Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 30, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 | |
Entity Registrant Name | EVOLVING SYSTEMS INC | |
Trading Symbol | evol | |
Entity Central Index Key | 1052054 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 11,674,397 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $11,038 | $9,781 |
Contract receivables, net of allowance for doubtful accounts of $41 and $43 at March 31, 2015 and December 31, 2014, respectively | 5,232 | 9,182 |
Unbilled work-in-progress, net of allowance of $306 at March 31, 2015 and December 31, 2014 | 6,147 | 4,995 |
Deferred income taxes | 79 | 80 |
Prepaid and other current assets | 1,275 | 1,331 |
Total current assets | 23,771 | 25,369 |
Property and equipment, net | 626 | 659 |
Amortizable intangible assets, net | 584 | 608 |
Goodwill | 16,183 | 17,010 |
Long-term deferred income taxes | 582 | 586 |
Total assets | 41,746 | 44,232 |
Current liabilities: | ||
Current portion of capital lease obligations | 5 | 5 |
Accounts payable and accrued liabilities | 3,387 | 4,460 |
Income taxes payable | 532 | 1,227 |
Unearned revenue | 4,834 | 3,883 |
Total current liabilities | 8,758 | 9,575 |
Long-term liabilities: | ||
Capital lease obligations, net of current portion | 5 | 7 |
Contingent earn-out obligation | 178 | 178 |
Long-term unearned revenue | 270 | 420 |
Total liabilities | 9,211 | 10,180 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 2,000,000 shares authorized; no shares issued and outstanding as of March 31, 2015 and December 31, 2014 | ||
Common stock, $0.001 par value; 40,000,000 shares authorized; 11,850,356 shares issued and 11,671,467 outstanding as of March 31, 2015 and 11,843,564 shares issued and 11,664,675 outstanding as of December 31, 2014 | 12 | 12 |
Additional paid-in capital | 96,199 | 96,005 |
Treasury stock 178,889 shares as of March 31, 2015 and December 31, 2014, at cost | -1,253 | -1,253 |
Accumulated other comprehensive loss | -5,830 | -4,534 |
Accumulated deficit | -56,593 | -56,178 |
Total stockholders' equity | 32,535 | 34,052 |
Total liabilities and stockholders' equity | $41,746 | $44,232 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Condensed Consolidated Balance Sheets [Abstract] | ||
Allowance for doubtful accounts receivable | $41 | $43 |
Unbilled work-in-progress, allowance | $306 | $306 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 11,850,356 | 11,843,564 |
Common stock, shares outstanding | 11,671,467 | 11,664,675 |
Treasury Stock, Shares | 178,889 | 178,889 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements Of Operations (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
REVENUE | ||
License fees and services | $4,339 | $4,367 |
Customer support | 2,321 | 2,215 |
Total revenue | 6,660 | 6,582 |
COSTS OF REVENUE AND OPERATING EXPENSES | ||
Costs of license fees and services, excluding depreciation and amortization | 1,225 | 1,478 |
Costs of customer support, excluding depreciation and amortization | 388 | 420 |
Sales and marketing | 1,584 | 1,660 |
General and administrative | 907 | 834 |
Product development | 1,014 | 883 |
Depreciation | 96 | 46 |
Amortization | 24 | 23 |
Restructuring | 211 | |
Total costs of revenue and operating expenses | 5,238 | 5,555 |
Income from operations | 1,422 | 1,027 |
Other income (expense) | ||
Interest income | 5 | 3 |
Interest expense | -3 | -5 |
Foreign currency exchange loss | -125 | -96 |
Other (expense) income, net | -123 | -98 |
Income from operations before income taxes | 1,299 | 929 |
Income tax expense | 439 | 278 |
Net income | $860 | $651 |
Basic income per common share | $0.07 | $0.06 |
Diluted income per common share | $0.07 | $0.05 |
Cash dividend declared per common share | $0.11 | $0.10 |
Weighted average basic shares outstanding | 11,668 | 11,621 |
Weighted average diluted shares outstanding | 11,938 | 11,917 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements Of Comprehensive Income (Loss) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Condensed Consolidated Statements Of Comprehensive Income (Loss) [Abstract] | ||
Net income | $860 | $651 |
Other comprehensive income (loss): | ||
Foreign currency translation gain (loss) | -1,296 | 311 |
Other comprehensive income (loss) | -1,296 | 311 |
Comprehensive income (loss) | ($436) | $962 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements Of Changes In Stockholders' Equity (USD $) | Common Stock [Member] | Additional Paid-In Capital [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated (Deficit) [Member] | Total |
In Thousands, except Share data | ||||||
Balance at Dec. 31, 2014 | $12 | $96,005 | ($1,253) | ($4,534) | ($56,178) | $34,052 |
Balance, shares at Dec. 31, 2014 | 11,664,675 | |||||
Stock option exercises | 6 | 6 | ||||
Stock option exercises, shares | 5,062 | |||||
Common Stock issued pursuant to the Employee Stock Purchase Plan | 13 | 13 | ||||
Common Stock issued pursuant to the Employee Stock Purchase Plan, shares | 1,730 | |||||
Stock-based compensation expense | 89 | 89 | ||||
Excess tax benefits from stock-based compensation | 86 | 86 | ||||
Common stock cash dividends | -1,275 | -1,275 | ||||
Net income | 860 | 860 | ||||
Foreign currency translation adjustment | -1,296 | -1,296 | ||||
Balance at Mar. 31, 2015 | $12 | $96,199 | ($1,253) | ($5,830) | ($56,593) | $32,535 |
Balance, shares at Mar. 31, 2015 | 11,671,467 |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements Of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $860 | $651 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 96 | 46 |
Amortization of intangible assets | 24 | 23 |
Amortization of debt issuance costs | 2 | 4 |
Stock-based compensation | 89 | 88 |
Unrealized foreign currency transaction losses, net | 125 | 96 |
Provision for deferred income taxes | 2 | 54 |
Change in operating assets and liabilities: | ||
Contract receivables | 3,654 | 474 |
Unbilled work-in-progress | -1,385 | -737 |
Prepaid and other assets | 37 | 44 |
Accounts payable and accrued liabilities | -1,646 | -758 |
Unearned revenue | 977 | -308 |
Net cash provided by (used in) operating activities | 2,835 | -323 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | -71 | -90 |
Net cash used in investing activities | -71 | -90 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Capital lease payments | -1 | -3 |
Common stock cash dividends | -1,275 | -1,163 |
Excess tax benefits from stock-based compensation | 86 | 11 |
Proceeds from the issuance of stock | 19 | 110 |
Net cash used in financing activities | -1,171 | -1,045 |
Effect of exchange rate changes on cash | -336 | 79 |
Net (decrease) increase in cash and cash equivalents | 1,257 | -1,379 |
Cash and cash equivalents at beginning of period | 9,781 | 13,785 |
Cash and cash equivalents at end of period | 11,038 | 12,406 |
Supplemental disclosure of cash and non-cash financing transactions: | ||
Income taxes paid | 722 | 33 |
Issuance of common stock related to acquisition | $19 |
Basis_Of_Presentation
Basis Of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Basis Of Presentation [Abstract] | |
Basis Of Presentation | NOTE 1 — BASIS OF PRESENTATION |
Organization — We are a provider of software solutions and services to the wireless, wireline and cable markets. We maintain long-standing relationships with many of the largest wireless, wireline and cable companies worldwide. Our customers rely on us to develop, deploy, enhance, maintain and integrate complex, highly reliable software solutions for a range of Operations Support Systems (“OSS”). We offer software products and solutions focused on activation and provisioning: our service activation solution, TertioTM (“TSA”) used to activate complex bundles of voice, video and data services for traditional and next generation wireless and wireline networks; our SIM card activation solution, Dynamic SIM Allocation TM (“DSA”) used to dynamically allocate and assign resources to wireless devices that rely on SIM cards; our cloud-based (SaaS) service activation, self—service mobile applications and data enablement solutions to wireless carriers and Mobile Virtual Network Operators (MVNOs); our connected devices activation solution, Intelligent M2M Controller that supports the activation of M2M devices with intermittent or infrequent usage patterns; and our number inventory solution, Total Number Management™, (TNM) a scalable and fully automated solution that enables operators to reliably and efficiently manage their telephone numbers (i.e. SIMs, MSISDNs, IMSIs, ICCIDs, IPs) as well as other communication identifiers such as URLs and email addresses. | |
Interim Consolidated Financial Statements — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conformity with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures included in these financial statements are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements included in this document have been prepared on the same basis as the annual consolidated financial statements, and in our opinion reflect all adjustments, which include normal recurring adjustments necessary for a fair presentation in accordance with GAAP and SEC regulations for interim financial statements. The results for the three months ended March 31, 2015 are not necessarily indicative of the results that we will have for any subsequent period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes to those statements for the year ended December 31, 2014 included in our Annual Report on Form 10-K. | |
Use of Estimates — The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. We made estimates with respect to revenue recognition for estimated hours to complete projects accounted for using the percentage-of-completion method, allowance for doubtful accounts, income tax valuation allowance, fair values of long-lived assets, valuation of intangible assets and goodwill, useful lives for property, equipment and intangible assets, business combinations, capitalization of internal software development costs and fair value of stock-based compensation amounts. Actual results could differ from these estimates. | |
Foreign Currency — Our functional currency is the U.S. dollar. The functional currency of our foreign operations is the respective local currency for each foreign subsidiary. Assets and liabilities of foreign operations denominated in local currencies are translated at the spot rate in effect at the applicable reporting date. Our consolidated statements of operations are translated at the weighted average rate of exchange during the applicable period. The resulting unrealized cumulative translation adjustment is recorded as a component of accumulated other comprehensive loss in stockholders’ equity. Realized and unrealized transaction gains and losses generated by transactions denominated in a currency different from the functional currency of the applicable entity are recorded in other income (expense) in the consolidated statements of operations in the period in which they occur. | |
Principles of Consolidation — The consolidated financial statements include the accounts of Evolving Systems, Inc. and subsidiaries, all of which are wholly owned. All significant intercompany transactions and balances have been eliminated in consolidation. | |
Goodwill — Goodwill is the excess of acquisition cost of an acquired entity over the fair value of the identifiable net assets acquired. Goodwill is not amortized, but tested for impairment annually or whenever indicators of impairment exist. These indicators may include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business or other factors. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. | |
