Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 27, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | PERFICIENT INC | |
Trading Symbol | 0 | |
Entity Central Index Key | 1,085,869 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding | 35,291,292 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 6,839 | $ 10,935 |
Accounts receivable, net | 96,734 | 113,928 |
Prepaid expenses | 3,519 | 2,476 |
Other current assets | 7,028 | 4,679 |
Total current assets | 114,120 | 132,018 |
Property and equipment, net | 8,369 | 7,966 |
Goodwill | 255,189 | 236,130 |
Intangible assets, net | 52,218 | 46,105 |
Other non-current assets | 4,017 | 3,823 |
Total assets | 433,913 | 426,042 |
Current liabilities: | ||
Accounts payable | 11,160 | 22,035 |
Other current liabilities | 26,851 | 33,028 |
Total current liabilities | 38,011 | 55,063 |
Long-term debt | 60,000 | 54,000 |
Other non-current liabilities | 10,419 | 12,251 |
Total liabilities | 108,430 | 121,314 |
Stockholders' equity: | ||
Common stock (par value $.001 per share; 50,000,000 shares authorized and 44,402,827 shares issued and 33,766,673 shares outstanding as of June 30, 2015; 43,174,676 shares issued and 32,854,802 shares outstanding as of December 31, 2014) | 44 | 43 |
Additional paid-in capital | 353,759 | 334,645 |
Accumulated other comprehensive loss | (803) | (651) |
Treasury stock, at cost (10,636,154 shares as of June 30, 2015; 10,319,874 shares as of December 31, 2014) | (101,624) | (95,353) |
Retained earnings | 74,107 | 66,044 |
Total stockholders' equity | 325,483 | 304,728 |
Total liabilities and stockholders' equity | $ 433,913 | $ 426,042 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Condensed Consolidated Balance Sheets | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 44,402,827 | 43,174,676 |
Common stock, shares outstanding (in shares) | 33,766,673 | 32,854,802 |
Treasury stock, shares (in shares) | 10,636,154 | 10,319,874 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues | ||||
Services | $ 97,186 | $ 98,316 | $ 195,815 | $ 186,805 |
Software and hardware | 7,468 | 13,913 | 15,970 | 18,916 |
Reimbursable expenses | 3,810 | 4,480 | 7,277 | 8,158 |
Total revenues | 108,464 | 116,709 | 219,062 | 213,879 |
Cost of revenues (exclusive of depreciation and amortization, shown separately below) | ||||
Project personnel costs | 62,290 | 61,102 | 125,737 | 117,847 |
Software and hardware costs | 6,636 | 12,393 | 13,364 | 16,895 |
Reimbursable expenses | 3,810 | 4,480 | 7,277 | 8,158 |
Other project related expenses | 827 | 886 | 1,723 | 1,672 |
Total cost of revenues | 73,563 | 78,861 | 148,101 | 144,572 |
Gross margin | 34,901 | 37,848 | 70,961 | 69,307 |
Selling, general and administrative | 24,813 | 22,433 | 48,856 | 43,116 |
Depreciation | 1,093 | 870 | 2,174 | 1,781 |
Amortization | 3,411 | 3,730 | 7,212 | 6,466 |
Acquisition costs | 21 | 1,076 | 21 | 2,569 |
Adjustment to fair value of contingent consideration | 89 | (1,677) | 174 | (1,463) |
Income from operations | 5,474 | 11,416 | 12,524 | 16,838 |
Net interest expense | (548) | (425) | (1,101) | (593) |
Net other income (expense) | 9 | 49 | (271) | 69 |
Income before income taxes | 4,935 | 11,040 | 11,152 | 16,314 |
Provision for income taxes | 938 | 4,653 | 3,089 | 6,881 |
Net income | $ 3,997 | $ 6,387 | $ 8,063 | $ 9,433 |
Basic net income per share | $ 0.12 | $ 0.20 | $ 0.24 | $ 0.30 |
Diluted net income per share | $ 0.12 | $ 0.19 | $ 0.24 | $ 0.29 |
Shares used in computing basic net income per share (in shares) | 33,333 | 31,564 | 33,190 | 31,147 |
Shares used in computing diluted net income per share (in shares) | 34,138 | 33,271 | 34,151 | 32,949 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Consolidated Statements of Comprehensive Income [Abstract] | ||||
Net income | $ 3,997 | $ 6,387 | $ 8,063 | $ 9,433 |
Foreign currency translation adjustment | 19 | 53 | (152) | (29) |
Total comprehensive income | $ 4,016 | $ 6,440 | $ 7,911 | $ 9,404 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Stockholders' Equity - 6 months ended Jun. 30, 2015 - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Loss [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Total |
Balance at Dec. 31, 2014 | $ 43 | $ 334,645 | $ (651) | $ (95,353) | $ 66,044 | $ 304,728 |
Balance (in shares) at Dec. 31, 2014 | 32,855,000 | 32,854,802 | ||||
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan | 229 | $ 229 | ||||
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan (in shares) | 19,000 | |||||
Net tax benefit from stock option exercises and restricted stock vesting | 852 | 852 | ||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions | 6,622 | 6,622 | ||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions (in shares) | 451,000 | |||||
Purchases of treasury stock and buyback of shares for taxes | (6,271) | (6,271) | ||||
Purchases of treasury stock and buyback of shares for taxes (in shares) | (316,000) | |||||
Issuance of stock for acquisitions | $ 1 | 11,411 | 11,412 | |||
Issuance of stock for acquisitions (in shares) | 758,000 | |||||
Net income | 8,063 | 8,063 | ||||
Foreign currency translation adjustment | (152) | (152) | ||||
Balance at Jun. 30, 2015 | $ 44 | $ 353,759 | $ (803) | $ (101,624) | $ 74,107 | $ 325,483 |
Balance (in shares) at Jun. 30, 2015 | 33,767,000 | 33,766,673 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
OPERATING ACTIVITIES | ||
Net income | $ 8,063 | $ 9,433 |
Adjustments to reconcile net income to net cash used in operations: | ||
Depreciation | 2,174 | 1,781 |
Amortization | 7,212 | 6,466 |
Deferred income taxes | (691) | 1,645 |
Non-cash stock compensation and retirement savings plan contributions | 6,622 | 6,275 |
Tax benefit from stock option exercises and restricted stock vesting | (875) | (1,770) |
Adjustment to fair value of contingent consideration | 174 | (1,463) |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 21,657 | (14,913) |
Other assets | (1,180) | 1,251 |
Accounts payable | (10,875) | 5,390 |
Other liabilities | (11,243) | (11,190) |
Net cash provided by operating activities | 21,038 | 2,905 |
INVESTING ACTIVITIES | ||
Purchase of property and equipment | (1,655) | (1,710) |
Capitalization of software developed for internal use | (593) | (2,361) |
Purchase of business, net of cash acquired | (23,580) | (46,240) |
Net cash used in investing activities | (25,828) | (50,311) |
FINANCING ACTIVITIES | ||
Proceeds from line of credit | 137,000 | 147,900 |
Payments on line of credit | (131,000) | (95,900) |
Payment of credit facility financing fees | (193) | 0 |
Tax benefit on stock option exercises and restricted stock vesting | 875 | 1,770 |
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan | 229 | 1,311 |
Purchase of treasury stock | (2,840) | (3,195) |
Remittance of taxes withheld as part of a net share settlement of restricted stock vesting | (3,431) | (4,827) |
Net cash provided by financing activities | 640 | 47,059 |
Effect of exchange rate on cash and cash equivalents | 54 | (39) |
Change in cash and cash equivalents | (4,096) | (386) |
Cash and cash equivalents at beginning of period | 10,935 | 7,018 |
Cash and cash equivalents at end of period | 6,839 | 6,632 |
Supplemental disclosures: | ||
Cash paid for income taxes | 4,190 | 4,294 |
Cash paid for interest | 725 | 426 |
Non-cash activity: | ||
Stock issued for purchase of businesses | 11,412 | 19,174 |
Estimated fair value of contingent consideration for purchase of business | $ 2,240 | $ 127 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Basis Of Presentation [Abstract] | |
Basis Of Presentation | 1. Basis of Presentation The accompanying interim unaudited condensed consolidated financial statements of Perficient, Inc. and its subsidiaries (collectively, the "Company") have been prepared in accordance with accounting principles generally accepted in the United States and are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") applicable to interim financial information. Accordingly, certain footnote disclosures have been condensed or omitted. In the opinion of management, the interim unaudited condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the Company's financial position, results of operations and cash flows for the periods presented. These financial statements should be read in conjunction with the Company's consolidated financial statements and notes thereto filed with the SEC in the Company's Annual Report on Form 10-K for the year ended December 31, 2014. Operating results for the three and six months ended June 30, 2015 may not be indicative of the results for the full fiscal year ending December 31, 2015. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Summary Of Significant Accounting Policies [Abstract] | |
