Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 28, 2016 | |
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 | Sep. 30, 2016 | |
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 | 35,788,875 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 19,133 | $ 17,835 |
Accounts and unbilled receivables, net of allowance of $361 and $415, respectively | 49,951 | 49,484 |
Deferred tax asset | 1,988 | 2,109 |
Prepaid expense and other current assets | 2,671 | 2,066 |
Total current assets | 73,743 | 71,494 |
Restricted cash | 338 | 394 |
Furniture, fixtures and equipment, net | 3,510 | 3,021 |
Goodwill | 42,164 | 37,286 |
Intangible assets, net | 11,871 | 13,860 |
Other assets | 5,754 | 4,704 |
Total assets | 137,380 | 130,759 |
Current liabilities | ||
Accounts payable | 7,348 | 6,700 |
Current maturities of long-term debt | 2,250 | 2,250 |
Deferred revenue | 4,255 | 5,154 |
Accrued expenses | 17,386 | 17,076 |
Total current liabilities | 31,239 | 31,180 |
Long-term debt, net of current maturities | 56,519 | 47,947 |
Other liabilities | 6,578 | 4,521 |
Total liabilities | 94,336 | 83,648 |
Commitments and contingencies (Note 7) | ||
Redeemable noncontrolling interest | 1,121 | 939 |
Stockholders' equity | ||
Preferred stock, $0.001 par value; 10,000 shares authorized; none issued | ||
Common stock, $.001 par value, 100,000 shares authorized; 38,003 shares issued and 35,735 outstanding at September 30, 2016 and 37,977 shares issued and 37,219 outstanding at December 31, 2015 | 38 | 38 |
Additional paid-in-capital | 205,002 | 204,904 |
Treasury stock (2,268 and 758 common shares, respectively, at cost) | (9,037) | (3,053) |
Accumulated other comprehensive loss | (6,547) | (6,538) |
Accumulated deficit | (147,533) | (149,179) |
Total stockholders' equity | 41,923 | 46,172 |
Total liabilities, redeemable noncontrolling interest and stockholders’ equity | $ 137,380 | $ 130,759 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowances (in dollars) | $ 361 | $ 415 |
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 | 38,003 | 37,977 |
Common stock, shares outstanding | 35,735 | 37,219 |
Treasury stock, shares | 2,268 | 758 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Revenues | $ 51,929 | $ 51,404 | $ 162,212 | $ 155,354 |
Operating expenses | ||||
Direct costs and expenses for advisors | 30,959 | 30,093 | 98,433 | 93,089 |
Selling, general and administrative | 16,613 | 16,405 | 52,428 | 49,826 |
Depreciation and amortization | 1,741 | 1,752 | 5,386 | 5,308 |
Operating income | 2,616 | 3,154 | 5,965 | 7,131 |
Interest income | 2 | 24 | 11 | |
Interest expense | (596) | (419) | (1,590) | (1,357) |
Foreign currency transaction (loss) gain | (38) | 24 | (300) | 424 |
Income before taxes | 1,982 | 2,761 | 4,099 | 6,209 |
Income tax provision | 1,226 | 975 | 2,331 | 2,497 |
Net income | 756 | 1,786 | 1,768 | 3,712 |
Net income attributable to noncontrolling interest | 24 | 8 | 123 | 147 |
Net income attributable to ISG | $ 732 | $ 1,778 | $ 1,645 | $ 3,565 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 35,707 | 37,315 | 36,219 | 37,182 |
Diluted (in shares) | 36,873 | 39,296 | 36,977 | 38,919 |
Earnings per share attributable to ISG: | ||||
Basic (in dollars per share) | $ 0.02 | $ 0.05 | $ 0.05 | $ 0.10 |
Diluted (in dollars per share) | $ 0.02 | $ 0.05 | $ 0.05 | $ 0.09 |
Comprehensive income: | ||||
Net income | $ 756 | $ 1,786 | $ 1,768 | $ 3,712 |
Foreign currency translation, net of tax (expense) benefit of $(22), $366, $44 and $996, respectively | 100 | (542) | (9) | (1,784) |
Comprehensive income | 856 | 1,244 | 1,759 | 1,928 |
Comprehensive income attributable to noncontrolling interest | 24 | 8 | 123 | 147 |
Comprehensive income attributable to ISG | $ 832 | $ 1,236 | $ 1,636 | $ 1,781 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Foreign currency translation, net of tax (expense) benefit | $ (22) | $ 366 | $ 44 | $ 996 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities | ||
Net income | $ 1,768 | $ 3,712 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation expense | 1,337 | 1,322 |
Amortization of intangibles | 4,049 | 3,985 |
Tax expense (benefit) from stock issuances | 110 | (203) |
Amortization of deferred financing costs | 130 | 107 |
Stock-based compensation | 5,180 | 3,640 |
Change in fair value of contingent consideration | (279) | 220 |
Changes in accounts receivable allowance | (16) | 166 |
Deferred tax benefit | (1,267) | (1,148) |
Loss on disposal of fixed assets | 2 | |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 2,341 | (1,808) |
Prepaid expense and other current assets | (1,516) | (2,712) |
Accounts payable | 38 | (1,325) |
Deferred revenue | (1,408) | (2,004) |
Debt issuance costs | 198 | |
Accrued expenses | (747) | (2,475) |
Net cash provided by operating activities | 9,918 | 1,479 |
Cash flows from investing activities | ||
Acquisitions net of cash acquired | (1,862) | (537) |
Restricted cash | 56 | (28) |
Purchase of furniture, fixtures and equipment | (1,904) | (1,057) |
Net cash used in investing activities | (3,710) | (1,622) |
Cash flows from financing activities | ||
Proceeds from debt | 13,500 | |
Principal payments on borrowings | (4,850) | (2,028) |
Proceeds from issuance of ESPP shares | 444 | 440 |
Payment of contingent consideration | (2,483) | (2,322) |
Installment payment for acquisition of CCI | (661) | |
Dividend paid | (5,189) | |
Debt issuance costs | 9 | |
Tax (expense) benefit from stock issuances | (110) | 203 |
Equity securities repurchased | (11,441) | (2,534) |
Net cash used in financing activities | (4,931) | (12,091) |
Effect of exchange rate changes on cash | 21 | (1,147) |
Net increase (decrease) in cash and cash equivalents | 1,298 | (13,381) |
Cash and cash equivalents, beginning of period | 17,835 | 27,662 |
Cash and cash equivalents, end of period | 19,133 | 14,281 |
Noncash investing and financing activities: | ||
Issuance of treasury stock for vested restricted stock awards and SARs | $ 4,973 | $ 3,625 |
DESCRIPTION OF ORGANIZATION AND
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | 9 Months Ended |
Sep. 30, 2016 | |
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 1,000 employees and operates in 21 countries. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2016 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | NOTE 2—BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015, 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 September 30, 2016, the results of operations for the three and nine months ended September 30, 2016 and 2015 and the cash flows for the nine months ended September 30, 2016 and 2015. The condensed consolidated balance sheet as of December 31, 2015 has been derived from the Company’s audited consolidated financial statements. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. 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, 2015, which are included in the Company’s 2015 Form 10-K filed with the SEC. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
