Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Feb. 01, 2014 | Jun. 30, 2013 | |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'DIGITAL RIVER INC /DE | ' | ' |
Entity Central Index Key | '0001062530 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Public Float | ' | ' | $625,975,000 |
Entity Common Stock, Shares Outstanding | ' | 33,086,354 | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
CURRENT ASSETS | ' | ' |
Cash and cash equivalents | $483,868 | $542,851 |
Short-term investments | 115,652 | 162,794 |
Accounts receivable, net of allowance of $3,206 and $4,834 | 70,865 | 55,192 |
Deferred tax assets | 1,479 | 457 |
Prepaid expenses and other | 27,878 | 31,813 |
Assets of discontinued operations | ' | 7,561 |
Total current assets | 699,742 | 800,668 |
Property and equipment, net | 53,770 | 53,098 |
Goodwill | 139,318 | 108,960 |
Intangible assets, net | 29,217 | 11,718 |
Long-term investments | 56,023 | 71,735 |
Deferred income taxes | 1,037 | 1,792 |
Other assets | 2,067 | 4,313 |
TOTAL ASSETS | 981,174 | 1,052,284 |
CURRENT LIABILITIES | ' | ' |
Accounts payable | 187,635 | 201,826 |
Accrued payroll | 20,058 | 11,294 |
Deferred revenue | 6,904 | 13,119 |
Other current liabilities | 55,899 | 50,149 |
Liabilities of discontinued operations | ' | 5,753 |
Total current liabilities | 270,496 | 282,141 |
NON-CURRENT LIABILITIES | ' | ' |
Senior convertible notes | 295,795 | 309,909 |
Other liabilities | 21,452 | 18,236 |
Total non-current liabilities | 317,247 | 328,145 |
TOTAL LIABILITIES | 587,743 | 610,286 |
STOCKHOLDERS' EQUITY | ' | ' |
Preferred stock, $.01 par value; 5,000,000 shares authorized; no shares issued or outstanding | ' | ' |
Common stock, $.01 par value; 120,000,000 shares authorized; 50,074,977 and 48,941,402 shares issued | 501 | 489 |
Treasury stock at cost; 16,910,883 and 13,581,889 shares | -424,416 | -368,721 |
Additional paid-in capital | 761,560 | 737,499 |
Retained earnings | 51,254 | 75,901 |
Accumulated other comprehensive income (loss) | 4,532 | -3,170 |
Total stockholders' equity | 393,431 | 441,998 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $981,174 | $1,052,284 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
Consolidated Balance Sheets | ' | ' |
Allowance for accounts receivable (in dollars) | $3,206 | $4,834 |
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 50,074,977 | 48,941,402 |
Treasury stock, shares | 16,910,883 | 13,581,889 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Consolidated Statements of Operations | ' | ' | ' |
Revenue | $389,679 | $370,496 | $376,469 |
Costs and expenses (exclusive of depreciation and amortization expense shown separately below): | ' | ' | ' |
Direct cost of services | 73,505 | 66,756 | 62,381 |
Network and infrastructure | 59,036 | 52,564 | 47,886 |
Sales and marketing | 106,954 | 97,816 | 102,221 |
Product research and development | 72,359 | 61,550 | 64,175 |
General and administrative | 56,279 | 55,763 | 40,649 |
Goodwill impairment | 21,249 | 175,241 | ' |
Depreciation and amortization | 22,080 | 20,192 | 22,001 |
Amortization of acquisition-related intangibles | 8,543 | 4,700 | 6,315 |
Total costs and expenses | 420,005 | 534,582 | 345,628 |
Income (loss) from operations | -30,326 | -164,086 | 30,841 |
Interest income | 2,451 | 3,820 | 6,098 |
Interest expense | -7,822 | -8,968 | -9,018 |
Other income (expense), net | 16,260 | 4,799 | -1,931 |
Income (loss) from continuing operations before income taxes | -19,437 | -164,435 | 25,990 |
Income tax expense (benefit) | -908 | 19,203 | 2,276 |
Income (loss) from continuing operations | -18,529 | -183,638 | 23,714 |
Income (loss) from discontinued operations, net of tax | -6,118 | -12,230 | -6,547 |
Net income (loss) | ($24,647) | ($195,868) | $17,167 |
Income (loss) per share - basic: | ' | ' | ' |
Income (loss) from continuing operations (in dollars per share) | ($0.58) | ($5.53) | $0.65 |
Income (loss) from discontinued operations (in dollars per share) | ($0.19) | ($0.37) | ($0.18) |
Net income (loss) per share - basic (in dollars per share) | ($0.77) | ($5.90) | $0.47 |
Income (loss) per share - diluted: | ' | ' | ' |
Income (loss) from continuing operations (in dollars per share) | ($0.58) | ($5.53) | $0.63 |
Income (loss) from discontinued operations (in dollars per share) | ($0.19) | ($0.37) | ($0.17) |
Net income (loss) per share - diluted (in dollars per share) | ($0.77) | ($5.90) | $0.46 |
Shares used in per-share calculation - basic (in shares) | 32,065 | 33,224 | 36,778 |
Shares used in per-share calculation - diluted (in shares) | 32,065 | 33,224 | 37,510 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Loss) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Consolidated Statements of Comprehensive Income (Loss) | ' | ' | ' |
Net income (loss) | ($24,647) | ($195,868) | $17,167 |
Other comprehensive income (loss): | ' | ' | ' |
Unrealized foreign exchange gain (loss) on the revaluation of investments in foreign subsidiaries | 1,155 | 6,495 | -9,004 |
Unrealized gain (loss) on investments | 6,547 | -1,701 | 746 |
Tax benefit (expense) | ' | ' | -278 |
Other comprehensive income (loss) | 7,702 | 4,794 | -8,536 |
Comprehensive income (loss) | ($16,945) | ($191,074) | $8,631 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Comprehensive Income (Loss) | Retained Earnings |
In Thousands, except Share data, unless otherwise specified | ||||||
BALANCE at Dec. 31, 2010 | $683,748 | $463 | ($255,196) | $683,307 | $572 | $254,602 |
BALANCE (in shares) at Dec. 31, 2010 | ' | 39,027,000 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Net income (loss) | 17,167 | ' | ' | ' | ' | 17,167 |
Unrealized gain (loss) on investments, net of tax expense (benefit) of $0 in 2013, $0 in 2012 and $278 in 2011 | 468 | ' | ' | ' | 468 | ' |
Foreign currency translation gain (loss) | -9,004 | ' | ' | ' | -9,004 | ' |
Repurchase of common stock | -79,758 | ' | -79,758 | ' | ' | ' |
Repurchase of common stock (in shares) | -4,265,168 | -4,265,000 | ' | ' | ' | ' |
Exercise of stock options | 364 | ' | ' | 364 | ' | ' |
Exercise of stock options (in shares) | ' | 19,000 | ' | ' | ' | ' |
Stock-based compensation | 22,114 | ' | ' | 22,114 | ' | ' |
Restricted stock issued under equity incentive plans, net of forfeitures | ' | 8 | ' | -8 | ' | ' |
Restricted stock issued under equity incentive plans, net of forfeitures (in shares) | ' | 765,000 | ' | ' | ' | ' |
Tax withheld in restricted stock vesting | -5,992 | ' | -5,992 | ' | ' | ' |
Tax withheld in restricted stock vesting (in shares) | ' | -179,000 | ' | ' | ' | ' |
Tax benefit (deficiency) of stock-based compensation | 699 | ' | ' | 699 | ' | ' |
Common stock issued under the Employee Stock Purchase Plan | 2,466 | 1 | ' | 2,465 | ' | ' |
Common stock issued under the Employee Stock Purchase Plan (in shares) | ' | 141,000 | ' | ' | ' | ' |
BALANCE at Dec. 31, 2011 | 632,272 | 472 | -340,946 | 708,941 | -7,964 | 271,769 |
BALANCE (in shares) at Dec. 31, 2011 | ' | 35,508,000 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Net income (loss) | -195,868 | ' | ' | ' | ' | -195,868 |
Unrealized gain (loss) on investments, net of tax expense (benefit) of $0 in 2013, $0 in 2012 and $278 in 2011 | -1,701 | ' | ' | ' | -1,701 | ' |
Foreign currency translation gain (loss) | 6,495 | ' | ' | ' | 6,495 | ' |
Repurchase of common stock | -22,667 | ' | -22,667 | ' | ' | ' |
Repurchase of common stock (in shares) | -1,533,132 | -1,533,000 | ' | ' | ' | ' |
Exercise of stock options | 1,567 | 1 | ' | 1,566 | ' | ' |
Exercise of stock options (in shares) | ' | 121,000 | ' | ' | ' | ' |
Stock-based compensation | 29,517 | ' | ' | 29,517 | ' | ' |
Restricted stock issued under equity incentive plans, net of forfeitures | ' | 14 | ' | -14 | ' | ' |
Restricted stock issued under equity incentive plans, net of forfeitures (in shares) | ' | 1,367,000 | ' | ' | ' | ' |
Tax withheld in restricted stock vesting | -5,108 | ' | -5,108 | ' | ' | ' |
Tax withheld in restricted stock vesting (in shares) | ' | -307,000 | ' | ' | ' | ' |
Tax benefit (deficiency) of stock-based compensation | -5,061 | ' | ' | -5,061 | ' | ' |
Common stock issued under the Employee Stock Purchase Plan | 2,552 | 2 | ' | 2,550 | ' | ' |
Common stock issued under the Employee Stock Purchase Plan (in shares) | ' | 204,000 | ' | ' | ' | ' |
BALANCE at Dec. 31, 2012 | 441,998 | 489 | -368,721 | 737,499 | -3,170 | 75,901 |
BALANCE (in shares) at Dec. 31, 2012 | ' | 35,360,000 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Net income (loss) | -24,647 | ' | ' | ' | ' | -24,647 |
Unrealized gain (loss) on investments, net of tax expense (benefit) of $0 in 2013, $0 in 2012 and $278 in 2011 | 6,547 | ' | ' | ' | 6,547 | ' |
Foreign currency translation gain (loss) | 1,155 | ' | ' | ' | 1,155 | ' |
Repurchase of common stock | -51,208 | ' | -51,208 | ' | ' | ' |
Repurchase of common stock (in shares) | -3,019,562 | -3,020,000 | ' | ' | ' | ' |
Exercise of stock options | 1,273 | 1 | ' | 1,272 | ' | ' |
Exercise of stock options (in shares) | ' | 122,000 | ' | ' | ' | ' |
Stock-based compensation | 20,568 | ' | ' | 20,568 | ' | ' |
Restricted stock issued under equity incentive plans, net of forfeitures | ' | 9 | ' | -9 | ' | ' |
Restricted stock issued under equity incentive plans, net of forfeitures (in shares) | ' | 847,000 | ' | ' | ' | ' |
Tax withheld in restricted stock vesting | -4,487 | ' | -4,487 | ' | ' | ' |
Tax withheld in restricted stock vesting (in shares) | ' | -309,000 | ' | ' | ' | ' |
Common stock issued under the Employee Stock Purchase Plan | 2,232 | 2 | ' | 2,230 | ' | ' |
Common stock issued under the Employee Stock Purchase Plan (in shares) | ' | 164,000 | ' | ' | ' | ' |
BALANCE at Dec. 31, 2013 | $393,431 | $501 | ($424,416) | $761,560 | $4,532 | $51,254 |
BALANCE (in shares) at Dec. 31, 2013 | ' | 33,164,000 | ' | ' | ' | ' |
Consolidated_Statements_of_Sto1
Consolidated Statements of Stockholders' Equity (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Consolidated Statements of Stockholders' Equity | ' | ' | ' |
Unrealized gain (loss) on investments tax expense (benefit) | $0 | $0 | $278 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
OPERATING ACTIVITIES | ' | ' | ' |
Net income (loss) | ($24,647) | ($195,868) | $17,167 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ' | ' | ' |
Loss on disposal of discontinued businesses | 1,894 | ' | ' |
Amortization of acquisition-related intangibles | 8,543 | 6,832 | 8,689 |
Provision for doubtful accounts | 1,661 | 2,031 | 1,317 |
Depreciation and amortization | 22,163 | 20,307 | 22,207 |
Impairment of goodwill | 21,249 | 175,241 | ' |
Impairment of intangibles | ' | 235 | 9,351 |
Debt issuance cost amortization | 1,701 | 1,953 | 1,986 |
Amortization of investment premiums | 2,837 | ' | ' |
Loss on sale of equipment | 88 | 85 | ' |
Gain on investment | -17,526 | -3,178 | ' |
Gain on business divestiture | ' | -246 | ' |
Stock-based compensation expense | 20,568 | 29,517 | 22,114 |
Excess tax benefits from stock-based compensation | ' | -505 | -1,985 |
Deferred and other income taxes | -150 | 23,349 | -2,649 |
Impairment of equity investment | ' | ' | 2,198 |
Change in operating assets and liabilities, net of acquisitions: | ' | ' | ' |
Accounts receivable | -15,278 | 2,715 | -15,292 |
Prepaid and other assets | 9,744 | -8,392 | 2,635 |
Accounts payable | -37,698 | -40,333 | 57,162 |
Deferred revenue | -7,288 | 8,265 | -1,782 |
Income tax payable | -1,679 | 10,948 | -4,061 |
Other current liabilities | -1,472 | 5,884 | -24,289 |
Net cash provided by (used in) operating activities | -15,290 | 38,840 | 94,768 |
INVESTING ACTIVITIES | ' | ' | ' |
Purchases of investments | -140,900 | -98,658 | -254,536 |
Sales of investments | 184,978 | 185,750 | 213,302 |
Cash received (paid) for cost method investments | 39,636 | 2,700 | -9,490 |
Cash received from divestitures | 120 | 500 | ' |
Cash paid for acquisitions, net of cash received | -55,843 | ' | ' |
Purchases of equipment and capitalized software | -23,334 | -22,035 | -23,860 |
Net cash provided by (used in) investing activities | 4,657 | 68,257 | -74,584 |
FINANCING ACTIVITIES | ' | ' | ' |
Debt issuance costs | ' | ' | -342 |
Repurchase of convertible senior notes | -5,353 | -43,896 | ' |
Exercise of stock options | 1,273 | 1,567 | 364 |
Sales of common stock under employee stock purchase plan | 2,232 | 2,552 | 2,466 |
Repurchase of common stock | -51,208 | -22,667 | -79,758 |
Repurchase of restricted stock to satisfy tax withholding obligation | -4,487 | -5,108 | -5,992 |
Excess tax benefits from stock-based compensation | ' | 505 | 1,985 |
Net cash provided by (used in) financing activities | -57,543 | -67,047 | -81,277 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 9,193 | 5,608 | -6,800 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | -58,983 | 45,658 | -67,893 |
CASH AND CASH EQUIVALENTS, beginning of year | 542,851 | 497,193 | 565,086 |
CASH AND CASH EQUIVALENTS, end of year | 483,868 | 542,851 | 497,193 |
SUPPLEMENTAL DISCLOSURES | ' | ' | ' |
Cash paid for interest on senior convertible notes | 6,081 | 7,123 | 7,010 |
Cash paid for income taxes | $4,292 | $3,272 | $5,085 |
NATURE_OF_OPERATIONS_AND_SUMMA
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||
We provide end-to-end global commerce, payments and marketing solutions to companies that want to sell their products and services online. We were incorporated in 1994 and began building and operating online stores for our clients in 1996. We generate revenue through revenue sharing, transaction fees, monthly service charges and fees for services charged to customers that utilize our solutions. | |||||||||||
Principles of Consolidation and Classification | |||||||||||
The consolidated financial statements include the accounts of Digital River, Inc. and our wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. | |||||||||||
Use of Estimates | |||||||||||
The preparation of financial statements in accordance with United States generally accepted accounting principles (U.S. GAAP) requires management 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 and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||
Foreign Currency Translation | |||||||||||
Substantially all of our foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities are translated at exchange rates prevailing at the balance sheet dates. Revenues, costs and expenses are translated at the average exchange rates for the reported period. Gains and losses resulting from translation are recorded as a component of "Accumulated other comprehensive income (loss)" within stockholders' equity. Losses resulting from foreign currency transactions were $1.3 million, $0.4 million and $1.5 million in 2013, 2012 and 2011, respectively, and are recorded within "Other income (expense), net". | |||||||||||
We are exposed to market risk from changes in foreign currency exchange rates. Our risks relate to the effect of foreign currency exchange rate fluctuations on the U.S. dollar value of foreign currency denominated operating sales and expenses and exchange rate translation losses (or gains) associated with economic interests that are denominated in a foreign currency. The risk of translation losses due to foreign exchange volatility is partially mitigated by the use of foreign exchange forward contracts with maturities of less than three months. These derivative transactions are not designated as hedges and are adjusted to fair value through income each period. The principal exposures mitigated were the Euro, Australian dollar, British pound, Canadian dollar, Danish krone and Japanese yen currencies. For the years ended December 31, 2013, 2012 and 2011, we recorded a loss of $0.1 million, a gain of $0.1 million, and a loss of $0.3 million, respectively, on derivative settlements within "Other income (expense), net". We held no open foreign exchange forward contracts at December 31, 2013 and the notional amount of holdings at December 31, 2012 was $1.9 million. The gain (loss) on derivative settlements and the notional amounts held at the respective year ends are not material when compared to our net income (loss) and our overall cash and cash equivalents reported for the respective periods. | |||||||||||
Our foreign currency contracts contain credit risk to the extent that our bank counterparties may be unable to meet the terms of the agreements. We minimize such risk by limiting our counterparties to major financial institutions of high credit quality. | |||||||||||
Cash and Cash Equivalents | |||||||||||
We consider all short-term, highly liquid investments and money market accounts, that are readily convertible into known amounts of cash and that have original or remaining maturities of three months or less at the date of purchase to be cash equivalents. | |||||||||||
Short-Term Investments | |||||||||||
Our short-term investments consist of debt securities that are classified as available-for-sale and are carried on our balance sheets at their market value with cumulative unrealized gains or losses recorded net of tax as a component of "Accumulated other comprehensive income (loss)" within stockholders' equity. We classify all of our available-for-sale securities, except for our auction rate securities, as current assets, as these securities represent investments available for current corporate purposes. Upon the sale of a security classified as available-for-sale, the amount reclassified out of "Accumulated other comprehensive income (loss)" into earnings is based on the specific identification method. | |||||||||||
Allowance for Doubtful Accounts | |||||||||||
We use estimates in determining our allowance for doubtful accounts which are based on our historical experience and current trends. We must estimate the collectability of our billed accounts receivable. We analyze accounts receivable and consider our historical bad debt experience, customer credit-worthiness, current economic trends and changes in our customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. We must make judgments and estimates in connection with the allowance in any accounting period. The uncollectible portion of receivables is charged against the allowance for doubtful accounts when collection efforts have ceased. | |||||||||||
Prepaid Expenses and Other | |||||||||||
Prepaid expenses and other are largely comprised of prepaid licenses, deferred set-up costs, deferred financing costs, notes receivable, value added taxes, income tax receivable and restricted cash. Restricted cash consists of cash and cash equivalents that are held in escrow accounts, or are otherwise restricted by agreements with third parties, for a particular purpose. As of December 31, 2013 and 2012, we had $3.6 million and $0.4 million of restricted cash, respectively. In 2012, $0.6 million of notes receivable, lent through a short term promissory note, was deemed to be uncollectable and a full reserve was recorded against the note at both December 31, 2013 and 2012, respectively. | |||||||||||
Property and Equipment | |||||||||||
Property and equipment is recorded at cost, less accumulated depreciation and amortization. Computer equipment, office furniture and purchased and internally developed software are depreciated or amortized under the straight-line method using estimated useful lives of three to seven years and leasehold improvements are depreciated over the shorter of the asset life or remaining length of the lease. Useful lives are based on our estimates of the period of time over which the assets will generate revenue or benefit our business. We review assets with definite lives for impairment whenever events or changes in circumstances indicate that the value we are carrying on our financial statements for an asset may not be recoverable. Our evaluation considers non-financial data such as changes in the operating environment and business strategy, competitive information, market trends and operating performance. Property and equipment at December 31 consisted of the following (in thousands): | |||||||||||
2013 | 2012 | ||||||||||
Computer hardware and software | $ | 174,928 | $ | 155,916 | |||||||
Furniture, fixtures and leasehold improvements | 12,339 | 12,040 | |||||||||
| | | | | | | | ||||
Total property and equipment | 187,267 | 167,956 | |||||||||
Accumulated depreciation and amortization | (133,497 | ) | (114,858 | ) | |||||||
| | | | | | | | ||||
Net property and equipment | $ | 53,770 | $ | 53,098 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Depreciation and amortization expense from continuing operations was $22.1 million, $20.2 million and $22.0 million in 2013, 2012 and 2011, respectively. | |||||||||||
Repairs and maintenance costs are charged directly to expense as incurred. Major renewals or replacements that substantially extend the useful life of an asset are capitalized and depreciated. | |||||||||||
Software Development | |||||||||||
Costs to develop software for internal use are capitalized when the criteria for capitalization under U.S. GAAP is met. This criteria includes that the project must be approved by senior management, costs must be related to new development or significant upgrades or enhancements to existing software, and completion and future utilization of the development must be probable. Costs related to development that do not meet these criteria are expensed in the period incurred. Capitalized costs of completed projects are amortized over the estimated useful life of the software. For the years ended December 31, 2013 and 2012, net software for internal use was $16.3 million and $18.6 million, respectively. | |||||||||||
Goodwill | |||||||||||
We have a single reporting unit. We complete our goodwill impairment analysis annually as of October 1, or more frequently if events or circumstances occur that would more likely than not reduce the fair value of our single reporting unit below its carrying amount. | |||||||||||
In conducting our impairment analysis, we first assess qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying amount, including goodwill. If after assessing all relevant qualitative factors, we determine that it is more likely than not that the fair value of our single reporting unit is less than its carrying amount, a blended income and market approach is then used to determine the fair value of our sole reporting unit and any applicable impairment charge. The application of goodwill impairment tests requires management judgment for many of the inputs. Key assumptions included in the impairment test include our revenue growth rate, discount rate, and estimates of our future cash flows. Changes in these estimates could result in additional impairment of goodwill in a future period. Any impairment charges reflect our view of anticipated risks based on our expectations of market and general economic conditions. See Note 5—Goodwill and Intangible Assets, for further details regarding our 2013 qualitative impairment analysis and 2012 quantitative analysis. | |||||||||||
Intangible Assets | |||||||||||
We amortize certain definite lived intangibles over their useful lives. Useful lives are based on our estimates of the period of time over which the assets will generate revenue or benefit our business. We review assets with definite lives for impairment whenever events or changes in circumstances indicate that the value we are carrying on our financial statements for an asset may not be recoverable. Our evaluation considers non-financial data such as changes in the operating environment and business strategy, competitive information, market trends and operating performance. If there are indications that an impairment may have occurred, we compare an undiscounted cash flow analysis to the carrying value of the assets. If the carrying amount of the asset exceeds the undiscounted cash flows, we measure the amount of the impairment by comparing the carrying amount of the asset to its fair value. See Note 5—Goodwill and Intangible Assets, for further details. | |||||||||||
Long-Term Investments | |||||||||||
Our long-term investments consist of market basis equity investments, cost method equity investments and auction rate securities. The market basis equity investments and auction rate securities are classified as available-for-sale and are carried on our balance sheet at their market value with cumulative unrealized gains or losses recorded net of tax as a component of "Accumulated other comprehensive income (loss)" within stockholders' equity. Upon the sale of a security classified as available-for-sale, the amount reclassified out of "Accumulated other comprehensive income (loss)" into earnings is based on the specific identification method. | |||||||||||
We also have equity investments that are accounted for under the cost method included in long-term investments. We review the key characteristics of our investments and their classification in accordance with U.S. GAAP on an annual basis, or when indications of potential impairment exist. If a decline in the fair value of a security is deemed by management to be other-than-temporary, we write down the cost basis of the investment to fair value, and the amount of the write-down is included in net earnings. | |||||||||||
Other Assets | |||||||||||
The following table summarizes our other assets as of December 31 (in thousands): | |||||||||||
2013 | 2012 | ||||||||||
Debt financing costs, net | $ | 1,410 | $ | 3,323 | |||||||
Other | 657 | 990 | |||||||||
| | | | | | | | ||||
Total other assets | $ | 2,067 | $ | 4,313 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Debt financing costs, net include broker, legal, accounting and other fees associated with entering into our 2010 and 2004 senior convertible notes. We amortize debt financing costs over the original term of the debt. | |||||||||||
Other Current Liabilities | |||||||||||
The following table summarizes our other current liabilities as of December 31 (in thousands): | |||||||||||
2013 | 2012 | ||||||||||
Accrued expenses | $ | 29,082 | $ | 30,036 | |||||||
Current portion of debt | 10,016 | 1,256 | |||||||||
Sales, value-added and transaction taxes | 15,534 | 18,507 | |||||||||
Current deferred and other income taxes | 1,267 | 350 | |||||||||
| | | | | | | | ||||
Total other current liabilities | $ | 55,899 | $ | 50,149 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Discontinued Operations | |||||||||||
We separately classify the results of operations and the assets and liabilities of material components or businesses that have been sold, disposed, or that meet the criteria for held for sale within our Consolidated Statements of Operations and Consolidated Balance Sheets. As allowed under U.S. GAAP, we do not reclassify the cash flows of discontinued businesses within our Consolidated Statements of Cash Flows. In determining if the criteria for separate presentation is met, we assess if the operations and cash flows of the business have been, or will be, eliminated from ongoing operations and whether we will have any significant continuing involvement in the operations of the business after the disposal transaction. The presentation of corresponding prior periods is updated to conform to the current period presentation. See Note 15—Discontinued Operations for further discussion. | |||||||||||
Comprehensive Income (Loss) | |||||||||||
Comprehensive income (loss) includes revenues, expenses, and gains and losses that are excluded from net earnings under GAAP. Items of comprehensive income (loss) are unrealized gains and losses on investments and foreign currency translation adjustments which are added to net income (loss) to compute comprehensive income (loss). Comprehensive income (loss) related to cumulative translation adjustments has no tax expense or benefit as these funds are indefinitely invested. | |||||||||||
The following table summarizes the changes in accumulated other comprehensive income (loss), net of tax, by component as of December 31 (in thousands): | |||||||||||
Foreign currency | Unrealized gain | Total | |||||||||
translation | (loss) on | ||||||||||
adjustment | investments | ||||||||||
Balance as of December 31, 2010 | $ | 5,074 | $ | (4,502 | ) | $ | 572 | ||||
Other comprehensive income before reclassifications | (9,004 | ) | 817 | (8,187 | ) | ||||||
Reclassification adjustment for net gains included in net income | — | (349 | ) | (349 | ) | ||||||
| | | | | | | | | | | |
Net current period other comprehensive income (loss) | (9,004 | ) | 468 | (8,536 | ) | ||||||
| | | | | | | | | | | |
Balance as of December 31, 2011 | $ | (3,930 | ) | $ | (4,034 | ) | $ | (7,964 | ) | ||
Other comprehensive income before reclassifications | 6,495 | (1,688 | ) | 4,807 | |||||||
Reclassification adjustment for net gains included in net income | — | (13 | ) | (13 | ) | ||||||
| | | | | | | | | | | |
Net current period other comprehensive income (loss) | 6,495 | (1,701 | ) | 4,794 | |||||||
| | | | | | | | | | | |
Balance as of December 31, 2012 | $ | 2,565 | $ | (5,735 | ) | $ | (3,170 | ) | |||
Other comprehensive income before reclassifications | 1,155 | 6,558 | 7,713 | ||||||||
Reclassification adjustment for net gains included in net income | — | (11 | ) | (11 | ) | ||||||
| | | | | | | | | | | |
