Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 6-May-15 | |
Document and Entity Information | ||
Entity Registrant Name | DATALINK CORP | |
Entity Central Index Key | 1056923 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 23,316,779 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets | ||
Cash and cash equivalents | $52,700 | $27,725 |
Short-term investments | 22,994 | |
Accounts receivable, net | 141,530 | 171,531 |
Net working capital receivable from acquisition | 741 | 741 |
Lease receivable | 2,430 | 2,482 |
Inventories, net | 6,868 | 5,447 |
Current deferred customer support contract costs | 116,764 | 106,497 |
Inventories shipped but not installed | 9,927 | 20,035 |
Income tax receivable | 4,478 | 4,194 |
Other current assets | 1,716 | 3,563 |
Total current assets | 337,154 | 365,209 |
Property and equipment, net | 7,617 | 7,244 |
Goodwill | 48,016 | 48,016 |
Finite-lived intangibles, net | 14,530 | 16,603 |
Deferred customer support contract costs, non-current | 58,828 | 58,484 |
Deferred taxes | 5,660 | 5,660 |
Long-term lease receivable | 3,865 | 4,016 |
Other assets | 706 | 759 |
Total assets | 476,376 | 505,991 |
Current liabilities | ||
Floor plan line of credit | 29,647 | 27,656 |
Accounts payable | 45,063 | 86,266 |
Lease payable | 1,883 | 2,319 |
Accrued commissions | 4,354 | 5,334 |
Accrued sales and use taxes | 2,825 | 4,117 |
Accrued expenses, other | 6,686 | 7,730 |
Deferred taxes | 1,982 | 1,982 |
Customer deposits | 4,653 | 3,325 |
Current deferred revenue from customer support contracts | 142,543 | 131,061 |
Other current liabilities | 701 | 746 |
Total current liabilities | 240,337 | 270,536 |
Deferred revenue from customer support contracts, non-current | 70,763 | 70,663 |
Long-term leases payable | 3,000 | 3,278 |
Other liabilities, non-current | 622 | 828 |
Total liabilities | 314,722 | 345,305 |
Stockholders' equity | ||
Common stock, $.001 par value, 50,000,000 shares authorized, 23,410,923 and 22,876,753 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively | 23 | 23 |
Additional paid-in capital | 116,028 | 115,048 |
Retained earnings | 45,603 | 45,615 |
Total stockholders' equity | 161,654 | 160,686 |
Total liabilities and stockholders' equity | $476,376 | $505,991 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Consolidated Balance Sheets | ||
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 23,410,923 | 22,876,753 |
Common stock, shares outstanding | 23,410,923 | 22,876,753 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Net sales: | ||
Products | $106,736 | $83,195 |
Services | 68,616 | 56,340 |
Total net sales | 175,352 | 139,535 |
Cost of sales: | ||
Cost of products | 85,782 | 66,770 |
Cost of services | 54,402 | 43,283 |
Total cost of sales | 140,184 | 110,053 |
Gross profit | 35,168 | 29,482 |
Operating expenses: | ||
Sales and marketing | 17,422 | 15,664 |
General and administrative | 6,989 | 5,301 |
Engineering | 8,242 | 7,514 |
Integration and transaction costs | 450 | |
Amortization of intangibles | 2,073 | 1,416 |
Total operating expenses | 35,176 | 29,895 |
Loss from operations | -8 | -413 |
Other income (expense): | ||
Gain on settlement related to StraTech acquisition | 876 | |
Interest income | 71 | 48 |
Interest expense | -86 | -29 |
Earnings (loss) before income taxes | -23 | 482 |
Income tax expense (benefit) | -9 | 181 |
Net earnings (loss) | ($14) | $301 |
Earnings (loss) per common share: | ||
Basic (in dollars per share) | $0 | $0.01 |
Diluted (in dollars per share) | $0 | $0.01 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 21,949 | 21,537 |
Diluted (in shares) | 21,949 | 22,188 |
Consolidated_Statements_of_Cas
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 earnings (loss) | ($14) | $301 |
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: | ||
Change in fair value of short-term investments | 17 | |
Provision (benefit) for bad debts | -94 | -23 |
Depreciation | 843 | 574 |
Amortization of finite-lived intangibles | 2,073 | 1,416 |
Gain on settlement related to StraTech acquisition | -876 | |
Deferred income taxes | 316 | |
Stock-based compensation expense | 1,442 | 984 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net and leases receivable | 30,298 | 31,468 |
Inventories | 8,687 | 6,132 |
Deferred costs/revenues/customer deposits, net | 2,299 | 1,045 |
Accounts payable and leases payable | -41,917 | -19,236 |
Accrued expenses | -3,316 | -6,012 |
Income tax receivable | -284 | -13,194 |
Other | 1,649 | -728 |
Net cash provided by operating activities | 1,666 | 2,184 |
Cash flows from investing activities: | ||
Purchases, sales and maturities of trading securities, net | 22,994 | 15,050 |
Purchases of property and equipment | -1,216 | -414 |
Net cash provided by investing activities | 21,778 | 14,636 |
Cash flows from financing activities: | ||
Net borrowings (payments) under floor plan line of credit | 1,991 | -5,853 |
Excess tax from stock compensation | 179 | 340 |
Proceeds from issuance of common stock from stock option exercise | 77 | |
Tax withholding payments reimbursed by restricted stock | -639 | -795 |
Net cash provided by (used in) financing activities | 1,531 | -6,231 |
Increase in cash and cash equivalents | 24,975 | 10,589 |
Cash and cash equivalents, beginning of period | 27,725 | 24,871 |
Cash and cash equivalents, end of period | 52,700 | 35,460 |
Supplementary cash flow information: | ||
Cash paid for income taxes | 97 | 12,718 |
Cash received for income tax refunds | 2 | |
Cash paid for interest expense | $21 | $3 |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Basis of Presentation | |
Basis of Presentation | |
1.Basis of Presentation | |
The Company has prepared the interim financial statements included in this Form 10-Q without an audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company has condensed or omitted certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, pursuant to such rules and regulations. You should read these financial statements in conjunction with the financial statements and related notes thereto included in the Company’s 2014 Annual Report on Form 10-K. | |
The financial statements presented herein as of March 31, 2015, and for the three months ended March 31, 2015 and 2014, reflect, in the opinion of management, all adjustments (which consist only of normal, recurring adjustments) necessary for a fair presentation of the financial position and the results of operations and cash flows for the periods presented. Management makes estimates and assumptions affecting the amounts of assets, liabilities, revenues and expenses the Company reports and the Company’s disclosure of contingent assets and liabilities at the date of the financial statements. The results of the interim periods are not necessarily indicative of the results for the full year. Accordingly, you should read these condensed financial statements in conjunction with the audited financial statements and the related notes thereto included in the Company’s 2014 Annual Report on Form 10-K. Actual results could differ materially from these estimates and assumptions. | |
Recently Issued Accounting Standards | |
In January 2015, the FASB issued Accounting Standards Update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, an update to ASC Topic 225 — Income Statement (“ASU 2015-01”), which eliminates from accounting principles generally accepted in the United States the concept of extraordinary items. Subtopic 225-20, Income Statement — Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. ASU 2015-01 is effective for annual periods beginning after December 15, 2015. An entity has the option to adopt the changes earlier provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company currently does not anticipate the adoption of this standard will have a material impact on its consolidated financial statements. | |
In June 2014, the FASB issued Accounting Standards Update 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period (“ASU 2014-12”), which requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. Thus, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The provisions of this ASU are effective for interim and annual periods beginning after December 15, 2015. Entities can apply the amendment either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company currently does not anticipate the adoption of this standard will have a material impact on its consolidated financial statements. | |
