Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 31, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Information Services Group Inc. | |
Entity Central Index Key | 1,371,489 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 37,303,346 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $ 13,122 | $ 27,662 |
Accounts receivable, net of allowance of $218 and $234, respectively | 46,474 | 41,148 |
Deferred tax asset | 1,110 | 1,138 |
Prepaid expense and other current assets | 2,379 | 2,130 |
Total current assets | 63,085 | 72,078 |
Restricted cash | 336 | 364 |
Furniture, fixtures and equipment, net | 3,243 | 3,478 |
Goodwill | 36,295 | 36,400 |
Intangible assets, net | 15,595 | 18,335 |
Other assets | 4,725 | 3,514 |
Total assets | 123,279 | 134,169 |
Current liabilities | ||
Accounts payable | 7,138 | 7,312 |
Current maturities of long-term debt | 2,250 | 3,938 |
Deferred revenue | 4,245 | 4,898 |
Accrued expenses | 11,969 | 21,116 |
Total current liabilities | 25,602 | 37,264 |
Long-term debt, net of current maturities | 49,704 | 49,434 |
Other liabilities | 4,361 | 6,007 |
Total liabilities | $ 79,667 | $ 92,705 |
Commitments and contingencies (Note 6) | ||
Redeemable noncontrolling interest | $ 926 | $ 747 |
Stockholders' equity | ||
Preferred stock, $0.001 par value; 10,000 shares authorized; none issued | ||
Common stock, $0.001 par value, 100,000 shares authorized; 37,943 shares issued and 37,232 shares outstanding at June 30, 2015 and 37,943 shares issued and 36,762 outstanding at December 31, 2014 | $ 38 | $ 38 |
Additional paid-in-capital | 203,576 | 204,525 |
Treasury stock (711 and 1,181 common shares, respectively, at cost) | (2,871) | (5,244) |
Accumulated other comprehensive loss | (5,824) | (4,582) |
Accumulated deficit | (152,233) | (154,020) |
Total stockholders' equity | 42,686 | 40,717 |
Total liabilities, redeemable noncontrolling interest and stockholders' equity | $ 123,279 | $ 134,169 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowances (in dollars) | $ 218 | $ 234 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 37,943 | 37,943 |
Common stock, shares outstanding | 37,232 | 36,762 |
Treasury stock, shares | 711 | 1,181 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Revenues | $ 53,411 | $ 54,888 | $ 103,950 | $ 103,129 |
Operating expenses | ||||
Direct costs and expenses for advisors | 32,558 | 31,497 | 62,996 | 61,309 |
Selling, general and administrative | 17,011 | 16,967 | 33,421 | 32,622 |
Depreciation and amortization | 1,838 | 1,900 | 3,556 | 3,638 |
Operating income | 2,004 | 4,524 | 3,977 | 5,560 |
Interest income | 7 | 7 | 9 | 9 |
Interest expense | (440) | (504) | (938) | (1,022) |
Bargain purchase gain | 146 | 146 | ||
Foreign currency transaction gain (loss) | 26 | (23) | 400 | (37) |
Income before taxes | 1,597 | 4,150 | 3,448 | 4,656 |
Income tax provision | 578 | 1,051 | 1,522 | 1,469 |
Net income | 1,019 | 3,099 | 1,926 | 3,187 |
Net income (Loss) attributable to noncontrolling interest | 85 | (6) | 139 | 19 |
Net income attributable to ISG | $ 934 | $ 3,105 | $ 1,787 | $ 3,168 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 37,199 | 37,220 | 37,116 | 37,302 |
Diluted (in shares) | 38,971 | 38,837 | 38,731 | 38,849 |
Earnings per share attributable to ISG: | ||||
Basic (in dollars per share) | $ 0.03 | $ 0.08 | $ 0.05 | $ 0.08 |
Diluted (in dollars per share) | $ 0.02 | $ 0.08 | $ 0.05 | $ 0.08 |
Comprehensive income: | ||||
Net income | $ 1,019 | $ 3,099 | $ 1,926 | $ 3,187 |
Foreign currency translation, net of tax (expense) benefit of $(315), $61, $630 and $126, respectively | 197 | 102 | (1,242) | 205 |
Comprehensive income | 1,216 | 3,201 | 684 | 3,392 |
Comprehensive income (loss) attributable to noncontrolling interest | 85 | (6) | 139 | 19 |
Comprehensive income attributable to ISG | $ 1,131 | $ 3,207 | $ 545 | $ 3,373 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Foreign currency translation, net of tax (expense) benefit | $ (315) | $ 61 | $ 630 | $ 126 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities | ||
Net income | $ 1,926 | $ 3,187 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation expense | 903 | 880 |
Amortization of intangibles | 2,653 | 2,759 |
Amortization of deferred financing costs | 76 | 76 |
Bargain purchase gain | (146) | |
Tax benefit from stock issuances | (178) | (487) |
Compensation costs related to stock-based awards | 2,225 | 1,212 |
Change in fair value of contingent consideration | 141 | 289 |
Changes in accounts receivable allowance | 19 | 44 |
Deferred tax benefit | (378) | (92) |
Loss on disposal of furniture, fixtures and equipment | 2 | 21 |
Changes in operating assets and liabilities, net of effects of acquisitions: | ||