Net current period other comprehensive income (loss) | 1,155 | 6,547 | 7,702 | ||||||||
| | | | | | | | | | | |
Balance as of December 31, 2013 | $ | 3,720 | $ | 812 | $ | 4,532 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The following table summarizes the reclassifications out of accumulated other comprehensive income (loss) for the year ended December 31, 2013 (in thousands): | |||||||||||
Reclassification out of Accumulated other comprehensive income | Amount reclassified | Affected line item in the | |||||||||
from accumulated other | Consolidated Statement of | ||||||||||
comprehensive income | Operations | ||||||||||
Realized gains (losses) on investments | |||||||||||
$ | 18 | Other income (expense), net | |||||||||
(7 | ) | Income tax benefit (expense) | |||||||||
| | | | | | ||||||
$ | 11 | Net income (loss) | |||||||||
| | | | | | ||||||
| | | | | | ||||||
Revenue Recognition | |||||||||||
We recognize revenue from services rendered once all the following criteria for revenue recognition have been met: (1) persuasive evidence of an agreement exists; (2) the services have been rendered; (3) the fee is fixed and determinable; and, (4) collection of the amounts due is reasonably assured. | |||||||||||
We sell both digital and physical products on behalf of our customers and charge transaction fees based on a percentage of the sale price. These revenues are recorded net of related costs of sales as generally our clients control product choices and are subject to inventory risks. Revenue for these sales is recognized upon fulfillment, when title and significant risk of ownership passes to the end customer. | |||||||||||
We provide payment processing services to merchants and charge monthly service and transaction based fees. Transaction fees are recognized in the period in which the transaction occurs. Service fees are recognized over the covered period. | |||||||||||
When we provide additional deliverables in connection with our e-commerce and payments solution arrangements, including site set up services, these services do not meet the criteria of separate units of accounting as the services do not have value to the client on a standalone basis. Therefore we account for these deliverables as one unit of accounting and recognize them over the term of the associated contract. When we provide client services on a standalone basis, such as website design, custom development, data backup, analytical marketing, affiliate marketing and email marketing services, revenue is recognized as the services are provided. | |||||||||||
Shipping revenue is recorded net of any associated costs. Taxes assessed by a governmental authority that are directly imposed on a revenue-producing transaction between a seller and a customer are not recorded as revenue. | |||||||||||
Credit Card Chargeback Reserve | |||||||||||
We use estimates based on historical experience and current trends to determine accrued chargeback expenses. The following table illustrates our provision for chargeback losses as a percentage of revenue for 2013, 2012 and 2011 (in thousands, except percentages): | |||||||||||
2013 | 2012 | 2011 | |||||||||
Revenue | $ | 389,679 | $ | 370,496 | $ | 376,469 | |||||
Provision for Credit Card Chargebacks | 332 | 688 | 452 | ||||||||
Provision for Credit Card Chargebacks as a % of Revenue | 0.1 | % | 0.2 | % | 0.1 | % | |||||
Determining appropriate reserves for chargeback transactions is an inherently uncertain process. The reserves are maintained at a level we deem appropriate to provide for losses incurred on revenue earned in each period. | |||||||||||
Stock-Based Compensation Expense | |||||||||||
We account for share-based payments made to our employees and directors, including stock options and employee stock purchases made through our Employee Stock Purchase Plan (ESPP) based on estimated fair values. The fair value of each stock option and employee stock purchase made through our ESPP are estimated on the date of grant using the Black-Scholes option pricing model. The fair value of restricted stock, restricted stock units and performance shares is determined based on the closing price of our common stock on the date of grant. We estimated the fair value of performance share units with a market condition granted to certain executives on the date of grant using the Monte Carlo valuation model. | |||||||||||
Compensation expense for all share-based payment awards is recognized over the requisite service period. Stock-based compensation expense recognized in our Consolidated Statements of Operations is based on awards ultimately expected to vest and thus has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Benefits of tax deductions in excess of recognized stock-based compensation expense are reported as a financing cash flow. | |||||||||||
Severance | |||||||||||
We begin to accrue for severance and outplacement costs when all of the criteria for one-time employment termination benefits are met, which is generally at the time of communication to the employee. Total restructuring related severance expense for the years ended December 31, 2013, 2012 and 2011 was $5.8 million, $1.7 million, and $0.0 million respectively. | |||||||||||
Advertising Costs | |||||||||||
The costs of advertising are charged to sales and marketing expense as incurred. We incurred advertising expense of $0.2 million, $0.2 million and $0.4 million in 2013, 2012 and 2011, respectively. | |||||||||||
Income Taxes | |||||||||||
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We record deferred tax assets for favorable tax attributes, including tax loss carryforwards. We currently have U.S. tax loss carryforwards, including acquired operating tax loss carryforwards, and a lesser amount of acquired foreign operating tax loss carryforwards. We evaluate the need for a valuation allowance against the deferred tax assets on a quarterly basis. | |||||||||||
Recent Accounting Pronouncements | |||||||||||
ASU 2013-11—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists: In July 2013, the FASB issued ASU 2013-11, which requires an entity to present unrecognized tax benefits as a reduction of the deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, if net settlement is required or expected. To the extent that net settlement is not required or expected, the unrecognized tax benefit must be presented as a liability. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. ASU No. 2013-11 is effective for reporting periods beginning after December 15, 2013, and should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Because this standard only affects the presentation of unrecognized tax benefits and not the measurement of an unrecognized tax benefit, we do not expect this standard to have a material impact on our Consolidated Financial Statements. | |||||||||||
ASU 2013-02—Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income: In February 2013, the FASB issued ASU 2013-02, which required entities to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, entities are required to present, either in the financial statements or footnotes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, entities are required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail on these amounts. ASU 2013-02 is effective prospectively for fiscal periods beginning after December 15, 2012. We have adopted the new guidance in ASU 2013-02 as of the period ended March 31, 2013, and its adoption did not have a material impact on our Consolidated Financial Statements. | |||||||||||
We have determined that all other recently issued accounting standards will not have a material impact on our Consolidated Financial Statements, or do not apply to our operations. | |||||||||||
Reclassifications | |||||||||||
Certain items in the prior years' Consolidated Statements of Operations and Consolidated Balance Sheets have been reclassified for comparative purposes to conform to the current year presentation. | |||||||||||
The results of the operations of CustomCD, Inc. (CustomCD) and Digital River Education Services, Inc. (DRES), which were sold on September 30, 2013 and October 1, 2013, respectively, have been classified within Discontinued Operations in our Consolidated Statements of Operations for the year ended December 31, 2013. The operations of these entities in the corresponding years ended December 31, 2012 and 2011 have been reclassified into Discontinued Operations for comparative purposes to conform to the current year presentation. In addition, the assets and liabilities of CustomCD and DRES in the December 31, 2012 Consolidated Balance Sheet have been reclassified and separately presented as current assets and current liabilities of discontinued operations. | |||||||||||
Through December 31, 2012, we reported payment processing fees, chargebacks, and directly related personnel expenses within the "Sales and marketing" and "General and administrative" line items. We have reclassified these expenses to the "Direct cost of services" line as these costs are associated directly with services rendered. For the years ended December 31, 2012 and 2011, excluding amounts related to CustomCD and DRES which have been reclassified to discontinued operations, we have reclassified $55.5 million and $49.0 million, respectively, previously reported as "Sales and marketing" and $2.0 million and $2.1 million, respectively, previously reported as "General and administrative" to "Direct cost of services". The reclassifications did not have an effect on reported consolidated net income (loss). | |||||||||||
NET_INCOME_PER_SHARE
NET INCOME PER SHARE | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
NET INCOME PER SHARE | ' | ||||||||||
NET INCOME PER SHARE | ' | ||||||||||
2. NET INCOME PER SHARE | |||||||||||
The following table summarizes the computation of basic and diluted net income per share (in thousands, except per share data): | |||||||||||
For the Years Ended | |||||||||||
December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Income (loss) from continuing operations per share—basic | |||||||||||
Income (loss) from continuing operations—basic | $ | (18,529 | ) | $ | (183,638 | ) | $ | 23,714 | |||
Weighted average shares outstanding—basic | 32,065 | 33,224 | 36,778 | ||||||||
| | | | | | | | | | | |
Income (loss) from continuing operations per share—basic | $ | (0.58 | ) | $ | (5.53 | ) | $ | 0.65 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
Income (loss) from continuing operations per share—diluted | |||||||||||
Income (loss) from continuing operations—basic | $ | (18,529 | ) | $ | (183,638 | ) | $ | 23,714 | |||
Exclude: Interest expense and amortized financing cost of convertible senior notes, net of tax benefit | — | — | 78 | ||||||||
| | | | | | | | | | | |
Income (loss) from continuing operations—diluted | $ | (18,529 | ) | $ | (183,638 | ) | $ | 23,792 | |||
| | | | | | | | | | | |
Weighted average shares outstanding—basic | 32,065 | 33,224 | 36,778 | ||||||||
Dilutive impact of non-vested stock and options outstanding | — | — | 532 | ||||||||
Dilutive impact of 2004 senior convertible notes | — | — | 200 | ||||||||
| | | | | | | | | | | |
Weighted average shares outstanding—diluted | 32,065 | 33,224 | 37,510 | ||||||||
| | | | | | | | | | | |
Income (loss) from continuing operations per share—diluted | $ | (0.58 | ) | $ | (5.53 | ) | $ | 0.63 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
For the year ended December 31, 2013 and 2012, 479,236 and 308,825 incremental shares, respectively, related to dilutive securities were not included in the diluted net income (loss) per share calculation because the Company reported a loss for this year. Incremental shares related to dilutive securities have an anti-dilutive impact on net income (loss) per share when a net loss is reported and therefore are not included in the calculation. | |||||||||||
Options to purchase 527,815, 1,438,511and 1,289,765 shares for 2013, 2012 and 2011, respectively, were not included in the computation of diluted net income (loss) per share, because their effect on diluted net income (loss) per share would have been anti-dilutive. | |||||||||||
The unissued shares underlying our 2004 senior convertible notes, 199,828 weighted average shares for 2013 and 2012 were excluded for the purposes of calculating GAAP diluted net income (loss) per share, because their effect on diluted net income (loss) per share would have been anti-dilutive. The unissued shares underlying our 2010 senior convertible notes, 6,057,747 weighted average shares for 2013, 6,986,627 weighted average shares for 2012, 7,022,077 weighted average shares for 2011, were excluded for the purposes of calculating GAAP diluted net income (loss) per share, because their effect on diluted net income per share would have been anti-dilutive. | |||||||||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
3. FAIR VALUE MEASUREMENTS | ||||||||||||||
Financial assets and liabilities that are re-measured and reported at fair value at each reporting period are classified and disclosed in one of the following three categories: | ||||||||||||||
Level 1—Observable inputs such as quoted prices in active markets; | ||||||||||||||
Level 2—Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including: | ||||||||||||||
• | ||||||||||||||
Quoted prices for similar assets or liabilities in active markets; | ||||||||||||||
• | ||||||||||||||
Quoted prices for identical or similar assets in less active markets than Level 1 investments; | ||||||||||||||
• | ||||||||||||||
Inputs other than quoted prices that are observable for assets or liabilities; and | ||||||||||||||
• | ||||||||||||||
Inputs that are derived principally from or corroborated by other observable market data. | ||||||||||||||
Level 3—Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management's estimate of market participant assumptions. | ||||||||||||||
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis | ||||||||||||||
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 fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our 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 Company's policy is to recognize transfers between levels of the fair value hierarchy at the end of the quarter. There have been no transfers of assets between levels of the hierarchy in 2013 or 2012. | ||||||||||||||
The following table sets forth by level within the fair value hierarchy our financial assets that were accounted for at fair value on a recurring basis at December 31, 2013 and 2012, (in thousands): | ||||||||||||||
Fair Value Measurements | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Balance as of December 31, 2013 | ||||||||||||||
Cash and cash equivalents | $ | 483,868 | $ | 483,868 | $ | — | $ | — | ||||||
Restricted cash | 3,560 | 3,560 | — | — | ||||||||||
Commercial Paper | 9,992 | 9,992 | — | — | ||||||||||
U.S. government sponsored entities | 4,000 | — | 4,000 | — | ||||||||||
Corporate bonds | 101,660 | 101,660 | — | — | ||||||||||
Market basis equity investments | 3,549 | 3,549 | — | — | ||||||||||
Auction rate securities | 41,993 | — | — | 41,993 | ||||||||||
| | | | | | | | | | | | | | |
Total assets measured at fair value | $ | 648,622 | $ | 602,629 | $ | 4,000 | $ | 41,993 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Balance as of December 31, 2012 | ||||||||||||||
Cash and cash equivalents | $ | 542,851 | $ | 542,851 | $ | — | $ | — | ||||||
Restricted cash | 351 | 351 | — | — | ||||||||||
U.S. government sponsored entities | 28,110 | — | 28,110 | — | ||||||||||
Corporate bonds | 128,622 | 128,622 | — | — | ||||||||||
Asset backed securities | 6,062 | — | 6,062 | — | ||||||||||
Market basis equity investments | 1,694 | 1,694 | — | — | ||||||||||
Auction rate securities | 37,001 | — | — | 37,001 | ||||||||||
| | | | | | | | | | | | | | |
Total assets measured at fair value | $ | 744,691 | $ | 673,518 | $ | 34,172 | $ | 37,001 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
The following is a reconciliation of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3 inputs) (in thousands): | ||||||||||||||
Fair Value | ||||||||||||||
Measurements Using | ||||||||||||||
Significant | ||||||||||||||
Unobservable Inputs | ||||||||||||||
(Level 3) | ||||||||||||||
Auction rate securities | ||||||||||||||
Balance as of December 31, 2010 | $ | 83,678 | ||||||||||||
Total unrealized gains (losses) included in other comprehensive income | 735 | |||||||||||||
Settlements | (19,075 | ) | ||||||||||||
| | | | | ||||||||||
Balance as of December 31, 2011 | $ | 65,338 | ||||||||||||
Total unrealized gains (losses) included in other comprehensive income | (2,637 | ) | ||||||||||||
Settlements | (25,700 | ) | ||||||||||||
| | | | | ||||||||||
Balance as of December 31, 2012 | $ | 37,001 | ||||||||||||
Total unrealized gains (losses) included in other comprehensive income | 5,092 | |||||||||||||
Settlements | (100 | ) | ||||||||||||
| | | | | ||||||||||
Balance as of December 31, 2013 | $ | 41,993 | ||||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
The following methods and assumptions were used to estimate the fair value of each class of financial instrument. There have been no changes in the valuation techniques used by the Company to fair value our financial instruments: | ||||||||||||||
Cash and Cash equivalents. Consist of cash on hand in bank deposits, highly liquid investments and money market accounts. The fair value was measured using quoted market prices and is classified as Level 1. The carrying amount approximates fair value. | ||||||||||||||
Restricted Cash. Consist of cash and cash equivalents that are held in escrow accounts and restricted by agreements with third parties for a particular purpose. The carrying amount approximates fair value and is classified as Level 1. | ||||||||||||||
Commercial Paper. Consist of primarily high grade commercial paper. The fair value of these investments was measured using quoted market prices and is classified as Level 1. The contractual maturities of these investments are within one year. | ||||||||||||||
U.S government sponsored entities. Consist of Fannie Mae, Freddie Mac and Federal Home Loan Bank investment grade bonds that are traded in less active markets than Level 1 investments. The fair value of these bonds is classified as Level 2. The contractual maturities of these investments are within three years. | ||||||||||||||
Corporate Bonds. Consist of investment grade corporate bonds that trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis. The fair value of these bonds was measured using quoted market prices and is classified as Level 1. The contractual maturities of these investments are within two years. | ||||||||||||||
Asset Backed Securities. Consist of securities backed by automobile loan receivables that are traded in less active markets than our Level 1 investments. The fair value is classified as Level 2. | ||||||||||||||
Market Basis Equity Investments. Consist of available-for-sale equity securities that trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis. The fair value of these investments was measured using quoted market prices and is classified as Level 1. | ||||||||||||||
Auction Rate Securities | ||||||||||||||
As of December 31, 2013, we held $45.7 million of auction rate securities (ARS) at par value which we have recorded at $42.0 million fair value. As of December 31, 2012, we held $45.8 million of ARS at par value which we have recorded at $37.0 million fair value. The ARS are 106 - 138% over-collateralized and the underlying student loans are guaranteed by the U.S. government. Almost all of these securities continue to fail at auction due to continued illiquid market conditions. | ||||||||||||||
Due to the illiquid market conditions, the fair value of our ARS is $3.7 million (8.2%) less than par value as of December 31, 2013. This reduction from par value is considered temporary and is recorded in "Accumulated other comprehensive income (loss)". The temporary reduction from par value recorded in "Accumulated other comprehensive income (loss)" was $8.8 million (19.3%) as of December 31, 2012. Unrealized gains on our ARS of $5.1 million in 2013, unrealized losses of $2.6 million in 2012, and unrealized gains of $0.7 million in 2011 are recorded in "Unrealized gain (loss) on investments" in our Consolidated Statements of Comprehensive Income (Loss). | ||||||||||||||
In evaluating our ARS portfolio, we note sustained performance of our securities, strong parity levels, observed market redemption activity, continued receipt of interest and penalty payments, and an increase in fair value at December 31, 2013 compared to December 31, 2012. As we expect to receive all contractual cash flows, we do not believe the unrealized losses to be credit related. We continue to believe that we will be able to liquidate at par over time. We also anticipate we will have sufficient cash flow from operations to execute our business strategy and fund our operational needs. We do not intend to sell, or believe we will be required to sell, these investments prior to recovery of their amortized cost basis. Accordingly, we have treated the fair value decline as temporary. | ||||||||||||||
The discounted cash flow model we used to value these securities included the following assumptions: | ||||||||||||||
December 31, | December 31, | |||||||||||||
2013 | 2012 | |||||||||||||
Redemption period (in years) | 7 | 7 | ||||||||||||
Credit ratings | BB+ to AAA | BB+ to AAA | ||||||||||||
Penalty coupon rate | 1.0% to 1.5% | 1.0% to 1.5% | ||||||||||||
Weighted average annualized yield | 1.60% | 1.50% | ||||||||||||
Risk adjusted discount rate | 4.7% to 7.8% | 3.5% to 12.3% | ||||||||||||
Management makes estimates and assumptions about the ARS, which can be sensitive to changes and effect the determination of fair value. An increase in the length of redemption period or an increase in the discount rate assumption would decrease our fair value. Also, a decrease in the securities' credit ratings would decrease our fair value. | ||||||||||||||
The portfolio had a weighted average maturity of 29.8 years and 30.8 years as of December 31, 2013 and December 31, 2012, respectively. | ||||||||||||||
We classify our ARS as Level 3 long-term investments until we receive a call or partial call on the securities. As of December 31, 2013 and December 31, 2012, our entire ARS portfolio was classified as Level 3 long-term investments. In 2013, we liquidated $0.1 million of ARS due to a partial call at par. In 2012, we liquidated $25.7 million of ARS due to full or partial calls at par. The amount of Level 3 assets as a percentage of total assets measured at fair value on a recurring basis was 6.5% and 5.0% in 2013 and 2012, respectively. | ||||||||||||||
Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis | ||||||||||||||
Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, they are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances like evidence of impairment. In 2013 and 2012, other than the impairment discussed in Note 5—Goodwill and Intangible Assets, we had no significant fair value adjustments of assets or liabilities on a nonrecurring basis subsequent to their initial recognition. The inputs used in the goodwill impairment fair value calculations fall within Level 3 inputs due to the significant unobservable inputs used to determine fair value. | ||||||||||||||
INVESTMENTS
INVESTMENTS | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||
INVESTMENTS | ' | ||||||||||||||||||||||
INVESTMENTS | ' | ||||||||||||||||||||||
4. INVESTMENTS | |||||||||||||||||||||||
As of December 31, 2013 and 2012, our available-for-sale securities consisted of the following (in thousands): | |||||||||||||||||||||||
Gross Unrealized Losses | Maturities/Reset Dates | ||||||||||||||||||||||
Cost | Gross Unrealized | Less than 12 | Greater than 12 | Fair Value | Less than 12 | Greater than 12 | |||||||||||||||||
Gains | Months | Months | Months | Months | |||||||||||||||||||
Balance as of December 31, 2013 | |||||||||||||||||||||||
Commercial paper | $ | 9,992 | $ | — | $ | — | $ | — | $ | 9,992 | $ | 9,992 | $ | — | |||||||||
U.S. government sponsored entities | 4,000 | — | — | — | 4,000 | — | 4,000 | ||||||||||||||||
Corporate bonds | 101,400 | 281 | (21 | ) | — | 101,660 | 58,280 | 43,380 | |||||||||||||||
Market basis equity investments | 1,668 | 1,881 | — | — | 3,549 | — | 3,549 | ||||||||||||||||
Auction Rate Securities | 45,725 | — | — | (3,732 | ) | 41,993 | — | 41,993 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Total available-for-sale securities | $ | 162,785 | $ | 2,162 | $ | (21 | ) | $ | (3,732 | ) | $ | 161,194 | $ | 68,272 | $ | 92,922 | |||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Balance as of December 31, 2012 | |||||||||||||||||||||||
U.S. government sponsored entities | $ | 28,103 | $ | 7 | $ | — | $ | — | $ | 28,110 | $ | 28,110 | $ | — | |||||||||
Corporate bonds | 128,035 | 587 | — | — | 128,622 | 51,094 | 77,528 | ||||||||||||||||
Asset backed securities | 6,058 | 4 | — | — | 6,062 | 6,062 | — | ||||||||||||||||
Market basis equity investments | 1,694 | — | — | — | 1,694 | — | 1,694 | ||||||||||||||||
Auction Rate Securities | 45,825 | — | — | (8,824 | ) | 37,001 | — | 37,001 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Total available-for-sale securities | $ | 209,715 | $ | 598 | $ | — | $ | (8,824 | ) | $ | 201,489 | $ | 85,266 | $ | 116,223 | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
We consider the fair value decline of our investments in corporate bonds and ARS to be temporary, as we do not intend to sell the investments and it is not likely that we will be required to sell the investments before recovery of their amortized cost basis. See Note 3—Fair Value Measurements, for further discussion regarding the fair value of ARS. Temporary unrealized gains and losses on available for sale securities are recorded in "Accumulated other comprehensive income (loss)". | |||||||||||||||||||||||
Realized gains or losses on investments are recorded in our Consolidated Statements of Operations within "Other income (expense), net". Upon the sale of a security classified as available for sale, the amount reclassified out of "Accumulated other comprehensive income (loss)" into earnings is based on the specific identification method. | |||||||||||||||||||||||
As of December 31, 2013 and 2012, our cost method equity investments were $10.5 million and $33.0 million, respectively, and are included under "Long-term investments" in our Consolidated Balance Sheets. During the first quarter of 2013, we sold a cost method equity investment to a third party and recorded a gain of $11.1 million. During the second quarter of 2013, we received additional funds based on our sales agreement and as a result we recorded a gain of $6.5 million. In 2012 we recorded a $3.2 million gain due to a call option that was executed for cash on the same cost method investment. All gains related to this cost basis investment are recorded in the line item "Other income (expense), net" in our Consolidated Statements of Operations. Based on future events, we may receive up to $3.1 million of additional sale proceeds. We have concluded that these additional funds represent contingent gains and have not accounted for them in our consolidated financial statements in accordance with U.S. GAAP. We have not estimated the fair value of our one remaining cost method equity investment as of December 31, 2013 as we are not aware of any facts or circumstances that would indicate a decline in the fair value of this investment below its carrying value. | |||||||||||||||||||||||
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | ||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | ||||||||||
5. GOODWILL AND INTANGIBLE ASSETS | |||||||||||
Goodwill | |||||||||||
We complete our goodwill impairment analysis annually as of October 1, or more frequently if events or circumstances occur that would more likely than not reduce the fair value of our single reporting unit below its carrying amount. In conducting our impairment analysis, we first assess qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying amount, including goodwill. If after assessing all relevant qualitative factors, we determine that it is more likely than not that the fair value of our single reporting unit is less than its carrying amount, a blended income and market approach is then used to determine the fair value of our sole reporting unit and any applicable impairment charge. The application of goodwill impairment tests is a level 3 fair value measurement and requires management judgment for many of the inputs. Key assumptions included in the impairment test include our revenue growth rate, discount rate, and estimates of our future cash flows. Changes in these estimates could result in additional impairment of goodwill in a future period. Any impairment charges reflect our view of anticipated risks based on our expectations of market and general economic conditions. | |||||||||||