Intangible Assets — Amortizable intangible assets consist primarily of purchased software and licenses, customer contracts and relationships, trademarks and tradenames, and business partnerships acquired in conjunction with our purchase of Telespree Communications (“Evolving Systems Labs, Inc.”). These assets are amortized using the straight-line method over their estimated lives. | |
We assess the impairment of identifiable intangibles if events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. If we determine that the carrying value of intangibles and/or long-lived assets may not be recoverable, we compare the estimated undiscounted cash flows expected to result from the use of the asset and its eventual disposition to the asset’s carrying amount. If an amortizable intangible or long-lived asset is not deemed to be recoverable, we recognize an impairment loss representing the excess of the asset’s carrying value over its estimated fair value. | |
Fair Value Measurements — Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: | |
Level 1 — Quoted prices in active markets for identical assets or liabilities. | |
Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
Level 3 — Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. | |
Cash and Cash Equivalents — All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. | |
Revenue Recognition — We recognize revenue when an agreement is signed, the fee is fixed or determinable and collectability is reasonably assured. We recognize revenue from two primary sources: license fees and services, and customer support. The majority of our license fees and services revenue is generated from fixed-price contracts, which provide for licenses to our software products and services to customize such software to meet our customers’ use. When the customization services are determined to be essential to the functionality of the delivered software, we recognize revenue using the percentage-of-completion method of accounting. In these types of arrangements, we do not typically have Vendor Specific Objective Evidence (“VSOE”) of fair value on the license fee/services portion (services are related to customizing the software) of the arrangement due to the large amount of customization required by our customers; however, we do have VSOE for the warranty/maintenance services based on the renewal rate of the first year of maintenance in the arrangement. The license/services portion is recognized using the percentage-of-completion method of accounting and the warranty/maintenance services are separated based on the renewal rate in the contract and recognized ratably over the warranty or maintenance period. We estimate the percentage-of-completion for each contract based on the ratio of direct labor hours incurred to total estimated direct labor hours and recognize revenue based on the percent complete multiplied by the contract amount allocated to the license fee/services. Since estimated direct labor hours, and changes thereto, can have a significant impact on revenue recognition, these estimates are critical and we review them regularly. If the arrangement includes a customer acceptance provision, the hours to complete the acceptance testing are included in the total estimated direct labor hours; therefore, the related revenue is recognized as the acceptance testing is performed. Revenue is not recognized in full until the customer has provided proof of acceptance on the arrangement. Generally, our contracts are accounted for individually. However, when certain criteria are met, it may be necessary to account for two or more contracts as one to reflect the substance of the group of contracts. We record amounts billed in advance of services being performed as unearned revenue. Unbilled work-in-progress represents revenue earned but not yet billable under the terms of the fixed-price contracts. All such amounts are expected to be billed and collected within 12 months. | |
We may encounter budget and schedule changes or increases on fixed-price contracts caused by increased labor or overhead costs. We make adjustments to cost estimates in the period in which the facts requiring such revisions become known. We record estimated losses, if any, in the period in which current estimates of total contract revenue and contract costs indicate a loss. If revisions to cost estimates are obtained after the balance sheet date but before the issuance of the interim or annual financial statements, we make adjustments to the interim or annual financial statements accordingly. | |
In arrangements where the services are not essential to the functionality of the delivered software, we recognize license revenue when a license agreement has been signed, delivery and acceptance have occurred, the fee is fixed or determinable and collectability is reasonably assured. Where applicable, we unbundle and record as revenue fees from multiple element arrangements as the elements are delivered to the extent that VSOE of fair value of the undelivered elements exist. If VSOE for the undelivered elements does not exist, we defer fees from such arrangements until the earlier of the date that VSOE does exist on the undelivered elements or all of the elements have been delivered. | |
We recognize revenue from fixed-price service contracts using the proportional performance method of accounting, which is similar to the percentage-of-completion method described above. We recognize revenue from professional services provided pursuant to time-and-materials based contracts and training services as the services are performed, as that is when our obligation to our customers under such arrangements is fulfilled. | |
We recognize revenue from our Mobile Data Enablement (“MDE”) contracts based on the number of transactions per month multiplied by a factor based on a unique table for transaction volumes relating to each account. | |
We recognize customer support, including maintenance revenue, ratably over the service contract period. When maintenance is bundled with the original license fee arrangement, its fair value, based upon VSOE, is deferred and recognized during the periods when services are provided. | |
Stock-based Compensation — We account for stock-based compensation by applying a fair-value-based measurement method to account for share-based payment transactions with employees and directors. We record compensation costs associated with the vesting of unvested options on a straight-line basis over the vesting period. Stock-based compensation is a non-cash expense because we settle these obligations by issuing shares of our common stock instead of settling such obligations with cash payments. We use the Black-Scholes model to estimate the fair value of each option grant on the date of grant. This model requires the use of estimates for expected term of the options and expected volatility of the price of our common stock. | |
Comprehensive Income (Loss) — Comprehensive income (loss) consists of two components, net income and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains, and losses that under GAAP are recorded as an element of shareholders’ equity but are excluded from net income. Other comprehensive income (loss) consists of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency. | |
Income Taxes — We record deferred tax assets and liabilities for the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in the accompanying condensed consolidated balance sheets, as well as operating loss and tax credit carry-forwards. We measure deferred tax assets and liabilities using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. We reduce deferred tax assets by a valuation allowance if, based on available evidence, it is more likely than not that these benefits will not be realized. | |
We use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. | |
Recent Accounting Pronouncements – In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” Topic 606. This Update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. The guidance in this Update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to illustrate the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements that will provide users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a reporting organization’s contracts with customers. This ASU is effective retrospectively for fiscal years, and interim periods within those years beginning after December 15, 2016 for public companies and 2017 for non-public entities, however the FASB has proposed deferral of the effective date by one year. We do not expect the adoption of this standard to have a significant impact on the Company’s financial position and results of operations. | |
Goodwill_And_Intangible_Assets
Goodwill And Intangible Assets | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Goodwill And Intangible Assets [Abstract] | ||||||||||||||||||||
Goodwill And Intangible Assets | NOTE 2 — GOODWILL AND INTANGIBLE ASSETS | |||||||||||||||||||
Changes in the carrying amount of goodwill by reporting unit were as follows (in thousands): | ||||||||||||||||||||
License and Services | Customer Support | Total | ||||||||||||||||||
U.S. | U.K. | U.K. | Goodwill | |||||||||||||||||
Balance as of December 31, 2014 | $ | 1,097 | $ | 7,118 | $ | 8,795 | $ | 17,010 | ||||||||||||
Effects of changes in foreign | ||||||||||||||||||||
currency exchange rates (1) | - | -370 | -457 | -827 | ||||||||||||||||
Balance at March 31, 2015 | $ | 1,097 | $ | 6,748 | $ | 8,338 | $ | 16,183 | ||||||||||||
-1 | Represents the impact of foreign currency translation for instances when goodwill is recorded in foreign entities whose functional currency is also their local currency. Goodwill balances are translated into U.S. dollars using exchange rates in effect at period end. Adjustments related to foreign currency translation are included in other comprehensive income. | |||||||||||||||||||
We conducted our annual goodwill impairment test as of July 31, 2014, and we determined that goodwill was not impaired as of the test date. From July 31, 2014 through the date of this report, no events have occurred that we believe may have impaired goodwill. | ||||||||||||||||||||
We amortized identifiable intangible assets on a straight-line basis over their estimated lives ranging from one to seven years and include the cumulative effects of foreign currency exchange rates. As of March 31, 2015 and December 31, 2014, identifiable intangibles were as follows (in thousands): | ||||||||||||||||||||
31-Mar-15 | 31-Dec-14 | |||||||||||||||||||
Gross Amount | Accumulated Amortization | Net Carrying Amount | Gross Amount | Accumulated Amortization | Net Carrying Amount | Weighted-Average Amortization Period | ||||||||||||||
Purchased software | $ | 439 | $ | 78 | $ | 361 | $ | 439 | $ | 64 | $ | 375 | 4.6 yrs | |||||||
Trademarks and tradenames | 63 | 18 | 45 | 63 | 15 | 48 | 3.8 yrs | |||||||||||||
Customer relationships | 216 | 38 | 178 | 216 | 31 | 185 | 4.6 yrs | |||||||||||||
$ | 718 | $ | 134 | $ | 584 | $ | 718 | $ | 110 | $ | 608 | 4.5 yrs | ||||||||
Amortization expense of identifiable intangible assets was $24,000 and $23,000 for the three months ended March 31, 2015 and 2014, respectively. Expected future amortization expense related to identifiable intangibles based on our carrying amount as of March 31, 2015 was as follows (in thousands): | ||||||||||||||||||||
