Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 27, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | SYNCHRONOSS TECHNOLOGIES INC | |
Entity Central Index Key | 1131554 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 43,279,832 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $152,487 | $235,967 |
Marketable securities | 54,955 | 51,097 |
Accounts receivable, net of allowance for doubtful accounts of $220 and $88 at March 31, 2015 and December 31, 2014, respectively | 138,011 | 118,371 |
Prepaid expenses and other assets | 30,775 | 35,023 |
Deferred tax assets | 3,123 | 1,475 |
Total current assets | 379,351 | 441,933 |
Marketable securities | 2,321 | 3,313 |
Property and equipment, net | 160,252 | 151,171 |
Goodwill | 173,367 | 147,135 |
Intangible assets, net | 109,766 | 99,489 |
Deferred tax assets | 2,903 | 1,232 |
Other assets | 18,532 | 18,549 |
Total assets | 846,492 | 862,822 |
Current liabilities: | ||
Accounts payable | 12,999 | 25,059 |
Accrued expenses | 33,606 | 42,679 |
Deferred revenues | 11,957 | 11,897 |
Contingent consideration obligation | 8,000 | |
Total current liabilities | 58,562 | 87,635 |
Lease financing obligation - long-term | 14,055 | 9,204 |
Convertible debt | 230,000 | 230,000 |
Deferred Tax Liabilities, Net, Noncurrent | 5,955 | 3,698 |
Other liabilities | 2,781 | 3,178 |
Stockholders' equity: | ||
Preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding at March 31, 2015 and December 31, 2014 | ||
Common stock, $0.0001 par value; 100,000 shares authorized, 46,940 and 46,444 shares issued; 43,236 and 42,711 outstanding at March 31, 2015 and December 31, 2014, respectively | 4 | 4 |
Treasury stock, at cost (3,704 and 3,733 shares at March 31, 2015 and December 31, 2014, respectively) | -65,969 | -66,336 |
Additional paid-in capital | 469,312 | 454,740 |
Accumulated other comprehensive loss | -39,482 | -20,014 |
Retained earnings | 171,274 | 160,713 |
Total stockholders' equity | 535,139 | 529,107 |
Total liabilities and stockholders' equity | $846,492 | $862,822 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $220 | $88 |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
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 | 100,000,000 | 100,000,000 |
Common stock, shares issued | 46,940,000 | 46,444,000 |
Common stock, shares outstanding | 43,236,000 | 42,711,000 |
Treasury stock, shares | 3,704,000 | 3,733,000 |
CONSOLIDATED_STATEMENTS_OF_INC
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||
Net revenues | $132,926 | $98,477 |
Costs and expenses: | ||
Cost of services | 53,655 | 39,979 |
Research and development | 22,024 | 15,541 |
Selling, general and administrative | 20,883 | 17,125 |
Net change in contingent consideration obligation | 1,211 | |
Restructuring charges | 3,240 | |
Depreciation and amortization | 14,835 | 12,266 |
Total costs and expenses | 114,637 | 86,122 |
Income from operations | 18,289 | 12,355 |
Interest income | 466 | 49 |
Interest expense | -1,342 | -420 |
Other income | 14 | 796 |
Income before income tax expense | 17,427 | 12,780 |
Income tax expense | -6,866 | -5,196 |
Net income | 10,561 | 7,584 |
Net income per common share: | ||
Basic (in dollars per share) | $0.25 | $0.19 |
Diluted (in dollars per share) | $0.23 | $0.19 |
Weighted-average common shares outstanding: | ||
Basic (in shares) | 41,626 | 39,769 |
Diluted (in shares) | 47,080 | 40,655 |
Comprehensive (loss) income | ($8,907) | $8,583 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Operating activities: | ||
Net income | $10,561 | $7,584 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization expense | 14,835 | 12,266 |
Amortization of debt issuance costs | 375 | |
Amortization of bond premium | 474 | 74 |
Deferred income taxes | -733 | 3,112 |
Non-cash interest on leased facility | 233 | 230 |
Stock-based compensation | 6,585 | 5,842 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net of allowance for doubtful accounts | -22,145 | -28,935 |
Prepaid expenses and other current assets | 5,623 | 816 |
Other assets | -443 | 465 |
Accounts payable | 106 | -3,388 |
Accrued expenses | -12,301 | -8,743 |
Contingent consideration obligation | -1,532 | 1,611 |
Excess tax benefit from the exercise of stock options | -1,981 | -385 |
Other liabilities | -243 | 1,249 |
Deferred revenues | 451 | -3,204 |
Net cash used in operating activities | -135 | -11,406 |
Investing activities: | ||
Purchases of fixed assets | -24,217 | -8,044 |
Purchases of marketable securities available-for-sale | -43,548 | -1,244 |
Sales and maturities of marketable securities available-for-sale | 40,285 | 315 |
Business acquired, net of cash | -59,481 | |
Net cash used in investing activities | -86,961 | -8,973 |
Financing activities: | ||
Proceeds from the exercise of stock options | 5,398 | 3,273 |
Payments on contingent consideration obligation | -4,468 | |
Excess tax benefit from the exercise of stock options | 1,981 | 385 |
Proceeds from the sale of treasury stock in connection with an employee stock purchase plan | 975 | 740 |
Repayments of capital obligations | -291 | -324 |
Net cash provided by financing activities | 3,595 | 4,074 |
Effect of exchange rate changes on cash | 21 | 64 |
Net decrease in cash and cash equivalents | -83,480 | -16,241 |
Cash and cash equivalents at beginning of period | 235,967 | 63,512 |
Cash and cash equivalents at end of period | 152,487 | 47,271 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | $346 | $717 |
Unaudited_Statements
Unaudited Statements | 3 Months Ended |
Mar. 31, 2015 | |
Unaudited Statements | |
Unaudited Statements | The consolidated financial statements as of March 31, 2015 and for the three months ended March 31, 2015 and 2014 are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods. They do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements and should be read in conjunction with the consolidated financial statements and notes in the Annual Report of Synchronoss Technologies, Inc. incorporated by reference in the Company's annual report on Form 10-K for the year ended December 31, 2014. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. The Company has no unconsolidated subsidiaries or investments accounted for under the equity method. The results reported in these consolidated financial statements should not necessarily be taken as indicative of results that may be expected for the entire year. The balance sheet at December 31, 2014 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Certain amounts from the prior year’s financial statements have been reclassified to conform to the current year’s presentation. |
Description_of_Business
Description of Business | 3 Months Ended |
Mar. 31, 2015 | |
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 cloud and activation solutions for connected devices to enterprise customers on a global scale. The Company’s software creates innovative consumer and enterprise solutions that drive billions of transactions on a wide range of connected devices across the world’s leading networks. The Company’s solutions include: intelligent connectivity management and content synchronization, backup and sharing service procurement, provisioning, activation, and support 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, such as automobiles, wearables for personal health and wellness, and connected homes), multi-channel retailers and other customers to accelerate and monetize value-add services for connected devices. This includes automating subscriber activation, order management, upgrades, service provisioning and connectivity and content management from any sales channel to any communication service (wireless or wireline), across any connected device type and managing the content transfer, synchronization and share. | |
