Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 29, 2013 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'SYNCHRONOSS TECHNOLOGIES INC | ' |
Entity Central Index Key | '0001131554 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 40,526,584 |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $37,087 | $36,028 |
Marketable securities | 7,894 | 20,188 |
Accounts receivable, net of allowance for doubtful accounts of $440 and $258 at September 30, 2013 and December 31, 2012, respectively | 88,694 | 74,980 |
Prepaid expenses and other assets | 23,710 | 24,012 |
Deferred tax assets | 4,120 | 4,114 |
Total current assets | 161,505 | 159,322 |
Marketable securities | 5,787 | 653 |
Property and equipment, net | 95,821 | 58,162 |
Goodwill | 125,998 | 127,322 |
Intangible assets, net | 100,764 | 110,760 |
Deferred tax assets | 4,047 | 6,961 |
Other assets | 9,821 | 3,482 |
Total assets | 503,743 | 466,662 |
Current liabilities: | ' | ' |
Accounts payable | 11,660 | 8,980 |
Accrued expenses | 29,756 | 41,658 |
Deferred revenues | 22,031 | 20,954 |
Contingent consideration obligation | 9,037 | 3,279 |
Total current liabilities | 72,484 | 74,871 |
Lease financing obligation - long-term | 9,257 | 9,540 |
Contingent consideration obligation - long-term | ' | 5,100 |
Other liabilities | 3,139 | 2,494 |
Stockholders' equity: | ' | ' |
Preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding at September 30, 2013 and December 31, 2012 | ' | ' |
Common stock, $0.0001 par value; 100,000 shares authorized, 44,303 and 42,533 shares issued; 40,510 and 38,674 outstanding at September 30, 2013 and December 31, 2012, respectively | 4 | 4 |
Treasury stock, at cost (3,793 and 3,859 shares at September 30, 2013 and December 31, 2012, respectively) | -67,104 | -67,918 |
Additional paid-in capital | 381,919 | 344,469 |
Accumulated other comprehensive loss | -1,901 | -365 |
Retained earnings | 105,945 | 98,467 |
Total stockholders' equity | 418,863 | 374,657 |
Total liabilities and stockholders' equity | $503,743 | $466,662 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, except Per Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ' | ' |
Accounts receivable, allowance for doubtful accounts (in dollars) | $440 | $258 |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 44,303 | 42,533 |
Common stock, shares outstanding | 40,510 | 38,674 |
Treasury stock, shares | 3,793 | 3,859 |
CONSOLIDATED_STATEMENTS_OF_INC
CONSOLIDATED STATEMENTS OF INCOME (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
CONSOLIDATED STATEMENTS OF INCOME | ' | ' | ' | ' |
Net revenues | $89,716 | $68,961 | $251,840 | $200,511 |
Costs and expenses: | ' | ' | ' | ' |
Cost of services | 38,133 | 29,136 | 105,791 | 84,388 |
Research and development | 16,554 | 12,645 | 49,630 | 38,091 |
Selling, general and administrative | 15,562 | 10,278 | 45,157 | 31,728 |
Net change in contingent consideration obligation | 500 | -327 | 2,676 | -5,735 |
Restructuring charges | ' | ' | 5,172 | ' |
Depreciation and amortization | 10,213 | 6,068 | 28,792 | 17,201 |
Total costs and expenses | 80,962 | 57,800 | 237,218 | 165,673 |
Income from operations | 8,754 | 11,161 | 14,622 | 34,838 |
Interest income | 149 | 295 | 432 | 1,023 |
Interest expense | -235 | -222 | -714 | -702 |
Other (expense) income | -369 | -207 | -326 | 586 |
Income before income tax expense | 8,299 | 11,027 | 14,014 | 35,745 |
Income tax expense | -4,709 | -4,825 | -6,536 | -12,111 |
Net income | 3,590 | 6,202 | 7,478 | 23,634 |
Net income per common share: | ' | ' | ' | ' |
Basic (in dollars per share) | $0.09 | $0.16 | $0.19 | $0.62 |
Diluted (in dollars per share) | $0.09 | $0.16 | $0.19 | $0.60 |
Weighted-average common shares outstanding: | ' | ' | ' | ' |
Basic (in shares) | 38,960 | 38,107 | 38,589 | 38,219 |
Diluted (in shares) | 40,056 | 38,872 | 39,662 | 39,192 |
Comprehensive income | $8,738 | $6,773 | $5,942 | $24,054 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Operating activities: | ' | ' |
Net income | $7,478 | $23,634 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization expense | 28,792 | 17,199 |
Loss on disposal of asset | ' | 198 |
Amortization of bond premium | 225 | 1,000 |
Deferred income taxes | 3,401 | 32 |
Non-cash interest on leased facility | 691 | 690 |
Stock-based compensation | 18,313 | 14,387 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable, net of allowance for doubtful accounts | -13,714 | -6,733 |
Prepaid expenses and other current assets | 1,656 | 7,022 |
Other assets | -6,724 | -122 |
Accounts payable | 2,680 | -2,665 |
Accrued expenses | -11,952 | -3,042 |
Contingent consideration obligation | 1,724 | -8,396 |
Excess tax benefit from the exercise of stock options | -983 | -6,592 |
Other liabilities | 1,063 | -146 |
Deferred revenues | 760 | -1,707 |
Net cash provided by operating activities | 33,410 | 34,759 |
Investing activities: | ' | ' |
Purchases of fixed assets | -55,216 | -25,377 |
Purchases of marketable securities available-for-sale | -6,703 | -13,082 |
Maturities of marketable securities available-for-sale | 13,635 | 15,531 |
Business acquired, net of cash | ' | -26,572 |
Net cash used in investing activities | -48,284 | -49,500 |
Financing activities: | ' | ' |
Proceeds from the exercise of stock options | 17,495 | 7,330 |
Payments on contingent consideration obligation | -1,090 | -2,268 |
Excess tax benefit from the exercise of stock option | 983 | 6,592 |
Repurchase of common stock | ' | -13,898 |
Proceeds from the sale of Treasury Stock in connection with an employee stock purchase plan | 1,474 | 612 |
Proceeds from capital obligations | ' | 38 |
Repayments of capital obligations | -1,236 | -750 |
Net cash provided (used) by financing activities | 17,626 | -2,344 |
Effect of exchange rate changes on cash | -1,693 | 391 |
Net increase (decrease) in cash and cash equivalents | 1,059 | -16,694 |
Cash and cash equivalents at beginning of year | 36,028 | 69,430 |
Cash and cash equivalents at end of period | 37,087 | 52,736 |
Supplemental disclosures of cash flow information: | ' | ' |
Cash paid for income taxes | $1,131 | $3,222 |
Description_of_Business
Description of Business | 9 Months Ended |
Sep. 30, 2013 | |
Description of Business | ' |
Description of Business | ' |
1. Description of Business | |
Synchronoss Technologies, Inc. (the “Company” or “Synchronoss”) is a mobile innovation company that provides software-based activation and personal cloud solutions for connected devices across the globe. Such solutions include device and service procurement, provisioning, activation, support, intelligent connectivity management and content synchronization, back-up and sharing that enable communications service providers (CSPs), cable operators/multi-services operators (MSOs), original equipment manufacturers (OEMs) with embedded connectivity (e.g. smartphones, laptops, tablets and mobile Internet devices, among others), e-Tailers/retailers and other customers to accelerate and monetize their go-to-market strategies for connected devices. This includes automating subscriber activation, order management, upgrades, service provisioning and connectivity and content management from any channel (e.g., e-commerce, telesales, enterprise, indirect and other retail outlets, etc.) to any communication service (e.g., wireless (3G, (EV-DO and HSPA), 4G, (LTE and WiMAX)), Wi-Fi, high speed access, local access, IPTV, cable, satellite TV, etc.) across any connected device type with support for content transfer, synchronization and sharing. The Company’s solutions touch all aspects of connected devices on the mobile Internet. | |
