Telecommunication Systems (TSYS) 10-Q 30 Jul 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 28, 2015
Document And Entity Information [Line Items]
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
Trading Symbol	TSYS
Entity Registrant Name	TELECOMMUNICATION SYSTEMS INC /FA/
Entity Central Index Key	1,111,665
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Class A Common Stock
Document And Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		56,321,657
Class B Common Stock
Document And Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		4,801,245

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 34,126	$ 26,922
Marketable securities	19,583	23,226
Accounts receivable, net of allowance of $631 in 2015 and $605 in 2014	62,877	74,051
Unbilled receivables	31,988	22,324
Inventory	9,217	6,253
Deferred project costs and other current assets	22,490	17,977
Total current assets	180,281	170,753
Property and equipment, net of accumulated depreciation and amortization of $89,192 in 2015 and $83,645 in 2014	32,576	33,418
Software development costs, net of accumulated amortization of $3,857 in 2015 and $3,072 in 2014	4,730	4,608
Acquired intangible assets, net of accumulated amortization of $15,813 in 2015 and $13,970 in 2014	15,363	17,206
Goodwill	104,241	104,241
Other assets	3,905	3,855
Total assets	341,096	334,081
Current liabilities:
Accounts payable and accrued expenses	37,352	41,599
Accrued payroll and related liabilities	11,569	13,599
Deferred revenue	23,751	22,000
Current portion of bank borrowings, notes payable, and capital lease obligations	8,573	19,291
Total current liabilities	81,245	96,489
Notes payable and capital lease obligations, less current portion	136,156	119,850
Deferred tax liabilities	3,814	3,556
Other liabilities	3,841	1,340
Stockholders’ equity:
Additional paid-in capital	348,511	346,277
Accumulated other comprehensive loss	(177)	(114)
Accumulated deficit	(232,905)	(233,917)
Total stockholders’ equity	116,040	112,846
Total liabilities and stockholders’ equity	341,096	334,081
Class A Common Stock
Stockholders’ equity:
Common stock, value	563	552
Class B Common Stock
Stockholders’ equity:
Common stock, value	$ 48	$ 48

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Accounts receivable, allowance	$ 631	$ 605
Property and equipment, accumulated depreciation and amortization	89,192	83,645
Software development costs, accumulated amortization	3,857	3,072
Acquired intangible assets, accumulated amortization	$ 15,813	$ 13,970
Class A Common Stock
Common Stock, par value	$ 0.01	$ 0.01
Common Stock, shares authorized	225,000,000	225,000,000
Common Stock, shares issued	56,256,169	55,144,066
Common Stock, shares outstanding	56,256,169	55,144,066
Class B Common Stock
Common Stock, par value	$ 0.01	$ 0.01
Common Stock, shares authorized	75,000,000	75,000,000
Common Stock, shares issued	4,801,245	4,801,245
Common Stock, shares outstanding	4,801,245	4,801,245

Consolidated Statements of Oper

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
Revenue
Services	$ 61,288	$ 67,052	$ 124,137	$ 129,321
Systems	26,639	19,169	45,657	41,990
Total revenue	87,927	86,221	169,794	171,311
Direct costs of revenue
Direct cost of services revenue	34,680	37,184	69,402	70,599
Direct cost of systems revenue	19,424	10,802	32,804	27,678
Total direct cost of revenue	54,104	47,986	102,206	98,277
Services gross profit	26,608	29,868	54,735	58,722
Systems gross profit	7,215	8,367	12,853	14,312
Total gross profit	33,823	38,235	67,588	73,034
Operating expenses
Research and development expense	8,923	11,285	17,370	21,648
Sales and marketing expense	6,082	6,317	12,466	13,248
General and administrative expense	11,787	13,177	24,406	24,824
Depreciation and amortization of property and equipment	3,027	3,366	6,064	6,769
Amortization of acquired intangible assets	916	949	1,843	1,898
Total operating expenses	30,735	35,094	62,149	68,387
Income from operations	3,088	3,141	5,439	4,647
Interest expense	(2,062)	(2,026)	(4,041)	(4,230)
Amortization of deferred financing fees	(156)	(212)	(319)	(380)
Other income, net	248		700	137
Net income before income taxes	1,118	903	1,779	174
Income tax (provision) benefit	(401)	155	(767)	407
Net income	$ 717	$ 1,058	$ 1,012	$ 581
Net income per share-basic	$ 0.01	$ 0.02	$ 0.02	$ 0.01
Net income per share-diluted	$ 0.01	$ 0.02	$ 0.02	$ 0.01
Weighted average shares outstanding-basic	60,948	59,396	60,608	59,238
Weighted average shares outstanding-diluted	62,678	60,575	62,316	59,742

Consolidated Statements of Comp

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
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 717	$ 1,058	$ 1,012	$ 581
Other comprehensive income:
Foreign currency translation adjustments	6	54	13	50
Unrealized gain (loss) on interest rate hedge	92		(105)
Unrealized gain (loss) on securities:
Arising during the period	(58)		34	(1)
Reclassification to net income	(1)	(5)	(5)	(7)
Net unrealized gain (loss)	(59)	(5)	29	(8)
Other comprehensive income:	39	49	(63)	42
Comprehensive income	$ 756	$ 1,107	$ 949	$ 623

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating activities:
Net income	$ 1,012	$ 581
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment	6,064	6,769
Stock-based compensation expense	2,528	3,200
Amortization of acquired intangible assets	1,843	1,898
Amortization of capitalized software development costs	785	597
Deferred tax expense	258
Amortization of deferred financing fees	319	380
Amortization of investment premiums and accretion of discounts, net	156	177
Other non-cash adjustments	(989)	12
Changes in operating assets and liabilities:
Accounts receivable, net	11,174	1,140
Unbilled receivables	(9,664)	(2,138)
Inventory	(2,964)	(1,207)
Deferred project costs and other current assets	(4,513)	(1,368)
Other assets	205	(289)
Accounts payable and accrued expenses	(4,247)	(2,214)
Accrued payroll and related liabilities	(2,030)	(1,868)
Deferred revenue	1,751	(799)
Other liabilities	2,396	(1,687)
Subtotal - Changes in operating assets and liabilities	(7,892)	(10,430)
Net cash provided by operating activities	4,084	3,184
Investing activities:
Cash received for business wind-down arrangement		15,016
Proceeds from sale of property and equipment	1,550
Purchases of property and equipment	(4,606)	(2,518)
Capitalized software development costs	(896)	(988)
Purchases of marketable securities	(3,338)	(22,260)
Proceeds from sale and maturity of marketable securities	6,854	4,288
Net cash used in investing activities	(436)	(6,462)
Financing activities:
Payments on bank borrowings, notes payable, and capital lease obligations	(21,099)	(12,278)
Proceeds from bank and other borrowings	24,938
Payments of tax withholdings on restricted stock	(1,054)	(833)
Earn-out payment related to 2012 acquisition		(268)
Proceeds from exercise of employee stock options and sale of stock	771	456
Net cash provided by (used) in financing activities	3,556	(12,923)
Net increase (decrease) in cash	7,204	(16,201)
Cash and cash equivalents at the beginning of the period	26,922	41,904
Cash and cash equivalents at the end of the period	$ 34,126	$ 25,703