The Company’s Synchronoss Personal Cloud™ platform is specifically designed to power the activation of the devices and technologies that seamlessly connect today’s consumer and leverage the Company’s cloud assets to manage these devices and content associated with them. Synchronoss WorkSpace™ platform focuses on providing a secure, integrated file sharing and collaboration solution for small and medium businesses. The Company’s consumer and small business platforms and solutions enable Synchronoss to drive a natural extension of the Company’s mobile activations and cloud services with leading wireless networks around the world to link other non-traditional devices (i.e., automobiles, wearables for personal health and wellness, and connected homes). | |
The Company’s Activation Services, Synchronoss Personal Cloud™ and Synchronoss WorkSpace™ 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 the Company’s solutions and technology to automate the process of activation and content and settings management for their subscriber’s devices while delivering additional communication services. The Company’s Integrated Life™ platform brings together the capabilities of device/service activation with content and settings management to provide a seamless experience of activating and managing both traditional and non-traditional devices. The Company’s platforms also support automated customer care processes through use of accurate and effective speech processing technology and enable the Company’s customers to offer their subscribers the ability to store in and retrieve from the Cloud their personal and work 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, highly available, 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 allowing the Company to meet the rapidly changing and converging services and connected devices offered by the Company’s customers. Synchronoss enables its customers to acquire, retain and service subscribers quickly, reliably and cost-effectively by enabling backup, restore, synchronization and sharing of subscriber content. Through the use of the Company’s platforms, the Company’s customers can simplify the processes associated with managing the customer experience for procuring, activating, connecting, backing-up, synchronizing and social media and enterprise-wide sharing/collaboration with connected devices and contents from these devices and associated services. The extensibility, scalability, reliability and relevance of the Company’s platforms enable new revenue streams and retention opportunities for the Company’s 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 the Company’s sales organizations in North America, Europe and Asia-Pacific. | |
The Company’s industry-leading customers include Tier 1 mobile service providers such as AT&T Inc., Verizon Wireless, Vodafone, Orange, Sprint, Telstra and U.S. Cellular, Tier 1 cable operators/MSOs and wireline operators like AT&T Inc., Comcast, Cablevision, Charter, CenturyLink, Mediacom and Level 3 Communications and large OEMs such as Apple and Ericsson. These customers utilize the Company’s platforms, technology and services to service both consumer and business customers. | |
Basis_of_Presentation_and_Cons
Basis of Presentation and Consolidation | 3 Months Ended |
Mar. 31, 2015 | |
Basis of Presentation and Consolidation | |
Basis of Presentation and Consolidation | 2. Basis of Presentation and Consolidation |
For further information about the Company’s basis of presentation and consolidation or its significant accounting policies, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014. | |
Impact of Recently Issued Accounting Standards | |
In March 2015, the Financial Accounting Standards Board issued Accounting issued Accounting Standards Update (ASU) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments is permitted for financial statements that have not been previously issued. The amendments should be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect of the change on the financial statement line items (i.e., debt issuance cost asset and the debt liability). The Company is currently evaluating the effects of ASU 2015-03 on the consolidated financial statements. | |
In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a variable interest entity ("VIE"), and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact, if any, of the adoption of this guidance on the consolidated financial statements. | |
In January 2015, the FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The new guidance eliminates the separate presentation of extraordinary items, net of tax and the related earnings per share, but does not affect the requirement to disclose material items that are unusual in nature or infrequently occurring. The ASU applies to all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Entities have the option to apply the new guidance prospectively or retrospectively, and can choose early adoption. The Company does not expect the adoption of this ASU to significantly impact the consolidated financial statements. | |
In May 2014, the FASB and the International Accounting Standards Board (“IASB”) (collectively, the “Boards”) jointly issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under US GAAP and IFRS. The standard’s core principle (issued as ASU 2014-09 by the FASB and as IFRS 15 by the IASB), is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. The effective date is fiscal years beginning after December 15, 2016. Early application is not permitted. The Company is currently evaluating the methods of adoption and the impact that ASU 2014-09 will have on the consolidated financial statements. | |
Earnings_per_Common_Share
Earnings per Common Share | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
Earnings per Common Share | |||||||
Earnings per Common Share | 3. Earnings per Common Share | ||||||
Basic earnings per share is calculated by using the weighted-average number of common shares outstanding during 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, convertible debt and unvested share awards. The dilutive effects of stock options and restricted stock awards are based on the treasury stock method. The dilutive effect of the assumed conversion of convertible debt is determined using the if-converted method. The after-tax effect of interest expense related to the convertible securities is added back to net income, and the convertible debt is assumed to have been converted into common shares at 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 291 and 1,642 for the three months ended March 31, 2015 and 2014, respectively. | |||||||
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
Numerator: | |||||||
Net income attributable to common stockholders | $ | 10,561 | $ | 7,584 | |||
Income effect for interest on convertible debt, net of tax | 475 | — | |||||
Numerator for diluted EPS- Income to common stockholders after assumed conversions | $ | 11,036 | $ | 7,584 | |||
