Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 24, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'Information Services Group Inc. | ' |
Entity Central Index Key | '0001371489 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 36,706,834 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets | ' | ' |
Cash and cash equivalents | $21,633 | $35,085 |
Accounts receivable, net of allowance of $259 and $352, respectively | 44,595 | 38,688 |
Deferred tax asset | 389 | 825 |
Prepaid expense and other current assets | 2,467 | 2,116 |
Total current assets | 69,084 | 76,714 |
Restricted cash | 189 | 54 |
Furniture, fixtures and equipment, net | 3,571 | 3,213 |
Goodwill | 36,519 | 34,691 |
Intangible assets, net | 19,854 | 22,093 |
Other assets | 3,426 | 3,109 |
Total assets | 132,643 | 139,874 |
Current liabilities | ' | ' |
Accounts payable | 7,105 | 6,024 |
Current maturities of long-term debt | 3,656 | 3,375 |
Deferred revenue | 3,894 | 3,944 |
Accrued expenses | 14,433 | 21,189 |
Total current liabilities | 29,088 | 34,532 |
Long-term debt, net of current maturities | 50,559 | 53,371 |
Deferred tax liability | ' | 2,432 |
Other liabilities | 6,196 | 6,296 |
Total liabilities | 85,843 | 96,631 |
Commitments and contingencies (Note 8) | ' | ' |
Redeemable noncontrolling interest | 656 | ' |
Stockholders' equity | ' | ' |
Preferred stock, $.001 par value; 10,000 shares authorized; none issued | ' | ' |
Common stock, $.001 par value, 100,000 shares authorized; 37,943 shares issued and 36,801 shares outstanding at September 30, 2014 and 37,943 shares issued and 37,122 outstanding at December 31, 2013 | 38 | 38 |
Additional paid-in-capital | 209,685 | 208,602 |
Treasury stock (1,142 and 821 common shares, respectively, at cost) | -5,111 | -2,796 |
Accumulated other comprehensive loss | -3,540 | -2,448 |
Accumulated deficit | -154,928 | -160,153 |
Total stockholders' equity | 46,144 | 43,243 |
Total liabilities, redeemable noncontrolling interest and stockholders' equity | $132,643 | $139,874 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ' | ' |
Accounts receivable, allowances (in dollars) | $259 | $352 |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 37,943 | 37,943 |
Common stock, shares outstanding | 36,801 | 37,122 |
Treasury stock, shares | 1,142 | 821 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) | ' | ' | ' | ' |
Revenues | $53,258 | $51,371 | $156,387 | $157,542 |
Operating expenses | ' | ' | ' | ' |
Direct costs and expenses for advisors | 31,487 | 30,733 | 92,796 | 92,467 |
Selling, general and administrative | 16,136 | 16,987 | 48,758 | 50,761 |
Depreciation and amortization | 1,863 | 1,854 | 5,501 | 5,600 |
Operating income | 3,772 | 1,797 | 9,332 | 8,714 |
Interest income | 3 | 3 | 12 | 15 |
Interest expense | -502 | -660 | -1,524 | -2,108 |
Gain on extinguishment of debt | ' | ' | ' | 79 |
Bargain purchase gain | ' | ' | 146 | ' |
Foreign currency transaction (loss) gain | -75 | -29 | -112 | -18 |
Income before taxes | 3,198 | 1,111 | 7,854 | 6,682 |
Income tax provision | 808 | 700 | 2,277 | 2,863 |
Net income | 2,390 | 411 | 5,577 | 3,819 |
Net income attributable to noncontrolling interest | 37 | ' | 56 | ' |
Net income attributable to ISG | 2,353 | 411 | 5,521 | 3,819 |
Weighted average shares outstanding: | ' | ' | ' | ' |
Basic (in shares) | 37,039 | 36,781 | 37,214 | 36,723 |
Diluted (in shares) | 38,740 | 38,830 | 38,813 | 38,712 |
Earnings per share attributable to ISG: | ' | ' | ' | ' |
Basic (in dollars per share) | $0.06 | $0.01 | $0.15 | $0.10 |
Diluted (in dollars per share) | $0.06 | $0.01 | $0.14 | $0.10 |
Comprehensive income: | ' | ' | ' | ' |
Net income | 2,390 | 411 | 5,577 | 3,819 |
Foreign currency translation, net of tax (expense) benefit of $(795), $(360), $(669) and $219, respectively | -1,297 | 564 | -1,092 | -381 |
Comprehensive income | 1,093 | 975 | 4,485 | 3,438 |
Comprehensive income attributable to noncontrolling interest | 37 | ' | 56 | ' |
Comprehensive income attributable to ISG | $1,056 | $975 | $4,429 | $3,438 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) | ' | ' | ' | ' |
Foreign currency translation, tax expense | ($795) | ($360) | ($669) | $219 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities | ' | ' |
Net income | $5,577 | $3,819 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ' | ' |
Depreciation expense | 1,340 | 1,211 |
Amortization of intangibles | 4,161 | 4,389 |
Amortization of deferred financing costs | 114 | 176 |
Gain on extinguishment of debt | ' | -79 |
Bargain purchase gain | -146 | ' |
Tax benefit from stock issuances | -423 | -575 |
Compensation costs related to stock-based awards | 2,069 | 3,018 |
Change in fair value of contingent consideration | 403 | 564 |
Changes in accounts receivable allowance | -41 | -46 |
Deferred tax benefit | -950 | -1,085 |
Loss on disposal of furniture, fixtures and equipment | 14 | 25 |
Changes in operating assets and liabilities, net of effects of acquisitions: | ' | ' |
Accounts receivable | -5,988 | -6,813 |
Prepaid expense and other current assets | -667 | -875 |
Accounts payable | 989 | 1,205 |
Deferred revenue | -50 | -468 |
Accrued liabilities | -8,557 | 3,553 |
Net cash (used in) provided by operating activities | -2,155 | 8,019 |
Cash flows from investing activities | ' | ' |
Acquisitions, net of cash acquired | -890 | ' |
Restricted cash | -135 | -1 |
Purchase of furniture, fixtures and equipment | -1,702 | -1,580 |
Net cash used in investing activities | -2,727 | -1,581 |
Cash flows from financing activities | ' | ' |
Proceeds from debt | ' | 55,000 |
Principal payments on borrowings | -2,531 | -58,306 |
Payment of contingent consideration | -1,633 | ' |
Equity securities repurchased | -4,301 | -2,954 |
Debt issuance costs | ' | -754 |
Tax benefit from stock issuances | 423 | 575 |
Proceeds from issuance of ESPP shares | 410 | 279 |
Net cash used in financing activities | -7,632 | -6,160 |
Effect of exchange rate changes on cash | -938 | -200 |
Net (decrease) increase in cash and cash equivalents | -13,452 | 78 |
Cash and cash equivalents, beginning of period | 35,085 | 23,499 |
Cash and cash equivalents, end of period | 21,633 | 23,577 |
Noncash financing activities: | ' | ' |
Issuance of treasury stock for vested restricted stock units awards | 1,605 | 646 |
Liability to CCI Sellers | 747 | ' |
Noncash investing activities: | ' | ' |
Accretion of noncontrolling interest | $23 | ' |
DESCRIPTION_OF_ORGANIZATION_AN
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | 9 Months Ended |
Sep. 30, 2014 | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ' |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ' |
NOTE 1—DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |
Information Services Group, Inc. (the “Company”) was founded in 2006 with the strategic vision to become a high-growth, leading provider of information-based advisory services. In 2007, we consummated our initial public offering and completed the acquisition of TPI Advisory Services Americas, Inc. (“TPI”). | |
BASIS_OF_PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2014 | |
BASIS OF PRESENTATION | ' |
BASIS OF PRESENTATION | ' |
NOTE 2—BASIS OF PRESENTATION | |
The accompanying unaudited condensed consolidated financial statements as of September 30, 2014 and for the three and nine months ended September 30, 2014 and 2013, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are considered necessary for a fair presentation of the financial position of the Company as of September 30, 2014, the results of operations for the three and nine months ended September 30, 2014 and 2013 and the cash flows for the nine months ended September 30, 2014 and 2013. The condensed consolidated balance sheet as of December 31, 2013 has been derived from the Company’s audited consolidated financial statements. Operating results for the three and nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. | |
Certain information and disclosures normally included in the notes to annual financial statements prepared in accordance with GAAP have been omitted from these interim financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the financial statements for the fiscal year ended December 31, 2013, which are included in the Company’s 2013 Annual Report on Form 10-K filed with the SEC. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | |||
Sep. 30, 2014 | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||
NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Use of Estimates | ||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates. The complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in the application of the proportional performance method of accounting affect the amounts of revenues, expenses, unbilled receivables and deferred revenue. Numerous internal and external factors can affect estimates. Estimates are also used for but not limited to: allowance for doubtful accounts, useful lives of furniture, fixtures and equipment, depreciation expense, contingent consideration, fair value assumptions in analyzing goodwill and intangible asset impairments, income taxes and deferred tax asset valuation, and the valuation of stock based compensation. | ||||
Fair Value | ||||