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, restricted cash, receivables, accounts payable, other current liabilities, and accrued interest approximated their fair values at September 30, 2016 and December 31, 2015 due to the short-term nature of these instruments. 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 following tables summarize assets and liabilities measured at fair value on a recurring basis at the dates indicated: Basis of Fair Value Measurements September 30, 2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ $ — $ — $ Total $ $ — $ — $ Liabilities: Contingent consideration (1) $ — $ — $ $ Foreign currency exchange forward contract (2) — — $ — $ $ $ Basis of Fair Value Measurements December 31, 2015 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ $ — $ — $ Total $ $ — $ — $ Liabilities: Contingent consideration (1) $ — $ — $ $ (1) The short-term portion is included in “Accrued expenses.” The long-term portion is included in “Other liabilities.” (2) Included in “Accrued Expenses.” The Company’s contingent consideration liability was $6.7 million and $4.0 million at September 30, 2016 and December 31, 2015, respectively. 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 13.5% to 19.8%. In January 2016, the Company entered into four foreign exchange forward contracts to partially hedge exposure to changes in foreign exchange rates. There is one remaining foreign exchange forward contract with a EUR notional of 3.0 million and USD notional of 3.3 million at September 30, 2016. The remaining contract is scheduled to settle at December 31, 2016. These contracts are marked-to-market with the resulting gains and losses recognized in earnings offsetting the gains and losses on the non-functional currency denominated monetary assets and liabilities being hedged. These derivative contracts are not designated as hedges and are carried at fair value, with changes in the fair value recorded to foreign currency transaction gain (loss) in the condensed consolidated statement of comprehensive income. We recognized a $0.1 million of unrealized loss on forward exchange contracts which is reflected on the foreign currency transaction gain (loss) line for the nine months ended September 30, 2016. The foreign currency exchange contracts agreement is valued using broker quotations or market transactions in either the listed or over-the-counter markets. These derivative instruments are classified within level 2. The Company’s financial instruments include outstanding borrowings of $59.4 million at September 30, 2016 and $50.8 million at December 31, 2015, which are carried at amortized cost. The fair value of debt is classified within Level 3 of the fair value hierarchy. The fair value of the Company's outstanding borrowings is approximately $59.4 million and $50.8 million at September 30, 2016 and December 31, 2015, respectively. 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 3.16% to 3.48%. 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 nine months ended September 30, 2016 and 2015: Nine Months Ended September 30, 2016 2015 Beginning Balance $ $ Payment of contingent consideration Acquisition Change in fair value of contingent consideration Accretion of contingent consideration Unrealized gain (loss) related to currency translation Ending Balance $ $ Recently Issued Accounting Pronouncements In May 2015, 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. In March 2016, the FASB issued an accounting standard update to clarify the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued an accounting standard update to clarify the identification of performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. In May 2016, the FASB issued an accounting standard update to clarify guidance in certain areas and add some practical expedients to the guidance. The amendments in these 2016 updates do not change the core principle of the previously issued guidance in May 2014. The Company is currently assessing the effects this guidance may have on its consolidated financial statements, as well as the method of transition that the Company will use in adopting the new standard. 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). In August 2015, the FASB clarified the guidance that debt issuance costs related to line-of-credit arrangements could continue to be presented as an asset and be subsequently amortized over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the arrangement. 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. The Company adopted the guidance effective January 1, 2016 and presented $0.7 million and $0.6 million, respectively, of debt issuance costs as a direct deduction to the debt liability as of September 30, 2016 and December 31, 2015. This change in accounting principle did not have an impact on the Company’s results of operations, cash flows or stockholders’ equity . In November 2015, the FASB issued an accounting standards update to simplify the presentation of deferred income taxes on the balance sheet. The update requires that all deferred tax assets and liabilities be classified as noncurrent. The current guidance that deferred tax assets and liabilities of a tax-paying component of an entity be offset and presented as a single amount is not impacted by this update. The provisions of the new standard are effective beginning January 1, 2017, for annual and interim periods and early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on its results of operations, but will result in a reclassification of current net deferred tax on its balance sheet in future years. Adoption of the guidance as of September 30, 2016 would result in a reclassification of current net deferred tax of $2.0 million and $2.1 million as of September 30, 2016 and December 31, 2015, respectively. In February 2016, the FASB issued guidance on accounting for leases which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The guidance requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases and will be effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The guidance requires the use of a modified retrospective approach. The Company is evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In March 2016, the FASB issued amended guidance related to employee share-based payment accounting. The guidance requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled and will be applied on a prospective basis. The guidance also requires presentation of excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity, and can be applied retrospectively or prospectively. The guidance increases the amount companies can withhold to cover income taxes on awards without triggering liability classification for shares used to satisfy statutory income tax withholding obligations and requires application of a modified retrospective transition method. The amended guidance will be effective for interim and annual periods beginning after December 15, 2016; early adoption is permitted if all provisions are adopted in the same period. The Company is evaluating the impact of the amended guidance on its consolidated financial statements and related disclosures. In August 2016, the FASB issued new guidance intended to reduce diversity in practice in how certain cash receipts and payments are classified in the statement of cash flows, including debt prepayment or extinguishment costs, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, and distributions from certain equity method investees. The guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The guidance requires application using a retrospective transition method. The Company is evaluating the impact of the guidance on its consolidated financial statements and related disclosures. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2016 | |
ACQUISITIONS | |
ACQUISITION | NOTE 4—ACQUISITIONS TracePoint Acquisition On April 29, 2016 (the “TracePoint Acquisition Date”), a subsidiary of the Company executed an Asset Purchase Agreement with TracePoint Consulting LLC, a Georgia limited liability company (“TracePoint”) and consummated the acquisition of substantially all of the assets and assumed certain liabilities of TracePoint for a purchase price of up to $7.7 million. The purchase price was comprised of $1.4 million of cash consideration paid at closing. TracePoint will also have the right to receive up to $6.3 million in additional consideration, of which $5.0 million to be paid 50% in cash and 50% in stock, with the remaining portion payable in cash, via earn-out payments for fiscal years 2016-2018, if certain financial targets are met. The following table summarizes the consideration transferred to acquire TracePoint and the amounts of identified assets acquired and liabilities assumed as of the TracePoint Acquisition Date: The preliminary allocable purchase price consists of the following: Cash $ Contingent consideration Total allocable purchase price $ Recognized amounts of identifiable assets acquired and liabilities assumed as of the TracePoint Acquisition Date: Cash $ — Accounts receivable Other assets Intangible assets Accounts payable Accrued expenses and other Net assets acquired $ Goodwill $ Costs associated with this acquisition are included in the selling, general and administrative expenses in the condensed consolidated statement of comprehensive income and totaled $0.1 million during the nine months ended September 30, 2016. 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 date. 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 Allocation Asset Life Amortizable intangible assets: Customer relationships $ years Non-compete years Total intangible assets $ Experton Group Acquisition On February 29, 2016 (the “Experton Acquisition Date”), the Company executed a Sale and Purchase Agreement for all the shares of Experton Group AG (“the Agreement”), and consummated the acquisition of all the shares of Experton Group AG (“Experton Group”), a German Corporation. Experton Group is a subscription-based research, advisory and benchmarking firm based in Munich, Germany. Under the terms of the Agreement, the Company acquired the shares for aggregate cash consideration of $0.6 million at closing and another $0.6 million of cash consideration to be paid one year from the Experton Acquisition Date. In addition, Experton Group is eligible to receive a minimum of $0 and a maximum of up to $1.2 million of earn-out payments for fiscal years 2016-2018, if certain revenue targets are met, payable in a combination of cash and stock consideration. The following table summarizes the consideration transferred to acquire Experton Group and the amounts of identified assets acquired and liabilities assumed as of the Experton Acquisition Date: The preliminary allocable purchase price consists of the following: Cash $ Post-completion installment payment Contingent consideration Total allocable purchase price $ Recognized amounts of identifiable assets acquired and liabilities assumed as of the Experton Acquisition Date: Cash $ Accounts receivable Other assets Intangible assets Deferred income tax liability Accounts payable Accrued expenses and other Net assets acquired $ Goodwill $ During the second quarter of 2016, the Company recorded an adjustment to its preliminary purchase price allocation with respect to its acquisition of the Experton Group (as defined below) as well as related deferred tax effects, including reducing the amount allocated to intangible assets by $0.3 million. Costs associated with this acquisition are included in the selling, general and administrative expenses in the condensed consolidated statement of comprehensive income and totaled $0.1 million during the nine months ended September 30, 2016. 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 Allocation Asset Life Amortizable intangible assets: Customer relationships $ years Non-compete years Total intangible assets $ The Condensed Consolidated Statements of Comprehensive Income include the results of Experton and TracePoint acquisitions subsequent to the closing. Had the acquisition occurred as of January 1, 2015, 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, 2016 | |
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 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 nine months ended September 30, 2016, the effect of 34,374 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, respectively. In addition, 0.1 million and 0.3 million restricted shares have not been considered in the diluted earnings per share calculation for the three and nine months ended September 30, 2016, as the effect would be anti-dilutive. For the three and nine months ended September 30, 2015, the effect of 68,748 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. The following tables set forth the computation of basic and diluted earnings per share: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 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 | 9 Months Ended |
Sep. 30, 2016 | |
INCOME TAXES | |
INCOME TAXES | NOTE 6—INCOME TAXES The Company’s effective tax rate for the three and nine months ended September 30, 2016 was 61.9% and 56.9% based on pretax income of $2.0 million and $4.1 million, respectively. The Company’s effective tax rate for the quarter was greater than the statutory rate primarily due to non-deductible travel and entertainment expenses, increase in FIN 48 accruals, and the impact of current quarter losses in jurisdictions where the Company is currently precluded from booking tax benefits. The effective tax rate was 35.3% and 40.2% for the three and nine months ended September 30, 2015, respectively. The difference is primarily due to the impact of current quarter losses in jurisdiction where the Company is currently precluded from booking tax benefits for the three months ended September 30, 2016. As of September 30, 2016, the Company had total unrecognized tax benefits of approximately $1.9 million all of which 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, 2016, the Company’s accrual of interest and penalties amounted to $0.6 million. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
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 were aware are properly reflected in the financial statements at September 30, 2016 and December 31, 2015. STA Consulting Contingent Consideration The Company paid the remaining contingent liability of $1.7 million in April 2016 related to 2015 performance. CCI Contingent Consideration As of September 30, 2016, the Company has recorded a liability of $0.6 million representing the remaining estimated fair value of contingent consideration related to the acquisition of CCI Consulting, and is classified as current and included in accrued expenses on the consolidated balance sheet . The Company paid $0.7 million in April 2016 related to 2015 performance and the remaining contingent liability is expected to be paid in the second quarter of 2017. Saugatuck Contingent Consideration As of September 30, 2016, the Company has recorded a liability of $0.9 million representing the estimated fair value of contingent consideration related to the acquisition of Saugatuck, of which $0.5 million is classified as current and included in accrued expenses on the consolidated balance sheet. The Company paid $0.2 million in February 2016 related to 2015 performance. Experton Contingent Consideration As of September 30, 2016, the Company has recorded a liability of $0.9 million representing the estimated fair value of contingent consideration related to the acquisition of Experton, of which $0.1 million is classified as current and included in accrued expenses on the consolidated balance sheet. TracePoint Contingent Consideration As of September 30, 2016, the Company has recorded a liability of $4.3 million representing the estimated fair value of contingent consideration related to the acquisition of TracePoint, of which $1.9 million is classified as current and included in accrued expenses on the consolidated balance sheet. |
GOODWILL
GOODWILL | 9 Months Ended |
Sep. 30, 2016 | |
GOODWILL | |
GOODWILL | NOTE 8—GOODWILL The changes in the carrying amount of goodwill for the period ended September 30, 2016 is as follows: Balance as of December 31, 2015 $ Acquisition Foreign currency impact Balance as of September 30, 2016 $ |
REDEEMABLE NONCONTROLLING INTER
REDEEMABLE NONCONTROLLING INTEREST | 9 Months Ended |
Sep. 30, 2016 | |
REDEEMABLE NONCONTROLLING INTEREST | |
REDEEMABLE NONCONTROLLING INTEREST | NOTE 9—REDEEMABLE NONCONTROLLING INTEREST The following provides a summary of activity in the noncontrolling interest account for the period ended September 30, 2016 relating to the acquisition of Convergent Technologies Partners: Balance as of December 31, 2015 $ Net income attributable to noncontrolling interest Accretion attributable to noncontrolling interest Balance as of September 30, 2016 $ |
SEGMENT AND GEOGRAPHICAL INFORM
SEGMENT AND GEOGRAPHICAL INFORMATION | 9 Months Ended |
Sep. 30, 2016 | |
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 Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 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 | 9 Months Ended |
Sep. 30, 2016 | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | NOTE 11—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. 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. As a result of the amendment, 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. On March 9, 2016, the Company amended the 2013 Credit Agreement. The amendment increases the revolving line of credit commitment by $15.0 million to a total of $40.0 million and allows the Company to maintain its maximum consolidated total leverage ratio at 3.00 to 1.00 through the first quarter of 2017. On April 29, 2016, the Company’s lenders agreed to amend the 2013 Credit Agreement to allow the Company to complete the acquisition of TracePoint Consulting LLC, a Georgia limited liability company (“TracePoint”). In addition, the Company’s lenders agreed to allow the Company to exclude the acquisition from the Company’s $10.0 million fiscal year permitted acquisition basket and from the calculation of the Company’s Consolidated Fixed Charge Coverage ratio. The material terms of the senior secured credit facility under the 2013 Credit Agreement, as amended, are as follows: · 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. · 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, 2016, our maximum total leverage ratio was 3.00 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 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 was not designated for hedging or speculative purposes. The expense related to this interest rate cap was not material. During the second quarter of 2016, the Company borrowed $13.5 million under the revolving credit facility to fund a modified Dutch auction tender offer for the Company’s shares and to retire a portion of the Compass convertible notes. As of September 30, 2016, the total principal outstanding under the term loan facility and revolving credit facility was $35.7 million and $23.5 million, respectively. Additional mandatory principal repayments totaling $0.6 million and $2.3 million will be due in 2016 and 2017, respectively. In the first quarter of 2016, the Company adopted accounting guidance requiring debt issuance costs related to recognized debt liabilities to be presented in the balance sheet as a direct reduction from the debt liability rather than an asset. Accordingly, as of September 30, 2016, approximately $0.7 million of deferred debt issuance costs were presented as a direct reduction within Long-Term Debt on the Company’s Consolidated Balance Sheets. Furthermore, the Company reclassified approximately $0.6 million of deferred debt issuance costs from Other Assets to Long-Term Debt as of December 31, 2015. 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. On May 6, 2016, the Company prepaid a convertible note in the amount of $3.2 million for principal and accrued interest as satisfaction in full of all indebtedness owed by the Company under such convertible note. No gain or loss was recorded as a result of this transaction. As a result of this transaction, the Company’s fully diluted shares outstanding reduced by 790,721 shares and the aggregate principal amount of convertible notes that remain outstanding is $0.2 million. |
SHARE REPURCHASE PROGRAM
SHARE REPURCHASE PROGRAM | 9 Months Ended |
Sep. 30, 2016 | |
SHARE REPURCHASE PROGRAM | |
SHARE REPURCHASE PROGRAM | NOTE 12—SHARE REPURCHASE PROGRAM On March 9, 2016, the Company’s Board of Directors approved a new share repurchase authorization of up to $15 million. The repurchase program is expected to be executed over time. The shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions, pursuant to a Rule 10b5-1 repurchase plan or by other means in accordance with federal securities laws. The timing and the amount of any repurchases will be determined by the Company’s management based on its evaluation of market conditions, capital allocation alternatives, and other factors. There is no guarantee as to the number of shares that will be repurchased, and the repurchase program may be extended, suspended or discontinued at any time without notice at the Company's discretion. On March 10, 2016 the Company commenced a tender offer to purchase up to $12.0 million in value of shares of its common stock $0.001 par value per share (the “Shares”), at a price not greater than $4.00 nor less than $3.30 per Share, to the seller in cash, less any applicable withholding taxes and without interest (the “Offer”). The Offer expired on April 7, 2016. The Company conducted the Offer through a procedure commonly called a modified “Dutch auction”. A modified “Dutch auction” tender offer allows stockholders to indicate how much stock and at what price within the specified offer range they wish to tender their stock. Based on the final count for the tender offer, the Company accepted for payment an aggregate of 2,323,879 shares of its common stock, $0.001 par value per share on April 7, 2016, at a purchase price of $4.00 per share for an aggregate purchase price of approximately $9.3 million. As of September 30, 2016, there is $18.2 million remaining available for repurchase under the Company’s repurchase program. |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
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 | Fair Value The carrying value of the Company’s cash and cash equivalents, restricted cash, receivables, accounts payable, other current liabilities, and accrued interest approximated their fair values at September 30, 2016 and December 31, 2015 due to the short-term nature of these instruments. 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 following tables summarize assets and liabilities measured at fair value on a recurring basis at the dates indicated: Basis of Fair Value Measurements September 30, 2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ $ — $ — $ Total $ $ — $ — $ Liabilities: Contingent consideration (1) $ — $ — $ $ Foreign currency exchange forward contract (2) — — $ — $ $ $ Basis of Fair Value Measurements December 31, 2015 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ $ — $ — $ Total $ $ — $ — $ Liabilities: Contingent consideration (1) $ — $ — $ $ (1) The short-term portion is included in “Accrued expenses.” The long-term portion is included in “Other liabilities.” (2) Included in “Accrued Expenses.” The Company’s contingent consideration liability was $6.7 million and $4.0 million at September 30, 2016 and December 31, 2015, respectively. 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 13.5% to 19.8%. In January 2016, the Company entered into four foreign exchange forward contracts to partially hedge exposure to changes in foreign exchange rates. There is one remaining foreign exchange forward contract with a EUR notional of 3.0 million and USD notional of 3.3 million at September 30, 2016. The remaining contract is scheduled to settle at December 31, 2016. These contracts are marked-to-market with the resulting gains and losses recognized in earnings offsetting the gains and losses on the non-functional currency denominated monetary assets and liabilities being hedged. These derivative contracts are not designated as hedges and are carried at fair value, with changes in the fair value recorded to foreign currency transaction gain (loss) in the condensed consolidated statement of comprehensive income. We recognized a $0.1 million of unrealized loss on forward exchange contracts which is reflected on the foreign currency transaction gain (loss) line for the nine months ended September 30, 2016. The foreign currency exchange contracts agreement is valued using broker quotations or market transactions in either the listed or over-the-counter markets. These derivative instruments are classified within level 2. The Company’s financial instruments include outstanding borrowings of $59.4 million at September 30, 2016 and $50.8 million at December 31, 2015, which are carried at amortized cost. The fair value of debt is classified within Level 3 of the fair value hierarchy. The fair value of the Company's outstanding borrowings is approximately $59.4 million and $50.8 million at September 30, 2016 and December 31, 2015, respectively. 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 3.16% to 3.48%. 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 nine months ended September 30, 2016 and 2015: Nine Months Ended September 30, 2016 2015 Beginning Balance $ $ Payment of contingent consideration Acquisition Change in fair value of contingent consideration Accretion of contingent consideration Unrealized gain (loss) related to currency translation Ending Balance $ $ |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2015, 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. In March 2016, the FASB issued an accounting standard update to clarify the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued an accounting standard update to clarify the identification of performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. In May 2016, the FASB issued an accounting standard update to clarify guidance in certain areas and add some practical expedients to the guidance. The amendments in these 2016 updates do not change the core principle of the previously issued guidance in May 2014. The Company is currently assessing the effects this guidance may have on its consolidated financial statements, as well as the method of transition that the Company will use in adopting the new standard. 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). In August 2015, the FASB clarified the guidance that debt issuance costs related to line-of-credit arrangements could continue to be presented as an asset and be subsequently amortized over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the arrangement. 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. The Company adopted the guidance effective January 1, 2016 and presented $0.7 million and $0.6 million, respectively, of debt issuance costs as a direct deduction to the debt liability as of September 30, 2016 and December 31, 2015. This change in accounting principle did not have an impact on the Company’s results of operations, cash flows or stockholders’ equity . In November 2015, the FASB issued an accounting standards update to simplify the presentation of deferred income taxes on the balance sheet. The update requires that all deferred tax assets and liabilities be classified as noncurrent. The current guidance that deferred tax assets and liabilities of a tax-paying component of an entity be offset and presented as a single amount is not impacted by this update. The provisions of the new standard are effective beginning January 1, 2017, for annual and interim periods and early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on its results of operations, but will result in a reclassification of current net deferred tax on its balance sheet in future years. Adoption of the guidance as of September 30, 2016 would result in a reclassification of current net deferred tax of $2.0 million and $2.1 million as of September 30, 2016 and December 31, 2015, respectively. In February 2016, the FASB issued guidance on accounting for leases which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The guidance requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases and will be effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The guidance requires the use of a modified retrospective approach. The Company is evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In March 2016, the FASB issued amended guidance related to employee share-based payment accounting. The guidance requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled and will be applied on a prospective basis. The guidance also requires presentation of excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity, and can be applied retrospectively or prospectively. The guidance increases the amount companies can withhold to cover income taxes on awards without triggering liability classification for shares used to satisfy statutory income tax withholding obligations and requires application of a modified retrospective transition method. The amended guidance will be effective for interim and annual periods beginning after December 15, 2016; early adoption is permitted if all provisions are adopted in the same period. The Company is evaluating the impact of the amended guidance on its consolidated financial statements and related disclosures. In August 2016, the FASB issued new guidance intended to reduce diversity in practice in how certain cash receipts and payments are classified in the statement of cash flows, including debt prepayment or extinguishment costs, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, and distributions from certain equity method investees. The guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The guidance requires application using a retrospective transition method. The Company is evaluating the impact of the guidance on its consolidated financial statements and related disclosures. |
SUMMARY OF SIGNIFICANT ACCOUN20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of assets and liabilities measured at fair value on a recurring basis | Basis of Fair Value Measurements September 30, 2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ $ — $ — $ Total $ $ — $ — $ Liabilities: Contingent consideration (1) $ — $ — $ $ Foreign currency exchange forward contract (2) — — $ — $ $ $ Basis of Fair Value Measurements December 31, 2015 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ $ — $ — $ Total $ $ — $ — $ Liabilities: Contingent consideration (1) $ — $ — $ $ (1) The short-term portion is included in “Accrued expenses.” The long-term portion is included in “Other liabilities.” (2) Included in “Accrued Expenses.” |
Schedule of change in the contingent consideration liability | Nine Months Ended September 30, 2016 2015 Beginning Balance $ $ Payment of contingent consideration Acquisition Change in fair value of contingent consideration Accretion of contingent consideration Unrealized gain (loss) related to currency translation Ending Balance $ $ |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
TracePoint | |
Business Acquisition | |
Schedule of preliminary allocable purchase price | Cash $ Contingent consideration Total allocable purchase price $ |
Schedule of recognized amounts of identifiable assets acquired and liabilities assumed | Cash $ — Accounts receivable Other assets Intangible assets Accounts payable Accrued expenses and other Net assets acquired $ Goodwill $ |
Schedule of purchase price assigned to intangible assets and the amortization period | Purchase Price Allocation Asset Life Amortizable intangible assets: Customer relationships $ years Non-compete years Total intangible assets $ |
Experton Group AG | |
Business Acquisition | |
Schedule of preliminary allocable purchase price | Cash $ Post-completion installment payment Contingent consideration Total allocable purchase price $ |
Schedule of recognized amounts of identifiable assets acquired and liabilities assumed | Cash $ Accounts receivable Other assets Intangible assets Deferred income tax liability Accounts payable Accrued expenses and other Net assets acquired $ Goodwill $ |
Schedule of purchase price assigned to intangible assets and the amortization period | Purchase Price Allocation Asset Life Amortizable intangible assets: Customer relationships $ years Non-compete years Total intangible assets $ |
NET INCOME PER COMMON SHARE (Ta
NET INCOME PER COMMON SHARE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
NET INCOME PER COMMON SHARE | |
Schedule of computation of basic and diluted earnings per share | Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 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 $ $ $ $ |
GOODWILL (Tables)
GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
GOODWILL | |
Schedule of changes in the carrying amount of goodwill | Balance as of December 31, 2015 $ Acquisition Foreign currency impact Balance as of September 30, 2016 $ |
REDEEMABLE NONCONTROLLING INT24
REDEEMABLE NONCONTROLLING INTEREST (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
REDEEMABLE NONCONTROLLING INTEREST | |
Schedules of summary of activity in the noncontrolling interest | Balance as of December 31, 2015 $ Net income attributable to noncontrolling interest Accretion attributable to noncontrolling interest Balance as of September 30, 2016 $ |
SEGMENT AND GEOGRAPHICAL INFO25
SEGMENT AND GEOGRAPHICAL INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
SEGMENT AND GEOGRAPHICAL INFORMATION | |
Schedule of geographical revenue information for the segment | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Revenues Americas $ $ $ $ Europe Asia Pacific $ $ $ $ |
DESCRIPTION OF ORGANIZATION A26
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Details) | Sep. 30, 2016employeecountryclient |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |
Number of clients worldwide | client | 500 |
Number of employees | employee | 1,000 |
Number of countries | country | 21 |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value of Financial Instruments (Details) $ in Thousands, € in Millions | 9 Months Ended | |||||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016EUR (€)derivative | Sep. 30, 2016USD ($)derivative | Jan. 31, 2016derivative | Dec. 31, 2015USD ($) | |
Liabilities: | ||||||
Outstanding borrowings | $ 59,400 | $ 50,800 | ||||
Change in the contingent consideration liability | ||||||
Beginning Balance | $ 4,019 | $ 4,825 | ||||
Payment of contingent consideration | (2,483) | (2,322) | ||||
Acquisition | 4,841 | 986 | ||||
Change in fair value of contingent consideration | (279) | 220 | ||||
Accretion of contingent consideration | 568 | 172 | ||||
Unrealized gain (loss) related to currency translation | 61 | (233) | ||||
Ending Balance | 6,727 | $ 3,648 | ||||
Foreign exchange forward | Not designated as hedges | ||||||
Liabilities: | ||||||
Number of foreign currency derivatives | derivative | 1 | 1 | 4 | |||
Notional amount of foreign currency derivatives | € 3 | $ 3,300 | ||||
Unrealized gain (loss) in foreign currency transaction | (100) | |||||
Saugatuck Technology Inc. | ||||||
Change in the contingent consideration liability | ||||||
Ending Balance | $ 900 | |||||
Minimum | ||||||
Liabilities: | ||||||
Discounted rate of cash outflow projections (as a percent) | 13.50% | |||||
Incremental borrowing rate used to discount future cash flows from financial instruments (as a percent) | 3.16% | |||||
Maximum | ||||||
Liabilities: | ||||||
Discounted rate of cash outflow projections (as a percent) | 19.80% | |||||
Incremental borrowing rate used to discount future cash flows from financial instruments (as a percent) | 3.48% | |||||
Level 3 | ||||||
Liabilities: | ||||||
