXPENSE, NET | OTHER (INCOME) EXPENSE, NET | ||||||||||||
The components of other (income) expense, net for fiscal 2015, 2014 and 2013 were as follows: | |||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Interest income | $ | (242 | ) | $ | (284 | ) | $ | (590 | ) | ||||
Interest expense | 811 | 829 | 990 | ||||||||||
Foreign exchange (gains) losses | (878 | ) | (67 | ) | 1,180 | ||||||||
Change in fair value of interest rate swap | 877 | (634 | ) | 384 | |||||||||
Other income, net | (168 | ) | (593 | ) | (446 | ) | |||||||
Total other (income) expense, net | $ | 400 | $ | (749 | ) | $ | 1,518 | ||||||
COMPUTATION OF NET INCOME PER SHARE | COMPUTATION OF NET INCOME PER SHARE | ||||||||||||
Net income per share of Class A common stock and Class B common stock is computed using the two-class method. Holders of Class A common stock are entitled to cash or stock dividends equal to 120% of the amount of such dividend payable with respect to a share of Class B Common Stock. | |||||||||||||
The following table sets forth the computation of basic and diluted net income per share: | |||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands, except per share data) | |||||||||||||
Net income | $ | 12,946 | $ | 6,386 | $ | 6,639 | |||||||
Less: dividends declared | (4,452 | ) | (4,362 | ) | (8,677 | ) | |||||||
Undistributed net income (loss) | $ | 8,494 | $ | 2,024 | $ | (2,038 | ) | ||||||
Net income per share – Class A Common Stock | |||||||||||||
Dividends declared | $ | 3,688 | $ | 3,606 | $ | 7,166 | |||||||
Allocation of undistributed net income (loss) | 7,041 | 1,676 | (1,683 | ) | |||||||||
Net income attributable to Class A common stock | $ | 10,729 | $ | 5,282 | $ | 5,483 | |||||||
Weighted average shares of Class A common stock outstanding—basic | 12,841 | 12,501 | 12,596 | ||||||||||
Weighted average potential shares of Class A common stock | 712 | 484 | 467 | ||||||||||
Weighted average shares of Class A common stock and potential common shares outstanding—diluted | 13,553 | 12,985 | 13,063 | ||||||||||
Basic net income per Class A common share | $ | 0.84 | $ | 0.42 | $ | 0.44 | |||||||
Diluted net income per Class A common share | $ | 0.79 | $ | 0.41 | $ | 0.42 | |||||||
Net income per share – Class B Common Stock | |||||||||||||
Dividends declared | $ | 764 | $ | 756 | $ | 1,511 | |||||||
Allocation of undistributed net income (loss) | 1,453 | 348 | (355 | ) | |||||||||
Net income attributable to Class B common stock | $ | 2,217 | $ | 1,104 | $ | 1,156 | |||||||
Weighted average shares of Class B common stock outstanding—basic | 3,183 | 3,149 | 3,160 | ||||||||||
Weighted average potential shares of Class B common stock | 88 | 89 | 106 | ||||||||||
Weighted average shares of Class B common stock and potential common shares outstanding—diluted | 3,271 | 3,238 | 3,266 | ||||||||||
Basic net income per Class B common share | $ | 0.7 | $ | 0.35 | $ | 0.37 | |||||||
Diluted net income per Class B common share | $ | 0.68 | $ | 0.34 | $ | 0.35 | |||||||
Potential common shares consist of the shares issuable upon the release of restricted stock units ("RSUs") and the exercise of stock options and stock appreciation rights ("SARs"). The Company’s unvested RSUs, unexercised stock options and unexercised SARs are not considered participating securities as they do not have rights to dividends or dividend equivalents prior to release or exercise. | |||||||||||||
The following table sets forth the number of potential common shares not included in the calculation of diluted earnings per share because their effects were anti-dilutive: | |||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Class A | 211 | 1,179 | 1,124 | ||||||||||
Class B | 45 | 184 | 151 | ||||||||||
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS | ||||||||||||
In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ("ASU 2013-11"), which requires an unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, similar tax loss, or a tax credit carryforward. To the extent the tax benefit is not available at the reporting date under the governing tax law or if the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented as a liability and not combined with deferred tax assets. ASU 2013-11 was effective for and adopted by the Company in the first quarter of fiscal 2015 and was applied prospectively to unrecognized tax benefits that existed at the effective date. The adoption of ASU 2013-11 impacted the Company’s financial statement presentation and disclosures, but otherwise did not impact the Company’s condensed consolidated results of operations or cash flows. | |||||||||||||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 will be effective for the Company’s fiscal year beginning February 1, 2017. At its April 1, 2015 meeting the FASB agreed to propose a one-year deferral of the effective date for all entities. If approved, this proposal would make ASU 2014-09 effective for the Company's fiscal year beginning February 1, 2018. Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative transition method. The Company is currently evaluating the accounting, transition and disclosure requirements of the standard and cannot currently estimate the financial statement impact of adoption. |
SUMMARY_OF_BUSINESS_AND_SIGNIF2
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||
Accounts receivable, net | Accounts receivable, net, consisted of the following as of January 31: | ||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Accounts receivable | $ | 81,411 | $ | 73,787 | |||||||||
Less allowance for: | |||||||||||||
Doubtful accounts | (1,194 | ) | (1,221 | ) | |||||||||
Sales adjustments | (1,330 | ) | (1,229 | ) | |||||||||
Accounts receivable, net | $ | 78,887 | $ | 71,337 | |||||||||
Schedule of Property and equipment, net | Property and equipment, net consisted of the following as of January 31: | ||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Buildings and building improvements | $ | 31,898 | $ | 32,298 | |||||||||
Computer equipment and software | 15,220 | 22,121 | |||||||||||
Furniture and office equipment | 7,783 | 10,856 | |||||||||||
Leasehold improvements | 5,856 | 6,033 | |||||||||||
Land | 3,850 | 3,850 | |||||||||||
Automobiles | 54 | 43 | |||||||||||
64,661 | 75,201 | ||||||||||||
Less accumulated depreciation and amortization | (31,507 | ) | (42,116 | ) | |||||||||
$ | 33,154 | $ | 33,085 | ||||||||||
Changes in property and equipment | The changes in property and equipment, net, for the fiscal years ended January 31were as follows: | ||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Cost | |||||||||||||
Balance at February 1 | $ | 75,201 | $ | 76,109 | |||||||||
Additions | 4,577 | 4,779 | |||||||||||
Disposals | (13,351 | ) | (5,145 | ) | |||||||||
Impact of foreign currency translation | (1,766 | ) | (542 | ) | |||||||||
Balance at January 31 | $ | 64,661 | $ | 75,201 | |||||||||
Accumulated depreciation | |||||||||||||
Balance at February 1 | $ | (42,116 | ) | $ | (43,583 | ) | |||||||
Depreciation | (3,816 | ) | (4,080 | ) | |||||||||
Disposals | 13,334 | 5,113 | |||||||||||
Impact of foreign currency translation | 1,091 | 434 | |||||||||||
Balance at January 31 | (31,507 | ) | (42,116 | ) | |||||||||
Property and equipment, net at January 31 | $ | 33,154 | $ | 33,085 | |||||||||
Schedule of capitalized software costs | Capitalized software costs and accumulated amortization at January 31 were as follows: | ||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Capitalized software costs: | |||||||||||||
Acquired software technology (1) | $ | 3,458 | $ | 3,577 | |||||||||
Capitalized software development costs (1) | 1,206 | 1,183 | |||||||||||
4,664 | 4,760 | ||||||||||||
Less accumulated amortization | (2,179 | ) | (1,445 | ) | |||||||||
Capitalized software costs, net | $ | 2,485 | $ | 3,315 | |||||||||
-1 | Acquired software technology and capitalized software development costs include the impact of foreign currency translation. | ||||||||||||
Estimated amortization expense | The following table summarizes the estimated amortization expense relating to the Company’s capitalized software costs as of January 31, 2015: | ||||||||||||
Fiscal Years | (in thousands) | ||||||||||||
2016 | $ | 1,065 | |||||||||||
2017 | 903 | ||||||||||||
2018 | 512 | ||||||||||||
2019 | 5 | ||||||||||||
$ | 2,485 | ||||||||||||
Changes in carrying amount of goodwill | The changes in the carrying amount of goodwill for the fiscal years ended January 31, 2015, and 2014 were as follows: | ||||||||||||
Gross | Accumulated | Goodwill, Net | |||||||||||
Carrying | Impairment | ||||||||||||
Amount | |||||||||||||
(in thousands) | |||||||||||||
Balance at January 31, 2013 | $ | 27,020 | $ | (15,608 | ) | $ | 11,412 | ||||||
CEBOS adjustment (1) | 105 | — | 105 | ||||||||||
Impact of foreign currency translation | (140 | ) | — | (140 | ) | ||||||||
Balance at January 31, 2014 | 26,985 | (15,608 | ) | 11,377 | |||||||||
Impact of foreign currency translation | (466 | ) | — | (466 | ) | ||||||||
Balance at January 31, 2015 | $ | 26,519 | $ | (15,608 | ) | $ | 10,911 | ||||||
-1 | During the fourth quarter of fiscal 2014 the Company finalized the allocation of the purchase price and recorded an adjustment of $0.1 million related to a change in certain assumptions associated with accounts receivable. This adjustment increased the provisionally recognized goodwill by the same amount. | ||||||||||||
Intangible assets | Intangible assets as of January 31 were as follows: | ||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Amortizable intangible assets | |||||||||||||
Customer relationships (1) | $ | 2,793 | $ | 3,048 | |||||||||
Trade name | 515 | 515 | |||||||||||
3,308 | 3,563 | ||||||||||||
Less: accumulated amortization | (1,558 | ) | (978 | ) | |||||||||