Basis of Presentation and Summa

Basis of Presentation and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2015
Accounting Policies [Abstract]
Basis of Presentation and Summary of Significant Accounting Policies	1. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. There were no significant changes to our accounting policies as described in Note 1 of our consolidated financial statements included in Item 15(a)(1) of our 2014 Annual Report on Form 10-K. These unaudited consolidated financial statements should be read in conjunction with our audited financial statements and related notes included in our 2014 Annual Report on Form 10-K. The terms “TCS,” “Company,” “we,” “us,” and “our” as used in this Form 10-Q refer to TeleCommunication Systems, Inc. and its subsidiaries as a combined entity, except where it is made clear that such terms mean only TeleCommunication Systems, Inc. Use of Estimates. The preparation of these financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Significant estimates and assumptions in these consolidated financial statements include estimates used in revenue recognition, fair value of business combinations, fair value associated with goodwill, intangible assets and long-lived asset impairment tests, estimated values of software development costs, income taxes and deferred valuation allowances, the fair value of marketable securities and stock-based compensation, and legal and contingency fees. Actual results could differ from those estimates. Reclassifications. Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation. These immaterial reclassifications had no effect on net income, working capital, or equity previously reported. Recent Accounting Pronouncements. In April 2015, the Financial Accounting Standards Board ("FASB") issued new guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the update. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within those periods. Early adoption is permitted. The amended guidance is not expected to have a material impact on our consolidated financial statements. In August 2014, the FASB issued new guidance for presentation of financial statements for going-concern, which addresses when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year after the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The new guidance applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The amended guidance is not expected to have a material impact on our consolidated financial statements. In May 2014, the FASB issued new guidance for revenue recognition. The new guidance provides a five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety. The core principle of the new standard is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures to enable users of the financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The guidance provides alternative methods of initial adoption; retrospectively applied to each prior reporting period or a modified retrospective approach, in which the cumulative effect of initially applying this new guidance is recognized at the date of initial application with additional disclosures. In July 2015, the FASB deferred the effective date to January 1, 2018 and is allowing early adoption beginning January 1, 2017. We are currently evaluating the alternative transition methods and the impact that this standard will have on our consolidated financial statements.

Earnings per share

Earnings per share	6 Months Ended
	Jun. 30, 2015
Earnings Per Share [Abstract]
Earnings Per Share	2. Earnings per share Basic net income per common share is based upon the average number of shares of common stock outstanding during the period. For the three and six months ended June 30, 2015 and 2014, respectively, 4,832 shares issuable upon conversion of our 7.75% Convertible Notes were excluded from the computation of diluted net income per share because their inclusion would have been anti-dilutive. For the three and six months ended June 30, 2014, shares issuable upon conversion of our 4.5% Convertible Senior Notes were excluded from the computation of diluted net loss per share because their inclusion would have been anti-dilutive. Concurrent with the issuance of the 4.5% Convertible Notes, we entered into convertible note hedge and warrant transactions. Because the Company would have exercised a call option if the market price of our stock exceeded the warrant exercise price of $12.74 per share, the effect of the convertible note hedge, which expired pro rata as the 2014 Notes were repurchased, was excluded from the calculation of diluted earnings per share for the three and six months ended June 30, 2014, as the impact was always considered anti-dilutive. The warrants expired in the second quarter of 2015. The following table summarizes the computations of basic and diluted earnings per share: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Numerator: Net income, basic and diluted $ 717 $ 1,058 $ 1,012 $ 581 Denominator: Total basic weighted-average common shares outstanding 60,948 59,396 60,608 59,238 Effect of dilutive stock options and restricted stock based on treasury stock method 1,730 1,179 1,708 504 Weighted average diluted shares 62,678 60,575 62,316 59,742 Basic earnings per common share: Net income per share-basic $ 0.01 $ 0.02 $ 0.02 $ 0.01 Diluted earnings per common share: Net income per share-diluted $ 0.01 $ 0.02 $ 0.02 $ 0.01 Our two classes of common stock (Class A and B) share equally in dividends declared or accumulated and have equal participation rights in undistributed earnings. In addition, our unvested restricted stock does not contain non-forfeitable rights to dividends and dividend equivalents. As such, unvested shares of restricted stock are not participating securities and our basic and diluted earnings per share are not impacted by the two-class method of computing earnings per share.

Stock-Based Compensation

Stock-Based Compensation	6 Months Ended
	Jun. 30, 2015
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Stock-Based Compensation	3. Stock-Based Compensation Restricted Stock We had 1,674 and 2,190 restricted stock units outstanding at a weighted-average grant date fair value per share of $2.75 and $2.42 as of June 30, 2015 and 2014, respectively. Total unrecognized share-based compensation expense is approximately $3,600 and $4,000 as of June 30, 2015 and 2014, respectively, which is expected to be recognized over a weighted-average period of approximately two years. Stock Options We had 16,085 and 16,172 stock options outstanding as of June 30, 2015 and 2014, respectively, of which 7,534 were “in-the-money” at June 30, 2015. During the first six months of 2015, we granted 2,561 options and 1,109 shares were exercised. Total unrecognized share-based compensation expense was approximately $5,700 and $4,700 as of June 30, 2015 and 2014, respectively, which is expected to be recognized over a weighted-average period of approximately four and three years, respectively. Total Stock-Based Compensation We recognized total share-based compensation expense of $1,210 and $1,379 in in the second quarters of 2015 and 2014, respectively, and $2,528 and $3,200 in the six months ended June 30, 2015 and 2014, respectively.

Supplemental Disclosure of Cash

Supplemental Disclosure of Cash Flow Information	6 Months Ended
	Jun. 30, 2015
Supplemental Cash Flow Elements [Abstract]
Supplemental Disclosure of Cash Flow Information	4. Supplemental Disclosure of Cash Flow Information Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Property and equipment acquired under capital lease $ 832 $ 647 $ 1,749 $ 991 Interest paid $ 3,005 $ 3,817 $ 4,020 $ 4,685 Income taxes (refunded) paid $ (169 ) $ 320 $ 66 $ 288

Marketable Securities

Marketable Securities	6 Months Ended
	Jun. 30, 2015
Available For Sale Securities [Abstract]
Marketable Securities	5. Marketable Securities Available-for-sale marketable securities at June 30, 2015: Amortized Gross Gross Estimated Cost Unrealized Unrealized Fair Basis Gains Losses Value Corporate bonds $ 18,066 $ 6 $ (20 ) $ 18,052 Mortgage-backed and asset-backed securities 733 — (2 ) 731 Agency bonds 803 — (3 ) 800 Total marketable securities $ 19,602 $ 6 $ (25 ) $ 19,583 The following table summarizes the estimated fair value of available-for-sale marketable securities by contractual maturity at June 30, 2015: Fair Value Due within 1 year or less $ 10,153 Due after 1 through 5 years 8,699 Mortgage-backed securities not due in a single maturity date 731 $ 19,583 Available-for-sale marketable securities at December 31, 2014: Amortized Gross Gross Estimated Cost Unrealized Unrealized Fair Basis Gains Losses Value Corporate bonds $ 21,748 $ 6 $ (50 ) $ 21,704 Mortgage-backed and asset-backed securities 1,226 — (3 ) 1,223 Agency bonds 300 — (1 ) 299 Total marketable securities $ 23,274 $ 6 $ (54 ) $ 23,226 The following table summarizes the estimated fair value of available-for-sale marketable securities by contractual maturity at December 31, 2014: Fair Value Due within 1 year or less $ 7,483 Due after 1 through 5 years 14,520 Mortgage-backed securities not due in a single maturity date 1,223 $ 23,226