In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU No. 2014-09”). The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. This ASU is intended to provide a more robust framework for addressing revenue issues; improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets; and provide more useful information to users of financial statements through improved revenue disclosure requirements. On April 1, 2015, the FASB voted to propose a delay in the effective date of ASU No. 2014-09, which would make the provisions of this ASU effective for interim and annual periods beginning after December 15, 2018. The Company is currently determining its implementation approach and assessing the impact on its consolidated financial statements. | |
Net_Earnings_Loss_per_Share
Net Earnings (Loss) per Share | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Net Earnings (Loss) per Share | ||||||||
Net Earnings (Loss) per Share | ||||||||
2.Net Earnings (Loss) per Share | ||||||||
The Company computes basic net earnings (loss) per share using the weighted average number of shares outstanding. Diluted net earnings per share include the effect of common stock equivalents, if any, for each period. Diluted per share amounts assume the conversion, exercise or issuance of all potential common stock instruments unless their effect is anti-dilutive. The following table computes basic and diluted net earnings per share: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
(in thousands, except per share data) | ||||||||
Net earnings (loss) | $ | (14 | ) | $ | 301 | |||
Basic: | ||||||||
Weighted average common shares outstanding | 21,949 | 21,537 | ||||||
Net earnings (loss) per share — basic | $ | (0.00 | ) | $ | 0.01 | |||
Diluted: | ||||||||
Shares used in the computation of basic net earnings (loss) per share | 21,949 | 21,537 | ||||||
Employee and non-employee director stock options | — | 185 | ||||||
Restricted stock that has not vested | — | 466 | ||||||
Shares used in the computation of diluted net earnings (loss) per share | 21,949 | 22,188 | ||||||
Net earnings (loss) per share - diluted | $ | (0.00 | ) | $ | 0.01 | |||
The Company excluded the following restricted stock grants that have not vested from weighted average common shares outstanding used in the computation of basic net earnings (loss) per share: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Restricted common stock that has not yet vested | 1,455,002 | 953,848 | ||||||
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Stock-Based Compensation | |||||||||
Stock-Based Compensation | |||||||||
3.Stock-Based Compensation | |||||||||
Restricted Stock: | |||||||||
Total stock-based compensation expense related to restricted stock was $1.3 million and $853,000 for the three months ended March 31, 2015 and 2014, respectively. Unrecognized stock-based compensation expense related to restricted stock was $11.4 million at March 31, 2015, which the Company will amortize ratably through February 2019. | |||||||||
The following table summarizes the Company’s restricted stock activity for the three months ended March 31, 2015: | |||||||||
Number of Shares | Weighted Average | ||||||||
Grant-Date Fair Value | |||||||||
Restricted stock that had not yet vested at January 1, 2015 | 1,003,841 | $ | 10.55 | ||||||
Granted | 602,810 | $ | 11.88 | ||||||
Cancelled | (30,750 | ) | $ | 10.99 | |||||
Shares vested | (150,697 | ) | $ | 9.32 | |||||
Restricted stock that has not yet vested at March 31, 2015 | 1,425,204 | $ | 11.23 | ||||||
Stock Options: | |||||||||
The Company recognized no stock-based compensation expense related to stock options for the three months ended March 31, 2015 or for the three months ended March 31, 2014. There was no unrecognized stock-based compensation expense related to stock options at March 31, 2015. | |||||||||
The following table represents stock option activity for the three months ended March 31, 2015: | |||||||||
Number of Shares | Weighted | Weighted Average | |||||||
Average | Remaining | ||||||||
Exercise Price | Contract Life in | ||||||||
Years | |||||||||
Outstanding options as of January 1, 2015 | 462,900 | $ | 3.52 | ||||||
Options granted | — | $ | — | ||||||
Options exercised | — | $ | — | ||||||
Options cancelled | — | $ | — | ||||||
Outstanding options as of March 31, 2015 | 462,900 | $ | 3.52 | 4.23 | |||||
Exercisable options as of March 31, 2015 | 462,900 | $ | 3.52 | 4.23 | |||||
Other: | |||||||||
Effective January 1, 2014 and pursuant to Deferred Stock Unit (“DSU”) Master Agreements, each member of the board of directors may elect to receive DSUs with a fair value equivalent to a percentage of each quarterly installment of the annual cash retainer for non-employee directors to which that member would otherwise be entitled for service as a Datalink director. In addition, each member of the board of directors may elect to receive a DSU award equal to a percentage of the award of shares of Restricted Stock to which that member would otherwise have been entitled as the equity component of the annual retainer. The DSUs and DSU awards vested and became non-forfeitable on each of June 30, 2014, September 30, 2014, December 31, 2014 and March 31, 2015, provided the board member remained in service with us. The Company will issue one share in payment and settlement of each vested DSU subject to the Master DSU Agreement following a termination of that board member’s service with Datalink. | |||||||||
During the three months ended March 31, 2015 and 2014, the Company recognized expense of $133,000 and $131,000, respectively, related to awards of 11,019 shares and 9,449 shares, respectively, of fully vested common stock to members of its Board of Directors. Of the 11,019 shares of fully vested stock awarded to members of the Company’s Board of Directors during the three months ended March 31, 2015, 5,019 shares were DSUs. Of the 9,449 shares of fully vested stock awarded to members of the Company’s Board of Directors during the three months ended March 31, 2014, 449 shares were DSUs. | |||||||||
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Taxes | |
Income Taxes | |
4.Income Taxes | |
The Company bases the provision for income taxes upon the estimated annual effective tax rates in the tax jurisdictions in which the Company operates. For the three months ended March 31, 2015 and 2014, the effective tax rate was 40.3% and 37.5%, respectively. The increase in the effective tax rate for the three months ended March 31, 2015 as compared to the same period in 2014 is primarily due to $14,000 of benefits from discrete item adjustments recognized during the three months ended March 31, 2014. The Company did not recognize any benefits from discrete item adjustments for the three months ended March 31, 2015. The Company expects our annual effective tax rate for 2015 to be approximately 40.3%. | |
As part of the process of preparing financial statements, the Company estimates federal and state income taxes. Management estimates the actual current tax exposure and assesses temporary differences resulting from different treatments for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which the Company includes within the balance sheet. Management must then assess the likelihood that the Company will utilize deferred tax assets to offset future taxable income during the periods in which the Company may deduct these temporary differences. For the three months ended March 31, 2015 the Company recorded income tax benefit of $9,000 with an effective tax rate of 40.3%. | |
Included in the balance of unrecognized tax benefits at March 31, 2015 and December 31, 2014 are potential benefits of $236,000 that, if recognized, would affect the effective tax rate. There are no interest or penalties accrued for this liability, however, any future amounts accrued would be a component of income tax expense. The Company does not anticipate that the total amount of unrecognized tax benefits as of March 31, 2015 will change significantly in the next 12 months. | |
