Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended |
Sep. 30, 2014 | |
Document Information [Line Items] | |
Document Type | S-1/A |
Amendment Flag | FALSE |
Document Period End Date | 30-Sep-14 |
Trading Symbol | PAYC |
Entity Registrant Name | Paycom Software, Inc. |
Entity Central Index Key | 1590955 |
Entity Filer Category | Non-accelerated Filer |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Current assets: | |||
Cash and cash equivalents | $18,473 | $13,362 | $13,435 |
Restricted cash | 370 | 369 | 368 |
Accounts receivable | 1,468 | 1,705 | 622 |
Prepaid expenses | 1,581 | 2,133 | 686 |
Inventory | 384 | 578 | 714 |
Income tax receivable | 150 | ||
Deferred tax assets | 2,422 | 3,672 | 4,184 |
Current assets before funds held for clients | 24,698 | 21,969 | 20,009 |
Funds held for clients | 393,633 | 455,779 | 324,266 |
Total current assets | 418,331 | 477,748 | 344,275 |
Property, plant and equipment, net | 46,642 | 38,671 | 25,139 |
Deposits and other assets | 595 | 461 | 417 |
Goodwill | 51,889 | 51,889 | 51,889 |
Intangible assets, net | 5,499 | 6,709 | 8,321 |
Total assets | 522,956 | 575,478 | 430,041 |
Current liabilities: | |||
Accounts payable | 1,976 | 5,020 | 2,351 |
Income tax payable | 148 | ||
Accrued commissions and bonuses | 2,568 | 3,598 | 1,953 |
Accrued payroll and vacation | 2,665 | 3,087 | 1,925 |
Deferred revenue | 2,186 | 1,582 | 1,036 |
Current portion of long-term debt | 845 | 9,545 | 2,151 |
Accrued expenses and other current liabilities | 3,871 | 4,372 | 1,978 |
Current liabilities before client funds obligation | 14,259 | 27,204 | 11,394 |
Client funds obligation | 393,633 | 455,779 | 324,266 |
Total current liabilities | 407,892 | 482,983 | 335,660 |
Deferred tax liabilities | 3,059 | 2,895 | 2,890 |
Long-term deferred revenue | 15,048 | 10,990 | 7,356 |
Long-term debt, less current portion | 26,341 | 11,545 | 11,959 |
Long-term debt to related parties | 60,875 | 60,633 | |
Derivative liability | 1,107 | 1,767 | |
Total long-term liabilities | 44,448 | 87,412 | 84,605 |
Commitments and contingencies | |||
Stockholders' equity: | |||
Common stock | 510 | 457 | 445 |
Additional paid in capital | 66,949 | 33,978 | 23,577 |
Retained earnings (accumulated deficit) | 3,157 | -29,349 | -14,249 |
Total parent's stockholders' equity | 70,616 | 5,086 | 9,773 |
Noncontrolling interest | -3 | 3 | |
Total stockholders' equity | 70,616 | 5,083 | 9,776 |
Total liabilities and stockholders' equity | $522,956 | $575,478 | $430,041 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | |||
Accumulated depreciation | $15,517 | $11,540 | $8,015 |
Accumulated amortization | $11,692 | $10,482 | $8,870 |
Common stock, par value | $0.01 | $0.01 | $0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 |
Common stock, shares issued | 51,056,462 | 45,708,573 | 44,560,048 |
Common stock, shares outstanding | 51,056,462 | 45,708,573 | 44,560,048 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Income (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Revenues | |||||||
Recurring | $35,910 | $25,210 | $105,030 | $75,808 | $105,560 | $75,420 | $56,382 |
Implementation and other | 688 | 620 | 1,859 | 1,513 | 2,041 | 1,390 | 824 |
Total revenues | 36,598 | 25,830 | 106,889 | 77,321 | 107,601 | 76,810 | 57,206 |
Cost of revenues | |||||||
Operating expenses | 5,798 | 4,846 | 17,847 | 13,633 | 19,070 | 14,895 | 12,287 |
Depreciation | 638 | 494 | 1,876 | 1,320 | 1,821 | 1,431 | 987 |
Total cost of revenues | 6,436 | 5,340 | 19,723 | 14,953 | 20,891 | 16,326 | 13,274 |
Administrative expenses | |||||||
Sales and marketing | 14,856 | 10,339 | 44,237 | 28,913 | 42,681 | 29,255 | 22,244 |
Research and development | 1,059 | 538 | 2,878 | 1,317 | 2,146 | 1,632 | 1,225 |
General and administrative | 8,410 | 6,815 | 25,816 | 18,851 | 28,729 | 19,372 | 14,650 |
Depreciation and amortization | 1,159 | 959 | 3,322 | 2,716 | 3,682 | 4,092 | 4,300 |
Total administrative expenses | 25,484 | 18,651 | 76,253 | 51,797 | 77,238 | 54,351 | 42,419 |
Total operating expenses | 31,920 | 23,991 | 95,976 | 66,750 | 98,129 | 70,677 | 55,693 |
Operating income | 4,678 | 1,839 | 10,913 | 10,571 | 9,472 | 6,133 | 1,513 |
Interest expense | -338 | -2,329 | -3,079 | -6,929 | -9,272 | -6,977 | -134 |
Net loss on early repayment of debt | -4,044 | ||||||
Other income (expense), net | 39 | -133 | 1,395 | 140 | 1,199 | 354 | 108 |
Income (loss) before income taxes | 4,379 | -623 | 5,185 | 3,782 | 1,399 | -490 | 1,487 |
Provision (benefit) for income taxes | 1,689 | -199 | 2,028 | 1,211 | 792 | -84 | 601 |
Net income (loss) | 2,690 | -424 | 3,157 | 2,571 | 607 | -406 | 886 |
Net income (loss) attributable to the noncontrolling interest | -3 | 19 | 6 | -3 | |||
Net income (loss) attributable to the Company | 2,690 | -421 | 3,157 | 2,552 | 601 | -403 | 886 |
Pro forma additional income tax expense (benefit) | -93 | 563 | -137 | -14 | 35 | ||
Pro forma net income (loss) | $2,690 | ($328) | $3,157 | $1,989 | $738 | ($389) | $851 |
Net income (loss) per share, basic | $0.05 | ($0.01) | $0.06 | $0.06 | $0.01 | ($0.01) | $0.02 |
Net income (loss) per share, diluted | $0.05 | ($0.01) | $0.06 | $0.05 | $0.01 | ($0.01) | $0.02 |
Pro forma net income (loss) per share, basic | $0.05 | ($0.01) | $0.06 | $0.04 | $0.02 | ($0.01) | $0.02 |
Pro forma net income (loss) per share, diluted | $0.05 | ($0.01) | $0.06 | $0.04 | $0.02 | ($0.01) | $0.02 |
Weighted average shares outstanding: | |||||||
Basic | 51,056,462 | 45,707,802 | 49,040,344 | 45,398,933 | 45,476,895 | 44,771,559 | 44,560,053 |
Diluted | 52,978,051 | 45,707,802 | 51,223,048 | 47,975,548 | 48,062,075 | 44,771,559 | 45,411,371 |
Pro forma weighted average shares outstanding: | |||||||
Basic | 51,056,462 | 45,707,802 | 49,040,344 | 45,398,933 | 45,476,895 | 44,771,559 | 44,560,053 |
Diluted | 52,978,051 | 45,707,802 | 51,223,048 | 47,975,548 | 48,062,075 | 44,771,559 | 45,411,371 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | 12 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Operating activities | |||||
Net income | $3,157 | $2,571 | $607 | ($406) | $886 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||
Depreciation and amortization | 5,198 | 4,036 | 5,486 | 5,522 | 5,286 |
Gain on sale of property, plant and equipment | -248 | ||||
Amortization of debt discount | 67 | 178 | 241 | 143 | |
Amortization of debt issuance costs | 17 | 19 | |||
Write off of debt issuance costs | 4,051 | ||||
Stock-based compensation | 362 | 925 | 934 | 503 | 165 |
Change in fair value of derivative liability | -1,107 | 257 | -660 | -333 | |
Changes in operating assets and liabilities: | |||||
Accounts receivable | 237 | -85 | -1,083 | -133 | -241 |
Prepaid expenses | -94 | -753 | -800 | -395 | 256 |
Inventory | 195 | -121 | 136 | 8 | -75 |
Deposits and other assets | -145 | -53 | -44 | -75 | -204 |
Income tax receivable | 150 | -150 | |||
Deferred tax assets | 1,250 | 1,211 | 512 | -323 | -1,247 |
Deferred tax liabilities | 164 | 5 | 159 | 1,791 | |
Income tax payable | 148 | ||||
Accounts payable | -3,044 | -159 | 2,667 | 1,157 | -597 |
Accrued commissions and bonuses | -1,030 | -1,195 | 1,645 | 1,461 | 3 |
Accrued payroll and vacation | -422 | -170 | 1,162 | 351 | 406 |
Deferred revenue | 4,662 | 2,775 | 4,163 | 2,778 | 2,185 |
Accrued expenses and other liabilities | -498 | 2,679 | 2,394 | 538 | 471 |
Net cash provided by operating activities | 13,301 | 12,096 | 16,984 | 10,974 | 9,085 |
Investing activities | |||||
Decrease in funds held for clients | 62,146 | 82,294 | -131,513 | -71,001 | -87,190 |
Increase (decrease) in restricted cash | 1 | -1 | -1 | -117 | -251 |
Additions to property, plant and equipment | -11,948 | -6,243 | -17,176 | -5,971 | -14,867 |
Proceeds from sale of property, plant and equipment | 258 | 106 | 9 | ||
Net cash provided (used) by investing activities | 50,199 | 76,050 | -148,432 | -76,983 | -102,299 |
Financing activities | |||||
Proceeds from issuance of long-term debt | 6,539 | 6,979 | 1,750 | 9,612 | |
Proceeds from issuance of long-term debt to related party | 16,398 | ||||
Proceeds from initial public offering | 62,842 | ||||
Payments on long-term debt | -401 | ||||
Payments on long-term debt | -65,442 | 1,750 | |||
Decrease in client funds obligation | -62,146 | -82,294 | 131,513 | 71,001 | 87,191 |
Proceeds from issuance of common shares | 2,409 | ||||
Common shares redeemed | -1,000 | ||||
Distributions paid to stockholders as return of capital | -18,807 | ||||
Incentive awards redeemed | -1,061 | -1,061 | |||
Payments of deferred offering costs | -647 | ||||
Capital impact of reorganization | -183 | ||||
Distributions paid to stockholders | -5,409 | -158 | -1,443 | ||
Capital contribution | 1 | 1,162 | |||
Net cash provided (used) in financing activities | -58,389 | -80,443 | 131,375 | 72,192 | 94,360 |
Change in cash and cash equivalents | 5,111 | 7,703 | -73 | 6,183 | 1,146 |
Cash and cash equivalents | |||||
Beginning of period | 13,362 | 13,435 | 13,435 | 7,252 | 6,106 |
End of period | 18,473 | 21,138 | 13,362 | 13,435 | 7,252 |
Supplemental cash flow disclosure | |||||
Cash paid for interest, net of amounts capitalized | 9,298 | 6,834 | 134 | ||
Noncash financing and investing activities | |||||
Purchase of property, plant and equipment on account | 368 | 167 | 45 | ||
Issuance of common stock as return of capital distribution | $46,193 |
Statement_of_Shareholders_Equi
Statement of Shareholders' Equity (USD $) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] |
In Thousands, except Share data | |||||
Beginning balance, value at Dec. 31, 2010 | $73,753 | $449 | $80,637 | ($7,333) | |
Beginning balance, shares at Dec. 31, 2010 | 44,919,037 | ||||
Distributions to stockholders | -1,443 | 987 | -2,430 | ||
Common stock redeemed | -1,000 | -7 | -993 | ||
Common stock redeemed, shares | -673,656 | ||||
Stock-based compensation | 165 | 165 | |||
Net income (loss) | 886 | 886 | |||
Ending balance, value at Dec. 31, 2011 | 72,361 | 442 | 80,796 | -8,877 | |
Ending balance, shares at Dec. 31, 2011 | 44,245,381 | ||||
Issuance of common stock | 2,409 | 3 | 2,406 | ||
Issuance of common stock,shares | 314,667 | ||||
Distributions to stockholders | -158 | 4,808 | -4,966 | ||
Distributions to stockholders as return of capital | -18,807 | -18,807 | |||
Stock-based compensation | 567 | 567 | |||