In December 2012, due to the deterioration in our stock price in the second half of 2012, adjustments in our forecasted revenue growth and change in our chief operating decision maker, management determined that a triggering event for potential goodwill impairment had occurred. As such, management completed an interim impairment test utilizing the blended income and market approach, and the key assumptions described in the preceding paragraph, and determined that the carrying value of the Company was in excess of fair value and a goodwill impairment was required. In the fourth quarter 2012, we recorded a preliminary non-cash pretax goodwill impairment charge of $175.2 million. A $14.1 million tax benefit was recorded as a result of the impairment charge. | |||||||||||
During the first quarter of 2013, we completed our goodwill impairment analysis and recorded an additional non-cash pretax goodwill impairment charge of $21.2 million relating to our single reporting unit. The tax benefit was offset by our current period tax valuation allowance. | |||||||||||
Based on our qualitative analysis performed as of October 1, 2013, we determined that it was more likely than not that the fair value of our single reporting unit is in excess of its carrying amount. The primary evidence utilized in reaching this conclusion was our market capitalization, which increased significantly since the goodwill impairment identified during 2012. A significant decrease in our market capitalization, or significant changes in quantitative or other qualitative factors, could lead to a future impairment. As of October 1, 2013, and through December 31, 2013, the goodwill in our single reporting unit is not considered to be at risk of impairment. | |||||||||||
During the third quarter of 2013, we allocated $0.3 million of goodwill from our single reporting unit to CustomCD and DRES, which were written-off and included in the computation of the loss on disposal of discontinued businesses as of the year ended December 31, 2013. See Note 15—Discontinued Operations, for further discussion of the sales of CustomCD and DRES. | |||||||||||
Goodwill impairment charges are included as a separate operating expense line item, "Goodwill impairment" within Continuing Operations in our Consolidated Statements of Operations. | |||||||||||
The changes in the net carrying amount of goodwill for the years ended December 31, 2013 and 2012 are as follows (in thousands): | |||||||||||
Carrying Amount | Accumulated | Carrying Amount | |||||||||
Gross | Impairment | Net | |||||||||
Balance as of December 31, 2011 | $ | 281,858 | $ | — | $ | 281,858 | |||||
Disposal of goodwill | (254 | ) | — | (254 | ) | ||||||
Impairment losses | — | (175,241 | ) | (175,241 | ) | ||||||
Adjustments from foreign currency translation | 2,597 | — | 2,597 | ||||||||
| | | | | | | | | | | |
Balance as of December 31, 2012 | $ | 284,201 | $ | (175,241 | ) | $ | 108,960 | ||||
Goodwill from acquisitions | 54,447 | — | 54,447 | ||||||||
Disposal of goodwill | (260 | ) | — | (260 | ) | ||||||
Impairment losses | — | (21,249 | ) | (21,249 | ) | ||||||
Adjustments from foreign currency translation | (2,580 | ) | — | (2,580 | ) | ||||||
| | | | | | | | | | | |
Balance as of December 31, 2013 | $ | 335,808 | $ | (196,490 | ) | $ | 139,318 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Intangible Assets | |||||||||||
All intangible assets are definite lived and are amortized over their useful lives. Useful lives are based on our estimates of the period of time over which the assets will generate revenue or benefit our business. We review assets with definite lives for impairment whenever events or changes in circumstances indicate that the value we are carrying on our financial statements for an asset may not be recoverable. During 2012, we impaired $0.2 million of intangibles due to the discontinued use of a trade name associated with an acquired product. During 2011, due to changes in our business strategy, a $9.4 million impairment was recorded to reduce the book carrying values of certain customer relationship, trade name, technology, and non-compete agreement intangibles. The fair values for these intangible assets were determined using the income approach. The application of intangible impairment tests is a level 3 fair value measurement and requires management judgment for many of the inputs. Impairments are recorded in "Amortization of acquisition-related intangibles" on the Consolidated Statements of Operations. Information regarding our other intangible assets is as follows (in thousands): | |||||||||||
As of December 31, 2013 | |||||||||||
Carrying Amount | Accumulated | Carrying Amount | |||||||||
Gross | Amortization | Net | |||||||||
Customer relationships | $ | 68,754 | $ | 45,113 | $ | 23,641 | |||||
Non-compete agreements | 4,289 | 4,289 | — | ||||||||
Technology/tradename | 44,039 | 38,463 | 5,576 | ||||||||
| | | | | | | | | | | |
Total | $ | 117,082 | $ | 87,865 | $ | 29,217 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
As of December 31, 2012 | |||||||||||
Carrying Amount | Accumulated | Carrying Amount | |||||||||
Gross | Amortization | Net | |||||||||
Customer relationships | $ | 55,808 | $ | 47,358 | $ | 8,450 | |||||
Non-compete agreements | 5,102 | 5,102 | — | ||||||||
Technology/tradename | 29,565 | 26,297 | 3,268 | ||||||||
| | | | | | | | | | | |
Total | $ | 90,475 | $ | 78,757 | $ | 11,718 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Amortization expense from continuing operations was $8.5 million, $4.7 million and $6.3 million, for the years ended 2013, 2012 and 2011, respectively. | |||||||||||
Estimated amortization expense for the remaining life of the intangible assets, based on intangible assets as of December 31, 2013, is as follows (in thousands): | |||||||||||
Year | |||||||||||
2014 | $ | 8,394 | |||||||||
2015 | 7,852 | ||||||||||
2016 | 6,912 | ||||||||||
2017 | 6,059 | ||||||||||
| | | | | |||||||
Total | $ | 29,217 | |||||||||
| | | | | |||||||
| | | | | |||||||
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended | |||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||||||||||||
6. STOCK-BASED COMPENSATION | ||||||||||||||||||||||||
Equity Incentive Plans | ||||||||||||||||||||||||
2007 Plan | ||||||||||||||||||||||||
Our stockholders approved the Digital River, Inc. 2007 Equity Incentive Plan (the "2007 Plan") at the Company's annual stockholder meeting held on May 31, 2007. The number of shares issuable under the 2007 Plan equals 7,450,000 shares of our common stock. In addition, shares not issued under the 1998 Plan shall become available for issuance under the 2007 Plan to the extent a stock option or other stock award under the 1998 Plan expires or terminates before shares of common stock are issued under the award. Under our 2007 Equity Incentive Plan we have the flexibility to grant incentive and non-statutory stock options, restricted stock awards, restricted stock unit awards and performance shares to our directors, employees, and consultants. There were 2,307,809 shares reserved under the plan as of December 31, 2013. | ||||||||||||||||||||||||
1998 Plan | ||||||||||||||||||||||||
The 1998 Equity Incentive Plan expired in June 2008 except as to options still outstanding under the plan. | ||||||||||||||||||||||||
Stock Option Awards | ||||||||||||||||||||||||
Options granted to employees typically expire no later than ten years after the date of grant. Awards that expire or are canceled without delivery of shares generally become available for issuance under the plan. We issue new shares to satisfy the exercise and vesting of awards granted under the stock award plan. Awards typically vest over 4 years. | ||||||||||||||||||||||||
Incentive stock option grants must have an exercise price of at least 100% of the fair market value of a share of common stock on the grant date. Incentive stock options granted to employees who, immediately before such grant, owned stock directly or indirectly representing more than 10% of the voting power of our stock, will have an exercise price of 110% of the fair market value of a share of common stock on the grant date and will expire no later than five years from the date of grant. | ||||||||||||||||||||||||
There were no stock options granted in 2013, 2012 or 2011. | ||||||||||||||||||||||||
A summary of the changes in outstanding options is as follows: | ||||||||||||||||||||||||
Options | Weighted | |||||||||||||||||||||||
Outstanding | Average | |||||||||||||||||||||||
Exercise | ||||||||||||||||||||||||
Price | ||||||||||||||||||||||||
Per Share | ||||||||||||||||||||||||
Balance, December 31, 2010 | 1,936,963 | $ | 33.53 | |||||||||||||||||||||
Exercised | (19,359 | ) | 18.8 | |||||||||||||||||||||
Canceled/expired | (95,712 | ) | 40.71 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
Balance, December 31, 2011 | 1,821,892 | $ | 33.31 | |||||||||||||||||||||
Exercised | (121,467 | ) | 12.9 | |||||||||||||||||||||
Canceled/expired | (140,228 | ) | 33.48 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
Balance, December 31, 2012 | 1,560,197 | $ | 34.89 | |||||||||||||||||||||
Exercised | (121,524 | ) | 10.47 | |||||||||||||||||||||
Canceled/expired | (910,858 | ) | 36.78 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
Balance, December 31, 2013 | 527,815 | $ | 37.24 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
| | | | | | | | |||||||||||||||||
The following table summarizes significant ranges of outstanding and exercisable options under our 1998 Plan and 2007 Plan as of December 31, 2013: | ||||||||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||||
Exercise Price | Number | Weighted | Weighted | Aggregate | Number | Weighted | Aggregate | |||||||||||||||||
Outstanding | Average | Average | Intrinsic | Exercisable | Average | Intrinsic | ||||||||||||||||||
Life | Exercise | Value | Exercise | Value | ||||||||||||||||||||
Remaining | Price | Price | ||||||||||||||||||||||
$22.98 - $30.69 | 179,087 | 1.3 years | 28.14 | — | 179,087 | 28.14 | — | |||||||||||||||||
31.84 - 38.17 | 178,774 | 4.1 years | 32.07 | — | 178,774 | 32.07 | — | |||||||||||||||||
40.10 - 57.36 | 169,954 | 3.1 years | 52.26 | — | 169,954 | 52.26 | — | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
$22.98 - $57.36 | 527,815 | 2.8 years | $ | 37.24 | $ | — | 527,815 | $ | 37.24 | $ | — | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
There is no aggregate intrinsic value for options outstanding and exercisable at December 31, 2013, as the exercise price for all options exceeds the Company's closing stock price of $18.47 as of December 31, 2013. The total intrinsic value of options exercised during the years ended December 31, 2013, 2012 and 2011 were $0.4 million, $0.3 million and $0.3 million, respectively, determined as of the date of exercise. The weighted average life remaining on exercisable options is 2.8 years. | ||||||||||||||||||||||||
Restricted and Performance Stock | ||||||||||||||||||||||||
Restricted stock awards are subject to forfeiture if employment terminates prior to the release of the restrictions. Performance based awards (performance shares) are subject to forfeiture if employment terminates prior to the release of the restrictions or if established performance goals are not met. Awards typically vest over 3 to 4 years. A summary of the changes in restricted stock and performance shares under our 1998 Plan and 2007 Plan as of December 31, 2013, is as follows: | ||||||||||||||||||||||||
Restricted Stock | Weighted | |||||||||||||||||||||||
and | Average | |||||||||||||||||||||||
Performance | Fair Value | |||||||||||||||||||||||
Shares | ||||||||||||||||||||||||
Non-Vested Balance, December 31, 2010 | 1,955,508 | $ | 27.5 | |||||||||||||||||||||
Granted | 1,014,150 | 32.51 | ||||||||||||||||||||||
Vested | (573,443 | ) | 28.23 | |||||||||||||||||||||
Forfeited | (249,203 | ) | 28.95 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
Non-Vested Balance, December 31, 2011 | 2,147,012 | $ | 29.5 | |||||||||||||||||||||
Granted | 1,746,350 | 17.45 | ||||||||||||||||||||||
Vested | (924,169 | ) | 28.99 | |||||||||||||||||||||
Forfeited | (379,421 | ) | 25.82 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
Non-Vested Balance, December 31, 2012 | 2,589,772 | $ | 22.1 | |||||||||||||||||||||
Granted | 1,873,245 | 14.79 | ||||||||||||||||||||||
Vested | (1,030,989 | ) | 23.02 | |||||||||||||||||||||
Forfeited | (787,014 | ) | 18.98 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
Non-Vested Balance, December 31, 2013 | 2,645,014 | $ | 17.49 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
| | | | | | | | |||||||||||||||||
Employee Stock Purchase Plan | ||||||||||||||||||||||||
We also sponsor an employee stock purchase plan under which 2,200,000 shares have been reserved for purchase by employees. The purchase price of the shares under the plan is the lesser of 85% of the fair market value on the first or last day of the offering period. Offering periods are currently every six months ending on June 30 and December 31. Employees may designate up to ten percent of their compensation for the purchase of shares under the plan. Total shares purchased by employees under the plan were 163,657, 204,241 and 140,910 in the years ended December 31, 2013, 2012 and 2011, respectively. There were 630,583 shares still reserved under the plan as of December 31, 2013. | ||||||||||||||||||||||||
Inducement Equity Incentive Plan | ||||||||||||||||||||||||
Effective on December 14, 2005, we adopted an Inducement Equity Incentive Plan (the "Inducement Plan"). No awards have been granted under this plan since 2007. There were 34,858 shares still reserved under the plan as of December 31, 2013. | ||||||||||||||||||||||||
Expense Information | ||||||||||||||||||||||||
The following table summarizes stock-based compensation expense, net of tax, related to employee stock options, awards and employee stock purchases recognized (in thousands): | ||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||||||
Costs and expenses | ||||||||||||||||||||||||
Direct cost of services | $ | 158 | $ | 184 | $ | 269 | ||||||||||||||||||
Network and infrastructure | 1,453 | 1,576 | 1,310 | |||||||||||||||||||||
Sales and marketing | 6,731 | 8,284 | 8,115 | |||||||||||||||||||||
Product research and development | 3,409 | 3,685 | 3,099 | |||||||||||||||||||||
General and administrative | 8,817 | 15,788 | 9,321 | |||||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
Stock-based compensation included in costs and expenses | 20,568 | 29,517 | 22,114 | |||||||||||||||||||||
Tax benefit | — | — | (7,942 | ) | ||||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
Stock-based compensation expense, net of tax | $ | 20,568 | $ | 29,517 | $ | 14,172 | ||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
| | | | | | | | | | | ||||||||||||||
At December 31, 2013, there was no unrecognized stock-based compensation expense related to unvested stock option awards as all outstanding option awards are fully vested. At December 31, 2013, there was approximately $26.4 million of total unrecognized stock-based compensation expense, adjusted for estimated forfeitures, related to unvested restricted stock and performance share awards that we expect to recognize over a weighted-average period of 2.4 years. | ||||||||||||||||||||||||
Valuation Information | ||||||||||||||||||||||||
During the year ended December 31, 2013, we estimated the fair value of stock-based compensation expense associated with our performance share units with a market condition on the date of grant using the Monte Carlo valuation model with the following weighted average assumptions. No performance share units with a market condition were granted in 2012 or 2011. | ||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||
Risk-free interest rate | 0.4 | % | ||||||||||||||||||||||
Expected life (years) | 2.8 | |||||||||||||||||||||||
Volatility factor | 49 | % | ||||||||||||||||||||||
Expected dividends | — | |||||||||||||||||||||||
Weighted average grant date fair value per share | $ | 14.22 | ||||||||||||||||||||||
During the years ended December 31, 2013, 2012 and 2011, we estimated the fair value of stock-based compensation expense associated with our employee stock purchase plans on the date of grant using the Black-Scholes option pricing valuation model with the following weighted average assumptions: | ||||||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||||||
Risk-free interest rate | 0.1 | % | 0.1 | % | 0.1 | % | ||||||||||||||||||
Expected life (years) | 0.5 | 0.5 | 0.5 | |||||||||||||||||||||
Volatility factor | 38 | % | 53 | % | 36 | % | ||||||||||||||||||
Expected dividends | — | — | — | |||||||||||||||||||||
Weighted average fair value of employee stock purchase plan shares | $ | 4.14 | $ | 4.68 | $ | 8.38 |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
INCOME TAXES | ' | ||||||||||
INCOME TAXES | ' | ||||||||||
7. INCOME TAXES | |||||||||||
The components of pretax income from continuing operations are as follows (in thousands): | |||||||||||
Year ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
United States | $ | (30,085 | ) | $ | (88,571 | ) | $ | (1,740 | ) | ||
International | 10,648 | (75,864 | ) | 27,730 | |||||||
| | | | | | | | | | | |
Income (loss) before income taxes | $ | (19,437 | ) | $ | (164,435 | ) | $ | 25,990 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
The provision (benefit) for income taxes from continuing operations is composed of the following (in thousands): | |||||||||||
Year ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Current tax expense (benefit): | |||||||||||
United States federal | $ | — | $ | — | $ | (1,904 | ) | ||||
State and local | 137 | — | (120 | ) | |||||||
International | 1,745 | 921 | 4,326 | ||||||||
| | | | | | | | | | | |
Total current provision (benefit) for income taxes | 1,882 | 921 | 2,302 | ||||||||
Deferred tax expense (benefit): | |||||||||||
United States federal | 883 | 17,615 | (93 | ) | |||||||
State and local | 55 | 1,107 | (6 | ) | |||||||
International | (3,728 | ) | (440 | ) | 73 | ||||||
| | | | | | | | | | | |
Total deferred provision (benefit) for income taxes | (2,790 | ) | 18,282 | (26 | ) | ||||||
| | | | | | | | | | | |
Income tax expense (benefit) | $ | (908 | ) | $ | 19,203 | $ | 2,276 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
For the years ended December 31, 2013 and 2012, our tax expense related to discontinued operations was $2.5 million and $9.6 million, respectively. For the year ended December 31, 2011, our tax benefit related to discontinued operations was $3.8 million. | |||||||||||
The following is a reconciliation of the difference between the actual provision for income taxes and the provision computed by applying the U.S. federal statutory rate of 35% to pretax income from continuing operations (in thousands): | |||||||||||
Year ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Tax expense at statutory rate | $ | (6,803 | ) | $ | (57,552 | ) | $ | 9,096 | |||
State taxes, net of federal benefit | 126 | (591 | ) | (96 | ) | ||||||
International rate differential | (2,047 | ) | (4,593 | ) | (8,589 | ) | |||||
Tax credits | (1,041 | ) | (117 | ) | (660 | ) | |||||
Nondeductible expense and other | 2,170 | 306 | 1,836 | ||||||||
Goodwill impairment | 5,823 | 48,285 | — | ||||||||
Valuation allowance (release) | 895 | 33,301 | (84 | ) | |||||||
Adjustment for unrecognized tax benefits | (31 | ) | 164 | 773 | |||||||
| | | | | | | | | | | |
Income tax expense (benefit) | $ | (908 | ) | $ | 19,203 | $ | 2,276 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred income taxes are as follows (in thousands): | |||||||||||
2013 | 2012 | ||||||||||
Deferred tax assets: | |||||||||||
Net operating loss and credit carryforwards | $ | 14,875 | $ | 15,306 | |||||||
Nondeductible reserves and accruals | 43,795 | 27,482 | |||||||||
Depreciation and amortization | 756 | 2,675 | |||||||||
Valuation allowance | (53,820 | ) | (37,860 | ) | |||||||
| | | | | | | | ||||
Total deferred tax assets | 5,606 | 7,603 | |||||||||
| | | | | | | | ||||
Deferred tax liabilities: | |||||||||||
Depreciation | (8,475 | ) | (6,018 | ) | |||||||
Other intangibles | (4,367 | ) | (1,770 | ) | |||||||
Gain on investment | — | (1,144 | ) | ||||||||
| | | | | | | | ||||
Total deferred tax liabilities | (12,842 | ) | (8,932 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liabilities | $ | (7,236 | ) | $ | (1,329 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
As of December 31, 2013, we had U.S. federal tax loss carryforwards of approximately $13.1 million and state tax loss carryforwards of $50.4 million to offset future taxable income. The tax losses consist of U.S. federal net operating losses of $10.9 million and acquired U.S. federal net operating losses of $2.2 million, as well as, state net operating losses of $23.8 million and acquired state net operating losses of $26.6 million. The U.S. federal tax loss carryforwards expire in the years 2025 through 2033, while the state tax loss carryforwards expire in the years 2014 through 2033. As of December 31, 2013, we also had foreign tax loss carryforwards of approximately $10.8 million. The foreign loss carryforwards do not expire under current law. | |||||||||||
On a quarterly basis, we assess whether a valuation allowance for net operating loss carryforwards and other deferred tax assets is needed. Beginning in the fourth quarter of 2012, we determined that it was necessary to place a valuation allowance against our net U.S. tax assets and a portion of our foreign tax assets. At December 31, 2013 and 2012, the Company had a valuation allowance on approximately $8.1 million and $11.3 million, respectively, of U.S. deferred tax assets related to operating losses, $17.6 million and $1.0 million, respectively, related to U.S. capital loss carryforwards and $22.0 million and $33.5 million, respectively, of deferred tax assets related to other U.S. tax attributes. At December 31, 2013 and 2012, we also have a valuation allowance on our foreign net operating loss assets of approximately $2.2 million and $2.3 million, respectively. Any future release of this valuation allowance will reduce expense. | |||||||||||
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): | |||||||||||
Balance as of December 31, 2010 | $ | 10,026 | |||||||||
Increases for tax positions taken during current year | 252 | ||||||||||
Increases for tax positions taken during prior years | 2,843 | ||||||||||
Decreases for tax positions taken during prior years | (842 | ) | |||||||||
Decreases for expiration of statute of limitations | (1,385 | ) | |||||||||
Decreases as a result of settlements with taxing authorities | (225 | ) | |||||||||
| | | | | |||||||
Balance as of December 31, 2011 | $ | 10,669 | |||||||||
Increases for tax positions taken during current year | 132 | ||||||||||
Increases for tax positions taken during prior years | 731 | ||||||||||
Decreases for tax positions taken during prior years | (20 | ) | |||||||||
Decreases for expiration of statute of limitations | (301 | ) | |||||||||
| | | | | |||||||
Balance as of December 31, 2012 | $ | 11,211 | |||||||||
Increases for tax positions taken during current year | 223 | ||||||||||
Increases for tax positions taken during prior years | 146 | ||||||||||
Decreases for tax positions taken during prior years | (126 | ) | |||||||||
Decreases for expiration of statute of limitations | (1,010 | ) | |||||||||
| | | | | |||||||
Balance as of December 31, 2013 | $ | 10,444 | |||||||||
| | | | | |||||||
| | | | | |||||||
Of the $10.4 million of unrecognized tax benefits, $9.7 million would affect our effective tax rate if recognized. We recognize interest and penalties related to uncertain tax positions in income tax expense. We had approximately $1.5 million and $0.9 million of accrued interest and penalties related to uncertain tax positions at December 31, 2013 and 2012, respectively. Interest on unrecognized tax benefits was $0.6 million, $0.4 million, and $0.1 million in years 2013, 2012, and 2011. | |||||||||||
The Company and its subsidiaries file income tax returns in U.S. federal and various state jurisdictions, and foreign jurisdictions. The tax years 2006 through 2012 remain open to examination by most of the major taxing jurisdictions to which we are subject. During 2011, the IRS completed an examination of the Company's 2009 U.S. tax return. Due to the potential resolution of examinations currently being performed by taxing authorities, and the expiration of various statutes of limitation, it is reasonably possible that our gross unrecognized tax benefits balance may change within the next twelve months by a range of zero to $8.9 million. Beyond this estimate, it is not practical to determine the timing of any cash flows related to these uncertain tax positions. | |||||||||||
We have not provided U.S. income taxes and foreign withholding taxes on the undistributed earnings of foreign subsidiaries as of December 31, 2013 because we intend to permanently reinvest such earnings outside the U.S. If these foreign earnings were to be repatriated in the future, the related U.S. tax liability may be reduced by any foreign income taxes previously paid on these earnings. As of December 31, 2013, the cumulative amount of earnings upon which U.S. income taxes have not been provided is approximately $117.2 million. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable. | |||||||||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
COMMITMENTS AND CONTINGENCIES | ' | ||||
COMMITMENTS AND CONTINGENCIES | ' | ||||
8. COMMITMENTS AND CONTINGENCIES | |||||
Leases | |||||
We currently have 40 facility leases in addition to leasing certain computer equipment under non-cancelable operating leases. Total rent expense, including common area maintenance charges, recognized under all leases was $10.5 million, $9.5 million and $8.5 million for the years ended December 31, 2013, 2012 and 2011, respectively. We did not incur contingent or sublease rental expense in 2013, 2012 or 2011. The minimum annual rent payments under long-term leases at December 31, 2013, were as follows (in thousands): | |||||
Year ending December 31, | Lease | ||||
Obligations | |||||
2014 | $ | 8,421 | |||
2015 | 4,768 | ||||
2016 | 4,266 | ||||
2017 | 3,831 | ||||
2018 | 4,107 | ||||
Thereafter | 11,549 | ||||
| | | | | |
Total future minimum obligations | $ | 36,942 | |||
| | | | | |
| | | | | |
Our headquarters in Minnetonka, MN is under a ten year operating lease which commenced in the second quarter of 2011. We have a right to renew the term for a single five year period subsequent to the original term. Significant provisions of the lease include a rent holiday for the first eighteen months of occupancy, subsequent rent escalations and leasehold improvement allowances. The rent holiday and escalations are amortized over the life of the agreement. Leasehold improvement allowances are classified as a reduction to rent and are recorded as a part of property and equipment, net, with amortization recorded over the life of the lease. | |||||
Litigation | |||||
DDR Holdings, LLC (DDR) brought a claim against us and several other defendants regarding U.S. Patents Nos. 6,629,135 ("the '135 patent"), 6,993,572 ("the '572 patent"), and 7,818,399 ("the '399 Patent"), which are owned by DDR. These patents claim e-commerce outsourcing systems and methods relating to the provision of outsourced e-commerce support pages having a common look and feel with a host's website. The case was filed in the U.S. District Court for the Eastern District of Texas on January 31, 2006 seeking injunctive relief, declaratory relief, damages and attorneys' fees. We denied infringement of any valid claim of the patents-in-suit, and asserted counter-claims seeking a judicial declaration that the patents are invalid and not infringed. After a delay due to DDR's request for re-examination of the '135 and '572 patents, Digital River and DDR concluded discovery and pre-trial depositions in August 2012. In pre-trial motions, DDR dropped its claims against Digital River with respect to the '135 and '399 patent. On October 12, 2012, the jury found in favor of the plaintiff on the infringement claim in connection with the '572 patent and awarded damages of $0.8 million (versus plaintiff's demand of $10.2 million). On June 20, 2013, the court denied Digital River's post-trial motions and entered judgment in the amount of $1.1 million (which amount includes pre-judgment interest), plus costs and post-judgment interest. Digital River has appealed. During the third quarter of 2012, initial full settlement of the awarded damages (exclusive of interest which may be awarded by the court) was accrued for on the "Other accrued liabilities" line of the Consolidated Balance Sheets and the "General and administrative" line of the Consolidated Statements of Operations. The accrued amount was adjusted to $1.1 million during the second quarter of 2013 to reflect the award of pre-judgment interest. In addition, on August 20, 2013, DDR filed a second lawsuit against DR, alleging both additional infringement of the '572 patent as well as a newly issued continuation patent, Patent No. 8,515,825 issued on August 20, 2013 ("the '825 patent"). While we intend to vigorously defend this matter, we cannot predict the timing or ultimate outcome, nor estimate a range of loss, if any, for this matter. | |||||