Summary Of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 periods. Actual results could differ from those estimates, and such differences could be material to the financial statements. Revenue Recognition Revenues are primarily derived from professional services provided on a time and materials basis. For time and material contracts, revenues are recognized and billed by multiplying the number of hours expended in the performance of the contract by the established billing rates. For fixed fee projects, revenues are generally recognized using an input method based on the ratio of hours expended to total estimated hours. Amounts invoiced and collected in excess of revenues recognized are classified as deferred revenues. On many projects the Company is also reimbursed for out-of-pocket expenses such as airfare, lodging, and meals. These reimbursements are included as a component of revenues. Revenues from software and hardware sales are generally recorded on a gross basis considering the Company's role as a principal in the transaction. On rare occasions, the Company enters into a transaction where it is not the principal. In these cases, revenue is recorded on a net basis. Unbilled revenues represent the project time and expenses that have been incurred, but not yet billed to the client, prior to the end of the fiscal period. For time and materials projects, the client is invoiced for the amount of hours worked multiplied by the billing rates as stated in the contract. For fixed fee arrangements, the client is invoiced according to the agreed-upon schedule detailing the amount and timing of payments in the contract. Clients are typically billed monthly for services provided during that month, but can be billed on a more or less frequent basis as determined by the contract. If the time and expenses are worked/incurred and approved at the end of a fiscal period and the invoice has not yet been sent to the client, the amount is recorded as unbilled revenue once the Company verifies all other revenue recognition criteria have been met. Revenues are recognized when the following criteria are met: (1) persuasive evidence of the customer arrangement exists; (2) fees are fixed and determinable; (3) delivery and acceptance have occurred; and (4) collectability is deemed probable. The Company's policy for revenue recognition in instances where multiple deliverables are sold contemporaneously to the same customer is in accordance with Financial Accounting Standards Board Accounting Standards Codification ("ASC") Subtopic 985-605, Software – Revenue Recognition, Revenue Recognition – Multiple-Element Arrangements Revenue Recognition Further, delivery of software and hardware sales, when sold contemporaneously with services, can generally occur at varying times depending on the specific client project arrangement. Delivery of services generally occurs over a period of time consistent with the timeline as outlined in the client contract. There are no significant cancellation or termination-type provisions for the Company's software and hardware sales. Contracts for professional services provide for a general right, to the client or the Company, to cancel or terminate the contract within a given period of time (generally 10 to 30 days' notice is required). The client is responsible for any time and expenses incurred up to the date of cancellation or termination of the contract. The Company may provide multiple services under the terms of an arrangement and is required to assess whether one or more units of accounting are present. Service fees are typically accounted for as one unit of accounting, as fair value evidence for individual tasks or milestones is not available. The Company follows the guidelines discussed above in determining revenues; however, certain judgments and estimates are made and used to determine revenues recognized in any accounting period. If estimates are revised, material differences may result in the amount and timing of revenues recognized for a given period. Revenues are presented net of taxes assessed by governmental authorities. Sales taxes are generally collected and subsequently remitted on all software and hardware sales and certain services transactions as appropriate. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2015 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | 3. Stock-Based Compensation Stock-based compensation is accounted for in accordance with ASC Topic 718, Compensation – Stock Compensation Stock Award Plans The Company's Amended and Restated Perficient, Inc. 2012 Long Term Incentive Plan (as amended, the "Incentive Plan") allows for the granting of various types of stock awards, not to exceed a total of 5.0 million shares, to eligible individuals. The Compensation Committee of the Board of Directors administers the Incentive Plan and determines the terms of all stock awards made under the Incentive Plan. Stock-based compensation cost recognized for the three and six months ended June 30, 2015 was approximately $3.4 million and $6.9 million, respectively, which included $0.5 million and $1.1 million, respectively, of expense for retirement savings plan contributions. The associated current and future income tax benefits recognized were $1.0 million and $2.1 million for the three and six months ended June 30, 2015, respectively. Stock-based compensation cost recognized for the three and six months ended June 30, 2014 was approximately $3.4 million and $6.6 million, respectively, which included $0.5 and $1.0 million, respectively, of expense for retirement savings plan contributions. The associated current and future income tax benefits recognized were $1.1 million and $2.1 million for the three and six months ended June 30, 2014, respectively. As of June 30, 2015, there was $17.7 million of total unrecognized compensation cost related to non-vested share-based awards and other incentive awards. This cost is expected to be recognized over a weighted-average period of two years. Stock option activity for the six months ended June 30, 2015 was as follows (shares in thousands): Shares Weighted-Average Exercise Price Options outstanding at December 31, 2014 12 $ 7.48 Options exercised (12 ) 7.48 Options canceled - - Options outstanding at June 30, 2015 - - Options vested at June 30, 2015 - $ - Restricted stock activity for the six months ended June 30, 2015 was as follows (shares in thousands): Shares Weighted-Average Grant Date Fair Value Restricted stock awards outstanding at December 31, 2014 1,506 $ 15.39 Awards granted 345 19.84 Awards vested (394 ) 13.81 Awards forfeited (104 ) 15.09 Restricted stock awards outstanding at June 30, 2015 1,353 $ 16.95 |
Net Income Per Share
Net Income Per Share | 6 Months Ended |
Jun. 30, 2015 | |
Net Income Per Share [Abstract] | |
Net Income Per Share | 4. Net Income per Share The following table presents the calculation of basic and diluted net income per share (in thousands, except per share information): Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Net income $ 3,997 $ 6,387 $ 8,063 $ 9,433 Basic: Weighted-average shares of common stock outstanding 33,333 31,564 33,190 31,147 Shares used in computing basic net income per share 33,333 31,564 33,190 31,147 Effect of dilutive securities: Stock options - 96 1 113 Restricted stock subject to vesting 354 485 429 592 Contingently issuable shares (1) - 38 - 19 Shares issuable for acquisition consideration (2) 451 1,088 531 1,078 Shares used in computing diluted net income per share 34,138 33,271 34,151 32,949 Basic net income per share $ 0.12 $ 0.20 $ 0.24 $ 0.30 Diluted net income per share $ 0.12 $ 0.19 $ 0.24 $ 0.29 Anti-dilutive options and restricted stock not included in the calculation of diluted net income per share - 290 54 145 (1) For the three and six months ended June 30, 2014, this represents the Company's estimate of shares to be issued to Clear Task, Inc. ("Clear Task") pursuant to the Asset Purchase Agreement. (2) For the three and six months ended June 30, 2015, this represents the shares held in escrow pursuant to: (i) Zeon (as defined below) |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments And Contingencies [Abstract] | |