The carrying value of the Company’s cash and cash equivalents, receivables, accounts payable, long-term debt, other current liabilities, and accrued interest approximate fair value. | ||||
Fair value is the price that would be received upon a sale of an asset or paid upon a transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). Market participants can use market data or assumptions in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable. The use of unobservable inputs is intended to allow for fair value determinations in situations where there is little, if any, market activity for the asset or liability at the measurement date. Under the fair-value hierarchy: | ||||
· | Level 1 measurements include unadjusted quoted market prices for identical assets or liabilities in an active market; | |||
· | Level 2 measurements include quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets; and | |||
· | Level 3 measurements include those that are unobservable and of a highly subjective measure. | |||
The Company held investments in cash equivalent money market funds of $20,000 at September 30, 2014 and December 31, 2013. The Company considers the fair value of cash equivalent money market funds to be classified within Level 1 of the fair value hierarchy. | ||||
The Company’s financial instruments include outstanding borrowings of $54.2 million at September 30, 2014 and $56.7 million at December 31, 2013, which are carried at amortized cost. The fair values of these instruments are classified within Level 3 of the fair value hierarchy. The fair value of the Company’s outstanding borrowings is approximately $54.3 million and $56.8 million at September 30, 2014 and December 31, 2013, respectively. The fair values of these instruments have been estimated using a discounted cash flow analysis based on the Company’s incremental borrowing rate for similar borrowing arrangements. The incremental borrowing rate used to discount future cash flows ranged from 2.66% to 2.74% at September 30, 2014. | ||||
The Company’s contingent consideration liability was $4.8 million and $4.1 million at September 30, 2014 and December 31, 2013, respectively. The Company paid $1.6 million related to the STA contingent consideration during the second quarter of 2014. The Company also increased the STA contingent consideration liability by $0.1 million and $0.4 million for the three and nine months ended September 30, 2014, respectively, based on the latest estimates of future profit level due to completion of new projects. On April 15, 2014, the Company recorded a liability of $2.0 million representing the fair value of the contingent consideration related to the acquisition of CCI Consulting Pty Ltd (“CCI”). The fair value measurement of this contingent consideration is classified within Level 3 of the fair value hierarchy and reflects the Company’s own assumptions in measuring fair values using the income approach. In developing these estimates, the Company considered certain performance projections, historical results, and industry trends. This amount was estimated through a valuation model that incorporated probability-weighted assumptions related to the achievement of these milestones and thus the likelihood of the Company making payments. These cash outflow projections have been discounted using a rate ranging from 2.3% to 13.5%, which is the after-tax cost of debt financing for market participants. | ||||
Recently Issued Accounting Pronouncements | ||||
In March 2013, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance clarifying the accounting for the release of cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2013. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows. | ||||
In July 2013, the FASB issued new accounting guidance requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. No new recurring disclosures are required. The amendments are effective for annual and interim reporting periods beginning on or after December 15, 2013, and are to be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows. | ||||
In April 2014, the FASB issued new accounting guidance regarding reporting discontinued operations and disclosures of disposals of components of an entity, which raises the threshold for determining which disposals are required to be presented as discontinued operations and modifies related disclosure requirements. The standard is applied prospectively and is effective in 2015 with early adoption permitted. The Company does not believe the adoption of this guidance will impact its consolidated financial statements or disclosures. | ||||
In May 2014, the FASB issued new accounting guidance outlines a single comprehensive model for entities to use in accounting for revenue. Under the guidance, revenue is recognized when a company 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. The standard is effective for public entities with annual and interim reporting periods beginning after December 15, 2016. Entities have the option of using either a full retrospective or a modified retrospective approach to adopt the guidance. We are currently assessing the effects this guidance may have on our consolidated financial statements, as well as the method of transition that we will use in adopting the new standard. | ||||
In August 2014, the FASB issued guidance on management’s responsibility to assess an entity’s ability to continue as a going concern and provide related footnote disclosures in certain circumstances. The guidance is effective for the Company’s interim and annual periods beginning after December 15, 2016. The Company does not believe the adoption of this guidance will impact its consolidated financial statements or disclosures. | ||||
ACQUISITIONS
ACQUISITIONS | 9 Months Ended | ||||||
Sep. 30, 2014 | |||||||
ACQUISITIONS | ' | ||||||
ACQUISITIONS | ' | ||||||
NOTE 4—ACQUISITION | |||||||
CTP Acquisition | |||||||
On March 17, 2014, Compass Holding BV, a wholly-owned subsidiary of ISG entered into an Agreement with Convergent Technologies Partners S.p.A. (“CTP”) whereby Compass Holding BV acquired 51% of CTP’s share capital for $1.0 million, which included $0.7 million of cash acquired, providing the Company with control over CTP. CTP became a subsidiary of the Company on the date of acquisition. At the same time CTP acquired 100% interest of Compass Management Consulting Italy “Compass Italy”, a subsidiary of Compass Holding BV for $0.3 million. The selling of Compass Italy and acquisition of CTP are treated as linked transaction and accordingly recorded on a net basis. The Company is consolidating the financial results of CTP in its consolidated financial statements and accordingly, reported revenues, costs and expenses, assets and liabilities, and cash flows include 100% of CTP, with the 49% noncontrolling interest share reported as net income attributable to noncontrolling interest in the consolidated statements of operations, and redeemable noncontrolling interest on the consolidated balance sheets. | |||||||
CTP is a leading management consulting firm providing specialized IT and operational strategies and solutions to Italy’s public sector. The agreement with CTP extends our global penetration into the public sector, building on our successful public sector businesses in North America, Australia and the UK. It also provides new growth opportunities for the Company to serve both public and private sector organizations in Italy with our combined resources. | |||||||
The parties also executed a put and call option agreement for the transfer to ISG of all of the outstanding CTP’s share capital that it does not own, exercisable upon certain conditions. The remaining 49% ownership in CTP is held by a third party. The third party representing the redeemable non-controlling interest in the subsidiary holds put rights for the remaining interest in CTP and the Company holds call rights with respect to such remaining interest. The put right provides the third party an option to sell its ownership interest to the Company after December 31, 2016 at a price based on four times the average of Earning Before Interests, Taxes, Depreciation and Amortization (“EBITDA”) and for the year 2015 and year 2016 as resulting from CTP’s approved financial statements for the year 2015 and year 2016 at the time of the exercise. Because the redeemable non-controlling interest in CTP has a redemption feature, as a result of the put option, the Company has classified the redeemable non-controlling interest in CTP in the mezzanine section of the Condensed Consolidated Balance Sheet. The redeemable non-controlling interest will be accreted to the redemption value by recording a corresponding adjustment to accumulated deficit at the end of each reporting period. | |||||||
The following table summarizes the consideration transferred to acquire CTP and the amounts of identified assets acquired and liabilities assumed at the acquisition date, as well as the fair value of the redeemable noncontrolling interest in CTP at the acquisition date: | |||||||
Fair value of consideration transferred | |||||||
Cash | $ | 697 | |||||
Redeemable noncontrolling interest* | 501 | ||||||
Total fair value transferred | $ | 1,198 | |||||