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jun. 30, 2015
Fair Value Disclosures [Abstract]
Fair Value Measurements	6. Fair Value Measurements Our assets and liabilities subject to fair value measurements on a recurring basis and the required disclosures: Fair Fair Value Measurements Value Using Fair Value Hierarchy As of June 30, 2015 Total Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 34,126 $ 34,126 $ — $ — Corporate bonds 18,052 18,052 — — Mortgage-backed and asset-backed securities 731 731 — — Agency bonds 800 800 — — Marketable securities 19,583 19,583 — — Deferred compensation plan investments 1,049 1,049 — — Assets at fair value $ 54,758 $ 54,758 $ — $ — Liabilities: Interest rate swap $ 345 $ — $ 345 $ — Deferred compensation 988 988 — — Liabilities at fair value $ 1,333 $ 988 $ 345 $ — Fair Fair Value Measurements Value Using Fair Value Hierarchy As of December 31, 2014 Total Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 26,922 $ 26,922 $ — $ — Corporate bonds 21,704 21,704 — — Mortgage-backed and asset-backed securities 1,223 1,223 — — Agency bonds 299 299 — — Marketable securities 23,226 23,226 — — Deferred compensation plan investments 1,282 1,282 — — Assets at fair value $ 51,430 $ 51,430 $ — $ — Liabilities: Interest rate swap $ 240 $ — $ 240 $ — Deferred compensation 873 873 — — Liabilities at fair value $ 1,113 $ 873 $ 240 $ — The carrying values of financial instruments, including accounts receivable, unbilled receivables, and accounts payable approximate their fair values due to their short-term maturities. We hold marketable securities that are investment grade and are classified as available-for-sale. The securities include corporate bonds, agency bonds, and mortgage and asset-backed securities that are carried at fair market value based on quoted market prices. We hold trading securities as part of a rabbi trust to fund supplemental executive retirement plans and deferred income plans. The funds held are all managed by a third party and include fixed income funds, equity securities, and money market accounts, or other investments for which there is an active quoted market. The related deferred compensation liabilities are valued based on the underlying investment selections in each participant’s account. The interest rate swap was valued based on forward curves observable in the market, using Level 2 inputs; see Note 12. The effectiveness of the interest rate swap is computed by comparing the present value of the cumulative change in the expected future cash flows of the variable leg of the swap and the present value of the cumulative change in the expected future variable interest payments designated in the hedging relationship. Assets and liabilities that are measured at fair value on a non-recurring basis include long-lived assets, intangible assets, and goodwill. These items are recognized at fair value when they are considered to be other than temporarily impaired using significant unobservable inputs and are classified as Level 3. The long-term debt, excluding leases, is reported at the borrowed amounts outstanding. The estimated fair value is based on a market approach using quoted market prices or current market rates for similar debt with approximately the same remaining maturities, where possible, and are classified as Level 2. Our long-term debt, excluding leases, consisted of borrowings under our Senior Credit Facilities and 7.75% convertible senior notes; see Note 12. At June 30, 2015, the estimated fair value of our long-term debt, excluding leases, was approximately $135,000 versus a carrying value of $135,717. At December 31, 2014, the estimated fair value of the long-term debt, excluding leases, was approximately $123,000 versus a carrying value of $124,567. There were no transfers in or out of Level 1, 2, or 3 during the three and six months ended June 30, 2015.

Segment Information

Segment Information	6 Months Ended
	Jun. 30, 2015
Segment Reporting [Abstract]
Segment Information	7. Segment Information We report operating results in two business segments: Commercial Segment: We are one of two leading companies that enable 9-1-1 call delivery via cellular, VoIP, and next generation technology. Other TCS hosted and managed services include cellular network and device platforms and applications for text messaging and location-based services. We are also engaged in patent monetization activity which is included in this segment. Commercial Segment customers include wireless network operators, VoIP service providers, wireless device manufacturers, automotive industry suppliers, and state and local governments. Government Segment: For U.S. Department of Defense agencies, we provide cybersecurity training and consulting, support, and “C4ISR” (command, control, communications, computers, intelligence surveillance and reconnaissance) resources, wireless ground terminals and related support, management and resale of satellite bandwidth, and information technology outsource services. TCS engineers furnish and support ground terminals used for secure satellite-based and other line-of-sight and beyond-line-of-sight communications, as well as related components incorporating government-approved cryptologic devices and other hardened components for aerospace and defense. Management evaluates segment performance based on gross profit, and all revenues reported below are from external customers. We do not maintain information regarding segment assets. Accordingly, asset information by reportable segment is not presented. The following tables set forth the results of our reportable segments and a reconciliation of segment gross profit to net income: Three Months Ended June 30, 2015 2014 Comm. Gvmt Total Comm. Gvmt Total Revenue Services $ 37,598 $ 23,690 $ 61,288 $ 37,949 $ 29,103 $ 67,052 Systems 6,715 19,924 26,639 9,284 9,885 19,169 Total revenue 44,313 43,614 87,927 47,233 38,988 86,221 Direct costs of revenue Direct cost of services 15,437 19,243 34,680 14,744 22,440 37,184 Direct cost of systems 3,953 15,471 19,424 3,609 7,193 10,802 Total direct cost of revenue 19,390 34,714 54,104 18,353 29,633 47,986 Gross profit Services gross profit 22,161 4,447 26,608 23,205 6,663 29,868 Systems gross profit 2,762 4,453 7,215 5,675 2,692 8,367 Total gross profit $ 24,923 $ 8,900 $ 33,823 $ 28,880 $ 9,355 $ 38,235 Six Months Ended June 30, 2015 2014 Comm. Gvmt Total Comm. Gvmt Total Revenue Services $ 75,906 $ 48,231 $ 124,137 $ 72,590 $ 56,731 $ 129,321 Systems 13,613 32,044 45,657 14,672 27,318 41,990 Total revenue 89,519 80,275 169,794 87,262 84,049 171,311 Direct costs of revenue Direct cost of services 30,549 38,853 69,402 28,488 42,111 70,599 Direct cost of systems 8,443 24,361 32,804 6,264 21,414 27,678 Total direct cost of revenue 38,992 63,214 102,206 34,752 63,525 98,277 Gross profit Services gross profit 45,357 9,378 54,735 44,102 14,620 58,722 Systems gross profit 5,170 7,683 12,853 8,408 5,904 14,312 Total gross profit $ 50,527 $ 17,061 $ 67,588 $ 52,510 $ 20,524 $ 73,034 Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Total segment gross profit $ 33,823 $ 38,235 $ 67,588 $ 73,034 Research and development expense (8,923 ) (11,285 ) (17,370 ) (21,648 ) Sales and marketing expense (6,082 ) (6,317 ) (12,466 ) (13,248 ) General and administrative expense (11,787 ) (13,177 ) (24,406 ) (24,824 ) Depreciation and amortization of property and equipment (3,027 ) (3,366 ) (6,064 ) (6,769 ) Amortization of acquired intangible assets (916 ) (949 ) (1,843 ) (1,898 ) Interest expense (2,062 ) (2,026 ) (4,041 ) (4,230 ) Amortization of deferred finance fees (156 ) (212 ) (319 ) (380 ) Other income, net 248 — 700 137 Net income before income taxes 1,118 903 1,779 174 Income tax (expense) benefit (401 ) 155 (767 ) 407 Net income $ 717 $ 1,058 $ 1,012 $ 581

Inventory

Inventory	6 Months Ended
	Jun. 30, 2015
Inventory Disclosure [Abstract]
Inventory	8. Inventory Inventory consisted of: June 30, December 31, 2015 2014 Component parts $ 7,963 $ 4,848 Finished goods and work in progress 1,254 1,405 Total inventory $ 9,217 $ 6,253

Acquired Intangible Assets, Cap

Acquired Intangible Assets, Capitalized Software Development Costs, and Goodwill	6 Months Ended
	Jun. 30, 2015
Goodwill And Intangible Assets Disclosure [Abstract]
Acquired Intangible Assets, Capitalized Software Development Costs, and Goodwill	9. Acquired Intangible Assets, Capitalized Software Development Costs, and Goodwill Our acquired intangible assets and capitalized software development costs consisted of: June 30, 2015 December 31, 2014 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Net Amount Amortization Net Acquired intangible assets and capitalized software development costs: Acquired intangible assets, including customer lists $ 31,176 $ 15,813 $ 15,363 $ 31,176 $ 13,970 $ 17,206 Capitalized software development costs 8,587 3,857 4,730 7,680 3,072 4,608 Total acquired intangible assets and capitalized software development costs $ 39,763 $ 19,670 $ 20,093 $ 38,856 $ 17,042 $ 21,814 Estimated future amortization expense: Six months ending December 31, 2015 $ 2,730 Year ending December 31, 2016 5,276 Year ending December 31, 2017 4,482 Year ending December 31, 2018 3,200 Year ending December 31, 2019 2,280 Thereafter 2,125 Total estimated future amortization expense $ 20,093 Software development costs: For the three and six months ended June 30, 2015, we capitalized $500 and $906, respectively, of software development costs after the point of technological feasibility had been reached but before the software was available for general release. For the three and six months ended June 30, 2014, we capitalized $492 and $1,001, respectively, of software development costs. These costs are being amortized over their estimated useful lives beginning when the products are available for general release. We routinely update our estimates of the recoverability of the capitalized software product costs. Management uses these estimates as the basis for evaluating the carrying values and remaining useful lives of the respective assets. Goodwill: The carrying amount of goodwill is: Commercial Government Segment Segment Total Balance as of June 30, 2015 and December 31, 2014 $ 49,945 $ 54,296 $ 104,241