The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. As of March 31, 2015, the Company was no longer subject to federal income tax examinations for taxable years before 2011. | |
As a result of the acquisition of Bear Data Solutions, Inc. (“Bear Data”) in October, 2014, utilization of U.S. net operating losses and tax credits of Bear Data are subject to annual limitations under Internal Revenue Code Sections 382 and 383, respectively. | |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2015 | |
Acquisitions | |
Acquisitions | |
5.Acquisitions | |
Bear Data Solutions, Inc. | |
On October 18, 2014, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Bear Data. Bear Data is primarily an IT services firm, serving California-based and international customers from offices in San Francisco, San Jose, Irvine and San Diego. A significant portion of its revenues is derived from networking products including Cisco wireless, routing and core switches. The aggregate purchase price for the overall transaction was approximately $13.4 million, including a cash payment of $12.7 million, net of cash acquired, in connection with the merger (the “Preliminary Purchase Price”), which is partially offset by a net working capital receivable from the sellers of $741,000 resulting from the preliminary estimated tangible net asset adjustment as defined by the Merger Agreement. The Preliminary Purchase Price will be subject to certain adjustments to reflect the difference, if any, between the net working capital at closing and target net working capital. An aggregate amount of $2.4 million of the Preliminary Purchase Price was placed into escrow to cover any post-closing adjustment to the Preliminary Purchase Price and indemnification obligations of the securityholders. Pursuant to the Merger Agreement, the sellers of Bear Data are obligated to pay us an amount equal to the difference between the actual tangible net assets on the closing date and the sellers’ good faith estimate of net tangible assets as set forth in the Merger Agreement. | |
The Company entered into a Common Stock Purchase Agreement (the “Common Stock Purchase Agreement”), also dated as of October 18, 2014, by and among Datalink Corporation, Merger Sub, and three executive securityholders of Bear Data. Under the Common Stock Purchase Agreement, the Company issued 156,360 shares of its common stock with a value of approximately $1.5 million, net of illiquidity adjustments, to the three Bear Data executives. The $13.4 million aggregate purchase price for the overall transaction discussed above includes the $1.5 million issuance of shares to the executive securityholders of Bear Data. For this purpose, the Company’s common stock was valued at the volume-weighted average of the per share trading prices of its common stock as reported through Bloomberg (based on all trades in the Company’s common stock and not an average of daily averages) for the 20 consecutive full trading days ending one business day prior to closing. These shares had an aggregate value of $1.7 million, offset by a $192,000 illiquidity adjustment. 75% of the shares issued under the Common Stock Purchase Agreement will not be transferable until the first anniversary of closing. | |
Under the acquisition method of accounting, the Company estimated the fair value of the assets acquired and liabilities assumed of Bear Data primarily using a discounted cash flow approach with respect to identified intangible assets and goodwill. The Company based this approach upon its estimates of future cash flows from the acquired assets and liabilities and utilized a discount rate consistent with the inherent risk associated with the acquired assets and liabilities assumed. The $13.4 million aggregate purchase price for the overall transaction discussed above consisted of $10.2 million of goodwill, $9.5 million of finite-lived intangible assets, and $6.3 million of net tangible liabilities. | |
The $9.5 million of finite-lived intangibles consisted of $370,000 of covenants not to compete, $890,000 of trademarks, $7,810,000 of customer relationships and $452,200 of order backlog having estimated lives of 3 years, 3 years, 6 years and 6 months, respectively. The indefinite-lived asset consisted of goodwill of approximately $10.2 million, which was not deductible for tax purposes. The Company is amortizing the covenants not to compete, trademarks, and order backlog using the straight line method. The Company is amortizing the customer relationships it acquired in the Bear Data acquisition over its useful life using an accelerated amortization method, to match the pattern in which the economic benefits of that asset are expected to be consumed. | |
Integration costs for 2015 include salaries, benefits and retention bonuses of exiting employees, some of whom assisted with the initial integration of Bear Data. In addition, transaction costs for 2015 include legal, audit, and other outside service fees necessary to complete the Company’s acquisition of Bear Data, which were expensed. Total integration and transaction costs were $450,000 for the three months ended March 31, 2015. | |
Strategic Technologies, Inc. | |
On October 4, 2012, the Company purchased substantially all of the assets and liabilities of Strategic Technologies, Inc. (‘‘StraTech’’) from StraTech and Midas Medici Group Holdings, Inc. (‘‘Midas,’’ parent company of StraTech and, together with StraTech, the ‘‘Sellers of StraTech’’). StraTech is an IT services and solutions firm that shares the Company’s focus on optimizing enterprise data centers and IT infrastructure through a common product and services portfolio designed to help customers increase business agility. The Company purchased StraTech for a purchase price of approximately $11.9 million, comprised of a cash payment of approximately $13.2 million, which was offset by a receivable due from the Sellers of StraTech of approximately $3.3 million, resulting from the preliminary tangible net asset adjustment as defined by the asset purchase agreement. In addition, the Company issued 269,783 shares of its common stock with a value of approximately $2.0 million. Of those shares, 242,805 shares were deposited in an escrow account as security for certain indemnification obligations of the Sellers of StraTech. | |
Pursuant to the asset purchase agreement, the Sellers of StraTech were obligated to pay the Company an amount equal to the difference between the actual tangible net assets on the closing date and the Sellers’ good faith estimated net tangible assets as set forth in the asset purchase agreement. The Company initially recorded a receivable due from the Sellers of StraTech of approximately $4.2 million related to this payment at the acquisition date. The Sellers of StraTech provided us with a ‘‘Notice of Disagreement,’’ which stated that they disputed the amount owed to the Company in connection with this reconciliation payment. The asset purchase agreement contained an arbitration provision for disputes over the value of tangible net assets. During the measurement period (up to one year from the acquisition date), the final tangible net asset adjustment was agreed to and the net effect was a decrease in the receivable due from the Sellers of StraTech of $936,000 and an increase in the purchase price for the same amount as reflected above. | |
In January 2014, the Company reached a settlement agreement with the former owners of StraTech regarding the disputed amount owed to the Company in connection with the reconciliation payment mentioned above. Under the terms of the agreement, the former owners of StraTech agreed to release the entire 242,805 shares of Datalink common stock that were being held in escrow in exchange for a payment of $100,000 and the release of certain other claims. As of December 31, 2013, the remaining $3.3 million receivable due from the Sellers of StraTech was deemed to be uncollectible and written down to the estimated realizable value, which was determined to be the fair value of the shares in escrow on December 31, 2013. The remaining receivable of $2,647,000 was reclassified from accounts receivable to equity within the December 31, 2013 balance sheet. Based on the value of the Company’s common stock on the date of the settlement agreement in January 2014, the Company recorded a gain before tax of approximately $876,000 during the first quarter of 2014 as a result of the increase in the Company’s stock price from December 31, 2013 to the date it repossessed the shares in escrow. | |