Denominator: | |||||||
Weighted average common shares outstanding — basic | 41,626 | 39,769 | |||||
Dilutive effect of: | |||||||
Shares from assumed conversion of convertible debt | 4,326 | — | |||||
Options and unvested restricted shares | 1,128 | 886 | |||||
Weighted average common shares outstanding — diluted | 47,080 | 40,655 | |||||
Fair_Value_Measurements_of_Ass
Fair Value Measurements of Assets and Liabilities | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
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: | ||||||||||
March 31, 2015 | December 31, 2014 | |||||||||
Level 1 (A) | $ | 157,884 | $ | 241,364 | ||||||
Level 2 (B) | 51,879 | 49,013 | ||||||||
Level 3 (C) | — | -8,000 | ||||||||
Total | $ | 209,763 | $ | 282,377 | ||||||
(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 three months ended March 31, 2015. | ||||||||||
The aggregate fair value of available-for-sale securities and aggregate amount of unrealized gains and losses for available-for-sale securities at March 31, 2015 were as follows: | ||||||||||
Aggregate Amount of | ||||||||||
Aggregate | Unrealized | |||||||||
Fair Value | Gains | Losses | ||||||||
Due in one year or less | $ | 54,955 | $ | 8 | $ | -89 | ||||
Due after one year, less than five years | 2,321 | 2 | -3 | |||||||
$ | 57,276 | $ | 10 | $ | -92 | |||||
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, 2014 were as follows: | ||||||||||
Aggregate Amount of | ||||||||||
Aggregate | Unrealized | |||||||||
Fair Value | Gains | Losses | ||||||||
Due in one year or less | $ | 51,097 | $ | 10 | $ | -72 | ||||
Due after one year, less than five years | 3,313 | 2 | -3 | |||||||
$ | 54,410 | $ | 12 | $ | -75 | |||||
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 the 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 as of March 31, 2015 and December 31, 2014 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 using the 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. As of December 31, 2014 all of the financial targets and contractual milestones were met and on February 20, 2015 the Company paid out $8 million related to the Strumsoft Earn-out. | ||||||||||
The changes in fair value of the Company’s Level 3 contingent consideration obligation during the three months ended March 31, 2015 were as follows: | ||||||||||
Level 3 | ||||||||||
Balance at December 31, 2014 | $ | 8,000 | ||||||||
Payment of contingent consideration | -8,000 | |||||||||
Balance at March 31, 2015 | $ | — | ||||||||
Acquisition
Acquisition | 3 Months Ended | |||||
Mar. 31, 2015 | ||||||
Acquisition | ||||||
Acquisition | 5. Acquisition | |||||
F-Secure Corporation (“F-Secure”) | ||||||
On February 23, 2015, the Company acquired certain cloud assets from F-Secure, an online security and privacy company headquartered in Finland, for cash consideration of $59.5 million, net of liabilities assumed. The Company believes that the purchase will expand the Company’s cloud services customer base. | ||||||
On February 18, 2015, the Company entered into a patent license and settlement agreement whereby the Company granted F-Secure a limited license to the Company's patents. As part of the business combination accounting rules, the Company calculated the fair value of the license using an income approach, specifically a relief from royalty method, which incorporates significant estimates and assumptions made by management, which by their nature are characterized by uncertainty. Inputs used to value the license are considered Level 3 inputs. | ||||||
The Company determined the preliminary fair value of the net assets acquired during the first quarter of 2015 as follows: | ||||||
Preliminary | ||||||
Purchase Price | ||||||
Allocation | ||||||
Intangible assets: | Wtd. Avg. | |||||
Technology | $ | 3,071 | 1 year | |||
Customer relationships | 20,475 | 5 years | ||||
Goodwill | 36,454 | |||||
Total assets acquired | 60,000 | |||||
Accrued expenses | 519 | |||||
Net assets acquired | $ | 59,481 | ||||
The goodwill recorded in connection with this acquisition is based on operating synergies and other benefits expected to result from the combined operations and the assembled workforce acquired. The goodwill acquired will not be deductible for tax purposes. | ||||||
Acquisition-related costs recognized during the three months ended March 31, 2015, including transaction costs such as legal, accounting, valuation and other professional services, were $856 thousand. | ||||||
Voxmobili SA (“Vox”) | ||||||
On July 11, 2014, the Company acquired all outstanding shares of Vox, a French company, for $25.1 million, net of cash acquired and liabilities assumed, subject to certain working capital adjustments. The Company believes that this acquisition contributed to its position as the leading provider of personal cloud solutions to the world’s largest mobile operators. | ||||||
The Company determined the preliminary fair value of the net assets acquired during the third quarter of 2014 as follows: | ||||||
Purchase Price | ||||||
Allocation | ||||||
Cash | $ | 1,414 | ||||
Prepaid expenses and other assets | 220 | |||||
Accounts receivable | 3,750 | |||||
Intangible assets: | Wtd. Avg. | |||||
Technology | 4,900 | 5 years | ||||
Customer relationships | 5,000 | 5 years | ||||
Goodwill | 17,188 | |||||
Total assets acquired | 32,472 | |||||
Accounts payable and accrued liabilities | 2,118 | |||||
Deferred revenues | 457 | |||||
Deferred taxes | 3,338 | |||||
Net assets acquired | $ | 26,559 | ||||
The goodwill recorded in connection with this acquisition was based on operating synergies and other benefits expected to result from the combined operations and the assembled workforce acquired. The goodwill acquired is not deductible for tax purposes. | ||||||
Acquisition-related costs, including transaction costs such as legal, accounting, valuation and other professional services, were $1.5 million. | ||||||
Stockholders_Equity
Stockholders' Equity | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
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 March 31, | |||||||||||
2015 | 2014 | ||||||||||
Expected stock price volatility | 48 | % | 63 | % | |||||||
Risk-free interest rate | 1.26 | % | 1.54 | % | |||||||
Expected life of options (in years) | 4.01 | 4.28 | |||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||
The weighted-average fair value (as of the date of grant) of the options was $15.86 and $16.20 per share for the three months ended March 31, 2015 and 2014, respectively. During the three months ended March 31, 2015 and 2014, the Company recorded total pre-tax stock-based compensation expense of $6.6 million ($4.4 million after tax or $0.09 per diluted share) and $5.8 million ($3.8 million after tax or $0.09 per diluted share), respectively, which includes the fair value for equity awards issued. The total stock-based compensation cost related to unvested equity awards not yet recognized as an expense as of March 31, 2015 was approximately $42.8 million. The expense is expected to be recognized over a weighted-average period of approximately 2.63 years. | |||||||||||
The following table summarizes information about stock options outstanding as of March 31, 2015: | |||||||||||
Weighted- | |||||||||||
Average | |||||||||||
Weighted- | Remaining | Aggregate | |||||||||
Number of | Average | Contractual | Intrinsic | ||||||||