Concentrations of Credit Risk a

Concentrations of Credit Risk and Major Customers	6 Months Ended
	Jun. 30, 2015
Risks And Uncertainties [Abstract]
Concentrations of Credit Risk and Major Customers	10. Concentrations of Credit Risk and Major Customers The financial instruments that potentially subject us to concentrations of credit risk are accounts receivable and unbilled receivables. Those customers that comprised 10% or more of our total revenue or receivables (billed and unbilled) are summarized in the following tables: % of Total Revenue For % of Total Revenue For the Three the Six Months Ended Months Ended Percentage of total revenue: June 30, June 30, Customer Segment 2015 2014 2015 2014 U.S. Government agencies and departments Government 17% 15% 15% 18% Customer A Commercial 16% 16% 17% 15% Customer B Commercial <10% 11% <10% 10% Percentage of receivables (billed and unbilled) as of June 30: Customer Segment 2015 2014 U.S. Government agencies and departments Government 12% 14% Customer A Commercial 15% 10% Customer B Commercial <10% 19%

Line of Credit

Line of Credit	6 Months Ended
	Jun. 30, 2015
Debt Disclosure [Abstract]
Line of Credit	11. Line of Credit We have maintained a line of credit arrangement with Silicon Valley Bank (“SVB”) since 2003. On June 25, 2013, we closed on a new senior secured credit facility, as amended on April 30, 2015 (the “Senior Credit Facility” or “Credit Agreement”), with the SVB and three other lenders. The Credit Agreement includes a revolving loan facility (“Revolving Loan Facility”) for up to $30,000 and matures on March 31, 2018. The principal amount outstanding under the Revolving Loan Facility is payable prior to or on the maturity date. Interest on the Revolving Loan Facility accrues at Eurodollar/LIBOR (beginning at LIBOR+3.75%) or Alternate Base Rate (“ABR”) (beginning at ABR +2.75%), which may be adjusted as provided in the Credit Agreement, and is payable monthly. The Revolving Loan Facility includes two sub-facilities: (i) a $10,000 letter of credit sub-facility under which the bank may issue letters of credit, and (ii) a $5,000 swingline sub-facility. As of June 30, 2015, there were no borrowings under our Revolving Loan Facility and we had $30,000 of unused borrowing availability. As of December 31, 2014, we had $5,000 of borrowings outstanding under the Revolving Loan Facility and had $25,000 of unused borrowing availability.

Long-Term Debt

Long-Term Debt	6 Months Ended
	Jun. 30, 2015
Debt Disclosure [Abstract]
Long-Term Debt	12. Long-Term Debt Long-term debt consisted of: June 30, December 31, 2015 2014 Senior credit facility $ 85,717 $ 74,567 7.75% Convertible notes due 2018 50,000 50,000 Total long-term debt 135,717 124,567 Less: current portion (4,572 ) (10,049 ) Non-current portion of long-term debt $ 131,145 $ 114,518 Aggregate maturities of long-term debt at June 30, 2015 are: 2015 $ 2,286 2016 5,143 2017 7,429 2018 120,859 Total long-term debt $ 135,717 Senior credit facilities Our senior credit facilities under a June 25, 2013 agreement, as amended on April 30, 2015 (the “Senior Credit Facilities” or “Credit Agreement”) include (i) a $56,500 term loan A facility (“Term Loan A Facility”), and (ii) a $43,500 delayed draw term loan facility (“Delayed Draw Term Loan Facility”). The Senior Credit Facilities also include a $25,000 incremental loan arrangement subject to the Company’s future needs and bank approval, although no assurances can be given that this incremental loan amount will be available to us when and if needed. In 2013 and 2014, we borrowed $10,000 and $14,562, respectively, under our Delayed Draw Term Loan Facility and the proceeds were used towards the retirement of our 4.5% convertible notes. The remaining $18,938 of the Delayed Draw Term Loan Facility was fully drawn on April 30, 2015 and the proceeds were used for general corporate purposes. The Credit Agreement provides that the banks hold at least $35,000 of the Company’s cash and marketable securities until December 31, 2015. Interest rate hedging activiti es In August 2014, we entered into an interest rate swap agreement with our principal bank. Its $32,094 initial notional amount represents about half of the outstanding balances of the floating rate Term Loan A Facility and the Delayed Term Loan Facility to reduce the variability of interest expense due to changes in interest rates. The interest rate swap results in us paying a fixed rate of 5.17% on the notional amount of the swap until its June 25, 2018 maturity. The notional amount of the swap will change over time to reflect approximately 50% of the outstanding expected Term Loan A Facility and Delayed Draw Term Loan Facility balances. Interest rate reset and interest rate payment dates mirror those of the underlying Term Loan A Facility and Delayed Draw Term Loan Facility. The swap is expected to exactly offset changes in expected cash flows due to fluctuations in the one month LIBOR rate over the term of the hedge. The interest rate swap fair value as of June 30, 2015 and December 31, 2014 was a $345 and $240 liability, respectively. For the three and six months ended June 30, 2015 and the three months ended December 31, 2014, the hedge was highly effective and no gains or losses were recognized in earnings.

Capital Leases

Capital Leases	6 Months Ended
	Jun. 30, 2015
Leases Capital [Abstract]
Capital Leases	13. Capital Leases We lease certain equipment under capital leases which are collateralized by the leased assets. Amortization of leased assets is included in depreciation and amortization expense. Future minimum payments under capital lease obligations consisted of the following at June 30, 2015: 2015 $ 2,389 2016 3,570 2017 2,457 2018 1,040 2019 190 Total minimum lease payments 9,646 Less: amounts representing interest (634 ) Present value of net minimum lease payments (including current portion of $4,001) $ 9,012

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Income Taxes	14. Income Taxes We reported income tax expense of $401 and $767 for the three and six months ended June 30, 2015, respectively, compared to $155 and $407 of income tax benefits for the three and six months ended June 30, 2014, respectively. As of June 30, 2015, we continued to provide a valuation allowance for all federal and some state deferred tax assets. The Company continually evaluates facts representing both positive and negative evidence in the determination of its ability to realize the deferred tax assets reported in the notes included in our 2014 Annual Report on Form 10-K. We do not anticipate a significant change to the total amount of unrecognized tax benefits within the next twelve months.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2015
Commitments And Contingencies Disclosure [Abstract]
Commitments and Contingencies	15. Commitments and Contingencies Some customers seek indemnification under their contractual arrangements with the Company for claims and other costs associated with defending lawsuits alleging infringement of patents through their use of our products and services, and the use of our products and services in combination with products and services of other vendors. In some cases we have agreed to assume the defense of the case. In others, the Company will negotiate with these customers in good faith because the Company believes its technology does not infringe the cited patents and due to specific clauses within the customer contractual arrangements that may or may not give rise to an indemnification obligation. The Company cannot predict the outcome of such matters and the resolutions could have a material effect on our consolidated results of operations, financial position, or cash flows. Due to the inherent difficulty of predicting the outcome of litigation and other legal proceedings and uncertainties regarding the Company’s existing litigation and other legal proceedings, the Company is unable to estimate the amount or range of reasonably possible loss in excess of amounts accrued. The Company’s assessments are based on estimates and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause the Company to change those estimates and assumptions. Therefore, it is possible that an unfavorable resolution of one or more pending litigation or other contingencies could have a material adverse effect on the Company’s consolidated financial statements in a future fiscal period. The application and interpretation of applicable state and local sales and other tax laws to certain of our service and system offerings in certain jurisdictions is uncertain. In accordance with generally accepted accounting principles, the Company makes a provision for a liability for taxes when it is both probable that the liability has been incurred and the amount of the liability or range of liability can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted if necessary. At June 30, 2015, the Company is subject to an ongoing state and local tax audit by the Washington State Department of Revenue. As this and other tax audits progress in the normal course of business, the Company will review and adjust a provision for loss as appropriate. Other than the items discussed immediately above, we are not currently subject to any other material legal proceedings. However, we may from time to time become a party to various legal proceedings arising in the ordinary course of our business.