In connection with this acquisition, the Company allocated the total purchase consideration to the net assets acquired, including finite-lived intangible assets, based in their respective fair values at the acquisition date. The total purchase price paid for StraTech was approximately $11.9 million, of which approximately $5.3 million was allocated to goodwill, $15.9 million to identifiable intangible assets, and $9.3 million to net tangible liabilities. The finite-lived intangible, which consisted of customer relationships, has an estimated life of five years. The Company is amortizing the finite-lived intangible asset it acquired in the StraTech acquisition over its useful life using an accelerated amortization method, to match the pattern in which the economic benefits of that asset are expected to be consumed. The Company may deduct the goodwill for tax purposes over a 15-year period. | |
Goodwill_and_Valuation_of_Long
Goodwill and Valuation of Long-Lived Assets | 3 Months Ended | |||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||
Goodwill and Valuation of Long-Lived Assets | ||||||||||||||||||||||
Goodwill and Valuation of Long-Lived Assets | ||||||||||||||||||||||
6.Goodwill and Valuation of Long-Lived Assets | ||||||||||||||||||||||
The Company assesses the carrying amount of its goodwill for potential impairment annually or more frequently if events or a change in circumstances indicate that impairment may have occurred. The Company performs an impairment test for finite-lived assets, such as intangible assets, and other long-lived assets, such as fixed assets, whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Circumstances that could represent triggering events and therefore require an interim impairment test of goodwill or evaluation of the Company’s finite-lived intangible assets or other long-lived assets include the following: loss of key personnel, unanticipated competition, higher or earlier than expected customer attrition, deterioration of operating performance, significant adverse industry, economic or regulatory changes or a significant decline in market capitalization. | ||||||||||||||||||||||
The Company has only one operating and reporting unit that earns revenues, incurs expenses and makes available discrete financial information for review by its chief operations decision maker. Accordingly, the Company completes its goodwill impairment testing on this single reporting unit. | ||||||||||||||||||||||
In conducting the annual impairment test of the Company’s goodwill, qualitative factors are first examined to determine whether the existence of events or circumstances indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If it is determined that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, a two-step impairment test is applied. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of the Company’s market capitalization with the carrying value of its net assets. If the Company’s total market capitalization is at or below the carrying value of its net assets, the Company performs the second step of the goodwill impairment test to measure the amount of impairment loss it records, if any. The Company considers goodwill impairment test estimates critical due to the amount of goodwill recorded on its balance sheet and the judgment required in determining fair value amounts. | ||||||||||||||||||||||
Goodwill was $48.0 million as of each of March 31, 2015 and December 31, 2014. The Company conducted its annual goodwill impairment test as of December 31, 2014, its last measurement date. Based on this analysis, the Company determined that there was no impairment to goodwill. The Company will continue to monitor conditions and changes that could indicate impairment of its recorded goodwill. | ||||||||||||||||||||||
At each of March 31, 2015 and 2014, the Company determined that no triggering events had occurred during the quarter and its finite-lived assets and long-lived assets were not impaired. | ||||||||||||||||||||||
Identified intangible assets are summarized as follows (in thousands): | ||||||||||||||||||||||
Amortizable | As of March 31, 2015 | As of December 31, 2014 | ||||||||||||||||||||
Period | Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||||
(years) | Assets | Amortization | Assets | Assets | Amortization | Assets | ||||||||||||||||
Customer relationships | 8-May | $ | 36,943 | $ | (23,518 | ) | $ | 13,425 | $ | 36,943 | $ | (21,776 | ) | $ | 15,167 | |||||||
Services agreement | 4 | 67 | (67 | ) | — | 67 | (67 | ) | — | |||||||||||||
Certification | 2 | 467 | (467 | ) | — | 467 | (467 | ) | — | |||||||||||||
Covenant not to compete | 3 | 848 | (535 | ) | 313 | 848 | (504 | ) | 344 | |||||||||||||
Trademarks | 3 | 1,153 | (399 | ) | 754 | 1,153 | (325 | ) | 828 | |||||||||||||
Order backlog | 3 months – 1 year | 2,614 | (2,576 | ) | 38 | 2,614 | (2,350 | ) | 264 | |||||||||||||
Total identified intangible assets | $ | 42,092 | $ | (27,562 | ) | $ | 14,530 | $ | 42,092 | $ | (25,489 | ) | $ | 16,603 | ||||||||
Amortization expense for identified intangible assets is summarized below (in thousands): | ||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||
March 31, | ||||||||||||||||||||||
2015 | 2014 | Statement of Operations Classification | ||||||||||||||||||||
Customer relationships | $ | 1,742 | $ | 1,376 | Operating expenses | |||||||||||||||||
Covenant not to compete | 31 | 40 | Operating expenses | |||||||||||||||||||
Trademarks | 74 | — | Operating expenses | |||||||||||||||||||
Order backlog | 226 | — | Operating expenses | |||||||||||||||||||
Total identified intangible assets | $ | 2,073 | $ | 1,416 | ||||||||||||||||||
Based on the identified intangible assets recorded at March 31, 2015, scheduled future amortization expense for the next five years is as follows: | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Remainder of 2015 | $ | 5,274 | ||||||||||||||||||||
2016 | 5,157 | |||||||||||||||||||||
2017 | 2,649 | |||||||||||||||||||||
2018 | 900 | |||||||||||||||||||||
2019 | 550 | |||||||||||||||||||||
$ | 14,530 | |||||||||||||||||||||
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Fair Value Measurements | ||||||||||||||
Fair Value Measurements | ||||||||||||||
7.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. In determining fair value for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and the assumptions that market participants would use when pricing the asset or liability. The Company applies fair value measurements for both financial and nonfinancial assets and liabilities. The Company has no nonfinancial assets or liabilities that require measurement at fair value on a recurring basis as of March 31, 2015. | ||||||||||||||
The fair value of the Company’s financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, accounts payable, line of credit and accrued expenses, approximate cost because of their short maturities. | ||||||||||||||
The Company uses the three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair values. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: | ||||||||||||||
· | Level 1 — Unadjusted quoted prices available in active markets for the identical assets or liabilities at the measurement date. | |||||||||||||
· | Level 2 — Significant other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly. | |||||||||||||
· | Level 3 — Significant unobservable inputs that the Company cannot corroborate by observable market data and thus reflect the use of significant management judgment. The Company generally determines these values using pricing models based on assumptions its management believes other market participants would make. | |||||||||||||
The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the Company determines the fair value measurement based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following table sets forth, by level within the fair value hierarchy, the accounting of the Company’s financial assets and/or liabilities at fair value on a recurring basis as of March 31, 2015 and December 31, 2014 according to the valuation techniques the Company used to determine their fair value(s). | ||||||||||||||