Net amortizable intangible assets | $ | 1,750 | $ | 2,585 | |||||||||
-1 | Customer relationships include the impact of foreign currency translation. | ||||||||||||
Estimated amortization expense relating intangible assets | The following table summarizes the estimated amortization expense relating to the Company’s intangible assets as of January 31, 2015: | ||||||||||||
Fiscal Years | (in thousands) | ||||||||||||
2016 | $ | 665 | |||||||||||
2017 | 665 | ||||||||||||
2018 | 420 | ||||||||||||
$ | 1,750 | ||||||||||||
Components other (income) expense | The components of other (income) expense, net for fiscal 2015, 2014 and 2013 were as follows: | ||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Interest income | $ | (242 | ) | $ | (284 | ) | $ | (590 | ) | ||||
Interest expense | 811 | 829 | 990 | ||||||||||
Foreign exchange (gains) losses | (878 | ) | (67 | ) | 1,180 | ||||||||
Change in fair value of interest rate swap | 877 | (634 | ) | 384 | |||||||||
Other income, net | (168 | ) | (593 | ) | (446 | ) | |||||||
Total other (income) expense, net | $ | 400 | $ | (749 | ) | $ | 1,518 | ||||||
Computation of basic and diluted net income per share | The following table sets forth the computation of basic and diluted net income per share: | ||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands, except per share data) | |||||||||||||
Net income | $ | 12,946 | $ | 6,386 | $ | 6,639 | |||||||
Less: dividends declared | (4,452 | ) | (4,362 | ) | (8,677 | ) | |||||||
Undistributed net income (loss) | $ | 8,494 | $ | 2,024 | $ | (2,038 | ) | ||||||
Net income per share – Class A Common Stock | |||||||||||||
Dividends declared | $ | 3,688 | $ | 3,606 | $ | 7,166 | |||||||
Allocation of undistributed net income (loss) | 7,041 | 1,676 | (1,683 | ) | |||||||||
Net income attributable to Class A common stock | $ | 10,729 | $ | 5,282 | $ | 5,483 | |||||||
Weighted average shares of Class A common stock outstanding—basic | 12,841 | 12,501 | 12,596 | ||||||||||
Weighted average potential shares of Class A common stock | 712 | 484 | 467 | ||||||||||
Weighted average shares of Class A common stock and potential common shares outstanding—diluted | 13,553 | 12,985 | 13,063 | ||||||||||
Basic net income per Class A common share | $ | 0.84 | $ | 0.42 | $ | 0.44 | |||||||
Diluted net income per Class A common share | $ | 0.79 | $ | 0.41 | $ | 0.42 | |||||||
Net income per share – Class B Common Stock | |||||||||||||
Dividends declared | $ | 764 | $ | 756 | $ | 1,511 | |||||||
Allocation of undistributed net income (loss) | 1,453 | 348 | (355 | ) | |||||||||
Net income attributable to Class B common stock | $ | 2,217 | $ | 1,104 | $ | 1,156 | |||||||
Weighted average shares of Class B common stock outstanding—basic | 3,183 | 3,149 | 3,160 | ||||||||||
Weighted average potential shares of Class B common stock | 88 | 89 | 106 | ||||||||||
Weighted average shares of Class B common stock and potential common shares outstanding—diluted | 3,271 | 3,238 | 3,266 | ||||||||||
Basic net income per Class B common share | $ | 0.7 | $ | 0.35 | $ | 0.37 | |||||||
Diluted net income per Class B common share | $ | 0.68 | $ | 0.34 | $ | 0.35 | |||||||
Schedule of potential common shares not included in calculation of diluted earnings per share | The following table sets forth the number of potential common shares not included in the calculation of diluted earnings per share because their effects were anti-dilutive: | ||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Class A | 211 | 1,179 | 1,124 | ||||||||||
Class B | 45 | 184 | 151 |
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
FAIR VALUE MEASUREMENTS [Abstract] | |||||||||||||
Summary of financial assets and liabilities, measured at fair value | The following table sets forth the financial assets, measured at fair value, as of January 31, 2015 and January 31, 2014: | ||||||||||||
Fair value measurement at reporting date using | |||||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||
(in thousands) | |||||||||||||
Money market mutual funds as of January 31, 2015 | $ | 98,294 | |||||||||||
Money market mutual funds as of January 31, 2014 | $ | 57,204 | |||||||||||
Liability related to the interest rate swap as of January 31, 2015 | $ | (626 | ) | ||||||||||
Asset related to the interest rate swap as of January 31, 2014 | $ | 250 | |||||||||||
Contingent liability associated with acquisitions as of January 31, 2015 | $ | (750 | ) | ||||||||||
Contingent liability associated with acquisitions as of January 31, 2014 | $ | (1,178 | ) | ||||||||||
Fair values of the derivative instrument | The fair values of the derivative instrument at January 31, 2015 and January 31, 2014 were as follows (in thousands): | ||||||||||||
(Liability) / Asset Derivative | |||||||||||||
Fair Value | |||||||||||||
Balance Sheet | January 31, | January 31, | |||||||||||
Location | 2015 | 2014 | |||||||||||
Derivative instrument: | |||||||||||||
Interest rate swap | Other (liabilities) assets | $ | (626 | ) | $ | 250 | |||||||
Total | $ | (626 | ) | $ | 250 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
INCOME TAXES [Abstract] | |||||||||||||
Summary of income tax expense (benefit) | Income tax expense (benefit) is summarized as follows: | ||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Current: | |||||||||||||
Federal | $ | 174 | $ | 303 | $ | 684 | |||||||
State | 109 | 33 | 25 | ||||||||||
Foreign | 3,010 | 2,703 | 2,569 | ||||||||||
Subtotal | 3, 293 | 3,039 | 3,278 | ||||||||||
Deferred: | |||||||||||||
Federal | (786 | ) | 20 | 942 | |||||||||
State | 229 | 306 | 220 | ||||||||||
Foreign | (348 | ) | 297 | (929 | ) | ||||||||
Subtotal | (905 | ) | 623 | 233 | |||||||||
Equity adjustment | 251 | 104 | 140 | ||||||||||
Total | $ | 2,639 | $ | 3,766 | $ | 3,651 | |||||||
Reconciliation of income taxes to the statutory rate | Actual income tax expense (benefit) differs from that obtained by applying the statutory federal income tax rate of 34% to income before income taxes as follows: | ||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Computed expected tax expense | $ | 5,299 | $ | 3,452 | $ | 3,499 | |||||||
State income taxes, net of federal income tax expense | 253 | 330 | 208 | ||||||||||
Incremental tax benefit from foreign operations | (5,220 | ) | (2,676 | ) | (1,355 | ) | |||||||
Non-deductible equity compensation | 258 | 1,176 | 913 | ||||||||||
Foreign withholding taxes | 1,256 | 1,171 | 928 | ||||||||||
Net change in valuation allowance | 1,657 | (108 | ) | (826 | ) | ||||||||
Net change in contingency reserve | (594 | ) | 45 | (68 | ) | ||||||||
Non-deductible expenses | 742 | 1,084 | 296 | ||||||||||
Benefit of tax credits | (1,345 | ) | (1,624 | ) | (446 | ) | |||||||
Subpart F Income | 283 | 198 | 313 | ||||||||||
Rate change impact | 54 | (88 | ) | 164 | |||||||||
Other | (4 | ) | 806 | 25 | |||||||||
Total | $ | 2,639 | $ | 3,766 | $ | 3,651 | |||||||
Components of deferred tax assets and liabilities | Significant components of the Company’s deferred tax assets and liabilities are as follows: | ||||||||||||
January 31, | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Deferred tax assets: | |||||||||||||
Allowance for doubtful accounts and sales adjustments | $ | 452 | $ | 492 | |||||||||
Accrued vacation | 2,015 | 1,923 | |||||||||||
Tax credits | 8,584 | 7,911 | |||||||||||
Deferred revenue | 3,666 | 3,467 | |||||||||||
Net operating loss carry forwards | 9,646 | 10,608 | |||||||||||
Accrued expenses - other | 2,478 | 2,076 | |||||||||||
Section 263(a) interest capitalization | 353 | 368 | |||||||||||
Equity compensation | 3,673 | 4,306 | |||||||||||
Other | 1,824 | 1,423 | |||||||||||
Total deferred tax assets | 32,691 | 32,574 | |||||||||||
Less valuation allowance | (10,684 | ) | (10,293 | ) | |||||||||
Less netting of unrecognized tax benefits against deferred tax assets | (1,406 | ) | — | ||||||||||
Deferred tax assets, net of valuation allowance | $ | 20,601 | $ | 22,281 | |||||||||
Deferred tax liabilities: | |||||||||||||
Unrecognized capital gain | (863 | ) | (1,033 | ) | |||||||||
Depreciation and amortization | (379 | ) | (654 | ) | |||||||||
Other comprehensive income | (20 | ) | (295 | ) | |||||||||
Other | (346 | ) | (378 | ) | |||||||||
Total deferred tax liabilities | (1,608 | ) | (2,360 | ) | |||||||||
Total net deferred tax assets | $ | 18,993 | $ | 19,921 | |||||||||
Recorded as: | |||||||||||||
Current portion of deferred tax assets | 9,434 | 8,242 | |||||||||||
Non-current portion of deferred tax assets | 11,229 | 13,110 | |||||||||||
Current portion of deferred tax liabilities (in current deferred tax assets) | (121 | ) | (109 | ) | |||||||||
Non-current portion of deferred tax liabilities (in non-current deferred tax assets) | (1,549 | ) | (1,322 | ) | |||||||||
Total net deferred tax assets | $ | 18,993 | $ | 19,921 | |||||||||
Gross amounts of unrecognized tax benefits | The following table reconciles the gross amounts of unrecognized tax benefits at the beginning and end of the period: | ||||||||||||
Years Ended January 31, | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Unrecognized tax benefits at beginning of the year | $ | 2,626 | $ | 2,581 | |||||||||
Increases as a result of tax positions taken in a prior period | 85 | 45 | |||||||||||
Increases as a result of tax positions taken in the current period | 27 | — | |||||||||||
Reduction as a result of a lapse of the statute of limitations | (649 | ) | — | ||||||||||
Decreases as a result of tax settlements | (165 | ) | — | ||||||||||
Unrecognized tax benefit at end of year | $ | 1,924 | $ | 2,626 | |||||||||
List of open tax year by jurisdiction | Below is a list of our material jurisdictions and the years open for audit as of fiscal 2015: | ||||||||||||
Jurisdiction | Years Open for Audit | ||||||||||||