Options | Options | Exercise Price | Term (Years) | Value | |||||||
Outstanding at December 31, 2014 | 2,767 | $ | 25.81 | ||||||||
Options Granted | 299 | 41.04 | |||||||||
Options Exercised | -227 | 23.80 | |||||||||
Options Cancelled | -96 | 30.91 | |||||||||
Outstanding at March 31, 2015 | 2,743 | $ | 27.45 | 4.59 | $ | 54,877 | |||||
Vested or expected to vest at March 31, 2015 | 2,524 | $ | 26.81 | 4.44 | $ | 52,128 | |||||
Exercisable at March 31, 2015 | 1,465 | $ | 22.40 | 3.40 | $ | 36,708 | |||||
A summary of the Company’s unvested restricted stock at March 31, 2015, and changes during the three months ended March 31, 2015, is presented below: | |||||||||||
Number of | |||||||||||
Non-Vested Restricted Stock | Awards | ||||||||||
Non-vested at December 31, 2014 | 1,342 | ||||||||||
Granted | 328 | ||||||||||
Vested | -298 | ||||||||||
Forfeited | -59 | ||||||||||
Non-vested at March 31, 2015 | 1,313 | ||||||||||
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 thousand 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 one 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 weighted-average assumptions used to value employee stock purchase rights are as follows: | |||||||||||
Three Months Ended March 31, | |||||||||||
2015 | 2014 | ||||||||||
Expected stock price volatility | 40 | % | 64 | % | |||||||
Risk-free interest rate | 0.05 | % | 0.08 | % | |||||||
Expected life (in years) | 0.50 | 0.50 | |||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||
During the three months ended March 31, 2015 and 2014, the Company recorded $150 thousand and $199 thousand, respectively, of compensation expense related to the ESPP. During the three months ended March 31, 2015 and 2014, the Company sold a total of 29 thousand and 27 thousand shares, respectively, of its Treasury Stock pursuant to purchases under its ESPP. Cash received from purchases through the ESPP during the three months ended March 31, 2015 and 2014, was approximately $975 thousand and $740 thousand, 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 March 31, 2015 was approximately $201 thousand, which is expected to be recognized over the remainder of the offering period. | |||||||||||
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Accumulated Other Comprehensive Income (Loss). | |||||||||||||
Accumulated Other Comprehensive Income (Loss) | 7. Accumulated Other Comprehensive Income (Loss) | ||||||||||||
Comprehensive (loss) income was as follows: | |||||||||||||
Three Months Ended March 31, | |||||||||||||
2015 | 2014 | ||||||||||||
Net income | $ | 10,561 | $ | 7,584 | |||||||||
Translation adjustments | -16,837 | 995 | |||||||||||
Unrealized income on securities, (net of tax) | 241 | 4 | |||||||||||
Net loss on intra-entity foreign currency transactions | -2,872 | — | |||||||||||
Total comprehensive (loss) income | $ | -8,907 | $ | 8,583 | |||||||||
The changes in accumulated other comprehensive income (loss) during the three months ended March 31, 2015, are as follows, net of tax: | |||||||||||||
Unrealized (Loss) | |||||||||||||
Income on | Unrealized Holding | ||||||||||||
Intra-Entity | Gains (Losses) on | ||||||||||||
Foreign | Foreign Currency | Available-for-Sale | |||||||||||
Currency | Transactions | Securities | Total | ||||||||||
Balance at December 31, 2014 | $ | -16,980 | $ | -2,857 | $ | -177 | $ | -20,014 | |||||
Other comprehensive (loss) income | -16,837 | -2,872 | 241 | -19,468 | |||||||||
Total comprehensive (loss) income | -16,837 | -2,872 | 241 | -19,468 | |||||||||
Balance at March 31, 2015 | $ | -33,817 | $ | -5,729 | $ | 64 | $ | -39,482 | |||||
Goodwill_and_Intangibles
Goodwill and Intangibles | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Goodwill and Intangibles | |||||||||||
Goodwill | |||||||||||
8. Goodwill and Intangibles | |||||||||||
Goodwill | |||||||||||
The Company recorded Goodwill which represents the excess of the purchase price over the fair value of assets acquired, including other definite-lived intangible assets. Goodwill is not amortized, but reviewed annually for impairment or upon the occurrence of events or changes in circumstances that would more likely than not reduce the fair value of the reporting unit below its carrying amount. | |||||||||||
The changes in Goodwill during the three months ended March 31, 2015 are as follows: | |||||||||||
Balance at December 31, 2014 | $ | 147,135 | |||||||||
F-Secure acquisition | 36,454 | ||||||||||
Translation adjustments | -10,222 | ||||||||||
Balance at March 31, 2015 | $ | 173,367 | |||||||||
Other Intangible Assets | |||||||||||
The Company’s intangible assets with definite lives consist primarily of trade names, technology, and customer lists and relationships. These intangible assets are being amortized on the straight‑line method over the estimated useful lives of the assets. | |||||||||||
The Company’s intangible assets consist of the following: | |||||||||||
Weighted | March 31, 2015 | ||||||||||
Average | Accumulated | ||||||||||
Life | Cost | Amortization | Net | ||||||||
Trade name | 4 | $ | 1,529 | $ | -1,293 | $ | 236 | ||||
Technology | 7 | 65,310 | -25,227 | 40,083 | |||||||
Customer lists and relationships | 9 | 86,246 | -22,938 | 63,308 | |||||||
Capitalized software and patents | 3 | 8,745 | -2,606 | 6,139 | |||||||
Order Backlog | — | 918 | -918 | — | |||||||
$ | 162,748 | $ | -52,982 | $ | 109,766 | ||||||
Debt
Debt | 3 Months Ended |
Mar. 31, 2015 | |
Debt | |
Debt | 9. Debt |
Credit Facility | |
In September 2013, the Company entered into a Credit Agreement (the “Credit Facility”) with JP Morgan Chase Bank, N.A., as the administrative agent, Wells Fargo Bank, National Association, as the syndication agent and Capital One, National Association and KeyBank National Association, as co-documentation agents. The Credit Facility, which can be used for general corporate purposes, is a $100 million unsecured revolving line of credit that matures on September 27, 2018. The Company pays a commitment fee in the range of 25 to 35 basis points on the unused balance of the revolving credit facility under the Credit Agreement. Commitment fees totaled approximately $64 thousand and $62 thousand during the three months ended March 31, 2015 and 2014, respectively. Synchronoss has the right to request an increase in the aggregate principal amount of the Credit Facility to $150 million. | |
The Credit Facility is subject to certain financial covenants. As of March 31, 2015, the Company was in compliance with all required covenants and there were no outstanding balances on the Credit Facility. | |
Convertible Senior Notes | |
On August 12, 2014, the Company issued $230.0 million aggregate principal amount of its 0.75% Convertible Senior Notes due in 2019 (the “2019 Notes”). The 2019 Notes mature on August 15, 2019, and bear interest at a rate of 0.75% per annum payable semi-annually in arrears on February 15 and August 15 of each year. The Company accounted for the $230.0 million face value of the debt as a liability and capitalized approximately $7.1 million of financing fees, related to the issuance. | |
The 2019 Notes are senior, unsecured obligations of the Company, and are convertible into shares of its common stock based on a conversion rate of 18.8072 shares per $1,000 principal amount of 2019 Notes which is equivalent to an initial conversion price of approximately $53.17 per share. The Company will satisfy any conversion of the 2019 Notes with shares of the Company’s common stock. The 2019 Notes are convertible at the note holders’ option prior to their maturity and if specified corporate transactions occur. The issue price of the 2019 Notes was equal to their face amount. | |
