Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2014 |
Accounting Policies [Abstract] | ' |
Nature of the Business | ' |
Nature of the Business |
The accompanying condensed consolidated financial statements include the accounts of Lionbridge Technologies, Inc. and its wholly owned subsidiaries (collectively, “Lionbridge” or the “Company”). These financial statements are unaudited. However, in the opinion of management, the condensed consolidated financial statements include all adjustments, all of a normal recurring nature, necessary for their fair presentation. Interim results are not necessarily indicative of results expected for a full year. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and footnotes necessary for a complete presentation of the operations, financial position and cash flows of the Company in conformity with U.S. generally accepted accounting principles (“GAAP”). The condensed consolidated balance sheet data as of December 31, 2013 was derived from audited financial statements, but does not include all disclosures required by GAAP for annual financial statements. These statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. |
The Company’s preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Estimates are used (but not limited to) when accounting for collectability of receivables, calculating service revenue using a proportional performance assessment and valuing intangible assets and deferred tax assets. Actual results could differ from these estimates. |
Stock-based Compensation | ' |
Stock-based Compensation |
The Company recognizes expense for stock options, performance-based restricted stock awards and time-based restricted stock awards pursuant to the authoritative guidance. Total compensation expense related to stock options, performance-based restricted stock awards and time-based restricted stock awards was $1.8 million and $1.7 million for the three month periods ended March 31, 2014 and 2013, respectively, classified in the condensed consolidated statements of operations line items as follows (in thousands): |
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| | Three Months Ended | |
March 31, |
| | 2014 | | | 2013 | |
Cost of revenue | | $ | 20 | | | $ | 28 | |
Sales and marketing | | | 521 | | | | 311 | |
General and administrative | | | 1,250 | | | | 1,298 | |
Research and development | | | 23 | | | | 13 | |
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Total stock-based compensation expense | | $ | 1,814 | | | $ | 1,650 | |
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As of March 31, 2014, future compensation cost related to non-vested stock options, less estimated forfeitures, is approximately $1.4 million and will be recognized over an estimated weighted average period of approximately 2.7 years. Lionbridge currently expects to amortize $13.1 million of unamortized compensation in connection with restricted stock awards outstanding as of March 31, 2014 over an estimated weighted average period of approximately 2.7 years. |
Exit or Disposal Cost Obligations | ' |
During the three month period ended March 31, 2014, Lionbridge recorded $0.3 million of restructuring, impairment and other charges, which included restructuring charges of $0.2 million for workforce reductions in Europe consisting of 4 technical staff and $53,000 of restructuring charges representing additional costs recorded for a previously vacated facility in order to reflect changes in initial estimates of a sublease arrangement due to current economic conditions. The $47,000 of other charges was related to accretion of a contingent consideration liability from the acquisition of VSI. The workforce and facility charges relate to the Company’s GLC segment and the VSI contingent consideration accretion relates to the Company’s GES segment. The Company made $0.3 million of cash payments in the three-month period ended March 31, 2014, all of which related to the GLC segment. |
During the three-month period ended March 31, 2013, Lionbridge recorded $0.7 million of restructuring, impairment and other charges, which included restructuring charges of $0.2 million for workforce reductions in Europe consisting of 4 technical staff and 1 administrative staff and $0.1 million of restructuring charges representing additional costs recorded for a previously vacated facility in order to reflect changes in initial estimates of a sublease arrangement due to current economic conditions. The remaining $0.4 million of other charges related to the Company’s engagement in strategic initiatives. The workforce and facility charges related to the Company’s Global Language and Content (“GLC”) segment and the costs related to strategic initiatives were included in Corporate. The Company made $1.0 million of cash payments in the three-month period ended March 31, 2013 all of which related to the GLC segment. |
Goodwill, Acquisition-Related Intangible Assets, and Other Long Lived Assets | ' |
Lionbridge assesses the impairment of goodwill and acquisition-related intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Such events or conditions could include an economic downturn in the industries to which Lionbridge provides services; increased competition; an increase in operating or other costs; additional volatility in international currencies; the pace of technological improvements; or other information regarding Lionbridge’s market value, such as a reduction in stock price to a price near or below the book value of the Company for an extended period of time. When Lionbridge determines that the carrying value of goodwill may not be recoverable based upon one or more of these indicators of impairment, the Company initially assesses any impairment using fair value measurements based on projected discounted cash flow valuation models and the market approach. In addition, goodwill is reviewed for impairment on an annual basis. At December 31, 2013, the Company performed its annual test of goodwill to determine if an impairment existed. This test determined that each reporting unit’s fair value substantially exceeded the carrying value of the net assets of each respective reporting unit, using projected discounted cash flow modeling and the market approach. As a result, no impairment was recorded for the year ended December 31, 2013. There were no events or changes in circumstances during the three months ended March 31, 2014 which indicated that an assessment of the impairment of goodwill and acquisition-related intangible assets was required. |
The Company evaluates whether there has been impairment in the carrying value of its long-lived assets if circumstances indicate that a possible impairment may exist. Impairment in the carrying value of an asset is assessed when the undiscounted expected future operating cash flows derived from the asset grouping are less than its carrying value. If it is determined that the asset group is impaired then it is written down to its estimated fair value. Factors that could lead to an impairment of its long-lived assets include a worsening in customer attrition rates compared to historical attrition rates, lower than initially anticipated cash flows associated with customer relationships, significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of the acquired assets or the strategy for our overall business, identification of other impaired assets within a reporting unit, disposition of a significant portion of an operating segment, significant negative industry or economic trends, significant decline in our stock price for a sustained period and a decline in our market capitalization relative to net book value. |
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Intangible assets arose from acquisitions made prior to 2011 and the acquisitions of Productive Resources, LLC (“PRI”) in June 2012, Virtual Solutions, Inc. (“VSI”) in November 2012 and E5 Global Holdings, Inc. (“E5”) in October 2013. Intangibles arising from acquisitions made prior to 2011 are being amortized using an economic consumption method over an estimated useful life of; (i) 3 to 12 year for customer relationships, (ii) 3 to 5 years for customer contracts and (iii) 1 to 4 years for acquired technology. Intangibles arising from the acquisitions of PRI, VSI and E5 are being amortized over a straight-line basis over the estimated useful life of; (i) 5 to 10 years for acquired technology, (ii) 2 to 12 years for customer relationships, (iii) 1 to 5 years for non-compete agreements and (iv) 1 to 2 years for trademarks. |
Recent Accounting Pronouncements | ' |
New pronouncements issued but not effective until after March 31, 2014 are not expected to have a material impact on our financial position, results of operations or liquidity. |