Twelve months ending March 31, | ||||||||||||||||||||
2016 | $ | 94 | ||||||||||||||||||
2017 | 94 | |||||||||||||||||||
2018 | 94 | |||||||||||||||||||
2019 | 89 | |||||||||||||||||||
2020 | 82 | |||||||||||||||||||
Thereafter | 131 | |||||||||||||||||||
$ | 584 | |||||||||||||||||||
Earnings_Per_Common_Share
Earnings Per Common Share | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
Earnings Per Common Share [Abstract] | |||||||
Earnings Per Common Share | NOTE 3 — EARNINGS PER COMMON SHARE | ||||||
We compute basic earnings per share (“EPS”) by dividing net income or loss available to common stockholders by the weighted average number of shares outstanding during the period, including common stock issuable under participating securities. We compute diluted EPS using the weighted average number of shares outstanding, including participating securities, plus all potentially dilutive common stock equivalents. Common stock equivalents consist of stock options. | |||||||
Our policy is to treat unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, as participating securities, included in the computation of both basic and diluted earnings per share. The following is the reconciliation of the denominator of the basic and diluted EPS computations (in thousands, except per share data): | |||||||
For the Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
Basic income per share: | |||||||
Net income available to common stockholders | $ | 860 | $ | 651 | |||
Basic weighted average shares outstanding | 11,668 | 11,621 | |||||
Basic income per share: | $ | 0.07 | $ | 0.06 | |||
Diluted income per share: | |||||||
Net income available to common stockholders | $ | 860 | $ | 651 | |||
Weighted average shares outstanding | 11,668 | 11,621 | |||||
Effect of dilutive securities - options | 270 | 296 | |||||
Diluted weighted average shares outstanding | 11,938 | 11,917 | |||||
Diluted income per share: | $ | 0.07 | $ | 0.05 | |||
For the three months ended March 31, 2015 and 2014, 0.3 million and 0.1 million shares, respectively, of common stock were excluded from the dilutive stock calculation because their exercise prices were greater than the average fair value of our common stock for the period. | |||||||
ShareBased_Compensation
Share-Based Compensation | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Share-Based Compensation [Abstract] | ||||||||||
Share-Based Compensation | NOTE 4 — SHARE-BASED COMPENSATION | |||||||||
We account for stock-based compensation by applying a fair-value-based measurement method to account for share-based payment transactions with employees and directors, and record compensation cost for all stock awards granted after January 1, 2006 and awards modified, repurchased, or cancelled after that date, using the modified prospective method. We record compensation costs associated with the vesting of unvested options on a straight-line basis over the vesting period. We recognized $0.1 million of compensation expense in the consolidated statements of operations, with respect to our stock-based compensation plans for the three months ended March 31, 2015 and 2014. The following table summarizes stock-based compensation expenses recorded in the consolidated statement of operations (in thousands): | ||||||||||
For the Three Months Ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Cost of license fees and services, excluding | ||||||||||
depreciation and amortization | $ | 22 | $ | 16 | ||||||
Cost of customer support, excluding | ||||||||||
depreciation and amortization | 2 | 2 | ||||||||
Sales and marketing | 7 | 11 | ||||||||
General and administrative | 24 | 42 | ||||||||
Product development | 34 | 17 | ||||||||
Total share based compensation | $ | 89 | $ | 88 | ||||||
Stock Incentive Plans | ||||||||||
In January 1996, our stockholders approved an Amended and Restated Stock Option Plan (the “Option Plan”). Under the Option Plan, as amended, 4,175,000 shares were reserved for issuance. Options issued under the Option Plan were at the discretion of the Board of Directors, including the vesting provisions of each stock option granted. Options were granted with an exercise price equal to the closing price of our common stock on the date of grant, generally vest over four years and expire no more than ten years from the date of grant. The Option Plan terminated on January 18, 2006; options granted before that date were not affected by the plan termination. At March 31, 2015 and December 31, 2014, 0.1 million options remained outstanding under the Option Plan. | ||||||||||
In June 2007, our stockholders approved the 2007 Stock Incentive Plan (the “2007 Stock Plan”) with a maximum of 1,000,000 shares reserved for issuance. In June 2010, our stockholders approved an amendment to the 2007 Stock Plan which increased the maximum shares that may be awarded under the plan to 1,250,000. In June 2013, our stockholders approved an amendment to the 2007 Stock Plan which increased the maximum shares that may be awarded under the plan to 1,502,209. Awards permitted under the 2007 Stock Plan include: Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Awards and Other Stock-Based Awards. Awards issued under the 2007 Stock Plan are at the discretion of the Board of Directors. As applicable, awards are granted with an exercise price equal to the closing price of our common stock on the date of grant, generally vest over four years for employees and one year for directors and expire no more than ten years from the date of grant. At March 31, 2015, there were approximately 27,000 shares available for grant under the 2007 Stock Plan, as amended. At March 31, 2015 and December 31, 2014, 0.6 million were issued and outstanding under the 2007 Stock Plan as amended, respectively. | ||||||||||
During the three months ended March 31, 2015 and 2014, there were no grants of restricted stock to members of our senior management. During the three months ended March 31, 2015 and 2014, 94 and 2,000 shares of restricted stock vested, respectively. No shares of restricted stock were forfeited during the three months ended March 31, 2015 and 2014. The fair market value of restricted shares for share-based compensation expensing is equal to the closing price of our common stock on the date of grant. Stock-based compensation expense includes $1,000 and $15,000 for the three months ended March 31, 2015 and 2014, respectively, of expense related to restricted stock grants. The restrictions on the stock awards are released quarterly, generally over two and four years for senior management and over one year for board members. | ||||||||||
The fair value of each option grant is estimated on the date of grant using the Black-Scholes model. The Black-Scholes model uses four assumptions to calculate the fair value of each option grant. The expected term of share options granted is derived using the simplified method, which we adopted in January 2008. The risk-free interest rate is based upon the rate currently available on zero-coupon U.S. Treasury instruments with a remaining term equal to the expected term of the stock options. The expected volatility is based upon historical volatility of our common stock over a period equal to the expected term of the stock options. The expected dividend yield is based upon historical and anticipated payment of dividends. The weighted-average assumptions used in the fair value calculations are as follows: | ||||||||||
For the Three Months Ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Expected term (years) | 6.0 | 5.9 | ||||||||
Risk-free interest rate | 1.30 | % | 1.69 | % | ||||||
Expected volatility | 51.48 | % | 55.98 | % | ||||||
Expected dividend yield | 4.95 | % | 3.90 | % | ||||||
The following is a summary of stock option activity under the plans for the three months ended March 31, 2015: | ||||||||||
Weighted- | ||||||||||
Average | ||||||||||
Weighted- | Remaining | Aggregate | ||||||||
Number of | Average | Contractual | Intrinsic | |||||||
Shares | Exercise | Term | Value | |||||||
(in thousands) | Price | (Years) | (in thousands) | |||||||
Options outstanding at December 31, 2014 | 630 | $ | 4.94 | 5.69 | $ | 2,959 | ||||
Options granted | 102 | 8.98 | ||||||||
Less options forfeited | -1 | 10.90 | ||||||||
Less options exercised | -5 | 1.22 | ||||||||
Options outstanding at March 31, 2015 | 726 | $ | 5.53 | 6.06 | $ | 2,659 | ||||
Options exercisable at March 31, 2015 | 501 | $ | 3.87 | 4.69 | $ | 2,580 | ||||
There were 102,000 and 154,500 stock options granted during the three months ended March 31, 2015 and 2014, respectively. The weighted-average grant-date fair value of stock options granted during the three months ended March 31, 2015 and 2014 was $2.78 and $3.90, respectively. As of March 31, 2015, there was approximately $0.7 million of total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted average period of 3.01 years. The total fair value of stock options vested during the three months ended March 31, 2015 and 2014 was approximately $0.2 million and $38,000, respectively. | ||||||||||
The deferred income tax benefits from stock option expense related to Evolving Systems U.K. totaled approximately $4,000 for the three months ended March 31, 2015 and 2014. | ||||||||||
Cash received from stock option exercises for the three months ended March 31, 2015 and 2014 was $6,000 and $0.1 million, respectively. | ||||||||||
Employee Stock Purchase Plan | ||||||||||
Under the Employee Stock Purchase Plan (“ESPP”), we are authorized to issue up to 550,000 shares. Employees may elect to have up to 15% of their gross compensation withheld through payroll deductions to purchase our common stock, capped at $25,000 annually and no more than 10,000 shares per offering period. The purchase price of the stock is 85% of the lower of the market price at the beginning or end of each three-month participation period. As of March 31, 2015, there were approximately 58,000 shares available for purchase. For the three months ended March 31, 2015 and 2014, we recorded compensation expense of $5,000 and $7,000, respectively, associated with grants under the ESPP which includes the fair value of the look-back feature of each grant as well as the 15% discount on the purchase price. This expense fluctuates each period primarily based on the level of employee participation. | ||||||||||
The fair value of each purchase made under our ESPP is estimated on the date of purchase using the Black-Scholes model. The Black-Scholes model uses four assumptions to calculate the fair value of each purchase. The expected term of each purchase is based upon the three-month participation period of each offering. The risk-free interest rate is based upon the rate currently available on zero-coupon U.S. Treasury instruments with a remaining term equal to the expected term of each offering. The expected volatility is based upon historical volatility of our common stock. The expected dividend yield is based upon historical and anticipated payment of dividends. The weighted average assumptions used in the fair value calculations are as follows: | ||||||||||
For the Three Months Ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Expected term (years) | 0.25 | 0.25 | ||||||||
Risk-free interest rate | 0.04 | % | 0.04 | % | ||||||
Expected volatility | 35.60 | % | 43.24 | % | ||||||
Expected dividend yield | 4.99 | % | 4.44 | % | ||||||