Holders of the 2019 Notes who convert their notes in connection with a qualifying fundamental change, as defined in the related indenture, may be entitled to a make-whole premium in the form of an increase in the conversion rate. Additionally, following the occurrence of a fundamental change, holders may require that the Company repurchase some or all of the 2019 Notes for cash at a repurchase price equal to 100% of the principal amount of the notes being repurchased, plus accrued and unpaid interest, if any. As of March 31, 2015, none of these conditions existed with respect to the 2019 Notes and as a result, the 2019 Notes are classified as long term. | |
The 2019 Notes are the Company’s direct senior unsecured obligations and rank equal in right of payment to all of the Company’s existing and future unsecured and unsubordinated indebtedness. | |
At March 31, 2015, the carrying amount of the liability and the outstanding principal of the 2019 Notes was $230.0 million, with an effective interest rate of approximately 1.36%. The fair value of the 2019 Notes was $270.7 million at March 31, 2015. | |
The interest expense of the Company’s 2019 Notes related to the contractual interest coupon was $431 thousand for the three months ended March 31, 2015. There was no interest expense related to the 2019 Notes for the three months ended March 31, 2014. | |
Restructuring_Charges
Restructuring Charges | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Restructuring Charges | |||||||||||||
Restructuring Charges | 10. Restructuring | ||||||||||||
In January 2015, the Company initiated the preliminary phase of a work-force reduction 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. As of March 31, 2015, there was $2.2 million of unpaid restructuring charges classified under accrued expenses on the balance sheet. | |||||||||||||
A summary of the Company’s restructuring accrual at March 31, 2015 and changes during the three months ended March 31, 2015, is presented below: | |||||||||||||
Balance at | Balance at | ||||||||||||
December 31, 2014 | Charges | Payments | March 31, 2015 | ||||||||||
Employment termination costs | $ | — | $ | 3,240 | $ | -1,065 | $ | 2,175 | |||||
Total | $ | — | $ | 3,240 | $ | -1,065 | $ | 2,175 | |||||
Legal_Matters
Legal Matters | 3 Months Ended |
Mar. 31, 2015 | |
Legal Matters | |
Legal Matters | 11. Legal Matters |
On October 7, 2014, the company filed an amended complaint in the United States District Court for the District of New Jersey (Civ Act. No. 3:14-cv-06220) against F-Secure Corporation and F-Secure, Inc. (collectively, “F-Secure"), claiming that F-Secure has infringed, and continues to infringe, several of the Company’s patents. In February 2015, Synchronoss entered into a patent license and settlement agreement with F-Secure Corporation and F-Secure, Inc. whereby the Company granted each of these companies (but not their subsidiaries or affiliates) a limited license to Synchronoss’ patents. As a result of entering into the patent license and settlement agreement, the parties filed a joint stipulation to dismiss the above complaint. | |
The Company’s 2011 acquisition agreement with Miyowa SA provided that former shareholders of Miyowa SA would be eligible for earn-out payments, to the extent specified business milestones were achieved following the acquisition. In December 2013, Eurowebfund and Bakamar, two former shareholders of Miyowa SA, filed a complaint against the Company in the Commercial Court of Paris, France claiming that they are entitled to certain earn-out payments under the acquisition agreement. The Company was served with a copy of this complaint in January 2014. The Company believes Miyowa SA failed to meet the criteria required for it to pay the claimed amounts and that no earn-out payments are owed. Although the Company cannot predict the outcome of the lawsuit due to the inherent uncertainties of litigation, it believes the positions of Eurowebfund and Bakamar are without merit, and the Company intends to defend all claims brought by them. | |
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. The defendants in several of these cases have filed counterclaims. 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 such counterclaims. | |
Subsequent_Events_Review
Subsequent Events Review | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events Review | |
Subsequent Events Review | 12. Subsequent Events Review |
The Company has evaluated all subsequent events and transactions through the filing date. | |
Basis_of_Presentation_and_Cons1
Basis of Presentation and Consolidation (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Basis of Presentation and Consolidation | |
Impact of Recently Issued Accounting Standards | Impact of Recently Issued Accounting Standards |
In March 2015, the Financial Accounting Standards Board issued Accounting issued Accounting Standards Update (ASU) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments is permitted for financial statements that have not been previously issued. The amendments should be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect of the change on the financial statement line items (i.e., debt issuance cost asset and the debt liability). The Company is currently evaluating the effects of ASU 2015-03 on the consolidated financial statements. | |
In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a variable interest entity ("VIE"), and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact, if any, of the adoption of this guidance on the consolidated financial statements. | |
In January 2015, the FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The new guidance eliminates the separate presentation of extraordinary items, net of tax and the related earnings per share, but does not affect the requirement to disclose material items that are unusual in nature or infrequently occurring. The ASU applies to all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Entities have the option to apply the new guidance prospectively or retrospectively, and can choose early adoption. The Company does not expect the adoption of this ASU to significantly impact the consolidated financial statements. | |
In May 2014, the FASB and the International Accounting Standards Board (“IASB”) (collectively, the “Boards”) jointly issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under US GAAP and IFRS. The standard’s core principle (issued as ASU 2014-09 by the FASB and as IFRS 15 by the IASB), is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. The effective date is fiscal years beginning after December 15, 2016. Early application is not permitted. The Company is currently evaluating the methods of adoption and the impact that ASU 2014-09 will have on the consolidated financial statements. | |
Earnings_per_Common_Share_Tabl
Earnings per Common Share (Tables) | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
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 March 31, | |||||||
2015 | 2014 | ||||||
Numerator: | |||||||
Net income attributable to common stockholders | $ | 10,561 | $ | 7,584 | |||