We are subject to legal proceedings, claims and litigation arising in the ordinary course of business. While the final outcome of these matters is currently not determinable, we believe there is no ordinary course litigation pending against us that is likely to have, individually or in the aggregate, a material effect on our consolidated financial position, results of operations, stockholders' equity or cash flows. Because of the uncertainty inherent in litigation, it is possible that unfavorable resolutions of these lawsuits, proceedings and claims could exceed the amount we have currently reserved for these matters. | |||||
From time to time, we are involved in other disputes or regulatory inquiries that arise in the ordinary course of business. Any claims or regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation, damage awards, injunctive relief or increased costs of doing business through adverse judgment or settlement, require us to change our business practices in expensive ways, require significant amounts of management time, result in the diversion of significant operational resources or otherwise harm our business. These matters are subject to inherent uncertainties and management's view of these matters may change in the future. | |||||
Third parties have from time-to-time claimed, and others may claim in the future, that we have infringed their intellectual property rights. We have been notified of several potential patent disputes, and expect that we will increasingly be subject to patent infringement claims as our services expand in scope and complexity. We have in the past been forced to litigate such claims. We may also become more vulnerable to third-party claims as laws, such as those related to privacy and online commerce, the Digital Millennium Copyright Act, the Lanham Act and the Communications Decency Act are enacted by legislatures and interpreted by the courts, and as we expand geographically into jurisdictions where the underlying laws with respect to the potential liability of online intermediaries like ourselves are either unclear or less favorable. These claims, whether meritorious or not, could be time consuming and costly to resolve, cause service upgrade delays, require expensive changes in our methods of doing business, or could require us to pay damages or enter into costly royalty or licensing agreements. | |||||
Indemnification Provisions | |||||
In the ordinary course of business we have included limited indemnification provisions in certain of our agreements with parties with whom we have commercial relations. Under these contracts, we generally indemnify, hold harmless and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party in connection with claims by any third party with respect to our domain names, trademarks, logos and other branding elements to the extent that such marks are applicable to our performance under the subject agreement. In certain agreements, including both agreements under which we have developed technology for certain commercial parties and agreements with our clients, we have provided an indemnity for other types of third-party claims. | |||||
In addition, we are required by our credit card processors to comply with credit card association operating rules, and we have agreed to indemnify our processors for any fines they are assessed by credit card associations as a result of processing payments for us. The credit card associations and their member banks set and interpret the credit card rules. Visa, MasterCard, American Express or Discover could adopt new operating rules or re-interpret existing rules that we or our credit card processors might find difficult to follow. We also could be subject to fines or increased fees from MasterCard and Visa. | |||||
To date, no significant costs have been incurred, either individually or collectively, in connection with our indemnification provisions. | |||||
Commitments and Guarantees | |||||
At certain times, we enter into agreements where a letter of credit is required to ensure payment of future obligations by counterparties, such as our credit card processors and international taxing jurisdictions. Upon withdrawal, we are obligated to fund the executor bank on demand. We have not set aside specific funds to cover this potential obligation as we can generally recover these costs from our clients. If drawn upon, we expect to fund this commitment with cash and cash equivalents. There were $0.6 million and $3.6 million in undrawn letters of credit at December 31, 2013, and 2012, respectively. | |||||
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2013 | |
DEBT | ' |
DEBT | ' |
9. DEBT | |
2010 Senior Convertible Notes | |
On November 1, 2010, we sold and issued $345.0 million in aggregate principal amount of senior convertible notes (2010 Notes), in a private, unregistered offering. The 2010 Notes are unsecured obligations and rank equally with all of our existing and future senior unsecured debt. The 2010 Notes were sold at their total principal amount. The 2010 Notes bear interest at the rate of 2.00% per annum from the date of issuance, payable semi-annually on May 1 and November 1, commencing on May 1, 2011. The 2010 Notes will mature, unless earlier repurchased, redeemed or converted in accordance with their terms, on November 1, 2030. | |
In 2013, we repurchased $5.4 million of the 2010 Notes in the open market at an average price of 98.8% of par. In 2013, the net loss on extinguishment of debt, which is net of the gain on sale and the write-off of debt issuance costs, was immaterial. In 2012, we repurchased $43.9 million of the 2010 Notes in the open market at an average price of 98.5% of par. In 2012, the loss on extinguishment of debt was $0.1 million, which is net of the gain on sale and the write-off of debt issuance costs. Notes repurchased are deemed to be extinguished for accounting purposes. | |
Holders have the right to convert some or all of the 2010 Notes at any time prior to the maturity date into shares of our common stock at the initial conversion rate of 20.3537 shares per $1,000 in principal amount of the 2010 Notes, which is equal to an initial conversion price of approximately $49.13 per share. At the initial conversion rate, assuming the conversion of all remaining $295.8 million in aggregate principal amount, the 2010 Notes may be converted into approximately 6,019,607 shares of our common stock. We will adjust the conversion price if certain events occur on or before November 1, 2015, as specified in the related indenture. | |
At any time on or after November 1, 2015, and prior to the maturity date, we may redeem for cash some or all of the 2010 Notes at a redemption price equal to the principal amount of the 2010 Notes to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date. | |
Holders have the right to require us to repurchase some or all of their 2010 Notes for cash on each of November 1, 2015, November 1, 2020 and November 1, 2025, at a repurchase price equal to the principal amount of the 2010 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. If we undergo certain types of fundamental changes prior to the maturity date, holders of the 2010 Notes will have the right, at their option, to require us to repurchase some or all of their 2010 Notes at a repurchase price equal to the principal amount of the 2010 Notes being repurchased, plus accrued and unpaid interest up to, but excluding, the repurchase date. | |
As of December 31, 2013 and 2012, the fair value of our $295.8 million and $301.1 million 2010 senior convertible notes was valued at $298.3 million and $285.3 million, respectively, based on the quoted fair market values of the debt. Debt is classified as a level 3 fair value measurement. We determine fair value based on the market approach. | |
2004 Senior Convertible Notes | |
In 2004, we sold and issued $195.0 million in aggregate principal amount of 1.25% senior convertible notes due January 1, 2024 (2004 Notes), in a private, unregistered offering. The 2004 Notes were sold at their principal amount. On January 1, 2009, the majority of the holders of the 2004 Notes exercised the option to require us to repurchase those Notes. On January 1, 2014, the majority of the remaining holders of the 2004 Notes exercised the option to require us to repurchase those Notes. Notes with an aggregate principal amount of approximately $0.1 million remain outstanding after the January 1, 2014 repurchase and are classified as non-current within "Senior convertible notes" in our Consolidated Balance sheet as of December 31, 2013. The $8.7 million of 2004 Notes that were repurchased on January 1, 2014 are classified as current in "Other current liabilities" in our Consolidated Balance Sheet as of December 31, 2013. Holders of the remaining $0.1 million outstanding 2004 Notes have the right to require us to repurchase their Notes prior to maturity on January 1, 2019. | |
As of December 31, 2013 and 2012, the fair value of our $8.8 million 2004 senior convertible notes was valued at $8.9 million and $8.6 million, respectively, based on the quoted fair market values of the debt. Debt is classified as a Level 3 fair value measurement. We determine fair value based on a market approach. | |
We incurred interest expense of $7.8 million, $9.0 million and $9.0 million in 2012, 2011 and 2010, respectively, related to our senior convertible notes. | |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
STOCKHOLDERS' EQUITY | ' | |||||||||||||
STOCKHOLDERS' EQUITY | ' | |||||||||||||
10. STOCKHOLDERS' EQUITY | ||||||||||||||
Share Repurchase Program | ||||||||||||||
The Company's stock repurchases during 2013, 2012 and 2011, were as follows: | ||||||||||||||
Year ending December 31, | Total number | Average | Total number of | Approximate dollar value of | ||||||||||
of shares | price paid | shares purchased | shares that may yet be | |||||||||||
purchased | per share | as part of publicly | purchased under the plan | |||||||||||
announced plan | (in millions) | |||||||||||||
2011 | 4,265,168 | $ | 18.7 | 4,265,168 | $ | 20.2 | ||||||||
2012 | 1,533,132 | $ | 14.78 | 1,533,132 | $ | 97.6 | ||||||||
2013 | 3,019,562 | $ | 16.96 | 3,019,562 | $ | 46.4 | ||||||||
| | | | | | | | | | | | | | |
Total | 8,817,862 | 8,817,862 | ||||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
EMPLOYEE_BENEFIT_PLAN
EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2013 | |
EMPLOYEE BENEFIT PLAN | ' |
EMPLOYEE BENEFIT PLAN | ' |
11. EMPLOYEE BENEFIT PLAN | |
401K Plan | |
We have a defined contribution 401(k) retirement plan for eligible employees. Employees may contribute up to 15% of their pretax compensation to the plan, with the Company providing a discretionary match of up to 50% of the total employee contribution. Amounts charged to expense related to our matching contributions were $2.4 million, $1.5 million and $1.1 million on matching percentages of 45%, 25% and 25% in 2013, 2012 and 2011, respectively. | |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||
12. SEGMENT INFORMATION | ||||||||||||||
We view our operations and manage our business as one reportable segment, providing outsourced commerce and payments solutions globally to a variety of companies. Although we differentiate our offerings in the broad categories of Commerce, Payments and Marketing Services, with the exception of revenue, the types of information and internal reports used by our chief operating decision maker to monitor performance, evaluate results of operations, allocate resources and otherwise manage the business are at a consolidated level. | ||||||||||||||
We market our products and services through our offices in the United States and our wholly-owned branches and subsidiaries operating in Australia, Austria, Brazil, Canada, China, Germany, Korea, India, Ireland, Japan, Luxembourg, Mexico, Russia, Singapore, Sweden, Taiwan and the United Kingdom. Sales to international customers accounted for 52.0%, 48.1% and 48.6% of revenue from continuing operations for 2013, 2012 and 2011, respectively. Sales are attributed to a geographic region based on the ordering location of the customer or the payment processing location, depending on the type of customer. If revenue earned in any individual country exceeds 10% of the revenue reported for the period, the country is separately listed. The remaining balance is separated between Europe and other. Currently, no non-U.S country exceeds the 10% threshold. Summarized revenue from continuing operations information by region is outlined below (dollars in thousands). | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
United States | $ | 187,046 | $ | 192,447 | $ | 193,467 | ||||||||
Europe | 118,852 | 113,163 | 120,494 | |||||||||||
Other | 83,781 | 64,886 | 62,508 | |||||||||||
| | | | | | | | | | | ||||
Total | $ | 389,679 | $ | 370,496 | $ | 376,469 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Microsoft Corporation accounted for approximately 32.5%, 30.9% and 29.2% of our revenue from continuing operations in 2013, 2012 and 2011, respectively. | ||||||||||||||
Asset information by geographic area is based on the physical location of the assets. If assets in any individual country exceed 10% of the assets reported for the period, the country is separately listed. Currently, no non-U.S country exceeds the 10% threshold. The assets located in the U.S and the remaining assets located in Europe and the rest of the world are detailed in the table below (in thousands): | ||||||||||||||
2013 | 2012 | |||||||||||||
United States | Europe and Other | United States | Europe and Other | |||||||||||
Total property and equipment | $ | 163,743 | $ | 23,524 | $ | 145,820 | $ | 22,136 | ||||||
Accumulated depreciation | (114,965 | ) | (18,532 | ) | (97,155 | ) | (17,703 | ) | ||||||
| | | | | | | | | | | | | | |
Net property and equipment | $ | 48,778 | $ | 4,992 | $ | 48,665 | $ | 4,433 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
QUARTERLY_FINANCIAL_DATA_UNAUD
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
QUARTERLY FINANCIAL DATA (UNAUDITED) | ' | |||||||||||||
QUARTERLY FINANCIAL DATA (UNAUDITED) | ' | |||||||||||||
13. QUARTERLY FINANCIAL DATA (UNAUDITED) | ||||||||||||||
The following tables contain selected unaudited statement of operations information for each quarter of 2013 and 2012. The following information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented. The results of the operations of CustomCD and DRES have been reclassified to Discontinued Operations for all periods presented. See Note 15—Discontinued Operations, for further discussion. Within the 2012 quarters, payment processing fees, chargebacks, and directly related personnel expenses have been reclassified into "Direct cost of services" to conform with 2013 presentation. See Note 1—Nature of Operations and Summary of Significant Accounting Policies, for further discussion. | ||||||||||||||
The operating results for any quarter are not necessarily indicative of results for any future period. | ||||||||||||||
Unaudited quarterly results of operations are as follows (in thousands, except per share data): | ||||||||||||||
Quarter Ended | ||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||
2013 | ||||||||||||||
Revenue | $ | 111,021 | $ | 90,163 | $ | 87,260 | $ | 101,235 | ||||||
Direct cost of services(1) | 22,006 | 17,061 | 16,205 | 18,233 | ||||||||||
Network and infrastructure(1) | 15,075 | 14,326 | 14,648 | 14,987 | ||||||||||
Income (loss) from continuing operations | (10,687 | ) | (203 | ) | (7,596 | ) | (43 | ) | ||||||
Income (loss) from discontinued operations | (678 | ) | (669 | ) | (4,891 | ) | 120 | |||||||
Net income (loss) | (11,365 | ) | (872 | ) | (12,487 | ) | 77 | |||||||
Income (loss) per share—basic: | ||||||||||||||
Income (loss) from continuing operations | $ | (0.33 | ) | $ | (0.01 | ) | $ | (0.24 | ) | $ | 0 | |||
Income (loss) from discontinued operations | (0.02 | ) | (0.02 | ) | (0.16 | ) | 0 | |||||||
| | | | | | | | | | | | | | |
Net income (loss) per share—basic | $ | (0.35 | ) | $ | (0.03 | ) | $ | (0.40 | ) | $ | 0 | |||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Income (loss) per share—diluted: | ||||||||||||||
Income (loss) from continuing operations | $ | (0.33 | ) | $ | (0.01 | ) | $ | (0.24 | ) | $ | 0 | |||
Income (loss) from discontinued operations | (0.02 | ) | (0.02 | ) | (0.16 | ) | 0 | |||||||
| | | | | | | | | | | | | | |
Net income (loss) per share—diluted | $ | (0.35 | ) | $ | (0.03 | ) | $ | (0.40 | ) | $ | 0 | |||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Quarter Ended | ||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||
2012 | ||||||||||||||
Revenue | $ | 98,204 | $ | 87,117 | $ | 87,056 | $ | 98,119 | ||||||
Direct cost of services(1) | 17,249 | 15,085 | 15,476 | 18,946 | ||||||||||
Network and infrastructure(1) | 12,452 | 12,686 | 13,184 | 14,242 | ||||||||||
Income (loss) from continuing operations | 5,184 | 681 | (735 | ) | (188,768 | ) | ||||||||
Income (loss) from discontinued operations | (447 | ) | (481 | ) | 1 | (11,303 | ) | |||||||
Net income (loss) | 4,737 | 200 | (734 | ) | (200,071 | ) | ||||||||
Income (loss) per share—basic: | ||||||||||||||
Income (loss) from continuing operations | $ | 0.15 | $ | 0.02 | $ | (0.02 | ) | $ | (5.77 | ) | ||||
Income (loss) from discontinued operations | (0.01 | ) | (0.01 | ) | 0 | (0.34 | ) | |||||||
| | | | | | | | | | | | | | |
Net income (loss) per share—basic | $ | 0.14 | $ | 0.01 | $ | (0.02 | ) | $ | (6.11 | ) | ||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Income (loss) per share—diluted: | ||||||||||||||
Income (loss) from continuing operations | $ | 0.15 | $ | 0.02 | $ | (0.02 | ) | $ | (5.77 | ) | ||||
Income (loss) from discontinued operations | (0.01 | ) | (0.01 | ) | 0 | (0.34 | ) | |||||||
| | | | | | | | | | | | | | |
Net income (loss) per share—diluted | $ | 0.14 | $ | 0.01 | $ | (0.02 | ) | $ | (6.11 | ) | ||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
-1 | ||||||||||||||
Gross profit is calculated as revenue less direct cost of services and network and infrastructure expenses and excludes depreciation and amortization expense. | ||||||||||||||
BUSINESS_COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
BUSINESS COMBINATIONS | ' | |||||||
BUSINESS COMBINATIONS | ' | |||||||
14. BUSINESS COMBINATIONS | ||||||||
Acquisition of LML Payment Systems, Inc. | ||||||||
On January 10, 2013 we acquired 100% of the capital stock of LML Payment Systems, Inc., a publically held payment service provider with operations in Victoria, British Columbia in an all cash transaction valued at $3.45 per share. The aggregate purchase price was $55.8 million, net of cash acquired of $47.0 million. Acquisition and integration costs of $5.7 million and $0.8 million were expensed as incurred, and were recorded in the line item "General and administrative" in our Consolidated Statements of Operations for the year ended December 31, 2013 and 2012, respectively. LML is a leading provider of payment processing services to the Canadian small and medium sized business market. This acquisition was made to broaden our online payments services to businesses of all sizes. The goodwill arising from the transaction consists primarily of the assembled workforce and synergies expected to be gained when combining the complimentary Digital River and LML business models. None of the goodwill recognized is expected to be deductible for income tax purposes. | ||||||||
LML revenue for the period starting as of the acquisition date of January 10, 2013, and ending on December 31, 2013, was $24.1 million. The legal entities acquired had a net loss for the period starting as of the acquisition date of January 10, 2013, and ending on December 31, 2013, of $0.6 million. The total legal entity losses include integration expenses of $1.4 million, but exclude any corporate allocations. | ||||||||
The purchase price for the LML acquisition has been assigned to the assets acquired and liabilities assumed based on their fair value at the date of acquisition. The allocation of the purchase price is summarized in the following table (in thousands): | ||||||||
LML Payment | ||||||||
Systems, Inc. | ||||||||
Cash and cash equivalents | $ | 46,957 | ||||||
Accounts receivable | 1,334 | |||||||
Receivable of acquisition expenses incurred on behalf of Digital River | 1,068 | |||||||
Customer and partner relationships | 23,230 | |||||||
Trade names | 3,567 | |||||||
Other intangibles | 1,185 | |||||||
Goodwill | 54,447 | |||||||
Other assets | 4,597 | |||||||
| | | | | ||||
Total assets acquired | 136,385 | |||||||
| | | | | ||||
Other liabilities | 33,585 | |||||||
| | | | | ||||
Total liabilities assumed | 33,585 | |||||||
| | | | | ||||
Total allocation of purchase price consideration | 102,800 | |||||||
| | | | | ||||
Less: cash acquired | (46,957 | ) | ||||||
| | | | | ||||
Total purchase price, net of cash acquired | $ | 55,843 | ||||||
| | | | | ||||
| | | | | ||||
For the LML acquisition, customer and partner relationships have a weighted average useful life of 5.0 years, trade names have a weighted average useful life of 5.0 years and other intangibles have a weighted average useful life of 4.8 years. | ||||||||
Amortization expense of LML acquisition-related intangible assets was $5.2 million for the year ended December 31, 2013. Estimated amortization expense for the remaining life of the LML intangible assets, is as follows (in thousands): | ||||||||
Year | ||||||||
2014 | $ | 5,394 | ||||||
2015 | 5,102 | |||||||
2016 | 5,102 | |||||||
2017 | 5,102 | |||||||
| | | | | ||||
Total | $ | 20,700 | ||||||
| | | | | ||||
| | | | | ||||
Pro Forma Operating Results (Unaudited) | ||||||||
The unaudited pro forma financial information in the table below summarizes the combined results of operations for Digital River, Inc. and LML. The consolidated financial statements include the historical operating results of each business acquired from the date of acquisition. | ||||||||
The historical financial information has been adjusted to give effect to pro forma events that are directly attributable to the transaction, are factually supportable and, in the case of the pro forma results of operations, have a nonrecurring impact. For the year ended December 31, 2012, the pro forma results include adjustments primarily related to amortization of acquired intangible assets of $5.4 million, less elimination of LML historical intangible amortization expense of $0.6 million and income taxes benefit of $2.6 million. The following unaudited pro forma condensed results of operations for 2013 and 2012 have been prepared as if the LML acquisition had occurred on January 1, 2012, (in thousands): | ||||||||
For the Years | ||||||||
Ended December 31, | ||||||||
2013 | 2012 | |||||||
Revenue | $ | 390,601 | $ | 398,784 | ||||
Net income (loss) | (24,355 | ) | (194,121 | ) | ||||
This pro forma financial information does not purport to represent results that would actually have been obtained if the transactions had been in effect on January 1, 2012, as applicable, or any future results that may be realized. | ||||||||
DISCONTINUED_OPERATIONS_AND_DI
DISCONTINUED OPERATIONS AND DISPOSALS | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
DISCONTINUED OPERATIONS AND DISPOSALS | ' | ||||||||||
DISCONTINUED OPERATIONS AND DISPOSALS | ' | ||||||||||
15. DISCONTINUED OPERATIONS AND DISPOSALS | |||||||||||
On September 30, 2013, we sold CustomCD, Inc., which was based in Portland, Oregon in a stock sale to a former employee. We have recorded a pre-tax loss on the sale of $0.1 million within "Income (loss) from discontinued operations, net of tax" in our Consolidated Statements of Operations. The results of operations of CustomCD, including the loss on the sale, have been excluded from the results of continuing operations and are reported as discontinued operations. We continue to utilize the services of CustomCD to provide back-up CDs to our customers. Expenses totaling $1.3 million, $1.5 million and $1.6 million in 2013, 2012 and 2011, respectively, are reflected in "Direct cost of sales" related to these services. | |||||||||||
On October 1, 2013, we sold Digital River Education Services, Inc., which was based in Plano, Texas in a stock sale to two former employees. We have recorded a pre-tax loss on the sale of $1.8 million within "Income (loss) from discontinued operations, net of tax" in our Consolidated Statements of Operations. The results of operations of DRES, including the loss on the sale, have been excluded from the results of continuing operations and are reported as discontinued operations. | |||||||||||
We do not allocate interest income or interest expense to discontinued operations. The operating results of the discontinued operations included in our Consolidated Statements of Operations for the 2013, 2012 and 2011 were as follows (in thousands): | |||||||||||
For the Years Ended | |||||||||||
December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Revenue | $ | 8,043 | $ | 15,726 | $ | 21,671 | |||||
| | | | | | | | | | | |
Income (loss) on discontinued operations before taxes and loss on sales | (1,704 | ) | (2,627 | ) | (10,379 | ) | |||||
Loss on disposal of discontinued businesses before taxes | (1,894 | ) | — | — | |||||||
Provision (benefit) for income taxes | 2,520 | 9,603 | (3,832 | ) | |||||||
| | | | | | | | | | | |
Income (loss) on discontinued operations, net of tax | $ | (6,118 | ) | $ | (12,230 | ) | $ | (6,547 | ) | ||
| | | | | | | | | | | |
| | | | | | | | | | | |
The assets and liabilities of discontinued operations for 2012 were as follows (in thousands): | |||||||||||
For the Years | |||||||||||
Ended | |||||||||||
December 31, | |||||||||||
2012 | |||||||||||
Current assets of discontinued operations | $ | 7,365 | |||||||||
Long-term assets of discontinued operations | 196 | ||||||||||
| | | | | |||||||
Total assets of discontinued operations | $ | 7,561 | |||||||||
| | | | | |||||||
| | | | | |||||||
Current liabilities of discontinued operations | $ | 5,753 | |||||||||
Non-current liabilities of discontinued operations | — | ||||||||||
| | | | | |||||||
Total liabilities of discontinued operations | $ | 5,753 | |||||||||
| | | | | |||||||
| | | | | |||||||
In the fourth quarter of 2012, we sold CCNow, Inc. to Snorrason Holdings, a privately held e-commerce service provider. Proceeds from the sale totaled $0.5 million and a gain of $0.2 million was recorded in conjunction with the divestiture. The operations of CCNow and the gain on the sale are not considered to be material to our consolidated financial statements and thus are not separately disclosed within discontinued operations. | |||||||||||
Schedule_II_Valuation_and_Qual
Schedule II Valuation and Qualifying Accounts | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Schedule II Valuation and Qualifying Accounts | ' | ||||||||||||||||
Schedule II Valuation and Qualifying Accounts | ' | ||||||||||||||||
Valuation and Qualifying Accounts | |||||||||||||||||
For Years Ended December 31, 2013, 2012 and 2011 | |||||||||||||||||
(in thousands) | |||||||||||||||||
Additions | |||||||||||||||||
Balance at | Charged | Charged | Deductions | Balance at | |||||||||||||
Beginning of | (Credited) to | (Credited) to | End of | ||||||||||||||
Year | Costs and | Other | Year | ||||||||||||||
Expenses | Accounts | ||||||||||||||||
2013 | |||||||||||||||||
Allowance for doubtful accounts | $ | 4,834 | $ | (242 | ) | $ | — | $ | (1,386 | ) | $ | 3,206 | |||||
Notes receivable reserve | 627 | — | — | — | 627 | ||||||||||||
Accrued chargeback reserve | 688 | 16,961 | — | (17,317 | ) | 332 | |||||||||||
Allowance for deferred tax assets | 37,860 | 18,825 | (2,865 | ) | — | 53,820 | |||||||||||
2012 | |||||||||||||||||
Allowance for doubtful accounts | $ | 4,269 | $ | 2,146 | $ | — | $ | (1,581 | ) | $ | 4,834 | ||||||
Notes receivable reserve | — | — | 627 | — | 627 | ||||||||||||
Accrued chargeback reserve | 452 | 19,719 | — | (19,483 | ) | 688 | |||||||||||
Allowance for deferred tax assets | 3,812 | 33,311 | 737 | — | 37,860 | ||||||||||||
2011 | |||||||||||||||||
Allowance for doubtful accounts | $ | 4,863 | $ | 2,967 | $ | — | $ | (3,561 | ) | $ | 4,269 | ||||||
Accrued chargeback reserve | 1,936 | 10,175 | — | (11,659 | ) | 452 | |||||||||||
Allowance for deferred tax assets | 816 | (279 | ) | 3,275 | — | 3,812 |
NATURE_OF_OPERATIONS_AND_SUMMA1
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||
Principles of Consolidation and Classification | ' | ||||||||||
Principles of Consolidation and Classification | |||||||||||
The consolidated financial statements include the accounts of Digital River, Inc. and our wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. | |||||||||||
Use of Estimates | ' | ||||||||||
Use of Estimates | |||||||||||
The preparation of financial statements in accordance with United States generally accepted accounting principles (U.S. GAAP) requires management 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 and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||
Foreign Currency Translation | ' | ||||||||||
Foreign Currency Translation | |||||||||||