Commitments And Contingencies | 5. Commitments and Contingencies The Company leases office space and certain equipment under various operating lease agreements. The Company has the option to extend the term of certain lease agreements. Future minimum commitments under these lease agreements as of June 30, 2015 were as follows (in thousands): Operating Leases 2015 remaining $ 2,877 2016 5,689 2017 4,875 2018 3,378 2019 2,705 Thereafter 4,220 Total minimum lease payments $ 23,744 |
Balance Sheet Components
Balance Sheet Components | 6 Months Ended |
Jun. 30, 2015 | |
Balance Sheet Components [Abstract] | |
Balance Sheet Components | 6. Balance Sheet Components June 30, 2015 December 31, 2014 (in thousands) Accounts receivable: Accounts receivable $ 63,085 $ 82,994 Unbilled revenues 34,791 31,845 Allowance for doubtful accounts (1,142 ) (911 ) Total $ 96,734 $ 113,928 Property and equipment: Computer hardware (useful life of 3 years) $ 10,710 $ 10,221 Furniture and fixtures (useful life of 5 years) 2,897 2,442 Leasehold improvements (useful life of 5 years) 2,474 2,075 Software (useful life of 1 to 7 years) 7,539 6,828 Less: Accumulated depreciation (15,251 ) (13,600 ) Total $ 8,369 $ 7,966 Other current liabilities: Accrued variable compensation $ 9,465 $ 15,060 Deferred revenue 5,180 5,945 Payroll related costs 1,898 1,614 Accrued subcontractor fees 690 871 Accrued medical claims expense 1,581 1,615 Acquired liabilities 1,651 2,603 Estimated fair value of contingent consideration liability (1) 2,414 - Other current liabilities 3,972 5,320 Total $ 26,851 $ 33,028 (1) Represents the fair value estimate of additional earnings-based contingent consideration that may be realized by Zeon's selling shareholders 12 months after the Zeon acquisition. |
Business Combinations
Business Combinations | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Business Combinations | 7. Business Combinations Acquisition of ForwardThink 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 expanded the Company's financial services vertical, including the Company's presence in the New York area. The Company's total allocable purchase price consideration was $40.1 million. The purchase price was comprised of $26.9 million in cash paid (net of cash acquired) 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 compensation expense within the Condensed Consolidated Statements of Operations (Unaudited). Approximately $0.8 million of expense will be recorded over three years and will be recognized ratably over the awards service period. The Company allocated the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions): Acquired tangible assets $ 4.6 Acquired intangible assets 18.0 Liabilities assumed (12.1 ) Goodwill 29.6 Total purchase price $ 40.1 The Company estimated that the intangible assets acquired have useful lives of eleven months to six years. Acquisition of BioPharm On April 1, 2014, the Company acquired substantially all of the assets of BioPharm Systems, Inc., a California corporation ("California BioPharm"), and all of the outstanding stock of BioPharm Systems, Inc., a Delaware corporation (together with California BioPharm, "BioPharm"), pursuant to the terms of an Asset Purchase Agreement and a Stock Purchase Agreement. BioPharm was a business and information technology consulting firm focused on the life sciences industry. The acquisition of BioPharm expanded the Company's industry vertical expertise with the addition of a dedicated life sciences vertical. The Company's total allocable purchase price consideration was $16.3 million. The purchase price was comprised of $11.2 million in cash paid (net of cash acquired) and $5.1 million in Company common stock issued at closing. The Company incurred approximately $0.7 million in transaction costs, which were expensed when incurred. The Company allocated the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions): Acquired tangible assets $ 3.5 Acquired intangible assets 8.4 Liabilities assumed (1.9 ) Goodwill 6.3 Total purchase price $ 16.3 The Company estimated that the intangible assets acquired have useful lives of nine months to ten years. Acquisition of Trifecta 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 (together, "Trifecta"), pursuant to the terms of an Asset Purchase Agreement. Trifecta was a business and information technology consulting firm focused on IBM WebSphere Commerce solutions. The acquisition of Trifecta expanded the Company's ability to deliver larger, more powerful commerce solutions. The Company's total allocable purchase price consideration was $13.6 million. Of the $13.6 million in total allocable purchase price consideration, $8.2 million was paid in cash and the remainder represents an assumption of liabilities. The Company incurred approximately $0.6 million in transaction costs, which were expensed when incurred. The Company allocated the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions): Acquired tangible assets $ 1.6 Acquired intangible assets 5.2 Liabilities assumed (5.7 ) Goodwill 7.1 Total cash purchase price $ 8.2 The Company estimated that the intangible assets acquired have useful lives of eight months to five years. Acquisition of Zeon On January 2, 2015, the Company acquired substantially all of the assets of Zeon Solutions Incorporated, a Wisconsin corporation, Grand River Interactive LLC, a Michigan limited liability company, and their Indian affiliate, Zeon Solutions Private Limited (collectively, "Zeon"), pursuant to the terms of an Asset Purchase Agreement. The acquisition of Zeon expanded the Company's expertise in the support of e-commerce and digital agency solutions. The Company has initially estimated the total allocable purchase price consideration to be $35.9 million. The purchase price was comprised of $22.3 million in cash paid and $11.4 million in Company common stock issued at closing increased by $2.2 million representing the initial fair value estimate of additional earnings-based contingent consideration, which may be realized by Zeon 12 months after the closing date of the acquisition. The Company incurred approximately $0.9 million in transaction costs, which were expensed when incurred. 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): Acquired tangible assets $ 8.6 Acquired intangible assets 12.7 Liabilities assumed (3.5 ) Goodwill 18.1 Total purchase price $ 35.9 The Company estimated that the intangible assets acquired have useful lives of nine months to eight years. The amounts above represent the acquisition fair value estimates as of June 30, 2015, 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. The results of the Zeon operations have been included in the Company's condensed consolidated financial statements since the acquisition date. The amount of revenue and net income of Zeon in the Company's Condensed Consolidated Statements of Operations (Unaudited) from the acquisition date to June 30, 2015 are as follows (in thousands): Acquisition Date to June 30, 2015 Revenues $ 14,316 Net income $ 1,100 Pro-forma Results of Operations The following presents the unaudited pro-forma combined results of operations of the Company with Zeon for the six months ended June 30, 2015 and ForwardThink, BioPharm, Trifecta, and Zeon for the six months ended June 30, 2014, after giving effect to certain pro-forma adjustments and assuming Zeon was acquired as of the beginning of 2014 and ForwardThink, BioPharm, and Trifecta were acquired as of the beginning of 2013. These unaudited pro-forma results are presented in compliance with the adoption of Accounting Standards Update ("ASU") 2010-29, Business Combinations Disclosure of Supplementary Pro Forma Information for Business Combinations Six Months Ended June 30, 2015 2014 Revenues $ 219,062 $ 232,391 Net income $ 8,666 $ 10,195 Basic net income per share $ 0.26 $ 0.31 Diluted net income per share $ 0.25 $ 0.30 Shares used in computing basic net income per share 33,729 33,083 Shares used in computing diluted net income per share 34,159 34,092 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | 8. Goodwill and Intangible Assets Goodwill represents the excess purchase price over the fair value of net assets acquired, or net liabilities assumed, in a business combination. In accordance with ASC Topic 