* | Equivalent to 49% of CTP’s share capital discounted for lack of control and marketability based on third party research. | ||||||
Recognized amounts of identifiable assets acquired and liabilities assumed as of March 17, 2014: | |||||||
Cash | $ | 734 | |||||
Accounts receivable | 565 | ||||||
Other assets | 436 | ||||||
Intangible assets | 139 | ||||||
Accounts payable | (65 | ) | |||||
Accrued expenses and other | (465 | ) | |||||
Net assets acquired | $ | 1,344 | |||||
Bargain purchase gain | $ | (146 | ) | ||||
This bargain purchase gain resulted as the fair value of the net assets acquired exceeded the consideration transferred. The excess resulted from the fact that the seller was motivated to sell. | |||||||
Costs associated with this acquisition are included in the selling, general and administrative expenses in the condensed consolidated statement of comprehensive income and totaled $0.2 million during the nine months ended September 30, 2014. This business combination was accounted for under the acquisition method of accounting, and as such, the aggregate purchase price was allocated to the assets acquired and liabilities assumed based on estimated fair values as of the closing dates. Based on the valuation and other factors as described above, the purchase price assigned to intangible assets and the amortization period were as follows: | |||||||
Purchase Price | Asset Life | ||||||
Allocation | |||||||
Amortizable intangible assets: | |||||||
Customer relationships | $ | 56 | 10 years | ||||
Certified Methodology (patent) | 83 | 3 years | |||||
Total intangible assets | $ | 139 | |||||
CCI Acquisition | |||||||
On April 15, 2014, Technology Partners International, Inc., a wholly-owned subsidiary of ISG, executed an Asset Purchase Agreement (the “CCI Agreement”) with CCI, and consummated the acquisition of all of the assets and assumption of certain liabilities of CCI. CCI is a Melbourne, Australia-based research firm that measures and analyzes customer satisfaction in business-to-business relationships. The agreement with CCI extends our global penetration into recurring revenue businesses in Asia Pacific. CCI’s products are a natural complement to our “Assess” capabilities that analyze service performance and cost metrics. | |||||||
Under the terms of the CCI Agreement, ISG acquired the assets for cash consideration of AU$1.9 million, of which AU$1.0 million was paid at closing and AU$0.9 million will be paid in April 2015. In addition, the sellers under the CCI Agreement (the “CCI Sellers”) are eligible to receive a minimum of AU$0 and a maximum up to AU$3.0 million of earn-out payments for fiscal years 2014-2016 if certain earnings targets are met. Finally, the CCI Sellers were granted 50,000 ISG Restricted Shares that will vest if certain target revenues of ISG and its affiliates are met. | |||||||
The following table summarizes the consideration transferred to acquire CCI and the amounts of identified assets acquired and liabilities assumed at the acquisition date: | |||||||
The preliminary allocable purchase price consists of the following: | |||||||
Cash | $ | 934 | |||||
Post-completion installment payment | 800 | ||||||
Restricted stock* | 237 | ||||||
Contingent consideration | 1,989 | ||||||
Working capital adjustment | (56 | ) | |||||
Total allocable purchase price | $ | 3,904 | |||||
* | 50,000 shares at $4.74 at close of market on 4/15/2014 | ||||||
Recognized amounts of identifiable assets acquired and liabilities assumed as of April 15, 2014: | |||||||
Cash | $ | 7 | |||||
Accounts receivable | 275 | ||||||
Other assets | 18 | ||||||
Intangible assets | 1,887 | ||||||
Accounts payable | (27 | ) | |||||
Accrued expenses and other | (203 | ) | |||||
Net assets acquired | $ | 1,957 | |||||
Goodwill(1) | $ | 1,947 | |||||
-1 | Goodwill of approximately $1.9 million acquired in the acquisition is deductible for tax purposes. | ||||||
Costs associated with this acquisition are included in the selling, general and administrative expenses in the condensed consolidated statement of comprehensive income and totaled $0.2 million during the nine months ended September 30, 2014. This business combination was accounted for under the acquisition method of accounting, and as such, the aggregate purchase price was allocated on a preliminary basis to the assets acquired and liabilities assumed based on estimated fair values as of the closing dates. The purchase price allocations will be finalized after the completion of the valuation of certain intangible assets and any adjustments to the preliminary purchase price allocations are not expected to have a material impact on the Company’s results of operations. Based on the valuation and other factors as described above, the purchase price assigned to intangible assets and the amortization period were as follows: | |||||||
Purchase Price | Asset Life | ||||||
Allocation | |||||||
Amortizable intangible assets: | |||||||
Customer relationships | $ | 1,270 | 20 years | ||||
Databases | 495 | 10 years | |||||
Backlog | 122 | 2 years | |||||
Total intangible assets | $ | 1,887 | |||||
The Condensed Consolidated Financial Statements include the results of the CTP and CCI acquisition subsequent to the closing. Had the acquisition occurred as of January 1, 2013, the impact on the Company’s results of operations would not have been material. | |||||||
NET_INCOME_PER_COMMON_SHARE
NET INCOME PER COMMON SHARE | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
NET INCOME PER COMMON SHARE | ' | |||||||||||||
NET INCOME PER COMMON SHARE | ' | |||||||||||||
NOTE 5—NET INCOME PER COMMON SHARE | ||||||||||||||
Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. The 250,000 contingently issuable shares related to the acquisition of STA Consulting as well as 50,000 contingently issuable shares related to the acquisition of CCI were excluded from basic and diluted earnings per share since the contingencies have not been met as of the reporting period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would share in the net income of the Company. For the three and nine months ended September 30, 2014, the effect of 0.1 million stock appreciation rights (“SARs”) have not been considered in the diluted earnings per share, since the market price of the stock was less than the exercise price during the period in the computation. For the three and nine months ended September 30, 2013, the effect of 0.1 million SARs have not been considered in the diluted earnings per share calculation, since the market price of the Company’s common stock was less than the exercise price during the period in the computation. In addition, 0.03 million and 0.8 million restricted shares have not been considered in the diluted earnings per share calculation for the three and nine months ended September 30, 2013, as the effect would be anti-dilutive. | ||||||||||||||
The following tables set forth the computation of basic and diluted earnings per share: | ||||||||||||||
Three Months | Nine Months | |||||||||||||
Ended September 30, | Ended September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Basic: | ||||||||||||||
Net income attributable to ISG | $ | 2,353 | $ | 411 | $ | 5,521 | $ | 3,819 | ||||||
Weighted average common shares | 37,039 | 36,781 | 37,214 | 36,723 | ||||||||||
Earnings per share attributable to ISG | $ | 0.06 | $ | 0.01 | $ | 0.15 | $ | 0.10 | ||||||
Diluted: | ||||||||||||||
Net income attributable to ISG | $ | 2,353 | $ | 411 | $ | 5,521 | $ | 3,819 | ||||||
Interest expense of convertible debt, net of tax | 25 | 19 | 71 | 93 | ||||||||||
Net income, attributable to ISG, as adjusted | $ | 2,378 | $ | 430 | $ | 5,592 | $ | 3,912 | ||||||
Basic weighted average common shares | 37,039 | 36,781 | 37,214 | 36,723 | ||||||||||
Potential common shares | 1,701 | 2,049 | 1,599 | 1,989 | ||||||||||
Diluted weighted average common shares | 38,740 | 38,830 | 38,813 | 38,712 | ||||||||||
Diluted earnings per share attributable to ISG | $ | 0.06 | $ | 0.01 | $ | 0.14 | $ | 0.10 | ||||||
INCOME_TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2014 | |
INCOME TAXES | ' |
INCOME TAXES | ' |
NOTE 6—INCOME TAXES | |
The Company’s effective tax rate for the three and nine months ended September 30, 2014 was 25.3% and 29.0% based on pretax income of $3.2 million and $7.9 million, respectively. Our effective tax rate for the quarter is lower than the statutory rate primarily due to decreased valuation allowance on foreign net operating losses, decreased tax liabilities for unremitted foreign earnings, and partial reversal of reserves related to previously unrecognized tax benefits. This compared to 63.0% and 42.8% for the three and nine months ended September 30, 2013, respectively. The difference is primarily due to changes in pre-tax income by jurisdiction, changes in valuation allowances placed against deferred tax assets, decreased tax liabilities for unremitted foreign earnings, and partial reversal or reserves related to previously unrecognized tax benefits for the three and nine months ended September 30, 2014 compared to the three and nine months ended September 30, 2013 | |