Fair Value Measurements | ||||||||||||||
(in thousands) | ||||||||||||||
Quoted Prices in | Significant Other | Significant | ||||||||||||
Active Markets for | Observable Inputs | Unobservable | ||||||||||||
Identical Assets | (Level 2) | Inputs | ||||||||||||
(Level 1) | (Level 3) | |||||||||||||
At March 31, 2015: | ||||||||||||||
Cash and cash equivalents | $ | 52,700 | $ | 52,700 | $ | — | $ | — | ||||||
Total assets measured at fair value | $ | 52,700 | $ | 52,700 | $ | — | $ | — | ||||||
At December 31, 2014: | ||||||||||||||
Cash and cash equivalents | $ | 27,725 | $ | 27,725 | $ | — | $ | — | ||||||
Short-term investments | 22,994 | 3,000 | 19,994 | |||||||||||
Total assets measured at fair value | $ | 50,719 | $ | 30,725 | $ | 19,994 | $ | — | ||||||
SalesType_Lease_Receivables_an
Sales-Type Lease Receivables and Sales-Leaseback Arrangements | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Sales-Type Lease Receivables and Sales-Leaseback Arrangements | |||||
Sales-Type Lease Receivables and Sales-Leaseback Arrangements | |||||
8.Sales-Type Lease Receivables and Sales-Leaseback Arrangements | |||||
The Company occasionally enters into sales-type lease agreements with its customers resulting from the sale of certain products. The Company’s lease receivables are recorded at cost within the accounts receivable and long-term lease receivables balances on its balance sheet and are due in installments over the lives of the leases. Cash received and applied against the receivable balance is recorded within changes in operating assets and liabilities in the net cash provided by operating activities section of the statement of cash flows. Finance income is derived over the term of the sales-type lease arrangement as the unearned income on financed sales-type leases is earned. Unearned income is amortized over the life of the lease using the interest method. The present value of net investment in sales-type lease receivables of $5.9 million and $6.1 million at March 31, 2015 and December 31, 2014, respectively, is reflected net of unearned income of $364,000 and $435,000 at March 31, 2015 and December 31, 2014, respectively. As of March 31, 2015, scheduled maturities of minimum lease payments receivable were as follows for the fiscal years ended December 31: | |||||
(in thousands) | |||||
Remainder of 2015 | $ | 2,260 | |||
2016 | 1,873 | ||||
2017 | 1,340 | ||||
2018 | 514 | ||||
2019 | 308 | ||||
6,295 | |||||
Less: Current portion | (2,430 | ) | |||
Long-term sales-type lease receivable | $ | 3,865 | |||
Lease receivables are individually evaluated for impairment. In the event the Company determines that a lease receivable may not be paid, it includes in its allowance an amount for the outstanding balance related to the lease receivable. At March 31, 2015, there were no material amounts past due related to lease receivables. | |||||
The Company’s lease receivables typically generate monthly cash inflows with average lease durations of 24 to 36 months. To better match cash outflows related to these receivables, the Company occasionally finances the equipment associated with its leases receivable through sales-leaseback arrangements over a period commensurate with the receivable. Gains associated with these sales are deferred in accordance with the accounting for sales-leaseback transactions and are amortized over the lives of the related lease agreements. As of March 31, 2015, the Company’s scheduled contractual cash obligations for future minimum lease payments were as follows for the fiscal years ended December 31: | |||||
(in thousands) | |||||
Remainder of 2015 | $ | 1,490 | |||
2016 | 1,808 | ||||
2017 | 992 | ||||
2018 | 492 | ||||
2019 | 101 | ||||
4,883 | |||||
Less: Current portion | (1,883 | ) | |||
Long-term sales-type lease receivable | $ | 3,000 | |||
Of the $4.9 million of contractual cash obligations for future minimum lease payments at March 31, 2015, $350,000 represented interest. | |||||
Line_of_Credit
Line of Credit | 3 Months Ended |
Mar. 31, 2015 | |
Line of Credit | |
Line of Credit | |
9.Line of Credit | |
On July 17, 2013, the Company entered into a Credit Agreement (“Credit Agreement”) with Castle Pines Capital LLC (“CPC”), an affiliate of Wells Fargo Bank, National Association (“Wells Fargo”). The Credit Agreement provided for a channel finance facility (“Floor Plan Line of Credit”) and a revolving facility (“Revolving Facility” and, together with the Floor Plan Line of Credit, “Combined Facility”) in a maximum combined aggregate amount of $40 million. On January 13, 2015, the Company entered into the First Amendment to Credit Agreement (the “Amended Agreement”), which provides an increase of $10 million to the Combined Facility for a maximum combined aggregate borrowing amount of $50 million. Under the Amended Agreement, borrowing under the Revolving Facility cannot exceed the lesser of (i) $50 million minus the amount outstanding under the Floor Plan Line of Credit or (ii) a borrowing base consisting of 85% of certain eligible accounts and 100% of channel financed inventory, subject to CPC’s ability to impose reserves in the future. The Floor Plan Line of Credit will finance certain purchases of inventory by us from vendors approved by CPC and the Revolving Facility may be used for working capital purposes and permitted acquisitions. | |
The amounts outstanding under the Revolving Facility bear interest at a per annum rate of 2.0% above Wells Fargo’s one-month LIBOR rate (approximately 0.18% at March 31, 2015). Advances under the Floor Plan Line of Credit will not bear interest so long as they are paid by the applicable payment due date and advances that remain outstanding after the applicable payment due date will bear interest at a per annum rate of LIBOR plus 4%. Under the Credit Agreement, the Company was obligated to pay quarterly to CPC an unused commitment fee equal to 0.50% per annum on the average daily unused amount of the Combined Facility, with usage including the sum of any advances under either the Floor Plan Line of Credit or the Revolving Facility. The Amended Agreement eliminates the unused commitment fee. The Combined Facility and certain bank product obligations owed to Wells Fargo or its affiliates are secured by substantially all of the Company’s personal property. The Amended Agreement terminates on January 9, 2018 and the Company will be obligated to pay certain prepayment fees if the Credit Agreement is terminated prior to that date. | |
The Amended Agreement contains customary representations, warranties, covenants and events of default, including but not limited to, covenants restricting the Company’s ability to (i) grant liens on its assets, (ii) make certain fundamental changes, including merging or consolidating with another entity or making any material change in the nature of its business, (iii) make certain dividends or distributions, (iv) make certain loans or investments, (v) guarantee or become liable in any way on certain liabilities or obligations of any other person or entity, or (vi) incur certain indebtedness. | |
The Credit Agreement contained certain covenants regarding the Company’s financial performance, including (i) a minimum tangible net worth of at least $20 million, (ii) a maximum funded debt to EBITDA ratio of no more than 3.00 to 1.00, and (iii) a minimum quarterly net income of at least $250,000. The Amended Agreement made modifications to those covenants, including (i) an increase of $10 million to the minimum tangible net worth requirement for a total minimum tangible net worth requirement of at least $30 million, (ii) deletion of the maximum funded debt to EBITDA ratio, and (iii) replacement of the minimum quarterly net income requirement with a minimum quarterly free cash flow requirement, which requires us to have free cash flow of at least $5 million at the end of each fiscal quarter for the trailing twelve-month period then ended, commencing December 31, 2014 and continuing at the end of each fiscal quarter thereafter. | |