U.S. Federal | FY12 and beyond | ||||||||||||
California | FY11 and beyond | ||||||||||||
Michigan | FY11 and beyond | ||||||||||||
New Jersey | FY11 and beyond | ||||||||||||
Australia | FY11 and beyond | ||||||||||||
France | FY12 and beyond | ||||||||||||
India | FY99 and beyond | ||||||||||||
Ireland | FY11 and beyond | ||||||||||||
United Kingdom | FY12 and beyond | ||||||||||||
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended | ||||||||||||||
Jan. 31, 2015 | |||||||||||||||
STOCKHOLDERS' EQUITY [Abstract] | |||||||||||||||
Dividends declared and/or paid | The following table sets forth the dividends declared and paid by the Company during fiscal 2015: | ||||||||||||||
Declaration | Record Date | Payable | Dividend | Dividend | Amount | ||||||||||
Date | Class A | Class B | |||||||||||||
11/28/14 | 12/23/14 | 1/6/15 | $ | 0.072 | $ | 0.06 | $ | 1,118,000 | |||||||
9/9/14 | 9/23/14 | 9/30/14 | $ | 0.072 | $ | 0.06 | $ | 1,118,000 | |||||||
6/11/14 | 6/25/14 | 7/2/14 | $ | 0.072 | $ | 0.06 | $ | 1,113,000 | |||||||
4/16/14 | 4/30/14 | 5/7/14 | $ | 0.072 | $ | 0.06 | $ | 1,103,000 |
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended | |||||||||||||
Jan. 31, 2015 | ||||||||||||||
STOCK-BASED COMPENSATION [Abstract] | ||||||||||||||
Allocation of stock-based compensation expense | The following table sets forth reported stock compensation expense included in the Company’s Consolidated Statements of Income and Comprehensive Income for the fiscal years ended January 31, 2015, 2014 and 2013: | |||||||||||||
Years Ended January 31, | ||||||||||||||
2015 | 2014 | 2013 | ||||||||||||
(in thousands) | ||||||||||||||
Stock-based compensation expense: | ||||||||||||||
Cost of maintenance, subscription and other revenue | $ | 197 | $ | 201 | $ | 197 | ||||||||
Cost of professional services | 492 | 476 | 482 | |||||||||||
Sales and marketing | 790 | 858 | 835 | |||||||||||
Research and development | 518 | 628 | 658 | |||||||||||
General and administrative | 2,996 | 2,517 | 2,436 | |||||||||||
Total stock-based compensation expense | $ | 4,993 | $ | 4,680 | $ | 4,608 | ||||||||
Weighted average assumptions used to value SARs | The weighted average assumptions used to value SARs are shown in the following table. | |||||||||||||
Years Ended January 31, | ||||||||||||||
2015 | 2014 | 2013 | ||||||||||||
Expected life in years | 4.98 | 4.57 | 4.61 | |||||||||||
Risk free interest rate | 1.58 | % | 1 | % | 0.69 | % | ||||||||
Volatility | 47 | % | 53 | % | 61 | % | ||||||||
Dividend rate | 1.32 | % | 2.42 | % | 2.25 | % | ||||||||
Activity for outstanding stock options and SARs | The following table summarizes the activity for outstanding options and SARs for the fiscal years ended January 31, 2015, 2014 and 2013: | |||||||||||||
Options/ | Weighted | Weighted | Aggregate | |||||||||||
SARs | Average | Average | Intrinsic | |||||||||||
(in thousands) | Exercise | Remaining | Value | |||||||||||
Price per | Contractual | (in thousands) | ||||||||||||
Share | Term | |||||||||||||
(years) | ||||||||||||||
Outstanding at January 31, 2012 | 2,871 | $ | 11.34 | |||||||||||
Granted | 570 | 12.9 | ||||||||||||
Exercised | (272 | ) | 8.34 | |||||||||||
Expired | (222 | ) | 22.26 | |||||||||||
Forfeited | (27 | ) | 9.49 | |||||||||||
Outstanding at January 31, 2013 | 2,920 | $ | 11.11 | |||||||||||
Granted | 599 | 11.73 | ||||||||||||
Exercised | (404 | ) | 9.21 | |||||||||||
Expired | (230 | ) | 15.16 | |||||||||||
Forfeited | (43 | ) | 10.68 | |||||||||||
Outstanding at January 31, 2014 | 2,842 | $ | 11.19 | |||||||||||
Granted | 387 | 21.61 | ||||||||||||
Exercised | (655 | ) | 11.47 | |||||||||||
Expired | (22 | ) | 12.68 | |||||||||||
Forfeited | (53 | ) | 12.31 | |||||||||||
Outstanding at January 31, 2015 | 2,499 | $ | 12.69 | 5.1 | $ | 16,964 | ||||||||
Vested and expected to vest at January 31, 2015 (1) | 2,483 | $ | 12.69 | 5.1 | $ | 16,855 | ||||||||
Vested and exercisable at January 31, 2015 | 1,323 | $ | 10.55 | 4 | $ | 11,246 | ||||||||
-1 | The expected-to-vest options and SARs are the result of applying the pre-vesting forfeiture rate assumptions to total outstanding options and SARs. | |||||||||||||
Summary of activity for RSUs | The following table summarizes the activity for RSUs for the fiscal years ended January 31, 2015, 2014 and 2013: | |||||||||||||
RSUs | Weighted | |||||||||||||
Average | ||||||||||||||
Grant Date | ||||||||||||||
Fair Value | ||||||||||||||
(in thousands) | ||||||||||||||
Restricted stock at January 31, 2012 | 414 | $ | 9.32 | |||||||||||
Granted | 200 | 12.2 | ||||||||||||
Released (1) | (223 | ) | 9.84 | |||||||||||
Forfeited | (6 | ) | 10.99 | |||||||||||
Restricted stock at January 31, 2013 | 385 | $ | 10.49 | |||||||||||
Granted | 231 | 11.2 | ||||||||||||
Released (1) | (165 | ) | 10.05 | |||||||||||
Forfeited | (21 | ) | 11.14 | |||||||||||
Restricted stock at January 31, 2014 | 430 | $ | 11.02 | |||||||||||
Granted | 287 | 21.25 | ||||||||||||
Released (1) | (167 | ) | 11.92 | |||||||||||
Forfeited | (47 | ) | 14 | |||||||||||
Restricted stock at January 31, 2015 | 503 | $ | 16.27 | |||||||||||
-1 | The number of RSUs released includes shares withheld on behalf of employees to satisfy minimum statutory tax withholding requirements. During the fiscal years ended January 31, 2015, 2014 and 2013, the Company withheld 45,000 shares, 47,000 shares and 57,000 shares, respectively, for payment of these taxes. The value of the withheld shares for the fiscal years ended January 31, 2015, 2014 and 2013 were $1.0 million, $0.6 million and $0.7 million, respectively. |
DEFERRED_REVENUES_Tables
DEFERRED REVENUES (Tables) | 12 Months Ended | ||||||||
Jan. 31, 2015 | |||||||||
DEFERRED REVENUES [Abstract] | |||||||||
Deferred revenues | Deferred revenues consisted of the following: | ||||||||
January 31, | |||||||||
2015 | 2014 | ||||||||
(in thousands) | |||||||||
Deferred maintenance revenue | $ | 86,381 | $ | 87,288 | |||||
Deferred subscription revenue | 11,563 | 7,590 | |||||||
Deferred services revenue | 2,813 | 5,261 | |||||||
Deferred license revenue | 1,890 | 3,967 | |||||||
Deferred other revenue | 74 | 54 | |||||||
Deferred revenues, current | 102,721 | 104,160 | |||||||
Deferred revenues, non-current (in Other liabilities) | 2,361 | 606 | |||||||
Total deferred revenues | $ | 105,082 | $ | 104,766 |
OTHER_BALANCE_SHEET_ACCOUNTS_T
OTHER BALANCE SHEET ACCOUNTS (Tables) | 12 Months Ended | ||||||||
Jan. 31, 2015 | |||||||||
OTHER BALANCE SHEET ACCOUNTS [Abstract] | |||||||||
Other balance sheet accounts | January 31, | ||||||||
2015 | 2014 | ||||||||
(in thousands) | |||||||||
Other current assets | |||||||||
Deferred cost of revenues | $ | 8,363 | $ | 8,143 | |||||
Prepaid expenses | 4,589 | 4,275 | |||||||
Income tax receivable, net of payables | 465 | 1,620 | |||||||
Other | 1,382 | 942 | |||||||
$ | 14,799 | $ | 14,980 | ||||||
Other assets, net | |||||||||
Other intangibles, net | $ | 1,750 | $ | 2,585 | |||||
Security deposits | 1,416 | 1,504 | |||||||
Fair value of interest rate swap | — | 250 | |||||||
Other long-term assets | 448 | 475 | |||||||
$ | 3,614 | $ | 4,814 | ||||||
Accounts payable | |||||||||
Trade payables | $ | 8,164 | $ | 7,049 | |||||
VAT payable | 4,708 | 3,993 | |||||||
$ | 12,872 | $ | 11,042 | ||||||
Other current liabilities | |||||||||
Accrued commissions and bonus | $ | 14,585 | $ | 13,322 | |||||
Accrued compensated absences | 8,072 | 8,598 | |||||||
Other accrued payroll | 4,805 | 3,647 | |||||||
Accrued professional fees | 1,733 | 1,770 | |||||||
Accrued travel | 1,580 | 1,421 | |||||||
Accrued contract labor | 908 | 849 | |||||||
Contingent liability related to acquisition of CEBOS | 750 | 471 | |||||||
Other current liabilities | 3,332 | 4,121 | |||||||
$ | 35,765 | $ | 34,199 | ||||||
Other liabilities | |||||||||
Long-term deferred revenue | $ | 2,361 | $ | 606 | |||||
Fair value of interest rate swap | 626 | — | |||||||
Long-term tax contingency reserve | 518 | 2,419 | |||||||
Contingent liability related to acquisition of CEBOS | — | 707 | |||||||
Other | 1,714 | 2,001 | |||||||
$ | 5,219 | $ | 5,733 |
DEBT_Tables
DEBT (Tables) | 12 Months Ended | ||||||||
Jan. 31, 2015 | |||||||||
DEBT [Abstract] | |||||||||
Debt | January 31, | January 31, | |||||||
2015 | 2014 | ||||||||
(in thousands) | |||||||||
Note payable | $ | 15,086 | $ | 15,474 | |||||
Less current maturities | (406 | ) | (389 | ) | |||||
Long-term debt | $ | 14,680 | $ | 15,085 |
ACCUMULATED_OTHER_COMPREHENSIV1
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 12 Months Ended | ||||
Jan. 31, 2015 | |||||
ACCUMULATED OTHER COMPREHENSIVE LOSS [Abstract] | |||||
Components of accumulated other comprehensive loss, net of taxes | The components of accumulated other comprehensive loss, net of taxes, were as follows: | ||||
Foreign Currency | |||||
Translation | |||||
Adjustments | |||||
(in thousands) | |||||
Balance as of January 31, 2014 | $ | (6,958 | ) | ||
Other comprehensive income before reclassifications | (460 | ) | |||
Amounts reclassified from accumulated other comprehensive loss | — | ||||
Net current period other comprehensive income | (460 | ) | |||
Balance as of January 31, 2015 | $ | (7,418 | ) |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||
Jan. 31, 2015 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||||
Future minimum rental payments under non-cancelable operating lease commitments | Future minimum rental payments under non-cancelable operating lease commitments with terms of more than one year as of January 31, 2015 are as follows (in millions): | ||||
2016 | $ | 5.5 | |||
2017 | 4.4 | ||||
2018 | 3.4 | ||||
2019 | 2.6 | ||||
2020 | 1.2 | ||||
Thereafter | 0.6 | ||||
$ | 17.7 |
BUSINESS_SEGMENT_INFORMATION_T
BUSINESS SEGMENT INFORMATION (Tables) | 12 Months Ended | ||||||||||||