Accounts receivable | (5,092) | (11,808) |
Prepaid expense and other current assets | (1,537) | (291) |
Accounts payable | (174) | 1,613 |
Deferred revenue | (653) | 48 |
Accrued liabilities | (2,645) | (8,082) |
Net cash used in operating activities | (2,712) | (10,777) |
Cash flows from investing activities | ||
Acquisitions net of cash acquired | (890) | |
Restricted cash | 28 | (157) |
Purchase of furniture, fixtures and equipment | (695) | (1,149) |
Net cash used in investing activities | (667) | (2,196) |
Cash flows from financing activities | ||
Principal payments on borrowings | (1,417) | (1,688) |
Payment of contingent consideration | (2,322) | (1,633) |
Equity securities repurchased | (1,169) | (2,807) |
Installment payment for acquisition of CCI | (661) | |
Dividend paid | (5,189) | |
Tax benefit from stock issuances | 178 | 487 |
Proceeds from issuance of ESPP shares | 289 | 251 |
Net cash used in financing activities | (10,291) | (5,390) |
Effect of exchange rate changes on cash | (870) | 166 |
Net decrease in cash and cash equivalents | (14,540) | (18,197) |
Cash and cash equivalents, beginning of period | 27,662 | 35,085 |
Cash and cash equivalents, end of period | 13,122 | 16,888 |
Noncash financing activities: | ||
Issuance of treasury stock for vested restricted stock awards | $ 3,175 | $ 1,534 |
DESCRIPTION OF ORGANIZATION AND
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | 6 Months Ended |
Jun. 30, 2015 | |
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”). The Company is a leading technology insights, market intelligence and advisory services company serving more than 500 clients around the world to help them achieve operational excellence. Based in Stamford, Connecticut, the Company has more than 900 employees and operates in 21 countries. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2015 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | NOTE 2—BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements as of June 30, 2015 and for the three and six months ended June 30, 2015 and 2014, 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 statement of the financial position of the Company as of June 30, 2015, the results of operations for the three and six months ended June 30, 2015 and 2014 and the cash flows for the six months ended June 30, 2015 and 2014. The condensed consolidated balance sheet as of December 31, 2014 has been derived from the Company’s audited consolidated financial statements. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. 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, 2014, which are included in the Company’s 2014 Form 10-K filed with the SEC. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and December 31, 2014. The Company considers the fair value of cash equivalent money market funds to be classified within Level 1 of the fair value hierarchy. The following table presents the carrying amounts and estimated fair values of our other financial instruments at June 30, 2015 and December 31, 2014: June 30, 2015 December 31, 2014 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Liabilities: Contingent consideration (1) $ $ $ $ Long-term debt , including current portion $ $ $ $ (1) The short-term portion is included in “Accrued expenses.” The long-term portion is included in “Other liabilities.” The Company’s contingent consideration liability was $2.6 million and $4.8 million at June 30, 2015 and December 31, 2014, respectively. The Company paid $2.3 million related to the contingent consideration during the second quarter of 2015. 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 the likelihood of the Company making payments. These cash outflow projections have then been discounted using a rate ranging from 2.3% to 13.5%, which is the after-tax cost of debt financing for market participants. The fair value of debt is classified within Level 3 of the fair value hierarchy. The fair values of debt 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 2.31% to 2.41%. The Company also considered recent transactions of peer group companies for similar instruments with comparable terms and maturities as well as an analysis of current market conditions. The following table represents the change in the contingent consideration liability during the six months ended June 30, 2015 and 2014: Six months Ended June 30, 2015 2014 Beginning Balance $ $ Payment of contingent consideration ) ) Acquisition — Change in fair value of contingent consideration Accretion of contingent consideration Impact of currency translation ) ) Ending Balance $ $ Dividend On December 2, 2014 the Board of Directors authorized a special dividend of $0.14 per share on the Company’s issued and outstanding shares of common stock. This cash dividend of $5.2 million was paid on January 28, 2015 to shareholders of record as of January 15, 2015. Prior to this special dividend, we had not paid any dividends on our common stock. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance that 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. On July 9, 2015, the FASB approved the deferral of the effective date of the new revenue guidance by one year to annual reporting periods beginning after December 15, 2017, with early adoption being permitted for annual 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. In April 2015, the FASB issued guidance require the presentation of debt issuance costs in financial statements as a direct reduction of related debt liabilities with amortization of debt issuance costs reported as interest expense. Under current U.S. GAAP standards, debt issuance costs are reported as deferred charges (i.e., as an asset). This guidance is effective for annual periods, and interim periods within those fiscal years, beginning after December 15, 2015 and is to be applied retrospectively upon adoption. Early adoption is permitted, including adoption in an interim period for financial statements that have not been previously issued. 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 . At June 30, 2015, the Company had debt issuance costs of $0.6 million. In April 2015, the FASB issued an accounting standards update with new guidance on whether a cloud computing arrangement includes a software license and the accounting for such an arrangement. If a cloud computing arrangement includes a software license, then the software license element of the arrangement should be accounted for consistently with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the agreement should be accounted for as a service contract. The standards update is effective for fiscal years and interim periods beginning after December 15, 2015, with early adoption permitted. 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 . |
NET INCOME PER COMMON SHARE
NET INCOME PER COMMON SHARE | 6 Months Ended |
Jun. 30, 2015 | |
NET INCOME PER COMMON SHARE | |
NET INCOME PER COMMON SHARE | NOTE 4—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 contingency has 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 six months ended June 30, 2015, 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. In addition, the 0.3 million and 0.4 million restricted shares have not been considered in the diluted earnings per share calculation for the three and six months ended June 30, 2015, respectively, as the effect would be anti-dilutive. For the three and six months ended June 30, 2014, 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. The following tables set forth the computation of basic and diluted earnings per share: Three Months Six Months Ended June 30, Ended June 30, 2015 2014 2015 2014 Basic: Net income attributable to ISG $ $ $ $ Weighted average common shares Earnings per share attributable to ISG $ $ $ $ Diluted: Net income attributable to ISG $ $ $ $ Interest expense of convertible debt, net of tax Net income, attributable to ISG, as adjusted $ $ $ $ Basic weighted average common shares Potential common shares Diluted weighted average common shares Diluted earnings per share attributable to ISG $ $ $ $ |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2015 | |
INCOME TAXES | |
INCOME TAXES | NOTE 5—INCOME TAXES The Company’s effective tax rate for the three and six months ended June 30, 2015 was 36.2% and 44.1% based on pretax income of $1.6 million and $3.4 million, respectively. Our effective tax rate for the quarter is higher than the statutory rate primarily due to state taxes and non-deductible expenses . This compared to 25.3% and 31.6% for the three and six months ended June 30, 2014, respectively. The difference is primarily due to changes in pre-tax income by jurisdiction, the impact of permanent items and state taxes on lower projections of pre-tax book income and certain discrete tax benefits in 2014 related to tax liabilities on unremitted foreign earnings and reversal of reserves for previously unrecognized tax positions for the three and six months ended June 30, 2015 compared to the three and six months ended June 30, 2014. As of June 30, 2015, the Company had total unrecognized tax benefits of approximately $2.3 million of which approximately $2.3 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 June 30, 2015, the Company’s accrual of interest and penalties amounted to $0.6 million. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 6—COMMITMENTS AND CONTINGENCIES The Company is subject to contingencies which arise through the ordinary course of business. All liabilities of which management is aware are properly reflected in the financial statements at June 30, 2015 and December 31, 2014. STA Consulting Contingent Consideration As of June 30, 2015, we have recorded a liability of $1.6 million representing the estimated fair value of contingent consideration related to the acquisition of STA Consulting, and is classified as current and included in accrued expenses on the consolidated balance sheet. During the quarter ended June 30, 2015, the Company paid $1.7 million related to 2014 performance and the remaining contingent liability is expected to be paid in the first quarter of 2016. The Company also increased the contingent consideration liability by $0.3 million in the second quarter of 2015 based on the latest estimates of future profit level due to completion of new projects. CCI Contingent Consideration As of June 30, 2015, we have recorded a liability of $1.0 million representing the estimated fair value of contingent consideration related to the acquisition of CCI Consulting, of which $0.4 million is classified as current and included in accrued expenses on the consolidated balance sheet. The Company paid $0.6 million in April of 2015 related to 2014 performance and the remaining contingent liability is expected to be paid in the second quarter of 2016 and second quarter of 2017. The Company also decreased the contingent consideration liability by $0.2 million in the second quarter of 2015 based on the latest estimates of future profit level due to completion of new projects. |
REDEEMABLE NONCONTROLLING INTER
REDEEMABLE NONCONTROLLING INTEREST | 6 Months Ended |
Jun. 30, 2015 | |
REDEEMABLE NONCONTROLLING INTEREST | |
REDEEMABLE NONCONTROLLING INTEREST | NOTE 7—REDEEMABLE NONCONTROLLING INTEREST The following provides a summary of activity in the noncontrolling interest account for the period ended June 30, 2015: Balance as of December 31, 2014 $ Net income attributable to noncontrolling interest Accretion attributable to noncontrolling interest Impact of currency translation Balance as of June 30, 2015 $ |
SEGMENT AND GEOGRAPHICAL INFORM
SEGMENT AND GEOGRAPHICAL INFORMATION | 6 Months Ended |
Jun. 30, 2015 | |
SEGMENT AND GEOGRAPHICAL INFORMATION | |
SEGMENT AND GEOGRAPHICAL INFORMATION | NOTE 8— 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 Six Months Ended June 30, Ended June 30, 2015 2014 2015 2014 Revenues Americas $ $ $ $ Europe Asia Pacific $ $ $ $ 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 LONG
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2015 | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | NOTE 9— FINANCING ARRANGEMENTS AND LONG-TERM DEBT 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 Company’s prior credit facility and to pay transaction costs. The material terms of the senior secured credit facility under the 2013 Credit Agreement are as follows, subject to the amendments to the 2013 Credit Agreement described below: · 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. · 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 June 30, 2015, 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. On May 11, 2015, the Company amended the 2013 Credit Agreement to reduce annual mandatory principal payments, lower borrowing costs and extend the term of the 2013 Credit Agreement by two years, resulting in a maturity date of May 3, 2020. The Term Loan is repayable in twenty consecutive quarterly installments of $562,500 each, commencing June 30, 2015. In addition, the amendment also allows the Company to prepay up to $3.5 million of the subordinated convertible notes issued in connection with the Company’s acquisition of Compass in 2011. As of June 30, 2015, the total principal outstanding under the term loan facility and revolving credit facility was $38.5 million and $10.0 million, respectively. Additional mandatory principal repayments totaling $1.1 million and $2.3 million will be due in 2015 and 2016, 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. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 6 Months Ended |
Jun. 30, 2015 | |
SUBSEQUENT EVENT. | |