As of September 30, 2014, the Company had total unrecognized tax benefits of approximately $2.2 million of which approximately $2.2 million of this benefit would impact the Company’s effective tax rate if recognized. The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax provision in its condensed consolidated statement of operations. As of September 30, 2014, the Company’s accrual of interest and penalties amounted to $0.5 million. | |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2014 | |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | ' |
NOTE 7—COMMITMENTS AND CONTINGENCIES | |
The Company is subject to contingencies which arise through the ordinary course of business. All material liabilities of which management is aware are properly reflected in the financial statements at September 30, 2014 and December 31, 2013. | |
STA Consulting Contingent Consideration | |
As of September 30, 2014, we have recorded a liability of $2.9 million representing the estimated fair value of contingent consideration related to the acquisition of STA Consulting, of which $1.6 million is classified as current and included in accrued expenses on the consolidated balance sheet. During the quarter ended June 30, 2014, the Company paid $1.6 million related to 2013 performance and the remaining contingent liability is expected to be paid in the first quarter of 2015 and the first quarter of 2016. The Company also increased the contingent consideration liability by $0.1 million and $0.4 million for the three and nine months ended September 30, 2014, respectively, based on the latest estimates of future profit level due to completion of new projects. | |
CCI Contingent Consideration | |
As of September 30, 2014, we have recorded a liability of $1.9 million representing the estimated fair value of contingent consideration related to the acquisition of CCI Consulting, of which $0.6 million is classified as current and included in accrued expenses on the consolidated balance sheet. | |
GOODWILL
GOODWILL | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
GOODWILL | ' | ||||
GOODWILL | ' | ||||
NOTE 8—GOODWILL | |||||
The changes in the carrying amount of goodwill for the period ended September 30, 2014 is as follows: | |||||
2014 | |||||
Balance as of January 1, 2014 | $ | 34,691 | |||
Acquisitions | 1,947 | ||||
Foreign currency impact | (119 | ) | |||
Balance as of September 30, 2014 | $ | 36,519 | |||
REDEEMABLE_NONCONTROLLING_INTE
REDEEMABLE NONCONTROLLING INTEREST | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
REDEEMABLE NONCONTROLLING INTEREST | ' | ||||
Redeemable non controlling interest | ' | ||||
NOTE 9—REDEEMABLE NONCONTROLLING INTEREST | |||||
The following provides a summary of activity in the noncontrolling interest account for the period ended September 30, 2014: | |||||
2014 | |||||
Balance as of January 1, 2014 | $ | — | |||
Acquisition of CTP | 501 | ||||
Net income attributable to noncontrolling interest | 56 | ||||
Accretion attributable to noncontrolling interest | 23 | ||||
Reduction on Compass Italy’s ownership(1) | 76 | ||||
Balance as of September 30, 2014 | $ | 656 | |||
-1 | Refer to Note 4 related to CTP Acquisition | ||||
SEGMENT_AND_GEOGRAPHICAL_INFOR
SEGMENT AND GEOGRAPHICAL INFORMATION | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
SEGMENT AND GEOGRAPHICAL INFORMATION | ' | |||||||||||||
SEGMENT AND GEOGRAPHICAL INFORMATION | ' | |||||||||||||
NOTE 10—SEGMENT AND GEOGRAPHICAL INFORMATION | ||||||||||||||
The Company operates as one reportable segment consisting primarily of fact-based sourcing advisory services. The Company operates principally in the Americas, Europe and Asia Pacific. | ||||||||||||||
Geographical revenue information for the segment is as follows: | ||||||||||||||
Three Months | Nine Months | |||||||||||||
Ended September 30, | Ended September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Revenues | ||||||||||||||
Americas | $ | 28,407 | $ | 28,496 | $ | 80,505 | $ | 87,532 | ||||||
Europe | 19,731 | 17,605 | 60,935 | 53,832 | ||||||||||
Asia Pacific | 5,120 | 5,270 | 14,947 | 16,178 | ||||||||||
$ | 53,258 | $ | 51,371 | $ | 156,387 | $ | 157,542 | |||||||
The segregation of revenues by geographic region is based upon the location of the legal entity performing the services. The Company does not measure or monitor gross profit or operating income by geography for the purposes of making operating decisions or allocating resources. | ||||||||||||||
FINANCING_ARRANGEMENTS_AND_LON
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | 9 Months Ended | |||
Sep. 30, 2014 | ||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ' | |||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ' | |||
NOTE 11—FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||
The Company’s current outstanding debt, may limit our ability to fund general corporate requirements and obtain additional financing, impact our flexibility in responding to business opportunities and competitive developments and increase our vulnerability to adverse economic and industry conditions. | ||||
On November 16, 2007, our wholly-owned subsidiary International Consulting Acquisition Corp. (“ICAC”) entered into a senior secured credit facility comprised of a $95.0 million term loan facility and a $10.0 million revolving credit facility (“the 2007 Credit Agreement”). On November 16, 2007, ICAC borrowed $95.0 million under the term loan facility to finance the purchase price for our acquisition of TPI and to pay transaction costs. In connection with entering into a new credit facility on May 3, 2013, the Company repaid in full all obligations and liabilities owing under, and terminated, the 2007 Credit Agreement, dated as of November 16, 2007. No early termination penalties were incurred by the Company in connection with the termination of the 2007 Credit Agreement. As a result of this transaction, the Company recognized a loss of $0.4 million in the second quarter of 2013 relating to the write down of unamortized debt financing costs relating to the 2007 Credit Agreement. This amount was recorded in Gain on Extinguishment of Debt in the accompanying consolidated statement of comprehensive income (loss). | ||||
On May 3, 2013 (the “Closing”), the Company entered into a five year senior secured credit facility (the “2013 Credit Agreement”) comprised of a $45.0 million term loan facility and a $25.0 million revolving credit facility. On May 3, 2013, the Company borrowed $55.0 million under the 2013 Credit Agreement to refinance our existing debt under the 2007 Credit Agreement and to pay transaction costs. The material terms of the senior secured credit facility under the 2013 Credit Agreement are as follows: | ||||
· | Each of the term loan facility and revolving credit facility has a maturity date of five years from the Closing. | |||
· | The credit facility is secured by all of the equity interests owned by the Company, and its direct and indirect domestic subsidiaries and, subject to agreed exceptions, the Company’s direct and indirect “first-tier” foreign subsidiaries and a perfected first priority security interest in all of the Company’s and its direct and indirect domestic subsidiaries’ tangible and intangible assets. | |||
· | The Company’s direct and indirect existing and future wholly-owned domestic subsidiaries serve as guarantors to the Company’s obligations under the senior secured facility. | |||
· | At the Company’s option, the credit facility bears interest at a rate per annum equal to either (i) the “Base Rate” (which is the highest of (a) the rate publicly announced from time to time by the administrative agent as its “prime rate”, (b) the Federal Funds Rate plus 0.5% per annum and (c) the Eurodollar Rate, plus 1.0%), plus the applicable margin (as defined below) or (ii) Eurodollar Rate (adjusted for maximum reserves) as determined by the Administrative Agent, plus the applicable margin. The applicable margin is adjusted quarterly based upon the Company’s quarterly leverage ratio. Prior to the end of the first full quarter following the closing of the credit facility, the applicable margin shall be a percentage per annum equal to 2.5% for the term loans and the revolving loans maintained as Base Rate loans or 3.5% for the term loans and revolving loans maintained as Eurodollar loans. | |||
· | The Term Loan is repayable in eight consecutive quarterly installments of $843,750 each, commencing September 30, 2013, followed by eleven consecutive quarterly installments in the amount of $1,125,000 each, commencing September 30, 2015, and a final payment of the outstanding principal amount of the Term Loan on the Maturity Date. | |||
· | Mandatory repayments of term loans shall be required from (subject to agreed exceptions) (i) 100% of the proceeds from asset sales by the Company and its subsidiaries, (ii) 100% of the net proceeds from issuances of debt and equity by the Company and its subsidiaries, and (iii) 100% of the net proceeds from insurance recovery and condemnation events of the Company and its subsidiaries. | |||
