Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 28, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | SYNCHRONOSS TECHNOLOGIES INC | |
Entity Central Index Key | 1,131,554 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 44,124,489 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 143,352 | $ 235,967 |
Marketable securities | 67,452 | 51,097 |
Accounts receivable, net of allowance for doubtful accounts of $376 and $88 at September 30, 2015 and December 31, 2014, respectively | 157,166 | 118,371 |
Prepaid expenses and other assets | 32,515 | 35,023 |
Deferred tax assets | 3,899 | 1,475 |
Total current assets | 404,384 | 441,933 |
Marketable securities | 16,195 | 3,313 |
Property and equipment, net | 168,785 | 151,171 |
Goodwill | 186,973 | 147,135 |
Intangible assets, net | 119,408 | 99,489 |
Deferred tax assets | 7,754 | 1,232 |
Other assets | 18,140 | 18,549 |
Total assets | 921,639 | 862,822 |
Current liabilities: | ||
Accounts payable | 14,814 | 25,059 |
Accrued expenses | 41,594 | 42,679 |
Deferred revenues | 14,039 | 11,897 |
Contingent consideration obligation | 170 | 8,000 |
Total current liabilities | 70,617 | 87,635 |
Lease financing obligation - long-term | 13,886 | 9,204 |
Convertible debt | 230,000 | 230,000 |
Deferred Tax Liabilities, Net, Noncurrent | 8,440 | 3,698 |
Other liabilities | $ 2,970 | $ 3,178 |
Stockholders' equity: | ||
Preferred 10,000 shares authorized, 0 shares issued and outstanding at stock, $0.0001 par value; September 30, 2015 and December 31, 2014 | ||
Common stock, $0.0001 par value; 100,000 shares authorized, 47,757 and 46,444 shares issued; 44,078 and 42,711 outstanding at September 30, 2015 and December 31, 2014, respectively | $ 4 | $ 4 |
Treasury stock, at cost (3,679 and 3,733 shares at September 30, 2015 and December 31, 2014, respectively) | (65,651) | (66,336) |
Additional paid-in capital | 498,653 | 454,740 |
Accumulated other comprehensive loss | (33,353) | (20,014) |
Retained earnings | 196,073 | 160,713 |
Total stockholders' equity | 595,726 | 529,107 |
Total liabilities and stockholders' equity | $ 921,639 | $ 862,822 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 376 | $ 88 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
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) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 47,757,000 | 46,444,000 |
Common stock, shares outstanding | 44,078,000 | 42,711,000 |
Treasury stock, shares | 3,679,000 | 3,733,000 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||
Net revenues | $ 150,874 | $ 125,175 | $ 421,620 | $ 327,103 |
Costs and expenses: | ||||
Cost of services | 63,438 | 50,496 | 172,013 | 131,766 |
Research and development | 23,986 | 21,056 | 68,472 | 53,902 |
Selling, general and administrative | 21,003 | 21,382 | 60,603 | 55,656 |
Net change in contingent consideration obligation | 355 | 1,680 | ||
Restructuring charges | 399 | 5,090 | ||
Depreciation and amortization | 19,754 | 16,268 | 51,221 | 42,292 |
Total costs and expenses | 128,580 | 109,557 | 357,399 | 285,296 |
Income from operations | 22,294 | 15,618 | 64,221 | 41,807 |
Interest income | 546 | 358 | 1,483 | 867 |
Interest expense | (1,448) | (1,164) | (4,208) | (2,258) |
Other income | (1,030) | 3 | (601) | 1,052 |
Income before income tax expense | 20,362 | 14,815 | 60,895 | 41,468 |
Income tax expense | (10,717) | (5,488) | (25,535) | (16,193) |
Net income | $ 9,645 | $ 9,327 | $ 35,360 | $ 25,275 |
Net income per common share: | ||||
Basic (in dollars per share) | $ 0.23 | $ 0.23 | $ 0.84 | $ 0.63 |
Diluted (in dollars per share) | $ 0.21 | $ 0.22 | $ 0.77 | $ 0.61 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 42,491 | 40,833 | 42,077 | 40,173 |
Diluted (in shares) | 47,692 | 44,265 | 47,505 | 41,795 |
Comprehensive income | $ 8,994 | $ (3,004) | $ 22,021 | $ 13,446 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating activities: | ||
Net income | $ 35,360 | $ 25,275 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 51,221 | 42,292 |
Amortization of debt issuance costs | 1,125 | 242 |
Amortization of bond premium | 1,261 | 263 |
Deferred income taxes | (11,772) | (2,407) |
Interest Expense, Lessee, Assets under Capital Lease | 694 | 709 |
Stock-based compensation | 21,234 | 20,470 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net of allowance for doubtful accounts | (40,442) | (40,795) |
Prepaid expenses and other current assets | 8,020 | (4,434) |
Other assets | (670) | (2,804) |
Accounts payable | 106 | 8,331 |
Accrued expenses | (4,975) | (1,570) |
Contingent consideration obligation | (1,532) | 2,881 |
Excess tax benefit from the exercise of stock options | (4,710) | (754) |
Other liabilities | (138) | 1,228 |
Deferred revenues | 1,610 | (3,925) |
Net cash provided by operating activities | 56,392 | 45,002 |
Investing activities: | ||
Purchases of fixed assets | (53,461) | (24,796) |
Purchases of intangibles | (1,200) | |
Purchases of marketable securities available-for-sale | (105,817) | (27,657) |
Sales and maturities of marketable securities available-for-sale | 75,370 | 1,990 |
Business acquired, net of cash | (83,592) | (38,085) |
Net cash used in investing activities | (168,700) | (88,548) |
Financing activities: | ||
Proceeds from the exercise of stock options | 16,752 | 20,727 |
Payments on contingent consideration obligation | (4,468) | |