The Company’s Activation Services and Personal Cloud platforms provide end-to-end seamless integration between customer-facing channels/applications, communication services, or devices and “back-office” infrastructure-related systems and processes. The Company’s customers rely on its solutions and technology to automate the process of activation and content management for their customers’ devices while delivering additional communication services. The Company’s platforms also support automated customer care processes through use of highly accurate and effective speech processing technology and enable the Company’s customers to offer their subscribers the ability to store in the Cloud their personal content and data which resides on their connected mobile devices, such as personal computers, smartphones and tablets. The Company’s platforms are designed to be carrier-grade, high availability, flexible and scalable to enable multiple converged communication services to be managed across multiple distribution channels, including e-commerce, m-commerce, telesales, customer stores, indirect and other retail outlets, etc., allowing it to meet the rapidly changing and converging services and connected devices offered by its customers. The Company enables its customers to acquire, retain and service subscribers quickly, reliably and cost-effectively by enabling back-up, synchronization and sharing of subscriber content. Through the use of the Company’s platforms, its customers can simplify the processes associated with managing the customer experience for procuring, activating, connecting, synchronizing and social media sharing connected devices, content and services. The extensibility, scalability and relevance of the Company’s platforms enable new revenue streams and retention opportunities for its customers through new subscriber acquisitions, sale of new devices, accessories and new value-added service offerings in the Cloud, while optimizing their cost of operations and enhancing customer experience. | |
The Company currently operates in and markets its solutions and services directly through its sales organizations in North America, Europe and Asia-Pacific. | |
Basis_of_Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2013 | |
Basis of Presentation | ' |
Basis of Presentation | ' |
2.Basis of Presentation | |
For further information about the Company’s basis of presentation or its significant accounting policies, refer to the financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2012. | |
In connection with the Spatial Systems Nominees PTY LTD (“Spatial”) acquisition, the consolidated balance sheet at December 31, 2012 has been recast to include retrospective purchase accounting adjustments. These adjustments pertain to measurement period adjustments during the nine months ended September 30, 2013 based on the reclassification and valuation of assets acquired and liabilities assumed in the Spatial acquisition. The effect on the consolidated balance sheet at December 31, 2012, as a result of the recast, is a decrease in accounts receivable of $2.6 million, an increase in prepaid expenses and other assets of $5.0 million, an increase in goodwill of $11.8 million, an increase in accrued expenses of $4.6 million, and an increase in deferred revenues of $9.6 million. | |
During the third quarter, the Company entered into a new three year agreement with AT&T which continues until July 31, 2016 unless earlier terminated. AT&T may renew this agreement for one additional year by providing at least ninety days written notice prior to the end of the initial term. This agreement defines the work activities, transaction pricing, forecasting process, service level agreements and remedies associated with certain services performed by the Company for AT&T’s e-commerce organizations. The agreement provides for AT&T to pay the Company (i) monthly hosting fees, (ii) fees based on the number of transactions processed through the Company’s technology platform, (iii) fees based on manual processing services and (iv) fees for professional services rendered by the Company. | |
Prior to the third quarter, several of the Company’s subsidiaries that operate outside the United States used the U.S. dollar as the functional currency. Effective July 1, 2013, the Company changed the functional currencies of those subsidiaries that operate outside the United States to their local currency. The functional currency is translated into U.S. dollars for balance sheet accounts using the month end rates in effect as of the balance sheet date and average exchange rate for revenue and expense accounts for each respective period. The translation adjustments are deferred as a separate component of stockholders’ equity, within accumulated other comprehensive income. Gains or losses resulting from transactions denominated in foreign currencies are included in other income or expense, within the consolidated statements of income. The effects of the change in functional currency were not material to the Company’s consolidated financial statements. | |
Impact of Recently Issued Accounting Standards | |
In February 2013, the FASB issued ASU 2013-02 which requires additional disclosures regarding the reporting of reclassifications out of accumulated other comprehensive income. ASU 2013-02 requires an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. This guidance is effective for reporting periods beginning after December 15, 2012. The Company adopted this guidance effective January 1, 2013. The Company’s adoption of this standard did not have a significant impact on its consolidated financial statements. | |
In March 2013, the FASB issued ASU 2013-05, which permits an entity to release cumulative translation adjustments into net income when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided, or, if a controlling financial interest is no longer held. The revised standard is effective for fiscal years beginning after December 15, 2013; however, early adoption is permitted. The Company does not expect adoption of this ASU to significantly impact its consolidated financial statements. | |
In July 2013, the FASB issued ASU 2013-11, which provides that a liability related to an unrecognized tax benefit would be offset against a deferred tax asset instead of presented gross for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. This new guidance is effective for fiscal years beginning after December 15, 2013. The Company does not expect adoption of this ASU to significantly impact its consolidated financial statements. | |
Earnings_per_Common_Share
Earnings per Common Share | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Earnings per Common Share | ' | |||||||||||||
Earnings per Common Share | ' | |||||||||||||
3. Earnings per Common Share | ||||||||||||||
The Company calculates basic and diluted per share amounts based on net earnings adjusted for the effects to earnings that would result if contingently issuable shares related to contingent consideration to be settled in the Company’s stock were reported as equity for the periods presented. To calculate basic earnings per share, the Company uses the weighted average number of common shares outstanding during the period adjusted for the weighted average number of contingently issuable shares. The weighted average numbers of shares contingently issuable are calculated as if they were outstanding as of the last day of the period. The diluted earnings per share calculation is based on the weighted average number of shares of common stock outstanding adjusted for the number of additional shares that would have been outstanding had all potentially dilutive common shares been issued. Potentially dilutive shares of common stock include stock options, non-vested share awards and contingently issuable shares related to contingent consideration to be settled in stock. The dilutive effects of stock options and restricted stock awards are based on the treasury stock method. The dilutive effects of the contingent consideration to be settled in stock are calculated as if the contingently issuable shares were outstanding as of the beginning of the period. The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share. Stock options that are anti-dilutive and excluded from the following table totaled 1,378 and 2,286 for the three months ended September 30, 2013 and 2012, respectively, and 1,406 and 1,709 for the nine months ended September 30, 2013 and 2012, respectively. | ||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Numerator: | ||||||||||||||
Net income attributable to common stockholders | $ | 3,590 | $ | 6,202 | $ | 7,478 | $ | 23,634 | ||||||
Denominator: | ||||||||||||||
Weighted average common shares outstanding — basic | 38,960 | 38,107 | 38,589 | 38,219 | ||||||||||
Dilutive effect of: | ||||||||||||||
Options and unvested restricted shares | 1,096 | 765 | 1,073 | 973 | ||||||||||
Weighted average common shares outstanding — diluted | 40,056 | 38,872 | 39,662 | 39,192 | ||||||||||