Basis of Presentation and Sum22

Basis of Presentation and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2015
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included . Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. There were no significant changes to our accounting policies as described in Note 1 of our consolidated financial statements included in Item 15(a)(1) of our 2014 Annual Report on Form 10-K. These unaudited consolidated financial statements should be read in conjunction with our audited financial statements and related notes included in our 2014 Annual Report on Form 10-K. The terms “TCS,” “Company,” “we,” “us,” and “our” as used in this Form 10-Q refer to TeleCommunication Systems, Inc. and its subsidiaries as a combined entity, except where it is made clear that such terms mean only TeleCommunication Systems, Inc.
Use of Estimates	Use of Estimates. The preparation of these financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Significant estimates and assumptions in these consolidated financial statements include estimates used in revenue recognition, fair value of business combinations, fair value associated with goodwill, intangible assets and long-lived asset impairment tests, estimated values of software development costs, income taxes and deferred valuation allowances, the fair value of marketable securities and stock -based compensation, and legal and contingency fees. Actual results could differ from those estimates.
Reclassifications	Reclassifications. Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation. These immaterial reclassifications had no effect on net income, working capital, or equity previously reported.
Recent Accounting Pronouncements	Recent Accounting Pronouncements. In April 2015, the Financial Accounting Standards Board ("FASB") issued new guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the update. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within those periods. Early adoption is permitted. The amended guidance is not expected to have a material impact on our consolidated financial statements. In August 2014, the FASB issued new guidance for presentation of financial statements for going-concern, which addresses when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year after the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The new guidance applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The amended guidance is not expected to have a material impact on our consolidated financial statements. In May 2014, the FASB issued new guidance for revenue recognition. The new guidance provides a five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety. The core principle of the new standard is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures to enable users of the financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The guidance provides alternative methods of initial adoption; retrospectively applied to each prior reporting period or a modified retrospective approach, in which the cumulative effect of initially applying this new guidance is recognized at the date of initial application with additional disclosures. In July 2015, the FASB deferred the effective date to January 1, 2018 and is allowing early adoption beginning January 1, 2017. We are currently evaluating the alternative transition methods and the impact that this standard will have on our consolidated financial statements.

Earnings per share (Tables)

Earnings per share (Tables)	6 Months Ended
	Jun. 30, 2015
Earnings Per Share [Abstract]
Summary of the Computations of Basic and Diluted Earnings per Share	The following table summarizes the computations of basic and diluted earnings per share: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Numerator: Net income, basic and diluted $ 717 $ 1,058 $ 1,012 $ 581 Denominator: Total basic weighted-average common shares outstanding 60,948 59,396 60,608 59,238 Effect of dilutive stock options and restricted stock based on treasury stock method 1,730 1,179 1,708 504 Weighted average diluted shares 62,678 60,575 62,316 59,742 Basic earnings per common share: Net income per share-basic $ 0.01 $ 0.02 $ 0.02 $ 0.01 Diluted earnings per common share: Net income per share-diluted $ 0.01 $ 0.02 $ 0.02 $ 0.01

Supplemental Disclosure of Ca24

Supplemental Disclosure of Cash Flow Information (Tables)	6 Months Ended
	Jun. 30, 2015
Supplemental Cash Flow Elements [Abstract]
Schedule of Supplement Disclosure of Cash Flow Information	Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Property and equipment acquired under capital lease $ 832 $ 647 $ 1,749 $ 991 Interest paid $ 3,005 $ 3,817 $ 4,020 $ 4,685 Income taxes (refunded) paid $ (169 ) $ 320 $ 66 $ 288

Marketable Securities (Tables)

Marketable Securities (Tables)	6 Months Ended
	Jun. 30, 2015
Available For Sale Securities [Abstract]
Summary of Available-for-Sale Marketable Securities	Available-for-sale marketable securities at June 30, 2015: Amortized Gross Gross Estimated Cost Unrealized Unrealized Fair Basis Gains Losses Value Corporate bonds $ 18,066 $ 6 $ (20 ) $ 18,052 Mortgage-backed and asset-backed securities 733 — (2 ) 731 Agency bonds 803 — (3 ) 800 Total marketable securities $ 19,602 $ 6 $ (25 ) $ 19,583 Available-for-sale marketable securities at December 31, 2014: Amortized Gross Gross Estimated Cost Unrealized Unrealized Fair Basis Gains Losses Value Corporate bonds $ 21,748 $ 6 $ (50 ) $ 21,704 Mortgage-backed and asset-backed securities 1,226 — (3 ) 1,223 Agency bonds 300 — (1 ) 299 Total marketable securities $ 23,274 $ 6 $ (54 ) $ 23,226
Summary of Available-for-Sale Marketable Securities by Contractual Maturity	The following table summarizes the estimated fair value of available-for-sale marketable securities by contractual maturity at June 30, 2015: Fair Value Due within 1 year or less $ 10,153 Due after 1 through 5 years 8,699 Mortgage-backed securities not due in a single maturity date 731 $ 19,583 The following table summarizes the estimated fair value of available-for-sale marketable securities by contractual maturity at December 31, 2014: Fair Value Due within 1 year or less $ 7,483 Due after 1 through 5 years 14,520 Mortgage-backed securities not due in a single maturity date 1,223 $ 23,226

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	6 Months Ended
	Jun. 30, 2015
Fair Value Disclosures [Abstract]
Assets and Liabilities Subject to Fair Value Measurements on Recurring Basis and Required Disclosures	Our assets and liabilities subject to fair value measurements on a recurring basis and the required disclosures: Fair Fair Value Measurements Value Using Fair Value Hierarchy As of June 30, 2015 Total Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 34,126 $ 34,126 $ — $ — Corporate bonds 18,052 18,052 — — Mortgage-backed and asset-backed securities 731 731 — — Agency bonds 800 800 — — Marketable securities 19,583 19,583 — — Deferred compensation plan investments 1,049 1,049 — — Assets at fair value $ 54,758 $ 54,758 $ — $ — Liabilities: Interest rate swap $ 345 $ — $ 345 $ — Deferred compensation 988 988 — — Liabilities at fair value $ 1,333 $ 988 $ 345 $ — Fair Fair Value Measurements Value Using Fair Value Hierarchy As of December 31, 2014 Total Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 26,922 $ 26,922 $ — $ — Corporate bonds 21,704 21,704 — — Mortgage-backed and asset-backed securities 1,223 1,223 — — Agency bonds 299 299 — — Marketable securities 23,226 23,226 — — Deferred compensation plan investments 1,282 1,282 — — Assets at fair value $ 51,430 $ 51,430 $ — $ — Liabilities: Interest rate swap $ 240 $ — $ 240 $ — Deferred compensation 873 873 — — Liabilities at fair value $ 1,113 $ 873 $ 240 $ —

Segment Information (Tables)