Debt issuance costs related to convertible notes | (6,561) | |
Proceeds from issuance of convertible notes | 230,000 | |
Borrowings on revolving line of credit | 40,000 | |
Repayment of revolving line of credit | (40,000) | |
Excess tax benefit from the exercise of stock options | 4,710 | 754 |
Proceeds from the sale of treasury stock in connection with an employee stock purchase plan | 1,902 | 1,677 |
Repayments of capital obligations | (1,772) | (1,129) |
Net cash provided by financing activities | 17,124 | 245,468 |
Effect of exchange rate changes on cash | 2,569 | 189 |
Net (decrease) increase in cash and cash equivalents | (92,615) | 202,111 |
Cash and cash equivalents at beginning of period | 235,967 | 63,512 |
Cash and cash equivalents at end of period | 143,352 | 265,623 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 24,052 | 14,152 |
Cash paid for interest | $ 3,918 | $ 1,998 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 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 transfer, synchronization and sharing of content. 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 leveraging the Company’s cloud assets to manage these devices and content associated with them. The 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 content 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, 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 Conso
Basis of Presentation and Consolidation | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation and Consolidation | |
Basis of Presentation and Consolidation | 2 . Basis of Presentation and Consolidation The consolidated financial statements as of September 30, 2015 and for the three and nine months ended September 30, 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. Certain amounts from the prior year’s financial statements have been reclassified to conform to the current year’s presentation and such amounts were not considered material to amend prior periods. 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 . Recently Issued Accounting Standards In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-16, simplifying the Accounting for Measurement-Period Adjustments that eliminates the requirement to restate prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The new guidance does not change what constitutes a measurement period adjustment. The Company does not expect the adoption of this ASU to significantly impact the consolidated financial statements. In August 2015, the FASB issued ASU 2015-15 Interest- Imputation of Interest, final guidance that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the debt liability rather than as an asset. This publication has been updated to reflect an SEC staff member’s comment in June 2015 that the staff will not object to an entity presenting the cost of securing a revolving line of credit as an asset, regardless of whether a balance is outstanding. 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. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU 2014-09 by one year, and would allow entities the option to early adopt the new revenue standard as of the original effective date. The Company is currently evaluating their adoption method and the impact of the standard on the consolidated financial statements. |
Earnings per Common Share
Earnings per Common Share | 9 Months Ended |
Sep. 30, 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, excluding amounts associated with restricted shares. 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 restricted stock. 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 745 thousand and 834 thousand for the three months ended September 30, 2015 and 2014 , respectively, and 434 thousand and 1.4 million for the nine months ended September 30, 2015 and 2014 , respectively. Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Numerator: Net income attributable to common stockholders $ $ $ $ Income effect for interest on convertible debt, net of tax Numerator for diluted EPS- Income to common stockholders after assumed conversions $ $ $ $ Denominator: Weighted average common shares outstanding — basic Dilutive effect of: Shares from assumed conversion of convertible debt Options and unvested restricted shares Weighted average common shares outstanding — diluted |
Fair Value Measurements of Asse
Fair Value Measurements of Assets and Liabilities | 9 Months Ended |
Sep. 30, 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: September 30, 2015 December 31, 2014 Level 1 (A) $ $ Level 2 (B) Level 3 (C) Total $ $ (A) Level 1 assets include money market funds which are classified as cash equivalents and marketable securities, respectively . (B) Level 2 assets include certificates of deposit, municipal bonds, enhanced income money market funds 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, 2015 . 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, 2015 were as follows: Aggregate Amount of Aggregate Unrealized Fair Value Gains Losses Due in one year or less $ $ $ Due after one year, less than five years $ $ $ 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 $ $ $ Due after one year, less than five years $ $ $ 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 September 30, 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. Contingent Consideration The Company determined the fair value of the contingent consideration related to Razorsight using a real options approach which uses a risk-adjusted expected growth rate based on assessments of expected growth in revenue, adjusted by an appropriate factor. 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. The Company determined the fair value of the contingent consideration obligation related to Strumsoft 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 nine months ended September 30, 2015 were as follows: Level 3 Balance at December 31, 2014 $ Payment of contingent consideration Addition of Razorsight earn-out Balance at September 30, 2015 $ |