Reclassification of Series C Preferred Units to debt | -46,193 | -46,193 | |||
Net income (loss) | -403 | -406 | 3 | ||
Ending balance, value at Dec. 31, 2012 | 9,776 | 445 | 23,577 | -14,249 | 3 |
Ending balance, shares at Dec. 31, 2012 | 44,560,048 | ||||
Issuance of common stock | 12 | 12 | |||
Issuance of common stock,shares | 1,148,525 | ||||
Distributions to stockholders | -5,409 | 10,298 | -15,707 | ||
Common stock redeemed | -1,061 | -1,061 | |||
Stock-based compensation | 1,164 | 1,164 | |||
Net income (loss) | 601 | 607 | -6 | ||
Ending balance, value at Dec. 31, 2013 | $5,083 | $457 | $33,978 | ($29,349) | ($3) |
Ending balance, shares at Dec. 31, 2013 | 45,708,573 |
Consolidation_Basis_of_Present
Consolidation, Basis of Presentation, Organization and Description of Business | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2013 | |||
Consolidation, Basis of Presentation, Organization and Description of Business | 1 | CONSOLIDATION AND BASIS OF PRESENTATION | 1 | ORGANIZATION AND DESCRIPTION OF BUSINESS |
The Reorganization | The Reorganization | |||
Paycom Software, Inc. (“Software”) and its wholly-owned subsidiary, Payroll Software Merger Sub, LLC (“Merger Sub”) were formed as Delaware entities on October 31, 2013, and December 23, 2013, respectively, in anticipation of an initial public offering (“IPO”) and were wholly-owned subsidiaries of Paycom Payroll, LLC (“Paycom”) prior to December 31, 2013. | Paycom Software, Inc. (“Software”) and its wholly-owned subsidiary, Payroll Software Merger Sub, LLC (“Merger Sub”) were formed as Delaware entities on October 31, 2013, and December 23, 2013, respectively, in anticipation of an initial public offering (“IPO”) and were wholly-owned subsidiaries of Paycom Payroll, LLC (“Paycom”) prior to December 31, 2013. | |||
On January 1, 2014, we consummated a reorganization pursuant to which: (i) affiliates of Welsh, Carson, Anderson & Stowe, L.P. contributed WCAS Paycom Holdings, Inc. (“WCAS Holdings”) and WCAS CP IV Blocker, Inc. (“CP IV Blocker”), which collectively own all of the Series A Preferred Units of Paycom Payroll Holdings, LLC (“Holdings”), to Software in exchange for shares of common stock of Software and (ii) the owners of outstanding Series B Preferred Units of Holdings contributed their Series B Preferred Units of Holdings to Software in exchange for shares of common stock of Software. Immediately after these contributions, Merger Sub merged with and into Holdings with Holdings surviving the merger. Upon consummation of the merger, the remaining holders of outstanding common and incentive units of Holdings received shares of common stock of Software for their common and incentive units by operation of Delaware law and Holdings’ ownership interest in Software was cancelled. Outstanding common units, Series B Preferred Units and WCAS Holdings and CP IV Blocker were contributed to Software in exchange for, or converted into, 45,708,573 shares of common stock and 8,121,101 shares of restricted stock of Software. Following these transactions, all outstanding Series C Preferred Units were eliminated in an intercompany transaction between Holdings and WCAS Holdings, and we assumed the 14% Note due 2017 issued by WCAS Holdings (the “2017 Note”). Following the reorganization, Software became a holding company with its principal asset being the Series A Preferred Units of Holdings (collectively, the “2014 Reorganization”). | On January 1, 2014, we consummated a reorganization pursuant to which: (i) affiliates of Welsh, Carson, Anderson & Stowe, L.P. contributed WCAS Paycom Holdings, Inc. (“WCAS Holdings”) and WCAS CP IV Blocker, Inc. (“CP IV Blocker”), which collectively own all of the Series A Preferred Units of Paycom Payroll Holdings, LLC (“Holdings”), to Software in exchange for shares of common stock of Software and (ii) the owners of outstanding Series B Preferred Units of Holdings contributed their Series B Preferred Units of Holdings to Software in exchange for shares of common stock of Software. Immediately after these contributions, Merger Sub merged with and into Holdings with Holdings surviving the merger. Upon consummation of the merger, the remaining holders of outstanding common and incentive units of Holdings received shares of common stock of Software for their common and incentive units by operation of Delaware law and Holdings’ ownership interest in Software was cancelled. Outstanding common units, Series B Preferred Units and WCAS Holdings and CP IV Blocker were contributed to Software in exchange for, or converted into, 45,708,573 shares of common stock and 8,121,101 shares of restricted stock of Software. Following these transactions, all outstanding Series C Preferred Units were eliminated in an intercompany transaction between Holdings and WCAS Holdings, and we assumed the 14% Note due 2017 issued by WCAS Holdings (the “2017 Note”). Following the reorganization, Software became a holding company with its principal asset being the Series A Preferred Units of Holdings (collectively, the “2014 Reorganization”). | |||
Software’s acquisition of WCAS Holdings and Holdings in the 2014 Reorganization represented transactions under common control and were required to be retrospectively applied to the financial statements for all prior periods when the financial statements were issued for a period that included the date the transactions occurred. This includes a retrospective presentation for all equity related disclosures, including share, per share, and restricted stock disclosures, which have been revised to reflect the effects of the 2014 Reorganization. Therefore, our consolidated financial statements are presented as if WCAS Holdings and Holdings were wholly-owned subsidiaries in periods prior to the 2014 Reorganization. The acquisition of CP IV Blocker was not deemed to be a reorganization under common control and therefore our historical consolidated financial statements for periods prior to January 1, 2014 include the ownership of a minority equity interest in CP IV Blocker, which was eliminated upon the acquisition of CP IV Blocker in the 2014 Reorganization on January 1, 2014. | Software’s acquisition of WCAS Holdings and Holdings in the 2014 Reorganization represented transactions under common control and were required to be retrospectively applied to the financial statements for all prior periods when the financial statements were issued for a period that included the date the transactions occurred. This includes a retrospective presentation for all equity related disclosures, including share, per share, and restricted stock disclosures, which have been revised to reflect the effects of the 2014 Reorganization. Therefore, our consolidated financial statements are presented as if WCAS Holdings and Holdings were wholly-owned subsidiaries in periods prior to the 2014 Reorganization. The acquisition of CP IV Blocker was not deemed to be a reorganization under common control and therefore our historical consolidated financial statements include the ownership of a minority equity interest in CP IV Blocker, which was eliminated upon the acquisition of CP IV Blocker in the 2014 Reorganization on January 1, 2014. | |||
Our unaudited interim condensed consolidated financial statements include the financial results of Software, WCAS Holdings, CP IV Blocker and Holdings, effective January 1, 2014. Intercompany balances and transactions were eliminated in consolidation. | Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our” and the “Company” refer, prior to the 2014 Reorganization, to Holdings, Holdings’ consolidated subsidiaries and WCAS Holdings collectively and, after the 2014 Reorganization, to Software and its consolidated subsidiaries. | |||
Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our” and the “Company” refer, prior to the 2014 Reorganization, to Holdings, Holdings’ consolidated subsidiaries and WCAS Holdings collectively, and after the 2014 Reorganization, to Software and its consolidated subsidiaries. | ||||
Basis of Presentation | ||||
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial statements that permit reduced disclosure for interim periods. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary to fairly present our condensed consolidated financial position as of September 30, 2014 and December 31, 2013, our condensed consolidated results of operations for the nine months ended September 30, 2014 and 2013 and our condensed consolidated cash flows for the nine months ended September 30, 2014 and 2013. Such adjustments are of a normal recurring nature. The information in this prospectus should be read in conjunction with our consolidated financial statements for the years ended December 31, 2013 and 2012 included elsewhere in this prospectus. | ||||
Use of Estimates | ||||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include the useful life for long-lived and intangible assets, the life of our client relationships, the fair market value of our equity incentive awards and the fair value of our financial instruments. These estimates are based on historical experience where applicable and other assumptions that management believes are reasonable under the circumstances. As such, actual results could materially differ from these estimates. | ||||
Segment Information | ||||
We operate in a single operating segment and a single reporting segment and all required financial segment information is presented in the condensed consolidated financial statements. | ||||
Summary of Significant Accounting Policies | ||||
Software’s significant accounting policies are discussed in Note 2 to its audited consolidated financial statements for the fiscal years ended December 31, 2013 and 2012 included elsewhere in this prospectus. | ||||
Recently Issued and Adopted Accounting Pronouncements | ||||
In July 2013, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance which requires entities to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. We adopted this new guidance during the nine months ended September 30, 2014, which did not have a material impact on our condensed consolidated financial statements. | ||||