Fair_Value_Measurements_of_Ass
Fair Value Measurements of Assets and Liabilities | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Fair Value Measurements of Assets and Liabilities | ' | ||||||||||
Fair Value Measurements of Assets and Liabilities | ' | ||||||||||
4. Fair Value Measurements of Assets and Liabilities | |||||||||||
The Company classifies marketable securities as available-for-sale. The fair value hierarchy established in the guidance adopted by the Company prioritizes the inputs used in valuation techniques into three levels as follows: | |||||||||||
· Level 1 — Observable inputs — quoted prices in active markets for identical assets and liabilities; | |||||||||||
· Level 2 — Observable inputs other than the quoted prices in active markets for identical assets and liabilities — includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets, and amounts derived from valuation models where all significant inputs are observable in active markets; and | |||||||||||
· Level 3 — Unobservable inputs — includes amounts derived from valuation models where one or more significant inputs are unobservable and require the Company to develop relevant assumptions. | |||||||||||
The following is a summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy: | |||||||||||
September 30, 2013 | December 31, 2012 | ||||||||||
Level 1 (A) | $ | 42,474 | $ | 41,395 | |||||||
Level 2 (B) | 8,294 | 15,474 | |||||||||
Level 3 (C) | (9,037 | ) | (8,379 | ) | |||||||
Total | $ | 41,731 | $ | 48,490 | |||||||
(A) Level 1 assets include money market funds and enhanced income money market funds which are classified as cash equivalents and marketable securities, respectively. | |||||||||||
(B) Level 2 assets include certificates of deposit, municipal bonds and corporate bonds which are classified as marketable securities. | |||||||||||
(C) Level 3 liabilities include the contingent consideration obligation. | |||||||||||
The Company utilizes the market approach to measure fair value for its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The Company’s marketable securities investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy occurred during the nine months ended September 30, 2013. | |||||||||||
The aggregate fair value of available-for-sale securities and aggregate amount of unrealized gains and losses for available for sale securities at September 30, 2013 were as follows: | |||||||||||
Aggregate Amount of | |||||||||||
Aggregate | Unrealized | ||||||||||
Fair Value | Gains | Losses | |||||||||
Due in one year or less | $ | 7,894 | $ | 2 | $ | (23 | ) | ||||
Due after one year, less than five years | 5,787 | 13 | (3 | ) | |||||||
$ | 13,681 | $ | 15 | $ | (26 | ) | |||||
The aggregate fair value of available-for-sale securities and aggregate amount of unrealized gains and losses for available for sale securities at December 31, 2012 were as follows: | |||||||||||
Aggregate Amount of | |||||||||||
Aggregate | Unrealized | ||||||||||
Fair Value | Gains | Losses | |||||||||
Due in one year or less | $ | 20,188 | $ | 18 | $ | (41 | ) | ||||
Due after one year, less than five years | 653 | 1 | (1 | ) | |||||||
$ | 20,841 | $ | 19 | $ | (42 | ) | |||||
Unrealized gains and losses are reported as a component of accumulated other comprehensive loss in stockholders’ equity. The cost of securities sold is based on specific identification method. The Company evaluates investments with unrealized losses to determine if the losses are other than temporary. The Company has determined that the gross unrealized losses at September 30, 2013 and December 31, 2012 are temporary. In making this determination, the Company considered the financial condition, credit ratings and near-term prospects of the issuers, the underlying collateral of the investments, and the magnitude of the losses as compared to the cost and the length of time the investments have been in an unrealized loss position. Additionally, while the Company classifies the securities as available for sale, the Company does not currently intend to sell such investments and it is more likely than not to recover the carrying value prior to being required to sell such investments. | |||||||||||
The Company determined the fair value of the contingent consideration obligation based on a probability-weighted income approach derived from quarterly revenue estimates and a probability assessment with respect to the likelihood of achieving the various performance criteria. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the Company’s contingent consideration obligation are the probabilities of achieving certain financial targets and contractual milestones. Significant increases (decreases) in any of those probabilities in isolation may result in a higher (lower) fair value measurement. No changes in valuation techniques occurred during the nine months ended September 30, 2013. | |||||||||||
The changes in fair value of the Company’s Level 3 contingent consideration obligation during the nine months ended September 30, 2013 were as follows: | |||||||||||
Level 3 | |||||||||||
Balance at December 31, 2012 | $ | 8,379 | |||||||||
Fair value adjustment to contingent consideration obligation included in net income | 2,676 | ||||||||||
Earn-out compensation due to SpeechCycle employees | 511 | ||||||||||
SpeechCycle Earn-out payment | (2,553 | ) | |||||||||
Fx impact of change in contingent consideration obligation | 24 | ||||||||||
Balance at September 30, 2013 | $ | 9,037 | |||||||||
Acquisition
Acquisition | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Acquisition | ' | ||||
Acquisition | ' | ||||
5. Acquisition | |||||
Spatial Systems Nominees PTY LTD (“Spatial”) | |||||
On November 30, 2012, the Company acquired 100% of the capital stock of Spatial, an Australian company with operations in the U.S., for total cash consideration of $30.6 million and issued approximately 240 shares of the Company’s Common Stock. The total cash consideration was comprised of $30.0 million for the purchase of all of the shares of Spatial and $625 for the estimated surplus working capital on the date of purchase. Of the 240 shares of the Company’s Common Stock issued, only a portion valued at approximately $1.4 million based on the Company’s November 30, 2012 closing stock price per share was considered purchase price. The remaining value of the shares will be recognized as compensation expense and amortized over the service period of three years. In addition, the Company potentially may make payments totaling up to approximately $5.0 million in cash and may issue up to 260 shares of stock based on the ability to achieve a range of business objectives for the period from December 1, 2012 through November 30, 2013. | |||||
The Company accounted for this business combination by applying the acquisition method, and accordingly, the purchase price was allocated to the tangible assets acquired and liabilities assumed based upon their fair values at the acquisition date. The excess of the purchase price over the net tangible assets and liabilities, approximately $36.4 million was recorded as goodwill, which is not tax deductible. The Company is in the process of finalizing the purchase allocation, thus the provisional measures of deferred revenue, deferred income taxes, intangibles and goodwill are subject to change. The purchase price allocation will be finalized in 2013. | |||||
Allocation of Consideration Transferred | |||||
Total purchase price is summarized as follows: | |||||
November 30, 2012 | |||||
Cash consideration | $ | 30,000 | |||
Working Capital Surplus | 625 | ||||
Value of Synchronoss common stock issued | 1,386 | ||||
Estimated fair value of the Earn-out payments | 4,600 | ||||
Total purchase price | $ | 36,611 | |||