Income effect for interest on convertible debt, net of tax | 475 | — | |||||
Numerator for diluted EPS- Income to common stockholders after assumed conversions | $ | 11,036 | $ | 7,584 | |||
Denominator: | |||||||
Weighted average common shares outstanding — basic | 41,626 | 39,769 | |||||
Dilutive effect of: | |||||||
Shares from assumed conversion of convertible debt | 4,326 | — | |||||
Options and unvested restricted shares | 1,128 | 886 | |||||
Weighted average common shares outstanding — diluted | 47,080 | 40,655 | |||||
Fair_Value_Measurements_of_Ass1
Fair Value Measurements of Assets and Liabilities (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Fair Value Measurements of Assets and Liabilities | ||||||||||
Schedule of assets and liabilities held and their related classifications under the fair value hierarchy | ||||||||||
March 31, 2015 | December 31, 2014 | |||||||||
Level 1 (A) | $ | 157,884 | $ | 241,364 | ||||||
Level 2 (B) | 51,879 | 49,013 | ||||||||
Level 3 (C) | — | -8,000 | ||||||||
Total | $ | 209,763 | $ | 282,377 | ||||||
(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 March 31, 2015 were as follows: | |||||||||
Aggregate Amount of | ||||||||||
Aggregate | Unrealized | |||||||||
Fair Value | Gains | Losses | ||||||||
Due in one year or less | $ | 54,955 | $ | 8 | $ | -89 | ||||
Due after one year, less than five years | 2,321 | 2 | -3 | |||||||
$ | 57,276 | $ | 10 | $ | -92 | |||||
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, 2014 were as follows: | ||||||||||
Aggregate Amount of | ||||||||||
Aggregate | Unrealized | |||||||||
Fair Value | Gains | Losses | ||||||||
Due in one year or less | $ | 51,097 | $ | 10 | $ | -72 | ||||
Due after one year, less than five years | 3,313 | 2 | -3 | |||||||
$ | 54,410 | $ | 12 | $ | -75 | |||||
Schedule of changes in fair value of Level 3 contingent consideration obligation | ||||||||||
Level 3 | ||||||||||
Balance at December 31, 2014 | $ | 8,000 | ||||||||
Payment of contingent consideration | -8,000 | |||||||||
Balance at March 31, 2015 | $ | — | ||||||||
Acquisition_Tables
Acquisition (Tables) | 3 Months Ended | |||||
Mar. 31, 2015 | ||||||
F-Secure Corporation ("F-Secure") | ||||||
Acquisition | ||||||
Summary of fair values of assets and liabilities assumed at acquisition date | ||||||
Preliminary | ||||||
Purchase Price | ||||||
Allocation | ||||||
Intangible assets: | Wtd. Avg. | |||||
Technology | $ | 3,071 | 1 year | |||
Customer relationships | 20,475 | 5 years | ||||
Goodwill | 36,454 | |||||
Total assets acquired | 60,000 | |||||
Accrued expenses | 519 | |||||
Net assets acquired | $ | 59,481 | ||||
Vox | ||||||
Acquisition | ||||||
Summary of purchase price | ||||||
Purchase Price | ||||||
Allocation | ||||||
Cash | $ | 1,414 | ||||
Prepaid expenses and other assets | 220 | |||||
Accounts receivable | 3,750 | |||||
Intangible assets: | Wtd. Avg. | |||||
Technology | 4,900 | 5 years | ||||
Customer relationships | 5,000 | 5 years | ||||
Goodwill | 17,188 | |||||
Total assets acquired | 32,472 | |||||
Accounts payable and accrued liabilities | 2,118 | |||||
Deferred revenues | 457 | |||||
Deferred taxes | 3,338 | |||||
Net assets acquired | $ | 26,559 | ||||
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Stockholders' Equity | |||||||||||
Schedule of weighted-average assumptions used in the Black-Scholes option pricing model | |||||||||||
Three Months Ended March 31, | |||||||||||
2015 | 2014 | ||||||||||
Expected stock price volatility | 48 | % | 63 | % | |||||||
Risk-free interest rate | 1.26 | % | 1.54 | % | |||||||
Expected life of options (in years) | 4.01 | 4.28 | |||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||
Schedule 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, 2014 | 2,767 | $ | 25.81 | ||||||||
Options Granted | 299 | 41.04 | |||||||||
Options Exercised | -227 | 23.80 | |||||||||
Options Cancelled | -96 | 30.91 | |||||||||
Outstanding at March 31, 2015 | 2,743 | $ | 27.45 | 4.59 | $ | 54,877 | |||||
Vested or expected to vest at March 31, 2015 | 2,524 | $ | 26.81 | 4.44 | $ | 52,128 | |||||
Exercisable at March 31, 2015 | 1,465 | $ | 22.40 | 3.40 | $ | 36,708 | |||||
Schedule of non-vested restricted stock and changes | |||||||||||
Number of | |||||||||||
Non-Vested Restricted Stock | Awards | ||||||||||
Non-vested at December 31, 2014 | 1,342 | ||||||||||
Granted | 328 | ||||||||||
Vested | -298 | ||||||||||
Forfeited | -59 | ||||||||||
Non-vested at March 31, 2015 | 1,313 | ||||||||||
Schedule of weighted-average assumptions used to value employee stock purchase rights | |||||||||||
Three Months Ended March 31, | |||||||||||
2015 | 2014 | ||||||||||
Expected stock price volatility | 40 | % | 64 | % | |||||||
Risk-free interest rate | 0.05 | % | 0.08 | % | |||||||
Expected life (in years) | 0.50 | 0.50 | |||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Accumulated Other Comprehensive Income (Loss). | |||||||||||||
Schedule of comprehensive income (loss) | |||||||||||||
Three Months Ended March 31, | |||||||||||||
2015 | 2014 | ||||||||||||
Net income | $ | 10,561 | $ | 7,584 | |||||||||
Translation adjustments | -16,837 | 995 | |||||||||||
Unrealized income on securities, (net of tax) | 241 | 4 | |||||||||||
Net loss on intra-entity foreign currency transactions | -2,872 | — | |||||||||||
Total comprehensive (loss) income | $ | -8,907 | $ | 8,583 | |||||||||
Schedule of changes in accumulated other comprehensive income (loss) | The changes in accumulated other comprehensive income (loss) during the three months ended March 31, 2015, are as follows, net of tax: | ||||||||||||
Unrealized (Loss) | |||||||||||||
Income on | Unrealized Holding | ||||||||||||
Intra-Entity | Gains (Losses) on | ||||||||||||
Foreign | Foreign Currency | Available-for-Sale | |||||||||||
Currency | Transactions | Securities | Total | ||||||||||
Balance at December 31, 2014 | $ | -16,980 | $ | -2,857 | $ | -177 | $ | -20,014 | |||||
Other comprehensive (loss) income | -16,837 | -2,872 | 241 | -19,468 | |||||||||
Total comprehensive (loss) income | -16,837 | -2,872 | 241 | -19,468 | |||||||||
Balance at March 31, 2015 | $ | -33,817 | $ | -5,729 | $ | 64 | $ | -39,482 | |||||
Goodwill_and_intangibles_Table
Goodwill and intangibles (Tables) | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Goodwill and Intangibles | |||||||||||
Schedule of changes in goodwill | |||||||||||
Balance at December 31, 2014 | $ | 147,135 | |||||||||
F-Secure acquisition | 36,454 | ||||||||||
Translation adjustments | -10,222 | ||||||||||
Balance at March 31, 2015 | $ | 173,367 | |||||||||
Schedule of composition of intangible assets | |||||||||||
Weighted | March 31, 2015 | ||||||||||
Average | Accumulated | ||||||||||
Life | Cost | Amortization | Net | ||||||||
Trade name | 4 | $ | 1,529 | $ | -1,293 | $ | 236 | ||||
Technology | 7 | 65,310 | -25,227 | 40,083 | |||||||
Customer lists and relationships | 9 | 86,246 | -22,938 | 63,308 | |||||||
Capitalized software and patents | 3 | 8,745 | -2,606 | 6,139 | |||||||
Order Backlog | — | 918 | -918 | — | |||||||
$ | 162,748 | $ | -52,982 | $ | 109,766 | ||||||
Restructuring_Charges_Tables
Restructuring Charges (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Restructuring Charges | |||||||||||||
Summary of the restructuring accrual and changes | |||||||||||||
Balance at | Balance at | ||||||||||||