Jan. 31, 2015 | |||||||||||||
BUSINESS SEGMENT INFORMATION [Abstract] | |||||||||||||
License and subscription revenues assigned to geographic regions | Years Ended January 31, | ||||||||||||
2015 | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Revenue: | |||||||||||||
North America (1) | $ | 129,693 | $ | 113,937 | $ | 109,388 | |||||||
EMEA | 98,279 | 89,133 | 76,182 | ||||||||||
Asia Pacific | 48,292 | 46,391 | 48,346 | ||||||||||
Latin America | 18,837 | 16,850 | 18,256 | ||||||||||
$ | 295,101 | $ | 266,311 | $ | 252,172 | ||||||||
Capital expenditures: | |||||||||||||
North America | $ | 3,468 | $ | 2,440 | $ | 1,664 | |||||||
EMEA | 482 | 1,224 | 1,071 | ||||||||||
Asia Pacific | 576 | 1,029 | 264 | ||||||||||
Latin America | 51 | 86 | 72 | ||||||||||
$ | 4,577 | $ | 4,779 | $ | 3,071 | ||||||||
January 31, | |||||||||||||
2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||
Property and equipment, net: | |||||||||||||
North America | $ | 27,967 | $ | 26,861 | |||||||||
EMEA | 3,617 | 4,677 | |||||||||||
Asia Pacific | 1,455 | 1,394 | |||||||||||
Latin America | 115 | 153 | |||||||||||
$ | 33,154 | $ | 33,085 | ||||||||||
-1 | Sales into Canada accounted for 2%, 2% and 3% of North America total revenue 2015, 2014 and 2013, respectively. |
QUARTERLY_INFORMATION_Unaudite1
QUARTERLY INFORMATION (Unaudited) (Tables) | 12 Months Ended | ||||||||||||||||
Jan. 31, 2015 | |||||||||||||||||
QUARTERLY INFORMATION (Unaudited) [Abstract] | |||||||||||||||||
Quarterly information (unaudited) | Quarters Ended | ||||||||||||||||
30-Apr | 31-Jul | Oct. 31 | Jan. 31 | ||||||||||||||
(in thousands, except per share data) | |||||||||||||||||
Fiscal 2015 | |||||||||||||||||
Total revenue | $ | 68,485 | $ | 73,050 | $ | 74,004 | $ | 79,562 | |||||||||
Total costs and expenses | 68,187 | 70,986 | 68,115 | 71,828 | |||||||||||||
Gross margin | 37,054 | 39,831 | 40,933 | 45,653 | |||||||||||||
Operating income | 298 | 2,064 | 5,889 | 7,734 | |||||||||||||
Net (loss) income | (76 | ) | 985 | 5,090 | 6,947 | ||||||||||||
Basic net (loss) income per share | |||||||||||||||||
Class A | $ | (0.01 | ) | $ | 0.06 | $ | 0.33 | $ | 0.44 | ||||||||
Class B | (0.00 | ) | 0.05 | 0.27 | 0.37 | ||||||||||||
Diluted net (loss) income per share | |||||||||||||||||
Class A | $ | (0.01 | ) | $ | 0.06 | $ | 0.31 | $ | 0.42 | ||||||||
Class B | (0.00 | ) | 0.05 | 0.27 | 0.36 | ||||||||||||
Fiscal 2014 | |||||||||||||||||
Total revenue | $ | 61,927 | $ | 65,194 | $ | 65,660 | $ | 73,530 | |||||||||
Total costs and expenses | 63,648 | 63,704 | 61,859 | 67,697 | |||||||||||||
Gross margin | 33,302 | 36,417 | 36,755 | 42,831 | |||||||||||||
Operating (loss) income | (1,721 | ) | 1,490 | 3,801 | 5,833 | ||||||||||||
Net ( loss) income | (1,263 | ) | 1,254 | 2,049 | 4,346 | ||||||||||||
Basic net ( loss) income per share | |||||||||||||||||
Class A | $ | (0.08 | ) | $ | 0.08 | $ | 0.14 | $ | 0.29 | ||||||||
Class B | (0.07 | ) | 0.07 | 0.11 | 0.24 | ||||||||||||
Diluted net (loss) income per share | |||||||||||||||||
Class A | $ | (0.08 | ) | $ | 0.08 | $ | 0.13 | $ | 0.27 | ||||||||
Class B | (0.07 | ) | 0.07 | 0.11 | 0.23 |
SUMMARY_OF_BUSINESS_AND_SIGNIF3
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, PART I (Details) (USD $) | 12 Months Ended | 0 Months Ended | |||||
Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 | Jan. 22, 2015 | Feb. 18, 2015 | |||
Business [Line Items] | |||||||
Proceeds from issuance of common stock, net of issuance cost | $37,046,000 | $0 | $0 | ||||
FOREIGN CURRENCY TRANSLATIONS AND TRANSACTIONS [Abstract] | |||||||
Foreign currency transaction and remeasurement (gains) losses | -900 | -100 | 1,200 | ||||
CASH AND EQUIVALENTS [Abstract] | |||||||
Cash and cash equivalents maturity classification, maximum | 90 days | ||||||
ACCOUNTS RECEIVABLE, NET [Abstract] | |||||||
Accounts receivable | 81,411,000 | 73,787,000 | |||||
Less allowance for: | |||||||
Doubtful accounts | -1,194,000 | -1,221,000 | |||||
Sales adjustments | -1,330,000 | -1,229,000 | |||||
Accounts receivable, net | 78,887,000 | 71,337,000 | |||||
Property and equipment, net [Abstract] | |||||||
Property, plant and equipment, gross | 64,661,000 | 75,201,000 | 76,109,000 | ||||
Less accumulated depreciation and amortization | -31,507,000 | -42,116,000 | -43,583,000 | ||||
Property, plant and equipment, net | 33,154,000 | 33,085,000 | |||||
Cost [Roll Forward] | |||||||
Balance at February 1 | 75,201,000 | 76,109,000 | |||||
Additions | 4,577,000 | 4,779,000 | |||||
Disposals | -13,351,000 | -5,145,000 | |||||
Impact of foreign currency translation | -1,766,000 | -542,000 | |||||
Balance at January 31 | 64,661,000 | 75,201,000 | 76,109,000 | ||||
Accumulated depreciation [Roll Forward] | |||||||
Balance at February 1 | -42,116,000 | -43,583,000 | |||||
Depreciation | -3,816,000 | -4,080,000 | |||||
Disposals | 13,334,000 | 5,113,000 | |||||
Impact of foreign currency translation | 1,091,000 | 434,000 | |||||
Balance at January 31 | -31,507,000 | -42,116,000 | -43,583,000 | ||||
Depreciation and amortization expense | 3,800,000 | 4,100,000 | 4,000,000 | ||||
Impairment charges | 0 | 0 | 0 | ||||
CAPITALIZED SOFTWARE COSTS [Abstract] | |||||||
Capitalized software amortization period | 3 years | ||||||
Acquired software technology | 3,458,000 | [1] | 3,577,000 | [1] | |||
Capitalized software development costs | 1,206,000 | [1] | 1,183,000 | [1] | |||
Capitalized software, gross | 4,664,000 | 4,760,000 | |||||
Less accumulated amortization | -2,179,000 | -1,445,000 | |||||
Capitalized software costs, net | 2,485,000 | 3,315,000 | |||||
Capitalized software development costs, write-off | 400,000 | ||||||
Capitalized computer software amortization | 1,100,000 | 1,200,000 | 600,000 | ||||
Gross Carrying Amount [Abstract] | |||||||
Gross Carrying Amount | 26,985,000 | 27,020,000 | |||||
Impact of foreign currency translation, gross | -466,000 | -140,000 | |||||
Gross Carrying Amount | 26,519,000 | 26,985,000 | 27,020,000 | ||||
Accumulated Impairment [Abstract] | |||||||
Accumulated Impairment | -15,608,000 | -15,608,000 | -15,608,000 | ||||
Goodwill, Net [Abstract] | |||||||
Goodwill, Net | 11,377,000 | 11,412,000 | |||||
Impact of foreign currency translation | -466,000 | -140,000 | |||||
Goodwill, Net | 10,911,000 | 11,377,000 | 11,412,000 | ||||
Amortizable intangible assets, gross | 3,308,000 | 3,563,000 | |||||
Less: accumulated amortization | -1,558,000 | -978,000 | |||||
Net amortizable intangible assets | 1,750,000 | 2,585,000 | |||||
Adjustment in purchase price allocation due to change in certain assumptions | 100,000 | ||||||
Goodwill impairment | 0 | 0 | 0 | ||||
Amortization of intangible assets | 706,000 | 710,000 | 264,000 | ||||
Estimated Amortization Expense [Abstract] | |||||||
2016 | 665,000 | ||||||
2017 | 665,000 | ||||||
2018 | 420,000 | ||||||
Total | 1,750,000 | ||||||
CEBOS [Member] | |||||||
Gross Carrying Amount [Abstract] | |||||||
Additions, gross | 105,000 | [2] | |||||
Goodwill, Net [Abstract] | |||||||
Additions, net | 105,000 | [2] | |||||
Customer Relationships [Member] | |||||||
Goodwill, Net [Abstract] | |||||||
Amortizable intangible assets, gross | 2,793,000 | [3] | 3,048,000 | [3] | |||
Trade Name [Member] | |||||||
Goodwill, Net [Abstract] | |||||||
Amortizable intangible assets, gross | 515,000 | 515,000 | |||||
Capitalized Software [Member] | |||||||
Estimated Amortization Expense [Abstract] | |||||||
2016 | 1,065,000 | ||||||
2017 | 903,000 | ||||||
2018 | 512,000 | ||||||
2019 | 5,000 | ||||||
Total | 2,485,000 | ||||||
Computer Equipment and Software [Member] | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Estimated useful life (in years) | 3 years | ||||||
Property and equipment, net [Abstract] | |||||||
Property, plant and equipment, gross | 15,220,000 | ||||||
Cost [Roll Forward] | |||||||
Balance at February 1 | 22,121,000 | ||||||
Balance at January 31 | 15,220,000 | ||||||
Furniture and Office Equipment [Member] | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Estimated useful life (in years) | 5 years | ||||||
Property and equipment, net [Abstract] | |||||||
Property, plant and equipment, gross | 7,783,000 | ||||||
Cost [Roll Forward] | |||||||
Balance at February 1 | 10,856,000 | ||||||
Balance at January 31 | 7,783,000 | ||||||
Building [Member] | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Estimated useful life (in years) | 39 years | ||||||
Building Improvements [Member] | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Estimated useful life (in years) | 10 years | ||||||
Property and equipment, net [Abstract] | |||||||
Property, plant and equipment, gross | 31,898,000 | ||||||
Cost [Roll Forward] | |||||||
Balance at February 1 | 32,298,000 | ||||||
Balance at January 31 | 31,898,000 | ||||||
Leasehold Improvements [Member] | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Estimated useful life (in years) | 5 years | ||||||
Property and equipment, net [Abstract] | |||||||
Property, plant and equipment, gross | 5,856,000 | ||||||
Cost [Roll Forward] | |||||||
Balance at February 1 | 6,033,000 | ||||||
Balance at January 31 | 5,856,000 | ||||||
Land [Member] | |||||||
Property and equipment, net [Abstract] | |||||||
Property, plant and equipment, gross | 3,850,000 | 3,850,000 | |||||
Cost [Roll Forward] | |||||||
Balance at January 31 | 3,850,000 | 3,850,000 | |||||
Automobiles [Member] | |||||||
Property and equipment, net [Abstract] | |||||||
Property, plant and equipment, gross | 54,000 | 43,000 | |||||
Cost [Roll Forward] | |||||||
Balance at January 31 | 54,000 | 43,000 | |||||
Sales Revenue [Member] | Customer Concentration Risk [Member] | Maximum [Member] | |||||||
FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK [Abstract] | |||||||