Long-term debt , including current portion | 59,400 | 50,800 | ||||
Fair value of outstanding borrowing | 59,400 | 50,800 | ||||
Recurring | ||||||
Assets: | ||||||
Cash equivalents | 20 | 20 | ||||
Total | 20 | 20 | ||||
Liabilities: | ||||||
Contingent consideration | 6,727 | 4,019 | ||||
Foreign currency exchange forward contract | 94 | |||||
Total | 6,821 | |||||
Recurring | Level 1 | ||||||
Assets: | ||||||
Cash equivalents | 20 | 20 | ||||
Total | 20 | 20 | ||||
Recurring | Level 2 | ||||||
Liabilities: | ||||||
Foreign currency exchange forward contract | 94 | |||||
Total | 94 | |||||
Recurring | Level 3 | ||||||
Liabilities: | ||||||
Contingent consideration | 6,727 | $ 4,019 | ||||
Total | $ 6,727 |
SUMMARY OF SIGNIFICANT ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Direct deduction to debt liability | $ (59,400) | $ (50,800) |
Current net deferred tax | 1,988 | 2,109 |
ASU 2015-03 | Restatement Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Direct deduction to debt liability | 700 | 600 |
ASU 2015-17 | Pro Forma Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Current net deferred tax | $ 2,000 | $ 2,100 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Thousands | Apr. 29, 2016 | Feb. 29, 2016 | Aug. 07, 2015 | Jun. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Business Acquisition | ||||||
Amount of consideration to be paid in cash and stock | $ 5,000 | |||||
Recognized amounts of identifiable assets acquired and liabilities assumed | ||||||
Goodwill | $ 42,164 | $ 37,286 | ||||
TracePoint | ||||||
Business Acquisition | ||||||
Contingent consideration higher range | $ 6,300 | |||||
Percentage of contingent consideration to be paid in cash | 50.00% | |||||
Percentage of contingent consideration to be paid in stock | 50.00% | |||||
Preliminary allocable purchase price | ||||||
Cash | $ 1,418 | |||||
Contingent consideration | 3,936 | |||||
Total allocable purchase price | 5,354 | |||||
Recognized amounts of identifiable assets acquired and liabilities assumed | ||||||
Accounts receivable | 1,099 | |||||
Other assets | 322 | |||||
Intangible assets | 1,243 | |||||
Accounts payable | (559) | |||||
Accrued expenses and other | (44) | |||||
Net assets acquired | 2,061 | |||||
Goodwill | 3,293 | |||||
Purchase price assigned to intangible assets and the amortization period | ||||||
Amortizable intangible assets | 1,243 | |||||
TracePoint | Maximum | ||||||
Preliminary allocable purchase price | ||||||
Total allocable purchase price | 7,700 | |||||
TracePoint | Customer relationships | ||||||
Purchase price assigned to intangible assets and the amortization period | ||||||
Amortizable intangible assets | $ 1,222 | |||||
Asset Life | 15 years | |||||
TracePoint | Non-compete | ||||||
Purchase price assigned to intangible assets and the amortization period | ||||||
Amortizable intangible assets | $ 21 | |||||
Asset Life | 3 years | |||||
TracePoint | Selling, general and administrative | ||||||
Recognized amounts of identifiable assets acquired and liabilities assumed | ||||||
Acquisition related cost | 100 | |||||
Experton Group AG | ||||||
Business Acquisition | ||||||
Contingent consideration lower range | $ 0 | |||||
Contingent consideration higher range | 1,200 | |||||
Preliminary allocable purchase price | ||||||
Cash | 554 | |||||
Post-completion installment payment | 554 | |||||
Contingent consideration | 905 | |||||
Total allocable purchase price | 2,013 | |||||
Recognized amounts of identifiable assets acquired and liabilities assumed | ||||||
Cash | 110 | |||||
Accounts receivable | 412 | |||||
Other assets | 57 | |||||
Intangible assets | 757 | |||||
Deferred income tax liability | (224) | |||||
Accounts payable | (51) | |||||
Accrued expenses and other | (521) | |||||
Net assets acquired | 540 | |||||
Goodwill | $ 1,473 | |||||
Reducing amount of purchase price allocated to intangible assets | $ 300 | |||||
Purchase price assigned to intangible assets and the amortization period | ||||||
Amortizable intangible assets | $ 757 | |||||
Experton Group AG | Customer relationships | ||||||
Purchase price assigned to intangible assets and the amortization period | ||||||
Amortizable intangible assets | $ 735 | |||||
Asset Life | 10 years | |||||
Experton Group AG | Non-compete | ||||||
Purchase price assigned to intangible assets and the amortization period | ||||||
Amortizable intangible assets | $ 22 | |||||
Asset Life | 3 years | |||||
Experton Group AG | Selling, general and administrative | ||||||
Recognized amounts of identifiable assets acquired and liabilities assumed | ||||||
Acquisition related cost | $ 100 |
NET INCOME PER COMMON SHARE - A
NET INCOME PER COMMON SHARE - Antidilutive Securities (Details) - shares | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | |
Antidilutive securities | |||
Securities considered antidilutive (in shares) | 300,000 | ||
Stock Appreciation Rights S A R S | |||
Antidilutive securities | |||
Shares excluded from basic and diluted earnings per share since the contingency has not been met | 68,748 | ||
Securities considered antidilutive (in shares) | 34,374 | ||
Restricted Stock | |||
Antidilutive securities | |||
Securities considered antidilutive (in shares) | 100,000 | ||
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 - C
NET INCOME PER COMMON SHARE - Computation of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | May 06, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 |
Basic: | |||||
Net income attributable to ISG | $ 732 | $ 1,778 | $ 1,645 | $ 3,565 | |
Weighted average common shares | 35,707,000 | 37,315,000 | 36,219,000 | 37,182,000 | |
Earnings per share attributable to ISG | $ 0.02 | $ 0.05 | $ 0.05 | $ 0.10 | |
Diluted: | |||||
Net income attributable to ISG | $ 732 | $ 1,778 | $ 1,645 | $ 3,565 | |
Interest expense of convertible debt, net of tax | 1 | 21 | 21 | 60 | |
Net income, attributable to ISG, as adjusted | $ 733 | $ 1,799 | $ 1,666 | $ 3,625 | |
Basic Weighted Average Common shares | 35,707,000 | 37,315,000 | 36,219,000 | 37,182,000 | |
Potential common shares | 790,721 | 1,166,000 | 1,981,000 | 758,000 | 1,737,000 |
Diluted weighted average common shares | 36,873,000 | 39,296,000 | 36,977,000 | 38,919,000 | |
Diluted earnings per share attributable to ISG | $ 0.02 | $ 0.05 | $ 0.05 | $ 0.09 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
INCOME TAXES | ||||
Effective income tax rates (as a percent) | 61.90% | 35.30% | 56.90% | 40.20% |
Pretax income | $ 1,982 | $ 2,761 | $ 4,099 | $ 6,209 |
Unrecognized tax benefits | 1,900 | 1,900 | ||
Unrecognized tax benefits that would impact the company's effective tax rate | 1,900 | 1,900 | ||
Interest and penalties accrued | $ 600 | $ 600 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Apr. 30, 2016 | Feb. 29, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Contingent Consideration | ||||||
Contingent acquisition liability | $ 6,727 | $ 4,019 | $ 3,648 | $ 4,825 | ||
Salvaggio Teal And Associates | ||||||
Contingent Consideration | ||||||
Amount paid for contingent consideration | $ 1,700 | |||||
CCI Consulting Private Limited | ||||||
Contingent Consideration | ||||||
Contingent acquisition liability | 600 | |||||