Of the $50 million maximum borrowing amount available at March 31, 2015 under the Combined Facility, the Company had outstanding advances of $29.6 million and $27.7 million on the Floor Plan Line of Credit at March 31, 2015 and December 31, 2014, respectively, related to the purchase of inventory from a vendor. | |
Basis_of_Presentation_Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Basis of Presentation | |
Recently Issued Accounting Standards | |
Recently Issued Accounting Standards | |
In January 2015, the FASB issued Accounting Standards Update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, an update to ASC Topic 225 — Income Statement (“ASU 2015-01”), which eliminates from accounting principles generally accepted in the United States the concept of extraordinary items. Subtopic 225-20, Income Statement — Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. ASU 2015-01 is effective for annual periods beginning after December 15, 2015. An entity has the option to adopt the changes earlier provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company currently does not anticipate the adoption of this standard will have a material impact on its consolidated financial statements. | |
In June 2014, the FASB issued Accounting Standards Update 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period (“ASU 2014-12”), which requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. Thus, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The provisions of this ASU are effective for interim and annual periods beginning after December 15, 2015. Entities can apply the amendment either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company currently does not anticipate the adoption of this standard will have a material impact on its consolidated financial statements. | |
In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU No. 2014-09”). The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. This ASU is intended to provide a more robust framework for addressing revenue issues; improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets; and provide more useful information to users of financial statements through improved revenue disclosure requirements. On April 1, 2015, the FASB voted to propose a delay in the effective date of ASU No. 2014-09, which would make the provisions of this ASU effective for interim and annual periods beginning after December 15, 2018. The Company is currently determining its implementation approach and assessing the impact on its consolidated financial statements. | |
Net_Earnings_Loss_per_Share_Ta
Net Earnings (Loss) per Share (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Net Earnings (Loss) per Share | ||||||||
Schedule of computation of basic and diluted net earnings (loss) per share | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
(in thousands, except per share data) | ||||||||
Net earnings (loss) | $ | (14 | ) | $ | 301 | |||
Basic: | ||||||||
Weighted average common shares outstanding | 21,949 | 21,537 | ||||||
Net earnings (loss) per share — basic | $ | (0.00 | ) | $ | 0.01 | |||
Diluted: | ||||||||
Shares used in the computation of basic net earnings (loss) per share | 21,949 | 21,537 | ||||||
Employee and non-employee director stock options | — | 185 | ||||||
Restricted stock that has not vested | — | 466 | ||||||
Shares used in the computation of diluted net earnings (loss) per share | 21,949 | 22,188 | ||||||
Net earnings (loss) per share - diluted | $ | (0.00 | ) | $ | 0.01 | |||
Schedule of restricted stock grants and options to purchase shares of common stock excluded from computation of diluted earnings (loss) per share | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Restricted common stock that has not yet vested | 1,455,002 | 953,848 | ||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Stock-Based Compensation | |||||||||
Summary of the entity's restricted stock activity | |||||||||
Number of Shares | Weighted Average | ||||||||
Grant-Date Fair Value | |||||||||
Restricted stock that had not yet vested at January 1, 2015 | 1,003,841 | $ | 10.55 | ||||||
Granted | 602,810 | $ | 11.88 | ||||||
Cancelled | (30,750 | ) | $ | 10.99 | |||||
Shares vested | (150,697 | ) | $ | 9.32 | |||||
Restricted stock that has not yet vested at March 31, 2015 | 1,425,204 | $ | 11.23 | ||||||
Summary of stock option activity | |||||||||
Number of Shares | Weighted | Weighted Average | |||||||
Average | Remaining | ||||||||
Exercise Price | Contract Life in | ||||||||
Years | |||||||||
Outstanding options as of January 1, 2015 | 462,900 | $ | 3.52 | ||||||
Options granted | — | $ | — | ||||||
Options exercised | — | $ | — | ||||||
Options cancelled | — | $ | — | ||||||
Outstanding options as of March 31, 2015 | 462,900 | $ | 3.52 | 4.23 | |||||
Exercisable options as of March 31, 2015 | 462,900 | $ | 3.52 | 4.23 | |||||
Goodwill_and_Valuation_of_Long1
Goodwill and Valuation of Long-Lived Assets (Tables) | 3 Months Ended | |||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||
Goodwill and Valuation of Long-Lived Assets | ||||||||||||||||||||||
Summary of identified intangible assets | ||||||||||||||||||||||
Identified intangible assets are summarized as follows (in thousands): | ||||||||||||||||||||||
Amortizable | As of March 31, 2015 | As of December 31, 2014 | ||||||||||||||||||||
Period | Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||||
(years) | Assets | Amortization | Assets | Assets | Amortization | Assets | ||||||||||||||||
Customer relationships | 8-May | $ | 36,943 | $ | (23,518 | ) | $ | 13,425 | $ | 36,943 | $ | (21,776 | ) | $ | 15,167 | |||||||
Services agreement | 4 | 67 | (67 | ) | — | 67 | (67 | ) | — | |||||||||||||
Certification | 2 | 467 | (467 | ) | — | 467 | (467 | ) | — | |||||||||||||
Covenant not to compete | 3 | 848 | (535 | ) | 313 | 848 | (504 | ) | 344 | |||||||||||||
Trademarks | 3 | 1,153 | (399 | ) | 754 | 1,153 | (325 | ) | 828 | |||||||||||||
Order backlog | 3 months – 1 year | 2,614 | (2,576 | ) | 38 | 2,614 | (2,350 | ) | 264 | |||||||||||||
Total identified intangible assets | $ | 42,092 | $ | (27,562 | ) | $ | 14,530 | $ | 42,092 | $ | (25,489 | ) | $ | 16,603 | ||||||||
Summary of amortization expense for identified intangible assets | ||||||||||||||||||||||
Amortization expense for identified intangible assets is summarized below (in thousands): | ||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||
March 31, | ||||||||||||||||||||||
2015 | 2014 | Statement of Operations Classification | ||||||||||||||||||||
Customer relationships | $ | 1,742 | $ | 1,376 | Operating expenses | |||||||||||||||||
Covenant not to compete | 31 | 40 | Operating expenses | |||||||||||||||||||
Trademarks | 74 | — | Operating expenses | |||||||||||||||||||
Order backlog | 226 | — | Operating expenses | |||||||||||||||||||
Total identified intangible assets | $ | 2,073 | $ | 1,416 | ||||||||||||||||||
Schedule of future amortization expense for the next five years | ||||||||||||||||||||||
Based on the identified intangible assets recorded at March 31, 2015, scheduled future amortization expense for the next five years is as follows: | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Remainder of 2015 | $ | 5,274 | ||||||||||||||||||||
2016 | 5,157 | |||||||||||||||||||||
2017 | 2,649 | |||||||||||||||||||||
2018 | 900 | |||||||||||||||||||||
2019 | 550 | |||||||||||||||||||||
$ | 14,530 | |||||||||||||||||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Fair Value Measurements | ||||||||||||||
Schedule of financial assets and/or liabilities at fair value on a recurring basis | ||||||||||||||
Fair Value Measurements | ||||||||||||||
(in thousands) | ||||||||||||||
Quoted Prices in | Significant Other | Significant | ||||||||||||
Active Markets for | Observable Inputs | Unobservable | ||||||||||||
Identical Assets | (Level 2) | Inputs | ||||||||||||
(Level 1) | (Level 3) | |||||||||||||
At March 31, 2015: | ||||||||||||||
Cash and cash equivalents | $ | 52,700 | $ | 52,700 | $ | — | $ | — | ||||||
Total assets measured at fair value | $ | 52,700 | $ | 52,700 | $ | — | $ | — | ||||||
At December 31, 2014: | ||||||||||||||
Cash and cash equivalents | $ | 27,725 | $ | 27,725 | $ | — | $ | — | ||||||
Short-term investments | 22,994 | 3,000 | 19,994 | |||||||||||
Total assets measured at fair value | $ | 50,719 | $ | 30,725 | $ | 19,994 | $ | — | ||||||
SalesType_Lease_Receivables_an1