Customer concentration risk (in hundredths) | 10.00% | 10.00% | 10.00% | ||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Maximum [Member] | |||||||
FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK [Abstract] | |||||||
Customer concentration risk (in hundredths) | 10.00% | 10.00% | |||||
Common Class A [Member] | |||||||
Business [Line Items] | |||||||
Stock issued (in shares) | 2,000,000 | 2,000,000 | |||||
Proceeds from issuance of common stock, net of issuance cost | 37,000,000 | 37,000,000 | |||||
Subsequent Event [Member] | Common Class A [Member] | |||||||
Business [Line Items] | |||||||
Stock issued (in shares) | 450,000 | ||||||
Proceeds from issuance of common stock, net of issuance cost | $8,400,000 | ||||||
[1] | Acquired software technology and capitalized software development costs include the impact of foreign currency translation. | ||||||
[2] | During the fourth quarter of fiscal 2014 the Company finalized the allocation of the purchase price and recorded an adjustment of $0.1 million related to a change in certain assumptions associated with accounts receivable. This adjustment increased the provisionally recognized goodwill by the same amount. | ||||||
[3] | Customer relationships include the impact of foreign currency translation. |
SUMMARY_OF_BUSINESS_AND_SIGNIF4
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES, PART II (Details) (USD $) | 3 Months Ended | 12 Months Ended | 0 Months Ended | ||||||||||||
Share data in Thousands, except Per Share data, unless otherwise specified | Jan. 31, 2015 | Oct. 31, 2014 | Jul. 31, 2014 | Apr. 30, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | Apr. 30, 2013 | Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 | Dec. 28, 2012 | Jun. 06, 2012 | Apr. 01, 2014 | Mar. 30, 2015 |
Class | Model | Payment | |||||||||||||
Population | |||||||||||||||
Class | |||||||||||||||
DEFERRED TAX ASSETS AND LIABILITIES [Abstract] | |||||||||||||||
Income tax recognition threshold (in hundredths) | 50.00% | ||||||||||||||
STOCK-BASED COMPENSATION [Abstract] | |||||||||||||||
Number of discernable populations | 2 | ||||||||||||||
REVENUE [Abstract] | |||||||||||||||
Number of software model offered clients | 2 | ||||||||||||||
Minimum contractual term | 12 months | ||||||||||||||
Maximum contractual term | 36 months | ||||||||||||||
Payment period for software license fees to customers with an established history of collections without concessions, Maximum | 1 year | ||||||||||||||
Maintenance revenue recognition period | 1 year | ||||||||||||||
Initial subscription period, minimum | 12 months | ||||||||||||||
Initial subscription period, maximum | 36 months | ||||||||||||||
Payment due date for subscription revenue, Maximum | 30 months | ||||||||||||||
ADVERTISING EXPENSES [Abstract] | |||||||||||||||
Advertising expense | $800,000 | $600,000 | $400,000 | ||||||||||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | |||||||||||||||
Net income | 6,947,000 | 5,090,000 | 985,000 | -76,000 | 4,346,000 | 2,049,000 | 1,254,000 | -1,263,000 | 12,946,000 | 6,386,000 | 6,639,000 | ||||
Less: Dividends declared | -4,452,000 | -4,362,000 | -8,677,000 | ||||||||||||
Undistributed net income (loss) | 8,494,000 | 2,024,000 | -2,038,000 | ||||||||||||
Net income per share [Abstract] | |||||||||||||||
Dividends declared | 4,452,000 | 4,362,000 | 8,677,000 | ||||||||||||
Allocation of undistributed net income (loss) | 8,494,000 | 2,024,000 | -2,038,000 | ||||||||||||
Net income | 6,947,000 | 5,090,000 | 985,000 | -76,000 | 4,346,000 | 2,049,000 | 1,254,000 | -1,263,000 | 12,946,000 | 6,386,000 | 6,639,000 | ||||
COMPUTATION OF NET INCOME PER SHARE [Abstract] | |||||||||||||||
Number of classes of common stock | 2 | 2 | |||||||||||||
Dividends common stock percentage that Class A is entitled to as compared to class B (in hundredths) | 120.00% | ||||||||||||||
OTHER (INCOME) EXPENSE, NET [Abstract] | |||||||||||||||
Interest income | -242,000 | -284,000 | -590,000 | ||||||||||||
Interest expense | 811,000 | 829,000 | 990,000 | ||||||||||||
Foreign exchange (gains) losses | -878,000 | -67,000 | 1,180,000 | ||||||||||||
Change in fair value of interest rate swap | 877,000 | -634,000 | 384,000 | ||||||||||||
Other (income) expense, net | -168,000 | -593,000 | -446,000 | ||||||||||||
Total other (income) expense, net | 400,000 | -749,000 | 1,518,000 | ||||||||||||
Common Class A [Member] | |||||||||||||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | |||||||||||||||
Net income | 10,729,000 | 5,282,000 | 5,483,000 | ||||||||||||
Less: Dividends declared | -3,688,000 | -3,606,000 | -7,166,000 | ||||||||||||
Undistributed net income (loss) | 7,041,000 | 1,676,000 | -1,683,000 | ||||||||||||
Net income per share [Abstract] | |||||||||||||||
Dividends declared | 3,688,000 | 3,606,000 | 7,166,000 | ||||||||||||
Allocation of undistributed net income (loss) | 7,041,000 | 1,676,000 | -1,683,000 | ||||||||||||
Net income | 10,729,000 | 5,282,000 | 5,483,000 | ||||||||||||
Weighted average shares by Class of common stock outstanding-basic (in shares) | 12,841 | 12,501 | 12,596 | ||||||||||||
Weighted average potential shares of common stock (in shares) | 712 | 484 | 467 | ||||||||||||
Weighted average shares of common stock and potential common shares outstanding-diluted (in shares) | 13,553 | 12,985 | 13,063 | ||||||||||||
Basic net income per common share (in dollars per share) | $0.44 | $0.33 | $0.06 | ($0.01) | $0.29 | $0.14 | $0.08 | ($0.08) | $0.84 | $0.42 | $0.44 | ||||
Diluted net income per common share (in dollars per share) | $0.42 | $0.31 | $0.06 | ($0.01) | $0.27 | $0.13 | $0.08 | ($0.08) | $0.79 | $0.41 | $0.42 | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 211 | 1,179 | 1,124 | ||||||||||||
Common Class B [Member] | |||||||||||||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | |||||||||||||||
Net income | 2,217,000 | 1,104,000 | 1,156,000 | ||||||||||||
Less: Dividends declared | -764,000 | -756,000 | -1,511,000 | ||||||||||||
Undistributed net income (loss) | 1,453,000 | 348,000 | -355,000 | ||||||||||||
Net income per share [Abstract] | |||||||||||||||
Dividends declared | 764,000 | 756,000 | 1,511,000 | ||||||||||||
Allocation of undistributed net income (loss) | 1,453,000 | 348,000 | -355,000 | ||||||||||||
Net income | 2,217,000 | 1,104,000 | 1,156,000 | ||||||||||||
Weighted average shares by Class of common stock outstanding-basic (in shares) | 3,183 | 3,149 | 3,160 | ||||||||||||
Weighted average potential shares of common stock (in shares) | 88 | 89 | 106 | ||||||||||||
Weighted average shares of common stock and potential common shares outstanding-diluted (in shares) | 3,271 | 3,238 | 3,266 | ||||||||||||
Basic net income per common share (in dollars per share) | $0.37 | $0.27 | $0.05 | $0 | $0.24 | $0.11 | $0.07 | ($0.07) | $0.70 | $0.35 | $0.37 | ||||
Diluted net income per common share (in dollars per share) | $0.36 | $0.27 | $0.05 | $0 | $0.23 | $0.11 | $0.07 | ($0.07) | $0.68 | $0.34 | $0.35 | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 45 | 184 | 151 | ||||||||||||
CEBOS [Member] | |||||||||||||||
BUSINESS COMBINATIONS [Abstract] | |||||||||||||||
Total purchase price of acquisition | 3,500,000 | ||||||||||||||
Number of separate contingent payments on acquisition on achievement of milestone | 2 | ||||||||||||||
Guaranteed future cash payment | 300,000 | ||||||||||||||
Contingent payments | 500,000 | ||||||||||||||
Decrease in contingent consideration | 300,000 | ||||||||||||||
Business acquisition earn out amount | 500,000 | ||||||||||||||
DynaSys [Member] | |||||||||||||||
BUSINESS COMBINATIONS [Abstract] | |||||||||||||||
Total purchase price of acquisition | 7,500,000 | ||||||||||||||
Subsequent Event [Member] | CEBOS [Member] | |||||||||||||||
BUSINESS COMBINATIONS [Abstract] | |||||||||||||||
Business acquisition earn out amount | $800,000 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 12 Months Ended | |||
Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 | Mar. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash deposited with commercial banks | $22,000,000 | $19,000,000 | ||
Derivatives, Fair Value [Line Items] | ||||
The fair values of derivative instrument | -626,000 | 250,000 | ||
Key Assumptions [Abstract] | ||||
Discount rate (in hundredths) | 4.60% | |||
Guaranteed Payment [Member] | ||||
Business Acquisition, Contingent Consideration [Line Items] | ||||
Contingent consideration paid | 800,000 | |||
Interest Rate Swap [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Description of variable rate basis | One month LIBOR | |||
Change in fair value recognized in net income | -900,000 | 600,000 | -400,000 | |
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | Other Assets [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
The fair values of derivative instrument | 250,000 | |||
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | Other Liabilities [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
The fair values of derivative instrument | -626,000 | |||
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Money market mutual funds | 98,294,000 | 57,204,000 | ||
Liability related to interest rate swap | 0 | |||
Asset related to interest rate swap | 0 | |||
Contingent liability associated with acquisitions | 0 | 0 | ||
Significant Other Observable Inputs (Level 2) [Member] | Recurring [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Money market mutual funds | 0 | 0 | ||
Liability related to interest rate swap | -626,000 | |||
Asset related to interest rate swap | 250,000 | |||
Contingent liability associated with acquisitions | 0 | 0 | ||
Significant Unobservable Inputs (Level 3) [Member] | Recurring [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Money market mutual funds | 0 | 0 | ||
Liability related to interest rate swap | 0 | |||