December 31, 2014 | Charges | Payments | March 31, 2015 | ||||||||||
Employment termination costs | $ | — | $ | 3,240 | $ | -1,065 | $ | 2,175 | |||||
Total | $ | — | $ | 3,240 | $ | -1,065 | $ | 2,175 | |||||
Earnings_per_Common_Share_Deta
Earnings per Common Share (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Numerator: | ||
Net income attributable to common stockholders | $10,561 | $7,584 |
Income effect for interest on convertible debt, net of tax | 475 | |
Numerator for diluted EPS- Income to common stockholders after assumed conversions | $11,036 | $7,584 |
Denominator: | ||
Weighted average common shares outstanding - basic | 41,626 | 39,769 |
Dilutive effect of: | ||
Shares from assumed conversion of convertible debt | 4,326 | |
Options and unvested restricted shares | 1,128 | 886 |
Weighted average common shares outstanding - diluted | 47,080 | 40,655 |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Stock options that are anti-dilutive and excluded from calculation of diluted earnings per share (in shares) | 291 | 1,642 |
Fair_Value_Measurements_of_Ass2
Fair Value Measurements of Assets and Liabilities - Heirarchy (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
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 | 157,884,000 | 241,364,000 |
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 | 51,879,000 | 49,013,000 |
Level 3 | ||
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy | ||
Contingent consideration obligation | -8,000,000 | |
Total | ||
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy | ||
Fair value of net assets | $209,763,000 | $282,377,000 |
Fair_Value_Measurements_of_Ass3
Fair Value Measurements of Assets and Liabilities - Available-for-Sale Contractual Maturities (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Aggregate Fair Value | ||
Due in one year or less | $54,955 | $51,097 |
Due after one year, less than five years | 2,321 | 3,313 |
Total | 57,276 | 54,410 |
Aggregate Amount of Unrealized Gains | ||
Due in one year or less | 8 | 10 |
Due after one year, less than five years | 2 | 2 |
Total | 10 | 12 |
Aggregate Amount of Unrealized Losses | ||
Due in one year or less | -89 | -72 |
Due after one year, less than five years | -3 | -3 |
Total | ($92) | ($75) |
Fair_Value_Measurements_of_Ass4
Fair Value Measurements of Assets and Liabilities - Level 3 (Details) (USD $) | 0 Months Ended | 3 Months Ended | |
In Thousands, unless otherwise specified | Feb. 20, 2015 | Mar. 31, 2015 | Dec. 31, 2014 |
Strumsoft, Inc. (Strumsoft) | |||
Changes in fair value of the Company's Level 3 contingent consideration obligation | |||
Earn-out compensation due to Strumsoft employees | ($8,000) | ||
Level 3 | Contingent Consideration Obligation | |||
Changes in fair value of the Company's Level 3 contingent consideration obligation | |||
Balance as at the beginning of the period | 8,000 | ||
Balance as at the end of the period | 8,000 | ||
Level 3 | Contingent Consideration Obligation | Strumsoft, Inc. (Strumsoft) | |||
Changes in fair value of the Company's Level 3 contingent consideration obligation | |||
Earn-out compensation due to Strumsoft employees | ($8,000) |
Acquisition_2015_Acquisitions_
Acquisition - 2015 Acquisitions (Details) (USD $) | 3 Months Ended | 0 Months Ended | |
Mar. 31, 2015 | Feb. 23, 2015 | Dec. 31, 2014 | |
Acquisition | |||
Payments to acquire business, net of cash acquired | $59,481,000 | ||
Preliminary Purchase Price Allocation | |||
Goodwill | 173,367,000 | 147,135,000 | |
F-Secure Corporation ("F-Secure") | |||
Acquisition | |||
Payments to acquire business, net of cash acquired | 59,500,000 | ||
Preliminary Purchase Price Allocation | |||
Goodwill | 36,454,000 | ||
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed Assets Including Goodwill | 60,000,000 | ||
Accrued Expenses | 519,000 | ||
Net assets acquired | 59,481,000 | ||
Goodwill and acquisition related costs | |||
Purchase price, tax deductible portion of goodwill | 0 | ||
Acquisition-related costs | 856,000 | ||
Technology | |||
Preliminary Purchase Price Allocation | |||
Estimated useful life | 7 years | ||
Technology | F-Secure Corporation ("F-Secure") | |||
Preliminary Purchase Price Allocation | |||
Intangible assets | 3,071,000 | ||
Estimated useful life | 1 year | ||
Customer relationships | F-Secure Corporation ("F-Secure") | |||
Preliminary Purchase Price Allocation | |||
Intangible assets | $20,475,000 | ||
Estimated useful life | 5 years |
Acquisition_2014_Acquisitions_
Acquisition - 2014 Acquisitions (Details) (USD $) | 3 Months Ended | 0 Months Ended | 3 Months Ended | |
Mar. 31, 2015 | Jul. 11, 2014 | Sep. 30, 2014 | Dec. 31, 2014 | |
Acquisition | ||||
Payments to acquire business, net of cash acquired | $59,481,000 | |||
Preliminary Purchase Price Allocation | ||||
Goodwill. | 173,367,000 | 147,135,000 | ||
Vox | ||||
Acquisition | ||||
Payments to acquire business, net of cash acquired | 25,100,000 | |||
Preliminary Purchase Price Allocation | ||||
Cash | 1,414,000 | |||
Prepaid expenses and other assets | 220,000 | |||
Accounts receivable | 3,750,000 | |||
Goodwill. | 17,188,000 | |||
Total assets acquired | 32,472,000 | |||
Accounts payable and accrued liabilities | 2,118,000 | |||
Deferred revenues | 457,000 | |||
Deferred taxes | 3,338,000 | |||
Net assets acquired | 26,559,000 | |||
Goodwill and acquisition related costs | ||||
Purchase price, tax deductible portion of goodwill | 0 | |||
Acquisition-related costs | 1,500,000 | |||
Technology | ||||
Preliminary Purchase Price Allocation | ||||
Estimated useful life | 7 years | |||
Technology | Vox | ||||
Preliminary Purchase Price Allocation | ||||
Intangible assets | 4,900,000 | |||
Estimated useful life | 5 years | |||
Customer relationships | Vox | ||||
Preliminary Purchase Price Allocation | ||||
Intangible assets | $5,000,000 | |||
Estimated useful life | 5 years |
Stockholders_Equity_Option_Awa
Stockholders' Equity - Option Awards Fair Value Assumptions (Details) (Stock Options, USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Stock Options | ||
Weighted-average assumptions used in the Black-Scholes option pricing model | ||
Expected stock price volatility (as a percent) | 48.00% | 63.00% |
Risk-free interest rate (as a percent) | 1.26% | 1.54% |
Expected life (in years) | 4 years 4 days | 4 years 3 months 11 days |
Expected dividend yield (as a percent) | 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) | $15.86 | $16.20 |
Pre-tax stock-based compensation expense recorded | $6,600,000 | $5,800,000 |
After tax stock-based compensation expense | 4,400,000 | 3,800,000 |
Stock-based compensation expense per diluted share (in dollars per share) | $0.09 | $0.09 |
Stock-based compensation cost related to non-vested equity awards not yet recognized as an expense | $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 7 months 17 days |
Stockholders_Equity_Option_Act
Stockholders' Equity - Option Activity (Details) (USD $) | 3 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 |
Number of Options | |
Options outstanding at the beginning of the period (in shares) | 2,767 |
Options Granted (in shares) | 299 |
Options Exercised (in shares) | -227 |
Options Cancelled (in shares) | -96 |
Options outstanding at the end of the period (in shares) | 2,743 |
Vested or expected to vest (in shares) | 2,524 |
Exercisable (in shares) | 1,465 |
Weighted-Average Exercise Price | |