The Company prepared an initial determination of the fair value of assets acquired and liabilities assumed as of the acquisition date using preliminary information. In accordance with ASC 805, during the measurement period an acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of the acquisition date. Accordingly, the Company has recognized measurement period adjustments made during the first quarter of 2013 to the fair value of certain assets acquired and liabilities assumed as a result of the further refinements in the Company’s provisional amounts. These adjustments were retrospectively applied to the November 30, 2012 acquisition date balance sheet. The effect of these adjustments on the preliminary purchase price allocation was a decrease in accounts receivable of $2.6 million, an increase in prepaid expenses and other assets of $5.0 million, an increase to goodwill of $11.8 million, an increase in accrued expenses of $4.6 million, and an increase to deferred revenues of $9.6 million. None of the adjustments had a material impact on the Company’s previously reported results of operations. | |||||
The following table summarizes the estimated fair values of the assets and liabilities assumed at the acquisition date, as adjusted: | |||||
November 30, 2012 | |||||
Cash and cash equivalents | $ | 2,395 | |||
Accounts receivable | 4,409 | ||||
Prepaid expenses and other assets | 5,232 | ||||
Property and equipment | 584 | ||||
Intangible assets | 11,322 | ||||
Other assets, non-current | 70 | ||||
Total identifiable assets acquired | 24,012 | ||||
Accounts payable and accrued liabilities | (9,860 | ) | |||
Deferred revenue | (11,111 | ) | |||
Deferred tax liability | (2,459 | ) | |||
Other liabilities, non-current | (389 | ) | |||
Total liabilities assumed | (23,819 | ) | |||
Net identifiable assets acquired | 193 | ||||
Goodwill | 36,418 | ||||
Net assets acquired | $ | 36,611 | |||
Newbay Software Limited (“Newbay”) | |||||
On December 24, 2012, the Company acquired 100% of the capital stock of Newbay, an Ireland company, and its subsidiaries, for cash consideration of $55.5 million. Newbay has operations in Europe and the U.S. | |||||
The Company accounted for this business combination by applying the acquisition method, and accordingly, the purchase price was allocated to the tangible assets acquired and liabilities assumed based upon their fair values at the acquisition date. The excess of the purchase price over the net tangible assets and liabilities, approximately $23.2 million was recorded as goodwill, which is not tax deductible. The Company is in the process of finalizing the purchase allocation, thus the provisional measures of deferred revenue, deferred income taxes, intangibles and goodwill are subject to change. The Company expects the purchase price allocation will be finalized in 2013. | |||||
Allocation of Consideration Transferred | |||||
Total purchase price is summarized as follows: | |||||
December 24, 2012 | |||||
Total consideration | $ | 55,500 | |||
Closing Adjustment | (2,947 | ) | |||
Total purchase price | $ | 52,553 | |||
The following table summarizes the estimated fair values of the assets and liabilities assumed at the acquisition date, as adjusted: | |||||
December 24, 2012 | |||||
Cash and cash equivalents | $ | 2,444 | |||
Accounts receivable | 5,748 | ||||
Prepaid expenses and other assets | 3,838 | ||||
Property and equipment | 4,543 | ||||
Intangible assets | 27,989 | ||||
Deferred tax asset | 517 | ||||
Other assets, non-current | 1,089 | ||||
Total identifiable assets acquired | 46,168 | ||||
Accounts payable and accrued liabilities | (13,575 | ) | |||
Deferred revenue | (881 | ) | |||
Captial lease | (2,348 | ) | |||
Total liabilities assumed | (16,804 | ) | |||
Net identifiable assets acquired | 29,364 | ||||
Goodwill | 23,189 | ||||
Net assets acquired | $ | 52,553 | |||
Total goodwill changed during the nine months ended September 30, 2013 as follows: | |||||
Balance at December 31, 2012 | $ | 127,322 | |||
Acquisitions | — | ||||
Reclassifications, adjustments and other | (298 | ) | |||
Translation adjustments | (1,026 | ) | |||
Balance at September 30, 2013 | $ | 125,998 | |||
Stockholders_Equity
Stockholders' Equity | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
Stockholders' Equity | ' | |||||||||||
Stockholders' Equity | ' | |||||||||||
6. Stockholders’ Equity | ||||||||||||
Stock Options | ||||||||||||
The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock-based awards. The weighted-average assumptions used in the Black-Scholes option pricing model are as follows: | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||
Expected stock price volatility | 65 | % | 68 | % | 66 | % | 69 | % | ||||
Risk-free interest rate | 1.39 | % | 0.63 | % | 0.86 | % | 0.81 | % | ||||
Expected life of options (in years) | 4.37 | 4.51 | 4.45 | 4.87 | ||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | ||||
The weighted-average fair value (as of the date of grant) of the options was $15.88 and $11.11 per share for the three months ended September 30, 2013 and 2012, respectively, and $15.76 and $14.10 per share for the nine months ended September 30, 2013 and 2012, respectively. During the three months ended September 30, 2013 and 2012, the Company recorded total pre-tax stock-based compensation expense of $7.3 million ($4.8 million after tax or $0.12 per diluted share) and $4.6 million ($2.9 million after tax or $0.07 per diluted share), respectively, which includes the fair value for equity awards issued after January 1, 2006. During the nine months ended September 30, 2013 and 2012, the Company recorded total pre-tax stock-based compensation expense of $18.3 million ($12.1 million after tax or $0.30 per diluted share) and $14.4 million ($9.1 million after tax or $0.23 per diluted share), respectively, which includes the fair value for equity awards issued after January 1, 2006. The total stock-based compensation cost related to non-vested equity awards not yet recognized as an expense as of September 30, 2013 was approximately $42.8 million. That cost is expected to be recognized over a weighted-average period of approximately 2.58 years. | ||||||||||||
The following table summarizes information about stock options outstanding as of September 30, 2013: | ||||||||||||
Weighted- | ||||||||||||
Average | ||||||||||||
Weighted- | Remaining | Aggregate | ||||||||||
Number of | Average | Contractual | Intrinsic | |||||||||
Options | Options | Exercise Price | Term (Years) | Value | ||||||||
Outstanding at December 31, 2012 | 3,976 | $ | 20.88 | |||||||||
Options Granted | 612 | 30.2 | ||||||||||
Options Exercised | (1,042 | ) | 16.78 | |||||||||
Options Cancelled | (117 | ) | 24.96 | |||||||||
Outstanding at September 30, 2013 | 3,429 | $ | 23.65 | 4.54 | $ | 49,432 | ||||||
Vested or expected to vest at September 30, 2013 | 3,253 | $ | 23.37 | 4.46 | $ | 47,803 | ||||||
Exercisable at September 30, 2013 | 1,994 | $ | 20.73 | 3.73 | $ | 34,560 | ||||||
A summary of the Company’s non-vested restricted stock at September 30, 2013, and changes during the nine months ended September 30, 2013, is presented below: | ||||||||||||
Non-Vested Restricted Stock | Number of | |||||||||||
Non-vested at December 31, 2012 | 866 | |||||||||||
Granted | 829 | |||||||||||
Vested | (241 | ) | ||||||||||
Forfeited | (102 | ) | ||||||||||
Non-vested at September 30, 2013 | 1,352 | |||||||||||
Employee Stock Purchase Plan | ||||||||||||
On February 1, 2012, the Company established a ten year Employee Stock Purchase Plan (“ESPP” or “the Plan”) for certain eligible employees. The Plan is to be administered by the Company’s Board of Directors. The total number of shares available for purchase under the Plan is 500 shares of the Company’s Common Stock. Employees participate over a six month period through payroll withholdings and may purchase, at the end of the six month period, the Company’s Common Stock at the lower of 85% of the fair market value on the first day of the offering period or the fair market value on the purchase date. No participant will be granted a right to purchase Common Stock under the Plan if such participant would own more than 5% of the total combined voting power of the Company. In addition, no participant may purchase more than a thousand shares of Common Stock within any purchase period. | ||||||||||||
The expected life of ESPP shares is the average of the remaining purchase period under each offering period. The assumptions used to value employee stock purchase rights are as follows: | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||
Expected stock price volatility | 65 | % | 68 | % | 67 | % | 68 | % | ||||
Risk-free interest rate | 0.1 | % | 0.92 | % | 0.12 | % | 0.92 | % | ||||