Asset related to interest rate swap | 0 | |||
Contingent liability associated with acquisitions | ($750,000) | ($1,178,000) |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | ||
Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 | |
Current: | |||
Federal | $174,000 | $303,000 | $684,000 |
State | 109,000 | 33,000 | 25,000 |
Foreign | 3,010,000 | 2,703,000 | 2,569,000 |
Current subtotal | 3,293,000 | 3,039,000 | 3,278,000 |
Deferred: | |||
Federal | -786,000 | 20,000 | 942,000 |
State | 229,000 | 306,000 | 220,000 |
Foreign | -348,000 | 297,000 | -929,000 |
Deferred subtotal | -905,000 | 623,000 | 233,000 |
Equity adjustment | 251,000 | 104,000 | 140,000 |
Total | 2,639,000 | 3,766,000 | 3,651,000 |
Federal statutory income tax rate (in hundredth) | 34.00% | ||
Income Tax Reconciliation [Abstract] | |||
Computed expected tax expense | 5,299,000 | 3,452,000 | 3,499,000 |
State income taxes, net of federal income tax expense | 253,000 | 330,000 | 208,000 |
Incremental tax benefit from foreign operations | -5,220,000 | -2,676,000 | -1,355,000 |
Non-deductible equity compensation | 258,000 | 1,176,000 | 913,000 |
Foreign withholding taxes | 1,256,000 | 1,171,000 | 928,000 |
Net change in valuation allowance | 1,657,000 | -108,000 | -826,000 |
Net change in contingency reserve | -594,000 | 45,000 | -68,000 |
Non-deductible expenses | 742,000 | 1,084,000 | 296,000 |
Benefit of tax credits | -1,345,000 | -1,624,000 | -446,000 |
Subpart F Income | 283,000 | 198,000 | 313,000 |
Rate change impact | 54,000 | -88,000 | 164,000 |
Other | -4,000 | 806,000 | 25,000 |
Total | 2,639,000 | 3,766,000 | 3,651,000 |
Consolidated U.S. income (loss) before income taxes | -2,400,000 | -1,200,000 | 2,300,000 |
Income before income taxes for foreign operations | 18,000,000 | 11,400,000 | 8,000,000 |
Permanently reinvested earnings of foreign subsidiaries | 76,100,000 | ||
Deferred Tax Assets [Abstract] | |||
Allowance for doubtful accounts and sales adjustments | 452,000 | 492,000 | |
Accrued vacation | 2,015,000 | 1,923,000 | |
Tax credits | 8,584,000 | 7,911,000 | |
Deferred revenue | 3,666,000 | 3,467,000 | |
Net operating loss carry forwards | 9,646,000 | 10,608,000 | |
Accrued expenses - other | 2,478,000 | 2,076,000 | |
Section 263(a) interest capitalization | 353,000 | 368,000 | |
Equity compensation | 3,673,000 | 4,306,000 | |
Other | 1,824,000 | 1,423,000 | |
Total deferred tax assets | 32,691,000 | 32,574,000 | |
Less valuation allowance | -10,684,000 | -10,293,000 | |
Less netting of unrecognized tax benefits against deferred tax assets | -1,406,000 | 0 | |
Deferred tax assets, net of valuation allowance | 20,601,000 | 22,281,000 | |
Deferred Tax Liabilities [Abstract] | |||
Unrecognized capital gain | -863,000 | -1,033,000 | |
Depreciation and amortization | -379,000 | -654,000 | |
Other comprehensive income | -20,000 | -295,000 | |
Other | -346,000 | -378,000 | |
Total deferred tax liabilities | -1,608,000 | -2,360,000 | |
Total net deferred tax assets | 18,993,000 | 19,921,000 | |
Current portion of deferred tax asset | 9,434,000 | 8,242,000 | |
Non-current portion of deferred tax assets | 11,229,000 | 13,110,000 | |
Current portion of deferred tax liabilities (in current deferred tax assets) | -121,000 | -109,000 | |
Non-current portion of deferred tax liabilities (in non-current deferred tax assets) | -1,549,000 | -1,322,000 | |
Tax benefit realized from exercise of stock options | 2,100,000 | 1,200,000 | |
Excess tax benefits realized | 100,000 | ||
Future increase in equity related to excess tax benefits | 2,100,000 | ||
Net operating loss carryforwards | 35,200,000 | ||
Tax credit carryforwards | 10,800,000 | ||
Decrease in reserve for uncertain tax position | 700,000 | ||
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits at beginning of the year | 2,626,000 | 2,581,000 | |
Increases as a result of tax positions taken in a prior period | 85,000 | 45,000 | |
Increases as a result of tax positions taken in the current period | 27,000 | 0 | |
Reduction as a result of a lapse of the statute of limitations | -649,000 | 0 | |
Decreases as a result of tax settlements | -165,000 | 0 | |
Unrecognized tax benefit at end of year | 1,924,000 | 2,626,000 | 2,581,000 |
Income Tax Contingency [Line Items] | |||
Income tax penalties and interest expense | 37,000 | ||
Unrecognized tax benefits, income tax penalties and interest accrued | 200,000 | ||
Unrecognized tax benefits recognized in next twelve months | $100,000 | ||
U.S. Federal [Member] | |||
Income Tax Contingency [Line Items] | |||
Years in which the company is currently under audit | FY12 and beyond | ||
California [Member] | |||
Income Tax Contingency [Line Items] | |||
Years in which the company is currently under audit | FY11 and beyond | ||
Michigan [Member] | |||
Income Tax Contingency [Line Items] | |||
Years in which the company is currently under audit | FY11 and beyond | ||
New Jersey [Member] | |||
Income Tax Contingency [Line Items] | |||
Years in which the company is currently under audit | FY11 and beyond | ||
Australia [Member] | |||
Income Tax Contingency [Line Items] | |||
Years in which the company is currently under audit | FY11 and beyond | ||
France [Member] | |||
Income Tax Contingency [Line Items] | |||
Years in which the company is currently under audit | FY12 and beyond | ||
India [Member] | |||
Income Tax Contingency [Line Items] | |||
Years in which the company is currently under audit | FY99 and beyond | ||
Ireland [Member] | |||
Income Tax Contingency [Line Items] | |||
Years in which the company is currently under audit | FY11 and beyond | ||
United Kingdom [Member] | |||
Income Tax Contingency [Line Items] | |||
Years in which the company is currently under audit | FY12 and beyond |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 12 Months Ended | 26 Months Ended | 0 Months Ended | ||||
Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 | Oct. 31, 2013 | Jan. 22, 2015 | Feb. 18, 2015 | Sep. 30, 2011 | |
Class | |||||||
Issuance of common stock [Abstract] | |||||||
Net proceeds from stock issued | $37,046,000 | $0 | $0 | ||||
Dividends [Abstract] | |||||||
Number of classes of common stock | 2 | ||||||
Dividends common stock percentage that Class A is entitled to as compared to class B (in hundredths) | 120.00% | ||||||
Declaration date | 11-Jun-14 | ||||||
Stock Repurchase Activity [Abstract] | |||||||
Cash consideration for repurchase of common stock | 0 | 686,000 | 7,530,000 | 12,500,000 | |||
Maximum [Member] | |||||||
Stock Repurchase Activity [Abstract] | |||||||
Number of shares authorized for repurchase (in shares) | 1,000,000 | ||||||
Dividends Declaration Date One [Member] | |||||||
Dividends [Abstract] | |||||||
Record date | 23-Dec-14 | ||||||
Payable | 6-Jan-15 | ||||||
Amount paid | 1,118,000 | ||||||
Dividends Declaration Date Two [Member] | |||||||
Dividends [Abstract] | |||||||
Record date | 23-Sep-14 | ||||||
Payable | 30-Sep-14 | ||||||
Amount paid | 1,118,000 | ||||||
Dividends Declaration Date Three [Member] | |||||||
Dividends [Abstract] | |||||||
Record date | 25-Jun-14 | ||||||
Payable | 2-Jul-14 | ||||||
Amount paid | 1,113,000 | ||||||
Dividends Declaration Date Four [Member] | |||||||
Dividends [Abstract] | |||||||
Record date | 30-Apr-14 | ||||||
Payable | 7-May-14 | ||||||
Amount paid | 1,103,000 | ||||||
Common Class A [Member] | |||||||
Issuance of common stock [Abstract] | |||||||
Stock issued (in shares) | 2,000,000 | 2,000,000 | |||||
Net proceeds from stock issued | 37,000,000 | 37,000,000 | |||||
Dividends [Abstract] | |||||||
Stock voting right (in votes per share) | 0.05 | ||||||
Stock Repurchase Activity [Abstract] | |||||||
Shares repurchased (in shares) | 897,000 | ||||||
Common Class A [Member] | Dividends Declaration Date One [Member] | |||||||
Dividends [Abstract] | |||||||
Dividend (in dollars per share) | $0.07 | ||||||
Common Class A [Member] | Dividends Declaration Date Two [Member] | |||||||
Dividends [Abstract] | |||||||
Dividend (in dollars per share) | $0.07 | ||||||
Common Class A [Member] | Dividends Declaration Date Three [Member] | |||||||
Dividends [Abstract] | |||||||
Dividend (in dollars per share) | $0.07 | ||||||
Common Class A [Member] | Dividends Declaration Date Four [Member] | |||||||
Dividends [Abstract] | |||||||
Dividend (in dollars per share) | $0.07 | ||||||
Common Class A [Member] | Subsequent Event [Member] | |||||||
Issuance of common stock [Abstract] | |||||||
Stock issued (in shares) | 450,000 | ||||||
Net proceeds from stock issued | $8,400,000 | ||||||
Common Class B [Member] | |||||||
Dividends [Abstract] | |||||||
Stock voting right (in votes per share) | 1 | ||||||
Stock Repurchase Activity [Abstract] | |||||||
Shares repurchased (in shares) | 103,000 | ||||||
Common Class B [Member] | Dividends Declaration Date One [Member] | |||||||
Dividends [Abstract] | |||||||
Dividend (in dollars per share) | $0.06 | ||||||
Common Class B [Member] | Dividends Declaration Date Two [Member] | |||||||
Dividends [Abstract] | |||||||
Dividend (in dollars per share) | $0.06 | ||||||
Common Class B [Member] | Dividends Declaration Date Three [Member] | |||||||
Dividends [Abstract] | |||||||
Dividend (in dollars per share) | $0.06 | ||||||
Common Class B [Member] | Dividends Declaration Date Four [Member] | |||||||
Dividends [Abstract] | |||||||
Dividend (in dollars per share) | $0.06 |
STOCKBASED_COMPENSATION_Detail
STOCK-BASED COMPENSATION (Details) (USD $) | 12 Months Ended | |||||
Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||||
Share-based compensation | $4,993,000 | $4,680,000 | $4,608,000 | |||
Excess tax benefits from stock awards | 266,000 | 72,000 | 462,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 4 years | |||||
Weighted average assumptions used to value Option/SAR [Abstract] | ||||||