350, Intangibles – Goodwill and Other Other intangible assets include customer relationships, non-compete arrangements, customer backlog, trade names, and internally developed software, which are being amortized over the assets' estimated useful lives using the straight-line method. Estimated useful lives range from nine months to ten years. Amortization of customer relationships, non-compete arrangements, customer backlog, trade names, and internally developed software is considered an operating expense and is included in "Amortization" in the accompanying Condensed Consolidated Statements of Operations (Unaudited). The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in a lack of recoverability or revised useful life. Goodwill The changes in the carrying amount of goodwill for the six months ended June 30, 2015 are as follows (in thousands): Balance at December 31, 2014 $ 236,130 Preliminary purchase price allocations for acquisitions (Note 7) 18,179 Effect of foreign currency adjustments and other 880 Balance at June 30, 2015 $ 255,189 Intangible Assets with Definite Lives The following table presents a summary of the Company's intangible assets that are subject to amortization (in thousands): June 30, 2015 December 31, 2014 Gross Carrying Amounts Accumulated Amortization Net Carrying Amounts Gross Carrying Amounts Accumulated Amortization Net Carrying Amounts Customer relationships $ 62,079 $ (18,161 ) $ 43,918 $ 54,389 $ (16,595 ) $ 37,794 Non-compete agreements 1,573 (962 ) 611 1,601 (866 ) 735 Customer backlog 1,040 (733 ) 307 2,341 (2,265 ) 76 Trade name 88 (58 ) 30 167 (148 ) 19 Internally developed software 9,180 (1,828 ) 7,352 8,897 (1,416 ) 7,481 Total $ 73,960 $ (21,742 ) $ 52,218 $ 67,395 $ (21,290 ) $ 46,105 The estimated useful lives of identifiable intangible assets are as follows: Customer relationships 3 – 10 years Non-compete agreements 3 – 5 years Internally developed software 1 – 7 years Trade name 1 year Customer backlog 9 – 11 months |
Line of Credit
Line of Credit | 6 Months Ended |
Jun. 30, 2015 | |
Line Of Credit [Abstract] | |
Line Of Credit | 9. Line of Credit Effective as of January 2, 2015, the Company entered into a second amendment and consent (the "Second Amendment") to its credit agreement with Silicon Valley Bank ("SVB"), U.S. Bank National Association, and Bank of America, N.A. (as amended, the "Credit Agreement"), pursuant to which the Company and the lenders, including Wells Fargo, National Association, as a new lender, increased the amount of available borrowing capacity thereunder by $35.0 million, allowing for revolving credit borrowings up to a maximum principal amount of $125.0 million, subject to an additional commitment increase of $50.0 million. Prior to the Second Amendment, the credit agreement allowed for revolving credit borrowing up to a maximum principal amount of $90.0 million, subject to a commitment increase of $25.0 million. The Credit Agreement also allows for the issuance of letters of credit in the aggregate amount of up to $10.0 million at any one time; outstanding letters of credit reduce the credit available for revolving credit borrowings. As of June 30, 2015, the Company had one outstanding letter of credit in the amount of $0.2 million to secure an office space lease. Substantially all of our assets are pledged to secure the credit facility. All outstanding amounts owed under the Credit Agreement become due and payable no later than the final maturity date of July 31, 2017. Borrowings under the Credit Agreement bear interest at our option of SVB's prime rate (4.00% on June 30, 2015) plus a margin ranging from 0.00% to 0.50% or one-month LIBOR (0.19% on June 30, 2015) plus a margin ranging from 2.00% to 2.50%. The additional margin amount is dependent on the level of outstanding borrowings. As of June 30, 2015, we had $64.8 million of maximum borrowing capacity. We incur an annual commitment fee of 0.20% on the unused portion of the line of credit. The Company is required to comply with various financial covenants under the Credit Agreement. Specifically, the Company is required to maintain a ratio of earnings before interest, taxes, depreciation, and amortization ("EBITDA") plus stock compensation and minus income taxes paid and capital expenditures to interest expense and scheduled payments due for borrowings on a trailing three months basis annualized of not less than 2.00 to 1.00 and a ratio of current maturities of long-term debt to EBITDA plus stock compensation and minus income taxes paid and capital expenditures of not more than 2.75 to 1.00. At June 30, 2015, the Company was in compliance with all covenants under the Credit Agreement. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Taxes [Abstract] | |
Income Taxes | 10. Income Taxes The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Internal Revenue Service (the "IRS") has completed examinations of the Company's U.S. income tax returns or the statute of limitations has passed on returns for the years through 2010. The Company's 2011 and 2012 U.S. income tax returns are currently under examination by the IRS. Under the provisions of the ASC Subtopic 740-10-25, Income Taxes - Recognition The Company's effective tax rate was 19.0% and 27.7% for the three and six months ended June 30, 2015, respectively, compared to 42.1% and 42.2% for the three and six months ended June 30, 2014, respectively. The decrease in the effective rate is primarily due to an additional research and development tax credit recorded during the three months ended June 30, 2015 of approximately $0.9 million related to the finalization of the Company's 2014 research and development tax assessment. As of June 30, 2015, the Company's net current deferred tax asset was $0.9 million and its net non-current deferred tax liability was $6.3 million. Generally, deferred tax assets are related to stock compensation, accruals and net operating losses of acquired companies. Deferred tax liabilities relate to goodwill, intangibles, fixed asset depreciation, and prepaid expenses. Net current deferred tax assets are recorded in "Other current assets" and net non-current deferred tax liabilities are recorded in "Other non-current liabilities" on the accompanying Condensed Consolidated Balance Sheet (Unaudited) as of June 30, 2015. |
Financial Instruments
Financial Instruments | 6 Months Ended |
Jun. 30, 2015 | |
Financial Instruments [Abstract] | |
Financial Instruments | 11. Financial Instruments In the normal course of business, the Company uses derivative financial instruments to manage foreign currency exchange rate risk. Currency exposure is monitored and managed by the Company as part of its risk management program which seeks to reduce the potentially adverse effects that market volatility could have on operating results. The Company's derivative financial instruments consist of non-deliverable foreign currency forward contracts. Financial instruments are neither held nor issued by the Company for trading purposes. Derivatives Not Designated as Hedging Instruments Both the gain or loss on the derivatives not designated as hedging instruments and the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. Realized gains or losses and changes in the estimated fair value of foreign currency forward contracts that have not been designated as hedges were a net loss of $0.1 million and $0.2 million during the three and six months ended June 30, 2015, respectively. No gains and losses were recognized during the three and six months ended June 30, 2014. Gains and losses on these contracts are recorded in net other income (expense) and net interest expense in the Condensed Consolidated Statements of Operations (Unaudited) and are offset by losses and gains on the related hedged items. The notional amounts of the Company's derivative instruments outstanding were as follows (in thousands): June 30, 2015 December 31, 2014 Derivatives not designated as hedges Foreign exchange contracts $ 3,910 $ - Total derivatives not designated as hedges $ 3,910 $ - Fair Value of Derivative Instruments The authoritative guidance defines fair value as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The authoritative guidance also establishes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity's pricing based upon its own market assumptions. The fair value hierarchy consists of the following three levels: • Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities. • Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. • Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. The Company estimates the fair value of each foreign exchange forward contract by using a present value of expected cash flows model. This model calculates the difference between the current market forward price and the contracted forward price for each foreign exchange contract and applies the difference in the rates to each outstanding contract. Valuations for all derivatives fall within Level 2 of the GAAP valuation hierarchy. The fair value of the Company's derivative instruments outstanding as of June 30, 2015 was immaterial. Derivatives may give rise to credit risks from the possible non-performance by counterparties. Credit risk is generally limited to the fair value of those contracts that are favorable to us. The Company has limited its credit risk by entering into derivative transactions only with highly-rated global financial institutions, limiting the amount of credit exposure with any one financial institution and conducting ongoing evaluation of the creditworthiness of the financial institutions with which the Company does business. The Company utilizes standard counterparty master agreements containing provisions for the netting of certain foreign currency transaction obligations and for the set-off of certain obligations in the event of an insolvency of one of the parties to the transaction. Within the Condensed Consolidated Balance Sheets (Unaudited), the Company records derivative assets and liabilities at net fair value. |
Recent Accounting Pronoucements
Recent Accounting Pronoucements | 6 Months Ended |
Jun. 30, 2015 | |
Recent Accounting Pronouncements [Abstract] | |
Recent Accounting Pronouncements | 12. Recent Accounting Pronouncements On May 28, 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, Revenue from Contracts with Customers In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest, In April 2015, the FASB issued ASU No. 2015-05 Customer's Accounting for Fees Paid in a Cloud Computing Arrangement, |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Summary Of Significant Accounting Policies [Abstract] | |
Use Of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 periods. Actual results could differ from those estimates, and such differences could be material to the financial statements. |
Revenue Recognition | Revenue Recognition Revenues are primarily derived from professional services provided on a time and materials basis. For time and material contracts, revenues are recognized and billed by multiplying the number of hours expended in the performance of the contract by the established billing rates. For fixed fee projects, revenues are generally recognized using an input method based on the ratio of hours expended to total estimated hours. Amounts invoiced and collected in excess of revenues recognized are classified as deferred revenues. On many projects the Company is also reimbursed for out-of-pocket expenses such as airfare, lodging, and meals. These reimbursements are included as a component of revenues. Revenues from software and hardware sales are generally recorded on a gross basis considering the Company's role as a principal in the transaction. On rare occasions, the Company enters into a transaction where it is not the principal. In these cases, revenue is recorded on a net basis. Unbilled revenues represent the project time and expenses that have been incurred, but not yet billed to the client, prior to the end of the fiscal period. For time and materials projects, the client is invoiced for the amount of hours worked multiplied by the billing rates as stated in the contract. For fixed fee arrangements, the client is invoiced according to the agreed-upon schedule detailing the amount and timing of payments in the contract. Clients are typically billed monthly for services provided during that month, but can be billed on a more or less frequent basis as determined by the contract. If the time and expenses are worked/incurred and approved at the end of a fiscal period and the invoice has not yet been sent to the client, the amount is recorded as unbilled revenue once the Company verifies all other revenue recognition criteria have been met. Revenues are recognized when the following criteria are met: (1) persuasive evidence of the customer arrangement exists; (2) fees are fixed and determinable; (3) delivery and acceptance have occurred; and (4) collectability is deemed probable. The Company's policy for revenue recognition in instances where multiple deliverables are sold contemporaneously to the same customer is in accordance with Financial Accounting Standards Board Accounting Standards Codification ("ASC") Subtopic 985-605, Software – Revenue Recognition, Revenue Recognition – Multiple-Element Arrangements Revenue Recognition Further, delivery of software and hardware sales, when sold contemporaneously with services, can generally occur at varying times depending on the specific client project arrangement. Delivery of services generally occurs over a period of time consistent with the timeline as outlined in the client contract. There are no significant cancellation or termination-type provisions for the Company's software and hardware sales. Contracts for professional services provide for a general right, to the client or the Company, to cancel or terminate the contract within a given period of time (generally 10 to 30 days' notice is required). The client is responsible for any time and expenses incurred up to the date of cancellation or termination of the contract. The Company may provide multiple services under the terms of an arrangement and is required to assess whether one or more units of accounting are present. Service fees are typically accounted for as one unit of accounting, as fair value evidence for individual tasks or milestones is not available. The Company follows the guidelines discussed above in determining revenues; however, certain judgments and estimates are made and used to determine revenues recognized in any accounting period. If estimates are revised, material differences may result in the amount and timing of revenues recognized for a given period. Revenues are presented net of taxes assessed by governmental authorities. Sales taxes are generally collected and subsequently remitted on all software and hardware sales and certain services transactions as appropriate. |
Stock-Based Compensation (Polic
Stock-Based Compensation (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | Stock-based compensation is accounted for in accordance with ASC Topic 718, Compensation – Stock Compensation |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | Goodwill represents the excess purchase price over the fair value of net assets acquired, or net liabilities assumed, in a business combination. In accordance with ASC Topic 350, Intangibles – Goodwill and Other Other intangible assets include customer relationships, non-compete arrangements, customer backlog, trade names, and internally developed software, which are being amortized over the assets' estimated useful lives using the straight-line method. Estimated useful lives range from nine months to ten years. Amortization of customer relationships, non-compete arrangements, customer backlog, trade names, and internally developed software is considered an operating expense and is included in "Amortization" in the accompanying Condensed Consolidated Statements of Operations (Unaudited). The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in a lack of recoverability or revised useful life. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Stock-Based Compensation [Abstract] | |
Summary Of Stock Option Activity | Stock option activity for the six months ended June 30, 2015 was as follows (shares in thousands): Shares Weighted-Average Exercise Price Options outstanding at December 31, 2014 12 $ 7.48 Options exercised (12 ) 7.48 Options canceled - - Options outstanding at June 30, 2015 - - Options vested at June 30, 2015 - $ - |
Summary Of Restricted Stock Activity | Restricted stock activity for the six months ended June 30, 2015 was as follows (shares in thousands): Shares Weighted-Average Grant Date Fair Value Restricted stock awards outstanding at December 31, 2014 1,506 $ 15.39 Awards granted 345 19.84 Awards vested (394 ) 13.81 Awards forfeited (104 ) 15.09 Restricted stock awards outstanding at June 30, 2015 1,353 $ 16.95 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Net Income Per Share [Abstract] | |