Balance at the beginning of the period (in dollars per share) | $25.81 |
Options Granted (in dollars per share) | $41.04 |
Options Exercised (in dollars per share) | $23.80 |
Options Cancelled (in dollars per share) | $30.91 |
Balance at the end of the period (in dollars per share) | $27.45 |
Vested or expected to vest (in dollars per share) | $26.81 |
Exercisable (in dollars per share) | $22.40 |
Weighted-Average Remaining Contractual Term | |
Outstanding | 4 years 7 months 2 days |
Vested or expected to vest | 4 years 5 months 9 days |
Exercisable | 3 years 4 months 24 days |
Aggregate Intrinsic Value | |
Outstanding | $54,877 |
Vested or expected to vest | 52,128 |
Exercisable | $36,708 |
Stockholders_Equity_Restricted
Stockholders' Equity - Restricted Stock (Details) (Restricted Stock) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Restricted Stock | |
Number of Awards | |
Non-vested at the beginning of the period (in shares) | 1,342 |
Granted (in shares) | 328 |
Vested (in shares) | -298 |
Forfeited (in shares) | -59 |
Non-vested at the end of the period (in shares) | 1,313 |
Stockholders_Equity_Employee_S
Stockholders' Equity - Employee Stock Purchase Plan (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Other information | ||
Cash received under program | $975 | $740 |
ESPP Plan | ||
Employee Stock Purchase Plan | ||
Term of Employee Stock Purchase Plan | 10 years | |
Total number of shares available for purchase | 500 | |
Employee Stock Purchase Plan Payroll Withholding Period | 6 months | |
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% | |
Weighted-average assumptions used in the Black-Scholes option pricing model | ||
Expected stock price volatility (as a percent) | 40.00% | 64.00% |
Risk-free interest rate (as a percent) | 0.05% | 0.08% |
Expected life (in years) | 6 months | 6 months |
Expected dividend yield (as a percent) | 0.00% | 0.00% |
Other information | ||
Compensation expense | 150 | 199 |
Number of shares sold under Employee Stock Purchase Plan | 29 | 27 |
Cash received under program | 975 | 740 |
Unrecognized compensation cost | $201 | |
ESPP Plan | Maximum | ||
Employee Stock Purchase Plan | ||
Maximum number of shares allowed to be purchased by single participant | 1 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Loss) - Comprehensive Income (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Comprehensive income (loss) | ||
Net income | $10,561 | $7,584 |
Translation adjustments | -16,837 | 995 |
Unrealized income on securities, (net of tax) | 241 | 4 |
Net loss on intra-entity foreign currency transactions | -2,872 | |
Total comprehensive (loss) income | ($8,907) | $8,583 |
Accumulated_Other_Comprehensiv3
Accumulated Other Comprehensive Income (Loss) - Changes in AOCI (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Changes in accumulated other comprehensive income (loss) | |
Balance at the beginning of the period | ($20,014) |
Other comprehensive income | -19,468 |
Total other comprehensive income (loss) | -19,468 |
Balance at the end of the period | -39,482 |
Foreign Currency | |
Changes in accumulated other comprehensive income (loss) | |
Balance at the beginning of the period | -16,980 |
Other comprehensive income | -16,837 |
Total other comprehensive income (loss) | -16,837 |
Balance at the end of the period | -33,817 |
Net Gain (Loss) on Intra-Entity Foreign Currency Transactions | |
Changes in accumulated other comprehensive income (loss) | |
Balance at the beginning of the period | -2,857 |
Other comprehensive income | -2,872 |
Total other comprehensive income (loss) | -2,872 |
Balance at the end of the period | -5,729 |
Unrealized Holding Gains (Losses) on Available-for-Sale Securities | |
Changes in accumulated other comprehensive income (loss) | |
Balance at the beginning of the period | -177 |
Other comprehensive income | 241 |
Total other comprehensive income (loss) | 241 |
Balance at the end of the period | $64 |
Goodwill_and_Intangibles_Goodw
Goodwill and Intangibles- Goodwill (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Goodwill | |
Balance at the beginning of the period | $147,135 |
Acquisitions | 36,454 |
Translation adjustments | -10,222 |
Balance at the end of the period | $173,367 |
Goodwill_and_Intangibles_Intan
Goodwill and Intangibles - Intangible Assets (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Intangible assets: | |
Gross amount | $162,748 |
Accumulated amortization | -52,982 |
Net amount | 109,766 |
Trade Name | |
Intangible assets | |
Estimated useful life of assets | 4 years |
Intangible assets: | |
Gross amount | 1,529 |
Accumulated amortization | -1,293 |
Net amount | 236 |
Technology | |
Intangible assets | |
Estimated useful life of assets | 7 years |
Intangible assets: | |
Gross amount | 65,310 |
Accumulated amortization | -25,227 |
Net amount | 40,083 |
Customer lists and relationships | |
Intangible assets | |
Estimated useful life of assets | 9 years |
Intangible assets: | |
Gross amount | 86,246 |
Accumulated amortization | -22,938 |
Net amount | 63,308 |
Capitalized software and patents | |
Intangible assets | |
Estimated useful life of assets | 3 years |
Intangible assets: | |
Gross amount | 8,745 |
Accumulated amortization | -2,606 |
Net amount | 6,139 |
Order Backlog | |
Intangible assets: | |
Gross amount | 918 |
Accumulated amortization | ($918) |
Debt_Credit_Facility_Details
Debt - Credit Facility (Details) (Credit Facility, USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Credit Facility | ||
Borrowing capacity | $100,000,000 | |
Commitment fee on unused balance | 64,000 | 62,000 |
Amount of borrowing capacity to which the company has a right to request an increase | 150,000,000 | |
Amount outstanding | $0 | |
Minimum | ||
Credit Facility | ||
Commitment fee on unused balance (as a percent) | 0.25% | |
Maximum | ||
Credit Facility | ||
Commitment fee on unused balance (as a percent) | 0.35% |
Debt_Convertible_Senior_Notes_
Debt - Convertible Senior Notes (Details) (2019 Notes, USD $) | 0 Months Ended | 3 Months Ended | ||
Aug. 12, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Aug. 12, 2014 | |
2019 Notes | ||||
Debt | ||||
Face amount of debt issued | $230,000,000 | $230,000,000 | ||
Interest rate, as a percent | 0.75% | 0.75% | ||
Capitalized finance fees | 7,100,000 | 7,100,000 | ||
Conversion ratio | 0.0188072 | |||
Conversion price | $53.17 | $53.17 | ||
Repurchase price, expressed as a percentage of principal of debt repurchased | 100.00% | |||
Carrying amount of debt | 230,000,000 | |||
Effective Interest Rate (as a percent) | 1.36% | |||
Fair value of debt | 270,700,000 | |||
Interest expense | $431,000 | $0 |
Restructuring_Charges_Details
Restructuring Charges (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Restructuring accrual and changes | |
Balance at the beginning of the period | $0 |
Charges | 3,240 |
Payments | -1,065 |
Balance at the end of the period | 2,175 |
Employment termination costs | |
Restructuring accrual and changes | |
Balance at the beginning of the period | 0 |
Charges | 3,240 |
Payments | -1,065 |
Balance at the end of the period | $2,175 |
Legal_Matters_Details
Legal Matters (Details) (Infringement of patents, Miyowa, USD $) | 12 Months Ended | |
Dec. 31, 2015 | Mar. 31, 2015 | |
item | ||
Infringement of patents | Miyowa | ||
Legal Matters | ||
Number of former shareholders | 2 | |
Earn-out payments due | $0 |