Expected life in years | 4 years 11 months 23 days | 4 years 6 months 25 days | 4 years 7 months 10 days | |||
Risk free interest rate (in hundredths) | 1.58% | 1.00% | 0.69% | |||
Volatility (in hundredths) | 47.00% | 53.00% | 61.00% | |||
Dividend rate (in hundredths) | 1.32% | 2.42% | 2.25% | |||
Options/SARs [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Term of award | 8 years | |||||
Annual award vesting (in hundredths) | 25.00% | |||||
Stock Options/SARs [Roll Forward] | ||||||
Outstanding at beginning of period (in shares) | 2,842,000 | 2,920,000 | 2,871,000 | |||
Granted (in shares) | 387,000 | 599,000 | 570,000 | |||
Exercised (in shares) | -655,000 | -404,000 | -272,000 | |||
Expired (in shares) | -22,000 | -230,000 | -222,000 | |||
Forfeited (in shares) | -53,000 | -43,000 | -27,000 | |||
Outstanding at end of period (in shares) | 2,499,000 | 2,842,000 | 2,920,000 | |||
Vested and expected to vest (in shares) | 2,483,000 | [1] | ||||
Vested and exercisable (in shares) | 1,323,000 | |||||
Weighted Average Exercise Price per Share [Abstract] | ||||||
Outstanding at beginning of period (in dollars per shares) | $11.19 | $11.11 | $11.34 | |||
Granted (in dollars per share) | $21.61 | $11.73 | $12.90 | |||
Exercised (in dollars per shares) | $11.47 | $9.21 | $8.34 | |||
Expired (in dollars per shares) | $12.68 | $15.16 | $22.26 | |||
Forfeited (in dollars per shares) | $12.31 | $10.68 | $9.49 | |||
Outstanding at end of period (in dollars per shares) | $12.69 | $11.19 | $11.11 | |||
Vested and expected to vest (in dollars per share) | $12.69 | [1] | ||||
Vested and exercisable (in dollars per share) | $10.55 | |||||
Additional disclosures [Abstract] | ||||||
Weighted average remaining contractual term, outstanding at end of period | 5 years 1 month 6 days | |||||
Weighted average remaining contractual term, vested and expected to vest at end of period | 5 years 1 month 6 days | [1] | ||||
Weighted average remaining contractual term, vested and exercisable at end of period | 4 years | |||||
Aggregate intrinsic value, outstanding at end of period | 16,964,000 | |||||
Aggregate intrinsic value, vested and expected to vest at end of period | 16,855,000 | [1] | ||||
Aggregate intrinsic value, vested and exercisable at end of period | 11,246,000 | |||||
SARs [Member] | ||||||
Additional disclosures [Abstract] | ||||||
Number of shares withheld for payment of taxes (in shares) | 88,000 | 49,000 | 35,000 | |||
Value of shares withheld for payment of taxes | 1,800,000 | 700,000 | 500,000 | |||
Total unrecognized compensation cost | 5,400,000 | |||||
Weighted-average period to recognize total unrecognized compensation cost | 2 years 7 months 6 days | |||||
New SARs [Member] | ||||||
Additional disclosures [Abstract] | ||||||
Weighted average grant date fair value of SARs granted (in dollars per share) | $8.18 | $4.24 | $5.37 | |||
RSUs [Member] | ||||||
Additional disclosures [Abstract] | ||||||
Number of shares withheld for payment of taxes (in shares) | 45,000 | 47,000 | 57,000 | |||
Value of shares withheld for payment of taxes | 1,000,000 | 600,000 | 700,000 | |||
Total unrecognized compensation cost | 6,200,000 | |||||
Weighted-average period to recognize total unrecognized compensation cost | 2 years 10 months 24 days | |||||
Summary of activity of RSUs [Roll Forward] | ||||||
Restricted stock at beginning of period (in shares) | 430,000 | 385,000 | 414,000 | |||
Granted (in shares) | 287,000 | 231,000 | 200,000 | |||
Released (in shares) | -167,000 | [2] | -165,000 | [2] | -223,000 | [2] |
Forfeited (in shares) | -47,000 | -21,000 | -6,000 | |||
Restricted stock at end of period (in shares) | 503,000 | 430,000 | 385,000 | |||
Weighted Average Grant Date Fair Value [Abstract] | ||||||
Restricted stock at beginning of period (in dollars per share) | $11.02 | $10.49 | $9.32 | |||
Granted (in dollars per share) | $21.25 | $11.20 | $12.20 | |||
Released (in dollars per share) | $11.92 | [2] | $10.05 | [2] | $9.84 | [2] |
Forfeited (in dollars per share) | $14 | $11.14 | $10.99 | |||
Restricted stock at end of period (in dollars per share) | $16.27 | $11.02 | $10.49 | |||
2006 Stock Incentive Program [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares authorized (in shares) | 4,150,000 | |||||
2006 Stock Incentive Program [Member] | Options/SARs [Member] | ||||||
Additional disclosures [Abstract] | ||||||
Total intrinsic value of stock options or SARs exercised | 5,700,000 | 2,100,000 | 1,400,000 | |||
2006 Stock Incentive Program [Member] | RSUs [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Annual award vesting (in hundredths) | 25.00% | |||||
Award vesting period | 4 years | |||||
2006 Stock Incentive Program [Member] | Common Class A [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares authorized (in shares) | 3,320,000 | |||||
Number of shares available for issuance (in shares) | 1,670,000 | |||||
2006 Stock Incentive Program [Member] | Common Class A [Member] | Options/SARs [Member] | ||||||
Stock Options/SARs [Roll Forward] | ||||||
Outstanding at end of period (in shares) | 2,174,000 | |||||
2006 Stock Incentive Program [Member] | Common Class A [Member] | RSUs [Member] | ||||||
Stock Options/SARs [Roll Forward] | ||||||
Outstanding at end of period (in shares) | 503,000 | |||||
2006 Stock Incentive Program [Member] | Common Class B [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares authorized (in shares) | 830,000 | |||||
Number of shares available for issuance (in shares) | 345,000 | |||||
2006 Stock Incentive Program [Member] | Common Class B [Member] | Options/SARs [Member] | ||||||
Stock Options/SARs [Roll Forward] | ||||||
Outstanding at end of period (in shares) | 325,000 | |||||
Amendment to 2006 Stock Incentive Program [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares available for issuance (in shares) | 2,000,000 | |||||
Cost of Maintenance, Subscription and Other Revenue [Member] | ||||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||||
Share-based compensation | 197,000 | 201,000 | 197,000 | |||
Cost of Professional Services [Member] | ||||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||||
Share-based compensation | 492,000 | 476,000 | 482,000 | |||
Sales and Marketing [Member] | ||||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||||
Share-based compensation | 790,000 | 858,000 | 835,000 | |||
Research and Development [Member] | ||||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||||
Share-based compensation | 518,000 | 628,000 | 658,000 | |||
General and Administrative [Member] | ||||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||||
Share-based compensation | $2,996,000 | $2,517,000 | $2,436,000 | |||
[1] | The expected-to-vest options and SARs are the result of applying the pre-vesting forfeiture rate assumptions to total outstanding options and SARs. | |||||
[2] | The number of RSUs released includes shares withheld on behalf of employees to satisfy minimum statutory tax withholding requirements. During the fiscal years ended January 31, 2015, 2014 and 2013, the Company withheld 45,000 shares, 47,000 shares and 57,000 shares, respectively, for payment of these taxes. The value of the withheld shares for the fiscal years ended January 31, 2015, 2014 and 2013 were $1.0 million, $0.6 million and $0.7 million, respectively. |
DEFERRED_REVENUES_Details
DEFERRED REVENUES (Details) (USD $) | 12 Months Ended | |
Jan. 31, 2015 | Jan. 31, 2014 | |
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenues, current | $102,721,000 | $104,160,000 |
Deferred revenues, non-current (in "Other liabilities") | 2,361,000 | 606,000 |
Total deferred revenues | 105,082,000 | 104,766,000 |
Exchange rate deferred maintenance revenue | 5,800,000 | |
Deferred Maintenance Revenue [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenues, current | 86,381,000 | 87,288,000 |
Deferred Subscription Revenue [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenues, current | 11,563,000 | 7,590,000 |
Deferred Services Revenue [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenues, current | 2,813,000 | 5,261,000 |
Deferred License Revenue [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenues, current | 1,890,000 | 3,967,000 |
Deferred Other Revenue [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenues, current | $74,000 | $54,000 |
OTHER_BALANCE_SHEET_ACCOUNTS_D
OTHER BALANCE SHEET ACCOUNTS (Details) (USD $) | Jan. 31, 2015 | Jan. 31, 2014 |
In Thousands, unless otherwise specified | ||
Other current assets | ||
Deferred cost of revenues | $8,363 | $8,143 |
Prepaid expenses | 4,589 | 4,275 |
Income tax receivable, net of payables | 465 | 1,620 |
Other | 1,382 | 942 |
Other current assets | 14,799 | 14,980 |
Other assets, net | ||
Other intangibles, net | 1,750 | 2,585 |
Security deposits | 1,416 | 1,504 |
Fair value of interest rate swap | 0 | 250 |
Other long-term assets | 448 | 475 |
Other assets, net | 3,614 | 4,814 |
Accounts payable | ||
Trade payables | 8,164 | 7,049 |
VAT payable | 4,708 | 3,993 |
Accounts payable | 12,872 | 11,042 |
Other current liabilities | ||
Accrued commissions and bonus | 14,585 | 13,322 |
Accrued compensated absences | 8,072 | 8,598 |
Other accrued payroll | 4,805 | 3,647 |
Accrued professional fees | 1,733 | 1,770 |
Accrued travel | 1,580 | 1,421 |
Accrued contract labor | 908 | 849 |
Contingent liability related to acquisition of CEBOS | 750 | 471 |
Other current liabilities | 3,332 | 4,121 |
Total | 35,765 | 34,199 |
Other liabilities | ||
Long-term deferred revenue | 2,361 | 606 |
Fair value of interest rate swap | 626 | 0 |
Long-term tax contingency reserve | 518 | 2,419 |
Contingent liability related to acquisition of CEBOS | 0 | 707 |
Other | 1,714 | 2,001 |
Other liabilities | $5,219 | $5,733 |
DEBT_Details
DEBT (Details) (USD $) | 12 Months Ended | ||
Jan. 31, 2015 | Jan. 31, 2014 | 30-May-12 | |
Debt Instrument [Line Items] | |||
Note payable | $15,086,000 | $15,474,000 | |
Less current maturities | -406,000 | -389,000 | |
Long-term debt | 14,680,000 | 15,085,000 | |
Rabobank N.A [Member] | Unsecured Credit Agreement [Member] | |||
Credit Facility [Abstract] | |||
Maximum borrowing capacity | 20,000,000 | ||
Maturity date | 15-Jul-17 | ||
Unused capacity commitment fee (in hundredths) | 0.25% | ||
Variable rate basis | One month LIBOR plus 0.75% | ||
Basis spread on variable rate (in hundredths) | 0.75% | ||
Covenant terms | The Facility provides that the Company maintain certain financial and operating ratios which include, among other provisions, minimum liquidity on a consolidated basis of $25 million in cash and equivalents at all times, a current ratio (calculated using current liabilities excluding deferred revenue) of not less than 1.3 to 1.0 determined at the end of each fiscal quarter, a leverage ratio of not more than 1.5 to 1.0 determined at the end of each fiscal quarter, and a debt service coverage ratio of not less than 1.5 to 1.0 determined at the end of each fiscal year. The Facility also contains customary covenants that could restrict the Companybs ability to incur additional indebtedness. | ||
Liquidity on a consolidated basis, Minimum | 25,000,000 | ||
Current ratio, Minimum | 1.3 | ||
Leverage ratio, Minimum | 1.5 | ||
Debt service coverage ratio, Minimum | 1.5 | ||
Effective borrowing rate (in hundredths) | 0.92% | ||
Borrowings outstanding | 0 | ||
2012 Mortgage [Member] | Rabobank N.A [Member] | Quad Ortega Hill LLC [Member] | |||
Notes Payable [Abstract] | |||
Original principal amount | 16,100,000 | ||
2012 Mortgage [Member] | Rabobank N.A [Member] | Credit Agreement [Member] | Quad Ortega Hill LLC [Member] | |||
Notes Payable [Abstract] | |||
Principal and interest | 88,100 | ||
Final principal payment | 11,700,000 | ||
Unpaid balance | $15,100,000 | ||
Maturity date | 30-Jun-22 | ||
Basis spread on variable rate (in hundredths) | 2.25% | ||
One month LIBOR (in hundredths) | 0.17% | ||
Fixed interest rate (in hundredths) | 4.31% | ||
Credit Facility [Abstract] | |||
Variable rate basis | One month LIBOR |
ACCUMULATED_OTHER_COMPREHENSIV2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 |
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Balance as of beginning of period | ($6,958) | |
Balance as of end of period | -7,418 | -6,958 |
Foreign Currency Translation Adjustments [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Balance as of beginning of period | -6,958 | |
Other comprehensive income before reclassifications | -460 | |
Amounts reclassified from accumulated other comprehensive loss | 0 | |
Net current period other comprehensive income | -460 | |
Balance as of end of period | ($7,418) |
EMPLOYEE_BENEFIT_PLANS_Details
EMPLOYEE BENEFIT PLANS (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 |
Foreign Defined Benefits Pension Plan [Member] | Foreign Subsidiaries Plan [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer contribution amount | $5 | $4.60 | $4.20 |
Foreign Defined Benefits Pension Plan [Member] | Foreign Subsidiaries Plan [Member] | Minimum [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Annual contribution per employee (in hundredths) | 3.00% | ||
Foreign Defined Benefits Pension Plan [Member] | Foreign Subsidiaries Plan [Member] | Maximum [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Annual contribution per employee (in hundredths) | 22.00% | ||
United States Defined Benefits Pension Plan [Member] | 401 (k) Plan [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employee service period, Minimum | 30 days | ||
Employers matching contribution of first four percent (in hundredths) | 75.00% | ||
Vesting period of employer contributions | 5 years | ||
Employer contribution amount | $1.80 | $1.50 | $1.50 |
Annual contribution per employee (in hundredths) | 4.00% |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 |
COMMITMENTS AND CONTINGENCIES [Abstract] | |||
Total rent expense | $5.60 | $5.80 | $6 |
Future minimum rental payments under non-cancelable operating lease [Abstract] | |||
2016 | 5.5 | ||
2017 | 4.4 | ||
2018 | 3.4 | ||
2019 | 2.6 | ||
2020 | 1.2 | ||
Thereafter | 0.6 | ||
Total future minimum payments due | 17.7 | ||
Other non-cancelable contractual obligations | $8.70 |
BUSINESS_SEGMENT_INFORMATION_D
BUSINESS SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||||
In Thousands, unless otherwise specified | Jan. 31, 2015 | Oct. 31, 2014 | Jul. 31, 2014 | Apr. 30, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | Apr. 30, 2013 | Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 | |||
Region | ||||||||||||||
Segment | ||||||||||||||
BUSINESS SEGMENT INFORMATION [Abstract] | ||||||||||||||
Number of geographic regions | 4 | |||||||||||||
Number of operating segments | 1 | |||||||||||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||||||||||||
Revenue | $79,562 | $74,004 | $73,050 | $68,485 | $73,530 | $65,660 | $65,194 | $61,927 | $295,101 | $266,311 | $252,172 | |||
Capital expenditures | 4,577 | 4,779 | 3,071 | |||||||||||
Property and equipment, net | 33,154 | 33,085 | 33,154 | 33,085 | ||||||||||
Percentage of sales into Canada to North America total revenue (in hundredths) | 2.00% | 2.00% | 3.00% | |||||||||||
North America [Member] | Reportable Segments [Member] | ||||||||||||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||||||||||||
Revenue | 129,693 | [1] | 113,937 | [1] | 109,388 | [1] | ||||||||
Capital expenditures | 3,468 | 2,440 | 1,664 | |||||||||||
Property and equipment, net | 27,967 | 26,861 | 27,967 | 26,861 | ||||||||||
EMEA [Member] | Reportable Segments [Member] | ||||||||||||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||||||||||||
Revenue | 98,279 | 89,133 | 76,182 | |||||||||||
Capital expenditures | 482 | 1,224 | 1,071 | |||||||||||
Property and equipment, net | 3,617 | 4,677 | 3,617 | 4,677 | ||||||||||
Asia Pacific [Member] | Reportable Segments [Member] | ||||||||||||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||||||||||||
Revenue | 48,292 | 46,391 | 48,346 | |||||||||||
Capital expenditures | 576 | 1,029 | 264 | |||||||||||
Property and equipment, net | 1,455 | 1,394 | 1,455 | 1,394 | ||||||||||
Latin America [Member] | Reportable Segments [Member] | ||||||||||||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||||||||||||
Revenue | 18,837 | 16,850 | 18,256 | |||||||||||
Capital expenditures | 51 | 86 | 72 | |||||||||||
Property and equipment, net | $115 | $153 | $115 | $153 | ||||||||||
[1] | Sales into Canada accounted for 2%, 2% and 3% of North America total revenue 2015, 2014 and 2013, respectively. |
QUARTERLY_INFORMATION_Unaudite2
QUARTERLY INFORMATION (Unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Jan. 31, 2015 | Oct. 31, 2014 | Jul. 31, 2014 | Apr. 30, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | Apr. 30, 2013 | Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 |
Class of Stock [Line Items] | |||||||||||
Total revenue | $79,562 | $74,004 | $73,050 | $68,485 | $73,530 | $65,660 | $65,194 | $61,927 | $295,101 | $266,311 | $252,172 |
Total costs and expenses | 71,828 | 68,115 | 70,986 | 68,187 | 67,697 | 61,859 | 63,704 | 63,648 | |||
Gross margin | 45,653 | 40,933 | 39,831 | 37,054 | 42,831 | 36,755 | 36,417 | 33,302 | 163,471 | 149,305 | 144,579 |
Operating (loss) income | 7,734 | 5,889 | 2,064 | 298 | 5,833 | 3,801 | 1,490 | -1,721 | 15,985 | 9,403 | 11,808 |
Net ( loss) income | 6,947 | 5,090 | 985 | -76 | 4,346 | 2,049 | 1,254 | -1,263 | 12,946 | 6,386 | 6,639 |
Common Class A [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Net ( loss) income | 10,729 | 5,282 | 5,483 | ||||||||
Basic net ( loss) income per share (in dollars per share) | $0.44 | $0.33 | $0.06 | ($0.01) | $0.29 | $0.14 | $0.08 | ($0.08) | $0.84 | $0.42 | $0.44 |
Diluted net (loss) income per share (in dollars per share) | $0.42 | $0.31 | $0.06 | ($0.01) | $0.27 | $0.13 | $0.08 | ($0.08) | $0.79 | $0.41 | $0.42 |
Common Class B [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Net ( loss) income | $2,217 | $1,104 | $1,156 | ||||||||
Basic net ( loss) income per share (in dollars per share) | $0.37 | $0.27 | $0.05 | $0 | $0.24 | $0.11 | $0.07 | ($0.07) | $0.70 | $0.35 | $0.37 |
Diluted net (loss) income per share (in dollars per share) | $0.36 | $0.27 | $0.05 | $0 | $0.23 | $0.11 | $0.07 | ($0.07) | $0.68 | $0.34 | $0.35 |
SCHEDULE_II_SCHEDULE_OF_VALUAT1
SCHEDULE II SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Jan. 31, 2015 | Jan. 31, 2014 | Jan. 31, 2013 |
Allowance for Bad Debt [Member] | |||
Movement In Valuation Allowances And Reserves [Rollforward] | |||
Balance at Beginning of Period | $1,221 | $1,474 | $1,283 |
Charged to Statements of Income | 86 | 72 | 324 |
Write-Offs, Net of Recoveries | -39 | -313 | -131 |
Impact of Foreign Currency Translation | -74 | -12 | -2 |
Balance at End of Period | 1,194 | 1,221 | 1,474 |
Allowance for Sales Returns [Member] | |||
Movement In Valuation Allowances And Reserves [Rollforward] | |||
Balance at Beginning of Period | 1,229 | 1,036 | 1,184 |
Charged to Statements of Income | 768 | 982 | 413 |
Write-Offs, Net of Recoveries | -574 | -729 | -548 |
Impact of Foreign Currency Translation | -93 | -60 | -13 |
Balance at End of Period | 1,330 | 1,229 | 1,036 |
Total Allowance for Doubtful Accounts [Member] | |||
Movement In Valuation Allowances And Reserves [Rollforward] | |||
Balance at Beginning of Period | 2,450 | 2,510 | 2,467 |
Charged to Statements of Income | 854 | 1,054 | 737 |
Write-Offs, Net of Recoveries | -613 | -1,042 | -679 |
Impact of Foreign Currency Translation | -167 | -72 | -15 |
Balance at End of Period | $2,524 | $2,450 | $2,510 |