· | The senior secured credit facility contains a number of covenants that, among other things, place restrictions on matters customarily restricted in senior secured credit facilities, including restrictions on indebtedness (including guarantee obligations), liens, fundamental changes, sales or disposition of property or assets, investments (including loans, advances, guarantees and acquisitions), transaction with affiliates, dividends and other payments in respect of capital stock, optional payments and modifications of other material debt instruments, negative pledges and agreements restricting subsidiary distributions and changes in line of business. In addition, the Company is required to comply with a total leverage ratio and fixed charge coverage ratio. As of September 30, 2014, our maximum total leverage ratio was 3.50 to 1.00 and we were in compliance with all covenants contained in the 2013 Credit Agreement. | |||
· | The senior secured credit facility contains customary events of default, including cross-default to other material agreements, judgment default and change of control. | |||
The Company is required under the 2013 Credit Agreement to establish a fixed or maximum interest rate covering a notional amount of not less than 50% of the aggregate outstanding indebtedness for borrowed money (other than the total revolving outstanding) for a period of three years from the closing date of our 2013 Credit Agreement. Subsequent to May 3, 2013, the Company entered into an agreement to cap the interest rate at 5% on the LIBOR component of its borrowings under the term loan facility until May 3, 2016. This interest rate cap is not designated for hedging or speculative purposes. The expense related to this interest rate cap was not material. | ||||
On March 18, 2014, the Company’s lenders agreed to amend the 2013 Credit Agreement to allow the Company to complete the acquisition of CCI. In addition, the Company’s lenders agreed to allow the Company to exclude the acquisition from its $5 million fiscal year permitted acquisition basket and from the calculation of its Consolidated Fixed Charge Coverage ratio. Lastly, the Company’s lenders agreed to increase its permitted acquisition baskets during any fiscal year from $5 million to $10 million and during the term of our Credit Agreement from $15 million to $40 million. On April 15, 2014, the acquisition of CCI was completed. | ||||
As of September 30, 2014, the total principal outstanding under the term loan facility and revolving credit facility was $40.8 million and $10.0 million, respectively. Additional mandatory principal repayments totaling $0.8 million and $3.9 million will be due in 2014 and 2015, respectively. | ||||
Compass Convertible Notes | ||||
On January 4, 2011, as part of the consideration for the acquisition of Compass, the Company issued an aggregate of $6.3 million in convertible notes to Compass (the “Notes”). The Notes mature on January 4, 2018 and interest is payable on the outstanding principal amount, computed daily, at the rate of 3.875% per annum on January 31 of each calendar year and on the seventh anniversary of the date of the Notes. The Notes were subject to transfer restrictions until January 31, 2013. If the price of the Company’s common stock on the Nasdaq Global Market exceeds $4 per share for 60 consecutive trading days (the “Trigger Event”), a holder of the Notes may convert all (but not less than all) of the outstanding principal amount of the Notes into shares of our common stock at the rate of 1 share for every $4 in principal amount outstanding. After the Trigger Event, the Company may prepay all or any portion of the outstanding principal amount of the Notes by giving a holder 30 days written notice. | ||||
On April 26, 2013, the Company settled a portion of the Notes. The payee agreed to accept from the Company an amount equal to $650,000 as satisfaction in full of all indebtedness of $1.1 million owing by the Company to such payee. As a result of this transaction, the Company recognized a gain of $0.5 million in the second quarter of 2013 representing the difference between the fair value of the consideration issued in the settlement transaction and the carrying value of the amounts due to the payee. This amount was recorded in Gain on Extinguishment of Debt in the accompanying consolidated statement of comprehensive income (loss). | ||||
On November 14, 2013, the Company’s lenders agreed to amend the 2013 Credit Agreement to allow the Company to prepay the entire outstanding principal amount of the CPIV S.A. Convertible Note (“CPIV Note”) plus accrued interest and exclude the CPIV Note prepayment from the calculation of our consolidated fixed charge coverage ratio. On November 25, 2013, the Company settled a portion of the Notes and prepaid the CPIV Note and the payee agreed to accept from the Company an amount equal to the principal of $1.7 million plus accrued interest as satisfaction in full of all indebtedness owing by the Company to such payee. Therefore, there was no gain or loss recorded as a result of this transaction. | ||||
On March 21, 2014, the Trigger Event occurred. As a result, a holder of the Notes may convert all (but not less than all) of the outstanding principal amount of the Notes into shares of our common stock at the rate of 1 share for every $4 in principal amount outstanding. In addition, ISG may elect to prepay all or any portion of the outstanding principal amount of the Notes by giving a holder 30 days written notice; however, such holder shall be given the opportunity to convert the outstanding principal amount into shares as described above. No holder of the Notes has the option to require cash payment as a result of the Trigger Event, hence the Notes are classified as non-current. | ||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | |||
Sep. 30, 2014 | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||
Use of Estimates | ' | |||
Use of Estimates | ||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates. The complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in the application of the proportional performance method of accounting affect the amounts of revenues, expenses, unbilled receivables and deferred revenue. Numerous internal and external factors can affect estimates. Estimates are also used for but not limited to: allowance for doubtful accounts, useful lives of furniture, fixtures and equipment, depreciation expense, contingent consideration, fair value assumptions in analyzing goodwill and intangible asset impairments, income taxes and deferred tax asset valuation, and the valuation of stock based compensation. | ||||
Fair Value of Financial Instruments | ' | |||
Fair Value | ||||
The carrying value of the Company’s cash and cash equivalents, receivables, accounts payable, long-term debt, other current liabilities, and accrued interest approximate fair value. | ||||
Fair value is the price that would be received upon a sale of an asset or paid upon a transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). Market participants can use market data or assumptions in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable. The use of unobservable inputs is intended to allow for fair value determinations in situations where there is little, if any, market activity for the asset or liability at the measurement date. Under the fair-value hierarchy: | ||||
· | Level 1 measurements include unadjusted quoted market prices for identical assets or liabilities in an active market; | |||
· | Level 2 measurements include quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets; and | |||
· | Level 3 measurements include those that are unobservable and of a highly subjective measure. | |||
The Company held investments in cash equivalent money market funds of $20,000 at September 30, 2014 and December 31, 2013. The Company considers the fair value of cash equivalent money market funds to be classified within Level 1 of the fair value hierarchy. | ||||
The Company’s financial instruments include outstanding borrowings of $54.2 million at September 30, 2014 and $56.7 million at December 31, 2013, which are carried at amortized cost. The fair values of these instruments are classified within Level 3 of the fair value hierarchy. The fair value of the Company’s outstanding borrowings is approximately $54.3 million and $56.8 million at September 30, 2014 and December 31, 2013, respectively. The fair values of these instruments have been estimated using a discounted cash flow analysis based on the Company’s incremental borrowing rate for similar borrowing arrangements. The incremental borrowing rate used to discount future cash flows ranged from 2.66% to 2.74% at September 30, 2014. | ||||
The Company’s contingent consideration liability was $4.8 million and $4.1 million at September 30, 2014 and December 31, 2013, respectively. The Company paid $1.6 million related to the STA contingent consideration during the second quarter of 2014. The Company also increased the STA contingent consideration liability by $0.1 million and $0.4 million for the three and nine months ended September 30, 2014, respectively, based on the latest estimates of future profit level due to completion of new projects. On April 15, 2014, the Company recorded a liability of $2.0 million representing the fair value of the contingent consideration related to the acquisition of CCI Consulting Pty Ltd (“CCI”). The fair value measurement of this contingent consideration is classified within Level 3 of the fair value hierarchy and reflects the Company’s own assumptions in measuring fair values using the income approach. In developing these estimates, the Company considered certain performance projections, historical results, and industry trends. This amount was estimated through a valuation model that incorporated probability-weighted assumptions related to the achievement of these milestones and thus the likelihood of the Company making payments. These cash outflow projections have been discounted using a rate ranging from 2.3% to 13.5%, which is the after-tax cost of debt financing for market participants. | ||||