Sales-Type Lease Receivables and Sales-Leaseback Arrangements (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Sales-Type Lease Receivables and Sales-Leaseback Arrangements | |||||
Schedule of maturities of minimum lease payments receivable | As of March 31, 2015, scheduled maturities of minimum lease payments receivable were as follows for the fiscal years ended December 31: | ||||
(in thousands) | |||||
Remainder of 2015 | $ | 2,260 | |||
2016 | 1,873 | ||||
2017 | 1,340 | ||||
2018 | 514 | ||||
2019 | 308 | ||||
6,295 | |||||
Less: Current portion | (2,430 | ) | |||
Long-term sales-type lease receivable | $ | 3,865 | |||
Schedule of contractual cash obligations of future minimum lease payments | As of March 31, 2015, the Company’s scheduled contractual cash obligations for future minimum lease payments were as follows for the fiscal years ended December 31: | ||||
(in thousands) | |||||
Remainder of 2015 | $ | 1,490 | |||
2016 | 1,808 | ||||
2017 | 992 | ||||
2018 | 492 | ||||
2019 | 101 | ||||
4,883 | |||||
Less: Current portion | (1,883 | ) | |||
Long-term sales-type lease receivable | $ | 3,000 | |||
Net_Earnings_Loss_per_Share_De
Net Earnings (Loss) per Share (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Net Earnings (Loss) per Share | ||
Net earnings (loss) | ($14) | $301 |
Basic: | ||
Weighted average common shares outstanding | 21,949,000 | 21,537,000 |
Net earnings per share - basic (in dollars per share) | $0 | $0.01 |
Diluted: | ||
Shares used in the computation of basic net earnings (loss) per share | 21,949,000 | 21,537,000 |
Employee and non-employee director stock options (in shares) | 185,000 | |
Restricted stock that has not vested (in shares) | 466,000 | |
Shares used in the computation of diluted net earnings (loss) per share | 21,949,000 | 22,188,000 |
Net earnings (loss) per share - diluted (in dollars per share) | $0 | $0.01 |
Restricted Stock | ||
Anti-dilutive shares | ||
Shares of common stock excluded from the computation of diluted earnings (loss) per share | 1,455,002 | 953,848 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Board of Directors | ||
Other | ||
Expense for common stock awards | $133,000 | $131,000 |
Awards of fully vested shares | 11,019 | 9,449 |
Restricted Stock | ||
Stock-Based Compensation | ||
Stock-based compensation expense | 1,300,000 | 853,000 |
Unrecognized stock-based compensation expense related to restricted stock | 11,400,000 | |
Number of Shares | ||
Restricted stock that had not yet vested at the beginning of the period (in shares) | 1,003,841 | |
Granted (in shares) | 602,810 | |
Cancelled (in shares) | -30,750 | |
Shares vested (in shares) | -150,697 | |
Restricted stock that has not yet vested at the end of the period (in shares) | 1,425,204 | |
Weighted Average Grant-Date Fair Value | ||
Non-vested restricted stock at the beginning of the period (in dollars per share) | $10.55 | |
Granted (in dollars per share) | $11.88 | |
Cancelled (in dollars per share) | $10.99 | |
Shares vested (in dollars per share) | $9.32 | |
Non-vested restricted stock at the end of the period (in dollars per share) | $11.23 | |
Stock Options | ||
Stock-Based Compensation | ||
Stock-based compensation expense | 0 | 0 |
Unrecognized stock-based compensation expense related to stock options | $0 | |
Stock option activity, Number of Shares | ||
Outstanding options at the beginning of the period (in shares) | 462,900 | |
Outstanding options at the end of the period (in shares) | 462,900 | |
Exercisable options at the end of the period (in shares) | 462,900 | |
Stock option activity, Weighted Average Exercise Price | ||
Outstanding options at the beginning of the period (in dollars per share) | $3.52 | |
Outstanding options at the end of the period (in dollars per share) | $3.52 | |
Exercisable options at the end of the period (in dollars per share) | $3.52 | |
Weighted Average Remaining Contract Life | ||
Outstanding options at the end of the period | 4 years 2 months 23 days | |
Exercisable options at the end of the period | 4 years 2 months 23 days | |
DSU | Board of Directors | ||
Other | ||
Awards of fully vested shares | 5,019 | 449 |
Number of shares awarded in payment and settlement of each vested Deferred Stock Unit. | 1 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Income Taxes | |||
Effective tax rate (as a percent) | 40.30% | 37.50% | |
Recognized benefit of discrete item adjustments | $0 | $14,000 | |
Expected annual effective tax rate (as a percent) | 40.30% | ||
Income tax expense (benefit) | -9,000 | 181,000 | |
Amount of unrecognized tax benefits which would affect our effective tax rate if recognized | 236,000 | 236,000 | |
Accrued interest and penalties related to uncertain tax positions | $0 | $0 |
Acquisitions_Details
Acquisitions: (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||
Mar. 31, 2015 | Oct. 18, 2014 | Oct. 18, 2014 | Dec. 31, 2014 | |
Acquisitions | ||||
Total integration and transaction costs | $450,000 | |||
Net working capital receivable from acquisition | 741,000 | 741,000 | ||
Shares issued | 23,410,923 | 22,876,753 | ||
Assets acquired at their fair value: | ||||
Goodwill | 48,016,000 | 48,016,000 | ||
Bear Data | ||||
Acquisitions | ||||
Total integration and transaction costs | 450,000 | |||
Purchase price | 13,400,000 | |||
Cash payment, net of cash acquired | 12,700,000 | |||
Net working capital receivable from acquisition | 741,000 | 741,000 | ||
Portion of consideration transferred and deposited in an escrow account to fund post-closing adjustments to the purchase price and other indemnification obligations | 2,400,000 | |||
Assets acquired at their fair value: | ||||
Finite-lived intangibles | 9,500,000 | 9,500,000 | ||
Goodwill | 10,200,000 | 10,200,000 | ||
Liabilities assumed at their fair value: | ||||
Net tangible liabilities | 6,300,000 | |||
Bear Data | Common Stock Purchase Agreement | ||||
Acquisitions | ||||
Shares issued | 156,360 | 156,360 | ||
Value of shares issued | 1,700,000 | 1,700,000 | ||
Illiquidity adjustments | 192,000 | |||
Purchase price, value of shares of common stock issued | 1,500,000 | 1,500,000 | ||
Acquisitions, separately recognized transaction | ||||
Purchase price, value of shares of common stock issued | 1,500,000 | 1,500,000 | ||
Number of executive securityholders | 3 | 3 | ||
Consecutive trading days used in calculating weighted average price per share | 20 days | |||
Number of trading days prior to closing | 1 day | |||
Percent of shares transferable after the first anniversary of closing | 75.00% | |||
Reconciliation of the net purchase price as compared to the cash payment for purchase | ||||
Plus value of shares issued | 1,500,000 | 1,500,000 | ||
Bear Data | Covenant not to compete | ||||
Liabilities assumed at their fair value: | ||||
Fair value of finite lived intangible assets | 370,000 | |||
Finite lived intangible assets, estimated lives | 3 years | |||
Bear Data | Trademarks | ||||
Liabilities assumed at their fair value: | ||||
Fair value of finite lived intangible assets | 890,000 | |||
Finite lived intangible assets, estimated lives | 3 years | |||
Bear Data | Customer relationships | ||||
Liabilities assumed at their fair value: | ||||
Fair value of finite lived intangible assets | 7,810,000 | |||
Finite lived intangible assets, estimated lives | 6 years | |||
Bear Data | Order backlog | ||||
Liabilities assumed at their fair value: | ||||
Fair value of finite lived intangible assets | $452,200 | |||
Finite lived intangible assets, estimated lives | 6 months |
Acquisitions_Details_2
Acquisitions: (Details 2) (USD $) | 3 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Oct. 04, 2012 | Oct. 04, 2012 | Jan. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | |
Assets acquired at their fair value: | |||||||
Goodwill | $48,016,000 | $48,016,000 | |||||
Reconciliation of the net purchase price as compared to the cash payment for purchase | |||||||
Total integration and transaction costs | 450,000 | ||||||
Charge for write-down of account receivable due from the Sellers | 876,000 | ||||||
StraTech | |||||||
Acquisitions | |||||||
Purchase price | 11,900,000 | ||||||
Purchase price, cash payment | 13,200,000 | ||||||
Purchase price, shares of common stock issued | 269,783 | ||||||