Schedule Of Basic And Diluted Net Income Per Share | The following table presents the calculation of basic and diluted net income per share (in thousands, except per share information): Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Net income $ 3,997 $ 6,387 $ 8,063 $ 9,433 Basic: Weighted-average shares of common stock outstanding 33,333 31,564 33,190 31,147 Shares used in computing basic net income per share 33,333 31,564 33,190 31,147 Effect of dilutive securities: Stock options - 96 1 113 Restricted stock subject to vesting 354 485 429 592 Contingently issuable shares (1) - 38 - 19 Shares issuable for acquisition consideration (2) 451 1,088 531 1,078 Shares used in computing diluted net income per share 34,138 33,271 34,151 32,949 Basic net income per share $ 0.12 $ 0.20 $ 0.24 $ 0.30 Diluted net income per share $ 0.12 $ 0.19 $ 0.24 $ 0.29 Anti-dilutive options and restricted stock not included in the calculation of diluted net income per share - 290 54 145 (1) For the three and six months ended June 30, 2014, this represents the Company's estimate of shares to be issued to Clear Task, Inc. ("Clear Task") pursuant to the Asset Purchase Agreement. (2) For the three and six months ended June 30, 2015, this represents the shares held in escrow pursuant to: (i) Zeon (as defined below) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Commitments And Contingencies [Abstract] | |
Schedule Of Operating Lease Agreement | The Company leases office space and certain equipment under various operating lease agreements. The Company has the option to extend the term of certain lease agreements. Future minimum commitments under these lease agreements as of June 30, 2015 were as follows (in thousands): Operating Leases 2015 remaining $ 2,877 2016 5,689 2017 4,875 2018 3,378 2019 2,705 Thereafter 4,220 Total minimum lease payments $ 23,744 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Balance Sheet Components [Abstract] | |
Components of Accounts Receivable | June 30, 2015 December 31, 2014 (in thousands) Accounts receivable: Accounts receivable $ 63,085 $ 82,994 Unbilled revenues 34,791 31,845 Allowance for doubtful accounts (1,142 ) (911 ) Total $ 96,734 $ 113,928 |
Components of Property And Equipment | Property and equipment: Computer hardware (useful life of 3 years) $ 10,710 $ 10,221 Furniture and fixtures (useful life of 5 years) 2,897 2,442 Leasehold improvements (useful life of 5 years) 2,474 2,075 Software (useful life of 1 to 7 years) 7,539 6,828 Less: Accumulated depreciation (15,251 ) (13,600 ) Total $ 8,369 $ 7,966 |
Components of Other Current Liabilities | Other current liabilities: Accrued variable compensation $ 9,465 $ 15,060 Deferred revenue 5,180 5,945 Payroll related costs 1,898 1,614 Accrued subcontractor fees 690 871 Accrued medical claims expense 1,581 1,615 Acquired liabilities 1,651 2,603 Estimated fair value of contingent consideration liability (1) 2,414 - Other current liabilities 3,972 5,320 Total $ 26,851 $ 33,028 (1) Represents the fair value estimate of additional earnings-based contingent consideration that may be realized by Zeon's selling shareholders 12 months after the Zeon acquisition. |
Business Combinations (Tables)
Business Combinations (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Supplementary Pro Forma Information For Business Combinations | These unaudited pro-forma results are presented in compliance with the adoption of Accounting Standards Update ("ASU") 2010-29, Business Combinations Disclosure of Supplementary Pro Forma Information for Business Combinations Six Months Ended June 30, 2015 2014 Revenues $ 219,062 $ 232,391 Net income $ 8,666 $ 10,195 Basic net income per share $ 0.26 $ 0.31 Diluted net income per share $ 0.25 $ 0.30 Shares used in computing basic net income per share 33,729 33,083 Shares used in computing diluted net income per share 34,159 34,092 |
ForwardThink [Member] | |
Business Combinations [Abstract] | |
Allocation of Total Purchase Price Consideration | The Company allocated the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions): Acquired tangible assets $ 4.6 Acquired intangible assets 18.0 Liabilities assumed (12.1 ) Goodwill 29.6 Total purchase price $ 40.1 |
BioPharm [Member] | |
Business Combinations [Abstract] | |
Allocation of Total Purchase Price Consideration | The Company allocated the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions): Acquired tangible assets $ 3.5 Acquired intangible assets 8.4 Liabilities assumed (1.9 ) Goodwill 6.3 Total purchase price $ 16.3 |
Trifecta [Member] | |
Business Combinations [Abstract] | |
Allocation of Total Purchase Price Consideration | The Company allocated the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions): Acquired tangible assets $ 1.6 Acquired intangible assets 5.2 Liabilities assumed (5.7 ) Goodwill 7.1 Total cash purchase price $ 8.2 |
Zeon [Member] | |
Business Combinations [Abstract] | |
Allocation of Total Purchase Price Consideration | 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): Acquired tangible assets $ 8.6 Acquired intangible assets 12.7 Liabilities assumed (3.5 ) Goodwill 18.1 Total purchase price $ 35.9 |
Supplementary Pro Forma Information For Business Combinations | The amount of revenue and net income of Zeon in the Company's Condensed Consolidated Statements of Operations (Unaudited) from the acquisition date to June 30, 2015 are as follows (in thousands): Acquisition Date to June 30, 2015 Revenues $ 14,316 Net income $ 1,100 |
Goodwill and Intangible Asset28
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets [Abstract] | |
Changes in the Carrying Amount Of Goodwill | The changes in the carrying amount of goodwill for the six months ended June 30, 2015 are as follows (in thousands): Balance at December 31, 2014 $ 236,130 Preliminary purchase price allocations for acquisitions (Note 7) 18,179 Effect of foreign currency adjustments and other 880 Balance at June 30, 2015 $ 255,189 |
Summary of Intangible Assets | The following table presents a summary of the Company's intangible assets that are subject to amortization (in thousands): June 30, 2015 December 31, 2014 Gross Carrying Amounts Accumulated Amortization Net Carrying Amounts Gross Carrying Amounts Accumulated Amortization Net Carrying Amounts Customer relationships $ 62,079 $ (18,161 ) $ 43,918 $ 54,389 $ (16,595 ) $ 37,794 Non-compete agreements 1,573 (962 ) 611 1,601 (866 ) 735 Customer backlog 1,040 (733 ) 307 2,341 (2,265 ) 76 Trade name 88 (58 ) 30 167 (148 ) 19 Internally developed software 9,180 (1,828 ) 7,352 8,897 (1,416 ) 7,481 Total $ 73,960 $ (21,742 ) $ 52,218 $ 67,395 $ (21,290 ) $ 46,105 |
Estimated Useful Lives of Identifiable Intangible Assets | The estimated useful lives of identifiable intangible assets are as follows: Customer relationships 3 – 10 years Non-compete agreements 3 – 5 years Internally developed software 1 – 7 years Trade name 1 year Customer backlog 9 – 11 months |
Financial Instruments (Tables)
Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Financial Instruments [Abstract] | |
Notional Amounts of Derivative Instruments Outstanding | The notional amounts of the Company's derivative instruments outstanding were as follows (in thousands): June 30, 2015 December 31, 2014 Derivatives not designated as hedges Foreign exchange contracts $ 3,910 $ - Total derivatives not designated as hedges $ 3,910 $ - |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Details) | 6 Months Ended |
Jun. 30, 2015 | |
Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Period of cancellation notice | 10 days |
Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Period of cancellation notice | 30 days |
Stock-Based Compensation, Narra
Stock-Based Compensation, Narrative (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock compensation | $ 3.4 | $ 3.4 | $ 6.9 | $ 6.6 |
Stock-based compensation cost recognized, retirement savings plan contributions | 0.5 | 0.5 | 1.1 | 1 |
Associated current and future income tax benefits recognized | 1 | $ 1.1 | 2.1 | $ 2.1 |
Total unrecognized compensation cost related to non-vested share-based awards | $ 17.7 | $ 17.7 | ||
Unrecognized compensation cost, weighted-average period for recognition | 2 years | |||