Substantially all of our foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities are translated at exchange rates prevailing at the balance sheet dates. Revenues, costs and expenses are translated at the average exchange rates for the reported period. Gains and losses resulting from translation are recorded as a component of "Accumulated other comprehensive income (loss)" within stockholders' equity. Losses resulting from foreign currency transactions were $1.3 million, $0.4 million and $1.5 million in 2013, 2012 and 2011, respectively, and are recorded within "Other income (expense), net". | |||||||||||
We are exposed to market risk from changes in foreign currency exchange rates. Our risks relate to the effect of foreign currency exchange rate fluctuations on the U.S. dollar value of foreign currency denominated operating sales and expenses and exchange rate translation losses (or gains) associated with economic interests that are denominated in a foreign currency. The risk of translation losses due to foreign exchange volatility is partially mitigated by the use of foreign exchange forward contracts with maturities of less than three months. These derivative transactions are not designated as hedges and are adjusted to fair value through income each period. The principal exposures mitigated were the Euro, Australian dollar, British pound, Canadian dollar, Danish krone and Japanese yen currencies. For the years ended December 31, 2013, 2012 and 2011, we recorded a loss of $0.1 million, a gain of $0.1 million, and a loss of $0.3 million, respectively, on derivative settlements within "Other income (expense), net". We held no open foreign exchange forward contracts at December 31, 2013 and the notional amount of holdings at December 31, 2012 was $1.9 million. The gain (loss) on derivative settlements and the notional amounts held at the respective year ends are not material when compared to our net income (loss) and our overall cash and cash equivalents reported for the respective periods. | |||||||||||
Our foreign currency contracts contain credit risk to the extent that our bank counterparties may be unable to meet the terms of the agreements. We minimize such risk by limiting our counterparties to major financial institutions of high credit quality. | |||||||||||
Cash and Cash Equivalents | ' | ||||||||||
Cash and Cash Equivalents | |||||||||||
We consider all short-term, highly liquid investments and money market accounts, that are readily convertible into known amounts of cash and that have original or remaining maturities of three months or less at the date of purchase to be cash equivalents. | |||||||||||
Short-Term Investments | ' | ||||||||||
Short-Term Investments | |||||||||||
Our short-term investments consist of debt securities that are classified as available-for-sale and are carried on our balance sheets at their market value with cumulative unrealized gains or losses recorded net of tax as a component of "Accumulated other comprehensive income (loss)" within stockholders' equity. We classify all of our available-for-sale securities, except for our auction rate securities, as current assets, as these securities represent investments available for current corporate purposes. Upon the sale of a security classified as available-for-sale, the amount reclassified out of "Accumulated other comprehensive income (loss)" into earnings is based on the specific identification method. | |||||||||||
Allowance for Doubtful Accounts | ' | ||||||||||
Allowance for Doubtful Accounts | |||||||||||
We use estimates in determining our allowance for doubtful accounts which are based on our historical experience and current trends. We must estimate the collectability of our billed accounts receivable. We analyze accounts receivable and consider our historical bad debt experience, customer credit-worthiness, current economic trends and changes in our customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. We must make judgments and estimates in connection with the allowance in any accounting period. The uncollectible portion of receivables is charged against the allowance for doubtful accounts when collection efforts have ceased. | |||||||||||
Prepaid Expenses and Other | ' | ||||||||||
Prepaid Expenses and Other | |||||||||||
Prepaid expenses and other are largely comprised of prepaid licenses, deferred set-up costs, deferred financing costs, notes receivable, value added taxes, income tax receivable and restricted cash. Restricted cash consists of cash and cash equivalents that are held in escrow accounts, or are otherwise restricted by agreements with third parties, for a particular purpose. As of December 31, 2013 and 2012, we had $3.6 million and $0.4 million of restricted cash, respectively. In 2012, $0.6 million of notes receivable, lent through a short term promissory note, was deemed to be uncollectable and a full reserve was recorded against the note at both December 31, 2013 and 2012, respectively. | |||||||||||
Property and Equipment | ' | ||||||||||
Property and Equipment | |||||||||||
Property and equipment is recorded at cost, less accumulated depreciation and amortization. Computer equipment, office furniture and purchased and internally developed software are depreciated or amortized under the straight-line method using estimated useful lives of three to seven years and leasehold improvements are depreciated over the shorter of the asset life or remaining length of the lease. Useful lives are based on our estimates of the period of time over which the assets will generate revenue or benefit our business. We review assets with definite lives for impairment whenever events or changes in circumstances indicate that the value we are carrying on our financial statements for an asset may not be recoverable. Our evaluation considers non-financial data such as changes in the operating environment and business strategy, competitive information, market trends and operating performance. Property and equipment at December 31 consisted of the following (in thousands): | |||||||||||
2013 | 2012 | ||||||||||
Computer hardware and software | $ | 174,928 | $ | 155,916 | |||||||
Furniture, fixtures and leasehold improvements | 12,339 | 12,040 | |||||||||
| | | | | | | | ||||
Total property and equipment | 187,267 | 167,956 | |||||||||
Accumulated depreciation and amortization | (133,497 | ) | (114,858 | ) | |||||||
| | | | | | | | ||||
Net property and equipment | $ | 53,770 | $ | 53,098 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Depreciation and amortization expense from continuing operations was $22.1 million, $20.2 million and $22.0 million in 2013, 2012 and 2011, respectively. | |||||||||||
Repairs and maintenance costs are charged directly to expense as incurred. Major renewals or replacements that substantially extend the useful life of an asset are capitalized and depreciated. | |||||||||||
Software Development | ' | ||||||||||
Software Development | |||||||||||
Costs to develop software for internal use are capitalized when the criteria for capitalization under U.S. GAAP is met. This criteria includes that the project must be approved by senior management, costs must be related to new development or significant upgrades or enhancements to existing software, and completion and future utilization of the development must be probable. Costs related to development that do not meet these criteria are expensed in the period incurred. Capitalized costs of completed projects are amortized over the estimated useful life of the software. For the years ended December 31, 2013 and 2012, net software for internal use was $16.3 million and $18.6 million, respectively. | |||||||||||
Goodwill | ' | ||||||||||
Goodwill | |||||||||||
We have a single reporting unit. We complete our goodwill impairment analysis annually as of October 1, or more frequently if events or circumstances occur that would more likely than not reduce the fair value of our single reporting unit below its carrying amount. | |||||||||||
In conducting our impairment analysis, we first assess qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying amount, including goodwill. If after assessing all relevant qualitative factors, we determine that it is more likely than not that the fair value of our single reporting unit is less than its carrying amount, a blended income and market approach is then used to determine the fair value of our sole reporting unit and any applicable impairment charge. The application of goodwill impairment tests requires management judgment for many of the inputs. Key assumptions included in the impairment test include our revenue growth rate, discount rate, and estimates of our future cash flows. Changes in these estimates could result in additional impairment of goodwill in a future period. Any impairment charges reflect our view of anticipated risks based on our expectations of market and general economic conditions. See Note 5—Goodwill and Intangible Assets, for further details regarding our 2013 qualitative impairment analysis and 2012 quantitative analysis. | |||||||||||
Intangible Assets | ' | ||||||||||
Intangible Assets | |||||||||||
We amortize certain definite lived intangibles over their useful lives. Useful lives are based on our estimates of the period of time over which the assets will generate revenue or benefit our business. We review assets with definite lives for impairment whenever events or changes in circumstances indicate that the value we are carrying on our financial statements for an asset may not be recoverable. Our evaluation considers non-financial data such as changes in the operating environment and business strategy, competitive information, market trends and operating performance. If there are indications that an impairment may have occurred, we compare an undiscounted cash flow analysis to the carrying value of the assets. If the carrying amount of the asset exceeds the undiscounted cash flows, we measure the amount of the impairment by comparing the carrying amount of the asset to its fair value. See Note 5—Goodwill and Intangible Assets, for further details. | |||||||||||
Long-Term Investments | ' | ||||||||||
Long-Term Investments | |||||||||||
Our long-term investments consist of market basis equity investments, cost method equity investments and auction rate securities. The market basis equity investments and auction rate securities are classified as available-for-sale and are carried on our balance sheet at their market value with cumulative unrealized gains or losses recorded net of tax as a component of "Accumulated other comprehensive income (loss)" within stockholders' equity. Upon the sale of a security classified as available-for-sale, the amount reclassified out of "Accumulated other comprehensive income (loss)" into earnings is based on the specific identification method. | |||||||||||
We also have equity investments that are accounted for under the cost method included in long-term investments. We review the key characteristics of our investments and their classification in accordance with U.S. GAAP on an annual basis, or when indications of potential impairment exist. If a decline in the fair value of a security is deemed by management to be other-than-temporary, we write down the cost basis of the investment to fair value, and the amount of the write-down is included in net earnings. | |||||||||||
Other Assets | ' | ||||||||||
Other Assets | |||||||||||
The following table summarizes our other assets as of December 31 (in thousands): | |||||||||||
2013 | 2012 | ||||||||||
Debt financing costs, net | $ | 1,410 | $ | 3,323 | |||||||
Other | 657 | 990 | |||||||||
| | | | | | | | ||||
Total other assets | $ | 2,067 | $ | 4,313 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Debt financing costs, net include broker, legal, accounting and other fees associated with entering into our 2010 and 2004 senior convertible notes. We amortize debt financing costs over the original term of the debt. | |||||||||||
Discontinued Operations | ' | ||||||||||
Discontinued Operations | |||||||||||
We separately classify the results of operations and the assets and liabilities of material components or businesses that have been sold, disposed, or that meet the criteria for held for sale within our Consolidated Statements of Operations and Consolidated Balance Sheets. As allowed under U.S. GAAP, we do not reclassify the cash flows of discontinued businesses within our Consolidated Statements of Cash Flows. In determining if the criteria for separate presentation is met, we assess if the operations and cash flows of the business have been, or will be, eliminated from ongoing operations and whether we will have any significant continuing involvement in the operations of the business after the disposal transaction. The presentation of corresponding prior periods is updated to conform to the current period presentation. See Note 15—Discontinued Operations for further discussion. | |||||||||||
Comprehensive Income (Loss) | ' | ||||||||||
Comprehensive Income (Loss) | |||||||||||
Comprehensive income (loss) includes revenues, expenses, and gains and losses that are excluded from net earnings under GAAP. Items of comprehensive income (loss) are unrealized gains and losses on investments and foreign currency translation adjustments which are added to net income (loss) to compute comprehensive income (loss). Comprehensive income (loss) related to cumulative translation adjustments has no tax expense or benefit as these funds are indefinitely invested. | |||||||||||
The following table summarizes the changes in accumulated other comprehensive income (loss), net of tax, by component as of December 31 (in thousands): | |||||||||||
Foreign currency | Unrealized gain | Total | |||||||||
translation | (loss) on | ||||||||||
adjustment | investments | ||||||||||
Balance as of December 31, 2010 | $ | 5,074 | $ | (4,502 | ) | $ | 572 | ||||
Other comprehensive income before reclassifications | (9,004 | ) | 817 | (8,187 | ) | ||||||
Reclassification adjustment for net gains included in net income | — | (349 | ) | (349 | ) | ||||||
| | | | | | | | | | | |
Net current period other comprehensive income (loss) | (9,004 | ) | 468 | (8,536 | ) | ||||||
| | | | | | | | | | | |
Balance as of December 31, 2011 | $ | (3,930 | ) | $ | (4,034 | ) | $ | (7,964 | ) | ||
Other comprehensive income before reclassifications | 6,495 | (1,688 | ) | 4,807 | |||||||
Reclassification adjustment for net gains included in net income | — | (13 | ) | (13 | ) | ||||||
| | | | | | | | | | | |
Net current period other comprehensive income (loss) | 6,495 | (1,701 | ) | 4,794 | |||||||
| | | | | | | | | | | |
Balance as of December 31, 2012 | $ | 2,565 | $ | (5,735 | ) | $ | (3,170 | ) | |||
Other comprehensive income before reclassifications | 1,155 | 6,558 | 7,713 | ||||||||
Reclassification adjustment for net gains included in net income | — | (11 | ) | (11 | ) | ||||||
| | | | | | | | | | | |
Net current period other comprehensive income (loss) | 1,155 | 6,547 | 7,702 | ||||||||
| | | | | | | | | | | |
Balance as of December 31, 2013 | $ | 3,720 | $ | 812 | $ | 4,532 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The following table summarizes the reclassifications out of accumulated other comprehensive income (loss) for the year ended December 31, 2013 (in thousands): | |||||||||||
Reclassification out of Accumulated other comprehensive income | Amount reclassified | Affected line item in the | |||||||||
from accumulated other | Consolidated Statement of | ||||||||||
comprehensive income | Operations | ||||||||||
Realized gains (losses) on investments | |||||||||||
$ | 18 | Other income (expense), net | |||||||||
(7 | ) | Income tax benefit (expense) | |||||||||
| | | | | | ||||||
$ | 11 | Net income (loss) | |||||||||
| | | | | | ||||||
| | | | | | ||||||
Revenue Recognition | ' | ||||||||||
Revenue Recognition | |||||||||||
We recognize revenue from services rendered once all the following criteria for revenue recognition have been met: (1) persuasive evidence of an agreement exists; (2) the services have been rendered; (3) the fee is fixed and determinable; and, (4) collection of the amounts due is reasonably assured. | |||||||||||
We sell both digital and physical products on behalf of our customers and charge transaction fees based on a percentage of the sale price. These revenues are recorded net of related costs of sales as generally our clients control product choices and are subject to inventory risks. Revenue for these sales is recognized upon fulfillment, when title and significant risk of ownership passes to the end customer. | |||||||||||
We provide payment processing services to merchants and charge monthly service and transaction based fees. Transaction fees are recognized in the period in which the transaction occurs. Service fees are recognized over the covered period. | |||||||||||
When we provide additional deliverables in connection with our e-commerce and payments solution arrangements, including site set up services, these services do not meet the criteria of separate units of accounting as the services do not have value to the client on a standalone basis. Therefore we account for these deliverables as one unit of accounting and recognize them over the term of the associated contract. When we provide client services on a standalone basis, such as website design, custom development, data backup, analytical marketing, affiliate marketing and email marketing services, revenue is recognized as the services are provided. | |||||||||||
Shipping revenue is recorded net of any associated costs. Taxes assessed by a governmental authority that are directly imposed on a revenue-producing transaction between a seller and a customer are not recorded as revenue. | |||||||||||
Credit Card Chargeback Reserve | ' | ||||||||||
Credit Card Chargeback Reserve | |||||||||||
We use estimates based on historical experience and current trends to determine accrued chargeback expenses. The following table illustrates our provision for chargeback losses as a percentage of revenue for 2013, 2012 and 2011 (in thousands, except percentages): | |||||||||||
2013 | 2012 | 2011 | |||||||||
Revenue | $ | 389,679 | $ | 370,496 | $ | 376,469 | |||||
Provision for Credit Card Chargebacks | 332 | 688 | 452 | ||||||||
Provision for Credit Card Chargebacks as a % of Revenue | 0.1 | % | 0.2 | % | 0.1 | % | |||||
Determining appropriate reserves for chargeback transactions is an inherently uncertain process. The reserves are maintained at a level we deem appropriate to provide for losses incurred on revenue earned in each period. | |||||||||||
Stock-Based Compensation Expense | ' | ||||||||||
Stock-Based Compensation Expense | |||||||||||
We account for share-based payments made to our employees and directors, including stock options and employee stock purchases made through our Employee Stock Purchase Plan (ESPP) based on estimated fair values. The fair value of each stock option and employee stock purchase made through our ESPP are estimated on the date of grant using the Black-Scholes option pricing model. The fair value of restricted stock, restricted stock units and performance shares is determined based on the closing price of our common stock on the date of grant. We estimated the fair value of performance share units with a market condition granted to certain executives on the date of grant using the Monte Carlo valuation model. | |||||||||||
Compensation expense for all share-based payment awards is recognized over the requisite service period. Stock-based compensation expense recognized in our Consolidated Statements of Operations is based on awards ultimately expected to vest and thus has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Benefits of tax deductions in excess of recognized stock-based compensation expense are reported as a financing cash flow. | |||||||||||
Severance | ' | ||||||||||
Severance | |||||||||||
We begin to accrue for severance and outplacement costs when all of the criteria for one-time employment termination benefits are met, which is generally at the time of communication to the employee. Total restructuring related severance expense for the years ended December 31, 2013, 2012 and 2011 was $5.8 million, $1.7 million, and $0.0 million respectively. | |||||||||||
Advertising Costs | ' | ||||||||||
Advertising Costs | |||||||||||
The costs of advertising are charged to sales and marketing expense as incurred. We incurred advertising expense of $0.2 million, $0.2 million and $0.4 million in 2013, 2012 and 2011, respectively. | |||||||||||
Income Taxes | ' | ||||||||||
Income Taxes | |||||||||||
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We record deferred tax assets for favorable tax attributes, including tax loss carryforwards. We currently have U.S. tax loss carryforwards, including acquired operating tax loss carryforwards, and a lesser amount of acquired foreign operating tax loss carryforwards. We evaluate the need for a valuation allowance against the deferred tax assets on a quarterly basis. | |||||||||||
Recent Accounting Pronouncements | ' | ||||||||||
Recent Accounting Pronouncements | |||||||||||
ASU 2013-11—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists: In July 2013, the FASB issued ASU 2013-11, which requires an entity to present unrecognized tax benefits as a reduction of the deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, if net settlement is required or expected. To the extent that net settlement is not required or expected, the unrecognized tax benefit must be presented as a liability. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. ASU No. 2013-11 is effective for reporting periods beginning after December 15, 2013, and should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Because this standard only affects the presentation of unrecognized tax benefits and not the measurement of an unrecognized tax benefit, we do not expect this standard to have a material impact on our Consolidated Financial Statements. | |||||||||||
ASU 2013-02—Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income: In February 2013, the FASB issued ASU 2013-02, which required entities to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, entities are required to present, either in the financial statements or footnotes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, entities are required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail on these amounts. ASU 2013-02 is effective prospectively for fiscal periods beginning after December 15, 2012. We have adopted the new guidance in ASU 2013-02 as of the period ended March 31, 2013, and its adoption did not have a material impact on our Consolidated Financial Statements. | |||||||||||
We have determined that all other recently issued accounting standards will not have a material impact on our Consolidated Financial Statements, or do not apply to our operations. | |||||||||||
Reclassifications | ' | ||||||||||
Reclassifications | |||||||||||
Certain items in the prior years' Consolidated Statements of Operations and Consolidated Balance Sheets have been reclassified for comparative purposes to conform to the current year presentation. | |||||||||||
The results of the operations of CustomCD, Inc. (CustomCD) and Digital River Education Services, Inc. (DRES), which were sold on September 30, 2013 and October 1, 2013, respectively, have been classified within Discontinued Operations in our Consolidated Statements of Operations for the year ended December 31, 2013. The operations of these entities in the corresponding years ended December 31, 2012 and 2011 have been reclassified into Discontinued Operations for comparative purposes to conform to the current year presentation. In addition, the assets and liabilities of CustomCD and DRES in the December 31, 2012 Consolidated Balance Sheet have been reclassified and separately presented as current assets and current liabilities of discontinued operations. | |||||||||||
Through December 31, 2012, we reported payment processing fees, chargebacks, and directly related personnel expenses within the "Sales and marketing" and "General and administrative" line items. We have reclassified these expenses to the "Direct cost of services" line as these costs are associated directly with services rendered. For the years ended December 31, 2012 and 2011, excluding amounts related to CustomCD and DRES which have been reclassified to discontinued operations, we have reclassified $55.5 million and $49.0 million, respectively, previously reported as "Sales and marketing" and $2.0 million and $2.1 million, respectively, previously reported as "General and administrative" to "Direct cost of services". The reclassifications did not have an effect on reported consolidated net income (loss). | |||||||||||
NATURE_OF_OPERATIONS_AND_SUMMA2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||
Schedule of property and equipment | ' | ||||||||||
Property and equipment at December 31 consisted of the following (in thousands): | |||||||||||
2013 | 2012 | ||||||||||
Computer hardware and software | $ | 174,928 | $ | 155,916 | |||||||
Furniture, fixtures and leasehold improvements | 12,339 | 12,040 | |||||||||
| | | | | | | | ||||
Total property and equipment | 187,267 | 167,956 | |||||||||
Accumulated depreciation and amortization | (133,497 | ) | (114,858 | ) | |||||||
| | | | | | | | ||||
Net property and equipment | $ | 53,770 | $ | 53,098 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Schedule of other assets | ' | ||||||||||
The following table summarizes our other assets as of December 31 (in thousands): | |||||||||||
2013 | 2012 | ||||||||||
Debt financing costs, net | $ | 1,410 | $ | 3,323 | |||||||
Other | 657 | 990 | |||||||||
| | | | | | | | ||||
Total other assets | $ | 2,067 | $ | 4,313 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Schedule of other current liabilities | ' | ||||||||||
The following table summarizes our other current liabilities as of December 31 (in thousands): | |||||||||||
2013 | 2012 | ||||||||||
Accrued expenses | $ | 29,082 | $ | 30,036 | |||||||
Current portion of debt | 10,016 | 1,256 | |||||||||
Sales, value-added and transaction taxes | 15,534 | 18,507 | |||||||||
Current deferred and other income taxes | 1,267 | 350 | |||||||||
| | | | | | | | ||||
Total other current liabilities | $ | 55,899 | $ | 50,149 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Summary of changes in accumulated other comprehensive income (loss), net of tax | ' | ||||||||||
The following table summarizes the changes in accumulated other comprehensive income (loss), net of tax, by component as of December 31 (in thousands): | |||||||||||
Foreign currency | Unrealized gain | Total | |||||||||
translation | (loss) on | ||||||||||
adjustment | investments | ||||||||||
Balance as of December 31, 2010 | $ | 5,074 | $ | (4,502 | ) | $ | 572 | ||||
Other comprehensive income before reclassifications | (9,004 | ) | 817 | (8,187 | ) | ||||||
Reclassification adjustment for net gains included in net income | — | (349 | ) | (349 | ) | ||||||
| | | | | | | | | | | |
Net current period other comprehensive income (loss) | (9,004 | ) | 468 | (8,536 | ) | ||||||
| | | | | | | | | | | |
Balance as of December 31, 2011 | $ | (3,930 | ) | $ | (4,034 | ) | $ | (7,964 | ) | ||
Other comprehensive income before reclassifications | 6,495 | (1,688 | ) | 4,807 | |||||||
Reclassification adjustment for net gains included in net income | — | (13 | ) | (13 | ) | ||||||
| | | | | | | | | | | |
Net current period other comprehensive income (loss) | 6,495 | (1,701 | ) | 4,794 | |||||||
| | | | | | | | | | | |
Balance as of December 31, 2012 | $ | 2,565 | $ | (5,735 | ) | $ | (3,170 | ) | |||
Other comprehensive income before reclassifications | 1,155 | 6,558 | 7,713 | ||||||||
Reclassification adjustment for net gains included in net income | — | (11 | ) | (11 | ) | ||||||
| | | | | | | | | | | |
Net current period other comprehensive income (loss) | 1,155 | 6,547 | 7,702 | ||||||||
| | | | | | | | | | | |
Balance as of December 31, 2013 | $ | 3,720 | $ | 812 | $ | 4,532 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Summary of reclassifications out of accumulated other comprehensive income (loss) | ' | ||||||||||
The following table summarizes the reclassifications out of accumulated other comprehensive income (loss) for the year ended December 31, 2013 (in thousands): | |||||||||||
Reclassification out of Accumulated other comprehensive income | Amount reclassified | Affected line item in the | |||||||||
from accumulated other | Consolidated Statement of | ||||||||||
comprehensive income | Operations | ||||||||||
Realized gains (losses) on investments | |||||||||||
$ | 18 | Other income (expense), net | |||||||||
(7 | ) | Income tax benefit (expense) | |||||||||
| | | | | | ||||||
$ | 11 | Net income (loss) | |||||||||
| | | | | | ||||||
| | | | | | ||||||
Schedule of provision for chargeback losses as a percentage of revenue | ' | ||||||||||
The following table illustrates our provision for chargeback losses as a percentage of revenue for 2013, 2012 and 2011 (in thousands, except percentages): | |||||||||||
2013 | 2012 | 2011 | |||||||||
Revenue | $ | 389,679 | $ | 370,496 | $ | 376,469 | |||||
Provision for Credit Card Chargebacks | 332 | 688 | 452 | ||||||||