Cash received from employee stock plan purchases for the three months ended March 31, 2015 and 2014 was $22,000 and $26,000, respectively. | ||||||||||
We issued shares related to the ESPP of approximately 3,000 for the three months ended March 31, 2015 and 2014. | ||||||||||
Concentration_Of_Credit_Risk
Concentration Of Credit Risk | 3 Months Ended |
Mar. 31, 2015 | |
Concentration Of Credit Risk [Abstract] | |
Concentration Of Credit Risk | NOTE 5 — CONCENTRATION OF CREDIT RISK |
For the three months ended March 31, 2015, one significant customer (defined as contributing at least 10%) accounted for 10% of revenue from operations. The significant customer for the three months ended March 31, 2015 is a large telecommunications operator in the United Kingdom. For the three months ended March 31, 2014, two significant customers accounted for 28% (17% and 11%) of revenue from operations. The significant customers for the three months ended March 31, 2014 are large telecommunications operators in Europe and Mexico. | |
As of March 31, 2015, one significant customer accounted for approximately 26% of contract receivables and unbilled work-in-progress. This customer is a large telecommunication operator in Nigeria. As of December 31, 2014, three significant customers accounted for approximately 55% (26%, 16% and 13%) of contract receivables and unbilled work-in-progress. These customers are large telecommunications operators in Nigeria, Mexico and Europe. | |
LongTerm_Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2015 | |
Long-Term Debt [Abstract] | |
Long-Term Debt | NOTE 6 — LONG-TERM DEBT |
On October 31, 2014, we renewed our $5.0 million Loan and Security Agreement (the “Revolving Facility”). The $5.0 million Revolving Facility bears interest at the greater of 2.75% or the U.S.A. Prime Rate minus one half of one percent (0.5%). Prime Rate was 3.25% as of March 31, 2015. The Revolving Facility is secured by all assets of Evolving Systems, including a pledge, subject to certain limitations with respect to stock of foreign subsidiaries, of the stock of the existing and future direct subsidiaries of Evolving Systems. There is no mandated borrowing required against the Revolving Facility. To take an advance under the Revolving Facility, we must have a balance of $3.0 million in cash on deposit and have quarterly net income and a specified ratio of current assets to current liabilities, as defined in the Revolving Facility. The Revolving Facility requires us to pay an annual credit facility fee of $10,000. All accrued interest on outstanding borrowings under the Revolving Facility is paid monthly, with any outstanding balance due with a final maturity of October 22, 2016. As of March 31, 2015, we are in compliance with the covenants and have $5.0 million available to borrow under this Revolving Facility. We are evaluating the Company’s need and potential uses for the facility, in the course of managing the company’s ongoing liquidity requirements. | |
Income_Taxes
Income Taxes | 3 Months Ended | ||
Mar. 31, 2015 | |||
Income Taxes [Abstract] | |||
Income Taxes | NOTE 7 — INCOME TAXES | ||
We recorded net income tax expense of $0.4 million and $0.3 million for the three months ended March 31, 2015 and 2014, respectively. The net expense during the three months ended March 31, 2015 consisted of current income tax expense of $0.4 million. The current tax expense consists of income tax from our U.S., U.K. and India based operations. The net expense during the three months ended March 31, 2014 consisted of current income tax expense of $0.2 million and a deferred tax expense of $57,000. The current tax expense consists primarily of income tax from our U.S., U.K. and India based operations and unrecoverable foreign withholding taxes in the U.S. The deferred tax expense was primarily related to undistributed foreign earnings, a decrease in deferred tax assets related to accrued liabilities and capitalized expenses for tax purpose related to the acquisition of Evolving Systems Labs, Inc. | |||
Our effective tax rate was 34% for the three months ended March 31, 2015 and 2014. | |||
As of March 31, 2015 and December 31, 2014 we continued to maintain a valuation allowance on portions of our domestic net deferred tax asset. Such assets primarily consist of certain state Net Operating Loss (“NOL”) carryforwards, research and development tax credits and Alternative Minimum Tax (“AMT”) credits. The $0.7 million of net deferred tax assets as of March 31, 2015, were comprised of the following: | |||
31-Mar-15 | |||
Deferred tax assets: | |||
Net operating loss carryforwards | $ | 495 | |
Research & Development Credits | 303 | ||
AMT credits | 951 | ||
Stock Compensation | 670 | ||
Depreciable assets | 119 | ||
Intangibles | 199 | ||
Accrued liabilities and reserves | 528 | ||
Total deferred tax assets | 3,265 | ||
Deferred tax liabilities | |||
Undistributed Foreign Earnings | $ | -855 | |
Total deferred tax liability | -855 | ||
Net deferred tax assets, before valuation allowance | $ | 2,410 | |
Valuation allowance | -1,749 | ||
Net deferred tax asset | $ | 661 | |
We have unrecognized tax benefit NOL’s which are comprised of windfall tax benefits related to stock-based compensation. Due to a recent adopted accounting pronouncement, Accounting Standards Update No. 2014-09, topic 740 “Income Tax”, these NOL’s were deducted from our NOL carryforwards and are not included in the above summarized net deferred tax asset. When utilized, windfall tax benefits related to stock-based compensation are recorded as a reduction to our taxes payable when realized, with a corresponding credit to additional paid in capital, not income tax expense. | |||
As of March 31, 2015 and December 31, 2014 we had no liability for unrecognized tax benefits. | |||
We conduct business globally and, as a result, Evolving Systems, Inc. or one or more of our subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world, namely the United Kingdom and India. | |||
Stockholders_Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2015 | |
Stockholders' Equity [Abstract] | |
Stockholders' Equity | NOTE 8 — STOCKHOLDERS’ EQUITY |
Common Stock Dividend | |
On March 17, 2015, our Board of Directors declared a first quarter cash dividend of $0.11 per share, payable March 31, 2015, to stockholders of record March 24, 2015. | |
Any determination to declare a future quarterly dividend, as well as the amount of any cash dividend which may be declared, will be based on our financial position, earnings, financial covenants to which we are subject, earnings outlook and other relevant factors at that time. | |
Certain Anti-Takeover Provisions/Agreements with Stockholders | |
Our restated certificate of incorporation allows the board of directors to issue up to 2,000,000 shares of preferred stock and to determine the price, rights, preferences and privileges of those shares without any further vote or action by our stockholders. The rights of the holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. Issuance of preferred stock, while providing desired flexibility in connection with possible acquisitions and other corporate purposes, could make it more difficult for a third party to acquire a majority of our outstanding voting stock. As of March 31, 2015 and December 31, 2014, no shares of preferred stock were outstanding. | |
In addition, we are subject to the anti-takeover provisions of Section 203 of Delaware General Corporation Law which prohibit us from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in the prescribed manner. The application of Section 203 may have the effect of delaying or preventing changes in control of our management, which could adversely affect the market price of our common stock by discouraging or preventing takeover attempts that might result in the payment of a premium price to our stockholders. | |
Segment_Information
Segment Information | 3 Months Ended | |||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||
Segment Information [Abstract] | ||||||||||||||||||
Segment Information | NOTE 9 — SEGMENT INFORMATION | |||||||||||||||||
We define operating segments as components of our enterprise for which separate financial information is reviewed regularly by the chief operating decision-makers to evaluate performance and to make operating decisions. We have identified our Chief Executive Officer and Vice President of Finance as our chief operating decision-makers (“CODM”). These chief operating decision makers review revenues by segment and review overall results of operations. | ||||||||||||||||||
We currently operate our business as two operating segments based on revenue type: license fees and services revenue, and customer support revenue (as shown on the consolidated statements of operations). License fees and services (“L&S”) revenue represents the fees received from the license of software products and those services directly related to the delivery of the licensed products, such as fees for custom development and integration services. Customer support (“CS”) revenue includes annual support fees, recurring maintenance fees, fees for maintenance upgrades and warranty services. Warranty services that are similar to software maintenance services are typically bundled with a license sale. Total assets by segment have not been disclosed as the information is not available to the chief operating decision-makers. | ||||||||||||||||||
Segment information is as follows (in thousands): | ||||||||||||||||||
For the Three Months Ended March 31, | ||||||||||||||||||
2015 | 2014 | |||||||||||||||||
Revenue | ||||||||||||||||||
License fees and services | $ | 4,339 | $ | 4,367 | ||||||||||||||
Customer support | 2,321 | 2,215 | ||||||||||||||||
Total revenue | 6,660 | 6,582 | ||||||||||||||||
Revenue less costs of revenue, excluding | ||||||||||||||||||
depreciation and amortization | ||||||||||||||||||
License fees and services | 3,114 | 2,889 | ||||||||||||||||
Customer support | 1,933 | 1,795 | ||||||||||||||||
5,047 | 4,684 | |||||||||||||||||
Unallocated Costs | ||||||||||||||||||
Other operating expenses | 3,505 | 3,377 | ||||||||||||||||
Depreciation and amortization | 120 | 69 | ||||||||||||||||
Restructuring | - | 211 | ||||||||||||||||
Interest income | -5 | -3 | ||||||||||||||||
Interest expense | 3 | 5 | ||||||||||||||||
Foreign currency exchange loss | 125 | 96 | ||||||||||||||||
Income from operations before income taxes | $ | 1,299 | $ | 929 | ||||||||||||||
Geographic Regions | ||||||||||||||||||
We are headquartered in Englewood, a suburb of Denver, Colorado. We use customer locations as the basis for attributing revenues to individual countries. We provide products and services on a global basis through our headquarters, our London-based Evolving Systems U.K. subsidiary and our San Francisco-based Evolving Systems Labs, Inc. subsidiary. Additionally, personnel in Bangalore, India provide software development services to our global operations. Financial information relating to operations by geographic region is as follows (in thousands): | ||||||||||||||||||
For the Three Months Ended March 31, | ||||||||||||||||||
2015 | 2014 | |||||||||||||||||
Revenue | L&S | CS | Total | L&S | CS | Total | ||||||||||||
United Kingdom | $ | 538 | $ | 491 | $ | 1,029 | $ | 1,098 | $ | 500 | $ | 1,598 | ||||||
India | 643 | 79 | 722 | 126 | - | 126 | ||||||||||||
Nigeria | 112 | 119 | 231 | 631 | 91 | 722 | ||||||||||||
Mexico | 316 | 117 | 433 | 588 | 114 | 702 | ||||||||||||