Segment Information (Tables)	6 Months Ended
	Jun. 30, 2015
Segment Reporting [Abstract]
Segment Reporting Information by Segment	The following tables set forth the results of our reportable segments and a reconciliation of segment gross profit to net income: Three Months Ended June 30, 2015 2014 Comm. Gvmt Total Comm. Gvmt Total Revenue Services $ 37,598 $ 23,690 $ 61,288 $ 37,949 $ 29,103 $ 67,052 Systems 6,715 19,924 26,639 9,284 9,885 19,169 Total revenue 44,313 43,614 87,927 47,233 38,988 86,221 Direct costs of revenue Direct cost of services 15,437 19,243 34,680 14,744 22,440 37,184 Direct cost of systems 3,953 15,471 19,424 3,609 7,193 10,802 Total direct cost of revenue 19,390 34,714 54,104 18,353 29,633 47,986 Gross profit Services gross profit 22,161 4,447 26,608 23,205 6,663 29,868 Systems gross profit 2,762 4,453 7,215 5,675 2,692 8,367 Total gross profit $ 24,923 $ 8,900 $ 33,823 $ 28,880 $ 9,355 $ 38,235 Six Months Ended June 30, 2015 2014 Comm. Gvmt Total Comm. Gvmt Total Revenue Services $ 75,906 $ 48,231 $ 124,137 $ 72,590 $ 56,731 $ 129,321 Systems 13,613 32,044 45,657 14,672 27,318 41,990 Total revenue 89,519 80,275 169,794 87,262 84,049 171,311 Direct costs of revenue Direct cost of services 30,549 38,853 69,402 28,488 42,111 70,599 Direct cost of systems 8,443 24,361 32,804 6,264 21,414 27,678 Total direct cost of revenue 38,992 63,214 102,206 34,752 63,525 98,277 Gross profit Services gross profit 45,357 9,378 54,735 44,102 14,620 58,722 Systems gross profit 5,170 7,683 12,853 8,408 5,904 14,312 Total gross profit $ 50,527 $ 17,061 $ 67,588 $ 52,510 $ 20,524 $ 73,034 Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Total segment gross profit $ 33,823 $ 38,235 $ 67,588 $ 73,034 Research and development expense (8,923 ) (11,285 ) (17,370 ) (21,648 ) Sales and marketing expense (6,082 ) (6,317 ) (12,466 ) (13,248 ) General and administrative expense (11,787 ) (13,177 ) (24,406 ) (24,824 ) Depreciation and amortization of property and equipment (3,027 ) (3,366 ) (6,064 ) (6,769 ) Amortization of acquired intangible assets (916 ) (949 ) (1,843 ) (1,898 ) Interest expense (2,062 ) (2,026 ) (4,041 ) (4,230 ) Amortization of deferred finance fees (156 ) (212 ) (319 ) (380 ) Other income, net 248 — 700 137 Net income before income taxes 1,118 903 1,779 174 Income tax (expense) benefit (401 ) 155 (767 ) 407 Net income $ 717 $ 1,058 $ 1,012 $ 581

Inventory (Tables)

Inventory (Tables)	6 Months Ended
	Jun. 30, 2015
Inventory Disclosure [Abstract]
Components of Inventory	Inventory consisted of: June 30, December 31, 2015 2014 Component parts $ 7,963 $ 4,848 Finished goods and work in progress 1,254 1,405 Total inventory $ 9,217 $ 6,253

Acquired Intangible Assets, C29

Acquired Intangible Assets, Capitalized Software Development Costs, and Goodwill (Tables)	6 Months Ended
	Jun. 30, 2015
Goodwill And Intangible Assets Disclosure [Abstract]
Acquired Intangible Assets and Capitalized Software Development Costs	Our acquired intangible assets and capitalized software development costs consisted of: June 30, 2015 December 31, 2014 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Net Amount Amortization Net Acquired intangible assets and capitalized software development costs: Acquired intangible assets, including customer lists $ 31,176 $ 15,813 $ 15,363 $ 31,176 $ 13,970 $ 17,206 Capitalized software development costs 8,587 3,857 4,730 7,680 3,072 4,608 Total acquired intangible assets and capitalized software development costs $ 39,763 $ 19,670 $ 20,093 $ 38,856 $ 17,042 $ 21,814
Estimated Future Amortization Expense	Estimated future amortization expense: Six months ending December 31, 2015 $ 2,730 Year ending December 31, 2016 5,276 Year ending December 31, 2017 4,482 Year ending December 31, 2018 3,200 Year ending December 31, 2019 2,280 Thereafter 2,125 Total estimated future amortization expense $ 20,093
Balances and Changes in Amount of Goodwill	The carrying amount of goodwill is: Commercial Government Segment Segment Total Balance as of June 30, 2015 and December 31, 2014 $ 49,945 $ 54,296 $ 104,241

Concentrations of Credit Risk30

Concentrations of Credit Risk and Major Customers (Tables)	6 Months Ended
	Jun. 30, 2015
Risks And Uncertainties [Abstract]
Summary of Customers Revenue, Accounts Receivable and Unbilled Receivables	The financial instruments that potentially subject us to concentrations of credit risk are accounts receivable and unbilled receivables. Those customers that comprised 10% or more of our total revenue or receivables (billed and unbilled) are summarized in the following tables: % of Total Revenue For % of Total Revenue For the Three the Six Months Ended Months Ended Percentage of total revenue: June 30, June 30, Customer Segment 2015 2014 2015 2014 U.S. Government agencies and departments Government 17% 15% 15% 18% Customer A Commercial 16% 16% 17% 15% Customer B Commercial <10% 11% <10% 10% Percentage of receivables (billed and unbilled) as of June 30: Customer Segment 2015 2014 U.S. Government agencies and departments Government 12% 14% Customer A Commercial 15% 10% Customer B Commercial <10% 19%

Long-Term Debt (Tables)

Long-Term Debt (Tables)	6 Months Ended
	Jun. 30, 2015
Debt Disclosure [Abstract]
Long-term Debt	Long-term debt consisted of: June 30, December 31, 2015 2014 Senior credit facility $ 85,717 $ 74,567 7.75% Convertible notes due 2018 50,000 50,000 Total long-term debt 135,717 124,567 Less: current portion (4,572 ) (10,049 ) Non-current portion of long-term debt $ 131,145 $ 114,518
Aggregate Maturities of Long-term Debt	Aggregate maturities of long-term debt at June 30, 2015 are: 2015 $ 2,286 2016 5,143 2017 7,429 2018 120,859 Total long-term debt $ 135,717

Capital Leases (Tables)

Capital Leases (Tables)	6 Months Ended
	Jun. 30, 2015
Leases Capital [Abstract]
Future Minimum Payments Under Capital Lease Obligations	Future minimum payments under capital lease obligations consisted of the following at June 30, 2015: 2015 $ 2,389 2016 3,570 2017 2,457 2018 1,040 2019 190 Total minimum lease payments 9,646 Less: amounts representing interest (634 ) Present value of net minimum lease payments (including current portion of $4,001) $ 9,012

Earnings per share - Additional

Earnings per share - Additional Information (Detail) - $ / shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Warrant exercise price		$ 12.74		$ 12.74
Earnings per share, dilutive effect, description			Because the Company would have exercised a call option if the market price of our stock exceeded the warrant exercise price of $12.74 per share, the effect of the convertible note hedge, which expired pro rata as the 2014 Notes were repurchased, was excluded from the calculation of diluted earnings per share for the three and six months ended June 30, 2014, as the impact was always considered anti-dilutive.
7.75% Convertible notes due 2018
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Debt instrument, interest rate percentage	7.75%	7.75%	7.75%	7.75%	7.75%
Common shares excluded from the computation of diluted net income (loss) per share	4,832	4,832	4,832	4,832
4.5% Convertible notes due 2014
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Debt instrument, interest rate percentage		4.50%		4.50%

Summary of the Computations of

Summary of the Computations of Basic and Diluted Earnings per Share (Detail) - 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
Numerator:
Net income, basic and diluted	$ 717	$ 1,058	$ 1,012	$ 581
Denominator:
Total basic weighted-average common shares outstanding	60,948	59,396	60,608	59,238
Effect of dilutive stock options and restricted stock based on treasury stock method	1,730	1,179	1,708	504
Weighted average diluted shares	62,678	60,575	62,316	59,742
Basic earnings per common share:
Net income per share-basic	$ 0.01	$ 0.02	$ 0.02	$ 0.01
Diluted earnings per common share:
Net income per share-diluted	$ 0.01	$ 0.02	$ 0.02	$ 0.01