Expected life (in years) | 0.5 | 0.5 | 0.5 | 0.5 | ||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | ||||
During the three months ended September 30, 2013 and 2012, the Company recorded $164 and $113, respectively, of compensation expense related to the ESPP. During the nine months ended September 30, 2013 and 2012, the Company recorded $493 and $321, respectively, of compensation expense related to the ESPP. During the three months ended September 30, 2013 and 2012, the Company sold a total of 31 and 33 shares, respectively, of its Treasury Stock pursuant to purchases under its ESPP Plan. During the nine months ended September 30, 2013 and 2012, the Company sold a total of 66 and 33 shares of its Treasury Stock pursuant to purchases under its ESPP Plan. Cash received from purchases through the ESPP Plan during the three months ended September 30, 2013 and 2012, was approximately $804 and $612, respectively, and is included within the financing activities section of the consolidated statements of cash flows. Cash received from purchases through the ESPP Plan during the nine months ended September 30, 2013 and 2012, was approximately $1,474 and $612, respectively, and is included within the financing activities section of the consolidated statements of cash flows. The total unrecognized compensation expense related to the ESPP as of September 30, 2013 was approximately $144, which is expected to be recognized over the remainder of the offering period. | ||||||||||||
Restructuring_Charges
Restructuring Charges | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Restructuring Charges | ' | ||||||||||||||||
Restructuring Charges | ' | ||||||||||||||||
7. Restructuring Charges | |||||||||||||||||
In January 2013, the Company initiated a work-force reduction of approximately 10 percent as part of a corporate restructuring, with reductions occurring across all levels and departments within the Company. This measure was intended to reduce costs and to align the Company’s resources with its key strategic priorities. Additionally, in relation to the work-force reduction, the Company initiated a facilities consolidation, beginning the process of closing one of its leased locations in Seattle, WA. The Company recorded restructuring charges of $4.6 million and $555 during the nine months ended September 30, 2013 for employment termination costs and minimum lease payments, respectively. There were no additional restructuring charges during the three months ended September 30, 2013. At September 30, 2013, the restructuring charges that were unpaid and classified under accrued expenses on the balance sheet related to the facilities consolidation were $256. | |||||||||||||||||
A summary of the Company’s restructuring accrual at September 30, 2013, and changes during the nine months ended September 30, 2013, is presented below: | |||||||||||||||||
Balance at | Balance at | ||||||||||||||||
December 31, 2012 | Charges | Payments | Adjustments | September 30, 2013 | |||||||||||||
Employment termination costs | $ | — | $ | 4,617 | $ | (4,602 | ) | $ | (15 | ) | $ | — | |||||
Facilities consolidation | — | 555 | (299 | ) | — | 256 | |||||||||||
Total | $ | — | $ | 5,172 | $ | (4,901 | ) | $ | (15 | ) | $ | 256 | |||||
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Accumulated Other Comprehensive Income | ' | |||||||||||||
Accumulated Other Comprehensive Income | ' | |||||||||||||
8. Accumulated Other Comprehensive Income | ||||||||||||||
The changes in accumulated other comprehensive income during the three months ended September 30, 2013, are as follows, net of tax: | ||||||||||||||
Unrealized | Net Gain (Loss) | |||||||||||||
Holding Gains on | on Intra-Entity | |||||||||||||
Foreign | Available-for-Sale | Foreign Currency | ||||||||||||
Currency | Securities | Transactions | Total | |||||||||||
Balance at June 30, 2013 | $ | (7,015 | ) | $ | (34 | ) | $ | — | $ | (7,049 | ) | |||
Other comprehensive income before reclassifications | 2,623 | 19 | 2,506 | 5,148 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | — | — | — | — | ||||||||||
Total other comprehensive loss | 2,623 | 19 | 2,506 | 5,148 | ||||||||||
Balance at September 30, 2013 | $ | (4,392 | ) | $ | (15 | ) | $ | 2,506 | $ | (1,901 | ) | |||
The changes in accumulated other comprehensive income during the nine months ended September 30, 2013, are as follows, net of tax: | ||||||||||||||
Unrealized | Net Gain (Loss) | |||||||||||||
Holding Gains on | on Intra-Entity | |||||||||||||
Foreign | Available-for-Sale | Foreign Currency | ||||||||||||
Currency | Securities | Transactions | Total | |||||||||||
Balance at December 31, 2012 | $ | (352 | ) | $ | (13 | ) | $ | — | $ | (365 | ) | |||
Other comprehensive income before reclassifications | (4,040 | ) | (2 | ) | 2,506 | (1,536 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income | — | — | — | — | ||||||||||
Total other comprehensive loss | (4,040 | ) | (2 | ) | 2,506 | (1,536 | ) | |||||||
Balance at September 30, 2013 | $ | (4,392 | ) | $ | (15 | ) | $ | 2,506 | $ | (1,901 | ) |
Credit_Facility
Credit Facility | 9 Months Ended |
Sep. 30, 2013 | |
Credit Facility | ' |
Credit Facility | ' |
9. Credit Facility | |
In September 2013, the Company entered into a Credit Agreement (the “Credit Facility”) with JP Morgan Chase Bank, N.A., as administrative agent, Wells Fargo Bank, National Association, as syndication agent and Capital One, National Association and KeyBank National Association, as co-documentation agents. The Credit Facility, which will be used for general corporate purposes, is a $100 million unsecured revolving line of credit that matures on September 27, 2018. Synchronoss has the right to request an increase in the aggregate principal amount of the Credit Facility to $150 million. Synchronoss has not drawn down any funds under the Credit Facility. | |
The Credit Facility is subject to certain financial covenants. As of September 30, 2013, the Company was in compliance with all required covenants and there were no outstanding balances on the Credit Facility. | |
Legal_Matters
Legal Matters | 9 Months Ended |
Sep. 30, 2013 | |
Legal Matters | ' |
Legal Matters | ' |
10. Legal Matters | |
The Company is not currently subject to any legal proceedings that could have a material adverse effect on its operations; however, it may from time to time become a party to various legal proceedings arising in the ordinary course of its business. The Company is currently the plaintiff in several patent infringement cases. Although the Company cannot predict the outcome of the cases at this time due to the inherent uncertainties of litigation, the Company continues to pursue its claims and believes that the counterclaims are without merit, and the Company intends to defend all of such counterclaims. | |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events | ' |
Subsequent Events | ' |
11. Subsequent Events | |
The Company has evaluated all subsequent events and transactions through the filing date. | |
Earnings_per_Common_Share_Tabl
Earnings per Common Share (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Earnings per Common Share | ' | |||||||||||||
Schedule of reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share | ' | |||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Numerator: | ||||||||||||||
Net income attributable to common stockholders | $ | 3,590 | $ | 6,202 | $ | 7,478 | $ | 23,634 | ||||||
Denominator: | ||||||||||||||
Weighted average common shares outstanding — basic | 38,960 | 38,107 | 38,589 | 38,219 | ||||||||||
Dilutive effect of: | ||||||||||||||
Options and unvested restricted shares | 1,096 | 765 | 1,073 | 973 | ||||||||||
Weighted average common shares outstanding — diluted | 40,056 | 38,872 | 39,662 | 39,192 | ||||||||||
Fair_Value_Measurements_of_Ass1
Fair Value Measurements of Assets and Liabilities (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Fair Value Measurements of Assets and Liabilities | ' | ||||||||||
Schedule of assets and liabilities held and their related classifications under the fair value hierarchy | ' | ||||||||||
September 30, 2013 | December 31, 2012 | ||||||||||
Level 1 (A) | $ | 42,474 | $ | 41,395 | |||||||
Level 2 (B) | 8,294 | 15,474 | |||||||||
Level 3 (C) | (9,037 | ) | (8,379 | ) | |||||||
Total | $ | 41,731 | $ | 48,490 | |||||||