Purchase price, value of shares of common stock issued | 2,000,000 | 2,000,000 | |||||
Shares of common stock deposited in escrow account | 242,805 | ||||||
Initial amount of receivable due from Sellers | 4,200,000 | 4,200,000 | |||||
Receivable due from sellers | 3,300,000 | 3,300,000 | |||||
Decrease in receivable due from sellers | 936,000 | ||||||
Increase in purchase price | 936,000 | ||||||
Shares of common stock deposited in escrow account released | 242,805 | ||||||
Payment for shares of common stock released from escrow account | 100,000 | ||||||
Assets acquired at their fair value: | |||||||
Finite-lived intangibles | 15,900,000 | 15,900,000 | |||||
Goodwill deductible for tax purposes | 5,300,000 | 5,300,000 | |||||
Period over which goodwill is deductible for tax purposes | 15 years | ||||||
Net tangible liabilities | 9,300,000 | ||||||
Reconciliation of the net purchase price as compared to the cash payment for purchase | |||||||
Payment in cash for purchase | 13,200,000 | ||||||
Less receivable due from seller | -3,300,000 | -3,300,000 | |||||
Plus value of shares issued | 2,000,000 | 2,000,000 | |||||
Uncollectible portion of receivable due from the Sellers | 3,300,000 | ||||||
Receivable reclassified from accounts receivable to equity | 2,647,000 | ||||||
Pre tax gain due to increase in stock price | $876,000 | ||||||
StraTech | Customer relationships | |||||||
Assets acquired at their fair value: | |||||||
Finite lived intangible assets, estimated lives | 5 years | ||||||
StraTech | Maximum | |||||||
Acquisitions | |||||||
Measurement period | 1 year |
Goodwill_and_Valuation_of_Long2
Goodwill and Valuation of Long-Lived Assets (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
item | item | ||
Goodwill and Valuation of Long-Lived Assets | |||
Number of operating units | 1 | ||
Number of reporting units | 1 | ||
Goodwill | $48,016 | $48,016 | |
Impairment of goodwill | 0 | ||
Number of triggering events that occurred | 0 | 0 | |
Identified intangible assets | |||
Gross Assets | 42,092 | 42,092 | |
Accumulated Amortization | -27,562 | -25,489 | |
Net Assets | 14,530 | 16,603 | |
Amortization of intangibles | 2,073 | 1,416 | |
Future amortization expenses for the next five years | |||
Remainder of 2015 | 5,274 | ||
2016 | 5,157 | ||
2017 | 2,649 | ||
2018 | 900 | ||
2019 | 550 | ||
Net Assets | 14,530 | 16,603 | |
Customer relationships | |||
Identified intangible assets | |||
Gross Assets | 36,943 | 36,943 | |
Accumulated Amortization | -23,518 | -21,776 | |
Net Assets | 13,425 | 15,167 | |
Amortization of intangibles | 1,742 | 1,376 | |
Future amortization expenses for the next five years | |||
Net Assets | 13,425 | 15,167 | |
Customer relationships | Minimum | |||
Identified intangible assets | |||
Amortizable Period | 5 years | ||
Customer relationships | Maximum | |||
Identified intangible assets | |||
Amortizable Period | 8 years | ||
Services agreement | |||
Identified intangible assets | |||
Amortizable Period | 4 years | ||
Gross Assets | 67 | 67 | |
Accumulated Amortization | -67 | -67 | |
Certification | |||
Identified intangible assets | |||
Amortizable Period | 2 years | ||
Gross Assets | 467 | 467 | |
Accumulated Amortization | -467 | -467 | |
Covenant not to compete | |||
Identified intangible assets | |||
Amortizable Period | 3 years | ||
Gross Assets | 848 | 848 | |
Accumulated Amortization | -535 | -504 | |
Net Assets | 313 | 344 | |
Amortization of intangibles | 31 | 40 | |
Future amortization expenses for the next five years | |||
Net Assets | 313 | 344 | |
Trademarks | |||
Identified intangible assets | |||
Amortizable Period | 3 years | ||
Gross Assets | 1,153 | 1,153 | |
Accumulated Amortization | -399 | -325 | |
Net Assets | 754 | 828 | |
Amortization of intangibles | 74 | ||
Future amortization expenses for the next five years | |||
Net Assets | 754 | 828 | |
Order backlog | |||
Identified intangible assets | |||
Gross Assets | 2,614 | 2,614 | |
Accumulated Amortization | -2,576 | -2,350 | |
Net Assets | 38 | 264 | |
Amortization of intangibles | 226 | ||
Future amortization expenses for the next five years | |||
Net Assets | $38 | $264 | |
Order backlog | Minimum | |||
Identified intangible assets | |||
Amortizable Period | 3 months | ||
Order backlog | Maximum | |||
Identified intangible assets | |||
Amortizable Period | 1 year |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (Fair value on a recurring basis, USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Fair Value Measurements | ||
Non-financial assets | $0 | |
Non-financial liabilities | 0 | |
Fair value | ||
Fair Value Measurements | ||
Total assets measured at fair value | 52,700 | 50,719 |
Fair value | Cash and cash equivalents | ||
Fair Value Measurements | ||
Total assets measured at fair value | 52,700 | 27,725 |
Fair value | Short-term investments | ||
Fair Value Measurements | ||
Total assets measured at fair value | 22,994 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value Measurements | ||
Total assets measured at fair value | 52,700 | 30,725 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Cash and cash equivalents | ||
Fair Value Measurements | ||
Total assets measured at fair value | 52,700 | 27,725 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Short-term investments | ||
Fair Value Measurements | ||
Total assets measured at fair value | 3,000 | |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Total assets measured at fair value | 19,994 | |
Significant Other Observable Inputs (Level 2) | Short-term investments | ||
Fair Value Measurements | ||
Total assets measured at fair value | $19,994 |
SalesType_Lease_Receivables_an2
Sales-Type Lease Receivables and Sales-Leaseback Arrangements (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Net investment in sales-type lease receivables | 5,900,000 | $6,100,000 |
Unearned income | 364,000 | 435,000 |
Lease receivables past due | 0 | |
Scheduled maturities of minimum lease payments receivable | ||
Remainder of 2015 | 2,260,000 | |
2016 | 1,873,000 | |
2017 | 1,340,000 | |
2018 | 514,000 | |
2019 | 308,000 | |
Future minimum payments receivable | 6,295,000 | |
Less: Current portion | -2,430,000 | -2,482,000 |
Long-term lease receivable | 3,865,000 | 4,016,000 |
Contractual cash obligations of future minimum lease payments by period | ||
Remainder of 2015 | 1,490,000 | |
2016 | 1,808,000 | |
2017 | 992,000 | |
2018 | 492,000 | |
2019 | 101,000 | |
Future minimum payments payable | 4,883,000 | |
Less: Current portion | -1,883,000 | -2,319,000 |
Long-term leases payable | 3,000,000 | 3,278,000 |
Interest included in contractual cash obligations | 350,000 | |
Minimum | ||
Term of lease receivables | 24 months | |
Maximum | ||
Term of lease receivables | 36 months |
Line_of_Credit_Details
Line of Credit: (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||
Dec. 31, 2014 | Jan. 13, 2015 | Jul. 17, 2013 | Mar. 31, 2015 | |
Combined facility | ||||
Line of Credit | ||||
Tangible net worth increase | $10,000,000 | |||
Number of trailing months for calculating free cash flow | 12 months | |||
Combined facility | Minimum | ||||
Line of Credit | ||||
Tangible net worth | 30,000,000 | 20,000,000 | ||
Free cash flow | 5,000,000 | |||
Quarterly net income | 250,000 | |||
Combined facility | Maximum | ||||
Line of Credit | ||||
Funded debt to EBITDA ratio | 3 | |||
Combined facility | CPC | ||||
Line of Credit | ||||
Increase to borrowing capacity | 10,000,000 | |||
Maximum borrowing amount | 50,000,000 | 40,000,000 | 50,000,000 | |
Unused commitment fee (as a percent) | 0.50% | |||
Revolving facility | CPC | ||||
Line of Credit | ||||
Borrowing base as a percentage of certain eligible accounts | 85.00% | |||
Borrowing base as a percentage of channel financed inventory | 100.00% | |||
Revolving facility | Wells Fargo Bank, N.A. | ||||
Line of Credit | ||||
Margin added to the variable interest rate (as a percent) | 2.00% | |||
Variable interest rate (as a percent) | one-month LIBOR | |||
Interest rate at the end of the period (as a percent) | 0.18% | |||
Floor plan line of credit | ||||
Line of Credit | ||||
Margin added to the variable interest rate (as a percent) | 4.00% | |||
Variable interest rate (as a percent) | LIBOR | |||
Outstanding advances on the lines of credit | 27,700,000 | $29,600,000 |