2012 Long Term Incentive Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum number of shares authorized under plan (in shares) | 5 | 5 |
Stock-Based Compensation, Summa
Stock-Based Compensation, Summary of Stock Option Activity (Details) - Jun. 30, 2015 - $ / shares shares in Thousands | Total |
Stock-Based Compensation [Abstract] | |
Options outstanding (in shares) at December 31, 2014 | 12 |
Options exercised (in shares) | (12) |
Options canceled (in shares) | 0 |
Options outstanding (in shares) at June 30, 2015 | 0 |
Options vested (in shares) at June 30, 2015 | 0 |
Options outstanding at December 31, 2014, Weighted-Average Exercise Price (in dollars per share) | $ 7.48 |
Options exercised, Weighted-Average Exercise Price (in dollars per share) | 7.48 |
Options canceled, Weighted-Average Exercise Price (in dollars per share) | 0 |
Options outstanding at June 30, 2015, Weighted-Average Exercise Price | 0 |
Options vested at June 30, 2015, Weighted-Average Exercise Price | $ 0 |
Stock-Based Compensation, Sum33
Stock-Based Compensation, Summary of Restricted Stock Activity (Details) - 6 months ended Jun. 30, 2015 - $ / shares shares in Thousands | Total |
Stock-Based Compensation [Abstract] | |
Restricted stock awards outstanding (in shares) at December 31, 2014 | 1,506 |
Awards granted (in shares) | 345 |
Awards vested (in shares) | (394) |
Awards forfeited (in shares) | (104) |
Restricted stock awards outstanding (in shares) at June 30, 2015 | 1,353 |
Restricted stock awards outstanding at December 31, 2014, Weighted-Average Grant Date Fair Value (in dollars per share) | $ 15.39 |
Awards granted, Weighted-Average Grant Date Fair Value (in dollars per share) | 19.84 |
Awards vested, Weighted-Average Grant Date Fair Value (in dollars per share) | 13.81 |
Awards forfeited, Weighted-Average Grant Date Fair Value (in dollars per share) | 15.09 |
Restricted stock awards outstanding (in dollars per share) at June 30, 2015, Weighted-Average Grant Date Fair Value | $ 16.95 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Net Income Per Share [Abstract] | |||||
Net income | $ 3,997 | $ 6,387 | $ 8,063 | $ 9,433 | |
Weighted-average shares of common stock outstanding (in shares) | 33,333 | 31,564 | 33,190 | 31,147 | |
Shares used in computing basic net income per share (in shares) | 33,333 | 31,564 | 33,190 | 31,147 | |
Stock options (in shares) | 0 | 96 | 1 | 113 | |
Restricted stock subject to vesting (in shares) | 354 | 485 | 429 | 592 | |
Contingently issuable shares (in shares) | [1] | 0 | 38 | 0 | 19 |
Shares issuable for acquisition consideration (in shares) | [2] | 451 | 1,088 | 531 | 1,078 |
Shares used in computing diluted net income per share (in shares) | 34,138 | 33,271 | 34,151 | 32,949 | |
Basic net income per share | $ 0.12 | $ 0.20 | $ 0.24 | $ 0.30 | |
Diluted net income per share | $ 0.12 | $ 0.19 | $ 0.24 | $ 0.29 | |
Anti-dilutive options and restricted stock not included in the calculation of diluted net income per share (in shares) | 0 | 290 | 54 | 145 | |
[1] | For the three and six months ended June 30, 2014, this represents the Company's estimate of shares to be issued to Clear Task, Inc. ("Clear Task") pursuant to the Asset Purchase Agreement. | ||||
[2] | For the three and six months ended June 30, 2015, this represents the shares held in escrow pursuant to: (i) the Agreement and Plan of Merger with ForwardThink Group Inc. ("ForwardThink"); (ii) the Asset Purchase Agreement with BioPharm Systems, Inc. ("BioPharm"); (iii) the Asset Purchase Agreement with Trifecta Technologies, Inc. and Trifecta Technologies Canada, Limited (together "Trifecta"); and (iv) the Asset Purchase Agreement with Zeon (as defined below) as part of the consideration. For the three and six months ended June 30, 2014, this represents the shares held in escrow pursuant to: (i) the Agreement and Plan of Merger with Northridge Systems, Inc.; (ii) the Agreement and Plan of Merger with TriTek Solutions, Inc.; (iii) the Asset Purchase Agreement with Clear Task; (iv) the Asset Purchase Agreement with CoreMatrix Systems, LLC; (v) the Agreement and Plan of Merger with ForwardThink; (vi) the Asset Purchase Agreement with BioPharm; and (vii) the Asset Purchase Agreement with Trifecta as part of the consideration. |
Commitments and Contingencies35
Commitments and Contingencies (Details) $ in Thousands | Jun. 30, 2015USD ($) |
Commitments And Contingencies [Abstract] | |
2015 remaining | $ 2,877 |
2,016 | 5,689 |
2,017 | 4,875 |
2,018 | 3,378 |
2,019 | 2,705 |
Thereafter | 4,220 |
Total minimum lease payments | $ 23,744 |
Balance Sheet Components, Compo
Balance Sheet Components, Components of Accounts Receivable (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Balance Sheet Components [Abstract] | ||
Accounts receivable | $ 63,085 | $ 82,994 |
Unbilled revenues | 34,791 | 31,845 |
Allowance for doubtful accounts | (1,142) | (911) |
Total | $ 96,734 | $ 113,928 |
Balance Sheet Components, Com37
Balance Sheet Components, Components of Property and Equipment (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | ||
Less: Accumulated depreciation | $ (15,251) | $ (13,600) |
Total | 8,369 | 7,966 |
Computer Hardware [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 10,710 | 10,221 |
Useful life | 3 years | |
Furniture And Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 2,897 | 2,442 |
Useful life | 5 years | |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 2,474 | 2,075 |
Useful life | 5 years | |
Software Costs [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 7,539 | $ 6,828 |
Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 1 year | |
Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 7 years |
Balance Sheet Components, Com38
Balance Sheet Components, Components of Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | |
Balance Sheet Components [Abstract] | |||
Accrued variable compensation | $ 9,465 | $ 15,060 | |
Deferred revenues | 5,180 | 5,945 | |
Payroll related costs | 1,898 | 1,614 | |
Accrued subcontractor fees | 690 | 871 | |
Accrued medical claims expense | 1,581 | 1,615 | |
Acquired liabilities | 1,651 | 2,603 | |
Estimated fair value of contingent consideration liability | 2,414 | [1] | 0 |
Other current liabilities | 3,972 | 5,320 | |
Total | $ 26,851 | $ 33,028 | |
[1] | Represents the fair value estimate of additional earnings-based contingent consideration that may be realized by Zeon's selling shareholders 12 months after the Zeon acquisition. |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015 | Dec. 31, 2014 | ||
Business Acquisition [Line Items] | |||
Estimated fair value of contingent consideration liability | $ 2,414 | [1] | $ 0 |
Business Combination, period to realize additional earnings-based contingent consideration | 12 months | ||
ForwardThink [Member] | |||
Business Acquisition [Line Items] | |||
Date of acquisition | Feb. 10, 2014 | ||
Cash paid for acquisition | $ 26,900 | ||
Common stock issued | 13,200 | ||
Transaction costs | 1,300 | ||
Employee Service Share Based Compensation Nonvested Awards Total Compensation Cost Not Yet Recognized - Cash Incentive Plan | $ 800 | ||
Employee Service Share Based Compensation Nonvested Awards Total Compensation Cost Period of Recognition Incentive Plan | 3 years | ||
Total purchase price | $ 40,100 | ||
ForwardThink [Member] | Minimum [Member] | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 11 months | ||
ForwardThink [Member] | Maximum [Member] | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 6 years | ||
BioPharm [Member] | |||
Business Acquisition [Line Items] | |||
Date of acquisition | Apr. 1, 2014 | ||
Cash paid for acquisition | $ 11,200 | ||
Common stock issued | 5,100 | ||
Transaction costs | 700 | ||
Total purchase price | $ 16,300 | ||
BioPharm [Member] | Minimum [Member] | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 9 months | ||
BioPharm [Member] | Maximum [Member] | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 10 years | ||
Trifecta [Member] | |||
Business Acquisition [Line Items] | |||
Date of acquisition | May 7, 2014 | ||
Cash paid for acquisition | $ 8,200 | ||
Common stock issued | |||
Transaction costs | $ 600 | ||
Total purchase price | $ 13,600 | ||
Trifecta [Member] | Minimum [Member] | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 8 months | ||
Trifecta [Member] | Maximum [Member] | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 5 years | ||