Acquisition
Acquisition | 9 Months Ended |
Sep. 30, 2015 | |
Acquisition | |
Acquisition | 5. Acquisition Razorsight Corporation (“Razorsight”) On August 4, 2015, the Company acquired all outstanding shares of Razorsight for $25.3 million, net of liabilities assumed. In addition, the Company potentially may make payments ("Razorsight Earn-out") totaling up to approximately $15 million based on the ability to achieve a range of business objectives for the period from the acquisition date through December 31, 2016. Razorsight offers cloud-based analytics solutions for communications service providers. Their cloud-based products embed advanced statistical analysis and predictive analytics to proactively pinpoint customer attrition risk, revenue opportunities, and better customer experiences. Synchronoss believes that this acquisition will strategically enhance the Company’s product portfolio allowing the Company to reach a broader client base and by expanding their value proposition and more deeply embedding their platform. The Company determined the preliminary fair value of the net assets acquired as follows: Purchase Price Allocation Cash $ Prepaid expenses and other assets Accounts receivable Equipment Other assets - long term Intangible assets: Wtd. Avg. Technology 4 years Customer relationships 10 years Goodwill Total assets acquired Accounts payable and accrued liabilities Lease obligation Deferred revenues Contingent consideration Deferred taxes Net assets acquired $ 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 $112 thousand . 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 as follows: Preliminary Purchase Price Allocation Intangible assets: Wtd. Avg. Technology $ 1 year Customer relationships 5 years Goodwill Total assets acquired Accrued expenses Net assets acquired $ 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 nine months ended September 30, 2015 , including transaction costs such as legal, accounting, valuation and other professional services, were $862 thousand . |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity | |
Stockholders' Equity | 6. Stockholders’ Equity Stock- based Compensation The following table summarizes information about stock-based compensation, which includes the fair value for equity awards issued: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Pre-tax stock based compensation expense $ $ $ $ Tax effect of stock based compensation Cash received from the exercise of options The total stock-based compensation cost related to unvested equity awards as of September 30, 2015 was approximately $ 67.0 million. The expense is expected to be recognized over a weighted-average period of approximately 2.73 years. A summary of the Company’s unvested restricted stock at September 30, 2015 , and changes during the nine months ended September 30, 2015 , is presented below: Number of Non-Vested Restricted Stock Awards Non-vested at December 31, 2014 Granted Vested Forfeited Non-vested at September 30, 2015 Stock Options The following table summarizes information about stock options outstanding as of September 30, 2015 : Weighted- Average Weighted- Remaining Aggregate Number of Average Contractual Intrinsic Options Options Exercise Price Term (Years) Value Outstanding at December 31, 2014 $ Options Granted Options Exercised Options Cancelled Outstanding at September 30, 2015 $ $ Vested or expected to vest at September 30, 2015 $ $ Exercisable at September 30, 2015 $ $ 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, 2015 2014 2015 2014 Expected stock price volatility % % % % Risk-free interest rate % % % % Expected life of options (in years) Expected dividend yield % % % % The weighted-average fair value (as of the date of grant) of the options was $15.53 and $17.03 per share for the three months ended September 30, 2015 and 2014 , respectively, and $16.54 and $14.64 per share for the nine months ended September 30, 2015 and 2014 , respectively . 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 September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Expected stock price volatility % % % % Risk-free interest rate % % % % Expected life (in years) Expected dividend yield % % % % The weighted-average fair value (as of the date of grant) of the ESPP shares was $11.82 and $10.58 per share for the three months ended September 30, 2015 and 2014 , respectively, and $11.82 and $10.54 per share for the nine months ended September 30, 2015 and 2014 , respectively. The following table summarizes information about the ESPP Plan: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Compensation expense $ $ $ $ Treasury shares sold Cash received from purchases (1) $ $ $ $ (1) 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, 2015 was approximately $197 thousand , which is expected to be recognized over the remainder of the offering period. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss). | |
Accumulated Other Comprehensive Income (Loss) | 7. Accumulated Other Comprehensive Income (Loss) Comprehensive income (loss) was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net income $ $ $ $ Translation adjustments Unrealized (loss) gain on securities, (net of tax) Net income (loss) on intra-entity foreign currency transactions, (net of tax) Total comprehensive income (loss) $ $ $ $ The changes in accumulated other comprehensive income (loss) during the nine months ended September 30, 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 $ $ $ $ Other comprehensive (loss) income Tax effect — Total comprehensive (loss) income Balance at September 30, 2015 $ $ $ $ |
Goodwill and Intangibles
Goodwill and Intangibles | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangibles | |
Goodwill | 8. Goodwill and Intangibles Goodwill The Company records goodwill which represents the excess of the purchase price over the fair value of assets acquired, including other definite-lived intangible assets. Goodwill is 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 nine months ended September 30, 2015 are as follows: Balance at December 31, 2014 $ Acquisitions Reclassifications, adjustments and other Translation adjustments Balance at September 30, 2015 $ The reclassification adjustment of $30 thousand is primarily related to a change in the Company’s deferred tax asset in connection with a pre-acquisition tax loss. Other Intangible Assets Intangible assets consist primarily of trade names, technology, and customer lists and relationships. These intangible assets are amortized on the straight ‑ line method over the estimated useful life. Amortization expense for the nine months ended September 30, 2015 and the year ended December 31, 2014 was $20.0 million and $19.8 million , respectively. The Company’s intangible assets consist of the following: Weighted September 30, 2015 Average Accumulated Life Cost Amortization Net Trade name $ $ $ Technology Customer lists and relationships Capitalized software and patents Order Backlog — — $ $ $ Weighted December 31, 2014 Average Accumulated Life Cost Amortization Net Trade name $ $ $ Technology Customer lists and relationships Capitalized software and patents Order Backlog — — $ $ $ Estimated future amortization expense of its intangible assets for the next five years is as follows: Year ending December 31: 2015 $ 2016 2017 2018 2019 2020 |
Debt
Debt | 9 Months Ended |
Sep. 30, 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 $89 thousand and $46 thousand during the three months ended September 30, 2015 and 2014 , respectively and $241 thousand and $171 thousand during the nine months ended September 30, 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 September 30, 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 September 30, 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 September 30, 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 $ 225.1 million at September 30, 2015 . The fair value of the liability of the 2019 Notes was determined using a discounted cash flow model based on current market interest rates available to the Company. These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2 of the fair-value hierarchy. The interest expense of the Company’s 2019 Notes related to the contractual interest coupon was $431 thousand and $216 thousand for the three months ended September 30, 2015 and 2014 , respectively and $1.3 million and $216 thousand for the nine months ended September 30, 2015 and 2014 , respectively. |
Restructuring Charges
Restructuring Charges | 9 Months Ended |
Sep. 30, 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 September 30, 2015 , there was $213 thousand of unpaid restructuring charges classified under accrued expenses on the balance sheet. A summary of the Company’s restructuring accrual at September 30, 2015 and changes during the nine months ended September 30, 2015 , is presented below: Balance at Balance at December 31, 2014 Charges Payments September 30, 2015 Employment termination costs $ — $ $ $ Facilities consolidation — — Total $ — $ $ $ |
Legal Matters
Legal Matters | 9 Months Ended |
Sep. 30, 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. The Company continues to pursue its claims and defend all counterclaims, which counterclaims the Company believes are without merit. However, due to the inherent uncertainties of litigation, the Company cannot predict the outcome of the lawsuit or estimate any potential loss if the outcome is adverse to the Company. 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 | 9 Months Ended |
Sep. 30, 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 Con18
Basis of Presentation and Consolidation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation and Consolidation | |
Impact of Recently Issued Accounting Standards | Recently Issued Accounting Standards In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-16, simplifying the Accounting for Measurement-Period Adjustments that eliminates the requirement to restate prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The new guidance does not change what constitutes a measurement period adjustment. The Company does not expect the adoption of this ASU to significantly impact the consolidated financial statements. In August 2015, the FASB issued ASU 2015-15 Interest- Imputation of Interest, final guidance that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the debt liability rather than as an asset. This publication has been updated to reflect an SEC staff member’s comment in June 2015 that the staff will not object to an entity presenting the cost of securing a revolving line of credit as an asset, regardless of whether a balance is outstanding. 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. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU 2014-09 by one year, and would allow entities the option to early adopt the new revenue standard as of the original effective date. The Company is currently evaluating their adoption method and the impact of the standard on the consolidated financial statements. |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Numerator: Net income attributable to common stockholders $ $ $ $ Income effect for interest on convertible debt, net of tax Numerator for diluted EPS- Income to common stockholders after assumed conversions $ $ $ $ Denominator: Weighted average common shares outstanding — basic Dilutive effect of: Shares from assumed conversion of convertible debt Options and unvested restricted shares Weighted average common shares outstanding — diluted |
Fair Value Measurements of As20
Fair Value Measurements of Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurements of Assets and Liabilities | |
Schedule of assets and liabilities held and their related classifications under the fair value hierarchy | September 30, 2015 December 31, 2014 Level 1 (A) $ $ Level 2 (B) Level 3 (C) Total $ $ (A) Level 1 assets include money market funds which are classified as cash equivalents and marketable securities, respectively . (B) Level 2 assets include certificates of deposit, municipal bonds, enhanced income money market funds 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, 2015 were as follows: Aggregate Amount of Aggregate Unrealized Fair Value Gains Losses Due in one year or less $ $ $ Due after one year, less than five years $ $ $ 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 $ $ $ Due after one year, less than five years $ $ $ |
Schedule of changes in fair value of Level 3 contingent consideration obligation | Level 3 Balance at December 31, 2014 $ Payment of contingent consideration Addition of Razorsight earn-out Balance at September 30, 2015 $ |
Acquisition (Tables)
Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Razorsight Corporation ("Razorsight") | |
Acquisition | |
Summary of fair values of assets and liabilities assumed at acquisition date | Purchase Price Allocation Cash $ Prepaid expenses and other assets Accounts receivable Equipment Other assets - long term Intangible assets: Wtd. Avg. Technology 4 years Customer relationships 10 years Goodwill Total assets acquired Accounts payable and accrued liabilities Lease obligation Deferred revenues Contingent consideration Deferred taxes Net assets acquired $ |
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 $ 1 year Customer relationships 5 years Goodwill Total assets acquired Accrued expenses Net assets acquired $ |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Schedule of stock-based compensation | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Pre-tax stock based compensation expense $ $ $ $ Tax effect of stock based compensation Cash received from the exercise of options |
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 $ Options Granted Options Exercised Options Cancelled Outstanding at September 30, 2015 $ $ Vested or expected to vest at September 30, 2015 $ $ Exercisable at September 30, 2015 $ $ |
Schedule of weighted-average assumptions used in the Black-Scholes option pricing model | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Expected stock price volatility % % % % Risk-free interest rate % % % % Expected life of options (in years) Expected dividend yield % % % % |
Schedule of weighted-average assumptions used to value employee stock purchase rights | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Expected stock price volatility % % % % Risk-free interest rate % % % % Expected life (in years) Expected dividend yield % % % % |
Summary information about the ESPP Plan | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Compensation expense $ $ $ $ Treasury shares sold Cash received from purchases (1) $ $ $ $ (1) Included within the financing activities section of the consolidated statements of cash flows. |
Restricted Stock | |
Schedule of non-vested restricted stock and changes | Number of Non-Vested Restricted Stock Awards Non-vested at December 31, 2014 Granted Vested Forfeited Non-vested at September 30, 2015 |
Accumulated Other Comprehensi23
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss). | |
Schedule of comprehensive income (loss) | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net income $ $ $ $ Translation adjustments Unrealized (loss) gain on securities, (net of tax) Net income (loss) on intra-entity foreign currency transactions, (net of tax) Total comprehensive income (loss) $ $ $ $ |
Schedule of changes in accumulated other comprehensive income (loss) | 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 $ $ $ $ Other comprehensive (loss) income Tax effect — Total comprehensive (loss) income Balance at September 30, 2015 $ $ $ $ |
Goodwill and intangibles (Table
Goodwill and intangibles (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangibles | |
Schedule of changes in goodwill | Balance at December 31, 2014 $ Acquisitions Reclassifications, adjustments and other Translation adjustments Balance at September 30, 2015 $ |
Schedule of composition of intangible assets | Weighted September 30, 2015 Average Accumulated Life Cost Amortization Net Trade name $ $ $ Technology Customer lists and relationships Capitalized software and patents Order Backlog — — $ $ $ Weighted December 31, 2014 Average Accumulated Life Cost Amortization Net Trade name $ $ $ Technology Customer lists and relationships Capitalized software and patents Order Backlog — — $ $ $ |
Schedule of estimated annual amortization expense of intangible assets for the next five years | Year ending December 31: 2015 $ 2016 2017 2018 2019 2020 |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Restructuring Charges | |
Summary of the restructuring accrual and changes | Balance at Balance at December 31, 2014 Charges Payments September 30, 2015 Employment termination costs $ — $ $ $ Facilities consolidation — — Total $ — $ $ $ |
Earnings per Common Share (Deta
Earnings per Common Share (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Numerator: | ||||
Net income attributable to common stockholders | $ 9,645 | $ 9,327 | $ 35,360 | $ 25,275 |
Income effect for interest on convertible debt, net of tax | 377 | 247 | 1,366 | 247 |
Numerator for diluted EPS- Income to common stockholders after assumed conversions | $ 10,022 | $ 9,574 | $ 36,726 | $ 25,522 |
Denominator: | ||||
Weighted average common shares outstanding - basic | 42,491 | 40,833 | 42,077 | 40,173 |
Dilutive effect of: | ||||
Shares from assumed conversion of convertible debt | 4,326 | 2,257 | 4,326 | 576 |
Options and unvested restricted shares | 875 | 1,175 | 1,102 | 1,046 |
Weighted average common shares outstanding - diluted | 47,692 | 44,265 | 47,505 | 41,795 |
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) | 745 | 834 | 434 | 1,400 |
Fair Value Measurements of As27
Fair Value Measurements of Assets and Liabilities - Heirarchy (Details) - USD ($) $ in Thousands | Sep. 30, 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 | 143,352 | $ 235,967 |
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 | 83,647 | 54,410 |
Level 3 | ||
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy | ||
Contingent consideration obligation | (170) | (8,000) |
Total | ||
Summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy | ||
Fair value of net assets | $ 226,829 | $ 282,377 |
Fair Value Measurements of As28
Fair Value Measurements of Assets and Liabilities - Available-for-Sale Contractual Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Aggregate Fair Value | ||
Due in one year or less | $ 67,452 | $ 51,097 |
Due after one year, less than five years | 16,195 | 3,313 |
Total | 83,647 | 54,410 |
Aggregate Amount of Unrealized Gains | ||
Due in one year or less | 15 | 10 |
Due after one year, less than five years | 19 | 2 |
Total | 34 | 12 |
Aggregate Amount of Unrealized Losses | ||
Due in one year or less | (110) | (72) |
Due after one year, less than five years | (9) | (3) |
Total | $ (119) | $ (75) |
Fair Value Measurements of As29
Fair Value Measurements of Assets and Liabilities - Level 3 (Details) - USD ($) $ in Thousands | Feb. 20, 2015 | Sep. 30, 2015 |
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 | |
Earn-out compensation due to Strumsoft employees | (8,000) | |
Addition of Razorsight earn-out | 170 | |
Balance as at the end of the period | $ 170 |
Acquisition - 2015 Acquisitions
Acquisition - 2015 Acquisitions - Razorsight (Details) - USD ($) $ in Thousands | Aug. 04, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Preliminary Purchase Price Allocation | ||||
Goodwill | $ 186,973 | $ 186,973 | $ 147,135 | |
Estimated useful life | 8 years | 8 years | ||
Razorsight Corporation ("Razorsight") | ||||
Acquisition | ||||
Cash consideration, net of liabilities assumed | $ 25,300 | |||
Earn-out obligation, high end of potential liability | 15,000 | |||
Preliminary Purchase Price Allocation | ||||
Cash | 1,172 | |||
Prepaid expenses and other assets | 1,300 | |||
Accounts receivable | 120 | |||
Equipment | 879 | |||
Other assets - long term | 144 | |||
Goodwill | 11,874 | |||
Total assets acquired | 36,379 | |||
Accounts payable and accrued liabilities | 2,211 | |||
Lease obligation | 284 | |||
Deferred revenues | 965 | |||
Contingent consideration | 170 | |||
Deferred taxes | 7,465 | |||
Net assets acquired | 25,284 | |||
Goodwill and acquisition related costs | ||||
Purchase price, tax deductible portion of goodwill | 0 | $ 0 | ||
Acquisition-related costs | $ 112 | |||
Technology | ||||
Preliminary Purchase Price Allocation | ||||
Estimated useful life | 7 years | 7 years | ||
Technology | Razorsight Corporation ("Razorsight") | ||||
Preliminary Purchase Price Allocation | ||||
Intangible assets | $ 9,200 | |||
Estimated useful life | 4 years | |||
Customer relationships | Razorsight Corporation ("Razorsight") | ||||
Preliminary Purchase Price Allocation | ||||
Intangible assets | $ 11,690 | |||
Estimated useful life | 10 years |
Acquisition - 2015 Acquisitio31