Provision for Credit Card Chargebacks as a % of Revenue | 0.1 | % | 0.2 | % | 0.1 | % |
NET_INCOME_PER_SHARE_Tables
NET INCOME PER SHARE (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
NET INCOME PER SHARE | ' | ||||||||||
Computation of basic and diluted net income per share | ' | ||||||||||
The following table summarizes the computation of basic and diluted net income per share (in thousands, except per share data): | |||||||||||
For the Years Ended | |||||||||||
December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Income (loss) from continuing operations per share—basic | |||||||||||
Income (loss) from continuing operations—basic | $ | (18,529 | ) | $ | (183,638 | ) | $ | 23,714 | |||
Weighted average shares outstanding—basic | 32,065 | 33,224 | 36,778 | ||||||||
| | | | | | | | | | | |
Income (loss) from continuing operations per share—basic | $ | (0.58 | ) | $ | (5.53 | ) | $ | 0.65 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
Income (loss) from continuing operations per share—diluted | |||||||||||
Income (loss) from continuing operations—basic | $ | (18,529 | ) | $ | (183,638 | ) | $ | 23,714 | |||
Exclude: Interest expense and amortized financing cost of convertible senior notes, net of tax benefit | — | — | 78 | ||||||||
| | | | | | | | | | | |
Income (loss) from continuing operations—diluted | $ | (18,529 | ) | $ | (183,638 | ) | $ | 23,792 | |||
| | | | | | | | | | | |
Weighted average shares outstanding—basic | 32,065 | 33,224 | 36,778 | ||||||||
Dilutive impact of non-vested stock and options outstanding | — | — | 532 | ||||||||
Dilutive impact of 2004 senior convertible notes | — | — | 200 | ||||||||
| | | | | | | | | | | |
Weighted average shares outstanding—diluted | 32,065 | 33,224 | 37,510 | ||||||||
| | | | | | | | | | | |
Income (loss) from continuing operations per share—diluted | $ | (0.58 | ) | $ | (5.53 | ) | $ | 0.63 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
Financial assets accounted for at fair value on recurring basis | ' | |||||||||||||
The following table sets forth by level within the fair value hierarchy our financial assets that were accounted for at fair value on a recurring basis at December 31, 2013 and 2012, (in thousands): | ||||||||||||||
Fair Value Measurements | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Balance as of December 31, 2013 | ||||||||||||||
Cash and cash equivalents | $ | 483,868 | $ | 483,868 | $ | — | $ | — | ||||||
Restricted cash | 3,560 | 3,560 | — | — | ||||||||||
Commercial Paper | 9,992 | 9,992 | — | — | ||||||||||
U.S. government sponsored entities | 4,000 | — | 4,000 | — | ||||||||||
Corporate bonds | 101,660 | 101,660 | — | — | ||||||||||
Market basis equity investments | 3,549 | 3,549 | — | — | ||||||||||
Auction rate securities | 41,993 | — | — | 41,993 | ||||||||||
| | | | | | | | | | | | | | |
Total assets measured at fair value | $ | 648,622 | $ | 602,629 | $ | 4,000 | $ | 41,993 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Balance as of December 31, 2012 | ||||||||||||||
Cash and cash equivalents | $ | 542,851 | $ | 542,851 | $ | — | $ | — | ||||||
Restricted cash | 351 | 351 | — | — | ||||||||||
U.S. government sponsored entities | 28,110 | — | 28,110 | — | ||||||||||
Corporate bonds | 128,622 | 128,622 | — | — | ||||||||||
Asset backed securities | 6,062 | — | 6,062 | — | ||||||||||
Market basis equity investments | 1,694 | 1,694 | — | — | ||||||||||
Auction rate securities | 37,001 | — | — | 37,001 | ||||||||||
| | | | | | | | | | | | | | |
Total assets measured at fair value | $ | 744,691 | $ | 673,518 | $ | 34,172 | $ | 37,001 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Reconciliation of assets measured at fair value on recurring basis using significant unobservable inputs (Level 3 inputs) | ' | |||||||||||||
The following is a reconciliation of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3 inputs) (in thousands): | ||||||||||||||
Fair Value | ||||||||||||||
Measurements Using | ||||||||||||||
Significant | ||||||||||||||
Unobservable Inputs | ||||||||||||||
(Level 3) | ||||||||||||||
Auction rate securities | ||||||||||||||
Balance as of December 31, 2010 | $ | 83,678 | ||||||||||||
Total unrealized gains (losses) included in other comprehensive income | 735 | |||||||||||||
Settlements | (19,075 | ) | ||||||||||||
| | | | | ||||||||||
Balance as of December 31, 2011 | $ | 65,338 | ||||||||||||
Total unrealized gains (losses) included in other comprehensive income | (2,637 | ) | ||||||||||||
Settlements | (25,700 | ) | ||||||||||||
| | | | | ||||||||||
Balance as of December 31, 2012 | $ | 37,001 | ||||||||||||
Total unrealized gains (losses) included in other comprehensive income | 5,092 | |||||||||||||
Settlements | (100 | ) | ||||||||||||
| | | | | ||||||||||
Balance as of December 31, 2013 | $ | 41,993 | ||||||||||||
| | | | | ||||||||||
| | | | | ||||||||||
Discounted cash flow model assumptions used to value securities | ' | |||||||||||||
The discounted cash flow model we used to value these securities included the following assumptions: | ||||||||||||||
December 31, | December 31, | |||||||||||||
2013 | 2012 | |||||||||||||
Redemption period (in years) | 7 | 7 | ||||||||||||
Credit ratings | BB+ to AAA | BB+ to AAA | ||||||||||||
Penalty coupon rate | 1.0% to 1.5% | 1.0% to 1.5% | ||||||||||||
Weighted average annualized yield | 1.60% | 1.50% | ||||||||||||
Risk adjusted discount rate | 4.7% to 7.8% | 3.5% to 12.3% |
INVESTMENTS_Tables
INVESTMENTS (Tables) | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||
INVESTMENTS | ' | ||||||||||||||||||||||
Schedule of components of available-for-sale securities | ' | ||||||||||||||||||||||
As of December 31, 2013 and 2012, our available-for-sale securities consisted of the following (in thousands): | |||||||||||||||||||||||
Gross Unrealized Losses | Maturities/Reset Dates | ||||||||||||||||||||||
Cost | Gross Unrealized | Less than 12 | Greater than 12 | Fair Value | Less than 12 | Greater than 12 | |||||||||||||||||
Gains | Months | Months | Months | Months | |||||||||||||||||||
Balance as of December 31, 2013 | |||||||||||||||||||||||
Commercial paper | $ | 9,992 | $ | — | $ | — | $ | — | $ | 9,992 | $ | 9,992 | $ | — | |||||||||
U.S. government sponsored entities | 4,000 | — | — | — | 4,000 | — | 4,000 | ||||||||||||||||
Corporate bonds | 101,400 | 281 | (21 | ) | — | 101,660 | 58,280 | 43,380 | |||||||||||||||
Market basis equity investments | 1,668 | 1,881 | — | — | 3,549 | — | 3,549 | ||||||||||||||||
Auction Rate Securities | 45,725 | — | — | (3,732 | ) | 41,993 | — | 41,993 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Total available-for-sale securities | $ | 162,785 | $ | 2,162 | $ | (21 | ) | $ | (3,732 | ) | $ | 161,194 | $ | 68,272 | $ | 92,922 | |||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Balance as of December 31, 2012 | |||||||||||||||||||||||
U.S. government sponsored entities | $ | 28,103 | $ | 7 | $ | — | $ | — | $ | 28,110 | $ | 28,110 | $ | — | |||||||||
Corporate bonds | 128,035 | 587 | — | — | 128,622 | 51,094 | 77,528 | ||||||||||||||||
Asset backed securities | 6,058 | 4 | — | — | 6,062 | 6,062 | — | ||||||||||||||||
Market basis equity investments | 1,694 | — | — | — | 1,694 | — | 1,694 | ||||||||||||||||
Auction Rate Securities | 45,825 | — | — | (8,824 | ) | 37,001 | — | 37,001 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Total available-for-sale securities | $ | 209,715 | $ | 598 | $ | — | $ | (8,824 | ) | $ | 201,489 | $ | 85,266 | $ | 116,223 | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | ||||||||||
Schedule of changes in the net carrying amount of goodwill | ' | ||||||||||
The changes in the net carrying amount of goodwill for the years ended December 31, 2013 and 2012 are as follows (in thousands): | |||||||||||
Carrying Amount | Accumulated | Carrying Amount | |||||||||
Gross | Impairment | Net | |||||||||
Balance as of December 31, 2011 | $ | 281,858 | $ | — | $ | 281,858 | |||||
Disposal of goodwill | (254 | ) | — | (254 | ) | ||||||
Impairment losses | — | (175,241 | ) | (175,241 | ) | ||||||
Adjustments from foreign currency translation | 2,597 | — | 2,597 | ||||||||
| | | | | | | | | | | |
Balance as of December 31, 2012 | $ | 284,201 | $ | (175,241 | ) | $ | 108,960 | ||||
Goodwill from acquisitions | 54,447 | — | 54,447 | ||||||||
Disposal of goodwill | (260 | ) | — | (260 | ) | ||||||
Impairment losses | — | (21,249 | ) | (21,249 | ) | ||||||
Adjustments from foreign currency translation | (2,580 | ) | — | (2,580 | ) | ||||||
| | | | | | | | | | | |
Balance as of December 31, 2013 | $ | 335,808 | $ | (196,490 | ) | $ | 139,318 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of information regarding other intangible assets | ' | ||||||||||
Information regarding our other intangible assets is as follows (in thousands): | |||||||||||
As of December 31, 2013 | |||||||||||
Carrying Amount | Accumulated | Carrying Amount | |||||||||
Gross | Amortization | Net | |||||||||
Customer relationships | $ | 68,754 | $ | 45,113 | $ | 23,641 | |||||
Non-compete agreements | 4,289 | 4,289 | — | ||||||||
Technology/tradename | 44,039 | 38,463 | 5,576 | ||||||||
| | | | | | | | | | | |
Total | $ | 117,082 | $ | 87,865 | $ | 29,217 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
As of December 31, 2012 | |||||||||||
Carrying Amount | Accumulated | Carrying Amount | |||||||||
Gross | Amortization | Net | |||||||||
Customer relationships | $ | 55,808 | $ | 47,358 | $ | 8,450 | |||||
Non-compete agreements | 5,102 | 5,102 | — | ||||||||
Technology/tradename | 29,565 | 26,297 | 3,268 | ||||||||
| | | | | | | | | | | |
Total | $ | 90,475 | $ | 78,757 | $ | 11,718 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of estimated amortization expense for the remaining life of the intangible assets | ' | ||||||||||
Estimated amortization expense for the remaining life of the intangible assets, based on intangible assets as of December 31, 2013, is as follows (in thousands): | |||||||||||
Year | |||||||||||
2014 | $ | 8,394 | |||||||||
2015 | 7,852 | ||||||||||
2016 | 6,912 | ||||||||||
2017 | 6,059 | ||||||||||
| | | | | |||||||
Total | $ | 29,217 | |||||||||
| | | | | |||||||
| | | | | |||||||
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended | |||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||||||||||||
Summary of changes in outstanding options | ' | |||||||||||||||||||||||
A summary of the changes in outstanding options is as follows: | ||||||||||||||||||||||||
Options | Weighted | |||||||||||||||||||||||
Outstanding | Average | |||||||||||||||||||||||
Exercise | ||||||||||||||||||||||||
Price | ||||||||||||||||||||||||
Per Share | ||||||||||||||||||||||||
Balance, December 31, 2010 | 1,936,963 | $ | 33.53 | |||||||||||||||||||||
Exercised | (19,359 | ) | 18.8 | |||||||||||||||||||||
Canceled/expired | (95,712 | ) | 40.71 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
Balance, December 31, 2011 | 1,821,892 | $ | 33.31 | |||||||||||||||||||||
Exercised | (121,467 | ) | 12.9 | |||||||||||||||||||||
Canceled/expired | (140,228 | ) | 33.48 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
Balance, December 31, 2012 | 1,560,197 | $ | 34.89 | |||||||||||||||||||||
Exercised | (121,524 | ) | 10.47 | |||||||||||||||||||||
Canceled/expired | (910,858 | ) | 36.78 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
Balance, December 31, 2013 | 527,815 | $ | 37.24 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
| | | | | | | | |||||||||||||||||
Summary of significant ranges of outstanding and exercisable options under 1998 Plan and 2007 Plan | ' | |||||||||||||||||||||||
The following table summarizes significant ranges of outstanding and exercisable options under our 1998 Plan and 2007 Plan as of December 31, 2013: | ||||||||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||||
Exercise Price | Number | Weighted | Weighted | Aggregate | Number | Weighted | Aggregate | |||||||||||||||||
Outstanding | Average | Average | Intrinsic | Exercisable | Average | Intrinsic | ||||||||||||||||||
Life | Exercise | Value | Exercise | Value | ||||||||||||||||||||
Remaining | Price | Price | ||||||||||||||||||||||
$22.98 - $30.69 | 179,087 | 1.3 years | 28.14 | — | 179,087 | 28.14 | — | |||||||||||||||||
31.84 - 38.17 | 178,774 | 4.1 years | 32.07 | — | 178,774 | 32.07 | — | |||||||||||||||||
40.10 - 57.36 | 169,954 | 3.1 years | 52.26 | — | 169,954 | 52.26 | — | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
$22.98 - $57.36 | 527,815 | 2.8 years | $ | 37.24 | $ | — | 527,815 | $ | 37.24 | $ | — | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Summary of changes in restricted stock and performance shares under 1998 Plan and 2007 Plan | ' | |||||||||||||||||||||||
A summary of the changes in restricted stock and performance shares under our 1998 Plan and 2007 Plan as of December 31, 2013, is as follows: | ||||||||||||||||||||||||
Restricted Stock | Weighted | |||||||||||||||||||||||
and | Average | |||||||||||||||||||||||
Performance | Fair Value | |||||||||||||||||||||||
Shares | ||||||||||||||||||||||||
Non-Vested Balance, December 31, 2010 | 1,955,508 | $ | 27.5 | |||||||||||||||||||||
Granted | 1,014,150 | 32.51 | ||||||||||||||||||||||
Vested | (573,443 | ) | 28.23 | |||||||||||||||||||||
Forfeited | (249,203 | ) | 28.95 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
Non-Vested Balance, December 31, 2011 | 2,147,012 | $ | 29.5 | |||||||||||||||||||||
Granted | 1,746,350 | 17.45 | ||||||||||||||||||||||
Vested | (924,169 | ) | 28.99 | |||||||||||||||||||||
Forfeited | (379,421 | ) | 25.82 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
Non-Vested Balance, December 31, 2012 | 2,589,772 | $ | 22.1 | |||||||||||||||||||||
Granted | 1,873,245 | 14.79 | ||||||||||||||||||||||
Vested | (1,030,989 | ) | 23.02 | |||||||||||||||||||||
Forfeited | (787,014 | ) | 18.98 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
Non-Vested Balance, December 31, 2013 | 2,645,014 | $ | 17.49 | |||||||||||||||||||||
| | | | | | | | |||||||||||||||||
| | | | | | | | |||||||||||||||||
Summary of stock-based compensation expense, net of tax | ' | |||||||||||||||||||||||
The following table summarizes stock-based compensation expense, net of tax, related to employee stock options, awards and employee stock purchases recognized (in thousands): | ||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||||||
Costs and expenses | ||||||||||||||||||||||||
Direct cost of services | $ | 158 | $ | 184 | $ | 269 | ||||||||||||||||||
Network and infrastructure | 1,453 | 1,576 | 1,310 | |||||||||||||||||||||
Sales and marketing | 6,731 | 8,284 | 8,115 | |||||||||||||||||||||
Product research and development | 3,409 | 3,685 | 3,099 | |||||||||||||||||||||
General and administrative | 8,817 | 15,788 | 9,321 | |||||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
Stock-based compensation included in costs and expenses | 20,568 | 29,517 | 22,114 | |||||||||||||||||||||
Tax benefit | — | — | (7,942 | ) | ||||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
Stock-based compensation expense, net of tax | $ | 20,568 | $ | 29,517 | $ | 14,172 | ||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
| | | | | | | | | | | ||||||||||||||
Performance share units with a market condition | ' | |||||||||||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||||||||||||
Schedule of weighted average assumptions used in estimating the fair value of stock-based compensation expense | ' | |||||||||||||||||||||||
During the year ended December 31, 2013, we estimated the fair value of stock-based compensation expense associated with our performance share units with a market condition on the date of grant using the Monte Carlo valuation model with the following weighted average assumptions. No performance share units with a market condition were granted in 2012 or 2011. | ||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||
Risk-free interest rate | 0.4 | % | ||||||||||||||||||||||
Expected life (years) | 2.8 | |||||||||||||||||||||||
Volatility factor | 49 | % | ||||||||||||||||||||||
Expected dividends | — | |||||||||||||||||||||||
Weighted average grant date fair value per share | $ | 14.22 | ||||||||||||||||||||||
Employee Stock Purchase Plan | ' | |||||||||||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||||||||||||
Schedule of weighted average assumptions used in estimating the fair value of stock-based compensation expense | ' | |||||||||||||||||||||||
During the years ended December 31, 2013, 2012 and 2011, we estimated the fair value of stock-based compensation expense associated with our employee stock purchase plans on the date of grant using the Black-Scholes option pricing valuation model with the following weighted average assumptions: | ||||||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||||||
Risk-free interest rate | 0.1 | % | 0.1 | % | 0.1 | % | ||||||||||||||||||
Expected life (years) | 0.5 | 0.5 | 0.5 | |||||||||||||||||||||
Volatility factor | 38 | % | 53 | % | 36 | % | ||||||||||||||||||
Expected dividends | — | — | — | |||||||||||||||||||||
Weighted average fair value of employee stock purchase plan shares | $ | 4.14 | $ | 4.68 | $ | 8.38 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
INCOME TAXES | ' | ||||||||||
Schedule of components of pretax income from continuing operations | ' | ||||||||||
The components of pretax income from continuing operations are as follows (in thousands): | |||||||||||
Year ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
United States | $ | (30,085 | ) | $ | (88,571 | ) | $ | (1,740 | ) | ||
International | 10,648 | (75,864 | ) | 27,730 | |||||||
| | | | | | | | | | | |
Income (loss) before income taxes | $ | (19,437 | ) | $ | (164,435 | ) | $ | 25,990 | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of components of provision (benefit) for income taxes from continuing operations | ' | ||||||||||
The provision (benefit) for income taxes from continuing operations is composed of the following (in thousands): | |||||||||||
Year ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Current tax expense (benefit): | |||||||||||
United States federal | $ | — | $ | — | $ | (1,904 | ) | ||||
State and local | 137 | — | (120 | ) | |||||||
International | 1,745 | 921 | 4,326 | ||||||||
| | | | | | | | | | | |
Total current provision (benefit) for income taxes | 1,882 | 921 | 2,302 | ||||||||
Deferred tax expense (benefit): | |||||||||||
United States federal | 883 | 17,615 | (93 | ) | |||||||
State and local | 55 | 1,107 | (6 | ) | |||||||
International | (3,728 | ) | (440 | ) | 73 | ||||||
| | | | | | | | | | | |
Total deferred provision (benefit) for income taxes | (2,790 | ) | 18,282 | (26 | ) | ||||||
| | | | | | | | | | | |
Income tax expense (benefit) | $ | (908 | ) | $ | 19,203 | $ | 2,276 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of reconciliation of the difference between the actual provision for income taxes and the provision computed by applying the U.S. federal statutory rate of 35% to pretax income | ' | ||||||||||
The following is a reconciliation of the difference between the actual provision for income taxes and the provision computed by applying the U.S. federal statutory rate of 35% to pretax income from continuing operations (in thousands): | |||||||||||
Year ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Tax expense at statutory rate | $ | (6,803 | ) | $ | (57,552 | ) | $ | 9,096 | |||
State taxes, net of federal benefit | 126 | (591 | ) | (96 | ) | ||||||
International rate differential | (2,047 | ) | (4,593 | ) | (8,589 | ) | |||||
Tax credits | (1,041 | ) | (117 | ) | (660 | ) | |||||
Nondeductible expense and other | 2,170 | 306 | 1,836 | ||||||||
Goodwill impairment | 5,823 | 48,285 | — | ||||||||
Valuation allowance (release) | 895 | 33,301 | (84 | ) | |||||||
Adjustment for unrecognized tax benefits | (31 | ) | 164 | 773 | |||||||
| | | | | | | | | | | |
Income tax expense (benefit) | $ | (908 | ) | $ | 19,203 | $ | 2,276 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of deferred income taxes | ' | ||||||||||
Significant components of deferred income taxes are as follows (in thousands): | |||||||||||
2013 | 2012 | ||||||||||
Deferred tax assets: | |||||||||||
Net operating loss and credit carryforwards | $ | 14,875 | $ | 15,306 | |||||||
Nondeductible reserves and accruals | 43,795 | 27,482 | |||||||||
Depreciation and amortization | 756 | 2,675 | |||||||||
Valuation allowance | (53,820 | ) | (37,860 | ) | |||||||
| | | | | | | | ||||
Total deferred tax assets | 5,606 | 7,603 | |||||||||
| | | | | | | | ||||
Deferred tax liabilities: | |||||||||||
Depreciation | (8,475 | ) | (6,018 | ) | |||||||
Other intangibles | (4,367 | ) | (1,770 | ) | |||||||
Gain on investment | — | (1,144 | ) | ||||||||
| | | | | | | | ||||
Total deferred tax liabilities | (12,842 | ) | (8,932 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liabilities | $ | (7,236 | ) | $ | (1,329 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits | ' | ||||||||||
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): | |||||||||||
Balance as of December 31, 2010 | $ | 10,026 | |||||||||
Increases for tax positions taken during current year | 252 | ||||||||||
Increases for tax positions taken during prior years | 2,843 | ||||||||||
Decreases for tax positions taken during prior years | (842 | ) | |||||||||
Decreases for expiration of statute of limitations | (1,385 | ) | |||||||||
Decreases as a result of settlements with taxing authorities | (225 | ) | |||||||||
| | | | | |||||||
Balance as of December 31, 2011 | $ | 10,669 | |||||||||
Increases for tax positions taken during current year | 132 | ||||||||||
Increases for tax positions taken during prior years | 731 | ||||||||||
Decreases for tax positions taken during prior years | (20 | ) | |||||||||
Decreases for expiration of statute of limitations | (301 | ) | |||||||||
| | | | | |||||||
Balance as of December 31, 2012 | $ | 11,211 | |||||||||
Increases for tax positions taken during current year | 223 | ||||||||||
Increases for tax positions taken during prior years | 146 | ||||||||||
Decreases for tax positions taken during prior years | (126 | ) | |||||||||
Decreases for expiration of statute of limitations | (1,010 | ) | |||||||||
| | | | | |||||||
Balance as of December 31, 2013 | $ | 10,444 | |||||||||
| | | | | |||||||
| | | | | |||||||
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
COMMITMENTS AND CONTINGENCIES | ' | ||||
Schedule of minimum annual rent payments under long-term leases | ' | ||||
The minimum annual rent payments under long-term leases at December 31, 2013, were as follows (in thousands): | |||||
Year ending December 31, | Lease | ||||
Obligations | |||||
2014 | $ | 8,421 | |||
2015 | 4,768 | ||||
2016 | 4,266 | ||||
2017 | 3,831 | ||||
2018 | 4,107 | ||||
Thereafter | 11,549 | ||||
| | | | | |
Total future minimum obligations | $ | 36,942 | |||
| | | | | |
| | | | | |
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
STOCKHOLDERS' EQUITY | ' | |||||||||||||
Schedule of the Company's stock repurchases | ' | |||||||||||||
The Company's stock repurchases during 2013, 2012 and 2011, were as follows: | ||||||||||||||
Year ending December 31, | Total number | Average | Total number of | Approximate dollar value of | ||||||||||
of shares | price paid | shares purchased | shares that may yet be | |||||||||||
purchased | per share | as part of publicly | purchased under the plan | |||||||||||
announced plan | (in millions) | |||||||||||||
2011 | 4,265,168 | $ | 18.7 | 4,265,168 | $ | 20.2 | ||||||||
2012 | 1,533,132 | $ | 14.78 | 1,533,132 | $ | 97.6 | ||||||||
2013 | 3,019,562 | $ | 16.96 | 3,019,562 | $ | 46.4 | ||||||||
| | | | | | | | | | | | | | |
Total | 8,817,862 | 8,817,862 | ||||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||
Summary of revenue from continuing operations information by region | ' | |||||||||||||
Summarized revenue from continuing operations information by region is outlined below (dollars in thousands). | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
United States | $ | 187,046 | $ | 192,447 | $ | 193,467 | ||||||||
Europe | 118,852 | 113,163 | 120,494 | |||||||||||
Other | 83,781 | 64,886 | 62,508 | |||||||||||
| | | | | | | | | | | ||||
Total | $ | 389,679 | $ | 370,496 | $ | 376,469 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
Schedule of assets located in the U.S and the remaining assets located in Europe and the rest of the world | ' | |||||||||||||
The assets located in the U.S and the remaining assets located in Europe and the rest of the world are detailed in the table below (in thousands): | ||||||||||||||
2013 | 2012 | |||||||||||||
United States | Europe and Other | United States | Europe and Other | |||||||||||
Total property and equipment | $ | 163,743 | $ | 23,524 | $ | 145,820 | $ | 22,136 | ||||||
Accumulated depreciation | (114,965 | ) | (18,532 | ) | (97,155 | ) | (17,703 | ) | ||||||
| | | | | | | | | | | | | | |
Net property and equipment | $ | 48,778 | $ | 4,992 | $ | 48,665 | $ | 4,433 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
QUARTERLY_FINANCIAL_DATA_UNAUD1
QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
QUARTERLY FINANCIAL DATA (UNAUDITED) | ' | |||||||||||||
Schedule of unaudited quarterly results of operations | ' | |||||||||||||
Unaudited quarterly results of operations are as follows (in thousands, except per share data): | ||||||||||||||
Quarter Ended | ||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||
2013 | ||||||||||||||
Revenue | $ | 111,021 | $ | 90,163 | $ | 87,260 | $ | 101,235 | ||||||
Direct cost of services(1) | 22,006 | 17,061 | 16,205 | 18,233 | ||||||||||
Network and infrastructure(1) | 15,075 | 14,326 | 14,648 | 14,987 | ||||||||||
Income (loss) from continuing operations | (10,687 | ) | (203 | ) | (7,596 | ) | (43 | ) | ||||||
Income (loss) from discontinued operations | (678 | ) | (669 | ) | (4,891 | ) | 120 | |||||||
Net income (loss) | (11,365 | ) | (872 | ) | (12,487 | ) | 77 | |||||||
Income (loss) per share—basic: | ||||||||||||||
Income (loss) from continuing operations | $ | (0.33 | ) | $ | (0.01 | ) | $ | (0.24 | ) | $ | 0 | |||
Income (loss) from discontinued operations | (0.02 | ) | (0.02 | ) | (0.16 | ) | 0 | |||||||
| | | | | | | | | | | | | | |
Net income (loss) per share—basic | $ | (0.35 | ) | $ | (0.03 | ) | $ | (0.40 | ) | $ | 0 | |||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Income (loss) per share—diluted: | ||||||||||||||
Income (loss) from continuing operations | $ | (0.33 | ) | $ | (0.01 | ) | $ | (0.24 | ) | $ | 0 | |||
Income (loss) from discontinued operations | (0.02 | ) | (0.02 | ) | (0.16 | ) | 0 | |||||||
| | | | | | | | | | | | | | |
Net income (loss) per share—diluted | $ | (0.35 | ) | $ | (0.03 | ) | $ | (0.40 | ) | $ | 0 | |||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Quarter Ended | ||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||
2012 | ||||||||||||||
Revenue | $ | 98,204 | $ | 87,117 | $ | 87,056 | $ | 98,119 | ||||||
Direct cost of services(1) | 17,249 | 15,085 | 15,476 | 18,946 | ||||||||||
Network and infrastructure(1) | 12,452 | 12,686 | 13,184 | 14,242 | ||||||||||
Income (loss) from continuing operations | 5,184 | 681 | (735 | ) | (188,768 | ) | ||||||||
Income (loss) from discontinued operations | (447 | ) | (481 | ) | 1 | (11,303 | ) | |||||||
Net income (loss) | 4,737 | 200 | (734 | ) | (200,071 | ) | ||||||||
Income (loss) per share—basic: | ||||||||||||||
Income (loss) from continuing operations | $ | 0.15 | $ | 0.02 | $ | (0.02 | ) | $ | (5.77 | ) | ||||
Income (loss) from discontinued operations | (0.01 | ) | (0.01 | ) | 0 | (0.34 | ) | |||||||
| | | | | | | | | | | | | | |
Net income (loss) per share—basic | $ | 0.14 | $ | 0.01 | $ | (0.02 | ) | $ | (6.11 | ) | ||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Income (loss) per share—diluted: | ||||||||||||||
Income (loss) from continuing operations | $ | 0.15 | $ | 0.02 | $ | (0.02 | ) | $ | (5.77 | ) | ||||
Income (loss) from discontinued operations | (0.01 | ) | (0.01 | ) | 0 | (0.34 | ) | |||||||
| | | | | | | | | | | | | | |
Net income (loss) per share—diluted | $ | 0.14 | $ | 0.01 | $ | (0.02 | ) | $ | (6.11 | ) | ||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
-1 | ||||||||||||||
Gross profit is calculated as revenue less direct cost of services and network and infrastructure expenses and excludes depreciation and amortization expense. | ||||||||||||||
BUSINESS_COMBINATIONS_Tables
BUSINESS COMBINATIONS (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
BUSINESS COMBINATIONS | ' | |||||||
Schedule of estimated amortization expense for the remaining life of the LML intangible assets | ' | |||||||
Estimated amortization expense for the remaining life of the intangible assets, based on intangible assets as of December 31, 2013, is as follows (in thousands): | ||||||||
Year | ||||||||
2014 | $ | 8,394 | ||||||
2015 | 7,852 | |||||||
2016 | 6,912 | |||||||
2017 | 6,059 | |||||||
| | | | | ||||
Total | $ | 29,217 | ||||||
| | | | | ||||
| | | | | ||||
LML | ' | |||||||
BUSINESS COMBINATIONS | ' | |||||||
Summary of allocation of the purchase price | ' | |||||||
The allocation of the purchase price is summarized in the following table (in thousands): | ||||||||
LML Payment | ||||||||
Systems, Inc. | ||||||||