Stock-Based Compensation - Addi

Stock-Based Compensation - Additional Information (Detail) - 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
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense			$ 2,528	$ 3,200
Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total unrecognized share-based compensation expense	$ 5,700	$ 4,700	$ 5,700	$ 4,700
Period of unrecognized share-based compensation costs to be recognized			4 years	3 years
Stock-based compensation, shares outstanding	16,085	16,172	16,085	16,172
Option granted			2,561
Option exercises			1,109
Employee Stock Option | In-The-Money
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding stock options ''in-the-money''	7,534		7,534
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units outstanding	1,674	2,190	1,674	2,190
Weighted-average fair value of restricted stock, per share	$ 2.75	$ 2.42	$ 2.75	$ 2.42
Total unrecognized share-based compensation expense	$ 3,600	$ 4,000	$ 3,600	$ 4,000
Period of unrecognized share-based compensation costs to be recognized			2 years	2 years
Stock Compensation Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 1,210	$ 1,379	$ 2,528	$ 3,200

Schedule of Supplement Disclosu

Schedule of Supplement Disclosure of Cash Flow Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Supplemental Cash Flow Elements [Abstract]
Property and equipment acquired under capital lease	$ 832	$ 647	$ 1,749	$ 991
Interest paid	3,005	3,817	4,020	4,685
Income taxes (refunded) paid	$ (169)	$ 320	$ 66	$ 288

Summary of Available-for-Sale M

Summary of Available-for-Sale Marketable Securities (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale marketable securities, Amortized Cost Basis	$ 19,602	$ 23,274
Available-for-sale marketable securities, Gross Unrealized Gains	6	6
Available-for-sale marketable securities, Gross Unrealized Losses	(25)	(54)
Marketable securities	19,583	23,226
Corporate bonds
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale marketable securities, Amortized Cost Basis	18,066	21,748
Available-for-sale marketable securities, Gross Unrealized Gains	6	6
Available-for-sale marketable securities, Gross Unrealized Losses	(20)	(50)
Marketable securities	18,052	21,704
Mortgage-backed and asset-backed securities
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale marketable securities, Amortized Cost Basis	733	1,226
Available-for-sale marketable securities, Gross Unrealized Losses	(2)	(3)
Marketable securities	731	1,223
Agency bonds
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale marketable securities, Amortized Cost Basis	803	300
Available-for-sale marketable securities, Gross Unrealized Losses	(3)	(1)
Marketable securities	$ 800	$ 299

Summary of Available-for-Sale38

Summary of Available-for-Sale Marketable Securities by Contractual Maturity (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Investments Debt And Equity Securities [Abstract]
Available-for-sale securities, contractual maturity, Due within 1 year or less, Fair Value	$ 10,153	$ 7,483
Available-for-sale securities, contractual maturity, Due after 1 through 5 years, Fair Value	8,699	14,520
Available-for-sale securities, Mortgage-backed securities not due in a single maturity date, Fair Value	731	1,223
Available-for-sale marketable securities, Estimated Fair Value	$ 19,583	$ 23,226

Assets and Liabilities Subject

Assets and Liabilities Subject to Fair Value Measurements and Required Disclosures (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Assets:
Cash and cash equivalents	$ 34,126	$ 26,922
Marketable securities	19,583	23,226
Deferred compensation plan investments	1,049	1,282
Assets at fair value	54,758	51,430
Liabilities:
Interest rate swap	345	240
Deferred compensation	988	873
Liabilities at fair value	1,333	1,113
Corporate bonds
Assets:
Marketable securities	18,052	21,704
Mortgage-backed and asset-backed securities
Assets:
Marketable securities	731	1,223
Agency bonds
Assets:
Marketable securities	800	299
Fair Value, Inputs, Level 1
Assets:
Cash and cash equivalents	34,126	26,922
Marketable securities	19,583	23,226
Deferred compensation plan investments	1,049	1,282
Assets at fair value	54,758	51,430
Liabilities:
Deferred compensation	988	873
Liabilities at fair value	988	873
Fair Value, Inputs, Level 1 | Corporate bonds
Assets:
Marketable securities	18,052	21,704
Fair Value, Inputs, Level 1 | Mortgage-backed and asset-backed securities
Assets:
Marketable securities	731	1,223
Fair Value, Inputs, Level 1 | Agency bonds
Assets:
Marketable securities	800	299
Fair Value, Inputs, Level 2
Liabilities:
Interest rate swap	345	240
Liabilities at fair value	$ 345	$ 240

Fair Value Measurements - Addit

Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Estimated Fair value of long term debt	$ 135,000	$ 135,000	$ 123,000
Carrying value of long term debt	135,717	135,717	$ 124,567
Transfers in or out of Level 1, 2, or 3	$ 0	$ 0
7.75% Convertible notes due 2018
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Debt instrument, interest rate percentage	7.75%	7.75%	7.75%	7.75%
Carrying value of long term debt	$ 50,000	$ 50,000	$ 50,000

Segment Information - Additiona

Segment Information - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2015Segment
Segment Reporting [Abstract]
Number of reporting segments	2

Segment Reporting Information b

Segment Reporting Information by Segment (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenue
Services	$ 61,288	$ 67,052	$ 124,137	$ 129,321
Systems	26,639	19,169	45,657	41,990
Total revenue	87,927	86,221	169,794	171,311
Direct costs of revenue
Direct cost of services	34,680	37,184	69,402	70,599
Direct cost of systems	19,424	10,802	32,804	27,678
Total direct cost of revenue	54,104	47,986	102,206	98,277
Gross profit
Services gross profit	26,608	29,868	54,735	58,722
Systems gross profit	7,215	8,367	12,853	14,312
Total gross profit	33,823	38,235	67,588	73,034
Research and development expense	(8,923)	(11,285)	(17,370)	(21,648)
Sales and marketing expense	(6,082)	(6,317)	(12,466)	(13,248)
General and administrative expense	(11,787)	(13,177)	(24,406)	(24,824)
Depreciation and amortization of property and equipment	(3,027)	(3,366)	(6,064)	(6,769)
Amortization of acquired intangible assets	(916)	(949)	(1,843)	(1,898)
Interest expense	(2,062)	(2,026)	(4,041)	(4,230)
Amortization of deferred financing fees	(156)	(212)	(319)	(380)
Other income, net	248		700	137
Net income before income taxes	1,118	903	1,779	174
Income tax (provision) benefit	(401)	155	(767)	407
Net income	717	1,058	1,012	581
Commercial Segment
Revenue
Services	37,598	37,949	75,906	72,590
Systems	6,715	9,284	13,613	14,672
Total revenue	44,313	47,233	89,519	87,262
Direct costs of revenue
Direct cost of services	15,437	14,744	30,549	28,488
Direct cost of systems	3,953	3,609	8,443	6,264
Total direct cost of revenue	19,390	18,353	38,992	34,752
Gross profit
Services gross profit	22,161	23,205	45,357	44,102
Systems gross profit	2,762	5,675	5,170	8,408
Total gross profit	24,923	28,880	50,527	52,510
Government Segment
Revenue
Services	23,690	29,103	48,231	56,731
Systems	19,924	9,885	32,044	27,318
Total revenue	43,614	38,988	80,275	84,049
Direct costs of revenue
Direct cost of services	19,243	22,440	38,853	42,111
Direct cost of systems	15,471	7,193	24,361	21,414
Total direct cost of revenue	34,714	29,633	63,214	63,525
Gross profit
Services gross profit	4,447	6,663	9,378	14,620
Systems gross profit	4,453	2,692	7,683	5,904
Total gross profit	$ 8,900	$ 9,355	$ 17,061	$ 20,524

Components of Inventory (Detail

Components of Inventory (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Component parts	$ 7,963	$ 4,848
Finished goods and work in progress	1,254	1,405
Total inventory	$ 9,217	$ 6,253