In May 2014, the FASB issued authoritative guidance which included a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is not permitted. Accordingly, the standard is effective for us on January 1, 2017. We are currently evaluating the impact that the standard will have on our condensed consolidated financial statements. | ||||
In June 2014, the FASB issued authoritative guidance for share-based payments which requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Accordingly, the standard is effective for us on January 1, 2016. We do not anticipate that the adoption of this standard will have a material impact on our condensed consolidated financial statements. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies | 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Software’s significant accounting policies are discussed in Note 2 to its audited consolidated financial statements for the fiscal years ended December 31, 2013 and 2012 included elsewhere in this prospectus. | Basis of Presentation and Principles of Consolidation | |||||
Our consolidated financial statements include the financial results of Software, Holdings, Paycom and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Intercompany balances and transactions have been eliminated in consolidation. | ||||||
Use of Estimates | ||||||
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include the useful life for long-lived and intangible assets, the life of our client relationships, the fair market value of our equity incentive awards and the fair value of our financial instruments. These estimates are based on historical experience where applicable and other assumptions that management believes are reasonable under circumstances. As such, actual results could materially differ from these estimates. | ||||||
Segment Information | ||||||
We operate in a single operating segment and a single reporting segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief executive officer in deciding how to allocate resources and assessing performance. Our chief executive officer allocates resources and assesses performance based upon financial information at the consolidated level. Since we operate in one operating segment, all required financial segment information is presented in the consolidated financial statements. | ||||||
Reclassifications | ||||||
Certain reclassifications were made to the 2012 and 2011 consolidated financial statements to conform to the 2013 presentation. These reclassifications were not material to the financial statements and had no effect on the consolidated stockholders’ equity or net income (loss). | ||||||
Cash Equivalents | ||||||
We consider all highly liquid debt instruments purchased with a maturity of three months or less and money market mutual funds to be cash equivalents. We maintain cash and cash equivalents in bank deposit accounts and money market funds, which may not be federally insured. The fair value of our cash and cash equivalents approximates carrying value. As of December 31, 2013 and 2012, all amounts were held in deposit on demand. We have not experienced any losses in such accounts and do not believe there is exposure to any significant credit risk on such accounts. | ||||||
Restricted Cash | ||||||
Restricted cash in our consolidated balance sheets primarily consists of cash held in restricted accounts due to requirements under an existing office building lease and our corporate building loan agreements. As of both December 31, 2013 and 2012, we had restricted cash of $0.4 million. | ||||||
Accounts Receivable | ||||||
We generally collect revenue from our customers via automatic deduction from clients’ bank accounts at the time processing occurs. Accounts receivable on our consolidated balance sheets consists primarily of revenue fees related to the last day of the period, which are collected on the following business day. As accounts receivable are collected via automatic deduction on the following business day, the Company has not recorded an allowance for doubtful accounts. | ||||||
Deferred offering costs | ||||||
Deferred offering costs represent legal, accounting and other direct costs related to our efforts to raise capital through an IPO. Costs related to IPO activities were deferred until the completion of the IPO, at which time they were offset against the IPO proceeds. As of December 31, 2013, we had capitalized $0.6 million associated with IPO activities and included such amount in prepaid expenses on the consolidated balance sheets. There were no deferred offering costs capitalized as of December 31, 2012. | ||||||
Inventory | ||||||
Our inventory consists of five types of time clocks sold to clients as part of our time and attendance services and are stated at the lower of cost or market. Cost is determined using the first-in first-out (“FIFO”) cost method. | ||||||
Time clocks are purchased as finished goods from a third party and as such we do not have any inventory classified as raw materials or work in process inventory. Rental clocks issued to clients under month-to-month operating leases are classified as property, plant, and equipment. We retain inventory in certain lines primarily as replacements for those clients who use the various clocks and have determined that no write-downs for obsolete items was required based on inventory turnover and our historical experience during the years ended December 31, 2013, 2012 and 2011. | ||||||
Property, Plant and Equipment | ||||||
Property, plant and equipment is stated at cost, net of accumulated depreciation. Depreciation is determined using the straight line method over the estimated useful lives of the assets as follows: | ||||||
Office equipment and furniture & fixtures | 5 years | |||||
Computer equipment and software | 3 years | |||||
Buildings | 30 years | |||||
Leasehold improvements | 3 years | |||||
Rental clocks | 5 years | |||||
Vehicles | 3 years | |||||
Our leasehold improvements are depreciated over the shorter of their estimated useful lives or the related lease terms. Costs incurred during construction of long-lived assets are recorded as construction in progress and are not depreciated until the asset is placed in service. | ||||||
We capitalize interest incurred related to construction in progress. For the years ended December 31, 2013, 2012 and 2011, we incurred interest costs of $2.6 million, $2.0 million and $0.4 million, respectively. For the years ended December 31, 2013, 2012 and 2011, interest expense of $0.1 million, less than $0.1 million and $0.3 million, respectively, was capitalized. | ||||||
Internal Use Software | ||||||
Expenditures for major software purchases and software developed or obtained for internal use are capitalized and amortized over a three-year period on a straight-line basis. Capitalized costs include external direct costs of materials and services associated with developing or obtaining internal use computer software and certain payroll and payroll-related costs for employees who are directly associated with internal use computer software projects. The amount of payroll costs that are capitalized with respect to these employees is limited to the time directly spent on such projects. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred. We also expense internal costs related to minor upgrades and enhancements, as it is impractical to separate these costs from normal maintenance activities. | ||||||
The total capitalized payroll costs related to internal use computer software projects was $1.2 million and $0.6 million as of December 31, 2013 and 2012, respectively, which have been included in property, plant and equipment. Amortization expense related to capitalized software costs of $0.6 million, $0.4 million and $0.4 million was charged to expense for the years ended December 31, 2013, 2012 and 2011, respectively. | ||||||
Goodwill and Other Intangible Assets | ||||||
Goodwill is not amortized, but is instead tested for impairment annually, or earlier if, at the reporting unit level, an indicator of impairment arises. The estimates and assumptions about future results of operations and cash flows made in connection with the impairment testing could differ from future actual results of operations and cash flows. If impairment exists, a write-down to fair value (normally measured by discounting estimated future cash flows) is recorded. Our business is largely homogeneous and, as a result, goodwill is associated with one reporting unit. We have selected June 30 as our annual goodwill impairment testing date and determined there was no impairment as of June 30, 2013. For the years ended December 31, 2013, 2012 and 2011, there were no indicators of impairment. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. | ||||||
Impairment of Long-Lived Assets | ||||||
Long-lived assets, including intangible assets with finite lives, are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset. We have determined that there was no impairment of long-lived assets for the years ended December 31, 2013, 2012 and 2011. | ||||||
Funds Held for Clients and Client Funds Obligation | ||||||
As part of our payroll and tax filing application, we collect funds for federal, state and local employment taxes from clients, handle applicable regulatory tax filings, correspondence and amendments, remit the funds to appropriate tax agencies, and handle other employer-related services. Amounts collected by us from clients for their federal, state and local employment taxes earn interest during the interval between receipt and disbursement, as we invest these funds in money market funds and certificates of deposit. The interest earned from these investments is included in the consolidated statements of income as other income, net. These investments are shown in the consolidated balance sheets as funds held for clients, and the offsetting liability for the tax filings is shown as client funds obligation. | ||||||
As of December 31, 2013 and 2012, the funds held for clients were invested in demand deposits, short-term certificates of deposit and money market funds. | ||||||
Revenue Recognition | ||||||
Our total revenue is comprised of recurring revenues and implementation and other revenues. We recognize revenue in accordance with accounting standards for software and service companies when all of the following criteria have been met: | ||||||
• | There is persuasive evidence of an arrangement; | |||||