SUBSEQUENT EVENT | NOTE 10 — SUBSEQUENT EVENT On August 7, 2015, the Company executed an Asset Purchase Agreement (the “Saugatuck Agreement”) by and among Saugatuck Technology Inc. (“Saugatuck”), ISG Information Services Group Americas, Inc. a wholly-owned subsidiary of ISG (“Buyer”), and the other parties thereto and consummated the acquisition of substantially all of the assets, and assumption of certain current liabilities, excluding debt and employee loans of Saugatuck. Under the terms of the Saugatuck Agreement, Buyer acquired the specified assets for aggregate cash and stock consideration of $0.8 million (net of cash received) consisting of $0.6 million in cash and $0.2 million in stock at closing. In addition, Saugatuck is eligible to receive a minimum of $0 and a maximum of up to $1.2 million of earn-out payments for fiscal years 2015-2018 if certain revenue targets are met, payable in a combination of cash and stock. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and December 31, 2014. The Company considers the fair value of cash equivalent money market funds to be classified within Level 1 of the fair value hierarchy. The following table presents the carrying amounts and estimated fair values of our other financial instruments at June 30, 2015 and December 31, 2014: June 30, 2015 December 31, 2014 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Liabilities: Contingent consideration (1) $ $ $ $ Long-term debt , including current portion $ $ $ $ (1) The short-term portion is included in “Accrued expenses.” The long-term portion is included in “Other liabilities.” The Company’s contingent consideration liability was $2.6 million and $4.8 million at June 30, 2015 and December 31, 2014, respectively. The Company paid $2.3 million related to the contingent consideration during the second quarter of 2015. 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 the likelihood of the Company making payments. These cash outflow projections have then been discounted using a rate ranging from 2.3% to 13.5%, which is the after-tax cost of debt financing for market participants. The fair value of debt is classified within Level 3 of the fair value hierarchy. The fair values of debt 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 2.31% to 2.41%. The Company also considered recent transactions of peer group companies for similar instruments with comparable terms and maturities as well as an analysis of current market conditions. The following table represents the change in the contingent consideration liability during the six months ended June 30, 2015 and 2014: Six months Ended June 30, 2015 2014 Beginning Balance $ $ Payment of contingent consideration ) ) Acquisition — Change in fair value of contingent consideration Accretion of contingent consideration Impact of currency translation ) ) Ending Balance $ $ |
Dividend | Dividend On December 2, 2014 the Board of Directors authorized a special dividend of $0.14 per share on the Company’s issued and outstanding shares of common stock. This cash dividend of $5.2 million was paid on January 28, 2015 to shareholders of record as of January 15, 2015. Prior to this special dividend, we had not paid any dividends on our common stock. |
Recently Issued Accounting Pronouncements. | Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance that 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. On July 9, 2015, the FASB approved the deferral of the effective date of the new revenue guidance by one year to annual reporting periods beginning after December 15, 2017, with early adoption being permitted for annual 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. In April 2015, the FASB issued guidance require the presentation of debt issuance costs in financial statements as a direct reduction of related debt liabilities with amortization of debt issuance costs reported as interest expense. Under current U.S. GAAP standards, debt issuance costs are reported as deferred charges (i.e., as an asset). This guidance is effective for annual periods, and interim periods within those fiscal years, beginning after December 15, 2015 and is to be applied retrospectively upon adoption. Early adoption is permitted, including adoption in an interim period for financial statements that have not been previously issued. 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 . At June 30, 2015, the Company had debt issuance costs of $0.6 million. In April 2015, the FASB issued an accounting standards update with new guidance on whether a cloud computing arrangement includes a software license and the accounting for such an arrangement. If a cloud computing arrangement includes a software license, then the software license element of the arrangement should be accounted for consistently with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the agreement should be accounted for as a service contract. The standards update is effective for fiscal years and interim periods beginning after December 15, 2015, with early adoption permitted. 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 . |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of carrying amounts and estimated fair values of other financial instruments | June 30, 2015 December 31, 2014 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Liabilities: Contingent consideration (1) $ $ $ $ Long-term debt , including current portion $ $ $ $ (1) The short-term portion is included in “Accrued expenses.” The long-term portion is included in “Other liabilities.” |