Recently Issued Accounting Pronouncements | ' | |||
Recently Issued Accounting Pronouncements | ||||
In March 2013, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance clarifying the accounting for the release of cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2013. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows. | ||||
In July 2013, the FASB issued new accounting guidance requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. No new recurring disclosures are required. The amendments are effective for annual and interim reporting periods beginning on or after December 15, 2013, and are to be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows. | ||||
In April 2014, the FASB issued new accounting guidance regarding reporting discontinued operations and disclosures of disposals of components of an entity, which raises the threshold for determining which disposals are required to be presented as discontinued operations and modifies related disclosure requirements. The standard is applied prospectively and is effective in 2015 with early adoption permitted. The Company does not believe the adoption of this guidance will impact its consolidated financial statements or disclosures. | ||||
In May 2014, the FASB issued new accounting guidance outlines a single comprehensive model for entities to use in accounting for revenue. Under the guidance, revenue is recognized when a company 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. The standard is effective for public entities with annual and interim reporting periods beginning after December 15, 2016. Entities have the option of using either a full retrospective or a modified retrospective approach to adopt the guidance. We are currently assessing the effects this guidance may have on our consolidated financial statements, as well as the method of transition that we will use in adopting the new standard. | ||||
In August 2014, the FASB issued guidance on management’s responsibility to assess an entity’s ability to continue as a going concern and provide related footnote disclosures in certain circumstances. The guidance is effective for the Company’s interim and annual periods beginning after December 15, 2016. The Company does not believe the adoption of this guidance will impact its consolidated financial statements or disclosures. | ||||
ACQUISITIONS_Tables
ACQUISITIONS (Tables) | 9 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Convergent Technologies Partners SPA[Member] | ' | ||||||
Business Acquisition | ' | ||||||
Summary of fair value of consideration transferred | ' | ||||||
Cash | $ | 697 | |||||
Redeemable noncontrolling interest* | 501 | ||||||
Total fair value transferred | $ | 1,198 | |||||
* | Equivalent to 49% of CTP’s share capital discounted for lack of control and marketability based on third party research. | ||||||
Schedule of recognized amounts of identifiable assets acquired and liabilities assumed | ' | ||||||
Recognized amounts of identifiable assets acquired and liabilities assumed as of March 17, 2014: | |||||||
Cash | $ | 734 | |||||
Accounts receivable | 565 | ||||||
Other assets | 436 | ||||||
Intangible assets | 139 | ||||||
Accounts payable | (65 | ) | |||||
Accrued expenses and other | (465 | ) | |||||
Net assets acquired | $ | 1,344 | |||||
Bargain purchase gain | $ | (146 | ) | ||||
Schedule of purchase price assigned to intangible assets and the amortization period | ' | ||||||
Purchase Price | Asset Life | ||||||
Allocation | |||||||
Amortizable intangible assets: | |||||||
Customer relationships | $ | 56 | 10 years | ||||
Certified Methodology (patent) | 83 | 3 years | |||||
Total intangible assets | $ | 139 | |||||
CCI Consulting Pty Ltd [Member] | ' | ||||||
Business Acquisition | ' | ||||||
Summary of fair value of consideration transferred | ' | ||||||
Cash | $ | 934 | |||||
Post-completion installment payment | 800 | ||||||
Restricted stock* | 237 | ||||||
Contingent consideration | 1,989 | ||||||
Working capital adjustment | (56 | ) | |||||
Total allocable purchase price | $ | 3,904 | |||||
* | 50,000 shares at $4.74 at close of market on 4/15/2014 | ||||||
Schedule of recognized amounts of identifiable assets acquired and liabilities assumed | ' | ||||||
Recognized amounts of identifiable assets acquired and liabilities assumed as of April 15, 2014: | |||||||
Cash | $ | 7 | |||||
Accounts receivable | 275 | ||||||
Other assets | 18 | ||||||
Intangible assets | 1,887 | ||||||
Accounts payable | (27 | ) | |||||
Accrued expenses and other | (203 | ) | |||||
Net assets acquired | $ | 1,957 | |||||
Goodwill(1) | $ | 1,947 | |||||
-1 | Goodwill of approximately $1.9 million acquired in the acquisition is deductible for tax purposes. | ||||||
Schedule of purchase price assigned to intangible assets and the amortization period | ' | ||||||
Purchase Price | Asset Life | ||||||
Allocation | |||||||
Amortizable intangible assets: | |||||||
Customer relationships | $ | 1,270 | 20 years | ||||
Databases | 495 | 10 years | |||||
Backlog | 122 | 2 years | |||||
Total intangible assets | $ | 1,887 | |||||
NET_INCOME_PER_COMMON_SHARE_Ta
NET INCOME PER COMMON SHARE (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
NET INCOME PER COMMON SHARE | ' | |||||||||||||
Schedule of computation of basic and diluted earnings per share | ' | |||||||||||||
Three Months | Nine Months | |||||||||||||
Ended September 30, | Ended September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Basic: | ||||||||||||||
Net income attributable to ISG | $ | 2,353 | $ | 411 | $ | 5,521 | $ | 3,819 | ||||||
Weighted average common shares | 37,039 | 36,781 | 37,214 | 36,723 | ||||||||||
Earnings per share attributable to ISG | $ | 0.06 | $ | 0.01 | $ | 0.15 | $ | 0.10 | ||||||
Diluted: | ||||||||||||||
Net income attributable to ISG | $ | 2,353 | $ | 411 | $ | 5,521 | $ | 3,819 | ||||||
Interest expense of convertible debt, net of tax | 25 | 19 | 71 | 93 | ||||||||||
Net income, attributable to ISG, as adjusted | $ | 2,378 | $ | 430 | $ | 5,592 | $ | 3,912 | ||||||
Basic weighted average common shares | 37,039 | 36,781 | 37,214 | 36,723 | ||||||||||
Potential common shares | 1,701 | 2,049 | 1,599 | 1,989 | ||||||||||
Diluted weighted average common shares | 38,740 | 38,830 | 38,813 | 38,712 | ||||||||||
Diluted earnings per share attributable to ISG | $ | 0.06 | $ | 0.01 | $ | 0.14 | $ | 0.10 | ||||||
GOODWILL_Tables
GOODWILL (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
GOODWILL | ' | ||||
Schedule of changes in the carrying amount of goodwill | ' | ||||
2014 | |||||
Balance as of January 1, 2014 | $ | 34,691 | |||
Acquisitions | 1,947 | ||||
Foreign currency impact | (119 | ) | |||
Balance as of September 30, 2014 | $ | 36,519 | |||
REDEEMABLE_NONCONTROLING_INTER
REDEEMABLE NONCONTROLING INTEREST (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
REDEEMABLE NONCONTROLLING INTEREST | ' | ||||
Schedules of summary of activity in the noncontrolling interest | ' | ||||
2014 | |||||
Balance as of January 1, 2014 | $ | — | |||
Acquisition of CTP | 501 | ||||
Net income attributable to noncontrolling interest | 56 | ||||
Accretion attributable to noncontrolling interest | 23 | ||||
Reduction on Compass Italy’s ownership(1) | 76 | ||||
Balance as of September 30, 2014 | $ | 656 | |||
-1 | Refer to Note 4 related to CTP Acquisition | ||||
SEGMENT_AND_GEOGRAPHICAL_INFOR1
SEGMENT AND GEOGRAPHICAL INFORMATION (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
SEGMENT AND GEOGRAPHICAL INFORMATION | ' | |||||||||||||
Schedule of geographical revenue information for the segment | ' | |||||||||||||
Three Months | Nine Months | |||||||||||||
Ended September 30, | Ended September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Revenues | ||||||||||||||
Americas | $ | 28,407 | $ | 28,496 | $ | 80,505 | $ | 87,532 | ||||||
Europe | 19,731 | 17,605 | 60,935 | 53,832 | ||||||||||
Asia Pacific | 5,120 | 5,270 | 14,947 | 16,178 | ||||||||||
$ | 53,258 | $ | 51,371 | $ | 156,387 | $ | 157,542 | |||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $) | 9 Months Ended | 9 Months Ended | 3 Months Ended | |||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Apr. 15, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | |
Minimum [Member] | Maximum [Member] | CCI Consulting Private Limited [Member] | CCI Consulting Private Limited [Member] | Carrying Reported Amount Fair Value Disclosure [Member] | Carrying Reported Amount Fair Value Disclosure [Member] | Estimate Of Fair Value Fair Value Disclosure [Member] | Estimate Of Fair Value Fair Value Disclosure [Member] | Estimate Of Fair Value Fair Value Disclosure [Member] | Estimate Of Fair Value Fair Value Disclosure [Member] | |||||