• | The service has been or is being provided to the client; | |||||
• | Collection of the fees is reasonably assured; and | |||||
• | The amount of fees to be paid by the client is fixed or determinable. | |||||
Recurring | ||||||
Recurring revenues are derived primarily from our talent acquisition, time and labor management, payroll, talent management and human resources applications. Talent acquisition includes application tracking, employment and background checks, on/off-boarding, e-verify and tax credit services. Time and labor management includes time and attendance, scheduling, time-off requests, labor allocation and labor management reports. Payroll includes payroll and tax management, paycom pay, expense management and garnishment management. Talent management includes employee self-service, compensation budgeting, performance management and executive dashboard. Human resources management includes document management, government and compliance, benefits and COBRA administration and personnel action forms. | ||||||
The services related to recurring revenues are rendered during each client’s payroll period, with the agreed-upon fee being charged and collected as part of our processing of the client’s payroll. Recurring revenues are recognized at the conclusion of processing of each client’s payroll-period, when each respective payroll client is billed. Collectability is reasonably assured as the fees are collected through an Automated Clearing House (“ACH”) as part of the client’s payroll cycle or through direct wire transfer, which minimizes the default risk. | ||||||
Implementation and other | ||||||
Implementation and other revenues represent non-refundable conversion fees which are charged to new clients to offset the expense of new client set-up and revenue from the sale of time clocks as part of our employee time and attendance services. Because these conversion fees and sale of time clocks relate to our recurring revenue, we have evaluated such arrangements under the accounting guidance that governs multiple element arrangements. | ||||||
For arrangements with multiple elements, we evaluate whether each element represents a separate unit of accounting. In order to treat deliverables in a multiple element arrangement as separate units of accounting, the deliverables must have standalone value upon delivery. If the deliverables have stand-alone value upon delivery, we account for each deliverable separately and revenue is recognized for the respective deliverables as they are delivered. If one or more of the deliverables does not have stand-alone value upon delivery, the deliverables that do not have stand-alone value are generally combined with the final deliverable within the arrangement and treated as a single unit of accounting. | ||||||
When multiple deliverables included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified separate units of accounting based on their relative selling price. Multiple deliverable arrangements accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting. Vendor-specific objective evidence (“VSOE”) of selling price, based on the price at which the item is regularly sold by the vendor on a stand-alone basis, should be used if it exists. If VSOE of selling price is not available, third-party evidence (“TPE”) of selling price is used to establish the selling price if it exists, and if not it would be based on our best estimate of selling price. | ||||||
For the years ended December 31, 2013, 2012 and 2011, we have determined that there is no stand-alone value associated with the upfront conversion fees as they do not have value to our clients on a stand-alone basis nor are they offered as an individual service; therefore, the conversion fees are deferred and recognized ratably over the estimated life of our clients, which we have estimated to be ten years. | ||||||
For the years ended December 31, 2013, 2012, and 2011, we have determined that the revenues from the employee time and attendance services, and the revenues from the sale of time clocks as part of our time and attendance services, have VSOE of selling price as they are sold on a stand-alone basis. Revenue is therefore recognized for the respective deliverables as they are delivered. | ||||||
Cost of Revenues | ||||||
Our costs and expenses applicable to total revenues represent total operating expenses and systems support and technology costs, including labor and related expenses, bank fees, shipping fees and costs of paper stock, envelopes, etc. In addition, costs included to derive gross margins are comprised of support labor and related expenses, related hardware costs and applicable depreciation costs. | ||||||
Advertising Costs | ||||||
Advertising costs are expensed the first time that advertising takes place. Advertising costs for the years ended December 31, 2013, 2012 and 2011 were $3.4 million, $2.3 million and $1.7 million, respectively. | ||||||
Sales Taxes | ||||||
We collect and remit sales tax on sales of time and attendance clocks and on payroll services in certain states. These taxes are shown on a net basis, and as such, excluded from revenue. For the years ended December 31, 2013, 2012 and 2011, sales taxes collected and remitted were $2.2 million, $1.6 million and $1.1 million, respectively. | ||||||
Employee Stock-Based Compensation | ||||||
All stock-based compensation awards to employees are recognized pro rata over the respective vesting period as compensation costs in the consolidated statements of income based on their fair values measured as of the date of grant. | ||||||
Income Taxes | ||||||
Our consolidated financial statements include a provision for income taxes incurred for WCAS Holdings for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. | ||||||
Prior to the 2014 Reorganization, we operated under Holdings as a limited liability company (“LLC”) that was taxed as a partnership. Business income passed through the business to the LLC members, who reported their share of profits or losses on their respective income tax returns. | ||||||
We file income tax returns in the U.S. and various state jurisdictions. We evaluate tax positions taken or expected to be taken in the course of preparing our tax returns and disallow the recognition of tax positions not deemed to meet a “more-likely-than-not” threshold of being sustained by the applicable tax authority. We do not believe there are any tax positions taken within the consolidated financial statements that would not meet this threshold. Our policy is to record interest and penalties, if any, related to uncertain tax positions as a component of general and administrative expenses. We are not aware of any ongoing or potential examinations as of December 31, 2013. However, the tax years 2010 through 2013 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions. | ||||||
Recently Adopted and Issued Accounting Pronouncements | ||||||
In February 2013, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance which adds new disclosure requirements for items reclassified out of Accumulated Other Comprehensive Income (“AOCI”). The update requires that an entity present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of AOCI based on its source and the income statement line items affected by the reclassification. The amendment is effective for fiscal years and interim periods beginning on after December 15, 2012. We adopted this new guidance for the year ended December 31, 2013, which did not have a material impact on our consolidated financial statements. | ||||||
In February 2013, the FASB issued authoritative guidance, which added new disclosure requirements to measure obligations resulting from joint and several liability arrangement for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date and disclose the arrangements and the total outstanding amount of obligation for all joint parties. These disclosures are in addition to existing related party disclosure requirements. The amendment is effective for fiscal years and interim periods beginning after December 15, 2013 and we do not expect the adoption of such guidance to have a material impact on our consolidated financial statements. | ||||||
In July 2013, the FASB issued authoritative guidance which requires entities to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. We adopted this new guidance for the year ended December 31, 2013, which did not have a material impact on our consolidated financial statements. | ||||||
In May 2014, the FASB issued authoritative guidance which included a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is not permitted. Accordingly, the standard is effective for us on January 1, 2017. We are currently evaluating the impact that the standard will have on our consolidated financial statements. | ||||||
In June 2014, the FASB issued authoritative guidance for share-based payments which requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Accordingly, the standard is effective for us on January 1, 2016. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. |
Property_Plant_and_Equipment
Property, Plant and Equipment | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||
Property, Plant and Equipment | 2 | PROPERTY, PLANT AND EQUIPMENT | 3 | PROPERTY, PLANT AND EQUIPMENT | ||||||||||||||
Property, plant and equipment and accumulated depreciation were as follows (dollars in thousands): | Property, plant and equipment and accumulated depreciation were as follows (dollars in thousands): | |||||||||||||||||
September 30, | December 31, | December 31, | ||||||||||||||||
2014 | 2013 | 2013 | 2012 | |||||||||||||||
Property, plant and equipment | Property, plant and equipment | |||||||||||||||||
Buildings | $ | 28,154 | $ | 14,828 | Furniture, fixtures and equipment | $ | 3,189 | $ | 2,887 | |||||||||
Software and capitalized software costs | 7,635 | 5,578 | Computer equipment | 4,832 | 3,498 | |||||||||||||
Computer equipment | 6,613 | 4,832 | Software and capitalized software costs | 5,578 | 3,588 | |||||||||||||
Rental clocks | 6,111 | 4,865 | Rental clocks | 4,865 | 3,480 | |||||||||||||
Furniture, fixtures and equipment | 4,073 | 3,189 | Vehicles | 421 | 468 | |||||||||||||
Vehicles | 421 | 421 | Buildings | 14,828 | 14,828 | |||||||||||||