Acquired Intangible Assets and

Acquired Intangible Assets and Capitalized Software Development Costs (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Finite Lived Intangible Assets [Line Items]
Acquired intangible assets, accumulated amortization	$ 15,813	$ 13,970
Acquired intangible assets, Net	15,363	17,206
Capitalized software development costs, Gross Carrying Amount	8,587	7,680
Capitalized software development costs, accumulated amortization	3,857	3,072
Capitalized software development costs, Net	4,730	4,608
Intangible assets and capitalized software development costs, Gross Carrying Amount	39,763	38,856
Intangible assets and capitalized software development costs, Accumulated Amortization	19,670	17,042
Intangible assets and capitalized software development costs, Net	20,093	21,814
Acquired intangible assets including customer lists
Finite Lived Intangible Assets [Line Items]
Acquired intangible assets, Gross Carrying Amount	31,176	31,176
Acquired intangible assets, accumulated amortization	15,813	13,970
Acquired intangible assets, Net	$ 15,363	$ 17,206

Estimated Future Amortization E

Estimated Future Amortization Expense (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Estimated future amortization expense:
Six months ending December 31, 2015	$ 2,730
Year ending December 31, 2016	5,276
Year ending December 31, 2017	4,482
Year ending December 31, 2018	3,200
Year ending December 31, 2019	2,280
Thereafter	2,125
Intangible assets and capitalized software development costs, Net	$ 20,093	$ 21,814

Acquired Intangible Assets, C46

Acquired Intangible Assets, Capitalized Software Development Costs, and Goodwill - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Goodwill And Intangible Assets Disclosure [Abstract]
Capitalized software development costs	$ 500	$ 492	$ 906	$ 1,001

Balances and Changes in Amount

Balances and Changes in Amount of Goodwill (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Goodwill [Line Items]
Goodwill	$ 104,241	$ 104,241
Commercial Segment
Goodwill [Line Items]
Goodwill	49,945	49,945
Government Segment
Goodwill [Line Items]
Goodwill	$ 54,296	$ 54,296

Customers Revenue and Receivabl

Customers Revenue and Receivables (Billed and Unbilled) (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Customer Concentration Risk | Revenue | U.S Government Agencies and Departments | Government Segment
Concentration Risk [Line Items]
Concentration of risk percentage	17.00%	15.00%	15.00%	18.00%
Customer Concentration Risk | Revenue | Customer A | Commercial Segment
Concentration Risk [Line Items]
Concentration of risk percentage	16.00%	16.00%	17.00%	15.00%
Customer Concentration Risk | Revenue | Customer B | Commercial Segment
Concentration Risk [Line Items]
Concentration of risk percentage		11.00%		10.00%
Credit Concentration Risk | Receivables (billed and unbilled) | U.S Government Agencies and Departments | Government Segment
Concentration Risk [Line Items]
Concentration of risk percentage			12.00%	14.00%
Credit Concentration Risk | Receivables (billed and unbilled) | Customer A | Commercial Segment
Concentration Risk [Line Items]
Concentration of risk percentage			15.00%	10.00%
Credit Concentration Risk | Receivables (billed and unbilled) | Customer B | Commercial Segment
Concentration Risk [Line Items]
Concentration of risk percentage				19.00%

Line of Credit - Additional Inf

Line of Credit - Additional Information (Detail) - Revolving Credit Facility - USD ($)	6 Months Ended
	Jun. 30, 2015	Apr. 30, 2015	Dec. 31, 2014
Line Of Credit Facility [Line Items]
Line of credit facility, interest rate description	The principal amount outstanding under the Revolving Loan Facility is payable prior to or on the maturity date. Interest on the Revolving Loan Facility accrues at Eurodollar/LIBOR (beginning at LIBOR+3.75%) or Alternate Base Rate (“ABR”) (beginning at ABR +2.75%), which may be adjusted as provided in the Credit Agreement.
Line of credit facility, maximum borrowing capacity	$ 30,000,000	$ 30,000,000	$ 30,000,000
Line of credit, maturity date	Mar. 31, 2018
Line of credit facility, amount outstanding	$ 0		5,000,000
Line of credit facility, unused borrowing capacity	30,000,000		$ 25,000,000
Letter Of Credit Sub-facility
Line Of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity	10,000,000
Swingline Sub-facility
Line Of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity	$ 5,000,000
Eurodollar
Line Of Credit Facility [Line Items]
Interest rate above base	3.75%
LIBOR
Line Of Credit Facility [Line Items]
Interest rate above base	3.75%
Alternate Base Rate (ABR)
Line Of Credit Facility [Line Items]
Interest rate above base	2.75%

Long-Term Debt - Schedule of Co

Long-Term Debt - Schedule of Components of Long-Term Debt (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Long-term debt	$ 135,717	$ 124,567
Less: current portion	(4,572)	(10,049)
Non-current portion of long-term debt	131,145	114,518
Senior Credit Facilities
Debt Instrument [Line Items]
Long-term debt	85,717	74,567
7.75% Convertible notes due 2018
Debt Instrument [Line Items]
Long-term debt	$ 50,000	$ 50,000

Long-term Debt (Parenthetical)

Long-term Debt (Parenthetical) (Detail)	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
7.75% Convertible notes due 2018
Debt Instrument [Line Items]
Debt instrument, interest rate percentage	7.75%	7.75%	7.75%

Long-Term Debt - Schedule of Ag

Long-Term Debt - Schedule of Aggregate Maturities of Long-Term Debt (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Debt Disclosure [Abstract]
2,015	$ 2,286
2,016	5,143
2,017	7,429
2,018	120,859
Long-term debt	$ 135,717	$ 124,567

Long-Term Debt - Senior Credit

Long-Term Debt - Senior Credit Facilities (Additional Information) (Detail) - USD ($) $ in Thousands	Apr. 30, 2015	Jun. 30, 2015	Dec. 31, 2014	Dec. 31, 2013	Jun. 25, 2013
Debt Instrument [Line Items]
Proceeds from bank and other borrowings		$ 24,938
Senior Credit Facilities
Debt Instrument [Line Items]
Debt instrument cash and marketable securities requirements					$ 35,000
4.5% Convertible notes due 2014
Debt Instrument [Line Items]
Debt instrument, repurchased face amount			$ 14,562	$ 10,000
Term Loan A Facility | Senior Credit Facilities
Debt Instrument [Line Items]
Debt instrument, amount					56,500
Delayed Draw Loan Facility As Amended | Senior Credit Facilities
Debt Instrument [Line Items]
Debt instrument, amount					43,500
Proceeds from bank and other borrowings	$ 18,938		$ 14,562	$ 10,000
Incremental Loan Arrangement | Senior Credit Facilities
Debt Instrument [Line Items]
Debt instrument, amount					$ 25,000

Long-Term Debt - Interest Rate

Long-Term Debt - Interest Rate Hedging Activities - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2015	Aug. 31, 2014
Derivative [Line Items]
Interest rate derivative liabilities, fair value	$ 345,000	$ 240,000	$ 345,000
Interest Rate Swap
Derivative [Line Items]
Derivative, notional amount				$ 32,094,000
Derivative, fixed interest rate				5.17%
Percentage of balance to be reflected				50.00%
Interest rate derivative liabilities, fair value	345,000	240,000	$ 345,000
Derivative, maturity date			Jun. 25, 2018
Gain (loss) recognized in earnings, effective portion	$ 0	$ 0	$ 0

Future Minimum Payments under C

Future Minimum Payments under Capital Lease Obligations (Detail) $ in Thousands	Jun. 30, 2015USD ($)
Leases Capital [Abstract]
2,015	$ 2,389
2,016	3,570
2,017	2,457
2,018	1,040
2,019	190
Total minimum lease payments	9,646
Less: amounts representing interest	(634)
Present value of net minimum lease payments (including current portion of $4,001)	$ 9,012

Future Minimum Payments under56

Future Minimum Payments under Capital Lease Obligations (Parenthetical) (Detail) $ in Thousands	Jun. 30, 2015USD ($)
Leases Capital [Abstract]
Current portion of capital lease payments	$ 4,001

Income Taxes - Additional Infor

Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 401	$ (155)	$ 767	$ (407)