Cash and cash equivalents | $ | 46,957 | ||||||
Accounts receivable | 1,334 | |||||||
Receivable of acquisition expenses incurred on behalf of Digital River | 1,068 | |||||||
Customer and partner relationships | 23,230 | |||||||
Trade names | 3,567 | |||||||
Other intangibles | 1,185 | |||||||
Goodwill | 54,447 | |||||||
Other assets | 4,597 | |||||||
| | | | | ||||
Total assets acquired | 136,385 | |||||||
| | | | | ||||
Other liabilities | 33,585 | |||||||
| | | | | ||||
Total liabilities assumed | 33,585 | |||||||
| | | | | ||||
Total allocation of purchase price consideration | 102,800 | |||||||
| | | | | ||||
Less: cash acquired | (46,957 | ) | ||||||
| | | | | ||||
Total purchase price, net of cash acquired | $ | 55,843 | ||||||
| | | | | ||||
| | | | | ||||
Schedule of estimated amortization expense for the remaining life of the LML intangible assets | ' | |||||||
Estimated amortization expense for the remaining life of the LML intangible assets, is as follows (in thousands): | ||||||||
Year | ||||||||
2014 | $ | 5,394 | ||||||
2015 | 5,102 | |||||||
2016 | 5,102 | |||||||
2017 | 5,102 | |||||||
| | | | | ||||
Total | $ | 20,700 | ||||||
| | | | | ||||
| | | | | ||||
Schedule of unaudited pro forma condensed results of operations | ' | |||||||
The following unaudited pro forma condensed results of operations for 2013 and 2012 have been prepared as if the LML acquisition had occurred on January 1, 2012, (in thousands): | ||||||||
For the Years | ||||||||
Ended December 31, | ||||||||
2013 | 2012 | |||||||
Revenue | $ | 390,601 | $ | 398,784 | ||||
Net income (loss) | (24,355 | ) | (194,121 | ) |
DISCONTINUED_OPERATIONS_AND_DI1
DISCONTINUED OPERATIONS AND DISPOSALS (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
DISCONTINUED OPERATIONS AND DISPOSALS | ' | ||||||||||
Schedule of operating results of the discontinued operations included in the Company's Consolidated Statements of Operations | ' | ||||||||||
The operating results of the discontinued operations included in our Consolidated Statements of Operations for the 2013, 2012 and 2011 were as follows (in thousands): | |||||||||||
For the Years Ended | |||||||||||
December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Revenue | $ | 8,043 | $ | 15,726 | $ | 21,671 | |||||
| | | | | | | | | | | |
Income (loss) on discontinued operations before taxes and loss on sales | (1,704 | ) | (2,627 | ) | (10,379 | ) | |||||
Loss on disposal of discontinued businesses before taxes | (1,894 | ) | — | — | |||||||
Provision (benefit) for income taxes | 2,520 | 9,603 | (3,832 | ) | |||||||
| | | | | | | | | | | |
Income (loss) on discontinued operations, net of tax | $ | (6,118 | ) | $ | (12,230 | ) | $ | (6,547 | ) | ||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of assets and liabilities of discontinued operations | ' | ||||||||||
The assets and liabilities of discontinued operations for 2012 were as follows (in thousands): | |||||||||||
For the Years | |||||||||||
Ended | |||||||||||
December 31, | |||||||||||
2012 | |||||||||||
Current assets of discontinued operations | $ | 7,365 | |||||||||
Long-term assets of discontinued operations | 196 | ||||||||||
| | | | | |||||||
Total assets of discontinued operations | $ | 7,561 | |||||||||
| | | | | |||||||
| | | | | |||||||
Current liabilities of discontinued operations | $ | 5,753 | |||||||||
Non-current liabilities of discontinued operations | — | ||||||||||
| | | | | |||||||
Total liabilities of discontinued operations | $ | 5,753 | |||||||||
| | | | | |||||||
| | | | | |||||||
NATURE_OF_OPERATIONS_AND_SUMMA3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
item | |||
Foreign Currency Translation | ' | ' | ' |
Losses resulting from foreign currency transactions | $1,300,000 | $400,000 | $1,500,000 |
Foreign exchange forward contracts, maximum maturities | '3 months | ' | ' |
(Loss) gain on derivative settlement | -100,000 | 100,000 | -300,000 |
Number of foreign exchange forward contracts | 0 | ' | ' |
Notional amount | ' | 1,900,000 | ' |
Prepaid Expenses and Other | ' | ' | ' |
Restricted cash | 3,600,000 | 400,000 | ' |
Notes receivable lent through short-term promissory note | 600,000 | 600,000 | ' |
Reserve recorded against the note | 600,000 | 600,000 | ' |
Property and Equipment | ' | ' | ' |
Total property and equipment | 187,267,000 | 167,956,000 | ' |
Accumulated depreciation and amortization | -133,497,000 | -114,858,000 | ' |
Net property and equipment | 53,770,000 | 53,098,000 | ' |
Depreciation and amortization expense from continuing operations | 22,080,000 | 20,192,000 | 22,001,000 |
Computer hardware and software | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Total property and equipment | 174,928,000 | 155,916,000 | ' |
Computer equipment | Minimum | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Estimated useful lives | '3 years | ' | ' |
Computer equipment | Maximum | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Estimated useful lives | '7 years | ' | ' |
Purchased and internally developed software | Minimum | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Estimated useful lives | '3 years | ' | ' |
Purchased and internally developed software | Maximum | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Estimated useful lives | '7 years | ' | ' |
Software for internal use | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Net property and equipment | 16,300,000 | 18,600,000 | ' |
Furniture, fixtures and leasehold improvements | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Total property and equipment | $12,339,000 | $12,040,000 | ' |
Furniture | Minimum | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Estimated useful lives | '3 years | ' | ' |
Furniture | Maximum | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Estimated useful lives | '7 years | ' | ' |
NATURE_OF_OPERATIONS_AND_SUMMA4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Other Assets | ' | ' | ' |
Debt financing costs, net | $1,410,000 | $3,323,000 | ' |
Other | 657,000 | 990,000 | ' |
Total other assets | 2,067,000 | 4,313,000 | ' |
Other Current Liabilities | ' | ' | ' |
Accrued expenses | 29,082,000 | 30,036,000 | ' |
Current portion of debt | 10,016,000 | 1,256,000 | ' |
Sales, value-added and transaction taxes | 15,534,000 | 18,507,000 | ' |
Current deferred and other income taxes | 1,267,000 | 350,000 | ' |
Total other current liabilities | 55,899,000 | 50,149,000 | ' |
Comprehensive Income (Loss) | ' | ' | ' |
Comprehensive income (loss), tax expense or benefit | ' | ' | 278,000 |
Changes in accumulated other comprehensive income (loss), net of tax, by component | ' | ' | ' |
Beginning balance | -3,170,000 | -7,964,000 | 572,000 |
Other comprehensive income before reclassifications | 7,713,000 | 4,807,000 | -8,187,000 |
Reclassification adjustment for net gains included in net income | -11,000 | -13,000 | -349,000 |
Net current period other comprehensive income (loss) | 7,702,000 | 4,794,000 | -8,536,000 |
Ending balance | 4,532,000 | -3,170,000 | -7,964,000 |
Advertising Costs | ' | ' | ' |
Advertising expense | 200,000 | 200,000 | 400,000 |
Unrealized gain (loss) on investments | ' | ' | ' |
Changes in accumulated other comprehensive income (loss), net of tax, by component | ' | ' | ' |
Beginning balance | -5,735,000 | -4,034,000 | -4,502,000 |
Other comprehensive income before reclassifications | 6,558,000 | -1,688,000 | 817,000 |
Reclassification adjustment for net gains included in net income | -11,000 | -13,000 | -349,000 |
Net current period other comprehensive income (loss) | 6,547,000 | -1,701,000 | 468,000 |
Ending balance | 812,000 | -5,735,000 | -4,034,000 |
Foreign currency translation adjustment | ' | ' | ' |
Comprehensive Income (Loss) | ' | ' | ' |
Comprehensive income (loss), tax expense or benefit | 0 | ' | ' |
Changes in accumulated other comprehensive income (loss), net of tax, by component | ' | ' | ' |
Beginning balance | 2,565,000 | -3,930,000 | 5,074,000 |
Other comprehensive income before reclassifications | 1,155,000 | 6,495,000 | -9,004,000 |
Net current period other comprehensive income (loss) | 1,155,000 | 6,495,000 | -9,004,000 |
Ending balance | $3,720,000 | $2,565,000 | ($3,930,000) |
NATURE_OF_OPERATIONS_AND_SUMMA5
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Amounts Reclassified from AOCI | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other income (expense), net | ' | ' | ' | ' | ' | ' | ' | ' | $16,260 | $4,799 | ($1,931) |
Income tax benefit (expense) | ' | ' | ' | ' | ' | ' | ' | ' | 908 | -19,203 | -2,276 |
Net income (loss) | 77 | -12,487 | -872 | -11,365 | -200,071 | -734 | 200 | 4,737 | -24,647 | -195,868 | 17,167 |
Credit Card Chargeback Reserve | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue | 101,235 | 87,260 | 90,163 | 111,021 | 98,119 | 87,056 | 87,117 | 98,204 | 389,679 | 370,496 | 376,469 |
Provision for Credit Card Chargebacks | ' | ' | ' | ' | ' | ' | ' | ' | 332 | 688 | 452 |
Provision for Credit Card Chargebacks as a % of Revenue | ' | ' | ' | ' | ' | ' | ' | ' | 0.10% | 0.20% | 0.10% |
Realized gains (losses) on investments | Reclassification out of Accumulated other comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amounts Reclassified from AOCI | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other income (expense), net | ' | ' | ' | ' | ' | ' | ' | ' | 18 | ' | ' |
Income tax benefit (expense) | ' | ' | ' | ' | ' | ' | ' | ' | -7 | ' | ' |
Net income (loss) | ' | ' | ' | ' | ' | ' | ' | ' | $11 | ' | ' |
NATURE_OF_OPERATIONS_AND_SUMMA6
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) (Employee termination, USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Employee termination | ' | ' | ' |
Severance | ' | ' | ' |
Total restructuring related severance expense | $5.80 | $1.70 | $0 |
NATURE_OF_OPERATIONS_AND_SUMMA7
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Sales and marketing | $106,954 | $97,816 | $102,221 |
General and administrative | 56,279 | 55,763 | 40,649 |
Reclassification from | ' | ' | ' |
Sales and marketing | ' | -55,500 | -49,000 |
General and administrative | ' | ($2,000) | ($2,100) |
NET_INCOME_PER_SHARE_Details
NET INCOME PER SHARE (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Income (loss) from continuing operations per share - basic | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income (loss) from continuing operations - basic (in dollars) | ($43) | ($7,596) | ($203) | ($10,687) | ($188,768) | ($735) | $681 | $5,184 | ($18,529) | ($183,638) | $23,714 |
Weighted average shares outstanding - basic (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 32,065 | 33,224 | 36,778 |
Income (loss) from continuing operations per share - basic (in dollars per share) | $0 | ($0.24) | ($0.01) | ($0.33) | ($5.77) | ($0.02) | $0.02 | $0.15 | ($0.58) | ($5.53) | $0.65 |
Income (loss) from continuing operations per share - diluted | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income (loss) from continuing operations - basic (in dollars) | -43 | -7,596 | -203 | -10,687 | -188,768 | -735 | 681 | 5,184 | -18,529 | -183,638 | 23,714 |
Exclude: Interest expense and amortized financing cost of convertible senior notes, net of tax benefit (in dollars) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 78 |
Income (loss) from continuing operations - diluted (in dollars) | ' | ' | ' | ' | ' | ' | ' | ' | ($18,529) | ($183,638) | $23,792 |
Weighted average shares outstanding - basic (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 32,065 | 33,224 | 36,778 |
Dilutive impact of non-vested stock and options outstanding (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 532 |
Dilutive impact of 2004 senior convertible notes (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 200 |
Weighted average shares outstanding - diluted (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 32,065 | 33,224 | 37,510 |
Income (loss) from continuing operations per share - diluted (in dollars per share) | $0 | ($0.24) | ($0.01) | ($0.33) | ($5.77) | ($0.02) | $0.02 | $0.15 | ($0.58) | ($5.53) | $0.63 |
NET_INCOME_PER_SHARE_Details_2
NET INCOME PER SHARE (Details 2) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Incremental shares related to dilutive securities | ' | ' | ' |
Antidilutive securities | ' | ' | ' |
Number of anti-dilutive shares excluded from the computation of diluted net income (loss) per share | 479,236 | 308,825 | ' |
Stock Options | ' | ' | ' |
Antidilutive securities | ' | ' | ' |
Number of anti-dilutive shares excluded from the computation of diluted net income (loss) per share | 527,815 | 1,438,511 | 1,289,765 |
Convertible debt securities | Convertible debt | 2004 Senior Convertible Notes | ' | ' | ' |
Antidilutive securities | ' | ' | ' |
Number of anti-dilutive shares excluded from the computation of diluted net income (loss) per share | 199,828 | 199,828 | ' |
Convertible debt securities | Convertible debt | 2010 Senior Convertible Notes | ' | ' | ' |
Antidilutive securities | ' | ' | ' |
Number of anti-dilutive shares excluded from the computation of diluted net income (loss) per share | 6,057,747 | 6,986,627 | 7,022,077 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
FAIR VALUE MEASUREMENTS | ' | ' |
Transfers of assets between levels of the hierarchy | $0 | $0 |
Transfers of assets between levels of the hierarchy | 0 | 0 |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 161,194,000 | 201,489,000 |
Commercial paper | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 9,992,000 | ' |
U.S. government sponsored entities | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 4,000,000 | 28,110,000 |
Corporate bonds | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 101,660,000 | 128,622,000 |
Asset backed securities | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | ' | 6,062,000 |
Market basis equity investments | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 3,549,000 | 1,694,000 |
Auction rate securities | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 41,993,000 | 37,001,000 |
Recurring | Total | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Cash and cash equivalents | 483,868,000 | 542,851,000 |
Restricted cash | 3,560,000 | 351,000 |
Assets measured at fair value | 648,622,000 | 744,691,000 |
Recurring | Total | Commercial paper | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 9,992,000 | ' |
Recurring | Total | U.S. government sponsored entities | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 4,000,000 | 28,110,000 |
Recurring | Total | Corporate bonds | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 101,660,000 | 128,622,000 |
Recurring | Total | Asset backed securities | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | ' | 6,062,000 |
Recurring | Total | Market basis equity investments | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 3,549,000 | 1,694,000 |
Recurring | Total | Auction rate securities | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 41,993,000 | 37,001,000 |
Recurring | Level 1 | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Cash and cash equivalents | 483,868,000 | 542,851,000 |
Restricted cash | 3,560,000 | 351,000 |
Assets measured at fair value | 602,629,000 | 673,518,000 |
Recurring | Level 1 | Commercial paper | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 9,992,000 | ' |
Recurring | Level 1 | Corporate bonds | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 101,660,000 | 128,622,000 |
Recurring | Level 1 | Market basis equity investments | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 3,549,000 | 1,694,000 |
Recurring | Level 2 | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Assets measured at fair value | 4,000,000 | 34,172,000 |
Recurring | Level 2 | U.S. government sponsored entities | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | 4,000,000 | 28,110,000 |
Recurring | Level 2 | Asset backed securities | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | ' | 6,062,000 |
Recurring | Level 3 | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Assets measured at fair value | 41,993,000 | 37,001,000 |
Recurring | Level 3 | Auction rate securities | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Available-for-sale securities, fair value | $41,993,000 | $37,001,000 |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details 2) (Auction rate securities, USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Auction rate securities | ' | ' | ' |
Reconciliation of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3 inputs) | ' | ' | ' |
Beginning Balance | $37,001 | $65,338 | $83,678 |
Total unrealized gains (losses) included in other comprehensive income | 5,092 | -2,637 | 735 |
Settlements | -100 | -25,700 | -19,075 |
Ending Balance | $41,993 | $37,001 | $65,338 |
FAIR_VALUE_MEASUREMENTS_Detail2
FAIR VALUE MEASUREMENTS (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Commercial paper | Maximum | ' | ' | ' |
Methods and assumptions used to estimate the fair value of each class of financial instrument | ' | ' | ' |
Investment, contractual maturity | '1 year | ' | ' |
U.S. government sponsored entities | Maximum | ' | ' | ' |
Methods and assumptions used to estimate the fair value of each class of financial instrument | ' | ' | ' |
Investment, contractual maturity | '3 years | ' | ' |
Corporate bonds | Maximum | ' | ' | ' |
Methods and assumptions used to estimate the fair value of each class of financial instrument | ' | ' | ' |
Investment, contractual maturity | '2 years | ' | ' |
Auction rate securities | ' | ' | ' |
Methods and assumptions used to estimate the fair value of each class of financial instrument | ' | ' | ' |
Par value | $45.70 | $45.80 | ' |
Fair value | 42 | 37 | ' |
Temporary fair value reduction recorded under "Accumulated other comprehensive income (loss)" | 3.7 | 8.8 | ' |
Temporary fair value reduction (as a percent) | 8.20% | 19.30% | ' |
Unrealized gains (losses) on ARS | 5.1 | -2.6 | 0.7 |
Weighted average maturity | '29 years 9 months 18 days | '30 years 9 months 18 days | ' |
Liquidated due to full calls, partial calls or sales at par | 0.1 | 25.7 | ' |
Auction rate securities | Minimum | ' | ' | ' |
Methods and assumptions used to estimate the fair value of each class of financial instrument | ' | ' | ' |
Over-collateralized percentage | 106.00% | ' | ' |
Auction rate securities | Maximum | ' | ' | ' |
Methods and assumptions used to estimate the fair value of each class of financial instrument | ' | ' | ' |
Over-collateralized percentage | 138.00% | ' | ' |
Recurring | Auction rate securities | ' | ' | ' |
Methods and assumptions used to estimate the fair value of each class of financial instrument | ' | ' | ' |
Level 3 assets to total assets measured at fair value (as a percent) | 6.50% | 5.00% | ' |
Nonrecurring | ' | ' | ' |
Methods and assumptions used to estimate the fair value of each class of financial instrument | ' | ' | ' |
Fair value adjustment, assets | 0 | 0 | ' |
Fair value adjustment, liabilities | $0 | $0 | ' |
FAIR_VALUE_MEASUREMENTS_Detail3
FAIR VALUE MEASUREMENTS (Details 4) (Auction rate securities) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Assumptions used to value securities | ' | ' |
Redemption period | '7 years | '7 years |
Minimum | ' | ' |
Assumptions used to value securities | ' | ' |
Penalty coupon rate (as a percent) | 1.00% | 1.00% |
Risk adjusted discount rate (as a percent) | 4.70% | 3.50% |
Maximum | ' | ' |
Assumptions used to value securities | ' | ' |
Penalty coupon rate (as a percent) | 1.50% | 1.50% |
Risk adjusted discount rate (as a percent) | 7.80% | 12.30% |
Weighted average | ' | ' |
Assumptions used to value securities | ' | ' |
Annualized yield (as a percent) | 1.60% | 1.50% |
INVESTMENTS_Details
INVESTMENTS (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | |
item | ||||
INVESTMENTS | ' | ' | ' | ' |
Cost | ' | ' | $162,785,000 | $209,715,000 |
Gross Unrealized Gains | ' | ' | 2,162,000 | 598,000 |
Gross Unrealized Losses Less than 12 Months | ' | ' | -21,000 | ' |
Gross Unrealized Losses Greater than 12 Months | ' | ' | -3,732,000 | -8,824,000 |
Fair Value | ' | ' | 161,194,000 | 201,489,000 |
Maturities/Reset Dates Less than 12 Months | ' | ' | 68,272,000 | 85,266,000 |
Maturities/Reset Dates Greater than 12 Months | ' | ' | 92,922,000 | 116,223,000 |
Aggregate carrying value of cost method equity investments | ' | ' | 10,500,000 | 33,000,000 |
Gain recorded under cost method equity investments | 6,500,000 | 11,100,000 | ' | ' |
Gain on call option that was executed for cash | ' | ' | 17,526,000 | 3,178,000 |
Contingent gain under cost method equity investments | ' | ' | 3,100,000 | ' |
Cost method equity investment where fair value has not been estimated | ' | ' | 1 | ' |
Commercial paper | ' | ' | ' | ' |
INVESTMENTS | ' | ' | ' | ' |
Cost | ' | ' | 9,992,000 | ' |
Fair Value | ' | ' | 9,992,000 | ' |
Maturities/Reset Dates Less than 12 Months | ' | ' | 9,992,000 | ' |
U.S. government sponsored entities | ' | ' | ' | ' |
INVESTMENTS | ' | ' | ' | ' |
Cost | ' | ' | 4,000,000 | 28,103,000 |
Gross Unrealized Gains | ' | ' | ' | 7,000 |
Fair Value | ' | ' | 4,000,000 | 28,110,000 |
Maturities/Reset Dates Less than 12 Months | ' | ' | ' | 28,110,000 |
Maturities/Reset Dates Greater than 12 Months | ' | ' | 4,000,000 | ' |
Corporate bonds | ' | ' | ' | ' |
INVESTMENTS | ' | ' | ' | ' |
Cost | ' | ' | 101,400,000 | 128,035,000 |
Gross Unrealized Gains | ' | ' | 281,000 | 587,000 |
Gross Unrealized Losses Less than 12 Months | ' | ' | -21,000 | ' |
Fair Value | ' | ' | 101,660,000 | 128,622,000 |
Maturities/Reset Dates Less than 12 Months | ' | ' | 58,280,000 | 51,094,000 |
Maturities/Reset Dates Greater than 12 Months | ' | ' | 43,380,000 | 77,528,000 |
Asset backed securities | ' | ' | ' | ' |
INVESTMENTS | ' | ' | ' | ' |
Cost | ' | ' | ' | 6,058,000 |
Gross Unrealized Gains | ' | ' | ' | 4,000 |
Fair Value | ' | ' | ' | 6,062,000 |
Maturities/Reset Dates Less than 12 Months | ' | ' | ' | 6,062,000 |
Market basis equity investments | ' | ' | ' | ' |
INVESTMENTS | ' | ' | ' | ' |
Cost | ' | ' | 1,668,000 | 1,694,000 |
Gross Unrealized Gains | ' | ' | 1,881,000 | ' |
Fair Value | ' | ' | 3,549,000 | 1,694,000 |
Maturities/Reset Dates Greater than 12 Months | ' | ' | 3,549,000 | 1,694,000 |
Auction Rate Securities | ' | ' | ' | ' |
INVESTMENTS | ' | ' | ' | ' |
Cost | ' | ' | 45,725,000 | 45,825,000 |
Gross Unrealized Losses Greater than 12 Months | ' | ' | -3,732,000 | -8,824,000 |
Fair Value | ' | ' | 41,993,000 | 37,001,000 |
Maturities/Reset Dates Greater than 12 Months | ' | ' | $41,993,000 | $37,001,000 |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS (Details) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | ||
Mar. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | |
CustomCD and DRES | |||||
Goodwill | ' | ' | ' | ' | ' |
Tax benefit as a result of the impairment charge | ' | $14,100,000 | ' | ' | ' |
Changes in the net carrying amount of goodwill | ' | ' | ' | ' | ' |
Carrying amount gross, balance at the beginning of the period | 284,201,000 | ' | 284,201,000 | 281,858,000 | ' |
Accumulated impairment, balance at the beginning of the period | -175,241,000 | ' | -175,241,000 | ' | ' |
Carrying amount net, balance at the beginning of the period | 108,960,000 | ' | 108,960,000 | 281,858,000 | ' |
Goodwill from acquisitions | ' | ' | 54,447,000 | ' | ' |
Disposal of goodwill | ' | ' | -260,000 | -254,000 | -300,000 |
Impairment losses | -21,200,000 | -175,200,000 | -21,249,000 | -175,241,000 | ' |
Adjustments from foreign currency translation | ' | ' | -2,580,000 | 2,597,000 | ' |
Carrying amount net, balance at the end of the period | ' | 284,201,000 | 335,808,000 | 284,201,000 | ' |
Accumulated impairment, balance at the end of the period | ' | -175,241,000 | -196,490,000 | -175,241,000 | ' |
Carrying amount gross, balance at the end of the period | ' | $108,960,000 | $139,318,000 | $108,960,000 | ' |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
GOODWILL AND INTANGIBLE ASSETS | ' | ' | ' |
Impairment of intangibles | ' | $235 | $9,351 |
Intangible assets acquired | ' | ' | ' |
Carrying Amount Gross | 117,082 | 90,475 | ' |
Accumulated Amortization | 87,865 | 78,757 | ' |
Carrying Amount Net | 29,217 | 11,718 | ' |
Amortization expense from continuing operations | 8,543 | 4,700 | 6,315 |
Estimated amortization expense for the remaining life of the intangible assets, based on intangible assets | ' | ' | ' |
2014 | 8,394 | ' | ' |
2015 | 7,852 | ' | ' |
2016 | 6,912 | ' | ' |
2017 | 6,059 | ' | ' |
Carrying Amount Net | 29,217 | 11,718 | ' |
Customer relationships | ' | ' | ' |
Intangible assets acquired | ' | ' | ' |
Carrying Amount Gross | 68,754 | 55,808 | ' |
Accumulated Amortization | 45,113 | 47,358 | ' |
Carrying Amount Net | 23,641 | 8,450 | ' |
Estimated amortization expense for the remaining life of the intangible assets, based on intangible assets | ' | ' | ' |
Carrying Amount Net | 23,641 | 8,450 | ' |
Non-compete Agreements | ' | ' | ' |
Intangible assets acquired | ' | ' | ' |
Carrying Amount Gross | 4,289 | 5,102 | ' |
Accumulated Amortization | 4,289 | 5,102 | ' |
Technology/Tradename | ' | ' | ' |
Intangible assets acquired | ' | ' | ' |
Carrying Amount Gross | 44,039 | 29,565 | ' |
Accumulated Amortization | 38,463 | 26,297 | ' |
Carrying Amount Net | 5,576 | 3,268 | ' |
Estimated amortization expense for the remaining life of the intangible assets, based on intangible assets | ' | ' | ' |
Carrying Amount Net | $5,576 | $3,268 | ' |
STOCKBASED_COMPENSATION_Detail
STOCK-BASED COMPENSATION (Details) (USD $) | 12 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | 31-May-07 | |
Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Common Stock | Common Stock | Common Stock | 2007 Plan | 2007 Plan | |
Owner of 10% of more | Minimum | Minimum | Maximum | Maximum | Common Stock | Common Stock | |||||||
Owner of 10% of more | Owner of 10% of more | ||||||||||||
STOCK-BASED COMPENSATION | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares issuable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,450,000 |
Number of shares reserved | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,307,809 | ' |
Awards vesting period | '4 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expiration term | ' | ' | ' | ' | ' | ' | '10 years | '5 years | ' | ' | ' | ' | ' |
Exercise price, percentage of fair market value | ' | ' | ' | 110.00% | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of voting power of stock | ' | ' | ' | ' | ' | 10.00% | ' | ' | ' | ' | ' | ' | ' |
Granted (in shares) | 0 | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options Outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at the beginning of the period (in shares) | 1,560,197 | 1,821,892 | 1,936,963 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercised (in shares) | -121,524 | -121,467 | -19,359 | ' | ' | ' | ' | ' | -122,000 | -121,000 | -19,000 | ' | ' |
Canceled/expired (in shares) | -910,858 | -140,228 | -95,712 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at the end of the period (in shares) | 527,815 | 1,560,197 | 1,821,892 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Exercise Price Per Share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at the beginning of the period (in dollars per share) | $34.89 | $33.31 | $33.53 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercised (in dollars per share) | $10.47 | $12.90 | $18.80 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Canceled/expired (in dollars per share) | $36.78 | $33.48 | $40.71 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at the end of the period (in dollars per share) | $37.24 | $34.89 | $33.31 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
STOCKBASED_COMPENSATION_Detail1
STOCK-BASED COMPENSATION (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Options Outstanding | ' | ' | ' |
Weighted Average Life Remaining | '2 years 9 months 18 days | ' | ' |
Additional disclosures | ' | ' | ' |
Closing stock price (in dollars per share) | $18.47 | ' | ' |
Total intrinsic value of stock options exercised (in dollars) | $400,000 | $300,000 | $300,000 |
Stock Options | ' | ' | ' |
Additional disclosures | ' | ' | ' |
Aggregate intrinsic value for options outstanding | 0 | ' | ' |
Aggregate intrinsic value for options exercisable | $0 | ' | ' |
Exercise Price $22.98 - $30.69 | ' | ' | ' |
STOCK-BASED COMPENSATION | ' | ' | ' |
Exercise Price, low end of range (in dollars per share) | $22.98 | ' | ' |
Exercise Price, high end of range (in dollars per share) | $30.69 | ' | ' |
Options Outstanding | ' | ' | ' |
Number Outstanding (in shares) | 179,087 | ' | ' |
Weighted Average Life Remaining | '1 year 3 months 18 days | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $28.14 | ' | ' |
Options Exercisable | ' | ' | ' |
Number Exercisable (in shares) | 179,087 | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $28.14 | ' | ' |
Exercise Price $31.84 - $38.17 | ' | ' | ' |
STOCK-BASED COMPENSATION | ' | ' | ' |
Exercise Price, low end of range (in dollars per share) | $31.84 | ' | ' |
Exercise Price, high end of range (in dollars per share) | $38.17 | ' | ' |
Options Outstanding | ' | ' | ' |
Number Outstanding (in shares) | 178,774 | ' | ' |
Weighted Average Life Remaining | '4 years 1 month 6 days | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $32.07 | ' | ' |