Zeon [Member] | |||
Business Acquisition [Line Items] | |||
Date of acquisition | Jan. 2, 2015 | ||
Cash paid for acquisition | $ 22,900 | ||
Common stock issued | 11,400 | ||
Estimated fair value of contingent consideration liability | 2,200 | ||
Transaction costs | 900 | ||
Total purchase price | $ 36,500 | ||
Zeon [Member] | Minimum [Member] | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 9 months | ||
Zeon [Member] | Maximum [Member] | |||
Business Acquisition [Line Items] | |||
Intangible assets estimated useful life | 8 years | ||
[1] | Represents the fair value estimate of additional earnings-based contingent consideration that may be realized by Zeon's selling shareholders 12 months after the Zeon acquisition. |
Business Combinations, Allocati
Business Combinations, Allocation of Total Purchase Price (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Business Acquisition [Line Items] | ||
Goodwill | $ 255,189 | $ 236,130 |
ForwardThink [Member] | ||
Business Acquisition [Line Items] | ||
Acquired tangible assets | 4,600 | |
Acquired intangible assets | 18,000 | |
Liabilities assumed | (12,100) | |
Goodwill | 29,600 | |
Total purchase price | 40,100 | |
Cash paid for acquisition | 26,900 | |
BioPharm [Member] | ||
Business Acquisition [Line Items] | ||
Acquired tangible assets | 3,500 | |
Acquired intangible assets | 8,400 | |
Liabilities assumed | (1,900) | |
Goodwill | 6,300 | |
Total purchase price | 16,300 | |
Cash paid for acquisition | 11,200 | |
Trifecta [Member] | ||
Business Acquisition [Line Items] | ||
Acquired tangible assets | 1,600 | |
Acquired intangible assets | 5,200 | |
Liabilities assumed | (5,700) | |
Goodwill | 7,100 | |
Total purchase price | 13,600 | |
Cash paid for acquisition | 8,200 | |
Zeon [Member] | ||
Business Acquisition [Line Items] | ||
Acquired tangible assets | 8,600 | |
Acquired intangible assets | 12,700 | |
Liabilities assumed | (2,900) | |
Goodwill | 18,100 | |
Total purchase price | 36,500 | |
Cash paid for acquisition | $ 22,900 |
Business Combinations, Schedule
Business Combinations, Schedule of Revenue and Income from Acquisition Date (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Business Combinations [Abstract] | |
Revenues | $ 14,316 |
Net income | $ 1,100 |
Business Combinations, Pro Form
Business Combinations, Pro Forma Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Business Acquisition, Pro Forma Information [Abstract] | ||
Revenues | $ 219,062 | $ 232,391 |
Net income | $ 8,666 | $ 10,195 |
Basic net income per share | $ 0.26 | $ 0.31 |
Diluted net income per share | $ 0.25 | $ 0.30 |
Shares used in computing basic net income per share | 33,729 | 33,083 |
Shares used in computing diluted net income per share | 34,159 | 34,092 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Changes in the Carrying Amount of Goodwill (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Goodwill and Intangible Assets [Abstract] | |
Balance at December 31, 2014 | $ 236,130 |
Preliminary purchase price allocations for acquisitions (Note 7) | 18,179 |
Effect of foreign currency adjustments and other | 880 |
Balance at June 30, 2015 | $ 255,189 |
Goodwill and Intangible Asset44
Goodwill and Intangible Assets, Summary of Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amounts | $ 73,960 | $ 67,395 |
Accumulated Amortization | (21,742) | (21,290) |
Net Carrying Amounts | 52,218 | 46,105 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amounts | 62,079 | 54,389 |
Accumulated Amortization | (18,161) | (16,595) |
Net Carrying Amounts | 43,918 | 37,794 |
Non-Compete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amounts | 1,573 | 1,601 |
Accumulated Amortization | (962) | (866) |
Net Carrying Amounts | 611 | 735 |
Customer Backlog [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amounts | 1,040 | 2,341 |
Accumulated Amortization | (733) | (2,265) |
Net Carrying Amounts | 307 | 76 |
Trade Name [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amounts | 88 | 167 |
Accumulated Amortization | (58) | (148) |
Net Carrying Amounts | 30 | 19 |
Internally Developed Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amounts | 9,180 | 8,897 |
Accumulated Amortization | (1,828) | (1,416) |
Net Carrying Amounts | $ 7,352 | $ 7,481 |
Goodwill and Intangible Asset45
Goodwill and Intangible Assets, Estimated Useful Lives of Identifiable Intangible Assets (Details) | 6 Months Ended |
Jun. 30, 2015 | |
Customer Relationships [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 3 years |
Customer Relationships [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 10 years |
Non-Compete Agreements [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 3 years |
Non-Compete Agreements [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 5 years |
Internally Developed Software [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 1 year |
Internally Developed Software [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 7 years |
Trade Name [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 1 year |
Customer Backlog [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 9 months |
Customer Backlog [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 11 months |
Line of Credit (Details)
Line of Credit (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | May. 07, 2014 | |
Line of Credit Facility [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $ 125 | $ 90 | |
Line of Credit Facility Maximum Borrowing Capacity Increase | 35 | ||
Line of credit facility, commitment increase | 50 | $ 25 | |
Line of credit facility, allowable issuance amount of letters of credit | 10 | ||
Letters of credit outstanding | $ 0.2 | ||
Credit agreement, final maturity date | Jul. 31, 2017 | ||
Line of credit, interest rate at period end (in hundredths) | 0.19% | ||
Line of credit facility, percentage of annual commitment fee on unused capacity (in hundredths) | 0.20% | ||
Unused portion of line of credit | $ 64.8 | ||
Minimum [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of credit, margin interest rate percentage (in hundredths) | 2.00% | ||
Ratio of EBITDA plus stock compensation and minus income taxes paid and capital expenditures to interest expense and scheduled payments due for borrowings | 1 | ||
Ratio of current maturities of long-term debt to EBITDA plus stock compensation and minus income taxes paid and capital expenditures | 1 | ||
Maximum [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of credit, margin interest rate percentage (in hundredths) | 2.50% | ||
Ratio of EBITDA plus stock compensation and minus income taxes paid and capital expenditures to interest expense and scheduled payments due for borrowings | 2 | ||
Ratio of current maturities of long-term debt to EBITDA plus stock compensation and minus income taxes paid and capital expenditures | 2.75 | ||
Silicon Valley Bank [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of credit, interest rate at period end (in hundredths) | 4.00% | ||
Silicon Valley Bank [Member] | Minimum [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of credit, margin interest rate percentage (in hundredths) | 0.00% | ||
Silicon Valley Bank [Member] | Maximum [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of credit, margin interest rate percentage (in hundredths) | 0.50% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Taxes [Abstract] | ||||
Unrecognized tax benefits | $ 0.7 | $ 0.7 | ||
Effective tax rate (in hundredths) | 19.00% | 42.10% | 27.70% | 42.20% |
Net current deferred tax asset | $ 0.9 | $ 0.9 | ||
Net non-current deferred tax liability | 6.3 | 6.3 | ||
Research and Development Tax Credit True-up | $ 0.9 | $ 0.9 |
Financial Instruments, Gains (L
Financial Instruments, Gains (Losses) on Derivatives, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Foreign Currency Forward [Member] | Net Other Income (Expense) and Net Interest Expense [Member] | Not Designated as Hedging Instrument [Member] | ||||
Gains (Losses) on Derivatives, Net [Abstract] | ||||
Gains (losses) on derivatives, net | $ (0.1) | $ 0 | $ (0.2) | $ 0 |
Financial Instruments, Notional
Financial Instruments, Notional Amounts (Details) - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Notional Amounts [Abstract] | ||
Notional amount | $ 3,910 | $ 0 |
Foreign Currency Forward [Member] | ||
Notional Amounts [Abstract] | ||
Notional amount | $ 3,910 | $ 0 |