Schedule of change in the contingent consideration liability | Six months Ended June 30, 2015 2014 Beginning Balance $ $ Payment of contingent consideration ) ) Acquisition — Change in fair value of contingent consideration Accretion of contingent consideration Impact of currency translation ) ) Ending Balance $ $ |
NET INCOME PER COMMON SHARE (Ta
NET INCOME PER COMMON SHARE (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
NET INCOME PER COMMON SHARE | |
Schedule of computation of basic and diluted earnings per share | Three Months Six Months Ended June 30, Ended June 30, 2015 2014 2015 2014 Basic: Net income attributable to ISG $ $ $ $ Weighted average common shares Earnings per share attributable to ISG $ $ $ $ Diluted: Net income attributable to ISG $ $ $ $ Interest expense of convertible debt, net of tax Net income, attributable to ISG, as adjusted $ $ $ $ Basic weighted average common shares Potential common shares Diluted weighted average common shares Diluted earnings per share attributable to ISG $ $ $ $ |
REDEEMABLE NONCONTROLLING INT20
REDEEMABLE NONCONTROLLING INTEREST (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
REDEEMABLE NONCONTROLLING INTEREST | |
Schedules of summary of activity in the noncontrolling interest | Balance as of December 31, 2014 $ Net income attribut able to noncontrolling interest Accretion attributable to noncontrolling interest Impact of currency translation Balance as of June 30, 2015 $ |
SEGMENT AND GEOGRAPHICAL INFO21
SEGMENT AND GEOGRAPHICAL INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
SEGMENT AND GEOGRAPHICAL INFORMATION | |
Schedule of geographical revenue information for the segment | Three Months Six Months Ended June 30, Ended June 30, 2015 2014 2015 2014 Revenues Americas $ $ $ $ Europe Asia Pacific $ $ $ $ |
DESCRIPTION OF ORGANIZATION A22
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Details) - Jun. 30, 2015 | employeecountryclient |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |
Number of clients worldwide | client | 500 |
Number of employees | 900 |
Number of countries | country | 21 |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | |
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||||||
Cash equivalents | $ 13,122,000 | $ 27,662,000 | $ 16,888,000 | $ 35,085,000 | ||
Change in the contingent consideration liability | ||||||
Payment of contingent consideration | $ 2,322,000 | $ 1,633,000 | ||||
Change in fair value of contingent consideration | $ 141,000 | 289,000 | ||||
Minimum | ||||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||||||
Rate used to discount future cash outflow projections related to contingent consideration (as a percent) | 2.30% | |||||
Incremental borrowing rate used to discount future cash flows from financial instruments (as a percent) | 2.31% | |||||
Maximum | ||||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||||||
Rate used to discount future cash outflow projections related to contingent consideration (as a percent) | 13.50% | |||||
Incremental borrowing rate used to discount future cash flows from financial instruments (as a percent) | 2.41% | |||||
Fair Value Inputs Level3 | ||||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||||||
Contingent consideration | (2,591,000) | $ (4,825,000) | (4,085,000) | (4,825,000) | (4,677,000) | $ (4,085,000) |
Change in the contingent consideration liability | ||||||
Beginning Balance | 4,825,000 | 4,085,000 | ||||
Payment of contingent consideration | 2,322,000 | 1,633,000 | ||||
Acquisition | $ 1,989,000 | |||||
Change in fair value of contingent consideration | 141,000 | 274,000 | ||||
Accretion of contingent consideration | 90,000 | 15,000 | ||||
Impact of currency translation | (143,000) | (53,000) | ||||
Ending Balance | 2,591,000 | 2,591,000 | $ 4,677,000 | |||
Carrying Amount | Fair Value Inputs Level3 | ||||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||||||
Contingent consideration | (2,591,000) | (4,825,000) | (4,825,000) | |||
Long-term debt, including current portion | 51,954,000 | 53,371,000 | ||||
Total | 54,545,000 | 58,196,000 | ||||
Change in the contingent consideration liability | ||||||
Beginning Balance | 4,825,000 | |||||
Ending Balance | 2,591,000 | 2,591,000 | ||||
Estimated Fair Value | Fair Value Inputs Level1 | Money Market Funds | ||||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||||||
Cash equivalents | 20,000 | 20,000 | ||||
Estimated Fair Value | Fair Value Inputs Level3 | ||||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||||||
Contingent consideration | (2,591,000) | (4,825,000) | (4,825,000) | |||
Long-term debt, including current portion | 51,867,000 | 53,412,000 | ||||
Total | 54,458,000 | $ 58,237,000 | ||||
Change in the contingent consideration liability | ||||||
Beginning Balance | 4,825,000 | |||||
Ending Balance | $ 2,591,000 | $ 2,591,000 |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details2) - USD ($) $ / shares in Units, $ in Millions | Jan. 28, 2015 | Dec. 02, 2014 | Jun. 30, 2015 |
Dividend | |||
Special dividend declared per share | $ 0.14 | ||
Special dividend paid per share | $ 5.2 | ||
Recently Issued Accounting Pronouncements. | |||
Debt issuance costs | $ 0.6 |
NET INCOME PER COMMON SHARE (De
NET INCOME PER COMMON SHARE (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Stock Appreciation Rights S A R S | ||||
Antidilutive securities | ||||
Securities considered antidilutive (in shares) | 100,000 | 100,000 | 100,000 | 100,000 |
Restricted Stock | ||||
Antidilutive securities | ||||
Securities considered antidilutive (in shares) | 300,000 | 400,000 | ||
Restricted Stock | Salvaggio Teal And Associates | ||||
Antidilutive securities | ||||
Shares excluded from basic and diluted earnings per share since the contingency has not been met | 250,000 | 250,000 | ||
Restricted Stock | CCI Consulting Private Limited | ||||
Antidilutive securities | ||||
Shares excluded from basic and diluted earnings per share since the contingency has not been met | 50,000 | 50,000 |
NET INCOME PER COMMON SHARE (26
NET INCOME PER COMMON SHARE (Details 2) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Basic: | ||||
Net income attributable to ISG | $ 934 | $ 3,105 | $ 1,787 | $ 3,168 |
Weighted average common shares | 37,199 | 37,220 | 37,116 | 37,302 |
Earnings per share attributable to ISG | $ 0.03 | $ 0.08 | $ 0.05 | $ 0.08 |
Diluted: | ||||
Net income attributable to ISG | $ 934 | $ 3,105 | $ 1,787 | $ 3,168 |
Interest expense of convertible debt, net of tax | 22 | 25 | 37 | 46 |
Net income, attributable to ISG, as adjusted | $ 956 | $ 3,130 | $ 1,824 | $ 3,214 |
Basic Weighted Average Common shares | 37,199 | 37,220 | 37,116 | 37,302 |
Potential common shares | 1,772 | 1,617 | 1,615 | 1,547 |
Diluted weighted average common shares | 38,971 | 38,837 | 38,731 | 38,849 |
Diluted earnings per share attributable to ISG | $ 0.02 | $ 0.08 | $ 0.05 | $ 0.08 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
INCOME TAXES | ||||
Effective income tax rates (as a percent) | 36.20% | 25.30% | 44.10% | 31.60% |
Pretax income (loss) | $ 1,597 | $ 4,150 | $ 3,448 | $ 4,656 |
Unrecognized tax benefits | 2,300 | 2,300 | ||
Unrecognized tax benefits that would impact the company's effective tax rate | 2,300 | 2,300 | ||
Interest and penalties accrued | $ 600 | $ 600 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Apr. 30, 2015 | |
Contingent Consideration | ||||
Increase (Decrease) in contingent consideration | $ 141 | $ 289 | ||
Salvaggio Teal And Associates | ||||
Contingent Consideration | ||||
Contingent consideration | $ 1,600 | 1,600 | ||
Amount paid for contingent consideration | 1,700 | 1,700 | ||
Increase (Decrease) in contingent consideration | 300 | |||
CCI Consulting Private Limited | ||||
Contingent Consideration | ||||
Contingent consideration | 1,000 | 1,000 | ||
Amount paid for contingent consideration | $ 600 | |||
Contingent consideration classified as current | 400 | $ 400 | ||
Increase (Decrease) in contingent consideration | $ (200) |
REDEEMABLE NONCONTROLLING INT29
REDEEMABLE NONCONTROLLING INTEREST (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
REDEEMABLE NONCONTROLLING INTEREST | ||||
Balance at the beginning of the period | $ 747 | |||
Net income attributable to noncontrolling interest | $ 85 | $ (6) | 139 | $ 19 |
Accretion attributable to noncontrolling interest | 39 | |||
Impact of currency translation | 1 | |||
Balance at the end of the period | $ 926 | $ 926 |
SEGMENT AND GEOGRAPHICAL INFO30
SEGMENT AND GEOGRAPHICAL INFORMATION (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)segment | Jun. 30, 2014USD ($) | |
SEGMENT AND GEOGRAPHICAL INFORMATION | ||||
Number of segments | segment | 1 | |||
Segment and geographical information | ||||
Revenues | $ 53,411 | $ 54,888 | $ 103,950 | $ 103,129 |
Americas | ||||
Segment and geographical information | ||||
Revenues | 28,628 | 27,665 | 56,244 | 52,098 |
Europe | ||||
Segment and geographical information | ||||
Revenues | 18,668 | 21,423 | 36,729 | 41,204 |
Asia Pacific | ||||
Segment and geographical information | ||||
Revenues | $ 6,115 | $ 5,800 | $ 10,977 | $ 9,827 |