Fair Value Inputs Level3 [Member] | Fair Value Inputs Level3 [Member] | Fair Value Inputs Level1 [Member] | Fair Value Inputs Level1 [Member] | Fair Value Inputs Level3 [Member] | Fair Value Inputs Level3 [Member] | |||||||||
Money Market Funds [Member] | Money Market Funds [Member] | |||||||||||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash equivalents | $21,633,000 | $23,577,000 | $35,085,000 | $23,499,000 | ' | ' | ' | ' | ' | ' | $20,000 | $20,000 | ' | ' |
Outstanding borrowings | ' | ' | ' | ' | ' | ' | ' | ' | 54,200,000 | 56,700,000 | ' | ' | 54,300,000 | 56,800,000 |
Incremental borrowing rate used to discount future cash flows from financial instruments (as a percent) | ' | ' | ' | ' | 2.66% | 2.74% | ' | ' | ' | ' | ' | ' | ' | ' |
Contingent consideration liability | ' | ' | ' | ' | ' | ' | 1,900,000 | 1,989,000 | ' | ' | ' | ' | 4,800,000 | 4,100,000 |
Amount paid for contingent consideration | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,600,000 | ' |
Increase in contingent consideration | $403,000 | $564,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $100,000 | ' |
Discount rate to discount future excess cash flows (as a percent) | ' | ' | ' | ' | 2.30% | 13.50% | ' | ' | ' | ' | ' | ' | ' | ' |
ACQUISITIONS_Detail
ACQUISITIONS (Detail) | 0 Months Ended | 9 Months Ended | 9 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | |||||||||||||
Mar. 17, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Mar. 17, 2014 | Mar. 17, 2014 | Mar. 17, 2014 | Mar. 17, 2014 | Mar. 17, 2014 | Sep. 30, 2014 | Mar. 17, 2014 | Mar. 17, 2014 | Mar. 17, 2014 | Apr. 15, 2014 | Apr. 15, 2014 | Sep. 30, 2014 | Apr. 15, 2014 | Apr. 15, 2014 | Apr. 15, 2014 | Apr. 15, 2014 | Apr. 15, 2014 | Apr. 15, 2014 | Apr. 15, 2014 | Apr. 15, 2014 | Mar. 17, 2014 | Mar. 17, 2014 | |
USD ($) | USD ($) | USD ($) | Minimum [Member] | Maximum [Member] | Customer Relationships [Member] | Customer Relationships [Member] | Certified Methodology (patent) | Certified Methodology (patent) | Convergent Technologies Partners SPA[Member] | Convergent Technologies Partners SPA[Member] | Convergent Technologies Partners SPA[Member] | Convergent Technologies Partners SPA[Member] | Convergent Technologies Partners SPA[Member] | CCI Consulting Private Limited [Member] | CCI Consulting Private Limited [Member] | CCI Consulting Private Limited [Member] | CCI Consulting Private Limited [Member] | CCI Consulting Private Limited [Member] | CCI Consulting Private Limited [Member] | CCI Consulting Private Limited [Member] | CCI Consulting Private Limited [Member] | CCI Consulting Private Limited [Member] | CCI Consulting Private Limited [Member] | CCI Consulting Private Limited [Member] | Compass Management Consulting Italy[Member] | Compass Management Consulting Italy[Member] | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Compass BV [Member] | Compass BV [Member] | USD ($) | AUD | USD ($) | USD ($) | AUD | Customer Relationships [Member] | Customer Relationships [Member] | Order Or Production Backlog [Member] | Order Or Production Backlog [Member] | Databases [Member] | Databases [Member] | Convergent Technologies Partners SPA[Member] | Convergent Technologies Partners SPA[Member] | ||||||||
item | USD ($) | USD ($) | USD ($) | USD ($) | |||||||||||||||||||||||
Business Acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of share capital acquired | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 51.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% |
Fair value of consideration transferred | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of share capital acquired | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 51.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% |
Cash | $1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | $697,000 | ' | ' | ' | ' | $934,000 | 1,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash consideration paid at closing | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash consideration payable in April 2015 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Redeemable noncontrolling interest | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 501,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ownership interest held by noncontrolling interest (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 49.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Noncontrolling interest calculated based on ratio of average 2015 and 2016 EBITDA | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Discount rate to discount future excess cash flows (as a percent) | ' | ' | ' | 2.30% | 13.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Post completion installment payment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 237,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contingent consideration | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,900,000 | 1,989,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Working capital adjustment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -56,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total allocable purchase price | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,198,000 | ' | ' | ' | ' | 3,904,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 300,000 | ' |
Minimum earn-out payments to be paid to the sellers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum earn-out payments to be paid to the sellers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares issued as part of the acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50,000 | 50,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Per share price of shares issued as part of the acquisition (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $4.74 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Allocation of Purchase Price: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 734,000 | ' | ' | ' | ' | ' | 7,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accounts receivable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 565,000 | ' | ' | ' | ' | ' | 275,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 436,000 | ' | ' | ' | ' | ' | 18,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 139,000 | ' | ' | ' | ' | ' | 1,887,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accounts payable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -65,000 | ' | ' | ' | ' | ' | -27,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued expenses and other | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -465,000 | ' | ' | ' | ' | ' | -203,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net assets acquired | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,344,000 | ' | ' | ' | ' | ' | 1,957,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill | ' | 36,519,000 | 34,691,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,947,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Bargain purchase gain | ' | 146,000 | ' | ' | ' | ' | ' | ' | ' | -146,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill acquired in the acquisition is deductible for tax purposes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Acquisition costs are included in the selling, general and administrative expenses | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 200,000 | ' | ' | ' | ' | ' | 200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortizable intangible assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortizable intangible assets | ' | ' | ' | ' | ' | ' | $56,000 | ' | $83,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,270,000 | ' | $122,000 | ' | $495,000 | ' | ' |
Asset Life | ' | ' | ' | ' | ' | '10 years | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '20 years | ' | '2 years | ' | '10 years | ' | ' | ' |
NET_INCOME_PER_COMMON_SHARE_De
NET INCOME PER COMMON SHARE (Details) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | |
Warrant [Member] | Warrant [Member] | Stock Appreciation Rights S A R S [Member] | Stock Appreciation Rights S A R S [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | |
Salvaggio Teal And Associates [Member] | CCI Consulting Private Limited [Member] | |||||||
Antidilutive securities | ' | ' | ' | ' | ' | ' | ' | ' |
Shares excluded from basic and diluted earnings per share since the contingency has not been met | ' | ' | ' | ' | ' | ' | 250,000 | 50,000 |
Securities considered antidilutive (in shares) | 100,000 | 100,000 | 100,000 | 100,000 | 30,000 | 800,000 | ' | ' |
NET_INCOME_PER_COMMON_SHARE_De1
NET INCOME PER COMMON SHARE (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Basic: | ' | ' | ' | ' |
Net income attributable to ISG | $2,353 | $411 | $5,521 | $3,819 |
Weighted average common shares | 37,039 | 36,781 | 37,214 | 36,723 |
Earnings per share attributable to ISG | $0.06 | $0.01 | $0.15 | $0.10 |
Diluted: | ' | ' | ' | ' |
Net income attributable to ISG | 2,353 | 411 | 5,521 | 3,819 |
Interest expense of convertible debt, net of tax | 25 | 19 | 71 | 93 |
Net income, attributable to ISG, as adjusted | $2,378 | $430 | $5,592 | $3,912 |
Basic weighted average common shares | 37,039 | 36,781 | 37,214 | 36,723 |
Potential common shares | 1,701 | 2,049 | 1,599 | 1,989 |
Diluted weighted average common shares | 38,740 | 38,830 | 38,813 | 38,712 |