Acquisition - 2015 Acquisitions - F-Secure Corporation (Details) - USD ($) | Feb. 23, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Preliminary Purchase Price Allocation | |||
Goodwill | $ 186,973,000 | $ 147,135,000 | |
Estimated useful life | 8 years | 8 years | |
F-Secure Corporation ("F-Secure") | |||
Acquisition | |||
Cash consideration, net of liabilities assumed | $ 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 | $ 862,000 | ||
Technology | |||
Preliminary Purchase Price Allocation | |||
Estimated useful life | 7 years | 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 |
Stockholders' Equity - Stock-ba
Stockholders' Equity - Stock-based compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Share-based compensation expense additional disclosures | ||||
Pre-tax stock-based compensation expense recorded | $ 8,143 | $ 7,788 | $ 21,234 | $ 20,470 |
Tax effect of stock based compensation | 2,570 | 2,637 | 6,701 | 6,962 |
Proceeds from the exercise of stock options | 4,924 | $ 12,857 | 16,752 | $ 20,727 |
Stock-based compensation cost related to non-vested equity awards not yet recognized as an expense | $ 67,000 | $ 67,000 | ||
Weighted-average period over which stock-based compensation cost related to non-vested equity awards is expected to be recognized | 2 years 8 months 23 days |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Stock (Details) - Restricted Stock shares in Thousands | 9 Months Ended |
Sep. 30, 2015shares | |
Number of Awards | |
Non-vested at the beginning of the period (in shares) | 1,342 |
Granted (in shares) | 765 |
Vested (in shares) | (524) |
Forfeited (in shares) | (158) |
Non-vested at the end of the period (in shares) | 1,425 |
Stockholders' Equity - Option A
Stockholders' Equity - Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Number of Options | |
Options outstanding at the beginning of the period (in shares) | shares | 2,767 |
Options Granted (in shares) | shares | 594 |
Options Exercised (in shares) | shares | (706) |
Options Cancelled (in shares) | shares | (173) |
Options outstanding at the end of the period (in shares) | shares | 2,482 |
Vested or expected to vest (in shares) | shares | 2,339 |
Exercisable (in shares) | shares | 1,247 |
Weighted-Average Exercise Price | |
Balance at the beginning of the period (in dollars per share) | $ 25.81 |
Options Granted (in dollars per share) | 43.22 |
Options Exercised (in dollars per share) | 23.73 |
Options Cancelled (in dollars per share) | 32 |
Balance at the end of the period (in dollars per share) | 30.13 |
Vested or expected to vest (in dollars per share) | 29.80 |
Exercisable (in dollars per share) | $ 23.55 |
Weighted-Average Remaining Contractual Term | |
Outstanding | 4 years 6 months 7 days |
Vested or expected to vest | 4 years 5 months 5 days |
Exercisable | 3 years 1 month 21 days |
Aggregate Intrinsic Value | |
Outstanding | $ | $ 13,119 |
Vested or expected to vest | $ | 12,973 |
Exercisable | $ | $ 11,681 |
Stockholders' Equity - Option35
Stockholders' Equity - Option Awards Fair Value Assumptions (Details) - Stock Options - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Weighted-average assumptions used in the Black-Scholes option pricing model | ||||
Expected stock price volatility (as a percent) | 46.00% | 48.00% | 48.00% | 58.00% |
Risk-free interest rate (as a percent) | 1.27% | 1.33% | 1.26% | 1.43% |
Expected life (in years) | 3 years 11 months 23 days | 4 years 1 month 13 days | 4 years | 4 years 3 months |
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Additional disclosures | ||||
Weighted-average fair value (as of the date of grant) of the options granted during the period (in dollars per share) | $ 15.53 | $ 17.03 | $ 16.54 | $ 14.64 |
Stockholders' Equity - Employee
Stockholders' Equity - Employee Stock Purchase Plan (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Other information | ||||
Cash received from purchases | $ 1,902 | $ 1,677 | ||
ESPP Plan | ||||
Employee Stock Purchase Plan | ||||
Term of Employee Stock Purchase Plan | 10 years | |||
Total number of shares available for purchase | 500 | 500 | ||
ESPP participation 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% | |||
Maximum number of shares allowed to be purchased by single participant | 1 | |||
Weighted-average assumptions used in the Black-Scholes option pricing model | ||||
Expected stock price volatility (as a percent) | 36.00% | 63.00% | 36.00% | 52.00% |
Risk-free interest rate (as a percent) | 0.25% | 0.07% | 0.24% | 0.06% |
Expected life (in years) | 6 months | 6 months | 6 months | 6 months |
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Other information | ||||
Weighted-average grant date fair value (in dollars per share) | $ 11.82 | $ 10.58 | $ 11.82 | $ 10.54 |
Compensation expense | $ 150 | $ 148 | $ 475 | $ 503 |
Treasury shares sold | 25 | 34 | 54 | 61 |
Cash received from purchases | $ 927 | $ 937 | $ 1,902 | $ 1,677 |
Unrecognized compensation cost | $ 197 | $ 197 |
Accumulated Other Comprehensi37
Accumulated Other Comprehensive Income (Loss) - Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Comprehensive income (loss) | ||||
Net income | $ 9,645 | $ 9,327 | $ 35,360 | $ 25,275 |
Translation adjustments | (971) | (10,652) | (11,681) | (6,735) |
Unrealized (loss) gain on securities, (net of tax) | 255 | (47) | 389 | (43) |