Leasehold improvements | 159 | 135 | Leasehold improvements | 135 | 135 | |||||||||||||
53,166 | 33,848 | 33,848 | 28,884 | |||||||||||||||
Less: accumulated depreciation | (15,517 | ) | (11,540 | ) | Less: accumulated depreciation | (11,540 | ) | (8,015 | ) | |||||||||
37,649 | 22,308 | 22,308 | 20,869 | |||||||||||||||
Land | 8,993 | 8,993 | Land | 8,993 | 4,205 | |||||||||||||
Construction in process | — | 7,370 | Construction in process | 7,370 | 65 | |||||||||||||
Property, plant and equipment, net | $ | 46,642 | $ | 38,671 | Property, plant and equipment, net | $ | 38,671 | $ | 25,139 | |||||||||
Rental clocks included in property, plant and equipment, net represent time clocks issued to clients under month-to-month operating leases. These items are transferred upon issuance from inventory to property, plant and equipment and depreciated over their estimated useful lives. | Rental clocks included in property, plant and equipment, net represent time clocks issued to clients under month-to-month operating leases. As such, these items are transferred from inventory to property, plant and equipment and depreciated over their estimated useful lives. | |||||||||||||||||
Depreciation expense for property, plant and equipment, net was $1.4 million and $4.0 million for the three and nine months ended September 30, 2014, respectively. Depreciation expense for property, plant and equipment, net was $1.0 million and $2.8 million for the three and nine months ended September 30, 2013, respectively. | Depreciation expense for property, plant and equipment, net was $3.9 million, $3.1 million and $2.0 million for the years ended December 31, 2013, 2012 and 2011, respectively. | |||||||||||||||||
We capitalize interest incurred under our indebtedness related to construction of our principal executive offices. For the nine months ended September 30, 2014, we paid interest costs of $0.9 million, of which $0.4 million was capitalized. For the nine months ended September 30, 2013, we paid interest costs of $0.6 million, of which less than $0.1 million was capitalized. | In October 2012, we began the construction of a second building/processing center at our headquarters. Completion of the building occurred in July 2014, and was financed with our funds, along with a construction note convertible to long-term notes payable, upon completion of the construction. | |||||||||||||||||
In November 2013 and December 2012, we purchased approximately 18.3 acres and 17.6 acres of land, respectively, from a related party for future expansion at our headquarters for total costs of $4.8 million and $2.3 million, respectively. For more information see Note 10—“Related Party Transactions.” |
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets, Net | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets, Net | 3 | GOODWILL AND INTANGIBLE ASSETS, NET | 4 | GOODWILL AND INTANGIBLE ASSETS, NET | ||||||||||||||||||||||||||||||
We had goodwill of $51.9 million as of September 30, 2014 and December 31, 2013. We have selected June 30 as our annual goodwill impairment testing date and determined there was no impairment as of June 30, 2014. For the year ended December 31, 2013, there were no indicators of impairment. | We had goodwill of $51.9 million as of December 31, 2013 and 2012. We performed the required impairment tests of goodwill for the years ended December 31, 2013, 2012 and 2011 and determined there was no impairment for each of those years then ended. | |||||||||||||||||||||||||||||||||
All of our intangible assets are considered to have finite lives and, as such, are subject to amortization. The components of intangible assets were as follows (dollars in thousands): | All of the intangible assets are considered to have finite lives and, as such, are subject to amortization. The components of intangible assets are as follows (dollars in thousands): | |||||||||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||||
Weighted Avg. | Gross | Accumulated | Net | Weighted Avg. | Gross | Accumulated | Net | |||||||||||||||||||||||||||
Remaining | Amortization | Remaining | Amortization | |||||||||||||||||||||||||||||||
Useful Life | Useful Life | |||||||||||||||||||||||||||||||||
(Years | ) | (Years) | ||||||||||||||||||||||||||||||||
Intangibles: | Intangibles: | |||||||||||||||||||||||||||||||||
Customer relationships | 2.8 | $ | 13,997 | $ | (10,147 | ) | $ | 3,850 | Customer relationships | 3.5 | $ | 13,997 | $ | (9,098 | ) | $ | 4,899 | |||||||||||||||||
Trade name | 7.8 | 3,194 | (1,545 | ) | 1,649 | Trade name | 8.5 | 3,194 | (1,384 | ) | 1,810 | |||||||||||||||||||||||
Total | $ | 17,191 | $ | (11,692 | ) | $ | 5,499 | Total | $ | 17,191 | $ | (10,482 | ) | $ | 6,709 | |||||||||||||||||||
December 31, 2013 | December 31, 2012 | |||||||||||||||||||||||||||||||||
Weighted Avg. | Gross | Accumulated | Net | Weighted Avg. | Gross | Accumulated | Net | |||||||||||||||||||||||||||
Remaining | Amortization | Remaining | Amortization | |||||||||||||||||||||||||||||||
Useful Life | Useful Life | |||||||||||||||||||||||||||||||||
(Years | ) | (Years) | ||||||||||||||||||||||||||||||||
Intangibles: | Intangibles: | |||||||||||||||||||||||||||||||||
Customer relationships | 3.5 | $ | 13,997 | $ | (9,098 | ) | $ | 4,899 | Customer relationships | 4.5 | $ | 13,997 | $ | (7,699 | ) | $ | 6,298 | |||||||||||||||||
Trade name | 8.5 | 3,194 | (1,384 | ) | 1,810 | Trade name | 9.5 | 3,194 | (1,171 | ) | 2,023 | |||||||||||||||||||||||
Total | $ | 17,191 | $ | (10,482 | ) | $ | 6,709 | Total | $ | 17,191 | $ | (8,870 | ) | $ | 8,321 | |||||||||||||||||||
The weighted average remaining useful life of our intangible assets was 4.3 years as of September 30, 2014. Amortization of intangible assets for the three and nine months ended September 30, 2014 was $0.4 million and $1.2 million, respectively. Amortization of intangible assets for the three and nine months ended September 30, 2013 was $0.4 million and $1.2 million, respectively. Estimated amortization expense as of September 30, 2014 for our existing intangible assets for the next five years and thereafter was as follows (dollars in thousands): | The weighted average remaining useful life of the intangible assets was 4.85 years as of December 31, 2013. Amortization of intangible assets for the years ended December 31, 2013, 2012 and 2011 totaled $1.6 million, $2.4 million and $3.2 million, respectively. | |||||||||||||||||||||||||||||||||
Estimated amortization expense for our existing intangible assets for the next five years and thereafter is as follows (dollars in thousands): | ||||||||||||||||||||||||||||||||||
Year Ending | Amortization | |||||||||||||||||||||||||||||||||
December 31, | Expense | Year Ending | Amortization | |||||||||||||||||||||||||||||||
2014 | $ | 403 | December 31, | |||||||||||||||||||||||||||||||
2015 | 1,613 | 2014 | $ | 1,613 | ||||||||||||||||||||||||||||||
2016 | 1,613 | 2015 | 1,613 | |||||||||||||||||||||||||||||||
2017 | 913 | 2016 | 1,613 | |||||||||||||||||||||||||||||||
2018 | 213 | 2017 | 913 | |||||||||||||||||||||||||||||||
Thereafter | 744 | 2018 | 213 | |||||||||||||||||||||||||||||||
Thereafter | 744 | |||||||||||||||||||||||||||||||||
$ | 5,499 | |||||||||||||||||||||||||||||||||
$ | 6,709 | |||||||||||||||||||||||||||||||||
Funds_Held_for_Clients_and_Cli
Funds Held for Clients and Client Funds Obligation | 9 Months Ended | |
Sep. 30, 2014 | ||
Funds Held for Clients and Client Funds Obligation | 4 | FUNDS HELD FOR CLIENTS AND CLIENT FUNDS OBLIGATION |
As part of our payroll and tax filing application, we collect funds for federal, state and local employment taxes from clients, handle applicable regulatory tax filings, correspondence and amendments, remit the funds to appropriate tax agencies, and handle other employer-related services. Amounts collected by us from clients for their federal, state and local employment taxes earn interest during the interval between receipt and disbursement, as we invest these funds in money market funds and certificates of deposit. These collections from clients are typically disbursed from one to 30 days after receipt, with some funds being held for up to 120 days. These investments are shown in the Condensed Consolidated Balance Sheets as “Funds held for clients”, and the offsetting liability for the tax filings is shown as “Client funds obligation.” As of September 30, 2014 and December 31, 2013, the funds held for clients were invested in demand deposits, short-term certificates of deposit and money market funds. The interest earned on these funds is included in “Other income (expense), net”, on the Condensed Consolidated Statements of Income. |
LongTerm_Debt
Long-Term Debt | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||
Long-Term Debt | 5 | LONG-TERM DEBT | 5 | LONG-TERM DEBT | ||||||||||||||
Our long-term debt consisted of the following (dollars in thousands): | Our long-term debt consisted of the following (dollars in thousands): | |||||||||||||||||
September 30, | December 31, | December 31, | December 31, | |||||||||||||||
2014 | 2013 | 2013 | 2012 | |||||||||||||||
Term note to bank due December 15, 2018(1) | $ | — | $ | 11,963 | Term note to bank due December 15, 2018(1)(3) | $ | 11,963 | $ | 12,360 | |||||||||
Construction note to bank(2) | — | 9,127 | Construction note to bank(2)(3) | 9,127 | 1,750 | |||||||||||||
Term note to bank due June 1, 2021(3) | 27,186 | — | Note to related party due April 3, 2017(4) | 46,193 | 46,193 | |||||||||||||
Note to related party due April 3, 2017(4) | — | 46,193 | Note to related party due April 3, 2022(5) | 18,807 | 18,807 | |||||||||||||
Note to related party due April 3, 2022(5) | — | 18,807 | Less: Unamortized debt discounts | (4,125 | ) | (4,367 | ) | |||||||||||
Less: Unamortized debt discounts | — | (4,125 | ) | |||||||||||||||
Total long-term debt (including current portion) | 81,965 | 74,743 | ||||||||||||||||
Total long-term debt (including current portion) | 27,186 | 81,965 | Less: Current portion | (9,545 | ) | (2,151 | ) | |||||||||||
Less: Current portion | (845 | ) | (9,545 | ) | ||||||||||||||
Total long-term debt, net | $ | 72,420 | $ | 72,592 | ||||||||||||||
Total long-term debt, net | $ | 26,341 | $ | 72,420 | ||||||||||||||