Diluted earnings per share attributable to ISG | $0.06 | $0.01 | $0.14 | $0.10 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
INCOME TAXES | ' | ' | ' | ' |
Effective income tax rates (as a percent) | 25.30% | 63.00% | 29.00% | 42.80% |
Pretax income (loss) | $3,198,000 | $1,111,000 | $7,854,000 | $6,682,000 |
Unrecognized tax benefits | 2,200,000 | ' | 2,200,000 | ' |
Unrecognized tax benefits that would impact the company's effective tax rate | 2,200,000 | ' | 2,200,000 | ' |
Interest and penalties accrued | $500,000 | ' | $500,000 | ' |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Apr. 15, 2014 | Apr. 15, 2014 | |
USD ($) | USD ($) | Salvaggio Teal And Associates [Member] | Salvaggio Teal And Associates [Member] | CCI Consulting Private Limited [Member] | CCI Consulting Private Limited [Member] | CCI Consulting Private Limited [Member] | |
USD ($) | USD ($) | USD ($) | USD ($) | AUD | |||
Contingent Consideration | ' | ' | ' | ' | ' | ' | ' |
Contingent consideration liability | ' | ' | $2,900,000 | $2,900,000 | $1,900,000 | $1,989,000 | ' |
Contingent consideration classified as current | ' | ' | ' | ' | 600,000 | ' | ' |
Contingent consideration classified as noncurrent | ' | ' | 1,600,000 | 1,600,000 | ' | ' | ' |
Increase in contingent consideration | 403,000 | 564,000 | 100,000 | 400,000 | ' | ' | ' |
Amount expected to be paid in first quarter of 2015 and the first quarter of 2016 related to 2013 performance | ' | ' | $1,600,000 | $1,600,000 | ' | ' | 3,000,000 |
GOODWILL_Details
GOODWILL (Details) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Changes in the carrying amount of goodwill | ' |
Goodwill, Beginning balance | $34,691 |
Acquisitions | 1,947 |
Foreign currency impact | -119 |
Goodwill, Ending balance | $36,519 |
REDEEMABLE_NONCONTROLLING_INTE1
REDEEMABLE NONCONTROLLING INTEREST (Details) (USD $) | 3 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 |
REDEEMABLE NONCONTROLLING INTEREST | ' | ' |
Acquisition of CTP | ' | $501 |
Net income attributable to noncontrolling interest | 37 | 56 |
Accretion attributable to noncontrolling interest | ' | 23 |
Reduction on Compass Italy's ownership (1) | ' | 76 |
Balance at the end of the period | $656 | $656 |
SEGMENT_AND_GEOGRAPHICAL_INFOR2
SEGMENT AND GEOGRAPHICAL INFORMATION (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
segment | ||||
SEGMENT AND GEOGRAPHICAL INFORMATION | ' | ' | ' | ' |
Number of segments | ' | ' | 1 | ' |
Segment and geographical information | ' | ' | ' | ' |
Revenues | $53,258 | $51,371 | $156,387 | $157,542 |
Americas [Member] | ' | ' | ' | ' |
Segment and geographical information | ' | ' | ' | ' |
Revenues | 28,407 | 28,496 | 80,505 | 87,532 |
Europe [Member] | ' | ' | ' | ' |
Segment and geographical information | ' | ' | ' | ' |
Revenues | 19,731 | 17,605 | 60,935 | 53,832 |
Asia Pacific [Member] | ' | ' | ' | ' |
Segment and geographical information | ' | ' | ' | ' |
Revenues | $5,120 | $5,270 | $14,947 | $16,178 |
FINANCING_ARRANGEMENTS_AND_LON1
FINANCING ARRANGEMENTS AND LONG-TERM DEBT (Details) (USD $) | 9 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 9 Months Ended | 0 Months Ended | ||||||||||||||||||
Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Nov. 14, 2013 | Apr. 26, 2013 | Jan. 04, 2011 | Jun. 30, 2013 | 3-May-13 | Jun. 30, 2013 | Nov. 16, 2007 | Nov. 16, 2007 | 3-May-13 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Mar. 18, 2014 | 3-May-13 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | 3-May-13 | Sep. 30, 2014 | Sep. 30, 2014 | Nov. 25, 2013 | |
Secured Debt [Member] | Secured Debt [Member] | Revolving Credit Facility [Member] | Convertible Notes Payable [Member] | Convertible Notes Payable [Member] | Convertible Notes Payable [Member] | Convertible Notes Payable [Member] | Credit Agreement2007 [Member] | Credit Agreement2007 [Member] | Credit Agreement2007 [Member] | Credit Agreement2007 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | Credit Agreement2013 [Member] | |||
Subsidiaries [Member] | C C G H Limited [Member] | C C G H Limited [Member] | C C G H Limited [Member] | C C G H Limited [Member] | Secured Debt [Member] | Revolving Credit Facility [Member] | Base Rate [Member] | Prime Rate [Member] | Federal Funds Rate [Member] | Eurodollar [Member] | Secured Debt [Member] | Secured Debt [Member] | Secured Debt [Member] | Secured Debt [Member] | Secured Debt [Member] | Secured Debt [Member] | Secured Debt [Member] | Secured Debt [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Convertible Notes Payable [Member] | ||||||||
Subsidiaries [Member] | Subsidiaries [Member] | Debt Instrument Periodic Payment By Commencing Date30 September2013 [Member] | Debt Instrument Periodic Payment By Commencing Date30 September2015 [Member] | Base Rate [Member] | Eurodollar [Member] | London Interbank Offered Rate L I B O R [Member] | Base Rate [Member] | Eurodollar [Member] | C C G H Limited [Member] | |||||||||||||||||||||
item | item | |||||||||||||||||||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity under senior secured credit facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $95,000,000 | $10,000,000 | ' | ' | ' | ' | ' | ' | $45,000,000 | ' | ' | ' | ' | ' | ' | $25,000,000 | ' | ' | ' |
Outstanding borrowings | ' | ' | 40,800,000 | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | 95,000,000 | ' | 55,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Early termination penalties incurred | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of gain (loss) recognized | ' | ' | ' | ' | ' | ' | ' | ' | 500,000 | ' | -400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 |
Term of senior secured credit facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'Base Rate | 'prime rate | 'Federal Funds Rate | 'Eurodollar Rate | ' | ' | ' | ' | ' | 'Base Rate loans | 'Eurodollar loans | 'LIBOR | ' | 'Base Rate loans | 'Eurodollar loans | ' |
Applicable margin (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.50% | 1.00% | ' | ' | ' | ' | ' | 2.50% | 3.50% | 5.00% | ' | 2.50% | 3.50% | ' |
Permitted acquisition baskets amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Permitted acquisition baskets amount after increase | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Permitted acquisition baskets term amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Permitted acquisition baskets term amount after increase | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 40,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Numbers of consecutive quarterly installments in which principal amount is repaid | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8 | 11 | ' | ' | ' | ' | ' | ' | ' |
Principal repayments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 843,750 | 1,125,000 | ' | ' | ' | ' | ' | ' | ' |
Percentage of proceeds from asset sales used for mandatory repayments of the debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of net proceeds from issuances of debt and equity used for mandatory repayments of the debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of net proceeds from insurance recovery and condemnation events used for mandatory repayments of the debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum notional amount required as a percentage of aggregate outstanding indebtedness other than revolving outstanding for establishment of fixed or maximum interest rate covering | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate covering period for specified percentage of notional amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of debt | 55,000,000 | ' | ' | ' | ' | ' | ' | 6,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Rate of interest (as a percent) | ' | ' | ' | ' | ' | ' | ' | 3.88% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Trigger Event condition related to minimum market price of common stock on the Nasdaq Global market (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | $4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Trigger event condition related to number of consecutive trading days on which market price of common stock exceeds $4 per share on the Nasdaq Global Market | ' | ' | ' | ' | ' | ' | ' | '60 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion rate | ' | ' | ' | ' | ' | 0.25 | ' | 0.25 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Written notice period after trigger event, that company need to serve for prepayment of all or portion of the outstanding principal amount of the Notes | ' | ' | ' | ' | ' | '30 days | ' | '30 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount paid in satisfaction of full of all indebtedness owing by the Company under the Note | ' | ' | ' | ' | ' | ' | 650,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount outstanding | ' | ' | ' | ' | ' | ' | 1,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Additional principal repayment due in 2014 | ' | 800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Additional principal repayment due in 2015 | ' | 3,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Settlement of Compass convertible note | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,700,000 |
Maximum total leverage ratio | ' | ' | ' | 3.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |