Business Combinations | 3 Months Ended |
Mar. 31, 2014 |
Business Combinations [Abstract] | ' |
Business Combinations | ' |
7. Business Combinations |
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Acquisition of TriTek |
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On May 1, 2013, the Company acquired TriTek, pursuant to the terms of an Agreement and Plan of Merger. TriTek was an IBM-focused enterprise content management and business process management consulting firm. The acquisition of TriTek further enhanced the Company's existing capabilities and further positioned the Company as the IBM solution provider of choice for enterprises across North America. |
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The Company has initially estimated the total allocable purchase price consideration to be $21.1 million. The purchase price was comprised of $17.0 million in cash paid and $4.1 million of Company common stock issued at closing. The Company incurred approximately $0.8 million in transaction costs, which were expensed when incurred. |
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The Company has estimated the allocation of the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions): |
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Acquired tangible assets | | $ | 12.1 | | | | | |
Acquired intangible assets | | | 6.2 | | | | | |
Liabilities assumed | | | (6.3 | ) | | | | |
Goodwill | | | 9.1 | | | | | |
Total purchase price | | $ | 21.1 | | | | | |
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The Company estimated that the intangible assets acquired have useful lives of eight months to eight years. |
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The amounts above represent the fair value estimates as of March 31, 2014 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to goodwill or income, as applicable. |
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Acquisition of Clear Task |
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On May 17, 2013, the Company acquired Clear Task, pursuant to the terms of an Asset Purchase Agreement. Clear Task provided salesforce.com implementations and customizations for enterprise customers. Clear Task's professionals helped clients implement Service Cloud, Sales Cloud, Chatter and platform engagement solutions to strengthen customer, employee and partner relationships, and maintain their competitive advantage. The acquisition of Clear Task further expanded the Company's cloud capabilities to include offerings from each of the world's leading cloud computing providers - IBM, Microsoft, Oracle and salesforce.com. |
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The Company has initially estimated the total allocable purchase price consideration to be $8.6 million. The purchase price was comprised of $6.0 million in cash paid and $1.2 million of Company common stock issued at closing increased by $1.4 million representing the initial fair value estimate of additional earnings-based contingent consideration, which may be realized by the Clear Task selling shareholders 12 months after the closing date of the acquisition. If the contingency is achieved, 80% of the earnings-based contingent consideration will be paid in cash and 20% will be issued in stock to the Clear Task selling shareholders. The contingent consideration is recorded in "Other current liabilities" on the Condensed Consolidated Balance Sheet as of March 31, 2014. The Company incurred approximately $0.6 million in transaction costs, which were expensed when incurred. |
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The Company has estimated the allocation of the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions): |
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Acquired tangible assets | | $ | 2.1 | | | | | |
Acquired intangible assets | | | 1.6 | | | | | |
Liabilities assumed | | | (0.8 | ) | | | | |
Goodwill | | | 5.7 | | | | | |
Total purchase price | | $ | 8.6 | | | | | |
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The Company estimated that the intangible assets acquired have useful lives of five months to five years. |
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The amounts above represent the fair value estimates as of March 31, 2014 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to goodwill or income, as applicable. |
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Acquisition of CoreMatrix |
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On October 11, 2013, the Company acquired CoreMatrix, pursuant to the terms of an Asset Purchase Agreement. CoreMatrix was a salesforce.com cloud computing services and solutions firm. The acquisition of CoreMatrix provides the Company with the comprehensive capacity to sell and deliver salesforce.com solutions across North America. |
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The Company has initially estimated the total allocable purchase price consideration to be $24.4 million. The purchase price was comprised of $18.5 million in cash paid and $2.5 million of Company common stock issued at closing increased by $3.4 million representing the initial fair value estimate of additional earnings-based contingent consideration, which may be realized by the CoreMatrix selling shareholders 12 and 24 months after the closing date of the acquisition. If the first contingency is achieved, 60% of the earnings-based contingent consideration will be paid in cash and 40% will be issued in stock to the CoreMatrix selling shareholders. If the second contingency is achieved, 80% of the earnings-based contingent consideration will be paid in cash and 20% will be issued in stock to the CoreMatrix selling shareholders. As of March 31, 2014, the contingent consideration is recorded in "Other non-current liabilities" on the Consolidated Balance Sheet, based on when settlement is expected to occur. The Company incurred approximately $0.8 million in transaction costs, which were expensed when incurred. |
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The Company has estimated the allocation of the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions): |
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Acquired tangible assets | | $ | 4.1 | | | | | |
Acquired intangible assets | | | 4.8 | | | | | |
Liabilities assumed | | | (1.6 | ) | | | | |
Goodwill | | | 17.1 | | | | | |
Total purchase price | | $ | 24.4 | | | | | |
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The Company estimated that the intangible assets acquired have useful lives of six months to ten years. |
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The amounts above represent the fair value estimates as of March 31, 2014 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to goodwill or income, as applicable. |
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Acquisition of ForwardThink |
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On February 10, 2014, the Company acquired ForwardThink, pursuant to the terms of an Agreement and Plan of Merger. ForwardThink was a financial services and solutions consulting firm. The acquisition of ForwardThink expands the Company's financial services vertically, including the Company's presence in the New York area. |
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The Company has initially estimated the total allocable purchase price consideration to be $39.9 million. The purchase price was comprised of $26.7 million in cash paid and $13.2 million of Company common stock issued at closing. The Company incurred approximately $1.3 million in transaction costs, which were expensed when incurred. The Company acquired certain equity awards which were replaced with a cash incentive plan pursuant to the Agreement and Plan of Merger. These awards are recognized separately from the acquisition of assets and assumptions of liabilities in the business combination and will be recognized as stock compensation expense within the Condensed Consolidated Statements of Operations in accordance with ASC 718. Approximately $0.8 million of expense will be recorded over three years and will be recognized ratably over the awards service period. |
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The Company has estimated the allocation of the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions): |
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Acquired tangible assets | | $ | 4.5 | | | | | |
Acquired intangible assets | | | 19.3 | | | | | |
Liabilities assumed | | | (12.2 | ) | | | | |
Goodwill | | | 28.3 | | | | | |
Total purchase price | | $ | 39.9 | | | | | |
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The Company estimated that the intangible assets acquired have useful lives of eleven months to six years. |
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The amounts above represent the fair value estimates as of March 31, 2014 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to goodwill or income, as applicable. |
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The results of the ForwardThink operations have been included in the Company's condensed consolidated financial statements since the acquisition date. |
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The amounts of revenue and net income of ForwardThink included in the Company's Condensed Consolidated Statements of Operations from the acquisition date to March 31, 2014 are as follows (in thousands): |
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| Acquisition Date to | | | | | |
31-Mar-14 | | | | |
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Revenues | | $ | 4,124 | | | | | |
Net income | | $ | 192 | | | | | |
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Acquisition of BioPharm Systems, Inc. |
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On April 1, 2014, the Company acquired substantially all of the assets of BioPharm Systems, Inc., a California corporation, and all of the outstanding stock of BioPharm Systems, Inc., a Delaware corporation, pursuant to the terms of an Asset Purchase Agreement and a Stock Purchase Agreement. Refer to Note 11, Subsequent Events, for further discussion. |
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Acquisition of Trifecta Technologies, Inc. and Trifecta Technologies Canada, Limited |
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On May 7, 2014, the Company acquired substantially all of the assets related to the eCommerce business of Trifecta Technologies, Inc. and Trifecta Technologies Canada, Limited, pursuant to the terms of an Asset Purchase Agreement. Refer to Note 11, Subsequent Events, for further discussion. |
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Pro-forma Results of Operations |
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The following presents the unaudited pro-forma combined results of operations of the Company with ForwardThink for the three months ended March 31, 2014 and TriTek, Clear Task, CoreMatrix, and ForwardThink for the three months ended March 31, 2013, after giving effect to certain pro-forma adjustments and assuming ForwardThink was acquired as of the beginning of 2013 and TriTek, Clear Task, and CoreMatrix were acquired as of the beginning of 2012. |
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These unaudited pro-forma results are presented in compliance with the adoption of Accounting Standards Update ("ASU") 2010-29, Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations, and are not necessarily indicative of the actual consolidated results of operations had the acquisitions actually occurred on January 1, 2013 or January 1, 2012 or of future results of operations of the consolidated entities (in thousands, except per share information): |
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| | Three Months Ended | |
| | March 31, | |
| | 2014 | | | 2013 | |
Revenues | | $ | 100,820 | | | $ | 103,978 | |
Net income | | $ | 4,385 | | | $ | 3,992 | |
Basic net income per share | | $ | 0.14 | | | $ | 0.12 | |
Diluted net income per share | | $ | 0.13 | | | $ | 0.12 | |
Shares used in computing basic net income per share | | | 32,136 | | | | 32,343 | |
Shares used in computing diluted net income per share | | | 32,966 | | | | 33,044 | |