-1 | In December 2011, we consolidated pre-existing construction loans for the construction of a new corporate headquarters, processing center and gymnasium into a term note. As of December 31, 2013 and 2012, we had a term note with an outstanding principal amount of $12.0 million and $12.4 million, respectively, from Kirkpatrick Bank, due December 15, 2018 (the “2011 Consolidated Loan”). Under the 2011 Consolidated Loan, principal and interest is payable monthly based on a 20 year amortization at an annual rate of 5.0%. The 2011 Consolidated Loan was collateralized by a first mortgage covering our original corporate headquarters building and is secured by a first lien security interest in certain personal property relating to our original corporate headquarters building. | |||||||||||||||||
-1 | In March 2013, we entered into a construction loan agreement for the construction of a second building at our corporate headquarters with Kirkpatrick Bank due May 1, 2015, which allowed for a maximum principal amount of $12.3 million (the “2013 Construction Loan”). The 2013 Construction Loan was secured by a first mortgage covering the second headquarters building and a first lien security interest in certain personal property relating to the second headquarters building. Under the 2013 Construction Loan, interest accrued monthly at the Wall Street Journal U.S. Prime Rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. Interest on the 2013 Construction Loan was payable monthly on the first day of each month. The 2013 Construction Loan, along with the 2011 Consolidated Loan, was converted into a term loan in July 2013 (the “2013 Term Loan”). | |||||||||||||||||
In November 2013, we entered into a loan agreement for the purchase of approximately 18.3 acres for future expansion at our headquarters with Kirkpatrick Bank, which allowed for a maximum principal amount of $3.0 million (“2013 Land Loan”). Under the 2013 Land Loan, interest accrued monthly at the Wall Street Journal U.S. Prime Rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. | -2 | In December 2012, we entered into a loan agreement for the purchase of approximately 17.6 acres for future expansion at our headquarters. As of December 31, 2012, the loan agreement had an outstanding principal amount of $1.8 million from Kirkpatrick Bank, due April 21, 2013 (the “December 2012 Loan”). Under the December 2012 Loan, interest accrues monthly at the Wall Street Journal U.S. Prime Rate plus 0.5%, adjusted from time to time, but not more often than each day, on the 21st day of each month. As of December 31, 2012, this equated to a rate of 3.25%. Principal on the note was due in one payment on the maturity date, collateralized by a first mortgage covering our corporate headquarters and a first security interest in certain personal property relating to our corporate headquarters. The December 2012 Loan was paid in full during the year ended December 31, 2013 with an advance from the construction loan entered into on March 2013, which is described below. | ||||||||||||||||
In December 2013, we consolidated the 2013 Term Loan and the 2013 Land Loan (“2013 Consolidated Loan”) under a modification agreement that increased the combined maximum principal amount of the 2013 Consolidated Loan to $14.6 million. The 2013 Consolidated Loan was secured by a first mortgage covering all of the second headquarters building and a first lien security interest in certain personal property relating to the second headquarters building. Under the 2013 Consolidated Loan, interest accrued monthly at the Wall Street Journal U.S. Prime rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. In the second quarter of 2014, the 2013 Consolidated Loan was consolidated into the 2021 Consolidated Loan. | ||||||||||||||||||
-3 | In March 2013, we entered into a construction loan agreement for the construction of a second building at our corporate headquarters with Kirkpatrick Bank due May 1, 2015, which allowed for a maximum principal amount of $12.3 million (the “2013 Construction Loan”). The 2013 Construction Loan was secured by a first mortgage covering all of the second headquarters building and a first lien security interest in certain personal property relating to the second headquarters building. Under the 2013 Construction Loan, interest accrued monthly at the Wall Street Journal U.S. Prime Rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. Interest on the 2013 Construction Loan was payable monthly on the first day of each month. During the year ended December 31, 2013, a portion of the advancement was drawn to repay the December 2012 Loan. The 2013 Construction Loan, along with the 2011 Consolidated Loan, was converted into a term loan in July 2013 (the “2013 Term Loan”). | |||||||||||||||||
The 2011 Consolidated Loan and the 2013 Consolidated Loan were subject to certain financial covenants, as defined in the applicable agreement, including maintaining a debt coverage ratio of EBITDA to indebtedness (defined as current maturities of long-term debt, interest expense and distributions) of greater than 1.5 to 1.0. As of December 31, 2013, we were not in compliance with the financial covenant related to the debt coverage ratio. We obtained a letter of waiver from the lender that excluded this item from the calculation as of December 31, 2013 and which remains in effect through April 30, 2015. | ||||||||||||||||||
In November 2013, we entered into a loan agreement for the purchase of approximately 18.3 acres for future expansion at our headquarters with Kirkpatrick Bank, which allowed for a maximum principal amount of $3.0 million (“2013 Land Loan”). Under the 2013 Land Loan, interest accrues monthly at the Wall Street Journal U.S. Prime Rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4% per annum. | ||||||||||||||||||
-2 | In December 2011, we consolidated pre-existing construction loans for the construction of a new corporate headquarters, processing center and gymnasium into a term note (the “2011 Consolidated Loan”). Under the 2011 Consolidated Loan, principal and interest were payable monthly based on a 20 year amortization rate of 5.0%. The 2011 Consolidated Loan was collateralized by a first mortgage covering our original corporate headquarters building and was secured by a first lien security interest in certain personal property relating to our original corporate headquarters building. In the second quarter of 2014, the 2011 Consolidated Loan was consolidated into the 2021 Consolidated Loan. See Note (3) below for the definition of, and more information about, the 2021 Consolidated Loan. | In December 2013, we consolidated the 2013 Term Loan and the 2013 Land Loan (“2013 Consolidated Loan”) under a modification agreement that increased the combined maximum principal amount of the 2013 Consolidated Loan to $14.6 million. The 2013 Consolidated Loan was secured by a first mortgage covering all of the second headquarters building and a first lien security interest in certain personal property relating to the second headquarters building. Under the 2013 Consolidated Loan, interest accrued monthly at the Wall Street Journal U.S. Prime rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. As of December 31, 2013, the 2013 Consolidated Loan had an outstanding principal amount of $9.1 million and availability of $5.5 million from Kirkpatrick Bank. | ||||||||||||||||
The 2013 Consolidated Loan, December 2012 Loan, and 2011 Consolidated Loan were subject to certain financial covenants, as defined in the applicable agreement, including maintaining a debt coverage ratio of EBITDA to indebtedness (defined as current maturities of long-term debt, interest expense and distributions) of greater than 1.5 to 1.0. As of December 31, 2013 and 2012, we were not in compliance with the financial covenant related to the debt coverage ratio. We obtained a letter of waiver from the lender that excluded these items from the calculation as of December 31, 2013 and 2012, which remains in effect through April 30, 2015. | ||||||||||||||||||
-3 | At September 30, 2014, our outstanding indebtedness consisted of a term note under a Loan Agreement (the “2021 Consolidated Loan”) with an outstanding principal balance of $27.2 million as of September 30, 2014. In June 2014, we consolidated outstanding amounts under the 2011 Consolidated Loan and 2013 Consolidated Loan into the 2021 Consolidated Loan under a modification agreement. The 2021 Consolidated Loan is due to Kirkpatrick Bank and matures on May 30, 2021. Under the 2021 Consolidated Loan, interest is payable monthly and accrues at a fixed rate of 4.75% per annum. The 2021 Consolidated Loan is secured by a mortgage covering our headquarters buildings and certain personal property relating to our headquarters buildings. | |||||||||||||||||
The 2021 Consolidated Loan includes certain financial covenants, including maintaining a debt coverage ratio of EBITDA to indebtedness (defined as current maturities of long-term debt, interest expense and distributions), as defined in the applicable agreement, of greater than 1.5 to 1.0. We were in compliance with the financial covenant related to the debt coverage ratio as of September 30, 2014. | -4 | In connection with the 2014 Reorganization, we assumed the 2017 Note that was issued by WCAS Holdings payable to Welsh, Carson, Anderson & Stowe X, L.P., a related party (“WCAS X”). The 2017 Note was due on April 3, 2017 and interest was payable at a rate of 14% per annum, payable semiannually in arrears on June 30 and December 31 of each year. We may, at our option, choose to defer all or a portion of the accrued interest on the note that is due and payable on any payment date, provided that such amount of accrued interest shall be added to the principal amount of the note on such interest payment date (with the accrued but unpaid interest bearing interest at an annual rate of 14.0%). As of December 31, 2013 and 2012, we had elected to pay accrued interest in cash. | ||||||||||||||||