FINANCING ARRANGEMENTS AND LO31
FINANCING ARRANGEMENTS AND LONG-TERM DEBT (Details) | May. 11, 2015USD ($)installment | Mar. 21, 2014 | Mar. 18, 2014USD ($) | Nov. 25, 2013USD ($) | Nov. 14, 2013 | May. 03, 2013USD ($) | Apr. 26, 2013USD ($) | Jan. 04, 2011$ / shares | Jan. 04, 2011USD ($)$ / shares | Jan. 03, 2011 | Jun. 30, 2013USD ($) | Jun. 30, 2015USD ($)item |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Additional principal repayment due in 2015 | $ 1,100,000 | |||||||||||
Additional principal repayment due in 2016 | 2,300,000 | |||||||||||
Secured Debt | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Outstanding borrowings | $ 38,500,000 | |||||||||||
Secured Debt | Subsidiaries | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Maximum total leverage ratio | 3.50 | |||||||||||
Revolving Credit Facility | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Outstanding borrowings | $ 10,000,000 | |||||||||||
Convertible Notes Payable | C C G H Limited | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Issuance of debt | $ 6,300,000 | |||||||||||
Rate of interest (as a percent) | 3.875% | 3.875% | ||||||||||
Trigger Event condition related to minimum market price of common stock on the Nasdaq Global market (in dollars per share) | $ / shares | $ 4 | $ 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 | 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 | |||||||||||
Convertible Notes Payable | C C G H Limited | Gain on extinguishment of debt | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Amount of gain (loss) recognized | $ 500,000 | |||||||||||
Credit Agreement2013 | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Outstanding borrowings | $ 55,000,000 | |||||||||||
Term of senior secured credit facility | 5 years | |||||||||||
Additional term due to amendment | 2 years | |||||||||||
Credit Agreement2013 | Base Rate | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Interest rate basis | Base Rate | |||||||||||
Credit Agreement2013 | Prime Rate | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Interest rate basis | prime rate | |||||||||||
Credit Agreement2013 | Federal Funds Rate | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Interest rate basis | Federal Funds Rate | |||||||||||
Applicable margin (as a percent) | 0.50% | |||||||||||
Credit Agreement2013 | Eurodollar | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Interest rate basis | Eurodollar Rate | |||||||||||
Applicable margin (as a percent) | 1.00% | |||||||||||
Credit Agreement2013 | Secured Debt | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Maximum borrowing capacity under senior secured credit facility | $ 45,000,000 | |||||||||||
Term of senior secured credit facility | 5 years | |||||||||||
Principal repayments | $ 562,500 | |||||||||||
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 | |||||||||||
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 | |||||||||||
Quarterly installments | installment | 20 | |||||||||||
Credit Agreement2013 | Secured Debt | Debt Instrument Periodic Payment By Commencing Date30 September2013 | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Numbers of consecutive quarterly installments in which principal amount is repaid | item | 8 | |||||||||||
Principal repayments | $ 843,750 | |||||||||||
Credit Agreement2013 | Secured Debt | Debt Instrument Periodic Payment By Commencing Date30 September2015 | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Numbers of consecutive quarterly installments in which principal amount is repaid | item | 11 | |||||||||||
Principal repayments | $ 1,125,000 | |||||||||||
Credit Agreement2013 | Secured Debt | London Interbank Offered Rate L I B O R | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Interest rate basis | LIBOR | |||||||||||
Applicable margin (as a percent) | 5.00% | |||||||||||
Credit Agreement2013 | Revolving Credit Facility | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Maximum borrowing capacity under senior secured credit facility | $ 25,000,000 | |||||||||||
Credit Agreement2013 | Convertible Notes Payable | C C G H Limited | ||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||||||||
Amount of gain (loss) recognized | $ 0 | |||||||||||
Settlement of Compass convertible note | $ 1,700,000 | |||||||||||
Amount of prepayment available under amended facility | $ 3,500,000 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - Aug. 07, 2015 - Subsequent Event - Saugatuck Agreement - USD ($) $ in Millions | Total |
SUBSEQUENT EVENT | |
Business consideration | $ 0.8 |
Cash paid | 0.6 |
Stock issued | 0.2 |
Minimum earn-out payments to be paid to the sellers | 0 |
Maximum earn-out payments to be paid to the sellers | $ 1.2 |