Other | 2,730 | 1,515 | 4,245 | 1,924 | 1,510 | 3,434 | ||||||||||||
Total revenues | $ | 4,339 | $ | 2,321 | $ | 6,660 | $ | 4,367 | $ | 2,215 | $ | 6,582 | ||||||
March 31, | December 31, | |||||||||||||||||
Long-lived assets, net | 2015 | 2014 | ||||||||||||||||
United States | $ | 1,967 | $ | 1,998 | ||||||||||||||
United Kingdom | 15,259 | 16,091 | ||||||||||||||||
Other | 167 | 188 | ||||||||||||||||
$ | 17,393 | $ | 18,277 | |||||||||||||||
Commitments_And_Contingencies
Commitments And Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Commitments And Contingencies [Abstract] | |
Commitments And Contingencies | NOTE 10 — COMMITMENTS AND CONTINGENCIES |
(a) Other Commitments | |
As permitted under Delaware law, we have agreements with officers and directors under which we agree to indemnify them for certain events or occurrences while the officer or director is, or was, serving at our request in this capacity. The term of the indemnification period is indefinite. There is no limit on the amount of future payments we could be required to make under these indemnification agreements; however, we maintain Director and Officer insurance policies, as well as an Employment Practices Liability Insurance Policy, that may enable us to recover a portion of any amounts paid. As a result of our insurance policy coverage, we believe the estimated fair value of these indemnification agreements is minimal. Accordingly, there were no liabilities recorded for these agreements as of March 31, 2015 or December 31, 2014. | |
We enter into standard indemnification terms with customers and suppliers, in the ordinary course of business, for third party claims arising under our contracts. In addition, as we may subcontract the development of deliverables under customer contracts, we could be required to indemnify customers for work performed by subcontractors. Depending upon the nature of the indemnification, the potential amount of future payments we could be required to make under these indemnification agreements may be unlimited. We may be able to recover damages from a subcontractor or other supplier if the indemnification results from the subcontractor’s or supplier’s failure to perform. To the extent we are unable to recover damages from a subcontractor or other supplier, we could be required to reimburse the indemnified party for the full amount. We have never incurred costs to defend lawsuits or settle claims relating to an indemnification. As a result, we believe the estimated fair value of these agreements is minimal. Accordingly, there were no liabilities recorded for these agreements as of March 31, 2015 or December 31, 2014. | |
Our standard license agreements contain product warranties that the software will be free of material defects and will operate in accordance with the stated requirements for a limited period of time. The product warranty provisions require us to cure any defects through any reasonable means. We believe the estimated fair value of the product warranty provisions in the license agreements in place with our customers is minimal. Accordingly, there were no liabilities recorded for these product warranty provisions as of March 31, 2015 or December 31, 2014. | |
Our software arrangements generally include a product indemnification provision whereby we will indemnify and defend a customer in actions brought against the customer for claims that our products infringe upon a copyright, trade secret, or valid patent of a third party. We have not historically incurred any significant costs related to product indemnification claims. Accordingly, there were no liabilities recorded for these indemnification provisions as of March 31, 2015 or December 31, 2014. | |
(b) Litigation | |
From time to time, we are involved in various legal matters arising in the normal course of business. We do not expect the outcome of such proceedings, either individually or in the aggregate, to have a material effect on our financial position, cash flows or results of operations. | |
Restructuring
Restructuring | 3 Months Ended |
Mar. 31, 2015 | |
Restructuring [Abstract] | |
Restructuring | NOTE 11 – RESTRUCTURING |
During the first quarter of 2014, we undertook a reduction in workforce involving the termination of employees resulting in an expense of $0.2 million primarily related to severance for the affected employees. The reduction in workforce was related to the consolidations of duplicative functions and alignment of staff with ongoing business activity as a result of the acquisition of Evolving Systems Labs, Inc. in the fourth quarter of 2013. There was no restructuring expense for the three months ended March 31, 2015. | |
There was no restructuring liability as of March 31, 2015 or December 31, 2014. | |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 12 — SUBSEQUENT EVENTS |
On May 5, 2015, our Board of Directors declared a second quarter cash dividend of $0.11 per share, payable May 29, 2015, to stockholders of record May 22, 2015. | |
Basis_Of_Presentation_Policy
Basis Of Presentation (Policy) | 3 Months Ended |
Mar. 31, 2015 | |
Basis Of Presentation [Abstract] | |
Organization | Organization — We are a provider of software solutions and services to the wireless, wireline and cable markets. We maintain long-standing relationships with many of the largest wireless, wireline and cable companies worldwide. Our customers rely on us to develop, deploy, enhance, maintain and integrate complex, highly reliable software solutions for a range of Operations Support Systems (“OSS”). We offer software products and solutions focused on activation and provisioning: our service activation solution, TertioTM (“TSA”) used to activate complex bundles of voice, video and data services for traditional and next generation wireless and wireline networks; our SIM card activation solution, Dynamic SIM Allocation TM (“DSA”) used to dynamically allocate and assign resources to wireless devices that rely on SIM cards; our cloud-based (SaaS) service activation, self—service mobile applications and data enablement solutions to wireless carriers and Mobile Virtual Network Operators (MVNOs); our connected devices activation solution, Intelligent M2M Controller that supports the activation of M2M devices with intermittent or infrequent usage patterns; and our number inventory solution, Total Number Management™, (TNM) a scalable and fully automated solution that enables operators to reliably and efficiently manage their telephone numbers (i.e. SIMs, MSISDNs, IMSIs, ICCIDs, IPs) as well as other communication identifiers such as URLs and email addresses. |
Interim Consolidated Financial Statements | Interim Consolidated Financial Statements — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conformity with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures included in these financial statements are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements included in this document have been prepared on the same basis as the annual consolidated financial statements, and in our opinion reflect all adjustments, which include normal recurring adjustments necessary for a fair presentation in accordance with GAAP and SEC regulations for interim financial statements. The results for the three months ended March 31, 2015 are not necessarily indicative of the results that we will have for any subsequent period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes to those statements for the year ended December 31, 2014 included in our Annual Report on Form 10-K. |
Use Of Estimates | Use of Estimates — The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. We made estimates with respect to revenue recognition for estimated hours to complete projects accounted for using the percentage-of-completion method, allowance for doubtful accounts, income tax valuation allowance, fair values of long-lived assets, valuation of intangible assets and goodwill, useful lives for property, equipment and intangible assets, business combinations, capitalization of internal software development costs and fair value of stock-based compensation amounts. Actual results could differ from these estimates. |
Foreign Currency | Foreign Currency — Our functional currency is the U.S. dollar. The functional currency of our foreign operations is the respective local currency for each foreign subsidiary. Assets and liabilities of foreign operations denominated in local currencies are translated at the spot rate in effect at the applicable reporting date. Our consolidated statements of operations are translated at the weighted average rate of exchange during the applicable period. The resulting unrealized cumulative translation adjustment is recorded as a component of accumulated other comprehensive loss in stockholders’ equity. Realized and unrealized transaction gains and losses generated by transactions denominated in a currency different from the functional currency of the applicable entity are recorded in other income (expense) in the consolidated statements of operations in the period in which they occur. |
Principles Of Consolidation | Principles of Consolidation — The consolidated financial statements include the accounts of Evolving Systems, Inc. and subsidiaries, all of which are wholly owned. All significant intercompany transactions and balances have been eliminated in consolidation. |
Goodwill | Goodwill — Goodwill is the excess of acquisition cost of an acquired entity over the fair value of the identifiable net assets acquired. Goodwill is not amortized, but tested for impairment annually or whenever indicators of impairment exist. These indicators may include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business or other factors. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. |
Intangible Assets | Intangible Assets — Amortizable intangible assets consist primarily of purchased software and licenses, customer contracts and relationships, trademarks and tradenames, and business partnerships acquired in conjunction with our purchase of Telespree Communications (“Evolving Systems Labs, Inc.”). These assets are amortized using the straight-line method over their estimated lives. |
We assess the impairment of identifiable intangibles if events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. If we determine that the carrying value of intangibles and/or long-lived assets may not be recoverable, we compare the estimated undiscounted cash flows expected to result from the use of the asset and its eventual disposition to the asset’s carrying amount. If an amortizable intangible or long-lived asset is not deemed to be recoverable, we recognize an impairment loss representing the excess of the asset’s carrying value over its estimated fair value. | |
Fair Value Measurements | Fair Value Measurements — Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: |
Level 1 — Quoted prices in active markets for identical assets or liabilities. | |
Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
Level 3 — Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. | |
Cash And Cash Equivalents | Cash and Cash Equivalents — All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. |
Revenue Recognition | Revenue Recognition — We recognize revenue when an agreement is signed, the fee is fixed or determinable and collectability is reasonably assured. We recognize revenue from two primary sources: license fees and services, and customer support. The majority of our license fees and services revenue is generated from fixed-price contracts, which provide for licenses to our software products and services to customize such software to meet our customers’ use. When the customization services are determined to be essential to the functionality of the delivered software, we recognize revenue using the percentage-of-completion method of accounting. In these types of arrangements, we do not typically have Vendor Specific Objective Evidence (“VSOE”) of fair value on the license fee/services portion (services are related to customizing the software) of the arrangement due to the large amount of customization required by our customers; however, we do have VSOE for the warranty/maintenance services based on the renewal rate of the first year of maintenance in the arrangement. The license/services portion is recognized using the percentage-of-completion method of accounting and the warranty/maintenance services are separated based on the renewal rate in the contract and recognized ratably over the warranty or maintenance period. We estimate the percentage-of-completion for each contract based on the ratio of direct labor hours incurred to total estimated direct labor hours and recognize revenue based on the percent complete multiplied by the contract amount allocated to the license fee/services. Since estimated direct labor hours, and changes thereto, can have a significant impact on revenue recognition, these estimates are critical and we review them regularly. If the arrangement includes a customer acceptance provision, the hours to complete the acceptance testing are included in the total estimated direct labor hours; therefore, the related revenue is recognized as the acceptance testing is performed. Revenue is not recognized in full until the customer has provided proof of acceptance on the arrangement. Generally, our contracts are accounted for individually. However, when certain criteria are met, it may be necessary to account for two or more contracts as one to reflect the substance of the group of contracts. We record amounts billed in advance of services being performed as unearned revenue. Unbilled work-in-progress represents revenue earned but not yet billable under the terms of the fixed-price contracts. All such amounts are expected to be billed and collected within 12 months. |
We may encounter budget and schedule changes or increases on fixed-price contracts caused by increased labor or overhead costs. We make adjustments to cost estimates in the period in which the facts requiring such revisions become known. We record estimated losses, if any, in the period in which current estimates of total contract revenue and contract costs indicate a loss. If revisions to cost estimates are obtained after the balance sheet date but before the issuance of the interim or annual financial statements, we make adjustments to the interim or annual financial statements accordingly. | |
In arrangements where the services are not essential to the functionality of the delivered software, we recognize license revenue when a license agreement has been signed, delivery and acceptance have occurred, the fee is fixed or determinable and collectability is reasonably assured. Where applicable, we unbundle and record as revenue fees from multiple element arrangements as the elements are delivered to the extent that VSOE of fair value of the undelivered elements exist. If VSOE for the undelivered elements does not exist, we defer fees from such arrangements until the earlier of the date that VSOE does exist on the undelivered elements or all of the elements have been delivered. | |
We recognize revenue from fixed-price service contracts using the proportional performance method of accounting, which is similar to the percentage-of-completion method described above. We recognize revenue from professional services provided pursuant to time-and-materials based contracts and training services as the services are performed, as that is when our obligation to our customers under such arrangements is fulfilled. | |
We recognize revenue from our Mobile Data Enablement (“MDE”) contracts based on the number of transactions per month multiplied by a factor based on a unique table for transaction volumes relating to each account. | |
We recognize customer support, including maintenance revenue, ratably over the service contract period. When maintenance is bundled with the original license fee arrangement, its fair value, based upon VSOE, is deferred and recognized during the periods when services are provided. | |
Stock-Based Compensation | Stock-based Compensation — We account for stock-based compensation by applying a fair-value-based measurement method to account for share-based payment transactions with employees and directors. We record compensation costs associated with the vesting of unvested options on a straight-line basis over the vesting period. Stock-based compensation is a non-cash expense because we settle these obligations by issuing shares of our common stock instead of settling such obligations with cash payments. We use the Black-Scholes model to estimate the fair value of each option grant on the date of grant. This model requires the use of estimates for expected term of the options and expected volatility of the price of our common stock. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) — Comprehensive income (loss) consists of two components, net income and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains, and losses that under GAAP are recorded as an element of shareholders’ equity but are excluded from net income. Other comprehensive income (loss) consists of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency. |
Income Taxes | Income Taxes — We record deferred tax assets and liabilities for the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in the accompanying condensed consolidated balance sheets, as well as operating loss and tax credit carry-forwards. We measure deferred tax assets and liabilities using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. We reduce deferred tax assets by a valuation allowance if, based on available evidence, it is more likely than not that these benefits will not be realized. |
We use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements – In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” Topic 606. This Update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. The guidance in this Update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to illustrate the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements that will provide users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a reporting organization’s contracts with customers. This ASU is effective retrospectively for fiscal years, and interim periods within those years beginning after December 15, 2016 for public companies and 2017 for non-public entities, however the FASB has proposed deferral of the effective date by one year. We do not expect the adoption of this standard to have a significant impact on the Company’s financial position and results of operations. |
Goodwill_And_Intangible_Assets1
Goodwill And Intangible Assets (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Goodwill And Intangible Assets [Abstract] | ||||||||||||||||||||
Summary Of Changes In Carrying Amount Of Goodwill | ||||||||||||||||||||
License and Services | Customer Support | Total | ||||||||||||||||||
U.S. | U.K. | U.K. | Goodwill | |||||||||||||||||
Balance as of December 31, 2014 | $ | 1,097 | $ | 7,118 | $ | 8,795 | $ | 17,010 | ||||||||||||
Effects of changes in foreign | ||||||||||||||||||||
currency exchange rates (1) | - | -370 | -457 | -827 | ||||||||||||||||
Balance at March 31, 2015 | $ | 1,097 | $ | 6,748 | $ | 8,338 | $ | 16,183 | ||||||||||||
-1 | Represents the impact of foreign currency translation for instances when goodwill is recorded in foreign entities whose functional currency is also their local currency. Goodwill balances are translated into U.S. dollars using exchange rates in effect at period end. Adjustments related to foreign currency translation are included in other comprehensive income. | |||||||||||||||||||
Summary Of Identifiable Intangible Assets | ||||||||||||||||||||
31-Mar-15 | 31-Dec-14 | |||||||||||||||||||
Gross Amount | Accumulated Amortization | Net Carrying Amount | Gross Amount | Accumulated Amortization | Net Carrying Amount | Weighted-Average Amortization Period | ||||||||||||||
Purchased software | $ | 439 | $ | 78 | $ | 361 | $ | 439 | $ | 64 | $ | 375 | 4.6 yrs | |||||||
Trademarks and tradenames | 63 | 18 | 45 | 63 | 15 | 48 | 3.8 yrs | |||||||||||||
Customer relationships | 216 | 38 | 178 | 216 | 31 | 185 | 4.6 yrs | |||||||||||||
$ | 718 | $ | 134 | $ | 584 | $ | 718 | $ | 110 | $ | 608 | 4.5 yrs | ||||||||
Summary Of Expected Future Amortization Expense Related To Identifiable Intangibles | ||||||||||||||||||||
Twelve months ending March 31, | ||||||||||||||||||||
2016 | $ | 94 | ||||||||||||||||||
2017 | 94 | |||||||||||||||||||
2018 | 94 | |||||||||||||||||||
2019 | 89 | |||||||||||||||||||
2020 | 82 | |||||||||||||||||||
Thereafter | 131 | |||||||||||||||||||
$ | 584 | |||||||||||||||||||
Earnings_Per_Common_Share_Tabl
Earnings Per Common Share (Tables) | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
Earnings Per Common Share [Abstract] | |||||||
Summary Of Basic And Diluted Earnings Per Share | |||||||
For the Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
Basic income per share: | |||||||
Net income available to common stockholders | $ | 860 | $ | 651 | |||
Basic weighted average shares outstanding | 11,668 | 11,621 | |||||
Basic income per share: | $ | 0.07 | $ | 0.06 | |||
Diluted income per share: | |||||||
Net income available to common stockholders | $ | 860 | $ | 651 | |||
Weighted average shares outstanding | 11,668 | 11,621 | |||||
Effect of dilutive securities - options | 270 | 296 | |||||
Diluted weighted average shares outstanding | 11,938 | 11,917 | |||||
Diluted income per share: | $ | 0.07 | $ | 0.05 | |||
ShareBased_Compensation_Tables
Share-Based Compensation (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Summary Of Stock-Based Compensation Expenses | ||||||||||
For the Three Months Ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Cost of license fees and services, excluding | ||||||||||
depreciation and amortization | $ | 22 | $ | 16 | ||||||
Cost of customer support, excluding | ||||||||||
depreciation and amortization | 2 | 2 | ||||||||
Sales and marketing | 7 | 11 | ||||||||
General and administrative | 24 | 42 | ||||||||
Product development | 34 | 17 | ||||||||
Total share based compensation | $ | 89 | $ | 88 | ||||||
Summary Of Stock Option Activity | ||||||||||
Weighted- | ||||||||||
Average | ||||||||||
Weighted- | Remaining | Aggregate | ||||||||
Number of | Average | Contractual | Intrinsic | |||||||
Shares | Exercise | Term | Value | |||||||
(in thousands) | Price | (Years) | (in thousands) | |||||||
Options outstanding at December 31, 2014 | 630 | $ | 4.94 | 5.69 | $ | 2,959 | ||||
Options granted | 102 | 8.98 | ||||||||
Less options forfeited | -1 | 10.90 | ||||||||
Less options exercised | -5 | 1.22 | ||||||||
Options outstanding at March 31, 2015 | 726 | $ | 5.53 | 6.06 | $ | 2,659 | ||||
Options exercisable at March 31, 2015 | 501 | $ | 3.87 | 4.69 | $ | 2,580 | ||||
Stock Incentive Plans [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Assumptions For Weighted Average Fair Value Of Stock Options | ||||||||||
For the Three Months Ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Expected term (years) | 6.0 | 5.9 | ||||||||
Risk-free interest rate | 1.30 | % | 1.69 | % | ||||||
Expected volatility | 51.48 | % | 55.98 | % | ||||||
Expected dividend yield | 4.95 | % | 3.90 | % | ||||||
Employee Stock Purchase Plan [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Assumptions For Weighted Average Fair Value Of Stock Options | ||||||||||
For the Three Months Ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Expected term (years) | 0.25 | 0.25 | ||||||||
Risk-free interest rate | 0.04 | % | 0.04 | % | ||||||
Expected volatility | 35.60 | % | 43.24 | % | ||||||
Expected dividend yield | 4.99 | % | 4.44 | % | ||||||
Income_Taxes_Tables
Income Taxes (Tables) | 3 Months Ended | ||
Mar. 31, 2015 | |||
Income Taxes [Abstract] | |||
Components Of Deferred Tax Assets And Liabilities | |||
31-Mar-15 | |||
Deferred tax assets: | |||
Net operating loss carryforwards | $ | 495 | |
Research & Development Credits | 303 | ||
AMT credits | 951 | ||
Stock Compensation | 670 | ||
Depreciable assets | 119 | ||
Intangibles | 199 | ||
Accrued liabilities and reserves | 528 | ||
Total deferred tax assets | 3,265 | ||
Deferred tax liabilities | |||
Undistributed Foreign Earnings | $ | -855 | |
Total deferred tax liability | -855 | ||
Net deferred tax assets, before valuation allowance | $ | 2,410 | |
Valuation allowance | -1,749 | ||
Net deferred tax asset | $ | 661 | |
Segment_Information_Tables
Segment Information (Tables) | 3 Months Ended | |||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||
Segment Information [Abstract] | ||||||||||||||||||
Segment Information | ||||||||||||||||||
For the Three Months Ended March 31, | ||||||||||||||||||
2015 | 2014 | |||||||||||||||||
Revenue | ||||||||||||||||||
License fees and services | $ | 4,339 | $ | 4,367 | ||||||||||||||
Customer support | 2,321 | 2,215 | ||||||||||||||||
Total revenue | 6,660 | 6,582 | ||||||||||||||||
Revenue less costs of revenue, excluding | ||||||||||||||||||
depreciation and amortization | ||||||||||||||||||
License fees and services | 3,114 | 2,889 | ||||||||||||||||
Customer support | 1,933 | 1,795 | ||||||||||||||||
5,047 | 4,684 | |||||||||||||||||
Unallocated Costs | ||||||||||||||||||
Other operating expenses | 3,505 | 3,377 | ||||||||||||||||
Depreciation and amortization | 120 | 69 | ||||||||||||||||
Restructuring | - | 211 | ||||||||||||||||
Interest income | -5 | -3 | ||||||||||||||||
Interest expense | 3 | 5 | ||||||||||||||||
Foreign currency exchange loss | 125 | 96 | ||||||||||||||||
Income from operations before income taxes | $ | 1,299 | $ | 929 | ||||||||||||||
Financial Information Relating To Operations By Geographic Region | For the Three Months Ended March 31, | |||||||||||||||||
2015 | 2014 | |||||||||||||||||
Revenue | L&S | CS | Total | L&S | CS | Total | ||||||||||||
United Kingdom | $ | 538 | $ | 491 | $ | 1,029 | $ | 1,098 | $ | 500 | $ | 1,598 | ||||||
India | 643 | 79 | 722 | 126 | - | 126 | ||||||||||||
Nigeria | 112 | 119 | 231 | 631 | 91 | 722 | ||||||||||||
Mexico | 316 | 117 | 433 | 588 | 114 | 702 | ||||||||||||
Other | 2,730 | 1,515 | 4,245 | 1,924 | 1,510 | 3,434 | ||||||||||||
Total revenues | $ | 4,339 | $ | 2,321 | $ | 6,660 | $ | 4,367 | $ | 2,215 | $ | 6,582 | ||||||
March 31, | December 31, | |||||||||||||||||
Long-lived assets, net | 2015 | 2014 | ||||||||||||||||
United States | $ | 1,967 | $ | 1,998 | ||||||||||||||
United Kingdom | 15,259 | 16,091 | ||||||||||||||||
Other | 167 | 188 | ||||||||||||||||
$ | 17,393 | $ | 18,277 | |||||||||||||||
Basis_Of_Presentation_Details
Basis Of Presentation (Details) | 3 Months Ended |
Mar. 31, 2015 | |
item | |
Basis Of Presentation [Abstract] | |
Number of recognized sources for revenue | 2 |
Time period for unearned revenue to be billed and collected | 12 months |
Goodwill_And_Intangible_Assets2
Goodwill And Intangible Assets (Narrative) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Goodwill And Intangible Assets [Line Items] | ||
Amortization of intangible assets | $24 | $23 |
Minimum [Member] | ||
Goodwill And Intangible Assets [Line Items] | ||
Estimated useful life of intangible asset | 1 year | |
Maximum [Member] | ||
Goodwill And Intangible Assets [Line Items] | ||
Estimated useful life of intangible asset | 7 years |
Goodwill_And_Intangible_Assets3
Goodwill And Intangible Assets (Summary Of Changes In Carrying Amount Of Goodwill) (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 | |
Goodwill And Intangible Assets [Line Items] | |||
Beginning Balance | $17,010 | ||
Effects of changes in foreign currency exchange rates | -827 | [1] | |
Ending Balance | 16,183 | ||
United States [Member] | License Fees And Services [Member] | |||
Goodwill And Intangible Assets [Line Items] | |||
Beginning Balance | 1,097 | ||
Ending Balance | 1,097 | 1,097 | |
United Kingdom [Member] | License Fees And Services [Member] | |||
Goodwill And Intangible Assets [Line Items] | |||
Beginning Balance | 7,118 | ||
Effects of changes in foreign currency exchange rates | -370 | [1] | |
Ending Balance | 6,748 | ||
United Kingdom [Member] | Customer Support [Member] | |||
Goodwill And Intangible Assets [Line Items] | |||
Beginning Balance | 8,795 | ||
Effects of changes in foreign currency exchange rates | -457 | [1] | |
Ending Balance | $8,338 | ||
[1] | Represents the impact of foreign currency translation for instances when goodwill is recorded in foreign entities whose functional currency is also their local currency. Goodwill balances are translated into U.S. dollars using exchange rates in effect at period end. Adjustments related to foreign currency translation are included in other comprehensive income. |
Goodwill_And_Intangible_Assets4
Goodwill And Intangible Assets (Summary Of Identifiable Intangible Assets) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $718 | $718 |
Accumulated Amortization | 134 | 110 |
Net Carrying Amount | 584 | 608 |
Weighted-Average Amortization Period | 4 years 6 months | |
Purchased Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 439 | 439 |
Accumulated Amortization | 78 | 64 |
Net Carrying Amount | 361 | 375 |
Weighted-Average Amortization Period | 4 years 7 months 6 days | |
Trademarks And Tradenames [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 63 | 63 |
Accumulated Amortization | 18 | 15 |
Net Carrying Amount | 45 | 48 |
Weighted-Average Amortization Period | 3 years 9 months 18 days | |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 216 | 216 |
Accumulated Amortization | 38 | 31 |
Net Carrying Amount | $178 | $185 |
Weighted-Average Amortization Period | 4 years 7 months 6 days |
Goodwill_And_Intangible_Assets5
Goodwill And Intangible Assets (Summary Of Expected Future Amortization Expense Related To Identifiable Intangibles) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Goodwill And Intangible Assets [Abstract] | ||
2016 | $94 | |
2017 | 94 | |
2018 | 94 | |
2019 | 89 | |
2020 | 82 | |
Thereafter | 131 | |
Net Carrying Amount | $584 | $608 |
Earnings_Per_Common_Share_Deta
Earnings Per Common Share (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Earnings Per Common Share [Abstract] | ||
Net income available to common stockholders | $860 | $651 |
Basic weighted average shares outstanding | 11,668,000 | 11,621,000 |
Basic income per share | $0.07 | $0.06 |
Effect of dilutive securities - options | 270,000 | 296,000 |
Diluted weighted average shares outstanding | 11,938,000 | 11,917,000 |
Diluted income per share | $0.07 | $0.05 |
Common stock excluded from dilutive stock calculation | 300,000 | 100,000 |
ShareBased_Compensation_Narrat
Share-Based Compensation (Narrative) (Details) (USD $) | 3 Months Ended | ||||||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2010 | Jun. 30, 2007 | Jan. 31, 1996 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Recognized compensation expense | $89,000 | $88,000 | |||||
Restricted stock granted in period | 0 | 0 | |||||
Restricted stock expense | 1,000 | 15,000 | |||||
Stock Incentive Plans [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted non-qualified options | 102,000 | 154,500 | |||||
Stock option shares of restricted stock vested | 94 | 2,000 | |||||
Forfeited restricted stock | 0 | 0 | |||||
Options remained outstanding under option plan | 726,000 | 630,000 | |||||
Weighted-average grant-date fair value of stock options granted | $2.78 | $3.90 | |||||
Total unrecognized compensation costs related to unvested stock options | 700,000 | ||||||
Weighted average recognition period | 3 years 4 days | ||||||
Fair value of stock options vested | 200,000 | 38,000 | |||||
Cash received from exercise of stock options | 6,000 | 100,000 | |||||
2007 Stock Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares authorized | 1,502,209 | 1,250,000 | 1,000,000 | ||||
Shares available for grant | 27,000 | ||||||
Options remained outstanding under option plan | 600,000 | 600,000 | |||||
Employee Stock Purchase Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Recognized compensation expense | 5,000 | 7,000 | |||||
Number of shares authorized | 550,000 | ||||||
Cash received from exercise of stock options | 22,000 | 26,000 | |||||
Maximum employee subscription rate | 15.00% | ||||||
Maximum value of shares per employee | 25,000 | ||||||
Maximum number of shares per employee | 10,000 | ||||||
Purchase price of stock | 85.00% | ||||||
Shares available for purchase under ESPP | 58,000 | ||||||
Discount on the purchase price of stock option | 15.00% | ||||||
Issued shares related to the ESPP | 3,000 | 3,000 | |||||
Option Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Amended and restated stock option plan, reserved for issuance | 4,175,000 | ||||||
Vesting period | 4 years | ||||||
Option plan termination date | 18-Jan-06 | ||||||
Options remained outstanding under option plan | 100,000 | 100,000 | |||||
Maximum [Member] | 2007 Stock Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Option expiration period | 10 years | ||||||
Maximum [Member] | Option Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Option expiration period | 10 years | ||||||
Employees [Member] | 2007 Stock Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
Directors [Member] | 2007 Stock Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 1 year | ||||||
Senior Management [Member] | Minimum [Member] | Stock Incentive Plans [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Release period for restricted stock options | 2 years | ||||||
Senior Management [Member] | Maximum [Member] | Stock Incentive Plans [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Release period for restricted stock options | 4 years | ||||||
Board Members [Member] | Stock Incentive Plans [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Release period for restricted stock options | 1 year | ||||||
Evolving Systems U.K. [Member] | Stock Incentive Plans [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Deferred income tax benefits from stock option expense | $4,000 | $4,000 |
ShareBased_Compensation_Summar
Share-Based Compensation (Summary Of Stock-Based Compensation Expenses) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share based compensation | $89,000 | $88,000 |
Cost Of License Fees And Services, Excluding Depreciation And Amortization [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share based compensation | 22,000 | 16,000 |
Cost Of Customer Support, Excluding Depreciation And Amortization [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share based compensation | 2,000 | 2,000 |
Sales And Marketing [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share based compensation | 7,000 | 11,000 |
General And Administrative [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share based compensation | 24,000 | 42,000 |
Product Development [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share based compensation | $34,000 | $17,000 |
ShareBased_Compensation_Assump
Share-Based Compensation (Assumptions For Weighted Average Fair Value Of Stock Options) (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Stock Incentive Plans [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (years) | 6 years | 5 years 10 months 24 days |
Risk-free interest rate | 1.30% | 1.69% |
Expected volatility | 51.48% | 55.98% |
Expected dividend yield | 4.95% | 3.90% |
Employee Stock Purchase Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (years) | 3 months | 3 months |
Risk-free interest rate | 0.04% | 0.04% |
Expected volatility | 35.60% | 43.24% |
Expected dividend yield | 4.99% | 4.44% |
ShareBased_Compensation_Summar1
Share-Based Compensation (Summary Of Stock Option Activity) (Details) (Stock Incentive Plans [Member], USD $) | 3 Months Ended | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Stock Incentive Plans [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of Shares, Options outstanding at December 31, 2014 | 630,000 | ||
Number of Shares, Options granted | 102,000 | 154,500 | |
Number of Shares, Less options forfeited | -1,000 | ||
Number of Shares, Less options exercised | -5,000 | ||
Number of Shares, Options outstanding at March 31, 2015 | 726,000 | 630,000 | |
Number of Shares, Option exercisable at March 31, 2015 | 501,000 | ||
Weighted-Average Exercise Price, Options outstanding at December 31, 2014 | $4.94 | ||
Weighted-Average Exercise Price, Options granted | $8.98 | ||
Weighted Average Exercise Price, Less options forfeited | $10.90 | ||
Weighted-Average Exercise Price, Less options exercised | $1.22 | ||
Weighted-Average Exercise Price, Options outstanding at March 31, 2015 | $5.53 | $4.94 | |
Weighted-Average Exercise Price, Options exercisable at March 31, 2015 | $3.87 | ||
Weighted-Average Remaining Contractual Term (Years), Options outstanding at December 31, 2014 | 6 years 22 days | 5 years 8 months 9 days | |
Weighted-Average Remaining Contractual Term (Years), Options outstanding at March 31, 2015 | 6 years 22 days | 5 years 8 months 9 days | |
Weighted-Average Remaining Contractual Term (Years), Option exercisable at March 31, 2015 | 4 years 8 months 9 days | ||
Aggregate Intrinsic Value, Options outstanding at December 31, 2014 | $2,959 | ||
Aggregate Intrinsic Value, Options outstanding at March 31, 2015 | 2,659 | 2,959 | |
Aggregate Intrinsic Value, Options exercisable at March 31, 2015 | $2,580 |
Concentration_Of_Credit_Risk_D
Concentration Of Credit Risk (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
customer | customer | customer | |
Sales Revenue Net [Member] | Customer Concentration Risk [Member] | |||
Concentration Risk [Line Items] | |||
Number of significant customers | 1 | 2 | |
Concentration risk, percentage | 10.00% | 28.00% | |
Sales Revenue Net [Member] | Customer One [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | 17.00% | |
Sales Revenue Net [Member] | Customer Two [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11.00% | ||
Contract Receivables And Unbilled Work-In-Progress [Member] | Customer Concentration Risk [Member] | |||
Concentration Risk [Line Items] | |||
Number of significant customers | 1 | 3 | |
Concentration risk, percentage | 26.00% | 55.00% | |
Contract Receivables And Unbilled Work-In-Progress [Member] | Customer One [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 26.00% | ||
Contract Receivables And Unbilled Work-In-Progress [Member] | Customer Two [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 16.00% | ||
Contract Receivables And Unbilled Work-In-Progress [Member] | Customer Three [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 13.00% |
LongTerm_Debt_Details
Long-Term Debt (Details) (Revolving Facility [Member], USD $) | 3 Months Ended | |
Mar. 31, 2015 | Oct. 31, 2014 | |
Revolving Facility [Member] | ||
Debt Instrument [Line Items] | ||
Line of credit initiation date | 31-Oct-14 | |
Line of credit facility, borrowing capacity, maximum | $5,000,000 | |
Line of credit facility, interest rate | 2.75% | |
Discount on prime rate, percentage | 0.50% | |
Line of credit facility, interest rate terms, description | Revolving Facility bears interest at the greater of 2.75% or the U.S.A. Prime Rate minus one half of one percent (0.5%). Prime Rate was 3.25% as of MarchB 31, 2015. | |
Line of credit facility, prime rate | 3.25% | |
Line of credit facility, covenant terms | To take an advance under the Revolving Facility, we must have a balance of $3.0 million in cash on deposit and have quarterly net income and a specified ratio of current assets to current liabilities, as defined in the Revolving Facility. The Revolving Facility requires us to pay an annual credit facility fee of $10,000. All accrued interest on outstanding borrowings under the Revolving Facility is paid monthly, with any outstanding balance due with a final maturity of OctoberB 22, 2016. | |
Line of credit facility, cash deposit requirements for advance | 3,000,000 | |
Line of credit facility, annual fee | 10,000 | |
Line of credit facility, interest payment frequency | paid monthly | |
Line of credit facility, maturity date | 22-Oct-16 | |
Available borrowing capacity under Revolving Facility | $5,000,000 |
Income_Taxes_Narrative_Details
Income Taxes (Narrative) (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Income Taxes [Abstract] | |||
Income tax expense | $439,000 | $278,000 | |
Current income tax expense (benefit) | 400,000 | 200,000 | |
Deferred tax expense | 57,000 | ||
Effective tax rate | 34.00% | 34.00% | |
Net deferred tax assets | 661,000 | ||
Unrecognized tax benefits | $0 | $0 |
Income_Taxes_Components_Of_Def
Income Taxes (Components Of Deferred Tax Assets And Liabilities) (Details) (USD $) | Mar. 31, 2015 |
In Thousands, unless otherwise specified | |
Income Taxes [Abstract] | |
Net operating loss carryforwards | $495 |
Research & Development Credits | 303 |
AMT credits | 951 |
Stock Compensation | 670 |
Depreciable assets | 119 |
Intangibles | 199 |
Accrued liabilities and reserves | 528 |
Total deferred tax assets | 3,265 |
Undistributed Foreign Earnings | -855 |
Total deferred tax liability | -855 |
Net deferred tax assets, before valuation allowance | 2,410 |
Valuation allowance | -1,749 |
Net deferred tax asset | $661 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 0 Months Ended | 3 Months Ended | ||
Mar. 17, 2015 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Stockholders' Equity [Abstract] | ||||
Dividend declared date | 17-Mar-15 | |||
Cash dividend declared per common share | $0.11 | $0.11 | $0.10 | |
Dividends payable, payable date | 31-Mar-15 | |||
Dividends payable, record date | 24-Mar-15 | |||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 | ||
Preferred stock, shares outstanding | 0 | 0 | ||
Anti-takeover provisions period | 3 years |
Segment_Information_Segment_In
Segment Information (Segment Information) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
segment | ||
Revenue | ||
Total revenue | $6,660 | $6,582 |
Revenue less costs of revenue, excluding depreciation and amortization | ||
Revenue less costs of revenue, excluding depreciation and amortization | 5,047 | 4,684 |
Unallocated Costs [Abstract] | ||
Other operating expenses | 3,505 | 3,377 |
Depreciation and amortization | 120 | 69 |
Restructuring | 211 | |
Interest income | -5 | -3 |
Interest expense | 3 | 5 |
Foreign currency exchange loss | 125 | 96 |
Income from operations before income taxes | 1,299 | 929 |
Number of operating segments based on revenue type | 2 | |
License Fees And Services [Member] | ||
Revenue | ||
Total revenue | 4,339 | 4,367 |
Revenue less costs of revenue, excluding depreciation and amortization | ||
Revenue less costs of revenue, excluding depreciation and amortization | 3,114 | 2,889 |
Customer Support [Member] | ||
Revenue | ||
Total revenue | 2,321 | 2,215 |
Revenue less costs of revenue, excluding depreciation and amortization | ||
Revenue less costs of revenue, excluding depreciation and amortization | $1,933 | $1,795 |
Segment_Information_Financial_
Segment Information (Financial Information Relating To Operations By Geographic Region) (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Segment Reporting Information [Line Items] | |||
Total revenue | $6,660 | $6,582 | |
Long-lived assets, net | 17,393 | 18,277 | |
United States [Member] | |||
Segment Reporting Information [Line Items] | |||
Long-lived assets, net | 1,967 | 1,998 | |
India [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 722 | 126 | |
Nigeria [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 231 | 722 | |
United Kingdom [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 1,029 | 1,598 | |
Long-lived assets, net | 15,259 | 16,091 | |
Mexico [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 433 | 702 | |
Other [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 4,245 | 3,434 | |
Long-lived assets, net | 167 | 188 | |
License Fees And Services [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 4,339 | 4,367 | |
License Fees And Services [Member] | India [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 643 | 126 | |
License Fees And Services [Member] | Nigeria [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 112 | 631 | |
License Fees And Services [Member] | United Kingdom [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 538 | 1,098 | |
License Fees And Services [Member] | Mexico [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 316 | 588 | |
License Fees And Services [Member] | Other [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 2,730 | 1,924 | |
Customer Support [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 2,321 | 2,215 | |
Customer Support [Member] | India [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 79 | ||
Customer Support [Member] | Nigeria [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 119 | 91 | |
Customer Support [Member] | United Kingdom [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 491 | 500 | |
Customer Support [Member] | Mexico [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 117 | 114 | |
Customer Support [Member] | Other [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenue | $1,515 | $1,510 |
Restructuring_Details
Restructuring (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Restructuring [Abstract] | |||
Expense of termination employees | $200,000 | ||
Restructuring costs paid | 0 | ||
Restructuring liability | $0 | $0 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 0 Months Ended | 3 Months Ended | 0 Months Ended | |
Mar. 17, 2015 | Mar. 31, 2015 | Mar. 31, 2014 | 5-May-15 | |
Subsequent Event [Line Items] | ||||
Cash dividend declared per common share | $0.11 | $0.11 | $0.10 | |
Dividends payable, payable date | 31-Mar-15 | |||
Dividends payable, record date | 24-Mar-15 | |||
Dividend declared date | 17-Mar-15 | |||
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Cash dividend declared per common share | $0.11 | |||
Dividends payable, payable date | 29-May-15 | |||
Dividends payable, record date | 22-May-15 | |||
Dividend declared date | 5-May-15 |