-4 | In April 2014, we paid off the balance of the 2017 Note that was issued by WCAS Holdings and was payable to Welsh, Carson, Anderson & Stowe X, L.P., a related party (“WCAS X”) with proceeds from our IPO. The 2017 Note accrued interest at a rate of 14% per annum. As of December 31, 2013, the outstanding principal balance of the 2017 Note was $46.2 million. | -5 | In April 2012, we entered into a 10% Senior Note due 2022 (the “2022 Note”) with WCAS Capital Partners IV, L.P., a related party (“WCAS CP IV”). The 2022 Note is due on April 3, 2022 and interest accrued at a rate of 10% per annum, payable semiannually in arrears on December 31st and June 30th of each year. We may, at our option, choose to defer all or a portion of the accrued interest on the note that is due and payable on any payment date, provided that such amount of accrued interest shall be multiplied by 1.3 and added to the principal amount of the note on such interest payment date (with the result that such interest shall have accrued at an effective rate of 13.0% instead of 10.0% through such payment date). As of December 31, 2013 and 2012, we had elected to pay accrued interest in cash. | |||||||||||||||
The 2022 Note was issued at a discount of $2.4 million. We amortized the discount over the term of the note using the effective interest method. The 2022 Note also contained certain features by which the holder, WCAS CP IV, could require us to redeem the note at principal amount plus any accrued interest upon our completion of a public offering or certain events of default. The 2022 Note also provided for mandatory redemption upon a liquidation event. These features (collectively, the “Prepayment Features”) were required to be bifurcated and separately accounted for at fair value with changes in fair value recorded in earnings. At inception, the Prepayment Features were valued at $2.1 million and recorded as a derivative liability on our consolidated balance sheet. | ||||||||||||||||||
-5 | In April 2014, we paid off the balance of the 10% Senior Note due 2022 (the “2022 Note”) with WCAS Capital Partners IV, L.P., a related party (“WCAS CP IV”) with proceeds from our IPO and from existing cash. The 2022 Note accrued interest at a rate of 10% per annum. As of December 31, 2013, the outstanding principal amount of the 2022 Note was $18.8 million. The 2022 Note was issued at a discount of $2.4 million. The total unamortized discount related to this note was $4.1 million. As of December 31, 2013, in conjunction with the payoff of this note, we wrote off the remaining unamortized discount of $0.5 million. | |||||||||||||||||
As of September 30, 2014, the carrying value and fair value of our total long-term debt, including the current portion, were each $27.2 million. As of December 31, 2013, the carrying value and fair value of our total long-term debt, including the current portion, were $82.0 million and $84.9 million, respectively. The fair value of variable rate long-term debt approximates its market value because the cost of borrowing fluctuates based upon market conditions. The fair value of fixed rate long-term debt is estimated based on the borrowing rates currently available to us for bank loans with similar terms and maturities. | As of December 31, 2013, the carrying value and fair value of our total long-term debt, including current portion was $82.0 million and $84.9 million, respectively. As of December 31, 2012, the carrying value and fair value of our total long-term debt, including current portion was $74.8 million and $75.9 million, respectively. The fair value of variable rate long-term debt approximates market value because the cost of borrowing fluctuates based upon market conditions. The fair value of fixed rate long-term debt is estimated based on the borrowing rates currently available to us for bank loans with similar terms and maturities. | |||||||||||||||||
Aggregate future maturities of long-term debt for the next five years and thereafter (including current portion) as of December 31, 2013 are as follows (dollars in thousands): | ||||||||||||||||||
Year Ending December 31, | ||||||||||||||||||
2014 | $ | 9,545 | ||||||||||||||||
2015 | 440 | |||||||||||||||||
2016 | 461 | |||||||||||||||||
2017 | 46,679 | |||||||||||||||||
2018 | 10,158 | |||||||||||||||||
Thereafter | 14,682 | |||||||||||||||||
$ | 81,965 | |||||||||||||||||
Employee_Savings_Plan
Employee Savings Plan | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2013 | |||
Employee Savings Plan | 6 | EMPLOYEE SAVINGS PLAN | 6 | EMPLOYEE SAVINGS PLAN |
Our employees that are over the age of 21 and have completed 90 days of service are eligible to participate in our 401(k) plan. We have made a Qualified Automatic Contribution Arrangement (“QACA”) election, whereby we make a matching contribution equal to 100% of the first 1% of salary deferrals and 50% of salary deferrals between 2% and 6%, up to a maximum matching contribution of 3.5% of salary each plan year for our employees. We are allowed to make additional discretionary matching contributions and discretionary profit sharing contributions. Employees are 100% vested in amounts attributable to salary deferrals and rollover contributions. The QACA matching contributions will be 100% vested after two years of employment from the date of hire. If an employee terminates service prior to completing two years of employment, the employee will not be vested in these contributions. The discretionary contributions are vested over a six year period. Matching contributions amounted to $0.4 million and $1.3 million for the three and nine months ended September 30, 2014, respectively. Matching contributions amounted to $0.3 million and $0.9 million for the three and nine months ended September 30, 2013, respectively. | Our employees that are over the age of 21 and have completed ninety (90) days of service are eligible to participate in our 401(k) plan. We have made a Qualified Automatic Contribution Arrangement (“QACA”) election, whereby we make a matching contribution equal to 100% of the first 1% of salary deferrals and 50% of salary deferrals between 2% and 6%, up to a maximum matching contribution of 3.5% of salary each plan year for our employees. We are allowed to make additional discretionary matching contributions and discretionary profit sharing contributions. Employees are 100% vested in amounts attributable to salary deferrals and rollover contributions. The QACA matching contributions will be 100% vested after two years of employment from the date of hire. If an employee terminates service prior to completing two years of employment, the employee will not be vested in these contributions. The discretionary contributions are vested over a six year period. Matching contributions amounted to $1.2 million, $1.0 million and $0.7 million for the years ended December 31, 2013, 2012 and 2011, respectively. |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | 7 | FAIR VALUE OF FINANCIAL INSTRUMENTS | 7 | FAIR VALUE OF FINANCIAL INSTRUMENTS | ||||||||||||||||||||||||||||||
Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, funds held for clients, client funds obligation, long-term debt and derivative liability. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable, funds held for clients and client fund obligations approximates fair value because of the short-term nature of the instruments. | Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, funds held for clients, client funds obligation, long-term debt and derivative liability. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable, funds held for clients and client fund obligations approximates fair value because of the short-term nature of the instruments. | |||||||||||||||||||||||||||||||||
We measure certain financial assets and liabilities at fair value at each reporting period. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value are as follows: | We measure certain financial assets and liabilities at fair value at each reporting period. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value are as follow: | |||||||||||||||||||||||||||||||||
Level 1—Unadjusted observable inputs that reflect quoted prices in active markets | Level 1—Unadjusted observable inputs that reflect quoted prices in active markets | |||||||||||||||||||||||||||||||||
Level 2—Input other than quoted prices in active markets that are directly or indirectly observable | Level 2—Input other than quoted prices in active markets that are directly or indirectly observable | |||||||||||||||||||||||||||||||||
Level 3—Unobservable inputs that are supported by little or no market activity | Level 3—Unobservable inputs that are supported by little or no market activity | |||||||||||||||||||||||||||||||||
We use observable data, when available. During the three and nine months ended September 30, 2014 and 2013, we did not have any transfers between Levels 1, 2 or 3 in the three-tier fair value hierarchy. | ||||||||||||||||||||||||||||||||||
We had no financial assets or liabilities measured at fair value on a recurring basis as of September 30, 2014. The following tables provide a summary of the fair value of financial instruments that are measured on a recurring basis using the above input categories as of December 31, 2013 (dollars in thousands): | We use observable data, when available. During the years ended December 31, 2013, 2012 and 2011, we did not have any transfers between level 1, 2 or 3 in the three-tier fair value hierarchy. | |||||||||||||||||||||||||||||||||
The following tables provide a summary of the fair value of financial instruments that are measured on a recurring basis using the above input categories (dollars in thousands): | ||||||||||||||||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | December 31, 2013 | ||||||||||||||||||||||||||||||
Liabilities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||
Derivative liability | $ | — | $ | — | $ | 1,107 | $ | 1,107 | Liabilities | |||||||||||||||||||||||||
Derivative liability | $ | — | $ | — | $ | 1,107 | $ | 1,107 | ||||||||||||||||||||||||||
$ | — | $ | — | $ | 1,107 | $ | 1,107 | |||||||||||||||||||||||||||
$ | — | $ | — | $ | 1,107 | $ | 1,107 | |||||||||||||||||||||||||||
The derivative liability related to the 2022 Note was classified as a Level 3 financial instrument due to valuation being based upon significant unobservable inputs. See “Note 5 Long-Term Debt” for additional information. | ||||||||||||||||||||||||||||||||||