Options Exercisable | ' | ' | ' |
Number Exercisable (in shares) | 178,774 | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $32.07 | ' | ' |
Exercise Price $40.10 - $57.36 | ' | ' | ' |
STOCK-BASED COMPENSATION | ' | ' | ' |
Exercise Price, low end of range (in dollars per share) | $40.10 | ' | ' |
Exercise Price, high end of range (in dollars per share) | $57.36 | ' | ' |
Options Outstanding | ' | ' | ' |
Number Outstanding (in shares) | 169,954 | ' | ' |
Weighted Average Life Remaining | '3 years 1 month 6 days | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $52.26 | ' | ' |
Options Exercisable | ' | ' | ' |
Number Exercisable (in shares) | 169,954 | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $52.26 | ' | ' |
Exercise Price $22.98 - $57.36 | ' | ' | ' |
STOCK-BASED COMPENSATION | ' | ' | ' |
Exercise Price, low end of range (in dollars per share) | $22.98 | ' | ' |
Exercise Price, high end of range (in dollars per share) | $57.36 | ' | ' |
Options Outstanding | ' | ' | ' |
Number Outstanding (in shares) | 527,815 | ' | ' |
Weighted Average Life Remaining | '2 years 9 months 18 days | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $37.24 | ' | ' |
Options Exercisable | ' | ' | ' |
Number Exercisable (in shares) | 527,815 | ' | ' |
Weighted Average Exercise Price (in dollars per share) | $37.24 | ' | ' |
STOCKBASED_COMPENSATION_Detail2
STOCK-BASED COMPENSATION (Details 3) (USD $) | 12 Months Ended | 72 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | |
Employee Stock Purchase Plan | Employee Stock Purchase Plan | Employee Stock Purchase Plan | Inducement Equity Incentive Plan | Maximum | Non-vested restricted stock and performance share awards | Non-vested restricted stock and performance share awards | Non-vested restricted stock and performance share awards | Non-vested restricted stock and performance share awards | Non-vested restricted stock and performance share awards | |
Employee Stock Purchase Plan | Minimum | Maximum | ||||||||
STOCK-BASED COMPENSATION | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Awards vesting period | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | '4 years |
Restricted Stock and Performance Shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Non-Vested Balance at the beginning of the period (in shares) | ' | ' | ' | ' | ' | 2,589,772 | 2,147,012 | 1,955,508 | ' | ' |
Granted (in shares) | ' | ' | ' | ' | ' | 1,873,245 | 1,746,350 | 1,014,150 | ' | ' |
Vested (in shares) | ' | ' | ' | ' | ' | -1,030,989 | -924,169 | -573,443 | ' | ' |
Forfeited (in shares) | ' | ' | ' | ' | ' | -787,014 | -379,421 | -249,203 | ' | ' |
Non-Vested Balance at the end of the period (in shares) | ' | ' | ' | ' | ' | 2,645,014 | 2,589,772 | 2,147,012 | ' | ' |
Weighted Average Fair Value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Non-Vested Balance at the beginning of the period (in dollars per share) | ' | ' | ' | ' | ' | $22.10 | $29.50 | $27.50 | ' | ' |
Granted (in dollars per share) | $4.14 | $4.68 | $8.38 | ' | ' | $14.79 | $17.45 | $32.51 | ' | ' |
Vested (in dollars per share) | ' | ' | ' | ' | ' | $23.02 | $28.99 | $28.23 | ' | ' |
Forfeited (in dollars per share) | ' | ' | ' | ' | ' | $18.98 | $25.82 | $28.95 | ' | ' |
Non-Vested Balance at the end of the period (in dollars per share) | ' | ' | ' | ' | ' | $17.49 | $22.10 | $29.50 | ' | ' |
Additional disclosures | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares reserved for purchase by employees | 2,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase price of the shares, percentage of fair market value on the first or last date of the offering period | ' | ' | ' | ' | 85.00% | ' | ' | ' | ' | ' |
Expected offering term | '6 months | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum percentage of employee compensation designated for purchase of shares | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares purchased by employees | 163,657 | 204,241 | 140,910 | ' | ' | ' | ' | ' | ' | ' |
Awards granted (in shares) | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' |
Number of shares reserved | 630,583 | ' | ' | 34,858 | ' | ' | ' | ' | ' | ' |
STOCKBASED_COMPENSATION_Detail3
STOCK-BASED COMPENSATION (Details 4) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
STOCK-BASED COMPENSATION | ' | ' | ' |
Stock-based compensation included in costs and expenses | $20,568 | $29,517 | $22,114 |
Tax benefit | ' | ' | -7,942 |
Stock-based compensation expense, net of tax | 20,568 | 29,517 | 14,172 |
Direct cost of services | ' | ' | ' |
STOCK-BASED COMPENSATION | ' | ' | ' |
Stock-based compensation included in costs and expenses | 158 | 184 | 269 |
Network and infrastructure | ' | ' | ' |
STOCK-BASED COMPENSATION | ' | ' | ' |
Stock-based compensation included in costs and expenses | 1,453 | 1,576 | 1,310 |
Sales and marketing | ' | ' | ' |
STOCK-BASED COMPENSATION | ' | ' | ' |
Stock-based compensation included in costs and expenses | 6,731 | 8,284 | 8,115 |
Product research and development | ' | ' | ' |
STOCK-BASED COMPENSATION | ' | ' | ' |
Stock-based compensation included in costs and expenses | 3,409 | 3,685 | 3,099 |
General and administrative | ' | ' | ' |
STOCK-BASED COMPENSATION | ' | ' | ' |
Stock-based compensation included in costs and expenses | $8,817 | $15,788 | $9,321 |
STOCKBASED_COMPENSATION_Detail4
STOCK-BASED COMPENSATION (Details 5) (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Employee Stock Purchase Plan | ' | ' | ' |
Weighted average assumptions used in estimating the fair value of stock-based compensation expense | ' | ' | ' |
Risk-free interest rate (as a percent) | 0.10% | 0.10% | 0.10% |
Expected life | '6 months | '6 months | '6 months |
Volatility factor (as a percent) | 38.00% | 53.00% | 36.00% |
Weighted average fair value of shares (in dollars per share) | $4.14 | $4.68 | $8.38 |
Non-vested restricted stock and performance share awards | ' | ' | ' |
STOCK-BASED COMPENSATION | ' | ' | ' |
Granted (in shares) | 1,873,245 | 1,746,350 | 1,014,150 |
Weighted average assumptions used in estimating the fair value of stock-based compensation expense | ' | ' | ' |
Weighted average fair value of shares (in dollars per share) | $14.79 | $17.45 | $32.51 |
Additional disclosures | ' | ' | ' |
Total unrecognized stock-based compensation expense (in dollars) | $26.40 | ' | ' |
Weighted-average period for recognition of unrecognized stock-based compensation expense | '2 years 4 months 24 days | ' | ' |
Non-vested stock option awards | ' | ' | ' |
Additional disclosures | ' | ' | ' |
Total unrecognized stock-based compensation expense (in dollars) | $0 | ' | ' |
Performance share units with a market condition | ' | ' | ' |
STOCK-BASED COMPENSATION | ' | ' | ' |
Granted (in shares) | ' | 0 | 0 |
Weighted average assumptions used in estimating the fair value of stock-based compensation expense | ' | ' | ' |
Risk-free interest rate (as a percent) | 0.40% | ' | ' |
Expected life | '2 years 9 months 18 days | ' | ' |
Volatility factor (as a percent) | 49.00% | ' | ' |
Weighted average fair value of shares (in dollars per share) | $14.22 | ' | ' |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Components of pretax income from continuing operations | ' | ' | ' |
United States | ($30,085) | ($88,571) | ($1,740) |
International | 10,648 | -75,864 | 27,730 |
Income (loss) from continuing operations before income taxes | -19,437 | -164,435 | 25,990 |
Current tax expense (benefit): | ' | ' | ' |
United States federal | ' | ' | -1,904 |
State and local | 137 | ' | -120 |
International | 1,745 | 921 | 4,326 |
Total current provision (benefit) for income taxes | 1,882 | 921 | 2,302 |
Deferred tax expense (benefit): | ' | ' | ' |
United States federal | 883 | 17,615 | -93 |
State and local | 55 | 1,107 | -6 |
International | -3,728 | -440 | 73 |
Total deferred provision (benefit) for income taxes | -2,790 | 18,282 | -26 |
Income tax expense (benefit) | -908 | 19,203 | 2,276 |
Provision (benefit) for income taxes from discontinued operations | 2,520 | 9,603 | -3,832 |
Reconciliation of the difference between the actual provision for income taxes and the provision computed by applying the U.S. federal statutory rate of 35% to pretax income | ' | ' | ' |
Federal statutory tax rate (as a percent) | 35.00% | ' | ' |
Tax expense at statutory rate | -6,803 | -57,552 | 9,096 |
State taxes, net of federal benefit | 126 | -591 | -96 |
International rate differential | -2,047 | -4,593 | -8,589 |
Tax credits | -1,041 | -117 | -660 |
Nondeductible expense and other | 2,170 | 306 | 1,836 |
Goodwill impairment | 5,823 | 48,285 | ' |
Valuation allowance (release) | 895 | 33,301 | -84 |
Adjustment for unrecognized tax benefits | -31 | 164 | 773 |
Income tax expense (benefit) | -908 | 19,203 | 2,276 |
Deferred tax assets: | ' | ' | ' |
Net operating loss and credit carryforwards | 14,875 | 15,306 | ' |
Nondeductible reserves and accruals | 43,795 | 27,482 | ' |
Depreciation and amortization | 756 | 2,675 | ' |
Valuation allowance | -53,820 | -37,860 | ' |
Total deferred tax assets | 5,606 | 7,603 | ' |
Deferred tax liabilities: | ' | ' | ' |
Depreciation | -8,475 | -6,018 | ' |
Other intangibles | -4,367 | -1,770 | ' |
Gain on investment | ' | -1,144 | ' |
Total deferred tax liabilities | -12,842 | -8,932 | ' |
Net deferred tax liabilities | ($7,236) | ($1,329) | ' |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Tax loss carryforward | ' | ' | ' |
Deferred tax assets reserved | $53,820,000 | $37,860,000 | ' |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | ' | ' | ' |
Balance at the beginning of the period | 11,211,000 | 10,669,000 | 10,026,000 |
Increases for tax positions taken during current year | 223,000 | 132,000 | 252,000 |
Increases for tax positions taken during prior years | 146,000 | 731,000 | 2,843,000 |
Decreases for tax positions taken during prior years | -126,000 | -20,000 | -842,000 |
Decreases for expiration of statute of limitations | -1,010,000 | -301,000 | -1,385,000 |
Decreases as a result of settlements with taxing authorities | ' | ' | -225,000 |
Balance at the end of the period | 10,444,000 | 11,211,000 | 10,669,000 |
Unrecognized tax benefits, would affect effective tax rate, if recognized | 9,700,000 | ' | ' |
Accrued interest and penalties related to uncertain tax positions | 1,500,000 | 900,000 | ' |
Interest on unrecognized tax benefits | 600,000 | 400,000 | 100,000 |
Gross unrecognized tax benefits change within the next twelve months, minimum | 0 | ' | ' |
Gross unrecognized tax benefits change within the next twelve months, maximum | 8,900,000 | ' | ' |
Cumulative amount of earnings upon which U.S. income taxes have not been provided | 117,200,000 | ' | ' |
U.S. federal tax | ' | ' | ' |
Tax loss carryforward | ' | ' | ' |
Tax loss carryforwards | 13,100,000 | ' | ' |
Net operating losses | 10,900,000 | ' | ' |
Acquired net operating losses | 2,200,000 | ' | ' |
Provision for federal income tax on foreign subsidiaries undistributed earnings | 0 | ' | ' |
U.S. federal tax | Operating losses | ' | ' | ' |
Tax loss carryforward | ' | ' | ' |
Deferred tax assets reserved | 8,100,000 | 11,300,000 | ' |
U.S. federal tax | Other tax attributes | ' | ' | ' |
Tax loss carryforward | ' | ' | ' |
Deferred tax assets reserved | 22,000,000 | 33,500,000 | ' |
U.S. federal tax | Capital losses | ' | ' | ' |
Tax loss carryforward | ' | ' | ' |
Deferred tax assets reserved | 17,600,000 | 1,000,000 | ' |
State tax | ' | ' | ' |
Tax loss carryforward | ' | ' | ' |
Tax loss carryforwards | 50,400,000 | ' | ' |
Net operating losses | 23,800,000 | ' | ' |
Acquired net operating losses | 26,600,000 | ' | ' |
Foreign tax | ' | ' | ' |
Tax loss carryforward | ' | ' | ' |
Tax loss carryforwards | 10,800,000 | ' | ' |
Foreign tax | Operating losses | ' | ' | ' |
Tax loss carryforward | ' | ' | ' |
Deferred tax assets reserved | $2,200,000 | $2,300,000 | ' |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 3 Months Ended | 12 Months Ended | 0 Months Ended | ||||
Jun. 30, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Jun. 20, 2013 | Oct. 12, 2012 | Jun. 30, 2013 | |
item | Patent infringement claim | Patent infringement claim | Patent infringement claim | ||||
COMMITMENTS AND CONTINGENCIES | ' | ' | ' | ' | ' | ' | ' |
Number of facility leases | ' | 40 | ' | ' | ' | ' | ' |
Total rent expense, including common area maintenance charges | ' | $10,500,000 | $9,500,000 | $8,500,000 | ' | ' | ' |
Minimum annual rent payments under long-term leases | ' | ' | ' | ' | ' | ' | ' |
2014 | ' | 8,421,000 | ' | ' | ' | ' | ' |
2015 | ' | 4,768,000 | ' | ' | ' | ' | ' |
2016 | ' | 4,266,000 | ' | ' | ' | ' | ' |
2017 | ' | 3,831,000 | ' | ' | ' | ' | ' |
2018 | ' | 4,107,000 | ' | ' | ' | ' | ' |
Thereafter | ' | 11,549,000 | ' | ' | ' | ' | ' |
Total future minimum obligations | ' | 36,942,000 | ' | ' | ' | ' | ' |
Leases | ' | ' | ' | ' | ' | ' | ' |
Operating lease term | '10 years | ' | ' | ' | ' | ' | ' |
Operating lease renewal term | ' | '5 years | ' | ' | ' | ' | ' |
Rent holiday period | ' | '18 months | ' | ' | ' | ' | ' |
COMMITMENTS AND CONTINGENCIES | ' | ' | ' | ' | ' | ' | ' |
Damages awarded | ' | ' | ' | ' | ' | 800,000 | ' |
Damages sought | ' | ' | ' | ' | ' | 10,200,000 | ' |
Amount of judgment entered by the court | ' | ' | ' | ' | 1,100,000 | ' | ' |
Accrued amount | ' | ' | ' | ' | ' | ' | 1,100,000 |
Number of pending litigation | ' | 0 | ' | ' | ' | ' | ' |
Amount of significant costs incurred individually or collectively, in connection with indemnification provisions | ' | 0 | ' | ' | ' | ' | ' |
Undrawn letters of credit | ' | $600,000 | $3,600,000 | ' | ' | ' | ' |
DEBT_Details
DEBT (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 01, 2010 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2004 | Jan. 02, 2014 | |
Convertible debt | Convertible debt | Convertible debt | Convertible debt | Convertible debt | Convertible debt | Convertible debt | ||||
2010 Senior Convertible Notes | 2010 Senior Convertible Notes | 2010 Senior Convertible Notes | 2004 Senior Convertible Notes | 2004 Senior Convertible Notes | 2004 Senior Convertible Notes | 2004 Senior Convertible Notes | ||||
Subsequent event | ||||||||||
DEBT | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal amount (in dollars) | ' | ' | ' | ' | ' | $345,000,000 | $8,800,000 | $8,800,000 | $195,000,000 | ' |
Interest rate (as a percent) | ' | ' | ' | ' | ' | 2.00% | ' | ' | 1.25% | ' |
Principal amount of debt repurchased | ' | ' | ' | 5,400,000 | 43,900,000 | ' | ' | ' | ' | 8,700,000 |
Average price as a percentage of par amount at which the entity repurchased notes | ' | ' | ' | 98.80% | 98.50% | ' | ' | ' | ' | ' |
Loss on extinguishment of debt | ' | ' | ' | ' | 100,000 | ' | ' | ' | ' | ' |
Initial conversion rate of debt principal (in shares per dollar) | ' | ' | ' | 0.0203537 | ' | ' | ' | ' | ' | ' |
Initial conversion price of shares, assuming conversion (in dollars per share) | ' | ' | ' | $49.13 | ' | ' | ' | ' | ' | ' |
Principal amount, remain outstanding | 295,795,000 | 309,909,000 | ' | 295,800,000 | 301,100,000 | ' | ' | ' | ' | 100,000 |
Number of common shares issuable upon conversion of note (in shares) | ' | ' | ' | 6,019,607 | ' | ' | ' | ' | ' | ' |
Fair value of debt | ' | ' | ' | 298,300,000 | 285,300,000 | ' | 8,900,000 | 8,600,000 | ' | ' |
Interest expense | $7,822,000 | $8,968,000 | $9,018,000 | ' | ' | ' | ' | ' | ' | ' |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 12 Months Ended | 36 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 |
STOCKHOLDERS' EQUITY | ' | ' | ' | ' |
Total number of shares purchased | 3,019,562 | 1,533,132 | 4,265,168 | 8,817,862 |
Average price paid per share (in dollars per share) | $16.96 | $14.78 | $18.70 | ' |
Total number of shares purchased as part of publicly announced plan | 3,019,562 | 1,533,132 | 4,265,168 | 8,817,862 |
Approximate dollar value of shares that may yet be purchased under the plan (in dollars) | $46.40 | $97.60 | $20.20 | ' |
EMPLOYEE_BENEFIT_PLAN_Details
EMPLOYEE BENEFIT PLAN (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
401K Plan | ' | ' | ' |
Percentage of employees' pretax contribution to the 401(k) retirement plan | 15.00% | ' | ' |
Amounts charged to expense related to matching contribution | $2.40 | $1.50 | $1.10 |
Plan | ' | ' | ' |
401K Plan | ' | ' | ' |
Employer's match percentage to employees' contribution | 50.00% | ' | ' |
Actual | ' | ' | ' |
401K Plan | ' | ' | ' |
Employer's match percentage to employees' contribution | 45.00% | 25.00% | 25.00% |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
SEGMENT INFORMATION | ' | ' | ' |
Number of reportable segments | 1 | ' | ' |
Microsoft | Sales | Customer Concentration | ' | ' | ' |
SEGMENT INFORMATION | ' | ' | ' |
Revenue from continuing operations (as a percent) | 32.50% | 30.90% | 29.20% |
International customers | Sales | Geographic concentration | ' | ' | ' |
SEGMENT INFORMATION | ' | ' | ' |
Number of countries exceeding the 10% threshold | 0 | ' | ' |
Revenue from continuing operations (as a percent) | 52.00% | 48.10% | 48.60% |
SEGMENT_INFORMATION_Details_2
SEGMENT INFORMATION (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
SEGMENT INFORMATION | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue | $101,235 | $87,260 | $90,163 | $111,021 | $98,119 | $87,056 | $87,117 | $98,204 | $389,679 | $370,496 | $376,469 |
United States | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
SEGMENT INFORMATION | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue | ' | ' | ' | ' | ' | ' | ' | ' | 187,046 | 192,447 | 193,467 |
Europe | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
SEGMENT INFORMATION | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue | ' | ' | ' | ' | ' | ' | ' | ' | 118,852 | 113,163 | 120,494 |
Other | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
SEGMENT INFORMATION | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue | ' | ' | ' | ' | ' | ' | ' | ' | $83,781 | $64,886 | $62,508 |
SEGMENT_INFORMATION_Details_3
SEGMENT INFORMATION (Details 3) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | United States | United States | Europe and Other | Europe and Other | Non-U.S. | ||
Assets | |||||||
Geographic concentration | |||||||
item | |||||||
SEGMENT INFORMATION | ' | ' | ' | ' | ' | ' | ' |
Number of countries exceeding the 10% threshold | ' | ' | ' | ' | ' | ' | 0 |
Total property and equipment | $187,267 | $167,956 | $163,743 | $145,820 | $23,524 | $22,136 | ' |
Accumulated depreciation | -133,497 | -114,858 | -114,965 | -97,155 | -18,532 | -17,703 | ' |
Net property and equipment | $53,770 | $53,098 | $48,778 | $48,665 | $4,992 | $4,433 | ' |
QUARTERLY_FINANCIAL_DATA_UNAUD2
QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
QUARTERLY FINANCIAL DATA (UNAUDITED) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue | $101,235 | $87,260 | $90,163 | $111,021 | $98,119 | $87,056 | $87,117 | $98,204 | $389,679 | $370,496 | $376,469 |
Direct cost of services | 18,233 | 16,205 | 17,061 | 22,006 | 18,946 | 15,476 | 15,085 | 17,249 | 73,505 | 66,756 | 62,381 |
Network and infrastructure | 14,987 | 14,648 | 14,326 | 15,075 | 14,242 | 13,184 | 12,686 | 12,452 | 59,036 | 52,564 | 47,886 |
Income (loss) from continuing operations | -43 | -7,596 | -203 | -10,687 | -188,768 | -735 | 681 | 5,184 | -18,529 | -183,638 | 23,714 |
Income (loss) from discontinued operations | 120 | -4,891 | -669 | -678 | -11,303 | 1 | -481 | -447 | -6,118 | -12,230 | -6,547 |
Net income (loss) | $77 | ($12,487) | ($872) | ($11,365) | ($200,071) | ($734) | $200 | $4,737 | ($24,647) | ($195,868) | $17,167 |
Income (loss) per share - basic: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income (loss) from continuing operations (in dollars per share) | $0 | ($0.24) | ($0.01) | ($0.33) | ($5.77) | ($0.02) | $0.02 | $0.15 | ($0.58) | ($5.53) | $0.65 |
Income (loss) from discontinued operations (in dollars per share) | $0 | ($0.16) | ($0.02) | ($0.02) | ($0.34) | $0 | ($0.01) | ($0.01) | ($0.19) | ($0.37) | ($0.18) |
Net income (loss) per share - basic (in dollars per share) | $0 | ($0.40) | ($0.03) | ($0.35) | ($6.11) | ($0.02) | $0.01 | $0.14 | ($0.77) | ($5.90) | $0.47 |
Income (loss) per share - diluted: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income (loss) from continuing operations (in dollars per share) | $0 | ($0.24) | ($0.01) | ($0.33) | ($5.77) | ($0.02) | $0.02 | $0.15 | ($0.58) | ($5.53) | $0.63 |
Income (loss) from discontinued operations (in dollars per share) | $0 | ($0.16) | ($0.02) | ($0.02) | ($0.34) | $0 | ($0.01) | ($0.01) | ($0.19) | ($0.37) | ($0.17) |
Net income (loss) per share - diluted (in dollars per share) | $0 | ($0.40) | ($0.03) | ($0.35) | ($6.11) | ($0.02) | $0.01 | $0.14 | ($0.77) | ($5.90) | $0.46 |
BUSINESS_COMBINATIONS_Details
BUSINESS COMBINATIONS (Details) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 10, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Jan. 10, 2013 | Dec. 31, 2013 | Jan. 10, 2013 | Dec. 31, 2013 | Jan. 10, 2013 | |
Customer and partner relationships | Customer and partner relationships | LML | LML | LML | LML | LML | LML | LML | LML | LML | LML | ||||
Customer and partner relationships | Customer and partner relationships | Trade names | Trade names | Other intangibles | Other intangibles | ||||||||||
BUSINESS COMBINATIONS | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Capital stock (as a percent) | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash consideration (in dollars per share) | ' | ' | ' | ' | ' | $3.45 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Acquisition and integration costs | ' | ' | ' | ' | ' | ' | ' | $5,700,000 | $800,000 | ' | ' | ' | ' | ' | ' |
Goodwill recognized expected to be deductible for income tax purposes | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' | ' | ' | ' | ' | ' |
Revenue | ' | ' | ' | ' | ' | ' | 24,100,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Net loss | ' | ' | ' | ' | ' | ' | 600,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Integration expenses | ' | ' | ' | ' | ' | ' | 1,400,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Allocation of the purchase price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | ' | ' | ' | ' | ' | 46,957,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accounts receivable | ' | ' | ' | ' | ' | 1,334,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Receivable of acquisition expenses incurred on behalf of Digital River | ' | ' | ' | ' | ' | 1,068,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortized intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 23,230,000 | ' | 3,567,000 | ' | 1,185,000 |
Goodwill | 139,318,000 | 108,960,000 | 281,858,000 | ' | ' | 54,447,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other assets | ' | ' | ' | ' | ' | 4,597,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total assets acquired | ' | ' | ' | ' | ' | 136,385,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total liabilities assumed | ' | ' | ' | ' | ' | 33,585,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total allocation of purchase price consideration | ' | ' | ' | ' | ' | 102,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Less: cash acquired | ' | ' | ' | ' | ' | -46,957,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total purchase price, net of cash acquired | 55,843,000 | ' | ' | ' | ' | 55,843,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average useful life | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | '5 years | ' | '4 years 9 months 18 days | ' |
Amortization expense of acquisition-related intangible assets | 8,543,000 | 6,832,000 | 8,689,000 | ' | ' | ' | ' | 5,200,000 | ' | ' | ' | ' | ' | ' | ' |
Estimated amortization expense for the remaining life of the intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2014 | 8,394,000 | ' | ' | ' | ' | ' | 5,394,000 | 5,394,000 | ' | ' | ' | ' | ' | ' | ' |
2015 | 7,852,000 | ' | ' | ' | ' | ' | 5,102,000 | 5,102,000 | ' | ' | ' | ' | ' | ' | ' |
2016 | 6,912,000 | ' | ' | ' | ' | ' | 5,102,000 | 5,102,000 | ' | ' | ' | ' | ' | ' | ' |
2017 | 6,059,000 | ' | ' | ' | ' | ' | 5,102,000 | 5,102,000 | ' | ' | ' | ' | ' | ' | ' |
Carrying Amount Net | $29,217,000 | $11,718,000 | ' | $23,641,000 | $8,450,000 | ' | $20,700,000 | $20,700,000 | ' | ' | ' | ' | ' | ' | ' |
BUSINESS_COMBINATIONS_Details_
BUSINESS COMBINATIONS (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
BUSINESS COMBINATIONS | ' | ' | ' |
Amortization expense of acquisition-related intangible assets | $8,543,000 | $6,832,000 | $8,689,000 |
Income tax benefit (expense) | 908,000 | -19,203,000 | -2,276,000 |
LML | ' | ' | ' |
BUSINESS COMBINATIONS | ' | ' | ' |
Amortization expense of acquisition-related intangible assets | 5,200,000 | ' | ' |
LML | Acquisition related nonrecurring adjustments | ' | ' | ' |
BUSINESS COMBINATIONS | ' | ' | ' |
Amortization expense of acquisition-related intangible assets | ' | 5,400,000 | ' |
Elimination of historical intangible asset amortization expense of acquiree | ' | 600,000 | ' |
Income tax benefit (expense) | ' | $2,600,000 | ' |
BUSINESS_COMBINATIONS_Details_1
BUSINESS COMBINATIONS (Details 3) (LML, USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
LML | ' | ' |
Pro Forma Operating Results (Unaudited) | ' | ' |
Revenue | $390,601 | $398,784 |
Net income (loss) | ($24,355) | ($194,121) |
DISCONTINUED_OPERATIONS_AND_DI2
DISCONTINUED OPERATIONS AND DISPOSALS (Details) (USD $) | 3 Months Ended | 12 Months Ended | 12 Months Ended | 3 Months Ended | ||||||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Oct. 02, 2013 | Dec. 31, 2012 |
Previously reported | CustomCD, Inc | CustomCD, Inc | CustomCD, Inc | Digital River Education Services, Inc. | Digital River Education Services, Inc. | CCNow, Inc. | ||||||||||||
item | ||||||||||||||||||
Discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expenses related to utilization of services to provide back-up CDs to customers | $18,233 | $16,205 | $17,061 | $22,006 | $18,946 | $15,476 | $15,085 | $17,249 | $73,505 | $66,756 | $62,381 | ' | $1,300 | $1,500 | $1,600 | ' | ' | ' |
Number of former employees to whom net assets are sold by the entity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' |
Operating results of the discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue | ' | ' | ' | ' | ' | ' | ' | ' | 8,043 | 15,726 | 21,671 | ' | ' | ' | ' | ' | ' | ' |
Income (loss) on discontinued operations before taxes and loss on sales | ' | ' | ' | ' | ' | ' | ' | ' | -1,704 | -2,627 | -10,379 | ' | ' | ' | ' | ' | ' | ' |
Loss on disposal of discontinued businesses before taxes | ' | ' | ' | ' | ' | ' | ' | ' | 1,894 | ' | ' | ' | 100 | ' | ' | 1,800 | ' | ' |
Provision (benefit) for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 2,520 | 9,603 | -3,832 | ' | ' | ' | ' | ' | ' | ' |
Income (loss) on discontinued operations, net of tax | 120 | -4,891 | -669 | -678 | -11,303 | 1 | -481 | -447 | -6,118 | -12,230 | -6,547 | ' | ' | ' | ' | ' | ' | ' |
Assets and liabilities of discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Current assets of discontinued operations | ' | ' | ' | ' | 7,561 | ' | ' | ' | ' | 7,561 | ' | 7,365 | ' | ' | ' | ' | ' | ' |
Long-term assets of discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 196 | ' | ' | ' | ' | ' | ' |
Total assets of discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,561 | ' | ' | ' | ' | ' | ' |
Current liabilities of discontinued operations | ' | ' | ' | ' | 5,753 | ' | ' | ' | ' | 5,753 | ' | 5,753 | ' | ' | ' | ' | ' | ' |
Total liabilities of discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,753 | ' | ' | ' | ' | ' | ' |
Proceeds from sale of business | ' | ' | ' | ' | ' | ' | ' | ' | 120 | 500 | ' | ' | ' | ' | ' | ' | ' | 500 |
Gain from sale of business | ' | ' | ' | ' | ' | ' | ' | ' | ' | $246 | ' | ' | ' | ' | ' | ' | ' | $200 |
Recovered_Sheet1
SCHEDULE II Valuation and Qualifying Accounts (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Allowance for doubtful accounts | ' | ' | ' |
Valuation and Qualifying Accounts Disclosure | ' | ' | ' |
Balance at Beginning of year | $4,834 | $4,269 | $4,863 |
Additions, Charged (Credited) to Costs and Expenses | -242 | 2,146 | 2,967 |
Deductions | -1,386 | -1,581 | -3,561 |
Balance at End of year | 3,206 | 4,834 | 4,269 |
Notes receivable reserve | ' | ' | ' |
Valuation and Qualifying Accounts Disclosure | ' | ' | ' |
Additions, Charged (Credited) to Other Accounts | ' | 627 | ' |
Balance at End of year | 627 | 627 | ' |
Accrued chargeback reserve | ' | ' | ' |
Valuation and Qualifying Accounts Disclosure | ' | ' | ' |
Balance at Beginning of year | 688 | 452 | 1,936 |
Additions, Charged (Credited) to Costs and Expenses | 16,961 | 19,719 | 10,175 |
Deductions | -17,317 | -19,483 | -11,659 |
Balance at End of year | 332 | 688 | 452 |
Allowance for deferred tax assets | ' | ' | ' |
Valuation and Qualifying Accounts Disclosure | ' | ' | ' |
Balance at Beginning of year | 37,860 | 3,812 | 816 |
Additions, Charged (Credited) to Costs and Expenses | 18,825 | 33,311 | -279 |
Additions, Charged (Credited) to Other Accounts | -2,865 | 737 | 3,275 |
Balance at End of year | $53,820 | $37,860 | $3,812 |