Amount paid for contingent consideration | $ 700 | |||||
CCI Consulting Private Limited | Accrued expenses | ||||||
Contingent Consideration | ||||||
Contingent consideration classified as current | 600 | |||||
Saugatuck Technology Inc. | ||||||
Contingent Consideration | ||||||
Contingent acquisition liability | 900 | |||||
Amount paid for contingent consideration | $ 200 | |||||
Saugatuck Technology Inc. | Accrued expenses | ||||||
Contingent Consideration | ||||||
Contingent consideration classified as current | 500 | |||||
Experton Group AG | ||||||
Contingent Consideration | ||||||
Contingent acquisition liability | 900 | |||||
Experton Group AG | Accrued expenses | ||||||
Contingent Consideration | ||||||
Contingent consideration classified as current | 100 | |||||
TracePoint | ||||||
Contingent Consideration | ||||||
Contingent acquisition liability | 4,300 | |||||
TracePoint | Accrued expenses | ||||||
Contingent Consideration | ||||||
Contingent consideration classified as current | $ 1,900 |
GOODWILL (Details)
GOODWILL (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Changes in the carrying amount of goodwill | |
Balance at the beginning | $ 37,286 |
Acquisitions | 4,766 |
Foreign currency impact | 112 |
Balance at the end | $ 42,164 |
REDEEMABLE NONCONTROLLING INT35
REDEEMABLE NONCONTROLLING INTEREST (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Balance at the beginning of the period | $ 939 | |||
Net income attributable to noncontrolling interest | $ 24 | $ 8 | 123 | $ 147 |
Balance at the end of the period | 1,121 | 1,121 | ||
Convergent Technologies Partners SPA | ||||
Balance at the beginning of the period | 939 | |||
Net income attributable to noncontrolling interest | 123 | |||
Accretion attributable to noncontrolling interest | 59 | |||
Balance at the end of the period | $ 1,121 | $ 1,121 |
SEGMENT AND GEOGRAPHICAL INFO36
SEGMENT AND GEOGRAPHICAL INFORMATION (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)segment | Sep. 30, 2015USD ($) | |
Segment and geographical information | ||||
Number of segments | segment | 1 | |||
Revenues | $ 51,929 | $ 51,404 | $ 162,212 | $ 155,354 |
Americas | ||||
Segment and geographical information | ||||
Revenues | 29,239 | 27,834 | 86,832 | 84,078 |
Europe | ||||
Segment and geographical information | ||||
Revenues | 16,611 | 18,066 | 56,885 | 54,795 |
Asia Pacific | ||||
Segment and geographical information | ||||
Revenues | $ 6,079 | $ 5,504 | $ 18,495 | $ 16,481 |
FINANCING ARRANGEMENTS AND LO37
FINANCING ARRANGEMENTS AND LONG-TERM DEBT (Details) | May 06, 2016USD ($)shares | Apr. 29, 2016USD ($) | Mar. 09, 2016USD ($) | May 11, 2015USD ($)installment | Nov. 25, 2013USD ($) | Nov. 14, 2013 | May 03, 2013USD ($) | Apr. 26, 2013USD ($) | Jan. 04, 2011$ / shares | Jan. 04, 2011USD ($)$ / shares | Sep. 30, 2016USD ($)shares | Sep. 30, 2015shares | Jun. 30, 2013USD ($) | Sep. 30, 2016USD ($)shares | Sep. 30, 2015shares | Jun. 30, 2016USD ($) | Dec. 31, 2015USD ($) |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||||||||||||||
Permitted acquisition baskets amount | $ 10,000,000 | ||||||||||||||||
Additional principal repayment due in 2016 | $ 600,000 | $ 600,000 | |||||||||||||||
Additional principal repayment due in 2017 | 2,300,000 | 2,300,000 | |||||||||||||||
Deferred debt issuance costs | 700,000 | 700,000 | |||||||||||||||
Other assets | 5,754,000 | 5,754,000 | $ 4,704,000 | ||||||||||||||
Long-term debt | 56,519,000 | 56,519,000 | 47,947,000 | ||||||||||||||
Issuance of debt | 13,500,000 | ||||||||||||||||
Amount outstanding | $ 59,400,000 | $ 59,400,000 | 50,800,000 | ||||||||||||||
Reduction in diluted shares outstanding | shares | 790,721 | 1,166,000 | 1,981,000 | 758,000 | 1,737,000 | ||||||||||||
Secured Debt | |||||||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||||||||||||||
Outstanding borrowings | $ 35,700,000 | $ 35,700,000 | |||||||||||||||
Secured Debt | Subsidiaries | |||||||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||||||||||||||
Maximum total leverage ratio | 3 | ||||||||||||||||
Revolving Credit Facility | |||||||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||||||||||||||
Outstanding borrowings | 23,500,000 | $ 23,500,000 | |||||||||||||||
Amount borrowed under the revolving credit facility | $ 13,500,000 | ||||||||||||||||
Convertible Notes Payable | |||||||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||||||||||||||
Amount paid in satisfaction of full of all indebtedness owing by the Company under the Note | $ 3,200,000 | ||||||||||||||||
Amount of gain (loss) recognized | 0 | ||||||||||||||||
Principal amount of debt outstanding | $ 200,000 | ||||||||||||||||
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 | ||||||||||||||||
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 | ||||||||||||||||
Amount of gain (loss) recognized | $ 500,000 | ||||||||||||||||
Credit Agreement2013 | |||||||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||||||||||||||
Term of senior secured credit facility | 5 years | ||||||||||||||||
Outstanding borrowings | $ 55,000,000 | ||||||||||||||||
Additional term due to amendment | 2 years | ||||||||||||||||
Maximum total leverage ratio | 3 | ||||||||||||||||
Credit Agreement2013 | Secured Debt | |||||||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||||||||||||||
Maximum borrowing capacity under senior secured credit facility | 45,000,000 | ||||||||||||||||
Number of quarterly installments | installment | 20 | ||||||||||||||||
Periodic repayment | $ 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 | ||||||||||||||||
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 | $ 40,000,000 | $ 25,000,000 | |||||||||||||||
Increase to maximum borrowing capacity | $ 15,000,000 | ||||||||||||||||
Credit Agreement2013 | Convertible Notes Payable | C C G H Limited | |||||||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||||||||||||||
Amount of prepayment available under amended facility | $ 3,500,000 | ||||||||||||||||
Amount of gain (loss) recognized | $ 0 | ||||||||||||||||
Settlement of Compass convertible note | $ 1,700,000 | ||||||||||||||||
ASU 2015-03 | Restatement Adjustment | |||||||||||||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||||||||||||||
Other assets | (600,000) | $ (600,000) | |||||||||||||||
Long-term debt | (600,000) | (600,000) | |||||||||||||||
Amount outstanding | $ (700,000) | $ (700,000) | $ (600,000) |
SHARE REPURCHASE PROGRAM (Detai
SHARE REPURCHASE PROGRAM (Details) - USD ($) $ / shares in Units, $ in Millions | Apr. 07, 2016 | Mar. 10, 2016 | Mar. 09, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |||
Tender Offer | |||||
Share repurchases amount | $ 9.3 | ||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |||
Share price (in dollars per share) | $ 4 | ||||
Number of shares of common stock repurchased | 2,323,879 | ||||
Amount available under the stock repurchase plan | $ 18.2 | ||||
Tender Offer | Maximum | |||||
Share repurchases amount | $ 12 | ||||
Share price (in dollars per share) | $ 4 | ||||
Tender Offer | Minimum | |||||
Share price (in dollars per share) | $ 3.30 | ||||
Repurchase Program March 2016 | |||||
Share repurchases amount | $ 15 |