Net income (loss) on intra-entity foreign currency transactions, (net of tax) | 65 | (1,632) | (2,047) | (5,051) |
Total comprehensive income (loss) | $ 8,994 | $ (3,004) | $ 22,021 | $ 13,446 |
Accumulated Other Comprehensi38
Accumulated Other Comprehensive Income (Loss) - Changes in AOCI (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Changes in accumulated other comprehensive income (loss) | |
Balance at the beginning of the period | $ (20,014) |
Other comprehensive (loss) income | (14,996) |
Tax effect | 1,657 |
Total other comprehensive income (loss) | (13,339) |
Balance at the end of the period | (33,353) |
Foreign Currency | |
Changes in accumulated other comprehensive income (loss) | |
Balance at the beginning of the period | (16,880) |
Other comprehensive (loss) income | (11,681) |
Total other comprehensive income (loss) | (11,681) |
Balance at the end of the period | (28,561) |
Unrealized (Loss) Income on Intra-Entity Foreign Currency Transactions | |
Changes in accumulated other comprehensive income (loss) | |
Balance at the beginning of the period | (2,957) |
Other comprehensive (loss) income | (3,715) |
Tax effect | 1,668 |
Total other comprehensive income (loss) | (2,047) |
Balance at the end of the period | (5,004) |
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 (loss) income | 400 |
Tax effect | (11) |
Total other comprehensive income (loss) | 389 |
Balance at the end of the period | $ 212 |
Goodwill and Intangibles- Goodw
Goodwill and Intangibles- Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Goodwill | |
Balance at the beginning of the period | $ 147,135 |
Acquisitions | 48,328 |
Reclassifications, adjustments and other | (30) |
Translation adjustments | (8,460) |
Balance at the end of the period | $ 186,973 |
Goodwill and Intangibles - Inta
Goodwill and Intangibles - Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Intangible assets | ||
Amortization expense | $ 20,000 | $ 19,800 |
Estimated useful life of assets | 8 years | 8 years |
Intangible assets: | ||
Cost | $ 187,049 | $ 149,202 |
Accumulated amortization | (67,641) | (49,713) |
Net amount | $ 119,408 | $ 99,489 |
Trade Name | ||
Intangible assets | ||
Estimated useful life of assets | 4 years | 4 years |
Intangible assets: | ||
Cost | $ 1,539 | $ 1,564 |
Accumulated amortization | (1,360) | (1,299) |
Net amount | $ 179 | $ 265 |
Technology | ||
Intangible assets | ||
Estimated useful life of assets | 7 years | 7 years |
Intangible assets: | ||
Cost | $ 75,549 | $ 66,931 |
Accumulated amortization | (31,845) | (24,260) |
Net amount | $ 43,704 | $ 42,671 |
Customer lists and relationships | ||
Intangible assets | ||
Estimated useful life of assets | 9 years | 10 years |
Intangible assets: | ||
Cost | $ 99,992 | $ 70,443 |
Accumulated amortization | (29,935) | (21,126) |
Net amount | $ 70,057 | $ 49,317 |
Capitalized software and patents | ||
Intangible assets | ||
Estimated useful life of assets | 3 years | 3 years |
Intangible assets: | ||
Cost | $ 9,051 | $ 9,346 |
Accumulated amortization | (3,583) | (2,110) |
Net amount | 5,468 | 7,236 |
Order Backlog | ||
Intangible assets: | ||
Cost | 918 | 918 |
Accumulated amortization | $ (918) | $ (918) |
Goodwill and Intangibles - In41
Goodwill and Intangibles - Intangible Assets - Future Amortization (Details) $ in Thousands | Sep. 30, 2015USD ($) |
Estimated future amortization expense | |
2,015 | $ 9,071 |
2,016 | 28,896 |
2,017 | 22,612 |
2,018 | 20,385 |
2,019 | 15,887 |
2,020 | $ 6,657 |
Debt - Credit Facility (Details
Debt - Credit Facility (Details) - Credit Facility - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Credit Facility | ||||
Borrowing capacity | $ 100,000 | $ 100,000 | ||
Commitment fee on unused balance | 89 | $ 46 | 241 | $ 171 |
Amount of borrowing capacity to which the company has a right to request an increase | 150,000 | |||
Amount outstanding | $ 0 | $ 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 ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Aug. 12, 2014 | |
Debt | |||||
Face amount of debt issued | $ 230,000,000 | ||||
Interest rate, as a percent | 0.75% | ||||
Capitalized finance fees | $ 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 | $ 230,000,000 | |||
Effective Interest Rate (as a percent) | 1.36% | 1.36% | |||
Fair value of debt | $ 225,100,000 | $ 225,100,000 | |||
Interest expense | $ 431,000 | $ 216,000 | $ 1,300,000 | $ 216,000 |
Restructuring Charges (Details)
Restructuring Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
Restructuring accrual and changes | ||
Balance at the beginning of the period | $ 0 | |
Charges | $ 399 | 5,090 |
Payments | (4,877) | |
Balance at the end of the period | 213 | 213 |
Employment termination costs | ||
Restructuring accrual and changes | ||
Balance at the beginning of the period | 0 | |
Payments | (4,877) | |
Balance at the end of the period | 150 | 150 |
Restructuring charges for Employment termination costs | 5,027 | |
Facilities consolidation | ||
Restructuring accrual and changes | ||
Balance at the beginning of the period | 0 | |
Charges | 63 | |
Payments | 0 | |
Balance at the end of the period | $ 63 | $ 63 |
Legal Matters (Details)
Legal Matters (Details) - Miyowa | 1 Months Ended | |
Dec. 31, 2013item | Sep. 30, 2015USD ($) | |
Legal Matters | ||
Earn-out | $ | $ 0 | |
Infringement of patents | ||
Legal Matters | ||
Number of former shareholders | 2 |