(A) Level 1 assets include money market funds and enhanced income money market funds which are classified as cash equivalents and marketable securities, respectively. | |||||||||||
(B) Level 2 assets include certificates of deposit, municipal bonds and corporate bonds which are classified as marketable securities. | |||||||||||
(C) Level 3 liabilities include the contingent consideration obligation. | |||||||||||
Schedule of aggregate fair value of available for sale securities and aggregate amount of unrealized gains and losses for available for sale securities | ' | ||||||||||
The aggregate fair value of available-for-sale securities and aggregate amount of unrealized gains and losses for available for sale securities at September 30, 2013 were as follows: | |||||||||||
Aggregate Amount of | |||||||||||
Aggregate | Unrealized | ||||||||||
Fair Value | Gains | Losses | |||||||||
Due in one year or less | $ | 7,894 | $ | 2 | $ | (23 | ) | ||||
Due after one year, less than five years | 5,787 | 13 | (3 | ) | |||||||
$ | 13,681 | $ | 15 | $ | (26 | ) | |||||
The aggregate fair value of available-for-sale securities and aggregate amount of unrealized gains and losses for available for sale securities at December 31, 2012 were as follows: | |||||||||||
Aggregate Amount of | |||||||||||
Aggregate | Unrealized | ||||||||||
Fair Value | Gains | Losses | |||||||||
Due in one year or less | $ | 20,188 | $ | 18 | $ | (41 | ) | ||||
Due after one year, less than five years | 653 | 1 | (1 | ) | |||||||
$ | 20,841 | $ | 19 | $ | (42 | ) | |||||
Schedule of changes in fair value of Level 3 contingent consideration obligation | ' | ||||||||||
Level 3 | |||||||||||
Balance at December 31, 2012 | $ | 8,379 | |||||||||
Fair value adjustment to contingent consideration obligation included in net income | 2,676 | ||||||||||
Earn-out compensation due to SpeechCycle employees | 511 | ||||||||||
SpeechCycle Earn-out payment | (2,553 | ) | |||||||||
Fx impact of change in contingent consideration obligation | 24 | ||||||||||
Balance at September 30, 2013 | $ | 9,037 | |||||||||
Acquisition_Tables
Acquisition (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Acquisition | ' | ||||
Schedule of changes in goodwill | ' | ||||
Balance at December 31, 2012 | $ | 127,322 | |||
Acquisitions | — | ||||
Reclassifications, adjustments and other | (298 | ) | |||
Translation adjustments | (1,026 | ) | |||
Balance at September 30, 2013 | $ | 125,998 | |||
Spatial Systems Nominees PTY LTD (Spatial) | ' | ||||
Acquisition | ' | ||||
Summary of purchase price | ' | ||||
November 30, 2012 | |||||
Cash consideration | $ | 30,000 | |||
Working Capital Surplus | 625 | ||||
Value of Synchronoss common stock issued | 1,386 | ||||
Estimated fair value of the Earn-out payments | 4,600 | ||||
Total purchase price | $ | 36,611 | |||
Summary of estimated fair values of assets and liabilities assumed at acquisition date | ' | ||||
November 30, 2012 | |||||
Cash and cash equivalents | $ | 2,395 | |||
Accounts receivable | 4,409 | ||||
Prepaid expenses and other assets | 5,232 | ||||
Property and equipment | 584 | ||||
Intangible assets | 11,322 | ||||
Other assets, non-current | 70 | ||||
Total identifiable assets acquired | 24,012 | ||||
Accounts payable and accrued liabilities | (9,860 | ) | |||
Deferred revenue | (11,111 | ) | |||
Deferred tax liability | (2,459 | ) | |||
Other liabilities, non-current | (389 | ) | |||
Total liabilities assumed | (23,819 | ) | |||
Net identifiable assets acquired | 193 | ||||
Goodwill | 36,418 | ||||
Net assets acquired | $ | 36,611 | |||
Newbay Software Limited (Newbay) | ' | ||||
Acquisition | ' | ||||
Summary of purchase price | ' | ||||
December 24, 2012 | |||||
Total consideration | $ | 55,500 | |||
Closing Adjustment | (2,947 | ) | |||
Total purchase price | $ | 52,553 | |||
Summary of estimated fair values of assets and liabilities assumed at acquisition date | ' | ||||
December 24, 2012 | |||||
Cash and cash equivalents | $ | 2,444 | |||
Accounts receivable | 5,748 | ||||
Prepaid expenses and other assets | 3,838 | ||||
Property and equipment | 4,543 | ||||
Intangible assets | 27,989 | ||||
Deferred tax asset | 517 | ||||
Other assets, non-current | 1,089 | ||||
Total identifiable assets acquired | 46,168 | ||||
Accounts payable and accrued liabilities | (13,575 | ) | |||
Deferred revenue | (881 | ) | |||
Captial lease | (2,348 | ) | |||
Total liabilities assumed | (16,804 | ) | |||
Net identifiable assets acquired | 29,364 | ||||
Goodwill | 23,189 | ||||
Net assets acquired | $ | 52,553 |
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
Stockholders' Equity | ' | |||||||||||
Schedule of weighted-average assumptions used in the Black-Scholes option pricing model | ' | |||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||
Expected stock price volatility | 65 | % | 68 | % | 66 | % | 69 | % | ||||
Risk-free interest rate | 1.39 | % | 0.63 | % | 0.86 | % | 0.81 | % | ||||
Expected life of options (in years) | 4.37 | 4.51 | 4.45 | 4.87 | ||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | ||||
Summary of information about stock options outstanding | ' | |||||||||||
Weighted- | ||||||||||||
Average | ||||||||||||
Weighted- | Remaining | Aggregate | ||||||||||
Number of | Average | Contractual | Intrinsic | |||||||||
Options | Options | Exercise Price | Term (Years) | Value | ||||||||
Outstanding at December 31, 2012 | 3,976 | $ | 20.88 | |||||||||
Options Granted | 612 | 30.2 | ||||||||||
Options Exercised | (1,042 | ) | 16.78 | |||||||||
Options Cancelled | (117 | ) | 24.96 | |||||||||
Outstanding at September 30, 2013 | 3,429 | $ | 23.65 | 4.54 | $ | 49,432 | ||||||
Vested or expected to vest at September 30, 2013 | 3,253 | $ | 23.37 | 4.46 | $ | 47,803 | ||||||
Exercisable at September 30, 2013 | 1,994 | $ | 20.73 | 3.73 | $ | 34,560 | ||||||
Schedule of non-vested restricted stock and changes | ' | |||||||||||
Non-Vested Restricted Stock | Number of | |||||||||||
Non-vested at December 31, 2012 | 866 | |||||||||||
Granted | 829 | |||||||||||
Vested | (241 | ) | ||||||||||
Forfeited | (102 | ) | ||||||||||
Non-vested at September 30, 2013 | 1,352 | |||||||||||
Schedule of assumptions used to value employee stock purchase rights | ' | |||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||
Expected stock price volatility | 65 | % | 68 | % | 67 | % | 68 | % | ||||
Risk-free interest rate | 0.1 | % | 0.92 | % | 0.12 | % | 0.92 | % | ||||
Expected life (in years) | 0.5 | 0.5 | 0.5 | 0.5 | ||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | 0 | % |
Restructuring_Charges_Tables
Restructuring Charges (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Restructuring Charges | ' | ||||||||||||||||
Summary of the restructuring accrual and changes | ' | ||||||||||||||||
Balance at | Balance at | ||||||||||||||||
December 31, 2012 | Charges | Payments | Adjustments | September 30, 2013 | |||||||||||||
Employment termination costs | $ | — | $ | 4,617 | $ | (4,602 | ) | $ | (15 | ) | $ | — | |||||
Facilities consolidation | — | 555 | (299 | ) | — | 256 | |||||||||||
Total | $ | — | $ | 5,172 | $ | (4,901 | ) | $ | (15 | ) | $ | 256 |
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Accumulated Other Comprehensive Income | ' | |||||||||||||
Schedule of changes in accumulated other comprehensive income | ' | |||||||||||||
The changes in accumulated other comprehensive income during the three months ended September 30, 2013, are as follows, net of tax: | ||||||||||||||
Unrealized | Net Gain (Loss) | |||||||||||||
Holding Gains on | on Intra-Entity | |||||||||||||
Foreign | Available-for-Sale | Foreign Currency | ||||||||||||
Currency | Securities | Transactions | Total | |||||||||||
Balance at June 30, 2013 | $ | (7,015 | ) | $ | (34 | ) | $ | — | $ | (7,049 | ) | |||
Other comprehensive income before reclassifications | 2,623 | 19 | 2,506 | 5,148 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | — | — | — | — | ||||||||||
Total other comprehensive loss | 2,623 | 19 | 2,506 | 5,148 | ||||||||||
Balance at September 30, 2013 | $ | (4,392 | ) | $ | (15 | ) | $ | 2,506 | $ | (1,901 | ) | |||
The changes in accumulated other comprehensive income during the nine months ended September 30, 2013, are as follows, net of tax: | ||||||||||||||
Unrealized | Net Gain (Loss) | |||||||||||||
