Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 28, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | Information Services Group Inc. | ||
Entity Central Index Key | 1,371,489 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 156,876,057 | ||
Entity Common Stock, Shares Outstanding | 43,687,058 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 28,420 | $ 34,485 |
Accounts and unbilled receivables, net of allowance of $503 and $494, respectively | 70,824 | 64,662 |
Deferred tax asset | 1,730 | |
Prepaid expense and other current assets | 4,467 | 5,374 |
Total current assets | 103,711 | 106,251 |
Restricted cash | 94 | 497 |
Furniture, fixtures and equipment, net | 5,229 | 4,789 |
Goodwill | 85,619 | 85,940 |
Intangible assets, net | 25,684 | 35,113 |
Deferred tax asset | 2,521 | |
Other assets | 1,902 | 2,532 |
Total assets | 224,760 | 235,122 |
Current liabilities | ||
Accounts payable | 7,192 | 9,724 |
Current maturities of long-term debt | 15,499 | 5,546 |
Deferred revenue | 8,898 | 9,112 |
Accrued expenses | 21,486 | 27,971 |
Total current liabilities | 53,075 | 52,353 |
Long-term debt, net of current maturities | 98,838 | 116,485 |
Deferred tax liability | 1,569 | 396 |
Other liabilities | 7,741 | 7,476 |
Total liabilities | 161,223 | 176,710 |
Commitments and contingencies (Note 12) | ||
Redeemable noncontrolling interest | 1,376 | |
Stockholders' equity | ||
Preferred stock, $.001 par value; 10,000 shares authorized; none issued | ||
Common stock, $.001 par value, 100,000 shares authorized; 44,490 shares issued and 43,560 outstanding at December 31, 2017 and 44,203 shares issued and 42,140 outstanding at December 31, 2016 | 44 | 44 |
Additional paid-in capital | 230,134 | 228,692 |
Treasury stock (930 and 2,063 common shares, respectively, at cost) | (3,161) | (8,216) |
Accumulated other comprehensive loss | (5,666) | (7,800) |
Accumulated deficit | (157,814) | (155,684) |
Total stockholders' equity | 63,537 | 57,036 |
Total liabilities, redeemable non-controlling interest and stockholders’ equity | $ 224,760 | $ 235,122 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowances (in dollars) | $ 503 | $ 494 |
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 | 44,490 | 44,203 |
Common stock, shares outstanding | 43,560 | 42,140 |
Treasury stock, shares | 930 | 2,063 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||
Revenues | $ 269,554 | $ 216,499 | $ 209,240 |
Operating expenses | |||
Direct costs and expenses for advisors | 156,630 | 132,359 | 124,701 |
Selling, general and administrative | 91,046 | 78,863 | 67,841 |
Depreciation and amortization | 12,721 | 7,869 | 7,083 |
Operating income (loss) | 9,157 | (2,592) | 9,615 |
Interest income | 107 | 27 | 14 |
Interest expense | (6,821) | (2,664) | (1,789) |
Foreign currency transaction (loss) gain | (343) | (95) | 303 |
Income (loss) before taxes | 2,100 | (5,324) | 8,143 |
Income tax provision | 4,198 | 1,054 | 3,189 |
Net (loss) income | (2,098) | (6,378) | 4,954 |
Net income attributable to non-controlling interest | 32 | 127 | 113 |
Net (loss) income attributable to ISG | $ (2,130) | $ (6,505) | $ 4,841 |
Weighted average shares outstanding: | |||
Basic (in shares) | 43,025 | 36,625 | 37,186 |
Diluted (in shares) | 43,025 | 36,625 | 38,936 |
(Loss) earnings per share attributable to ISG: | |||
Basic (in dollars per share) | $ (0.05) | $ (0.18) | $ 0.13 |
Diluted (in dollars per share) | $ (0.05) | $ (0.18) | $ 0.13 |
Comprehensive (loss) income: | |||
Net (loss) income | $ (2,098) | $ (6,378) | $ 4,954 |
Foreign currency translation, net of tax (expense) benefit of $(1,270), $738 and $1,102, respectively. | 2,134 | (1,262) | (1,956) |
Comprehensive income (loss) | 36 | (7,640) | 2,998 |
Comprehensive income attributable to non-controlling interest | 32 | 127 | 113 |
Comprehensive income (loss) attributable to ISG | $ 4 | $ (7,767) | $ 2,885 |
CONSOLIDATED STATEMENT OF COMP5
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||
Foreign currency translation, tax benefit (expense) | $ (1,270) | $ 738 | $ 1,102 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid In Capital [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2014 | $ 38 | $ 204,525 | $ (5,244) | $ (4,582) | $ (154,020) | $ 40,717 |
Balance (in shares) at Dec. 31, 2014 | 37,943 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income attributable to ISG | 4,841 | 4,841 | ||||
Other comprehensive income (loss) | (1,956) | (1,956) | ||||
Equity securities repurchased | 2 | (3,383) | (3,381) | |||
Proceeds from issuance of ESPP | (80) | 661 | 581 | |||
Issuance of treasury shares | (4,913) | 4,913 | ||||
Accretion of noncontrolling interest | (78) | (78) | ||||
Dividend paid | (61) | (61) | ||||
Acquisition | 150 | 150 | ||||
Acquisition (in shares) | 34 | |||||
Tax benefit on stock issuance | 310 | 310 | ||||
Stock based compensation | 5,049 | 5,049 | ||||
Balance at Dec. 31, 2015 | $ 38 | 204,904 | (3,053) | (6,538) | (149,179) | 46,172 |
Balance (in shares) at Dec. 31, 2015 | 37,977 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income attributable to ISG | (6,505) | (6,505) | ||||
Other comprehensive income (loss) | (1,262) | (1,262) | ||||
Equity securities repurchased | (11,565) | (11,565) | ||||
Proceeds from issuance of ESPP | (74) | 635 | 561 | |||
Issuance of treasury shares | (5,767) | 5,767 | ||||
Accretion of noncontrolling interest | (309) | (309) | ||||
Issuance of common stock for earnout | 100 | 100 | ||||
Issuance of common stock for earnout (in shares) | 26 | |||||
Issuance of common stock | $ 3 | 11,997 | 12,000 | |||
Issuance of common stock (in shares) | 3,000 | |||||
Acquisition | $ 3 | 10,941 | 10,944 | |||
Acquisition (in shares) | 3,200 | |||||
Tax benefit on stock issuance | (147) | (147) | ||||
Stock based compensation | 7,047 | 7,047 | ||||
Balance at Dec. 31, 2016 | $ 44 | 228,692 | (8,216) | (7,800) | (155,684) | $ 57,036 |
Balance (in shares) at Dec. 31, 2016 | 44,203 | 44,203 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income attributable to ISG | (2,130) | $ (2,130) | ||||
Other comprehensive income (loss) | 2,134 | 2,134 | ||||
Equity securities repurchased | (2,853) | (2,853) | ||||
Proceeds from issuance of ESPP | (136) | 808 | 672 | |||
Issuance of treasury shares | (7,100) | 7,100 | ||||
Accretion of noncontrolling interest | 30 | 30 | ||||
Issuance of common stock for earnout | 721 | 721 | ||||
Issuance of common stock for earnout (in shares) | 287 | |||||
Purchase of non-controlling interest | 488 | 488 | ||||
Stock based compensation | 7,439 | 7,439 | ||||
Balance at Dec. 31, 2017 | $ 44 | $ 230,134 | $ (3,161) | $ (5,666) | $ (157,814) | $ 63,537 |
Balance (in shares) at Dec. 31, 2017 | 44,490 | 44,490 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | |||
Net (loss) income | $ (2,098) | $ (6,378) | $ 4,954 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation expense | 3,207 | 1,903 | 1,760 |
Amortization of intangible assets | 9,514 | 5,966 | 5,323 |
Deferred tax expense from stock issuances | 333 | 147 | (310) |
Amortization of deferred financing costs | 884 | 302 | 141 |
Loss on sublease | 578 | ||
Stock-based compensation | 7,439 | 7,047 | 5,049 |
Change in fair value of contingent consideration | 145 | (210) | 468 |
Changes in accounts receivable allowance | 351 | 34 | 174 |
Deferred tax benefit | (1,008) | (1,904) | (1,958) |
Loss on disposal of fixed assets | 19 | 3 | |
Changes in operating assets and liabilities, net of acquisitions: | |||
Accounts receivable | (6,028) | 2,068 | (7,506) |
Prepaid expense and other assets | 1,545 | (714) | (1,820) |
Accounts payable | (2,381) | 1,732 | (612) |
Deferred revenue | (387) | 1,409 | (372) |
Debt issuance costs | (38) | (2,730) | |
Accrued expenses | (631) | 3,687 | 3,016 |
Net cash provided by operating activities | 11,444 | 12,359 | 8,310 |
Cash flows from investing activities | |||
Acquisitions, net of cash acquired | (889) | (55,187) | (537) |
Restricted cash | 403 | (103) | (30) |
Purchase of furniture, fixtures and equipment | (3,169) | (2,359) | (1,378) |
Net cash used in investing activities | (3,655) | (57,649) | (1,945) |
Cash flows from financing activities | |||
Proceeds from debt | 72,281 | ||
Proceeds from issuance of common stock | 12,000 | ||
Principal payments on borrowings | (8,540) | (4,850) | (2,591) |
Proceeds from issuance of ESPP shares | 672 | 561 | 581 |
Payment of contingent consideration | (2,665) | (3,854) | (2,322) |
Installment payment for acquisitions | (543) | (661) | |
Dividend paid | (5,189) | ||
Payments related to tax withholding for stock-based compensation | (2,210) | (1,700) | (1,497) |
Debt issuance costs | (137) | ||
Tax expense from stock issuances | (147) | 310 | |
Equity securities repurchased | (2,853) | (11,565) | (3,381) |
Net cash (used in) provided by financing activities | (16,139) | 62,589 | (14,750) |
Effect of exchange rate changes on cash | 2,285 | (649) | (1,442) |
Net (decrease) increase in cash and cash equivalents | (6,065) | 16,650 | (9,827) |
Cash and cash equivalents, beginning of period | 34,485 | 17,835 | 27,662 |
Cash and cash equivalents, end of period | 28,420 | 34,485 | 17,835 |
Cash paid for: | |||
Interest | 5,596 | 1,926 | 1,464 |
Taxes, net of refunds | 2,440 | $ 5,714 | 4,526 |
Non-cash investing and financing activities: | |||
Issuance of common stock for acquisition | 10,944 | ||
Issuance of treasury stock for vested restricted stock awards | $ 7,100 | $ 5,767 | $ 4,913 |
DESCRIPTION OF ORGANIZATION AND
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | 12 Months Ended |
Dec. 31, 2017 | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1—DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIO Information Services Group, Inc. (the “Company”, or “ISG”) 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 pioneer in developing the market for sourcing advisory services. In December 2017, we consummated our transformational acquisition of Alsbridge Holdings, Inc. (“Alsbridge”), a U.S.-based sourcing, automation and transformation advisory firm. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly‑owned subsidiaries. These consolidated financial statements and footnotes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. Unless the context requires otherwise, references to the Company include ISG and its consolidated subsidiaries. Reclassification Certain prior years’ amounts have been reclassified to conform to the current year’s presentation, including reclassification to the Condensed Consolidated Statements of Cash Flows due to the adoption of the share-based payment accounting standard in the first quarter of 2017 as further described below under Recently Issued Accounting Pronouncements. This reclassification had no impact on our results of operations, financial position, or changes in shareholders’ equity. Use of Estimates The preparation of financial statements in conformity with GAAP 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 and definite‑lived intangible assets, depreciation expense, fair value assumptions in analyzing goodwill and intangible asset impairments, income taxes and deferred tax asset valuation, and the valuation of stock based compensation. Business Combinations We have acquired businesses critical to the Company’s long‑term growth strategy. Results of operations for acquisitions are included in the accompanying consolidated statement of comprehensive income from the date of acquisition. Acquisitions are accounted for using the purchase method of accounting and the purchase price is allocated to the net assets acquired based upon their estimated fair values at the date of acquisition. The excess of the purchase price over the net assets was recorded as goodwill. Acquisition-related costs are expensed as incurred and recorded in selling, general and administrative expenses. Final valuations of assets and liabilities are obtained and recorded within one year from the date of the acquisition. Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents, including certain money market accounts. The Company principally maintains its cash in money market and bank deposit accounts in the United States of America which typically exceed applicable insurance limits. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. Restricted Cash Restricted cash consists of cash and cash equivalents which the Company has committed to fulfill certain obligations and are not available for general corporate purposes. Accounts and Unbilled Receivables and Allowance for Doubtful Accounts Our trade receivables primarily consist of amounts due for services already performed via fixed fee or time and materials arrangements. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of clients to pay fees or for disputes that affect its ability to fully collect billed accounts receivable. The allowance for these risks is prepared by reviewing the status of all accounts and recording reserves on a specific identification method based on previous experiences and historical bad debts. However, our actual experience may vary significantly from these estimates. If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay their invoices, we may need to record additional allowances or write‑offs in future periods. To the extent the provision relates to a client’s inability or unwillingness to make required payments, the provision is recorded as bad debt expense, which is classified within selling, general and administrative expense in the accompanying consolidated statement of comprehensive income. The provision for unbilled services is recorded as a reduction to revenues to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. Prepaid Expenses and Other Assets Prepaid expenses and other assets consist primarily of prepaid expenses for insurance, conferences and deposits for facilities, programs and promotion items. Furniture, Fixtures and Equipment, net Furniture, fixtures and equipment is recorded at cost. Depreciation is computed by applying the straight‑line method over the estimated useful life of the assets, which ranges from three to five years. Leasehold improvements are depreciated over the lesser of the useful life of the underlying asset or the lease term, which generally range from three to five years. Expenditures for renewals and betterments are capitalized. Repairs and maintenance are charged to expense as incurred. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts and any associated gain or loss thereon is reflected in the accompanying consolidated statement of comprehensive income. Internal‑Use Software and Website Development Costs The Company capitalizes internal‑use software and website development costs and records these amounts within furniture, fixtures and equipment. Accounting standards require that certain costs related to the development or purchase of internal‑use software and systems as well as the costs incurred in the application development stage related to its website be capitalized and amortized over the estimated useful life of the software or system. They also require that costs related to the preliminary project stage, data conversion and post implementation/operation stage of an internal‑use software development project be expensed as incurred. During the years ended December 31, 2017, 2016 and 2015, the Company capitalized $1.3 million, $0.7 million and $0.3 million, respectively, of costs associated with system and website development. Goodwill Our goodwill represents the excess of the cost of businesses acquired over the fair value of the net assets acquired at the date of acquisition. Goodwill is not amortized but rather tested for impairment at least annually by applying a fair‑value based test in accordance with accounting and disclosure requirements for goodwill and other indefinite‑lived intangible assets. This test is performed by us during our fourth fiscal quarter or more frequently if we believe impairment indicators are present. The Company adopted Accounting Standards Update (“ASU”) 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" effective December 30, 2017 which has eliminated Step 2 from the goodwill impairment test. Under this update, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. There was no impairment of goodwill during the years ended December 31, 2017, 2016 and 2015. Long‑Lived Assets Long‑lived assets, excluding goodwill and indefinite‑lived intangibles, to be held and used by the Company are reviewed to determine whether any significant change in the long‑lived asset’s physical condition, a change in industry conditions or a reduction in cash flows associated with the use of the long‑lived asset. If these or other factors indicate the carrying amount of the asset may not be recoverable, the Company determines whether impairment has occurred through the use of an undiscounted cash flow analysis of the asset at the lowest level for which identifiable cash flows exist. If impairment has occurred, the Company recognizes a loss for the difference between the carrying amount and the fair value of the asset. The fair value of the asset is measured using market prices or, in the absence of market prices, an estimate of discounted cash flows. Cash flows are generally discounted at an interest rate commensurate with our weighted average cost of capital for a similar asset. Assets are classified as held for sale when the Company has a plan for disposal of certain assets and those assets meet the held for sale criteria of accounting and disclosure requirement for the impairment or disposal of long‑lived assets. Debt Issuance Costs Costs directly incurred in obtaining long‑term financing, typically bank and attorney fees, are deferred and are amortized over the life of the related loan using the effective interest method. Deferred issuance costs are classified as a direct deduction to the long-term debt in the accompanying consolidated balance sheet. Amortization of debt issuance costs is included in interest expense and totaled $0.9 million, $0.3 million and $0.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. Revenue Recognition We recognize our revenues for the sale of services and products when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, the fee is fixed or determinable and the collectability of the related revenue is reasonably assured. We principally derive revenues from fees for services generated on a project‑by‑project basis. Prior to the commencement of a project, we reach agreement with the client on rates for services based upon the scope of the project, staffing requirements and the level of client involvement. It is our policy to obtain written agreements from new clients prior to performing services. In these agreements, the clients acknowledge that they will pay based upon the amount of time spent on the project or an agreed upon fee structure. Revenues for services rendered are recognized on a time and materials basis or on a fixed‑fee or capped‑fee basis in accordance with accounting and disclosure requirements for revenue recognition. Fees for services that have been performed, but for which we have not invoiced the customers, are recorded as unbilled receivables in the accompanying consolidated balance sheets. Revenues from subscription contracts are recognized ratably over the life of the contract, which is generally one year. These fees are typically billed in advance and included in deferred revenue until recognized. Revenues for time and materials contracts are recognized based on the number of hours worked by our advisors at an agreed upon rate per hour and are recognized in the period in which services are performed. Revenues for time and materials contracts are billed monthly, semimonthly or in accordance with the specific contractual terms of each project. Revenues related to fixed‑fee or capped‑fee contracts are recognized into revenue as value is delivered to the customer. The pattern of revenue recognition for these contracts varies depending on the terms of the individual contracts, and may be recognized proportionally over the term of the contract or deferred until the end of the contract term and recognized when our obligations have been fulfilled with the customer. In instances where substantive acceptance provisions are specified in customer contracts, revenues are deferred until all acceptance criteria have been met. The pattern of revenue recognition for contracts where revenues are recognized proportionally over the term of the contact is based on the proportional performance method of accounting using the ratio of labor hours incurred to estimated total labor hours, which we consider to be the best available indicator of the pattern and timing in which contract obligations are fulfilled. This percentage is multiplied by the contracted dollar amount of the project to determine the amount of revenue to recognize in an accounting period. The contracted amount used in this calculation typically excludes the amount the client pays for reimbursable expenses. There are situations where the number of hours to complete projects may exceed our original estimate as a result of an increase in project scope or unforeseen events. On a regular basis, we review the hours incurred and estimated total labor hours to complete. The results of any revisions in these estimates are reflected in the period in which they become known. We believe we have demonstrated a history of successfully estimating the total labor hours to complete a project. The agreements entered into in connection with a project, whether on a time and materials basis or fixed‑fee or capped‑fee basis, typically allow our clients to terminate early due to breach or for convenience with 30 days’ notice. In the event of termination, the client is contractually required to pay for all time, materials and expenses incurred by us through the effective date of the termination. In addition, from time to time, we enter into agreements with clients that limit our right to enter into business relationships with specific competitors of that client for a specific time period. These provisions typically prohibit us from performing a defined range of services that it might otherwise be willing to perform for potential clients. These provisions are generally limited to six to twelve months and usually apply only to specific employees or the specific project team. We also derive revenues based on negotiating reductions in network costs of companies with the entity’s related service providers and providing other services such as audits of network and communication expenses, and consultation for network architecture. These contracts can be fixed in fees or can be based on the level of savings achieved related to its communications costs. Additionally, these contracts can also have a fixed component and a contingent component that is based on the savings generated by the Company. For these contracts, we record the fixed fees using the milestone method of accounting such that revenues are recorded over the period of the delivery of the services. Revenues that are determined based on a percentage of the ultimate level of savings are considered earned and recorded as revenues when the work has been completed, and the savings and resulting revenues can be determined. We do not defer any costs incurred related to services which revenues are determined based on the ultimate savings. The contract periods range from a few months to in excess of a year. We recognize revenues in advance of billing, those revenues are recorded as unbilled revenues. When we receive cash in advance of completing services or earning revenues, those amounts are recorded as unearned revenues. We also enter into arrangements for the sale of robotics software licenses and related delivery of consulting services at the same time or within close proximity to one another. Such software related multiple-element arrangements include the sale of software licenses, post contract support (“PCS”), and other software related services whereby software license delivery is followed by the subsequent or contemporaneous delivery of the other elements. We apply Accounting Standards Codification (“ASC”) 985-605, Software Revenue Recognition to account for these arrangements. The PCS services are not accounted for as a separate unit of accounting. Since vendor specific objective evidence (“VSOE”) of the license sale, PCS and other consulting service for the multiple element arrangements is not determinable and because licenses of the customer are one year in length, we record revenue for these arrangements in a straight line manner commencing after installation is complete, over the remaining term of the license. Reimbursable Expenditures Amounts billed to customers for reimbursable expenditures are included in revenues and the associated costs incurred by the Company are included in direct costs and expenses for advisors in the accompanying consolidated statement of comprehensive income. Non‑reimbursable amounts are expensed as incurred. Reimbursable expenditures totaled $9.8 million, $8.7 million and $10.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. Direct Costs and Expenses for Advisors Direct costs and expenses for advisors include payroll expenses and advisory fees directly associated with the generation of revenues and other program expenses. Direct costs and expenses for advisors are expensed as incurred. Direct costs and expenses for advisors also include expense accruals for discretionary bonus payments. Bonus accrual levels are adjusted throughout the year based on actual and projected individual and Company performance. Stock‑Based Compensation We grant restricted stock units with a fair value that is determined based on the closing price of our common stock on the date of grant. Such grants generally vest ratably over a four-year period for employees and a three-year period for directors. Stock‑based compensation expense is recognized ratably over the applicable service period. We follow the provisions of accounting and disclosures requirement for share-based payments, requiring the measurement and recognition of all share‑based compensation under the fair value method. Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash investments with high quality financial institutions. The Company extends credit to its customers based upon an evaluation of the customer’s financial condition and credit history and generally does not require collateral. Treasury Stock The Company makes treasury stock purchases in the open market pursuant to the share repurchase program, which was most recently approved by the Board of Directors on March 9, 2016. Treasury stock is recorded on the consolidated balance sheet at cost as a reduction of stockholders’ equity. Shares are released from Treasury at original cost on a first‑in, first‑out basis, with any gain on the sale reflected as an adjustment to additional paid‑in capital. Losses are reflected as an adjustment to additional paid‑in capital to the extent of gains previously recognized, otherwise as an adjustment to retained earnings. Foreign Currency Translation The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the end of the reporting period. Revenue and expense items are translated at average exchange rates for the reporting period. Resulting translation adjustments are included in the accompanying statement of comprehensive income and accompanying statement of stockholders’ equity as a component of Accumulated Other Comprehensive Loss . The functional currency of the Company and its subsidiaries is the respective local currency. The Company has contracts denominated in foreign currencies and therefore, a portion of the Company’s revenues are subject to foreign currency risks. Transactional currency gains and losses that arise from transactions denominated in currencies other than the functional currencies of our operations are recorded in Foreign Currency Transaction Loss in the accompanying consolidated statement of comprehensive income. Fair Value of Financial Instruments The carrying value of the Company’s cash and cash equivalents, receivables, accounts payable, other current liabilities, and accrued interest approximate fair value. Fair value measurements were applied with respect to our nonfinancial assets and liabilities measured on a nonrecurring basis, which would consist of measurements primarily to goodwill, intangible assets and other long‑lived assets, and assets acquired and liabilities assumed in a business combination. 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. During 2017, there were no transfers of our financial assets between Level 1 and Level 2 measures. Our financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following tables summarize assets and liabilities measured at fair value on a recurring basis at the dates indicated: Basis of Fair Value Measurements 12/31/2017 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 303 $ - $ - $ 303 Total $ 303 $ - $ - $ 303 Liabilities: Contingent consideration (1) $ - $ - $ 3,698 $ 3,698 $ - $ - $ 3,698 $ 3,698 Basis of Fair Value Measurements 12/31/2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 22 $ - $ - $ 22 Total $ 22 $ - $ - $ 22 Liabilities: Contingent consideration (1) $ - $ - $ 6,073 $ 6,073 $ - $ - $ 6,073 $ 6,073 (1) The short-term portion is included in “accrued expenses.” The long-term portion is included in “Other liabilities.” 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 14.5% to 27.3%. The Company’s financial instruments include outstanding borrowings of $116.7 million at December 31, 2017 and $125.3 million at December 31, 2016, 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 $116.5 million and $124.9 million at December 31, 2017 and 2016, 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 2.00% to 5.2%. 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 years ended December 31, 2017 and 2016: December 31, 2017 2016 Beginning Balance $ 6,073 $ 4,019 Payment of contingent consideration (3,386) (3,954) Acquisitions — 4,946 Change in fair value of contingent consideration 145 (210) Accretion of contingent consideration 826 1,259 Unrealized gain related to currency translation 40 13 Ending Balance $ 3,698 $ 6,073 Income Taxes We use the asset and liability method to account for income taxes, including recognition of deferred tax assets and liabilities for the anticipated future tax consequences attributable to differences between financial statement amounts and their respective tax basis. We review our deferred tax assets for recovery. A valuation allowance is established when we believe that it is more likely than not that some portion of its deferred tax assets will not be realized. Changes in the valuation allowance from period to period are included in our tax provision in the period of change. For uncertain tax positions, we use a prescribed model for assessing the financial recognition and measurement of all tax positions taken or expected to be taken in its tax returns. The guidance provides clarification on derecognition, classification, interest and penalties, accounting in interim periods, disclosures and transition. Our provision for income taxes also includes the impact of provisions established for uncertain income tax positions, as well as the related interest. In December 2017, the Tax Cuts and Jobs Act (the “TCJ Act”) legislation was enacted. The TCJ Act includes significant changes to the U.S. corporate tax system, including a U.S. federal corporate income tax rate reduction from 35% to 21% and other changes. Accounting Standards Codification 740, Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation was enacted. As such, we have accounted for the tax effects as a result of the enactment of the TCJ Act as of December 31, 2017. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standard Board (the “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. In addition, the guidance requires significantly expanded disclosures around the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We will adopt the standard using the cumulative catch-up transition method. We will also use practical expedients permitted by the standard when applicable. These practical expedients include: · applying the new guidance only to contracts that are not completed as of January 1, 2018; and · expensing the incremental costs to obtain a contract as incurred when the expected amortization period is one year or less. The Company has adopted this guidance effective as of January 1, 2018. In preparation for adoption of the standard, we have reached conclusions on key accounting assessments related to the standard and are in the process of implementing related internal control changes. For software and implementation contracts, revenue recognition on the software component will be accelerated to the point at which the software is installed, while revenue on the implementation component will be recognized over the software implementation period as a percentage of hours incurred to date as compared to the total expected hours. In addition, the software cost will no longer be capitalized and amortized over the term of the software. Instead, the software cost will be expensed once the software is installed. For network contingency contracts with termination for convenience clauses, revenue will be recognized over time due to the existence of provisions for payment for progress incurred to date plus a reasonable profit margin in contracts with termination for convenience clauses. For managed service implementation contracts, revenue will be recognized over time as a percentage of hours incurred to date as compared to the total expected hours of the implementation. Based on our assessment, we concluded that our historical revenue recognition will not significantly change other than for software and implementation contracts, certain network contingency contracts, and certain managed service implementation contracts. Given the foregoing revenue recognition timing changes, adoption of the standard will result in an increase of approximately $3.4 million to retained earnings (gross of tax) due to revenue being accelerated. This increase to retained earnings is partially offset by a decrease of approximately $1.8 million primarily due to software cost being expensed and a related amount of recorded income tax expense. This resulted in a net cumulative catch-up adjustment of approximately $1.6 million increase to retained earnings in Q1 2018. The Company will continue to further evaluate the effect that the adoption of the standard will have on our disclosures as we prepare for our first quarter 2018 Form 10-Q filing. In November 2015, the FASB issued an accounting standard 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 adopted this guidance on a prospective method; therefore, prior periods were not retrospectively adjusted. As a result of this adoption, $1.1 million of net current deferred tax assets are included in the net noncurrent deferred tax assets as of December 31, 2017. The adoption of this guidance in the first quarter of 2017 by the Company did not have a material impact on its results of operations. 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 ASU 2016-09, amended guidance related to employee share-based payment accounting. The new guidance requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled, allows an employer to repurchase more of an employee’s shares than previously allowed for tax withholding purposes without triggering liability accounting, allows a company to make a policy election to account for forfeitures as they occur, and eliminates the requirement that excess tax benefits be realized before companies can recognize them. The new guidance also requires excess tax benefits and tax shortfalls to be presented on the cash flow statement as an operating activity rather than as a financing activity, and clarifies that cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation are to be presented as a financing activity. This guidance is effective prospectively for annual reporting periods, and interim periods therein, beginning after December 15, 2016. We have adopted ASU 2016-09 effective January 1, 2017 on a prospective basis as permitted by the new standard. As a result of this adoption: · Tax expenses of $0.3 million were recognized on stock-based compensation expense were reflected as a component of the provision for income taxes for the year ended December 31, 2017. · We elected to adopt the cash flow presentation of the excess tax benefits prospectively where these benefits are classified along with other income tax cash flows as operating cash flows. · We have elected to continue to estimate t |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2017 | |
ACQUISITIONS | |
ACQUISITION | NOTE 3—ACQUISITION Alsbridge Acquisition On December 1, 2016 (the “Alsbridge Acquisition Date”), a wholly-owned subsidiary of Information Services Group, Inc. (“ISG” or the “Company”) executed an Agreement and Plan of Merger (the “Alsbridge Agreement”), by and among Alsbridge Holdings, Inc., a Delaware corporation (“Alsbridge”), ISG Information Services Group Americas, Inc., a Texas corporation (“Parent”), Gala Acquisition Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Parent (“Acquisition Sub”), and LLR Equity Partners III, L.P., solely in its capacity as representative of the equity holders of Alsbridge, pursuant to which Acquisition Sub merged with and into Alsbridge with Alsbridge becoming an indirect wholly-owned subsidiary of ISG (the “Merger”). Under the terms of the Alsbridge Agreement, Parent paid to the former security holders of Alsbridge merger consideration with an aggregate value equal to approximately $74.0 million, consisting of $56.0 million in cash, an aggregate of $7.0 million in unsecured subordinated promissory notes and 3.2 million shares of ISG’s common stock, par value $0.001 per share (“ISG Stock”) (collectively, the “Merger Consideration”). The stockholders of Alsbridge also could receive contingent consideration in an aggregate amount up to approximately $2.5 million based upon the collection of certain accounts receivable. The fair value of this contingent consideration has been determined to be $1.5 million. Pursuant to the terms of the Alsbridge Agreement, Alsbridge will indemnify the Company for uncertain tax positions and tax liabilities that were incurred by Alsbridge. The Company has recorded these tax liabilities and related indemnification asset in the amount of $2.0 million as of the acquisition date. This was a complementary acquisition which combines ISG research, digital, sourcing and managed services with Alsbridge’s network carrier services, robotic process automation and incremental sourcing advisory capabilities. The combined firm will offer a broader range of services, deeper proprietary data and market intelligence, and more extensive expertise to help enterprise, government, and service and technology provider clients leverage digital technologies to achieve operational excellence. The purchase price has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the Alsbridge Acquisition Date. The purchase price allocation was based upon a valuation completed by third-party valuation specialists using an income approach and estimates and assumptions provided by management. The excess of the purchase price over the net tangible and identifiable intangible assets was recorded as goodwill. The $45.0 million allocated to goodwill is not deductible for tax purposes. The following table summarizes the consideration transferred to acquire Alsbridge and the amounts of identified assets acquired and liabilities assumed as of the Alsbridge Acquisition Date: The final allocable price consists of the following: Cash $ 56,000 Contingent consideration 1,456 Note payable (1) 6,810 Common stock (2) 10,944 Total allocable purchase price $ 75,210 (1) Note discounted at market rate (2) 3,200,000 shares issued at $3.42 per share as part of the Merger. Recognized amounts of identifiable assets acquired and liabilities assumed as of the Alsbridge Acquisition Date: Cash $ 2,674 Accounts and other receivable 16,767 Other assets 5,856 Intangible assets 25,246 Accounts payable (733) Deferred income tax liability of acquired intangible assets (9,593) Accrued expenses and other (9,352) Net assets acquired $ 30,865 Goodwill $ 44,345 Acquisition-related costs associated with this Merger are included in the selling, general and administrative expenses in the Consolidated Statement of Comprehensive Income and totaled $3.5 million for the year ended December 31, 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. During 2017, the Company recorded a $0.6 million adjustment to the purchase price allocation, which was the result of a correction of an error in the pre-acquisition deferred tax calculation. The impact was not material to the Consolidated Statement of Comprehensive Income and the Company did not consider the amount material to prior periods. As such, the correction for this error was made during the year ended December 31, 2017. 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 $ 17,316 years Non-compete 239 years Databases 7,691 years Total intangible assets $ 25,246 The Condensed Consolidated Statements of Comprehensive Income includes the results of the Alsbridge acquisition subsequent to the closing. Alsbridge contributed revenues of $5.5 million and net income of $0.1 million for the year ended December 31, 2016. The following unaudited pro forma financial information for the years ended December 31, 2016 and 2015, assumes that the acquisitions of Alsbridge occurred at the beginning of the periods presented. The unaudited proforma financial information is presented for information purposes only. Such information is based upon the stand alone historical results of each company and does not reflect the actual results that would have been reported had the acquisitions been completed when assumed, nor is it indicative of the future results of operations for the combined enterprise. Year Ended December 31, 2016 2015 (unaudited) Revenue $ 269,161 $ 279,108 Net (loss) income $ (5,528) $ 6,780 |
NET INCOME (LOSS) PER COMMON SH
NET INCOME (LOSS) PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2017 | |
NET INCOME (LOSS) PER COMMON SHARE | |
NET INCOME (LOSS) PER COMMON SHARE | NOTE 4— NET INCOME (LOSS) 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. 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 year ended December 31, 2016 and 2015, 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. The following tables set forth the computation of basic and diluted earnings (loss) per share: Years Ended December 31, 2017 2016 2015 Basic: Net (loss) income attributable to ISG $ (2,130) $ (6,505) $ 4,841 Weighted average common shares 43,025 36,625 37,186 (Loss) earnings per share attributable to ISG $ (0.05) $ (0.18) $ 0.13 Diluted: Net (loss) income attributable to ISG $ (2,130) $ (6,505) $ 4,841 Interest expense of convertible debt, net of tax — — 80 Net (loss) income attributable to ISG, as adjusted $ (2,130) $ (6,505) $ 4,921 Basic weighted average common shares 43,025 36,625 37,186 Potential common shares — — 1,750 Diluted weighted average common shares 43,025 36,625 38,936 Diluted (loss) earnings per share attributable to ISG $ (0.05) $ (0.18) $ 0.13 |
ACCOUNTS AND UNBILLED RECEIVABL
ACCOUNTS AND UNBILLED RECEIVABLES | 12 Months Ended |
Dec. 31, 2017 | |
ACCOUNTS AND UNBILLED RECEIVABLES | |
ACCOUNTS AND UNBILLED RECEIVABLES | NOTE 5—ACCOUNTS AND UNBILLED RECEIVABLES Accounts and unbilled receivables, net of valuation allowance, consisted of the following: December 31, 2017 2016 Accounts receivable $ 53,405 $ 51,264 Unbilled receivables 17,271 13,306 Receivables from related parties 148 92 $ 70,824 $ 64,662 |
FURNITURE, FIXTURES AND EQUIPME
FURNITURE, FIXTURES AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
FURNITURE, FIXTURES AND EQUIPMENT | |
FURNITURE, FIXTURES AND EQUIPMENT | NOTE 6—FURNITURE, FIXTURES AND EQUIPMENT Furniture, fixtures and equipment consisted of the following: Estimated December 31, Useful Lives 2017 2016 Computer hardware, software and other office equipment to years $ 6,250 $ 5,317 Furniture, fixtures and leasehold improvements to years 2,715 2,441 Internal-use software and development costs to years 6,969 5,676 Accumulated depreciation (10,705) (8,645) $ 5,229 $ 4,789 Depreciation expense was $3.2 million, $1.9 million and $1.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 7—INTANGIBLE ASSETS The carrying amount of intangible assets, net of accumulated amortization and impairment charges, as of December 31, 2017 and 2016 consisted of the following: 2017 Gross Carrying Accumulated Currency Net Book Amount Acquisitions Amortization impact Value Amortizable intangibles: Customer relationships $ 73,723 $ — $ (55,844) $ (105) $ 17,774 Noncompete agreements 5,952 — (5,754) 1 199 Software — (1,520) (63) — Backlog — (4,981) (21) — Databases 13,135 — (5,475) (98) 7,562 Trademark and trade names — (1,101) — 149 Intangibles $ 100,645 $ — $ (74,675) $ (286) $ 25,684 2016 Gross Carrying Accumulated Currency Net Book Amount Acquisitions Amortization impact Value Amortizable intangibles: Customer relationships $ $ 19,273 $ (47,303) $ (151) $ Noncompete agreements 282 (5,686) (1) Software — (1,501) (78) Backlog — (4,974) (28) — Databases 7,691 (4,774) (113) Trademark and trade names — (923) — Intangibles $ $ $ $ $ Amortization expense was $9.5 million, $6.0 million and $5.3 million for the years ended December 31, 2017, 2016 and 2015, respectively. The estimated future amortization expense subsequent to December 31, 2017, is as follows: 2018 $ 4,942 2019 3,972 2020 3,397 2021 2,198 2022 1,757 Thereafter 9,418 $ 25,684 |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2017 | |
GOODWILL | |
GOODWILL | NOTE 8—GOODWILL The changes in the carrying amount of goodwill for the year ended December 31, 2017 and 2016 are as follows: 2017 2016 Balance as of January 1 Goodwill $ 216,697 $ 167,972 Foreign currency impact (489) (418) Accumulated impairment losses (130,268) (130,268) Net balance as of January 1 85,940 37,286 Acquisitions — 48,725 Adjustment (643) — Foreign currency impact 322 (71) (321) 48,654 Balance as of December 31 Goodwill 216,697 216,697 Adjustment (643) - Foreign currency impact (167) (489) Accumulated impairment losses (130,268) (130,268) Net balance as of December 31 $ 85,619 $ 85,940 During 2017, the Company recorded a $0.6 million adjustment to the purchase price allocation, which was the result of a correction of an error in the pre-acquisition deferred tax calculation. |
REDEEMABLE NON-CONTROLLING INTE
REDEEMABLE NON-CONTROLLING INTEREST | 12 Months Ended |
Dec. 31, 2017 | |
REDEEMABLE NON-CONTROLLING INTEREST | |
REDEEMABLE NONCONTROLLING INTEREST | NOTE 9—REDEEMABLE NONCONTROLLING INTEREST The following table represents the change during the years ended December 31, 2017 and 2016: December 31, 2017 2016 Beginning balance $ 1,376 $ 939 Net income attributable to non-controlling interest 32 127 Accretion attributable to non-controlling interest (30) 309 Purchase of remaining non-controlling interest (1,377) — Impact of currency translation (1) 1 Ending balance $ — $ 1,376 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2017 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 10—ACCRUED EXPENSES The components of accrued liabilities at December 31, 2017 and 2016 are as follows: December 31, 2017 2016 Accrued payroll and vacation $ 7,741 $ 5,758 Accrued corporate and payroll related taxes 4,657 4,545 Accrued severance and integration 15 1,449 Accrued acquisitions related costs — 1,968 Accrued payable to former Alsbridge's owners — 4,275 Contingent consideration—current 2,365 3,284 Other 6,708 6,692 $ 21,486 $ 27,971 |
FINANCING ARRANGEMENTS AND LONG
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2017 | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | NOTE 11—FINANCING ARRANGEMENTS AND LONG‑TERM DEBT Long‑term debt consists of the following: December 31, 2017 2016 Senior secured credit facility $ 109,500 $ 118,000 Note payable 7,038 7,078 Compass convertible notes 211 211 Debt discount (74) (181) Debt issuance costs (2,338) (3,077) 114,337 122,031 Less current installments on long term debt 15,499 5,546 Long-term debt $ 98,838 $ 116,485 Aggregate annual maturities of debt obligations by calendar year, are as follows: Debt 2018 $ 15,499 2019 8,250 2020 11,000 2021 82,000 $ 116,749 On December 1, 2016, the Company amended and restated its senior secured credit facility to include a $110.0 million term facility and a $30.0 million revolving facility (the “2016 Credit Agreement”). The material terms under the 2016 Credit Agreement are as follows: Each of the term loan facility and revolving credit facility has a maturity date of December 1, 2021 (the “Maturity Date”). 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 four consecutive quarterly installments of $1,375,000 each, that commenced March 31, 2017, followed by eight consecutive quarterly installments in the amount of $2,062,500 each, commencing March 31, 2018, followed by seven consecutive quarterly installments of $2,750,000 each, commencing March 31, 2020 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), transactions 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. · The senior secured credit facility contains customary events of default, including cross-default to other material agreements, judgment default and change of control. On February 10, 2017, as required by the 2016 Credit Agreement, the Company entered into an agreement to cap the interest rate at 4% on the LIBOR component of its borrowings under the term loan facility until December 31, 2019. This interest rate cap was not designated for hedging or speculative purposes. The expense related to this interest rate cap was not material. As of December 31, 2017, the total principal outstanding under the term loan facility and revolving credit facility was $104.5 million and $5.0 million, respectively. The effective interest rate for the term loan facility and revolving credit facility as of December 31, 2017 was 5.2% and 5.1%, respectively. Compass Convertible Notes On January 4, 2011, as part of the consideration for the acquisition of Compass, we issued an aggregate of $6.3 million in convertible notes to Compass (the “Compass Notes”). The Compass Notes had a maturity date of January 4, 2018 with interest 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 Compass Notes. In 2013 and 2016, we prepaid substantial portions of the outstanding principal amount of the Compass Notes. As of December 31, 2017, the total principal outstanding under the remaining Compass Notes was $0.2 million. On January 4, 2018, we paid off the outstanding principal and interest on the Compass Notes. The Compass Notes were subject to transfer restrictions until January 31, 2013. If the price of our common stock on the Nasdaq Global Market exceeded $4 per share for 60 consecutive trading days (the “Trigger Event”), the holder of the Compass Notes could convert all (but not less than all) of the outstanding principal amount of the Compass Notes into shares of our common stock at the rate of 1 share for every $4 in principal amount outstanding. After the Trigger Event, we could prepay all or any portion of the outstanding principal amount of the Compass Notes by giving the holder 30 days written notice. On March 21, 2014, the Trigger Event occurred. As a result, a holder of the Compass Notes could convert all (but not less than all) of the outstanding principal amount of the Compass Notes into shares of our common stock at the rate of 1 share for every $4 in principal amount outstanding. In addition, ISG could elect to prepay all or any portion of the outstanding principal amount of the Compass Notes by giving a holder 30 days written notice; however, such holder had to be given the opportunity to convert the outstanding principal amount into shares as described above. No holder of the Compass Notes had the ability to require cash payment as a result of the Trigger Event. Alsbridge Notes On December 1, 2016, as part of the merger consideration for the acquisition of Alsbridge, we issued an aggregate of $7.0 million in unsecured subordinated promissory notes (the “Alsbridge Notes”). The Alsbridge Notes mature on September 1, 2018 and interest accrues on the principal amount daily at a rate of 2.0% and is payable upon maturity. At any time, the Company may at its option prepay all or any portion of Alsbridge Notes. As of December 31, 2017, the total principal outstanding under the Alsbridge Notes was $7.0 million. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 12—COMMITMENTS AND CONTINGENCIES The Company is involved in certain legal proceedings arising in the ordinary course of business. Management, after review and consultation with legal counsel, believes the ultimate success of parties of the legal proceedings is remote and the ultimate aggregate liability, if any, resulting from such proceedings will not be material to the financial position of the Company. Employee Retirement Plans The Company sponsors a tax-qualified 401(k) plan with a profit sharing feature (the “Savings Plan”). The Savings Plan provides retirement benefits for participating employees. Participating employees can contribute a portion of their eligible salary on a pre-tax basis up to a maximum amount set by the Internal Revenue Code. For 2017, the maximum pre-tax contribution by an employee into the Savings Plan was $18,000, except for specified catch up contributions permitted by participants who are age 50 or older. The Company provides a match for those with less than 2 years of service of 50% of the first 6% that the employee contributes to the plan subject to a cap of $8,100 and for those with 2 or more years of service the company provides a match of 50% of the first 7% that the employee contributes to the plan subject to a cap of $9,450 in 2017. For the years ended December 31, 2016, 2015 and 2014, $1.5 million, $1.3 million and $1.5 million were contributed to the Savings Plan by the Company, respectively. Leases The Company leases its office space under long‑term operating lease agreements which expire at various dates through August 2026. Under the operating leases, the Company pays certain operating expenses relating to the leased property and monthly base rent. Aggregate future minimum payments under noncancelable leases with initial or remaining terms of one year or more consist of the following at December 31, 2017: Operating Leases 2018 $ 2,507 2019 2,656 2020 2,637 2021 1,828 2022 1,233 Thereafter 2,755 Total minimum lease payments $ 13,616 The Company’s rental expense for operating leases was $3.2 million, $2.9 million and $2.9 million, in 2017, 2016 and 2015, respectively. Saugatuck Contingent Consideration As of December 31, 2017, we have recorded a liability of $0.6 million representing the estimated fair value of contingent consideration related to the acquisition of Saugatuck, of which $0.3 million is classified as current and included in accrued expenses on the consolidated balance sheet. Experton Contingent Consideration As of December 31, 2017, the Company has recorded a liability of $0.8 million representing the estimated fair value of contingent consideration related to the acquisition of Experton, of which $0.5 million is classified as current and included in accrued expenses on the consolidated balance sheet. TracePoint Contingent Consideration As of December 31, 2017, the Company has recorded a liability of $2.3 million representing the estimated fair value of contingent consideration related to the acquisition of TracePoint, of which $1.6 million is classified as current and included in accrued expenses on the consolidated balance sheet. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 13—RELATED PARTY TRANSACTIONS From time to time, the Company may have receivables and payables with employees and shareholders. The Company had outstanding receivables from related parties, including shareholders, totaling $0.1 million as of December 31, 2017 and 2016, respectively, and no outstanding payables. These transactions related to personal withholding taxes paid on behalf of expatriate employees. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES | |
INCOME TAXES | NOTE 14—INCOME TAXES The components of income before income taxes for the years ended December 31, 2017, 2016 and 2015 consists of the following: Years Ended December 31, 2017 2016 2015 Domestic $ (6,981) $ (6,840) $ 1,331 Foreign 9,081 1,516 6,812 Total income before income taxes $ 2,100 $ (5,324) $ 8,143 The components of the 2017, 2016 and 2015 income tax provision are as follows: Years Ended December 31, 2017 2016 2015 Current: Federal $ 1,259 $ 1,224 $ 2,934 State 608 206 728 Foreign 3,006 1,528 1,485 Total current provision 4,873 2,958 5,147 Deferred: Federal (268) (1,866) (1,851) State (297) 23 (120) Foreign (110) (61) 13 Total deferred benefit (675) (1,904) (1,958) Total $ 4,198 $ 1,054 $ 3,189 The differences between the effective tax rates reflected in the total provision for income taxes and the U.S. federal statutory rate of 35% for the year ended December 31, 2017, 2016 and 2015 were as follows: Years Ended December 31, 2017 2016 2015 Tax provision computed at 35% $ 735 $ (1,863) $ 2,850 Nondeductible expenses 445 1,131 565 State income taxes, net of federal benefit 94 66 291 Tax impact of foreign operations 258 1,809 (1) 283 Net increase (decrease) of uncertain tax positions (2) 389 (44) (704) Tax law change impact on deferred taxes 1,471 — — Tax law change impact on transition tax 601 — — Other 205 (45) (96) Income tax provision $ 4,198 $ 1,054 $ 3,189 Effective income tax rates 199.9 % (19.8) % 39.2 % (1) Primarily valuation allowance increase related to foreign loss carryover tax benefits of $0.9 million plus foreign tax credit carryover of $0.7 million, and other foreign tax items of $0.2 million. (2) During the years ended December 31, 2017 and December 31, 2015, the Company reversed an unrealized tax benefit liability of $0.5 million and $0.8 million, respectively, established at the time of the acquisition of Alsbridge and Compass. An associated tax indemnity receivable was also reversed and recorded in selling, general and administrative expenses. On December 22, 2017, the TCJ Act was signed into law, making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The Company has calculated its best estimate of the impact of the TCJ Act in its year-end income tax provision in accordance with its understanding of the TCJ Act and guidance available as of the date of this filing. As a result of the enactment of the TCJ Act, the Company has recorded a provisional net expense of $2.1 million during the fourth quarter of 2017. This total tax law impact amount, which is included in the provision for income taxes in the Consolidated Statement of Comprehensive Income, consists of two provisional components: (i) transition tax on unrepatriated foreign earnings is a tax on previously untaxed accumulated and current earnings and profits ("E&P") of the Company's foreign subsidiaries. To determine the amount of the transition tax, the Company must determine, among other factors, the amount of post-1986 E&P of its foreign subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. The transition tax provides the Company additional foreign source income for the company to utilize foreign tax credit carryovers whose tax benefit was unrecognized because it was offset by a valuation allowance. The tax benefit recorded is $0.3 million. The Company continues to record liabilities on its unremitted earnings. As a result of moving to a territorial tax system, deferred withholding and earnings distribution taxes of $0.9 million remains in the Company’s deferred tax liabilities, and (ii) a $1.5 million net expense resulting from the remeasurement of the companies U.S. deferred tax balances. The Tax Act also creates a new Global Intangible Low-Taxed Income (“GILTI”) tax regime. Under GILTI, income earned after December 31, 2017 by certain non-United States subsidiaries must be included currently in the gross income of the United States parent company. Because of the complexity of the new GILTI tax rules and lack of guidance as to how to calculate the tax, we are continuing to evaluate this provision of the Tax Act and its impact on ISG. In accordance with accounting guidance on income taxes, the Company is permitted to make an accounting policy election to either treat taxes due on future inclusions in U.S. taxable income related to GILTI as a current period expense when incurred or to factor such amounts into the Company's measurement of its deferred taxes. The Company has not yet been able to reasonably estimate the effect of this provision of the Tax Act or make an accounting policy election for the accounting treatment whether to record deferred taxes attributable to the GILTI tax. The Company has not recorded any amounts related to potential GILTI tax in the Company’s Financial Statements. Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of U.S. GAAP in the reporting period that includes December 22, 2017 in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJ Act. The guidance in SAB 118 also allows companies to adjust the provisional amounts during a one-year measurement period. All income tax effects recorded in the Company’s Financial Statements as a result of the Tax Reform Act are provisional in accordance with SAB 118, as the Company has not yet completed its evaluation of the impact of the new law. Any subsequent adjustment will be recorded to current tax expense in the quarter of fiscal 2018 when the analysis is complete. Other provisions in the legislation effective for future years, such as interest deductibility and changes to executive compensation plans, may have material implications to the Company’s consolidated financial statements. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities were as follows: December 31, 2017 2016 Current deferred tax asset Compensation related expenses $ — $ 2,550 Valuation allowance for deferred tax assets — (754) Accruals and reserves — 1,359 U.S. net operating loss carryovers — — Total current deferred tax asset (1) — 3,155 Current deferred tax liability Prepaids — (1,155) Other — (270) Total current deferred tax liability (1) — (1,425) Net current deferred tax asset $ — $ 1,730 Noncurrent deferred tax asset Compensation related expenses $ 2,138 $ 617 Foreign currency translation 2,020 4,469 U.S. foreign tax credit carryovers 1,478 2,309 Foreign net operating loss carryovers 6,208 5,764 Accruals and reserves 686 — Other 475 516 Valuation allowance for deferred tax assets (6,543) (6,048) Total noncurrent deferred tax asset 6,462 7,627 Noncurrent deferred tax liability Depreciable assets (277) (344) Prepaids (481) — Intangible assets (2,040) (6,175) Investment in foreign subsidiaries (1,143) (1,504) Foreign earnings distribution taxes (1,119) — Foreign intangibles and reserves (450) — Total noncurrent deferred tax liability (5,510) (8,023) Net noncurrent deferred tax asset/(liability) 952 (396) Net deferred tax asset $ 952 $ 1,334 (1) In November 2015, the FASB issued an accounting standard 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 adopted this guidance on a prospective method; therefore, prior periods were not retrospectively adjusted. Uncertain tax positions Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more‑likely‑than‑not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more‑likely‑than‑not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more‑likely‑than‑not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. It is the Company’s policy to accrue for interest and penalties related to its uncertain tax positions within income tax expense. A tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period is as follows: December 31, 2017 2016 2015 Balance, beginning of year $ 3,033 $ 1,780 $ 2,192 Additions as a result of tax positions taken during the current period 774 73 205 Additions as a result of tax positions taken during a prior period 630 — 270 Additions as a result of acquisitions — 1,233 — Reductions as a result of settlement with tax authorities — (9) — Reductions as a result of lapse of statute (387) (44) (887) Balance, end of year $ 4,050 $ 3,033 $ 1,780 We do not expect our unrecognized tax benefits to significantly change in the next twelve months. The Company has recognized through income tax expense approximately $1.0 million of interest and penalties related to uncertain tax positions. The amount of unrecognized tax benefit, if recognized, that would impact the effective tax rate is $4.1 million. With few exceptions, the Company is no longer subject to U.S. federal, state, local, or non‑U.S. income tax examinations by tax authorities for years before 2011. |
STOCK BASED COMPENSATION PLANS
STOCK BASED COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2017 | |
STOCK BASED COMPENSATION PLANS | |
STOCK BASED COMPENSATION PLANS | NOTE 15—STOCK‑BASED COMPENSATION PLANS The Amended and Restated 2007 Equity and Incentive Award Plan (“Incentive Plan”) and Amended and Restated 2007 Employee Stock Purchase Plan (“ESPP”) were approved by the Company’s stockholders at our 2014 annual meeting. Subject to the terms of the Incentive Plan, the Incentive Plan authorizes the grant of awards, which awards may be made in the form of (i) nonqualified stock options; (ii) stock options intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code (stock options described in clause (i) and (ii), “options”); (iii) stock appreciation rights (“SARs”); (iv) restricted stock and/or restricted stock units; (v) other stock based awards; (vi) performance-based awards, which are equity awards or incentive awards intended to qualify for full tax deductibility by the company under Code Section 162 (m); and (vii) incentive awards, a cash-denominated award earnable by achievement of performance goals. The issuance of shares or the payment of cash upon the exercise of an award or in consideration of the cancellation or termination of an award shall reduce the total number of shares available under the Incentive Plan, as applicable. The provisions of each award will vary based on the type of award granted and will be specified by the Compensation Committee of the Board of Directors. Those awards which are based on a specific contractual term will be granted with a term not to exceed ten years. The SARs granted under the Incentive Plan are granted with an exercise price equal to the fair market value of the Common Shares at the time the SARs are granted. At the 2017 Annual Meeting, our stockholders approved an amendment to the Incentive Plan to increase the number of shares of common stock available for issuance under the Incentive Plan by 5,300,000 shares (the “Incentive Plan Amendment”). As of December 31, 2017, there were 5,614,838 and 652,740 shares available for grant under the amended and restated Incentive Plan and ESPP, respectively. The Company recognized $7.4 million, $7.0 million and $5.0 million in employee stock‑based compensation expense during the years ended December 31, 2017, 2016 and 2015, respectively. This expense was recorded in selling, general and administrative in the consolidated statement of comprehensive income. Restricted Share Awards/Units The Incentive Plan provides for the granting of restricted share awards (“RSA”) or restricted share units (“RSU”), the vesting of which is subject to conditions and limitations established at the time of the grant. Upon the grant of an RSA, the participant has the rights of a shareholder, including but not limited to the right to vote such shares and the right to receive any dividends paid on such shares. Recipients of RSU awards will not have the rights of a shareholder of the Company until such date as the Common Shares are issued or transferred to the recipient. If the employee retires (at the normal retirement age stated in the applicable retirement plan or applicable law, if there is a mandatory retirement age), the restricted shares continue to vest on the same schedule as if the employee remained employed with the Company. Upon a change in control, or upon a termination of employment due to employee’s death or permanent disability, the restricted shares become 100% vested. Dividends accrue and will be paid if and when the restricted shares vest. The Company also granted RSUs to specific employees which have the following characteristics: Performance‑Based RSU Vesting (EBITDA): Provided the employee continues to be employed through specific date set forth in the award, the RSUs will vest on such date if specific financial performance is met, otherwise the RSUs will be forfeited. Time‑Based RSU Vesting: So long as the employee continues to be employed through the fourth anniversary of the grant date, the RSUs will become 100% vested on such date. If an employee’s employment is terminated (i) at any time during the vesting period due to the employee’s death, disability or retirement prior to the applicable vesting date or (ii) without cause by the Company after 50% of the relevant period has elapsed, then the RSUs will vest pro rata based on the period of time worked relative to such period. However, no shares will be distributed until the applicable pro rata vesting date (and, in the case of the Performance‑Based RSUs, only if and to the extent that the performance target is achieved). In all other terminations occurring prior to the applicable vesting date, the RSUs will expire. Pursuant to the terms of the Incentive Plan, in the event of a change in control, the Compensation Committee of the Board of Directors may accelerate vesting of the outstanding awards of RSUs then held by participants. All RSUs will be payable in shares of the Company’s common stock immediately upon vesting. No dividend equivalents will be paid with respect to any RSUs. As part of the Incentive Plan Amendment, if approved by our stockholders, dividends/dividend equivalents may be paid or credited on other stock-based awards (such as restricted stock units), but those dividends/dividend equivalents must be subject to the same vesting (or more stringent vesting) than the vesting applicable to the underlying awards. The fair value of RSAs and RSUs is determined based on the closing price of the Company’s shares on the grant date. The total fair value is amortized to expense on a straight‑line basis over the vesting period. There has been no activities for RSAs since December 31, 2011 and none are currently outstanding. A summary of the status of the Company’s RSUs issued under its Incentive Plan as of December 31, 2017 and changes during the year then ended, is presented below: Weighted- Average Grant Date RSU Fair Value Non-vested at December 31, 2014 2,636 $ 3.73 Granted 1,881 $ 3.90 Vested (1,099) $ 3.29 Forfeited (250) $ 3.28 Non-vested at December 31, 2015 3,168 $ 4.02 Granted 2,129 $ 3.79 Vested (1,464) $ 3.96 Forfeited (126) $ 3.88 Non-vested at December 31, 2016 3,707 $ 3.91 Granted 2,778 $ 3.60 Vested (1,781) $ 3.90 Forfeited (548) $ 3.83 Non-vested at December 31, 2017 4,156 $ 3.72 The total fair value of RSUs vested during the years ended December 31, 2017, 2016 and 2015 was $6.9 million $5.8 million and $3.6 million, respectively. As of December 31, 2017, there was $8.8 million of unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted‑average period of 2.2 years. Stock Appreciation Rights The Compensation Committee may grant (i) a stock appreciation right independent of an option or (ii) a stock appreciation right in connection with an option, or a portion thereof. A stock appreciation right granted pursuant to clause (ii) of the preceding sentence (A) may be granted at the time the related option is granted or at any time prior to the exercise or cancellation of the related option, (B) shall cover the same number of shares covered by an option (or such lesser number of shares as the Compensation Committee may determine) and (C) shall be subject to the same terms and conditions as such option except for such additional limitations as are contemplated above (or such additional limitations as may be included in an award agreement). SARs granted pursuant to the Incentive Plan are granted with an exercise price equal to the fair market value of the Common Shares at the time the SARs are granted. Pursuant to the applicable award agreements, the SARs vest and become exercisable with respect to 25% of the shares subject to the SARs on the first four anniversaries of the grant date, so long as the employee remains employed with the Company on each such date. If the employee’s employment with the Company is terminated as a result of the employee’s death or disability, all unvested SARs will be fully vested. If the employee retires, the SARs will continue to vest on the same schedule as if the employee had remained employed with the Company. Any vested SARs will expire upon the earliest to occur of the following: (i) the tenth anniversary of the grant date; (ii) one year following the date of the employee’s termination of services as a result of death or permanent disability; (iii) 90 days following the fourth anniversary of the grant date, following the participant’s retirement; (iv) 30 days following the date of the participant’s termination of employment for any reason (other than as a result of death, disability or retirement); and (v) immediately upon a termination for cause. SARs will be settled in the form of shares of the Company’s common stock upon exercise. A summary of the status of the Company’s SARs issued under its Incentive Plan is presented below: Weighted-Average Weighted-Average Remaining Aggregate Exercise Contractual Intrinsic SARs Price Life Value (in years) Outstanding at December 31, 2014 106 $ 5.78 3.3 $ 39 Granted — $ — $ — Exercised (25) $ 3.17 $ 32 Forfeited (34) $ 7.20 $ — Outstanding at December 31, 2015 47 $ 6.13 2.2 $ 6 Granted — $ — $ — Exercised — $ — $ — Forfeited — $ — $ — Outstanding at December 31, 2016 47 $ 6.13 1.2 $ 6 Granted — $ — $ — Exercised — $ — $ — Forfeited (34) $ 7.20 $ — Outstanding at December 31, 2017 13 $ 3.18 0.9 $ 12 Vested and expected to vest at December 31, 2017 13 $ 3.18 0.9 $ 12 Exercisable at December 31, 2017 13 $ 3.18 0.9 $ 12 The Company did not grant any SAR during the years end December 31, 2017, 2016 and 2015, respectively. The total fair value of the SARs vested was $0 during the years ended December 31, 2017, 2016 and 2015. As of December 31, 2017, all of the compensation costs related to the Company’s vested SARs have been recognized. Employee Stock Purchase Plan The Company uses the Black‑Scholes option pricing model to estimate the fair value of shares expected to be issued under the Company’s employee stock purchase plan. The ESPP provides that a total of 1.2 million shares of Common Stock are reserved for issuance under the plan. The ESPP, which is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code, is implemented utilizing three-month offerings with purchases occurring at three-month intervals. The ESPP administration is overseen by the Company’s Compensation Committee. Employees are eligible to participate if they are employed by the Company for at least 20 hours per week and more than five months in a calendar year. The ESPP permits eligible employees to purchase Common Stock through payroll deductions, ranging from one to ten percent of their eligible earnings subject to IRS regulated cap of $25,000. The price of Common Stock purchased under the ESPP is 90% of the fair market value of the Common Stock on the applicable purchase date. Employees may end their participation in an offering at any time during the offering period, and participation ends automatically upon termination of employment. The Compensation Committee may at any time amend or terminate the ESPP, except that no such amendment or termination may adversely affect shares previously granted under the ESPP. The Company may issue new shares for the ESPP using treasury shares or newly issued shares. For the year ended December 31, 2017, the Company issued 213,134 shares for the ESPP. There were 652,740 shares available for purchase at December 31, 2017 under the ESPP. |
SEGMENT AND GEOGRAPHICAL INFORM
SEGMENT AND GEOGRAPHICAL INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
SEGMENT AND GEOGRAPHICAL INFORMATION | |
SEGMENT AND GEOGRAPHICAL INFORMATION | NOTE 16—SEGMENT AND GEOGRAPHICAL INFORMATION The Company operates in one segment, fact‑based sourcing advisory services. The Company operates principally in the Americas, Europe, and Asia Pacific. The Company’s foreign operations are subject to local government regulations and to the economic and political uncertainties of those areas. Geographical information for the segment is as follows: Years Ended December 31, 2017 2016 2015 Revenues Americas (1) $ 161,845 $ 116,566 $ 108,925 Europe (2) 82,910 75,149 77,781 Asia Pacific (3) 24,799 24,784 22,534 $ 269,554 $ 216,499 $ 209,240 Fixed assets Americas $ 3,495 $ 3,246 $ 1,907 Europe 1,390 1,237 955 Asia Pacific 344 306 159 $ 5,229 $ 4,789 $ 3,021 (1) Substantially all relates to operations in the United States. (2) Includes revenues from operations in Germany of $40.0 million, $33.5 million and $29.4 million in 2017, 2016 and 2015, respectively. Includes revenues from operations in the United Kingdom of $14.8 million, $12.5 million and $21.2 million in 2017, 2016 and 2015, respectively. (3) Includes revenues from operations in Australia of $18.6 million, $19.1 million and $17.3 million in 2017, 2016 and 2015, respectively. 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 or any other measure or metric, other than consolidated, for the purposes of making operating decisions or allocating resources. |
UNAUDITED QUARTERLY INFORMATION
UNAUDITED QUARTERLY INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
UNAUDITED QUARTERLY INFORMATION | |
UNAUDITED QUARTERLY INFORMATION | NOTE 17—UNAUDITED QUARTERLY INFORMATION Quarters Ended March 31, June 30, September 30, December 31, 2017 2017 2017 2017 Fiscal 2017: Net sales $ 66,555 $ 68,038 $ 68,349 $ 66,612 Gross profit $ 25,869 $ 27,785 $ 30,135 $ 29,135 Operating income $ 1,181 $ 546 $ 3,474 $ 3,956 Other expense, net $ (1,744) $ (1,774) $ (1,812) $ (1,727) (Loss) income from operations $ (563) $ (1,228) $ 1,662 $ 2,229 Net (loss) income attributable to ISG $ (606) $ (302) $ 1,428 $ (2,650) Basic (loss) earnings per share attributable to ISG $ (0.01) $ (0.01) $ 0.03 $ (0.06) Diluted (loss) earnings per share attributable to ISG $ (0.01) $ (0.01) $ 0.03 $ (0.06) Basic weighted average common shares attributable to ISG 42,316 43,058 43,305 43,423 Diluted weighted average common shares attributable to ISG 42,316 43,058 44,658 43,423 d w Quarters Ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016 Fiscal 2016: Net sales $ 49,929 $ 60,354 $ 51,929 $ 54,287 Gross profit $ 18,561 $ 24,248 $ 20,970 $ 20,361 Operating income $ 132 $ 3,217 $ 2,616 $ (8,557) Other expense, net $ (912) $ (320) $ (634) $ (866) (Loss) income from operations $ (780) $ 2,897 $ 1,982 $ (9,423) Net (loss) income attributable to ISG $ (699) $ 1,612 $ 732 $ (8,150) Basic (loss) earnings per share attributable to ISG $ (0.02) $ 0.05 $ 0.02 $ (0.22) Diluted (loss) earnings per share attributable to ISG $ (0.02) $ 0.04 $ 0.02 $ (0.22) Basic weighted average common shares attributable to ISG 37,340 35,609 35,707 37,842 Diluted weighted average common shares attributable to ISG 37,340 36,719 36,873 37,842 |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2017 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | INFORMATION SERVICES GROUP, INC. SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (in thousands) Balance at Charges to Balance at Beginning Costs and Additions/ End of Description of Period Expenses (Deductions) Period Year ended December 31, 2017 Allowance for doubtful accounts $ 494 351 (342) $ 503 Allowance for tax valuation $ 6,802 572 (831) $ 6,543 Year ended December 31, 2016 Allowance for doubtful accounts $ 415 34 45 $ 494 Allowance for tax valuation $ 5,146 1,497 159 $ 6,802 Year ended December 31, 2015 Allowance for doubtful accounts $ 234 174 7 $ 415 Allowance for tax valuation $ 5,694 (171) (377) $ 5,146 |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly‑owned subsidiaries. These consolidated financial statements and footnotes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. Unless the context requires otherwise, references to the Company include ISG and its consolidated subsidiaries. |
Reclassification | Reclassification Certain prior years’ amounts have been reclassified to conform to the current year’s presentation, including reclassification to the Condensed Consolidated Statements of Cash Flows due to the adoption of the share-based payment accounting standard in the first quarter of 2017 as further described below under Recently Issued Accounting Pronouncements. This reclassification had no impact on our results of operations, financial position, or changes in shareholders’ equity. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP 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 and definite‑lived intangible assets, depreciation expense, fair value assumptions in analyzing goodwill and intangible asset impairments, income taxes and deferred tax asset valuation, and the valuation of stock based compensation. |
Business Combinations | Business Combinations We have acquired businesses critical to the Company’s long‑term growth strategy. Results of operations for acquisitions are included in the accompanying consolidated statement of comprehensive income from the date of acquisition. Acquisitions are accounted for using the purchase method of accounting and the purchase price is allocated to the net assets acquired based upon their estimated fair values at the date of acquisition. The excess of the purchase price over the net assets was recorded as goodwill. Acquisition-related costs are expensed as incurred and recorded in selling, general and administrative expenses. Final valuations of assets and liabilities are obtained and recorded within one year from the date of the acquisition. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents, including certain money market accounts. The Company principally maintains its cash in money market and bank deposit accounts in the United States of America which typically exceed applicable insurance limits. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. |
Restricted Cash | Restricted Cash Restricted cash consists of cash and cash equivalents which the Company has committed to fulfill certain obligations and are not available for general corporate purposes. |
Accounts and Unbilled Receivables and Allowance for Doubtful Accounts | Accounts and Unbilled Receivables and Allowance for Doubtful Accounts Our trade receivables primarily consist of amounts due for services already performed via fixed fee or time and materials arrangements. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of clients to pay fees or for disputes that affect its ability to fully collect billed accounts receivable. The allowance for these risks is prepared by reviewing the status of all accounts and recording reserves on a specific identification method based on previous experiences and historical bad debts. However, our actual experience may vary significantly from these estimates. If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay their invoices, we may need to record additional allowances or write‑offs in future periods. To the extent the provision relates to a client’s inability or unwillingness to make required payments, the provision is recorded as bad debt expense, which is classified within selling, general and administrative expense in the accompanying consolidated statement of comprehensive income. The provision for unbilled services is recorded as a reduction to revenues to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. |
Prepaid Expenses and Other Assets | Prepaid Expenses and Other Assets Prepaid expenses and other assets consist primarily of prepaid expenses for insurance, conferences and deposits for facilities, programs and promotion items. |
Furniture, Fixtures and Equipment, net | Furniture, Fixtures and Equipment, net Furniture, fixtures and equipment is recorded at cost. Depreciation is computed by applying the straight‑line method over the estimated useful life of the assets, which ranges from three to five years. Leasehold improvements are depreciated over the lesser of the useful life of the underlying asset or the lease term, which generally range from three to five years. Expenditures for renewals and betterments are capitalized. Repairs and maintenance are charged to expense as incurred. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts and any associated gain or loss thereon is reflected in the accompanying consolidated statement of comprehensive income. |
Internal-Use Software and Website Development Costs | Internal‑Use Software and Website Development Costs The Company capitalizes internal‑use software and website development costs and records these amounts within furniture, fixtures and equipment. Accounting standards require that certain costs related to the development or purchase of internal‑use software and systems as well as the costs incurred in the application development stage related to its website be capitalized and amortized over the estimated useful life of the software or system. They also require that costs related to the preliminary project stage, data conversion and post implementation/operation stage of an internal‑use software development project be expensed as incurred. During the years ended December 31, 2017, 2016 and 2015, the Company capitalized $1.3 million, $0.7 million and $0.3 million, respectively, of costs associated with system and website development. |
Goodwill | Goodwill Our goodwill represents the excess of the cost of businesses acquired over the fair value of the net assets acquired at the date of acquisition. Goodwill is not amortized but rather tested for impairment at least annually by applying a fair‑value based test in accordance with accounting and disclosure requirements for goodwill and other indefinite‑lived intangible assets. This test is performed by us during our fourth fiscal quarter or more frequently if we believe impairment indicators are present. The Company adopted Accounting Standards Update (“ASU”) 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" effective December 30, 2017 which has eliminated Step 2 from the goodwill impairment test. Under this update, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. There was no impairment of goodwill during the years ended December 31, 2017, 2016 and 2015. |
Long-Lived Assets | Long‑Lived Assets Long‑lived assets, excluding goodwill and indefinite‑lived intangibles, to be held and used by the Company are reviewed to determine whether any significant change in the long‑lived asset’s physical condition, a change in industry conditions or a reduction in cash flows associated with the use of the long‑lived asset. If these or other factors indicate the carrying amount of the asset may not be recoverable, the Company determines whether impairment has occurred through the use of an undiscounted cash flow analysis of the asset at the lowest level for which identifiable cash flows exist. If impairment has occurred, the Company recognizes a loss for the difference between the carrying amount and the fair value of the asset. The fair value of the asset is measured using market prices or, in the absence of market prices, an estimate of discounted cash flows. Cash flows are generally discounted at an interest rate commensurate with our weighted average cost of capital for a similar asset. Assets are classified as held for sale when the Company has a plan for disposal of certain assets and those assets meet the held for sale criteria of accounting and disclosure requirement for the impairment or disposal of long‑lived assets. |
Debt Issuance Costs | Debt Issuance Costs Costs directly incurred in obtaining long‑term financing, typically bank and attorney fees, are deferred and are amortized over the life of the related loan using the effective interest method. Deferred issuance costs are classified as a direct deduction to the long-term debt in the accompanying consolidated balance sheet. Amortization of debt issuance costs is included in interest expense and totaled $0.9 million, $0.3 million and $0.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. |
Revenue Recognition | Revenue Recognition We recognize our revenues for the sale of services and products when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, the fee is fixed or determinable and the collectability of the related revenue is reasonably assured. We principally derive revenues from fees for services generated on a project‑by‑project basis. Prior to the commencement of a project, we reach agreement with the client on rates for services based upon the scope of the project, staffing requirements and the level of client involvement. It is our policy to obtain written agreements from new clients prior to performing services. In these agreements, the clients acknowledge that they will pay based upon the amount of time spent on the project or an agreed upon fee structure. Revenues for services rendered are recognized on a time and materials basis or on a fixed‑fee or capped‑fee basis in accordance with accounting and disclosure requirements for revenue recognition. Fees for services that have been performed, but for which we have not invoiced the customers, are recorded as unbilled receivables in the accompanying consolidated balance sheets. Revenues from subscription contracts are recognized ratably over the life of the contract, which is generally one year. These fees are typically billed in advance and included in deferred revenue until recognized. Revenues for time and materials contracts are recognized based on the number of hours worked by our advisors at an agreed upon rate per hour and are recognized in the period in which services are performed. Revenues for time and materials contracts are billed monthly, semimonthly or in accordance with the specific contractual terms of each project. Revenues related to fixed‑fee or capped‑fee contracts are recognized into revenue as value is delivered to the customer. The pattern of revenue recognition for these contracts varies depending on the terms of the individual contracts, and may be recognized proportionally over the term of the contract or deferred until the end of the contract term and recognized when our obligations have been fulfilled with the customer. In instances where substantive acceptance provisions are specified in customer contracts, revenues are deferred until all acceptance criteria have been met. The pattern of revenue recognition for contracts where revenues are recognized proportionally over the term of the contact is based on the proportional performance method of accounting using the ratio of labor hours incurred to estimated total labor hours, which we consider to be the best available indicator of the pattern and timing in which contract obligations are fulfilled. This percentage is multiplied by the contracted dollar amount of the project to determine the amount of revenue to recognize in an accounting period. The contracted amount used in this calculation typically excludes the amount the client pays for reimbursable expenses. There are situations where the number of hours to complete projects may exceed our original estimate as a result of an increase in project scope or unforeseen events. On a regular basis, we review the hours incurred and estimated total labor hours to complete. The results of any revisions in these estimates are reflected in the period in which they become known. We believe we have demonstrated a history of successfully estimating the total labor hours to complete a project. The agreements entered into in connection with a project, whether on a time and materials basis or fixed‑fee or capped‑fee basis, typically allow our clients to terminate early due to breach or for convenience with 30 days’ notice. In the event of termination, the client is contractually required to pay for all time, materials and expenses incurred by us through the effective date of the termination. In addition, from time to time, we enter into agreements with clients that limit our right to enter into business relationships with specific competitors of that client for a specific time period. These provisions typically prohibit us from performing a defined range of services that it might otherwise be willing to perform for potential clients. These provisions are generally limited to six to twelve months and usually apply only to specific employees or the specific project team. We also derive revenues based on negotiating reductions in network costs of companies with the entity’s related service providers and providing other services such as audits of network and communication expenses, and consultation for network architecture. These contracts can be fixed in fees or can be based on the level of savings achieved related to its communications costs. Additionally, these contracts can also have a fixed component and a contingent component that is based on the savings generated by the Company. For these contracts, we record the fixed fees using the milestone method of accounting such that revenues are recorded over the period of the delivery of the services. Revenues that are determined based on a percentage of the ultimate level of savings are considered earned and recorded as revenues when the work has been completed, and the savings and resulting revenues can be determined. We do not defer any costs incurred related to services which revenues are determined based on the ultimate savings. The contract periods range from a few months to in excess of a year. We recognize revenues in advance of billing, those revenues are recorded as unbilled revenues. When we receive cash in advance of completing services or earning revenues, those amounts are recorded as unearned revenues. We also enter into arrangements for the sale of robotics software licenses and related delivery of consulting services at the same time or within close proximity to one another. Such software related multiple-element arrangements include the sale of software licenses, post contract support (“PCS”), and other software related services whereby software license delivery is followed by the subsequent or contemporaneous delivery of the other elements. We apply Accounting Standards Codification (“ASC”) 985-605, Software Revenue Recognition to account for these arrangements. The PCS services are not accounted for as a separate unit of accounting. Since vendor specific objective evidence (“VSOE”) of the license sale, PCS and other consulting service for the multiple element arrangements is not determinable and because licenses of the customer are one year in length, we record revenue for these arrangements in a straight line manner commencing after installation is complete, over the remaining term of the license. |
Reimbursable Expenditures | Reimbursable Expenditures Amounts billed to customers for reimbursable expenditures are included in revenues and the associated costs incurred by the Company are included in direct costs and expenses for advisors in the accompanying consolidated statement of comprehensive income. Non‑reimbursable amounts are expensed as incurred. Reimbursable expenditures totaled $9.8 million, $8.7 million and $10.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. |
Direct Costs and Expenses for Advisors | Direct Costs and Expenses for Advisors Direct costs and expenses for advisors include payroll expenses and advisory fees directly associated with the generation of revenues and other program expenses. Direct costs and expenses for advisors are expensed as incurred. Direct costs and expenses for advisors also include expense accruals for discretionary bonus payments. Bonus accrual levels are adjusted throughout the year based on actual and projected individual and Company performance. |
Stock-Based Compensation | Stock‑Based Compensation We grant restricted stock units with a fair value that is determined based on the closing price of our common stock on the date of grant. Such grants generally vest ratably over a four-year period for employees and a three-year period for directors. Stock‑based compensation expense is recognized ratably over the applicable service period. We follow the provisions of accounting and disclosures requirement for share-based payments, requiring the measurement and recognition of all share‑based compensation under the fair value method. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash investments with high quality financial institutions. The Company extends credit to its customers based upon an evaluation of the customer’s financial condition and credit history and generally does not require collateral. |
Treasury Stock | Treasury Stock The Company makes treasury stock purchases in the open market pursuant to the share repurchase program, which was most recently approved by the Board of Directors on March 9, 2016. Treasury stock is recorded on the consolidated balance sheet at cost as a reduction of stockholders’ equity. Shares are released from Treasury at original cost on a first‑in, first‑out basis, with any gain on the sale reflected as an adjustment to additional paid‑in capital. Losses are reflected as an adjustment to additional paid‑in capital to the extent of gains previously recognized, otherwise as an adjustment to retained earnings. |
Foreign Currency Translation | Foreign Currency Translation The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the end of the reporting period. Revenue and expense items are translated at average exchange rates for the reporting period. Resulting translation adjustments are included in the accompanying statement of comprehensive income and accompanying statement of stockholders’ equity as a component of Accumulated Other Comprehensive Loss . The functional currency of the Company and its subsidiaries is the respective local currency. The Company has contracts denominated in foreign currencies and therefore, a portion of the Company’s revenues are subject to foreign currency risks. Transactional currency gains and losses that arise from transactions denominated in currencies other than the functional currencies of our operations are recorded in Foreign Currency Transaction Loss in the accompanying consolidated statement of comprehensive income. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value of the Company’s cash and cash equivalents, receivables, accounts payable, other current liabilities, and accrued interest approximate fair value. Fair value measurements were applied with respect to our nonfinancial assets and liabilities measured on a nonrecurring basis, which would consist of measurements primarily to goodwill, intangible assets and other long‑lived assets, and assets acquired and liabilities assumed in a business combination. 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. During 2017, there were no transfers of our financial assets between Level 1 and Level 2 measures. Our financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following tables summarize assets and liabilities measured at fair value on a recurring basis at the dates indicated: Basis of Fair Value Measurements 12/31/2017 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 303 $ - $ - $ 303 Total $ 303 $ - $ - $ 303 Liabilities: Contingent consideration (1) $ - $ - $ 3,698 $ 3,698 $ - $ - $ 3,698 $ 3,698 Basis of Fair Value Measurements 12/31/2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 22 $ - $ - $ 22 Total $ 22 $ - $ - $ 22 Liabilities: Contingent consideration (1) $ - $ - $ 6,073 $ 6,073 $ - $ - $ 6,073 $ 6,073 (1) The short-term portion is included in “accrued expenses.” The long-term portion is included in “Other liabilities.” 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 14.5% to 27.3%. The Company’s financial instruments include outstanding borrowings of $116.7 million at December 31, 2017 and $125.3 million at December 31, 2016, 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 $116.5 million and $124.9 million at December 31, 2017 and 2016, 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 2.00% to 5.2%. 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 years ended December 31, 2017 and 2016: December 31, 2017 2016 Beginning Balance $ 6,073 $ 4,019 Payment of contingent consideration (3,386) (3,954) Acquisitions — 4,946 Change in fair value of contingent consideration 145 (210) Accretion of contingent consideration 826 1,259 Unrealized gain related to currency translation 40 13 Ending Balance $ 3,698 $ 6,073 |
Income Taxes | Income Taxes We use the asset and liability method to account for income taxes, including recognition of deferred tax assets and liabilities for the anticipated future tax consequences attributable to differences between financial statement amounts and their respective tax basis. We review our deferred tax assets for recovery. A valuation allowance is established when we believe that it is more likely than not that some portion of its deferred tax assets will not be realized. Changes in the valuation allowance from period to period are included in our tax provision in the period of change. For uncertain tax positions, we use a prescribed model for assessing the financial recognition and measurement of all tax positions taken or expected to be taken in its tax returns. The guidance provides clarification on derecognition, classification, interest and penalties, accounting in interim periods, disclosures and transition. Our provision for income taxes also includes the impact of provisions established for uncertain income tax positions, as well as the related interest. In December 2017, the Tax Cuts and Jobs Act (the “TCJ Act”) legislation was enacted. The TCJ Act includes significant changes to the U.S. corporate tax system, including a U.S. federal corporate income tax rate reduction from 35% to 21% and other changes. Accounting Standards Codification 740, Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation was enacted. As such, we have accounted for the tax effects as a result of the enactment of the TCJ Act as of December 31, 2017. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standard Board (the “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. In addition, the guidance requires significantly expanded disclosures around the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We will adopt the standard using the cumulative catch-up transition method. We will also use practical expedients permitted by the standard when applicable. These practical expedients include: · applying the new guidance only to contracts that are not completed as of January 1, 2018; and · expensing the incremental costs to obtain a contract as incurred when the expected amortization period is one year or less. The Company has adopted this guidance effective as of January 1, 2018. In preparation for adoption of the standard, we have reached conclusions on key accounting assessments related to the standard and are in the process of implementing related internal control changes. For software and implementation contracts, revenue recognition on the software component will be accelerated to the point at which the software is installed, while revenue on the implementation component will be recognized over the software implementation period as a percentage of hours incurred to date as compared to the total expected hours. In addition, the software cost will no longer be capitalized and amortized over the term of the software. Instead, the software cost will be expensed once the software is installed. For network contingency contracts with termination for convenience clauses, revenue will be recognized over time due to the existence of provisions for payment for progress incurred to date plus a reasonable profit margin in contracts with termination for convenience clauses. For managed service implementation contracts, revenue will be recognized over time as a percentage of hours incurred to date as compared to the total expected hours of the implementation. Based on our assessment, we concluded that our historical revenue recognition will not significantly change other than for software and implementation contracts, certain network contingency contracts, and certain managed service implementation contracts. Given the foregoing revenue recognition timing changes, adoption of the standard will result in an increase of approximately $3.4 million to retained earnings (gross of tax) due to revenue being accelerated. This increase to retained earnings is partially offset by a decrease of approximately $1.8 million primarily due to software cost being expensed and a related amount of recorded income tax expense. This resulted in a net cumulative catch-up adjustment of approximately $1.6 million increase to retained earnings in Q1 2018. The Company will continue to further evaluate the effect that the adoption of the standard will have on our disclosures as we prepare for our first quarter 2018 Form 10-Q filing. In November 2015, the FASB issued an accounting standard 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 adopted this guidance on a prospective method; therefore, prior periods were not retrospectively adjusted. As a result of this adoption, $1.1 million of net current deferred tax assets are included in the net noncurrent deferred tax assets as of December 31, 2017. The adoption of this guidance in the first quarter of 2017 by the Company did not have a material impact on its results of operations. 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 ASU 2016-09, amended guidance related to employee share-based payment accounting. The new guidance requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled, allows an employer to repurchase more of an employee’s shares than previously allowed for tax withholding purposes without triggering liability accounting, allows a company to make a policy election to account for forfeitures as they occur, and eliminates the requirement that excess tax benefits be realized before companies can recognize them. The new guidance also requires excess tax benefits and tax shortfalls to be presented on the cash flow statement as an operating activity rather than as a financing activity, and clarifies that cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation are to be presented as a financing activity. This guidance is effective prospectively for annual reporting periods, and interim periods therein, beginning after December 15, 2016. We have adopted ASU 2016-09 effective January 1, 2017 on a prospective basis as permitted by the new standard. As a result of this adoption: · Tax expenses of $0.3 million were recognized on stock-based compensation expense were reflected as a component of the provision for income taxes for the year ended December 31, 2017. · We elected to adopt the cash flow presentation of the excess tax benefits prospectively where these benefits are classified along with other income tax cash flows as operating cash flows. · We have elected to continue to estimate the number of stock-based awards expected to vest, rather than electing to account for forfeitures as they occur to determine the amount of compensation cost to be recognized in each period. · We presented employee taxes paid as a financing activity on the Condensed Consolidated Statements of Cash Flows retrospectively, as such the comparable period within the Condensed Consolidated Statements of Cash Flows has been recast to reflect the adoption. The adoption of this guidance in the first quarter of 2017 by the Company did not have a material impact on its results of operations. 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. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In November 2016, the FASB issued an accounting standard to require that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. If different, a reconciliation of the cash balances reported in the cash flow statement and the balance sheet would need to be provided along with explanatory information. The guidance is effective on January 1, 2018. We do not expect the adoption of this guidance will have a material impact on our consolidated financial statements. In January 2017, the FASB issued an accounting standard that changes the GAAP definition of a business which can impact the accounting for asset purchases, acquisitions, goodwill impairment, and other assessments. The guidance is effective on January 1, 2018. We do not expect the adoption of this guidance will have a material impact on our consolidated financial statements. In January 2017, the FASB issued an accounting standard that eliminates Step 2 of the goodwill impairment test, which required us to determine the implied fair value of goodwill by allocating the reporting unit's fair value to each of its assets and liabilities as if the reporting unit was acquired in a business acquisition. Instead, the updated guidance requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of the reporting unit to its carrying value, and recognizing a non-cash impairment charge for the amount by which the carrying value exceeds the reporting unit's fair value with the loss not exceeding the total amount of goodwill allocated to that reporting unit. The updated guidance is effective beginning January 1, 2020, with early adoption permitted, and will be applied on a prospective basis. The adoption of this guidance in 2017 by the Company did not have a material impact on its results of operations. |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of assets and liabilities measured at fair value on a recurring basis | Basis of Fair Value Measurements 12/31/2017 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 303 $ - $ - $ 303 Total $ 303 $ - $ - $ 303 Liabilities: Contingent consideration (1) $ - $ - $ 3,698 $ 3,698 $ - $ - $ 3,698 $ 3,698 Basis of Fair Value Measurements 12/31/2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 22 $ - $ - $ 22 Total $ 22 $ - $ - $ 22 Liabilities: Contingent consideration (1) $ - $ - $ 6,073 $ 6,073 $ - $ - $ 6,073 $ 6,073 (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 | December 31, 2017 2016 Beginning Balance $ 6,073 $ 4,019 Payment of contingent consideration (3,386) (3,954) Acquisitions — 4,946 Change in fair value of contingent consideration 145 (210) Accretion of contingent consideration 826 1,259 Unrealized gain related to currency translation 40 13 Ending Balance $ 3,698 $ 6,073 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) - Alsbridge | 12 Months Ended |
Dec. 31, 2017 | |
Business Acquisition | |
Schedule of final allocable purchase price | Cash $ 56,000 Contingent consideration 1,456 Note payable (1) 6,810 Common stock (2) 10,944 Total allocable purchase price $ 75,210 (1) Note discounted at market rate (2) 3,200,000 shares issued at $3.42 per share as part of the Merger. |
Schedule of recognized amounts of identifiable assets acquired and liabilities assumed | Cash $ 2,674 Accounts and other receivable 16,767 Other assets 5,856 Intangible assets 25,246 Accounts payable (733) Deferred income tax liability of acquired intangible assets (9,593) Accrued expenses and other (9,352) Net assets acquired $ 30,865 Goodwill $ 44,345 |
Schedule of purchase price assigned to intangible assets and the amortization period | Purchase Price Allocation Asset Life Amortizable intangible assets: Customer relationships $ 17,316 years Non-compete 239 years Databases 7,691 years Total intangible assets $ 25,246 |
Schedule of unaudited pro forma financial information | Year Ended December 31, 2016 2015 (unaudited) Revenue $ 269,161 $ 279,108 Net (loss) income $ (5,528) $ 6,780 |
NET INCOME (LOSS) PER COMMON 29
NET INCOME (LOSS) PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
NET INCOME (LOSS) PER COMMON SHARE | |
Schedule of computation of basic and diluted earnings per share | Years Ended December 31, 2017 2016 2015 Basic: Net (loss) income attributable to ISG $ (2,130) $ (6,505) $ 4,841 Weighted average common shares 43,025 36,625 37,186 (Loss) earnings per share attributable to ISG $ (0.05) $ (0.18) $ 0.13 Diluted: Net (loss) income attributable to ISG $ (2,130) $ (6,505) $ 4,841 Interest expense of convertible debt, net of tax — — 80 Net (loss) income attributable to ISG, as adjusted $ (2,130) $ (6,505) $ 4,921 Basic weighted average common shares 43,025 36,625 37,186 Potential common shares — — 1,750 Diluted weighted average common shares 43,025 36,625 38,936 Diluted (loss) earnings per share attributable to ISG $ (0.05) $ (0.18) $ 0.13 |
ACCOUNTS AND UNBILLED RECEIVA30
ACCOUNTS AND UNBILLED RECEIVABLES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
ACCOUNTS AND UNBILLED RECEIVABLES | |
Schedule of accounts and unbilled receivables, net of valuation allowance | December 31, 2017 2016 Accounts receivable $ 53,405 $ 51,264 Unbilled receivables 17,271 13,306 Receivables from related parties 148 92 $ 70,824 $ 64,662 |
FURNITURE, FIXTURES AND EQUIP31
FURNITURE, FIXTURES AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
FURNITURE, FIXTURES AND EQUIPMENT | |
Schedule of furniture, fixtures and equipment | Estimated December 31, Useful Lives 2017 2016 Computer hardware, software and other office equipment to years $ 6,250 $ 5,317 Furniture, fixtures and leasehold improvements to years 2,715 2,441 Internal-use software and development costs to years 6,969 5,676 Accumulated depreciation (10,705) (8,645) $ 5,229 $ 4,789 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INTANGIBLE ASSETS | |
Schedule of carrying amount of intangible assets, net of accumulated amortization and impairment charges | 2017 Gross Carrying Accumulated Currency Net Book Amount Acquisitions Amortization impact Value Amortizable intangibles: Customer relationships $ 73,723 $ — $ (55,844) $ (105) $ 17,774 Noncompete agreements 5,952 — (5,754) 1 199 Software — (1,520) (63) — Backlog — (4,981) (21) — Databases 13,135 — (5,475) (98) 7,562 Trademark and trade names — (1,101) — 149 Intangibles $ 100,645 $ — $ (74,675) $ (286) $ 25,684 2016 Gross Carrying Accumulated Currency Net Book Amount Acquisitions Amortization impact Value Amortizable intangibles: Customer relationships $ $ 19,273 $ (47,303) $ (151) $ Noncompete agreements 282 (5,686) (1) Software — (1,501) (78) Backlog — (4,974) (28) — Databases 7,691 (4,774) (113) Trademark and trade names — (923) — Intangibles $ $ $ $ $ |
Schedule of estimated future amortization expense | 2018 $ 4,942 2019 3,972 2020 3,397 2021 2,198 2022 1,757 Thereafter 9,418 $ 25,684 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
GOODWILL | |
Schedule of changes in the carrying amount of goodwill | 2017 2016 Balance as of January 1 Goodwill $ 216,697 $ 167,972 Foreign currency impact (489) (418) Accumulated impairment losses (130,268) (130,268) Net balance as of January 1 85,940 37,286 Acquisitions — 48,725 Adjustment (643) — Foreign currency impact 322 (71) (321) 48,654 Balance as of December 31 Goodwill 216,697 216,697 Adjustment (643) - Foreign currency impact (167) (489) Accumulated impairment losses (130,268) (130,268) Net balance as of December 31 $ 85,619 $ 85,940 |
REDEEMABLE NON-CONTROLLING IN34
REDEEMABLE NON-CONTROLLING INTEREST (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
REDEEMABLE NON-CONTROLLING INTEREST | |
Schedules of summary of activity in the non-controlling interest | December 31, 2017 2016 Beginning balance $ 1,376 $ 939 Net income attributable to non-controlling interest 32 127 Accretion attributable to non-controlling interest (30) 309 Purchase of remaining non-controlling interest (1,377) — Impact of currency translation (1) 1 Ending balance $ — $ 1,376 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
ACCRUED EXPENSES | |
Schedule of components of accrued liabilities | December 31, 2017 2016 Accrued payroll and vacation $ 7,741 $ 5,758 Accrued corporate and payroll related taxes 4,657 4,545 Accrued severance and integration 15 1,449 Accrued acquisitions related costs — 1,968 Accrued payable to former Alsbridge's owners — 4,275 Contingent consideration—current 2,365 3,284 Other 6,708 6,692 $ 21,486 $ 27,971 |
FINANCING ARRANGEMENTS AND LO36
FINANCING ARRANGEMENTS AND LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |
Schedule of long-term debt | December 31, 2017 2016 Senior secured credit facility $ 109,500 $ 118,000 Note payable 7,038 7,078 Compass convertible notes 211 211 Debt discount (74) (181) Debt issuance costs (2,338) (3,077) 114,337 122,031 Less current installments on long term debt 15,499 5,546 Long-term debt $ 98,838 $ 116,485 |
Schedule of aggregate annual maturities of debt obligations by calendar year | Debt 2018 $ 15,499 2019 8,250 2020 11,000 2021 82,000 $ 116,749 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of aggregate future minimum payments under noncancelable leases | Operating Leases 2018 $ 2,507 2019 2,656 2020 2,637 2021 1,828 2022 1,233 Thereafter 2,755 Total minimum lease payments $ 13,616 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES | |
Schedule of the components of income (loss) before income taxes | Years Ended December 31, 2017 2016 2015 Domestic $ (6,981) $ (6,840) $ 1,331 Foreign 9,081 1,516 6,812 Total income before income taxes $ 2,100 $ (5,324) $ 8,143 |
Schedule of the components of income tax (benefit) provision | Years Ended December 31, 2017 2016 2015 Current: Federal $ 1,259 $ 1,224 $ 2,934 State 608 206 728 Foreign 3,006 1,528 1,485 Total current provision 4,873 2,958 5,147 Deferred: Federal (268) (1,866) (1,851) State (297) 23 (120) Foreign (110) (61) 13 Total deferred benefit (675) (1,904) (1,958) Total $ 4,198 $ 1,054 $ 3,189 |
Schedule of the differences between the effective tax rates reflected in the total provision for income taxes and the U.S. federal statutory rate of 35% | Years Ended December 31, 2017 2016 2015 Tax provision computed at 35% $ 735 $ (1,863) $ 2,850 Nondeductible expenses 445 1,131 565 State income taxes, net of federal benefit 94 66 291 Tax impact of foreign operations 258 1,809 (1) 283 Net increase (decrease) of uncertain tax positions (2) 389 (44) (704) Tax law change impact on deferred taxes 1,471 — — Tax law change impact on transition tax 601 — — Other 205 (45) (96) Income tax provision $ 4,198 $ 1,054 $ 3,189 Effective income tax rates 199.9 % (19.8) % 39.2 % (1) Primarily valuation allowance increase related to foreign loss carryover tax benefits of $0.9 million plus foreign tax credit carryover of $0.7 million, and other foreign tax items of $0.2 million. (2) During the years ended December 31, 2017 and December 31, 2015, the Company reversed an unrealized tax benefit liability of $0.5 million and $0.8 million, respectively, established at the time of the acquisition of Alsbridge and Compass. An associated tax indemnity receivable was also reversed and recorded in selling, general and administrative expenses. |
Schedule of significant portions of the deferred tax assets and liabilities due to the tax effects of temporary differences | December 31, 2017 2016 Current deferred tax asset Compensation related expenses $ — $ 2,550 Valuation allowance for deferred tax assets — (754) Accruals and reserves — 1,359 U.S. net operating loss carryovers — — Total current deferred tax asset (1) — 3,155 Current deferred tax liability Prepaids — (1,155) Other — (270) Total current deferred tax liability (1) — (1,425) Net current deferred tax asset $ — $ 1,730 Noncurrent deferred tax asset Compensation related expenses $ 2,138 $ 617 Foreign currency translation 2,020 4,469 U.S. foreign tax credit carryovers 1,478 2,309 Foreign net operating loss carryovers 6,208 5,764 Accruals and reserves 686 — Other 475 516 Valuation allowance for deferred tax assets (6,543) (6,048) Total noncurrent deferred tax asset 6,462 7,627 Noncurrent deferred tax liability Depreciable assets (277) (344) Prepaids (481) — Intangible assets (2,040) (6,175) Investment in foreign subsidiaries (1,143) (1,504) Foreign earnings distribution taxes (1,119) — Foreign intangibles and reserves (450) — Total noncurrent deferred tax liability (5,510) (8,023) Net noncurrent deferred tax asset/(liability) 952 (396) Net deferred tax asset $ 952 $ 1,334 (1) In November 2015, the FASB issued an accounting standard 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 adopted this guidance on a prospective method; therefore, prior periods were not retrospectively adjusted. |
Schedule of reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period | December 31, 2017 2016 2015 Balance, beginning of year $ 3,033 $ 1,780 $ 2,192 Additions as a result of tax positions taken during the current period 774 73 205 Additions as a result of tax positions taken during a prior period 630 — 270 Additions as a result of acquisitions — 1,233 — Reductions as a result of settlement with tax authorities — (9) — Reductions as a result of lapse of statute (387) (44) (887) Balance, end of year $ 4,050 $ 3,033 $ 1,780 |
STOCK BASED COMPENSATION PLANS
STOCK BASED COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
STOCK BASED COMPENSATION PLANS | |
Summary of the status of the Company's RSUs issued under its Incentive Plan | Weighted- Average Grant Date RSU Fair Value Non-vested at December 31, 2014 2,636 $ 3.73 Granted 1,881 $ 3.90 Vested (1,099) $ 3.29 Forfeited (250) $ 3.28 Non-vested at December 31, 2015 3,168 $ 4.02 Granted 2,129 $ 3.79 Vested (1,464) $ 3.96 Forfeited (126) $ 3.88 Non-vested at December 31, 2016 3,707 $ 3.91 Granted 2,778 $ 3.60 Vested (1,781) $ 3.90 Forfeited (548) $ 3.83 Non-vested at December 31, 2017 4,156 $ 3.72 |
Summary of the status of the Company's SARs issued under its Incentive Plan | Weighted-Average Weighted-Average Remaining Aggregate Exercise Contractual Intrinsic SARs Price Life Value (in years) Outstanding at December 31, 2014 106 $ 5.78 3.3 $ 39 Granted — $ — $ — Exercised (25) $ 3.17 $ 32 Forfeited (34) $ 7.20 $ — Outstanding at December 31, 2015 47 $ 6.13 2.2 $ 6 Granted — $ — $ — Exercised — $ — $ — Forfeited — $ — $ — Outstanding at December 31, 2016 47 $ 6.13 1.2 $ 6 Granted — $ — $ — Exercised — $ — $ — Forfeited (34) $ 7.20 $ — Outstanding at December 31, 2017 13 $ 3.18 0.9 $ 12 Vested and expected to vest at December 31, 2017 13 $ 3.18 0.9 $ 12 Exercisable at December 31, 2017 13 $ 3.18 0.9 $ 12 |
SEGMENT AND GEOGRAPHICAL INFO40
SEGMENT AND GEOGRAPHICAL INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SEGMENT AND GEOGRAPHICAL INFORMATION | |
Schedule of geographical revenue information for the segment | Years Ended December 31, 2017 2016 2015 Revenues Americas (1) $ 161,845 $ 116,566 $ 108,925 Europe (2) 82,910 75,149 77,781 Asia Pacific (3) 24,799 24,784 22,534 $ 269,554 $ 216,499 $ 209,240 Fixed assets Americas $ 3,495 $ 3,246 $ 1,907 Europe 1,390 1,237 955 Asia Pacific 344 306 159 $ 5,229 $ 4,789 $ 3,021 (1) Substantially all relates to operations in the United States. (2) Includes revenues from operations in Germany of $40.0 million, $33.5 million and $29.4 million in 2017, 2016 and 2015, respectively. Includes revenues from operations in the United Kingdom of $14.8 million, $12.5 million and $21.2 million in 2017, 2016 and 2015, respectively. (3) Includes revenues from operations in Australia of $18.6 million, $19.1 million and $17.3 million in 2017, 2016 and 2015, respectively. |
UNAUDITED QUARTERLY INFORMATI41
UNAUDITED QUARTERLY INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
UNAUDITED QUARTERLY INFORMATION | |
Schedule of unaudited quarterly information | Quarters Ended March 31, June 30, September 30, December 31, 2017 2017 2017 2017 Fiscal 2017: Net sales $ 66,555 $ 68,038 $ 68,349 $ 66,612 Gross profit $ 25,869 $ 27,785 $ 30,135 $ 29,135 Operating income $ 1,181 $ 546 $ 3,474 $ 3,956 Other expense, net $ (1,744) $ (1,774) $ (1,812) $ (1,727) (Loss) income from operations $ (563) $ (1,228) $ 1,662 $ 2,229 Net (loss) income attributable to ISG $ (606) $ (302) $ 1,428 $ (2,650) Basic (loss) earnings per share attributable to ISG $ (0.01) $ (0.01) $ 0.03 $ (0.06) Diluted (loss) earnings per share attributable to ISG $ (0.01) $ (0.01) $ 0.03 $ (0.06) Basic weighted average common shares attributable to ISG 42,316 43,058 43,305 43,423 Diluted weighted average common shares attributable to ISG 42,316 43,058 44,658 43,423 d w Quarters Ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016 Fiscal 2016: Net sales $ 49,929 $ 60,354 $ 51,929 $ 54,287 Gross profit $ 18,561 $ 24,248 $ 20,970 $ 20,361 Operating income $ 132 $ 3,217 $ 2,616 $ (8,557) Other expense, net $ (912) $ (320) $ (634) $ (866) (Loss) income from operations $ (780) $ 2,897 $ 1,982 $ (9,423) Net (loss) income attributable to ISG $ (699) $ 1,612 $ 732 $ (8,150) Basic (loss) earnings per share attributable to ISG $ (0.02) $ 0.05 $ 0.02 $ (0.22) Diluted (loss) earnings per share attributable to ISG $ (0.02) $ 0.04 $ 0.02 $ (0.22) Basic weighted average common shares attributable to ISG 37,340 35,609 35,707 37,842 Diluted weighted average common shares attributable to ISG 37,340 36,719 36,873 37,842 |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Furniture, Fixtures and Equipment, net to Reimbursable Expenditures (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Internal-Use Software and Website Development Costs | |||
Capitalized costs associated with system conversion and website development | $ 1,300 | $ 700 | $ 300 |
Goodwill | |||
Impairment of goodwill | 0 | 0 | 0 |
Debt Issuance Costs | |||
Amortization of debt issuance costs | $ 884 | 302 | 141 |
Revenue Recognition | |||
Notice period to terminate agreements early due to breach or for convenience | 30 days | ||
Reimbursable Expenditures | |||
Reimbursable expenditures | $ 9,800 | $ 8,700 | $ 10,100 |
Minimum | |||
Revenue Recognition | |||
Term of provisions | 6 months | ||
Maximum | |||
Revenue Recognition | |||
Term of provisions | 12 months | ||
Furniture Fixtures And Equipment | Minimum | |||
Furniture, Fixtures and Equipment, net | |||
Estimated useful life of assets | 3 years | ||
Furniture Fixtures And Equipment | Maximum | |||
Furniture, Fixtures and Equipment, net | |||
Estimated useful life of assets | 5 years | ||
Leasehold Improvements | Minimum | |||
Furniture, Fixtures and Equipment, net | |||
Estimated useful life of assets | 3 years | ||
Leasehold Improvements | Maximum | |||
Furniture, Fixtures and Equipment, net | |||
Estimated useful life of assets | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Stock-Based Compensation (Details) - Restricted Stock | 12 Months Ended |
Dec. 31, 2017 | |
Employees | |
Stock-Based Compensation | |
Award vesting period | 4 years |
Directors | |
Stock-Based Compensation | |
Award vesting period | 3 years |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value of Financial Instruments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Assets and liabilities measured at fair value on a recurring basis | ||
Transfers of financial assets between Level 1 and Level 2 | $ 0 | |
Transfers of financial assets between Level 2 and Level 1 | 0 | |
Liabilities: | ||
Long-term debt, gross | 116,749,000 | $ 125,300,000 |
Change in the contingent consideration liability | ||
Beginning Balance | 6,073,000 | 4,019,000 |
Payment of contingent consideration | (3,386,000) | (3,954,000) |
Acquisitions | 4,946,000 | |
Change in fair value of contingent consideration | 145,000 | (210,000) |
Accretion of contingent consideration | 826,000 | 1,259,000 |
Unrealized gain related to currency translation | 40,000 | 13,000 |
Ending Balance | $ 3,698,000 | 6,073,000 |
Minimum | ||
Liabilities: | ||
Discounted rate of cash outflow projections (as a percent) | 14.50% | |
Incremental borrowing rate used to discount future cash flows from financial instruments (as a percent) | 2.00% | |
Maximum | ||
Liabilities: | ||
Discounted rate of cash outflow projections (as a percent) | 27.30% | |
Incremental borrowing rate used to discount future cash flows from financial instruments (as a percent) | 5.20% | |
Level 3 | ||
Liabilities: | ||
Fair value of outstanding borrowing | $ 116,500,000 | 124,900,000 |
Recurring | ||
Assets: | ||
Cash equivalents | 303,000 | 22,000 |
Total | 303,000 | 22,000 |
Liabilities: | ||
Contingent consideration | 3,698,000 | 6,073,000 |
Total | 3,698,000 | 6,073,000 |
Recurring | Level 1 | ||
Assets: | ||
Cash equivalents | 303,000 | 22,000 |
Total | 303,000 | 22,000 |
Recurring | Level 3 | ||
Liabilities: | ||
Contingent consideration | 3,698,000 | 6,073,000 |
Total | $ 3,698,000 | $ 6,073,000 |
SUMMARY OF SIGNIFICANT ACCOUN45
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||
U.S. federal statutory income tax rate (as a percent) | 35.00% | 35.00% | 35.00% | |
Scenario Forecast | ||||
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||
U.S. federal statutory income tax rate (as a percent) | 21.00% |
SUMMARY OF SIGNIFICANT ACCOUN46
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Recently Issued Accounting Pronouncements | |||
Net current deferred tax assets, noncurrent | $ 2,521 | ||
Provision for income taxes | 4,198 | $ 1,054 | $ 3,189 |
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | |||
Recently Issued Accounting Pronouncements | |||
Revenue, gross of tax | 3,400 | ||
Increase to retained earnings offset | 1,800 | ||
Cumulative catch-up adjustment to retained earnings | 1,600 | ||
ASU 2015-17 | Adjustment | |||
Recently Issued Accounting Pronouncements | |||
Net current deferred tax assets, noncurrent | 1,100 | ||
ASU 2016-09 | Adjustment | |||
Recently Issued Accounting Pronouncements | |||
Provision for income taxes | $ 300 |
ACQUISITIONS - Alsbridge Acquis
ACQUISITIONS - Alsbridge Acquisition (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 01, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 17, 2014 |
Business Acquisition | |||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |||
Recognized amounts of identifiable assets acquired and liabilities assumed | |||||
Goodwill | $ 85,619 | $ 85,940 | $ 37,286 | ||
Adjustments | (643) | ||||
Alsbridge | |||||
Business Acquisition | |||||
Contingent consideration higher range | $ 2,500 | ||||
Tax liabilities and related indemnification asset | 2,000 | ||||
Preliminary allocable purchase price | |||||
Cash | 56,000 | ||||
Contingent consideration | 1,456 | ||||
Total allocable purchase price | 75,210 | ||||
Recognized amounts of identifiable assets acquired and liabilities assumed | |||||
Cash | $ 2,674 | ||||
Accounts and other receivable | 16,767 | ||||
Other assets | 5,856 | ||||
Intangible assets | 25,246 | ||||
Accounts payable | (733) | ||||
Deferred income tax liability of acquired intangible assets | (9,593) | ||||
Accrued expenses and other | (9,352) | ||||
Net assets acquired | 30,865 | ||||
Goodwill | $ 44,345 | ||||
Amortizable intangible assets: | |||||
Amortizable intangible assets | 25,246 | ||||
Alsbridge | Note payable | |||||
Business Acquisition | |||||
Unsecured subordinated promissory notes issued | 7,000 | $ 7,000 | |||
Preliminary allocable purchase price | |||||
Note payable | $ 6,810 | ||||
Alsbridge | Common Stock | |||||
Business Acquisition | |||||
Common stock, par value (in dollars per share) | $ 0.001 | ||||
Preliminary allocable purchase price | |||||
Common stock | $ 10,944 | ||||
Number of shares issued | 3,200,000 | ||||
Share price | $ 3.42 | ||||
Alsbridge | Selling, general and administrative | |||||
Recognized amounts of identifiable assets acquired and liabilities assumed | |||||
Acquisition related cost | $ 3,500 | ||||
Alsbridge | Customer relationships | |||||
Amortizable intangible assets: | |||||
Amortizable intangible assets | $ 17,316 | ||||
Asset Life | 15 years | ||||
Alsbridge | Non-compete | |||||
Amortizable intangible assets: | |||||
Amortizable intangible assets | $ 239 | ||||
Asset Life | 5 years | ||||
Alsbridge | Databases | |||||
Amortizable intangible assets: | |||||
Amortizable intangible assets | $ 7,691 | ||||
Asset Life | 15 years |
ACQUISITIONS - Alsbridge Acqu48
ACQUISITIONS - Alsbridge Acquisition Proforma (Details) - Alsbridge - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Business Acquisition | ||
Revenues contributed by acquiree | $ 5,500 | |
Net income contributed by acquiree | 100 | |
Revenue | 269,161 | $ 279,108 |
Net (loss) income | $ (5,528) | $ 6,780 |
NET INCOME (LOSS) PER COMMON 49
NET INCOME (LOSS) PER COMMON SHARE - Antidilutive Securities (Details) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Appreciation Rights (SARs) | ||
Antidilutive securities | ||
Securities considered antidilutive (in shares) | 34,374 | 34,374 |
NET INCOME (LOSS) PER COMMON 50
NET INCOME (LOSS) PER COMMON SHARE - Computation of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Basic: | |||||||||||
Net (loss) income attributable to ISG | $ (2,650) | $ 1,428 | $ (302) | $ (606) | $ (8,150) | $ 732 | $ 1,612 | $ (699) | $ (2,130) | $ (6,505) | $ 4,841 |
Weighted average common shares | 43,423 | 43,305 | 43,058 | 42,316 | 37,842 | 35,707 | 35,609 | 37,340 | 43,025 | 36,625 | 37,186 |
Basic (loss) earnings per share attributable to ISG | $ (0.06) | $ 0.03 | $ (0.01) | $ (0.01) | $ (0.22) | $ 0.02 | $ 0.05 | $ (0.02) | $ (0.05) | $ (0.18) | $ 0.13 |
Diluted: | |||||||||||
Net (loss) income attributable to ISG | $ (2,650) | $ 1,428 | $ (302) | $ (606) | $ (8,150) | $ 732 | $ 1,612 | $ (699) | $ (2,130) | $ (6,505) | $ 4,841 |
Interest expense of convertible debt, net of tax | 80 | ||||||||||
Net (loss) income attributable to ISG, as adjusted | $ (2,130) | $ (6,505) | $ 4,921 | ||||||||
Basic weighted average common shares | 43,423 | 43,305 | 43,058 | 42,316 | 37,842 | 35,707 | 35,609 | 37,340 | 43,025 | 36,625 | 37,186 |
Potential common shares | 1,750 | ||||||||||
Diluted weighted average common shares | 43,423 | 44,658 | 43,058 | 42,316 | 37,842 | 36,873 | 36,719 | 37,340 | 43,025 | 36,625 | 38,936 |
Diluted (loss) earnings per share attributable to ISG | $ (0.06) | $ 0.03 | $ (0.01) | $ (0.01) | $ (0.22) | $ 0.02 | $ 0.04 | $ (0.02) | $ (0.05) | $ (0.18) | $ 0.13 |
ACCOUNTS AND UNBILLED RECEIVA51
ACCOUNTS AND UNBILLED RECEIVABLES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
ACCOUNTS AND UNBILLED RECEIVABLES | ||
Accounts receivable | $ 53,405 | $ 51,264 |
Unbilled Receivables | 17,271 | 13,306 |
Receivables from related parties | 148 | 92 |
Accounts and unbilled receivables, net of valuation allowance | $ 70,824 | $ 64,662 |
FURNITURE, FIXTURES AND EQUIP52
FURNITURE, FIXTURES AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Furniture, fixtures and equipment | |||
Accumulated depreciation | $ (10,705) | $ (8,645) | |
Furniture, fixtures and equipment, net | 5,229 | 4,789 | $ 3,021 |
Depreciation expense | 3,207 | 1,903 | $ 1,760 |
Computer hardware, software and other office equipment | |||
Furniture, fixtures and equipment | |||
Furniture, fixture and equipment, gross | $ 6,250 | 5,317 | |
Computer hardware, software and other office equipment | Minimum | |||
Furniture, fixtures and equipment | |||
Estimated Useful Lives | 2 years | ||
Computer hardware, software and other office equipment | Maximum | |||
Furniture, fixtures and equipment | |||
Estimated Useful Lives | 5 years | ||
Furniture, fixtures and leasehold improvements | |||
Furniture, fixtures and equipment | |||
Furniture, fixture and equipment, gross | $ 2,715 | 2,441 | |
Furniture, fixtures and leasehold improvements | Minimum | |||
Furniture, fixtures and equipment | |||
Estimated Useful Lives | 2 years | ||
Furniture, fixtures and leasehold improvements | Maximum | |||
Furniture, fixtures and equipment | |||
Estimated Useful Lives | 5 years | ||
Internal-use software and development costs | |||
Furniture, fixtures and equipment | |||
Furniture, fixture and equipment, gross | $ 6,969 | $ 5,676 | |
Internal-use software and development costs | Minimum | |||
Furniture, fixtures and equipment | |||
Estimated Useful Lives | 3 years | ||
Internal-use software and development costs | Maximum | |||
Furniture, fixtures and equipment | |||
Estimated Useful Lives | 5 years |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible assets | |||
Gross Carrying Amount | $ 100,645 | $ 73,399 | |
Acquisitions | 27,246 | ||
Accumulated Amortization | (74,675) | (65,161) | |
Currency impact | (286) | (371) | |
Net book value | 25,684 | 35,113 | |
Amortization expense | 9,514 | 5,966 | $ 5,323 |
Estimated future amortization expense | |||
2,018 | 4,942 | ||
2,019 | 3,972 | ||
2,020 | 3,397 | ||
2,021 | 2,198 | ||
2,022 | 1,757 | ||
Thereafter | 9,418 | ||
Estimated future amortization expense | 25,684 | ||
Customer relationships | |||
Intangible assets | |||
Gross Carrying Amount | 73,723 | 54,450 | |
Acquisitions | 19,273 | ||
Accumulated Amortization | (55,844) | (47,303) | |
Currency impact | (105) | (151) | |
Net book value | 17,774 | 26,269 | |
Non-compete | |||
Intangible assets | |||
Gross Carrying Amount | 5,952 | 5,670 | |
Acquisitions | 282 | ||
Accumulated Amortization | (5,754) | (5,686) | |
Currency impact | 1 | (1) | |
Net book value | 199 | 265 | |
Software | |||
Intangible assets | |||
Gross Carrying Amount | 1,583 | 1,583 | |
Accumulated Amortization | (1,520) | (1,501) | |
Currency impact | (63) | (78) | |
Net book value | 4 | ||
Backlog | |||
Intangible assets | |||
Gross Carrying Amount | 5,002 | 5,002 | |
Accumulated Amortization | (4,981) | (4,974) | |
Currency impact | (21) | (28) | |
Databases | |||
Intangible assets | |||
Gross Carrying Amount | 13,135 | 5,444 | |
Acquisitions | 7,691 | ||
Accumulated Amortization | (5,475) | (4,774) | |
Currency impact | (98) | (113) | |
Net book value | 7,562 | 8,248 | |
Trademarks And Trade Names | |||
Intangible assets | |||
Gross Carrying Amount | 1,250 | 1,250 | |
Accumulated Amortization | (1,101) | (923) | |
Net book value | $ 149 | $ 327 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in the carrying amount of goodwill | ||
Gross balance at the beginning | $ 216,697 | $ 167,972 |
Foreign currency impact | (489) | (418) |
Accumulated impairment losses | (130,268) | (130,268) |
Balance at the beginning | 85,940 | 37,286 |
Acquisitions | 48,725 | |
Adjustments | (643) | |
Foreign currency impact | 322 | (71) |
Changes during the period | (321) | 48,654 |
Gross balance at the end | 216,697 | 216,697 |
Foreign currency impact | (167) | (489) |
Accumulated impairment losses | (130,268) | (130,268) |
Balance at the end | $ 85,619 | $ 85,940 |
REDEEMABLE NON-CONTROLLING IN55
REDEEMABLE NON-CONTROLLING INTEREST (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
REDEEMABLE NON-CONTROLLING INTEREST | ||
Beginning balance | $ 1,376 | $ 939 |
Net income attributable to non-controlling interest | 32 | 127 |
Accretion attributable to non-controlling interest | (30) | 309 |
Purchase of remaining non-controlling interest | (1,377) | |
Impact of currency translation | $ (1) | 1 |
Ending balance | $ 1,376 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
ACCRUED EXPENSES | ||
Accrued payroll and vacation | $ 7,741 | $ 5,758 |
Accrued corporate and payroll related taxes | 4,657 | 4,545 |
Accrued severance and integration | 15 | 1,449 |
Accrued acquisitions related costs | 1,968 | |
Accrued payable to former Alsbridge's owners | 4,275 | |
Contingent consideration classified as current | 2,365 | 3,284 |
Other | 6,708 | 6,692 |
Accrued liabilities | $ 21,486 | $ 27,971 |
FINANCING ARRANGEMENTS AND LO57
FINANCING ARRANGEMENTS AND LONG-TERM DEBT - Long-term Debt and Annual Maturities of Debt Obligations Tables (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||
Long-term debt, gross | $ 116,749 | $ 125,300 |
Debt discount | (74) | (181) |
Debt issuance costs | (2,338) | (3,077) |
Long-term debt, net | 114,337 | 122,031 |
Less current installments on long term debt | 15,499 | 5,546 |
Long-term debt | 98,838 | 116,485 |
Secured Debt | ||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||
Long-term debt, gross | 109,500 | 118,000 |
Note payable | ||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||
Long-term debt, gross | 7,038 | 7,078 |
Convertible Notes Payable | ||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||
Long-term debt, gross | $ 211 | $ 211 |
FINANCING ARRANGEMENTS AND LO58
FINANCING ARRANGEMENTS AND LONG-TERM DEBT - Long-term Debt and Annual Maturities of Debt Obligations Tables (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Aggregate annual maturities of debt obligations | ||
2,018 | $ 15,499 | |
2,019 | 8,250 | |
2,020 | 11,000 | |
2,021 | 82,000 | |
Long-term debt, total | $ 116,749 | $ 125,300 |
FINANCING ARRANGEMENTS AND LO59
FINANCING ARRANGEMENTS AND LONG-TERM DEBT - Narrative (Details) | 1 Months Ended | 12 Months Ended | |||
Mar. 31, 2020USD ($)installment | Mar. 31, 2018USD ($)installment | Mar. 31, 2017USD ($)installment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Base Rate | |||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||
Interest rate basis | Base Rate | ||||
Eurodollar | |||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||
Interest rate basis | Eurodollar Rate | ||||
Applicable margin (as a percent) | 1.00% | ||||
Prime Rate | |||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||
Interest rate basis | prime rate | ||||
Federal Funds Rate | |||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||
Interest rate basis | Federal Funds Rate | ||||
Applicable margin (as a percent) | 0.50% | ||||
Secured Debt | |||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||
Maximum borrowing capacity under senior secured credit facility | $ 110,000,000 | ||||
Number of quarterly installments | installment | 4 | ||||
Periodic repayment | $ 1,375,000 | ||||
Outstanding borrowings | $ 104,500,000 | ||||
Effective interest rate | 5.20% | ||||
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% | ||||
Secured Debt | Scenario Forecast | |||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||
Number of quarterly installments | installment | 7 | 8 | |||
Periodic repayment | $ 2,750,000 | $ 2,062,500 | |||
Revolving Credit Facility | |||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||
Maximum borrowing capacity under senior secured credit facility | $ 30,000,000 | ||||
Outstanding borrowings | $ 5,000,000 | ||||
Effective interest rate | 5.10% | ||||
Maximum | Secured Debt | London Interbank Offered Rate L I B O R | |||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |||||
Applicable margin (as a percent) | 4.00% |
FINANCING ARRANGEMENTS AND LO60
FINANCING ARRANGEMENTS AND LONG-TERM DEBT - Compass Convertible Notes (Details) $ / shares in Units, $ in Thousands | Jan. 04, 2011USD ($)$ / shares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 01, 2016USD ($) |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||
Amount outstanding | $ 116,749 | $ 125,300 | ||
Convertible Notes Payable | ||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||
Amount outstanding | 211 | 211 | ||
Note payable | ||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||
Amount outstanding | 7,038 | $ 7,078 | ||
C C G H Limited | Convertible Notes Payable | ||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||
Issuance of debt | $ 6,300 | |||
Rate of interest (as a percent) | 3.875% | |||
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 | |||
Amount outstanding | 200 | |||
Alsbridge | Note payable | ||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||
Rate of interest (as a percent) | 2.00% | |||
Unsecured subordinated promissory notes issued | $ 7,000 | $ 7,000 | ||
Amount outstanding | $ 7,000 | |||
Minimum | C C G H Limited | Convertible Notes Payable | ||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||
Trigger Event condition related to minimum market price of common stock on the Nasdaq Global market (in dollars per share) | $ / shares | $ 4 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
TPI Employee Retirement Plan | |||
Contribution under profit-sharing plan | $ 1,500,000 | $ 1,300,000 | $ 1,500,000 |
Aggregate future minimum payments under noncancelable leases | |||
2,018 | 2,507,000 | ||
2,019 | 2,656,000 | ||
2,020 | 2,637,000 | ||
2,021 | 1,828,000 | ||
2,022 | 1,233,000 | ||
Thereafter | 2,755,000 | ||
Total minimum lease payments | 13,616,000 | ||
Rental expense for operating leases | 3,200,000 | $ 2,900,000 | $ 2,900,000 |
Less Than Two Years of Service | |||
TPI Employee Retirement Plan | |||
Maximum employer contribution per eligible employee, amount | $ 18,000 | ||
Maximum employer contribution per eligible employee (as a percent) | 6.00% | ||
Company match of the first 6% | 50.00% | ||
Maximum employee contribution eligible for company match | $ 8,100 | ||
Two Years or More Than Two Years of Service | |||
TPI Employee Retirement Plan | |||
Company match of the first 6% | 50.00% | ||
Maximum employee contribution eligible for company match | $ 7 | ||
Contribution under profit-sharing plan | $ 9,450 |
COMMITMENTS AND CONTINGENCIES62
COMMITMENTS AND CONTINGENCIES - Contingent Considerations (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Contingent Consideration | |||
Contingent acquisition liability | $ 3,698 | $ 6,073 | $ 4,019 |
Contingent consideration classified as current | 2,365 | $ 3,284 | |
Saugatuck Technology Inc. | |||
Contingent Consideration | |||
Contingent acquisition liability | 600 | ||
Saugatuck Technology Inc. | Accrued expenses | |||
Contingent Consideration | |||
Contingent consideration classified as current | 300 | ||
Experton Group | |||
Contingent Consideration | |||
Contingent acquisition liability | 800 | ||
Experton Group | Accrued expenses | |||
Contingent Consideration | |||
Contingent consideration classified as current | 500 | ||
TracePoint | |||
Contingent Consideration | |||
Contingent acquisition liability | 2,300 | ||
TracePoint | Accrued expenses | |||
Contingent Consideration | |||
Contingent consideration classified as current | $ 1,600 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
RELATED PARTY TRANSACTIONS | ||
Receivables from related parties, including shareholders | $ 148 | $ 92 |
Payable to related parties | $ 0 | $ 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income before income taxes | ||||||||||||
Domestic | $ (6,981) | $ (6,840) | $ 1,331 | |||||||||
Foreign | 9,081 | 1,516 | 6,812 | |||||||||
Income (loss) before taxes | $ 2,229 | $ 1,662 | $ (1,228) | $ (563) | $ (9,423) | $ 1,982 | $ 2,897 | $ (780) | 2,100 | (5,324) | 8,143 | |
Current: | ||||||||||||
Federal | 1,259 | 1,224 | 2,934 | |||||||||
State | 608 | 206 | 728 | |||||||||
Foreign | 3,006 | 1,528 | 1,485 | |||||||||
Total current provision | 4,873 | 2,958 | 5,147 | |||||||||
Deferred: | ||||||||||||
Federal | (268) | (1,866) | (1,851) | |||||||||
State | (297) | 23 | (120) | |||||||||
Foreign | (110) | (61) | 13 | |||||||||
Total deferred benefit | (675) | (1,904) | (1,958) | |||||||||
Total | $ 4,198 | $ 1,054 | $ 3,189 | |||||||||
U.S. federal statutory income tax rate (as a percent) | 35.00% | 35.00% | 35.00% | |||||||||
Differences between the effective tax rates reflected in the total provision for income taxes and the U.S. federal statutory rate | ||||||||||||
Tax provision computed at 35% | $ 735 | $ (1,863) | $ 2,850 | |||||||||
Nondeductible expenses | 445 | 1,131 | 565 | |||||||||
State income taxes, net of federal benefit | 94 | 66 | 291 | |||||||||
Tax impact of foreign operations | 258 | 1,809 | 283 | |||||||||
Release of uncertain tax positions | 389 | (44) | (704) | |||||||||
Tax law change impact on deferred taxes | 1,471 | |||||||||||
Tax law change impact on transition tax | 601 | |||||||||||
Other | 205 | (45) | (96) | |||||||||
Total | $ 4,198 | $ 1,054 | $ 3,189 | |||||||||
Effective income tax rates (as a percent) | 199.90% | (19.80%) | 39.20% | |||||||||
Allowance of foreign net operating loss carryovers | 900 | $ 900 | ||||||||||
Allowance foreign tax credit carryover tax benefit | 700 | 700 | ||||||||||
Allowance foreign tax items, other | 200 | 200 | ||||||||||
Provisional net expense recorded for TCJ Act | 2,100 | |||||||||||
Tax benefit recorded | 300 | |||||||||||
Deferred withholding and earnings distribution taxes remains in deferred tax liabilities | 900 | 900 | ||||||||||
Remeasurement of deferred tax balances | 1,500 | |||||||||||
Current deferred tax asset | ||||||||||||
Compensation related expenses | 2,550 | $ 2,550 | ||||||||||
Valuation allowance for deferred tax assets | (754) | (754) | ||||||||||
Accruals and reserves | 1,359 | 1,359 | ||||||||||
Total current deferred tax asset | 3,155 | 3,155 | ||||||||||
Current deferred tax liability | ||||||||||||
Prepaids | (1,155) | (1,155) | ||||||||||
Other | (270) | (270) | ||||||||||
Total current deferred tax liability | (1,425) | (1,425) | ||||||||||
Net current deferred tax asset | 1,730 | 1,730 | ||||||||||
Noncurrent deferred tax asset | ||||||||||||
Compensation related expenses | 2,138 | 617 | 2,138 | 617 | ||||||||
Foreign currency translation | 2,020 | 4,469 | 2,020 | 4,469 | ||||||||
U.S. foreign tax credit carryovers | 1,478 | 2,309 | 1,478 | 2,309 | ||||||||
Foreign net operating loss carryovers | 6,208 | 5,764 | 6,208 | 5,764 | ||||||||
Accruals and Reserves | 686 | 686 | ||||||||||
Other | 475 | 516 | 475 | 516 | ||||||||
Valuation allowance for deferred tax assets | (6,543) | (6,048) | (6,543) | (6,048) | ||||||||
Total noncurrent deferred tax asset | 6,462 | 7,627 | 6,462 | 7,627 | ||||||||
Noncurrent deferred tax liability | ||||||||||||
Depreciable assets | (277) | (344) | (277) | (344) | ||||||||
Prepaids | (481) | (481) | ||||||||||
Intangible assets | (2,040) | (6,175) | (2,040) | (6,175) | ||||||||
Investment in foreign subsidiaries | (1,143) | (1,504) | (1,143) | (1,504) | ||||||||
Foreign earnings distribution taxes | (1,119) | (1,119) | ||||||||||
Foreign intangibles and reserves | (450) | (450) | ||||||||||
Total noncurrent deferred tax liability | (5,510) | (8,023) | (5,510) | (8,023) | ||||||||
Net noncurrent deferred tax asset/(liability) | 952 | (396) | 952 | (396) | ||||||||
Net deferred tax asset | 952 | 1,334 | 952 | 1,334 | ||||||||
Reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period | ||||||||||||
Balance, beginning of year | $ 3,033 | $ 1,780 | $ 4,050 | 3,033 | 1,780 | $ 2,192 | ||||||
Additions as a result of tax positions taken during the current period | 774 | 73 | 205 | |||||||||
Additions as a result of tax positions taken during a prior period | 630 | 270 | ||||||||||
Additions as a result of acquisitions | 1,233 | |||||||||||
Reductions as a result of settlement with tax authorities | (9) | |||||||||||
Reductions as a result of lapse of statute | (387) | (44) | (887) | |||||||||
Balance, end of year | 4,050 | $ 3,033 | 4,050 | $ 3,033 | 1,780 | |||||||
State income tax expense recognized of interest and penalties related to uncertain tax positions | 1,000 | |||||||||||
Unrecognized tax benefits that would impact the company's effective tax rate | $ 4,100 | 4,100 | ||||||||||
Scenario Forecast | ||||||||||||
Deferred: | ||||||||||||
U.S. federal statutory income tax rate (as a percent) | 21.00% | |||||||||||
Alsbridge | ||||||||||||
Differences between the effective tax rates reflected in the total provision for income taxes and the U.S. federal statutory rate | ||||||||||||
Reversal of unrealized tax benefit liability | 500 | 500 | ||||||||||
Compass | ||||||||||||
Differences between the effective tax rates reflected in the total provision for income taxes and the U.S. federal statutory rate | ||||||||||||
Reversal of unrealized tax benefit liability | $ 800 | $ 800 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Details) | 12 Months Ended | |||
Dec. 31, 2017USD ($)item$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | |
STOCK-BASED COMPENSATION PLANS | ||||
Recognized employee stock-based compensation expense | $ | $ 7,400,000 | $ 7,000,000 | $ 5,000,000 | |
Employee Stock Purchase Plan | ||||
STOCK-BASED COMPENSATION PLANS | ||||
Shares available under the plan | 1,200,000 | |||
Shares available for grant | 652,740 | |||
Weighted-Average Grant Date Fair Value | ||||
Offering period for the plan | 3 months | |||
Period of interval between occurrence of purchases | 3 months | |||
IRS regulated cap for payroll deduction to purchase common stock | $ | $ 25,000 | |||
Purchase price expressed as a percentage of fair market value of common stock (as a percent) | 90.00% | |||
Shares issued under ESPP | 213,134 | |||
Shares available for purchase under ESPP | 652,740 | |||
Minimum | Employee Stock Purchase Plan | ||||
Weighted-Average Grant Date Fair Value | ||||
Eligible service period of employees per week to participate in the plan | 20 hours | |||
Eligible service period of employees in a calendar year to participate in the plan | 5 months | |||
Percentage of employees' eligible earnings as payroll deduction to purchase common stock | 1.00% | |||
Maximum | Employee Stock Purchase Plan | ||||
Weighted-Average Grant Date Fair Value | ||||
Percentage of employees' eligible earnings as payroll deduction to purchase common stock | 10.00% | |||
Equity Incentive Plan2007 | ||||
STOCK-BASED COMPENSATION PLANS | ||||
Shares available for grant | 5,614,838 | |||
Weighted-Average Grant Date Fair Value | ||||
Total fair value RSUs vested (in dollars) | $ | $ 6,900,000 | $ 5,800,000 | $ 3,600,000 | |
Equity Incentive Plan2007 | Maximum | ||||
STOCK-BASED COMPENSATION PLANS | ||||
Anniversary period from the grant date on which the award will expire | 10 years | |||
Equity Incentive Plan2007 | Stock Appreciation Rights (SARs) | ||||
STOCK-BASED COMPENSATION PLANS | ||||
Number of anniversaries | item | 4 | |||
Anniversary period from the grant date on which the award will expire | 10 years | |||
Period following the employee's termination of services as a result of death or permanent disability after which the award will expire | 1 year | |||
Period following fourth anniversary from the grant date after which the award will expire | 90 days | |||
Period following the participant's termination of employment due to reasons other than death, disability or retirement after which the award will expire | 30 days | |||
SARs | ||||
Outstanding at the beginning of the period (in shares) | 47,000 | 47,000 | 106,000 | |
Exercised (in shares) | (25,000) | |||
Forfeited (in shares) | (34,000) | (34,000) | ||
Outstanding at the end of the period (in shares) | 13,000 | 47,000 | 47,000 | 106,000 |
Vested and expected to vest at the end of the period (in shares) | 13,000 | |||
Exercisable at the end of the period (in shares) | 13,000 | |||
Weighted-Average Exercise Price | ||||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 6.13 | $ 6.13 | $ 5.78 | |
Exercised (in dollars per share) | $ / shares | 3.17 | |||
Forfeited (in dollars per share) | $ / shares | 7.20 | 7.20 | ||
Outstanding at the end of the period (in dollars per share) | $ / shares | 3.18 | $ 6.13 | $ 6.13 | $ 5.78 |
Vested and expected to vest at the end of the period (in dollars per share) | $ / shares | 3.18 | |||
Exercisable at the end of the period (in dollars per share) | $ / shares | $ 3.18 | |||
Weighted-Average Remaining Contractual Life | ||||
Outstanding at the end of the period | 10 months 24 days | 1 year 2 months 12 days | 2 years 2 months 12 days | 3 years 3 months 18 days |
Vested and expected to vest at the end of the period | 10 months 24 days | |||
Exercisable at the end of the period | 10 months 24 days | |||
Aggregate Intrinsic Value | ||||
Outstanding at the beginning of the period (in dollars) | $ | $ 6,000 | $ 6,000 | $ 39,000 | |
Exercised (in dollars) | $ | 32,000 | |||
Outstanding at the end of the period (in dollars) | $ | 12,000 | 6,000 | 6,000 | $ 39,000 |
Vested and expected to vest at the end of the period (in dollars) | $ | 12,000 | |||
Exercisable at the end of the period (in dollars) | $ | 12,000 | |||
Total fair value of the awards vested | $ | $ 0 | $ 0 | $ 0 | |
Equity Incentive Plan2007 | Stock Appreciation Rights (SARs) | Awards Vesting On Four Anniversaries | ||||
STOCK-BASED COMPENSATION PLANS | ||||
Award vesting percentage | 25.00% | |||
Equity Incentive Plan2007 | Restricted Stock Units R S U | ||||
Aggregate Intrinsic Value | ||||
Percentage of relevant period has elapsed for pro rata vesting of the awards | 50.00% | |||
RSA and RSU | ||||
Non-vested at the beginning of the period (in shares) | 3,707,000 | 3,168,000 | 2,636,000 | |
Granted (in shares) | 2,778,000 | 2,129,000 | 1,881,000 | |
Vested (in shares) | (1,781,000) | (1,464,000) | (1,099,000) | |
Forfeited (in shares) | (548,000) | (126,000) | (250,000) | |
Non-vested at the end of the period (in shares) | 4,156,000 | 3,707,000 | 3,168,000 | 2,636,000 |
Weighted-Average Grant Date Fair Value | ||||
Non-vested at the beginning of the period (in dollars per share) | $ / shares | $ 3.91 | $ 4.02 | $ 3.73 | |
Granted (in dollars per share) | $ / shares | 3.60 | 3.79 | 3.90 | |
Vested (in dollars per share) | $ / shares | 3.90 | 3.96 | 3.29 | |
Forfeited (in dollars per share) | $ / shares | 3.83 | 3.88 | 3.28 | |
Non-vested at the end of the period (in dollars per share) | $ / shares | $ 3.72 | $ 3.91 | $ 4.02 | $ 3.73 |
Unrecognized compensation cost related to the RSUs | $ | $ 8,800,000 | |||
Weighted-average period to recognize unrecognized compensation cost | 2 years 2 months 12 days | |||
Equity Incentive Plan2007 | Restricted Stock Units R S U | Awards Vesting On Employment Through The Fourth Anniversary Of Grant | ||||
STOCK-BASED COMPENSATION PLANS | ||||
Award vesting percentage | 100.00% | |||
Equity Incentive Plan2007 | Restricted Stock | Awards Vesting On Change In Control | ||||
STOCK-BASED COMPENSATION PLANS | ||||
Award vesting percentage | 100.00% | |||
Incentive Plan Amendment | ||||
STOCK-BASED COMPENSATION PLANS | ||||
Additional shares authorized | 5,300,000 |
SEGMENT AND GEOGRAPHICAL INFO66
SEGMENT AND GEOGRAPHICAL INFORMATION (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)segment | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Segment and geographical information | |||||||||||
Number of segments | segment | 1 | ||||||||||
Revenues | $ 66,612 | $ 68,349 | $ 68,038 | $ 66,555 | $ 54,287 | $ 51,929 | $ 60,354 | $ 49,929 | $ 269,554 | $ 216,499 | $ 209,240 |
Furniture, fixtures and equipment, net | 5,229 | 4,789 | 5,229 | 4,789 | 3,021 | ||||||
Americas | |||||||||||
Segment and geographical information | |||||||||||
Revenues | 161,845 | 116,566 | 108,925 | ||||||||
Furniture, fixtures and equipment, net | 3,495 | 3,246 | 3,495 | 3,246 | 1,907 | ||||||
Europe | |||||||||||
Segment and geographical information | |||||||||||
Revenues | 82,910 | 75,149 | 77,781 | ||||||||
Furniture, fixtures and equipment, net | 1,390 | 1,237 | 1,390 | 1,237 | 955 | ||||||
Asia Pacific | |||||||||||
Segment and geographical information | |||||||||||
Revenues | 24,799 | 24,784 | 22,534 | ||||||||
Furniture, fixtures and equipment, net | $ 344 | $ 306 | 344 | 306 | 159 | ||||||
Germany | |||||||||||
Segment and geographical information | |||||||||||
Revenues | 40,000 | 33,500 | 29,400 | ||||||||
United Kingdom | |||||||||||
Segment and geographical information | |||||||||||
Revenues | 14,800 | 12,500 | 21,200 | ||||||||
Australia | |||||||||||
Segment and geographical information | |||||||||||
Revenues | $ 18,600 | $ 19,100 | $ 17,300 |
UNAUDITED QUARTERLY INFORMATI67
UNAUDITED QUARTERLY INFORMATION (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
UNAUDITED QUARTERLY INFORMATION | |||||||||||
Net Sales | $ 66,612 | $ 68,349 | $ 68,038 | $ 66,555 | $ 54,287 | $ 51,929 | $ 60,354 | $ 49,929 | $ 269,554 | $ 216,499 | $ 209,240 |
Gross Profit | 29,135 | 30,135 | 27,785 | 25,869 | 20,361 | 20,970 | 24,248 | 18,561 | |||
Operating income (loss) | 3,956 | 3,474 | 546 | 1,181 | (8,557) | 2,616 | 3,217 | 132 | 9,157 | (2,592) | 9,615 |
Other expense, net | (1,727) | (1,812) | (1,774) | (1,744) | (866) | (634) | (320) | (912) | |||
(Loss) income from operations | 2,229 | 1,662 | (1,228) | (563) | (9,423) | 1,982 | 2,897 | (780) | 2,100 | (5,324) | 8,143 |
Net (loss) income attributable to ISG | $ (2,650) | $ 1,428 | $ (302) | $ (606) | $ (8,150) | $ 732 | $ 1,612 | $ (699) | $ (2,130) | $ (6,505) | $ 4,841 |
Basic (loss) earnings per share attributable to ISG | $ (0.06) | $ 0.03 | $ (0.01) | $ (0.01) | $ (0.22) | $ 0.02 | $ 0.05 | $ (0.02) | $ (0.05) | $ (0.18) | $ 0.13 |
Diluted (loss) earnings per share attributable to ISG | $ (0.06) | $ 0.03 | $ (0.01) | $ (0.01) | $ (0.22) | $ 0.02 | $ 0.04 | $ (0.02) | $ (0.05) | $ (0.18) | $ 0.13 |
Basic weighted average common shares | 43,423 | 43,305 | 43,058 | 42,316 | 37,842 | 35,707 | 35,609 | 37,340 | 43,025 | 36,625 | 37,186 |
Diluted weighted average common shares | 43,423 | 44,658 | 43,058 | 42,316 | 37,842 | 36,873 | 36,719 | 37,340 | 43,025 | 36,625 | 38,936 |
SCHEDULE II - VALUATION AND Q68
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Allowance for doubtful accounts | |||
Changes in valuation and qualifying accounts | |||
Balance at Beginning of Period | $ 494 | $ 415 | $ 234 |
Charges to Costs and Expenses | 351 | 34 | 174 |
Additions/(Deductions) | (342) | 45 | 7 |
Balance at End of Period | 503 | 494 | 415 |
Allowance for tax valuation | |||
Changes in valuation and qualifying accounts | |||
Balance at Beginning of Period | 6,802 | 5,146 | 5,694 |
Charges to Costs and Expenses | 572 | 1,497 | (171) |
Additions/(Deductions) | (831) | 159 | (377) |
Balance at End of Period | $ 6,543 | $ 6,802 | $ 5,146 |