Holding Gains on | on Intra-Entity | |||||||||||||
Foreign | Available-for-Sale | Foreign Currency | ||||||||||||
Currency | Securities | Transactions | Total | |||||||||||
Balance at December 31, 2012 | $ | (352 | ) | $ | (13 | ) | $ | — | $ | (365 | ) | |||
Other comprehensive income before reclassifications | (4,040 | ) | (2 | ) | 2,506 | (1,536 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income | — | — | — | — | ||||||||||
Total other comprehensive loss | (4,040 | ) | (2 | ) | 2,506 | (1,536 | ) | |||||||
Balance at September 30, 2013 | $ | (4,392 | ) | $ | (15 | ) | $ | 2,506 | $ | (1,901 | ) |
Basis_of_Presentation_Details
Basis of Presentation (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Nov. 30, 2012 | Dec. 31, 2012 | Nov. 30, 2012 |
In Thousands, unless otherwise specified | AT&T | Spatial Systems Nominees PTY LTD (Spatial) | Spatial Systems Nominees PTY LTD (Spatial) | Spatial Systems Nominees PTY LTD (Spatial) | ||
Retrospective purchase accounting adjustments | Retrospective purchase accounting adjustments | |||||
Basis of Presentation | ' | ' | ' | ' | ' | ' |
Accounts receivable | ($88,694) | ($74,980) | ' | ' | $2,600 | ' |
Prepaid expenses and other assets | 23,710 | 24,012 | ' | ' | 5,000 | ' |
Goodwill | 125,998 | 127,322 | ' | 36,418 | 11,800 | 11,800 |
Accrued expenses | 29,756 | 41,658 | ' | ' | 4,600 | ' |
Deferred revenues | $22,031 | $20,954 | ' | ' | $9,600 | ' |
Service agreement period | ' | ' | '3 years | ' | ' | ' |
Additional renewal period of the service agreement | ' | ' | '1 year | ' | ' | ' |
Minimum notice period for the renewal agreement | ' | ' | '90 days | ' | ' | ' |
Earnings_per_Common_Share_Deta
Earnings per Common Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Earnings per Common Share | ' | ' | ' | ' |
Stock options that are anti-dilutive and excluded from calculation of diluted earnings per share (in shares) | 1,378 | 2,286 | 1,406 | 1,709 |
Numerator: | ' | ' | ' | ' |
Net income attributable to common stockholders | $3,590 | $6,202 | $7,478 | $23,634 |
Denominator: | ' | ' | ' | ' |
Weighted average common shares outstanding - basic | 38,960 | 38,107 | 38,589 | 38,219 |
Dilutive effect of: | ' | ' | ' | ' |
Options and unvested restricted shares | 1,096 | 765 | 1,073 | 973 |
Weighted average common shares outstanding - diluted | 40,056 | 38,872 | 39,662 | 39,192 |
Fair_Value_Measurements_of_Ass2
Fair Value Measurements of Assets and Liabilities (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy | ' | ' |
Fair value of asset transfers from Level 1 to Level 2 | $0 | ' |
Fair value of asset transfers from Level 2 to Level 1 | 0 | ' |
Level 1 | ' | ' |
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy | ' | ' |
Money market funds | 42,474 | 41,395 |
Level 2 | ' | ' |
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy | ' | ' |
Certificates of deposit, municipal bonds and corporate bonds | 8,294 | 15,474 |
Aggregate Fair Value | ' | ' |
Due in one year or less | 7,894 | 20,188 |
Due after one year, less than five years | 5,787 | 653 |
Total | 13,681 | 20,841 |
Aggregate Amount of Unrealized Gains | ' | ' |
Due in one year or less | 2 | 18 |
Due after one year, less than five years | 13 | 1 |
Total | 15 | 19 |
Aggregate Amount of Unrealized Losses | ' | ' |
Due in one year or less | -23 | -41 |
Due after one year, less than five years | -3 | -1 |
Total | -26 | -42 |
Level 3 | ' | ' |
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy | ' | ' |
Contingent consideration obligation | -9,037 | -8,379 |
Total | ' | ' |
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy | ' | ' |
Fair value of net assets | $41,731 | $48,490 |
Fair_Value_Measurements_of_Ass3
Fair Value Measurements of Assets and Liabilities (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Changes in fair value of the Company's Level 3 contingent consideration obligation | ' | ' | ' | ' |
Fair value adjustment to contingent obligation included in net income | $500 | ($327) | $2,676 | ($5,735) |
Level 3 | Speech Cycle | ' | ' | ' | ' |
Changes in fair value of the Company's Level 3 contingent consideration obligation | ' | ' | ' | ' |
Earn-out compensation due to SpeechCycle employees | ' | ' | 511 | ' |
Level 3 | Contingent Consideration | ' | ' | ' | ' |
Changes in fair value of the Company's Level 3 contingent consideration obligation | ' | ' | ' | ' |
Balance as at the beginning of the period | ' | ' | 8,379 | ' |
Fair value adjustment to contingent obligation included in net income | ' | ' | 2,676 | ' |
Fx impact of change in contingent consideration obligation | ' | ' | 24 | ' |
Balance as at the end of the period | 9,037 | ' | 9,037 | ' |
Level 3 | Contingent Consideration | Speech Cycle | ' | ' | ' | ' |
Changes in fair value of the Company's Level 3 contingent consideration obligation | ' | ' | ' | ' |
Speech Cycle Earn-out payment | ' | ' | ($2,553) | ' |
Acquisition_Details
Acquisition (Details) (USD $) | 9 Months Ended | 0 Months Ended | 0 Months Ended | |||
Sep. 30, 2013 | Nov. 30, 2012 | Nov. 30, 2012 | Dec. 31, 2012 | Nov. 30, 2012 | Dec. 24, 2012 | |
Spatial Systems Nominees PTY LTD (Spatial) | Spatial Systems Nominees PTY LTD (Spatial) | Spatial Systems Nominees PTY LTD (Spatial) | Spatial Systems Nominees PTY LTD (Spatial) | Newbay Software Limited (Newbay) | ||
Maximum | Retrospective purchase accounting adjustments | Retrospective purchase accounting adjustments | ||||
Acquisition | ' | ' | ' | ' | ' | ' |
Percentage of capital stock acquired | ' | 100.00% | ' | ' | ' | 100.00% |
Total cash consideration including working capital surplus | ' | $30,600,000 | ' | ' | ' | ' |
Number of common shares issued for acquisition | ' | 240,000 | 260,000 | ' | ' | ' |
Cash consideration | ' | 30,000,000 | ' | ' | ' | 55,500,000 |
Cash consideration estimated surplus working capital | ' | 625,000 | ' | ' | ' | ' |
Portion considered as purchase price based on closing stock price per share | ' | 1,400,000 | ' | ' | ' | ' |
Amortization term of remaining value of shares issuable based on service period | ' | '3 years | ' | ' | ' | ' |
Potential cash payments | ' | 5,000,000 | ' | ' | ' | ' |
Excess of purchase price over net tangible assets and liabilities, recorded as goodwill which is not tax deductible | 125,998,000 | 36,418,000 | ' | 11,800,000 | 11,800,000 | 23,189,000 |
Allocation of Consideration Transferred | ' | ' | ' | ' | ' | ' |
Total consideration | ' | 30,000,000 | ' | ' | ' | 55,500,000 |
Working Capital Surplus | ' | 625,000 | ' | ' | ' | ' |
Value of Synchronoss common stock issued | ' | 1,386,000 | ' | ' | ' | ' |
Estimated fair value of the Earn-out payments | ' | 4,600,000 | ' | ' | ' | ' |
Closing Adjustment | ' | ' | ' | ' | ' | -2,947,000 |
Total purchase price | ' | 36,611,000 | ' | ' | ' | 52,553,000 |
Adjustment to purchase price allocation | ' | ' | ' | ' | ' | ' |
Accounts receivable | ' | -4,409,000 | ' | ' | 2,600,000 | -5,748,000 |
Prepaid expenses and other assets | ' | 5,232,000 | ' | ' | 5,000,000 | 3,838,000 |
Goodwill | 125,998,000 | 36,418,000 | ' | 11,800,000 | 11,800,000 | 23,189,000 |
Accrued expenses | ' | ' | ' | ' | 4,600,000 | ' |
Deferred revenue | ' | 11,111,000 | ' | ' | 9,600,000 | 881,000 |
Goodwill | ' | ' | ' | ' | ' | ' |
Balance at the beginning of the period | 127,322,000 | ' | ' | 11,800,000 | 11,800,000 | ' |
Reclassifications, adjustments and other | -298,000 | ' | ' | ' | ' | ' |
Translation adjustments | -1,026,000 | ' | ' | ' | ' | ' |
Balance at the end of the period | $125,998,000 | $36,418,000 | ' | $11,800,000 | $11,800,000 | $23,189,000 |
Acquisition_Details_2
Acquisition (Details 2) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Dec. 24, 2012 |
In Thousands, unless otherwise specified | Spatial Systems Nominees PTY LTD (Spatial) | Newbay Software Limited (Newbay) | ||
Summary of estimated fair values of assets and liabilities assumed at the acquisition date | ' | ' | ' | ' |
Cash and cash equivalents | ' | ' | $2,395 | $2,444 |
Accounts receivable | ' | ' | 4,409 | 5,748 |
Prepaid expenses and other assets | ' | ' | 5,232 | 3,838 |
Property and equipment | ' | ' | 584 | 4,543 |
Intangible assets | ' | ' | 11,322 | 27,989 |
Deferred tax asset | ' | ' | ' | 517 |
Other assets, non-current | ' | ' | 70 | 1,089 |
Total identifiable assets acquired | ' | ' | 24,012 | 46,168 |
Accounts payable and accrued liabilities | ' | ' | -9,860 | -13,575 |
Deferred revenue | ' | ' | -11,111 | -881 |
Deferred tax liability | ' | ' | -2,459 | ' |
Capital lease | ' | ' | ' | -2,348 |
Other liabilities, non-current | ' | ' | -389 | ' |
Total liabilities assumed | ' | ' | -23,819 | -16,804 |
Net identifiable assets acquired | ' | ' | 193 | 29,364 |
Goodwill | 125,998 | 127,322 | 36,418 | 23,189 |
Net assets acquired | ' | ' | $36,611 | $52,553 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | ||
Share data in Thousands, except Per Share data, unless otherwise specified | Feb. 01, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Number of Awards | ' | ' | ' | ' | ' |
Cash received under program | ' | ' | ' | $1,474,000 | $612,000 |
Employee Stock Purchase Plan | ' | ' | ' | ' | ' |
Weighted-average assumptions used in the Black-Scholes option pricing model | ' | ' | ' | ' | ' |
Expected stock price volatility (as a percent) | ' | 65.00% | 68.00% | 67.00% | 68.00% |
Risk-free interest rate (as a percent) | ' | 0.10% | 0.92% | 0.12% | 0.92% |
Expected life | ' | '6 months | '6 months | '6 months | '6 months |
Expected dividend yield (as a percent) | ' | 0.00% | 0.00% | 0.00% | 0.00% |
Share-based compensation expense additional disclosures | ' | ' | ' | ' | ' |
After tax stock-based compensation expense | ' | 164,000 | 113,000 | 493,000 | 321,000 |
Stock-based compensation cost related to non-vested equity awards not yet recognized as an expense | ' | 144,000 | ' | 144,000 | ' |
Number of Awards | ' | ' | ' | ' | ' |
Term of Employee Stock Purchase Plan | '10 years | ' | ' | ' | ' |
Employee Stock Purchase Plan Payroll Withholding Period | ' | ' | ' | '6 months | ' |
Total number of shares available for purchase | 500 | ' | ' | ' | ' |
Percentage of fair market value of common stock | ' | ' | ' | 85.00% | ' |
Maximum Percentage of total combined voting power a participant is allowed to be granted a right to purchase common stock | ' | ' | ' | 5.00% | ' |
Maximum number of shares allowed to be purchased by single participant | ' | ' | ' | 1,000 | ' |
Number of shares sold under Employee Stock Purchase Plan | ' | 31 | 33 | 66 | 33 |
Cash received under program | ' | 804,000 | 612,000 | 1,474,000 | 612,000 |
Stock options | ' | ' | ' | ' | ' |
Weighted-average assumptions used in the Black-Scholes option pricing model | ' | ' | ' | ' | ' |
Expected stock price volatility (as a percent) | ' | 65.00% | 68.00% | 66.00% | 69.00% |
Risk-free interest rate (as a percent) | ' | 1.39% | 0.63% | 0.86% | 0.81% |
Expected life | ' | '4 years 4 months 13 days | '4 years 6 months 4 days | '4 years 5 months 12 days | '4 years 10 months 13 days |
Expected dividend yield (as a percent) | ' | 0.00% | 0.00% | 0.00% | 0.00% |
Share-based compensation expense additional disclosures | ' | ' | ' | ' | ' |
Weighted-average fair value (as of the date of grant) of the options granted during the period (in dollars per share) | ' | $15.88 | $11.11 | $15.76 | $14.10 |
Pre-tax stock-based compensation expense recorded | ' | 7,300,000 | 4,600,000 | 18,300,000 | 14,400,000 |
After tax stock-based compensation expense | ' | 4,800,000 | 2,900,000 | 12,100,000 | 9,100,000 |
Stock-based compensation expense per diluted share (in dollars per share) | ' | $0.12 | $0.07 | $0.30 | $0.23 |
Stock-based compensation cost related to non-vested equity awards not yet recognized as an expense | ' | 42,800,000 | ' | 42,800,000 | ' |
Weighted-average period over which stock-based compensation cost related to non-vested equity awards is expected to be recognized | ' | ' | ' | '2 years 6 months 29 days | ' |
Number of Options | ' | ' | ' | ' | ' |
Options outstanding at the beginning of the period (in shares) | ' | ' | ' | 3,976 | ' |
Options Granted (in shares) | ' | ' | ' | 612 | ' |
Options Exercised (in shares) | ' | ' | ' | -1,042 | ' |
Options Cancelled (in shares) | ' | ' | ' | -117 | ' |
Options outstanding at the end of the period (in shares) | ' | 3,429 | ' | 3,429 | ' |
Vested or expected to vest (in shares) | ' | 3,253 | ' | 3,253 | ' |
Exercisable (in shares) | ' | 1,994 | ' | 1,994 | ' |
Weighted-Average Exercise Price | ' | ' | ' | ' | ' |
Balance at the beginning of the period (in dollars per share) | ' | ' | ' | $20.88 | ' |
Options Granted (in dollars per share) | ' | ' | ' | $30.20 | ' |
Options Exercised (in dollars per share) | ' | ' | ' | $16.78 | ' |
Options Cancelled (in dollars per share) | ' | ' | ' | $24.96 | ' |
Balance at the end of the period (in dollars per share) | ' | $23.65 | ' | $23.65 | ' |
Vested or expected to vest (in dollars per share) | ' | $23.37 | ' | $23.37 | ' |
Exercisable (in dollars per share) | ' | $20.73 | ' | $20.73 | ' |
Weighted-Average Remaining Contractual Term | ' | ' | ' | ' | ' |
Outstanding | ' | ' | ' | '4 years 6 months 14 days | ' |
Vested or expected to vest | ' | ' | ' | '4 years 5 months 16 days | ' |
Exercisable | ' | ' | ' | '3 years 8 months 23 days | ' |
Aggregate Intrinsic Value | ' | ' | ' | ' | ' |
Outstanding | ' | 49,432,000 | ' | 49,432,000 | ' |
Vested or expected to vest | ' | 47,803,000 | ' | 47,803,000 | ' |
Exercisable | ' | $34,560,000 | ' | $34,560,000 | ' |
Restricted stock | ' | ' | ' | ' | ' |
Number of Awards | ' | ' | ' | ' | ' |
Non-vested at the beginning of the period (in shares) | ' | ' | ' | 866 | ' |
Granted (in shares) | ' | ' | ' | 829 | ' |
Vested (in shares) | ' | ' | ' | -241 | ' |
Forfeited (in shares) | ' | ' | ' | -102 | ' |
Non-vested at the end of the period (in shares) | ' | 1,352 | ' | 1,352 | ' |
Restructuring_Charges_Details
Restructuring Charges (Details) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended |
Jan. 31, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
Restructuring Charges | ' | ' | ' |
Percent of work-force reduction under corporate restructuring plan | 10.00% | ' | ' |
Restructuring charges for Employment termination costs | ' | $0 | $4,600,000 |
Restructuring charges for Minimum lease payments | ' | 0 | 555,000 |
Restructuring accrual and changes | ' | ' | ' |
Charges | ' | ' | 5,172,000 |
Payments | ' | ' | -4,901,000 |
Adjustments | ' | ' | -15,000 |
Balance at the end of the period | ' | 256,000 | 256,000 |
Employment termination costs | ' | ' | ' |
Restructuring accrual and changes | ' | ' | ' |
Charges | ' | ' | 4,617,000 |
Payments | ' | ' | -4,602,000 |
Adjustments | ' | ' | -15,000 |
Facilities consolidation | ' | ' | ' |
Restructuring accrual and changes | ' | ' | ' |
Charges | ' | ' | 555,000 |
Payments | ' | ' | -299,000 |
Balance at the end of the period | ' | $256,000 | $256,000 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Details) (USD $) | 3 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 |
Changes in accumulated other comprehensive income | ' | ' |
Balance at the beginning of the period | ($7,049) | ($365) |
Other comprehensive income before reclassifications | 5,148 | -1,536 |
Total other comprehensive loss | 5,148 | -1,536 |
Balance at the end of the period | -1,901 | -1,901 |
Foreign Currency | ' | ' |
Changes in accumulated other comprehensive income | ' | ' |
Balance at the beginning of the period | -7,015 | -352 |
Other comprehensive income before reclassifications | 2,623 | -4,040 |
Total other comprehensive loss | 2,623 | -4,040 |
Balance at the end of the period | -4,392 | -4,392 |
Unrealized Holding Gains on Available-for-Sale Securities | ' | ' |
Changes in accumulated other comprehensive income | ' | ' |
Balance at the beginning of the period | -34 | -13 |
Other comprehensive income before reclassifications | 19 | -2 |
Total other comprehensive loss | 19 | -2 |
Balance at the end of the period | -15 | -15 |
Net Gain (Loss) on Intra-Entity Foreign Currency Transactions | ' | ' |
Changes in accumulated other comprehensive income | ' | ' |
Other comprehensive income before reclassifications | 2,506 | 2,506 |
Total other comprehensive loss | 2,506 | 2,506 |
Balance at the end of the period | $2,506 | $2,506 |
Credit_Facility_Details
Credit Facility (Details) (Credit facility, USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Credit facility | ' |
Credit Facility | ' |
Borrowing capacity | $100,000,000 |
Amount of borrowing capacity to which the company has a right to request an increase | 150,000,000 |
Amount outstanding | $0 |