The key inputs used to calculate the fair value of the embedded derivative are: probability of exit, remaining term, yield volatility, credit spread, and risk-free rate. In general, increases in the probability of exit, credit spread, and risk-free rate would increase the value of the embedded derivative. Conversely, increases in the remaining term and yield volatility would decrease the value of the embedded derivative. | ||||||||||||||||||||||||||||||||||
Quantitative information regarding significant unobservable inputs used for recurring Level 3 fair value measurements of financial instruments were as follows as of December 31, 2013: | December 31, 2012 | |||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||
December 31, 2013 | Derivative liability | $ | — | $ | — | $ | 1,767 | $ | 1,767 | |||||||||||||||||||||||||
Valuation Technique | Key Inputs | Range | ||||||||||||||||||||||||||||||||
Derivative Liability | Lattice Model | Probability of exit | 90% | $ | — | $ | — | $ | 1,767 | $ | 1,767 | |||||||||||||||||||||||
Remaining term | 0.8 years - 8.3 years | |||||||||||||||||||||||||||||||||
Yield Volatility | 21.4% - 31.1% | The derivative liability related to long-term debt to related party is classified as a Level 3 derivative due to valuation based upon significant unobservable inputs. | ||||||||||||||||||||||||||||||||
Credit Spread | 8.90% | The key inputs used to calculate the fair value of the embedded derivative are: probability of exit, remaining term, yield volatility, credit spread, and risk-free rate. In general, increases in the probability of exit, credit spread, and risk-free rate would increase the value of the embedded derivative. Conversely, increases in the remaining term and yield volatility would decrease the value of the embedded derivative. | ||||||||||||||||||||||||||||||||
Risk-free rate | 0.13% - 2.45% | Quantitative information regarding significant unobservable inputs used for recurring Level 3 fair value measurements of financial instruments as of December 31, 2013 and 2012 were as follows: | ||||||||||||||||||||||||||||||||
The following table summarizes the changes in fair value of our Level 3 financial instruments for the three and nine months ended September 30, 2014 and 2013 (dollars in thousands): | ||||||||||||||||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||||||||||
Three Months | Nine Months | Valuation Technique | Key Inputs | Range | ||||||||||||||||||||||||||||||
Ended | Ended | Derivative Liability | Lattice Model | Probability of exit | 90% | |||||||||||||||||||||||||||||
September 30, 2014 | September 30, 2014 | Remaining term | 0.8 years - 8.3 years | |||||||||||||||||||||||||||||||
Beginning Balance | $ | — | $ | 1,107 | Yield Volatility | 21.4% - 31.1% | ||||||||||||||||||||||||||||
Issuances | — | — | Credit Spread | 8.90% | ||||||||||||||||||||||||||||||
Change in fair value of derivative liability | — | (635 | ) | Risk-free rate | 0.13% - 2.45% | |||||||||||||||||||||||||||||
Write-off to Other income (expense) | — | (472 | ) | |||||||||||||||||||||||||||||||
Ending Balance | $ | — | $ | — | December 31, 2012 | |||||||||||||||||||||||||||||
Valuation Technique | Key Inputs | Range | ||||||||||||||||||||||||||||||||
Derivative Liability | Lattice Model | Probability of exit | 90% | |||||||||||||||||||||||||||||||
Remaining term | 3.3 years - 9.3 years | |||||||||||||||||||||||||||||||||
Three Months | Nine Months | Yield Volatility | 20.4% - 28.5% | |||||||||||||||||||||||||||||||
Ended | Ended | Credit Spread | 11.94% | |||||||||||||||||||||||||||||||
September 30, 2013 | September 30, 2013 | Risk-free rate | 0.36% - 1.78% | |||||||||||||||||||||||||||||||
Beginning Balance | $ | 1,766 | $ | 1,767 | ||||||||||||||||||||||||||||||
Issuances | — | — | The following table summarizes the change in fair value of our Level 3 financial instruments for the years ended December 31, 2013 and 2012 (dollars in thousands). | |||||||||||||||||||||||||||||||
Change in fair value of derivative liability | (659 | ) | (660 | ) | ||||||||||||||||||||||||||||||
Ending Balance | $ | 1,107 | $ | 1,107 | 2013 | 2012 | ||||||||||||||||||||||||||||
Balance, beginning of year | $ | 1,767 | $ | — | ||||||||||||||||||||||||||||||
Total change in fair value of derivative liability recognized as “Other income (expense), net” in the Condensed Consolidated Statements of Income was $(0.7) million for each of the three and nine months ended September 30, 2013. Total change in fair value of derivative liability, including write-off of the balance due to payoff of the associated loan, recognized as “Other income (expense), net” in the Condensed Consolidated Statements of Income, was $0 and $(1.1) million for the three and nine months ended September 30, 2014, respectively. | Issuances | — | 2,100 | |||||||||||||||||||||||||||||||
Change in fair value of derivative liability | (660 | ) | (333 | ) | ||||||||||||||||||||||||||||||
Balance, end of year | $ | 1,107 | $ | 1,767 | ||||||||||||||||||||||||||||||
Total change in fair value of derivative liability recognized as other income, net in the consolidated statements of income was $0.7 million and $0.3 million for the years ended December 31, 2013 and 2012, respectively. There was no change in fair value of derivative liability recognized during the year ended December 31, 2011. |
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||||
Earnings Per Share | 8 | EARNINGS PER SHARE | 8 | EARNINGS PER SHARE | ||||||||||||||||||||||||||
Basic earnings per share (“EPS”) is based on the weighted average number of shares of common stock outstanding for the period. Diluted EPS is computed in a similar manner to basic EPS after assuming the issuance of shares of common stock for all potentially dilutive shares of restricted stock whether or not they are vested. | Basic earnings per share (“EPS”) is based on the weighted average number of shares of common stock outstanding for the period. Diluted EPS is computed in a similar manner to basic EPS after assuming the issuance of shares of common stock for all potentially dilutive shares of restricted stock whether or not they are vested. | |||||||||||||||||||||||||||||
Under the 2014 Reorganization, all the outstanding common units, Series B Preferred Units and incentive units of Holdings were exchanged for, or converted into, 45,708,573 shares of our common stock and 8,121,101 shares of our restricted stock as of January 1, 2014. | Under the 2014 Reorganization, all the outstanding common units, Series B Preferred Units and incentive units of Holdings were exchanged for, or converted into, 45,708,573 shares of our common stock and 8,121,101 shares of our restricted stock as of January 1, 2014. | |||||||||||||||||||||||||||||
The following is a reconciliation of net income (loss) and the shares of common stock used in the computation of basic and diluted net earnings per share (dollars in thousands): | The following is a reconciliation of net income and the shares of common stock used in the computation of basic and diluted net earnings per share (dollars in thousands): | |||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Year Ended December 31, | ||||||||||||||||||||||||||||
September 30, | September 30, | September 30, | September 30, | 2013 | 2012 | 2011 | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | Numerator: | ||||||||||||||||||||||||||
Numerator: | Net income (loss) | $ | 607 | $ | (406 | ) | $ | 886 | ||||||||||||||||||||||
Net income (loss) | $ | 2,690 | $ | (424 | ) | $ | 3,157 | $ | 2,571 | Net income (loss) attributable to the non-controlling interest | (6 | ) | 3 | — | ||||||||||||||||
Net income (loss) attributable to the non-controlling interest | — | (3 | ) | — | 19 | |||||||||||||||||||||||||
Net income (loss) attributable to the Company | $ | 601 | $ | (403 | ) | $ | 886 | |||||||||||||||||||||||
Net income (loss) attributable to the Company | $ | 2,690 | $ | (421 | ) | $ | 3,157 | $ | 2,552 | |||||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||||||
Denominator: | Weighted average shares outstanding | 44,560,053 | 44,560,053 | 44,560,053 | ||||||||||||||||||||||||||
Weighted average shares outstanding | 51,056,462 | 44,560,053 | 49,040,344 | 44,560,053 | Adjustment for vested restricted stock | 916,842 | 211,506 | — | ||||||||||||||||||||||
Adjustment for vested restricted stock | — | 1,147,749 | — | 838,880 | ||||||||||||||||||||||||||
Shares for calculating basic EPS | 45,476,895 | 44,771,559 | 44,560,053 | |||||||||||||||||||||||||||
Shares for calculating basic EPS | 51,056,462 | 45,707,802 | 49,040,344 | 45,398,933 | ||||||||||||||||||||||||||
Weighted average shares outstanding | 44,560,053 | 44,560,053 | 44,560,053 | |||||||||||||||||||||||||||
Weighted average shares outstanding | 51,056,462 | 45,707,802 | 49,040,344 | 44,560,053 | Dilutive effect of unvested restricted stock | 3,502,022 | 211,506 | 851,318 | ||||||||||||||||||||||
Dilutive effect of unvested restricted stock | 1,921,589 | — | 2,182,704 | 3,415,495 | ||||||||||||||||||||||||||
Shares for calculating diluted EPS | 48,062,075 | 44,771,559 | 45,411,371 | |||||||||||||||||||||||||||
Shares for calculating diluted EPS | 52,978,051 | 45,707,802 | 51,223,048 | 47,975,548 | ||||||||||||||||||||||||||
Net income per share: | ||||||||||||||||||||||||||||||
Net income (loss) per share: | Basic | $ | 0.01 | $ | (0.01 | ) | $ | 0.02 | ||||||||||||||||||||||
Basic | $ | 0.05 | $ | (0.01 | ) | $ | 0.06 | $ | 0.06 | Diluted | $ | 0.01 | $ | (0.01 | ) | $ | 0.02 | |||||||||||||
Diluted | $ | 0.05 | $ | (0.01 | ) | $ | 0.06 | $ | 0.05 | |||||||||||||||||||||
We excluded 2,301,603 shares of restricted stock from the diluted earnings per share calculation for the three months ended September 30, 2013 because the shares were anti-dilutive. | We excluded 2,683,822 shares of restricted stock from the diluted earnings per share calculation for the year ended December 31, 2012 because they were anti-dilutive. | |||||||||||||||||||||||||||||
Pro forma net income per share (UNAUDITED) | ||||||||||||||||||||||||||||||
There is no difference in net income and pro forma net income for either the three or nine months ended September 30, 2014. The following is a reconciliation of pro forma net income for the three and nine months ended September 30, 2013 and the shares of stock used in the computation of pro forma basic and diluted net income per share (dollars in thousands): | In connection with the 2014 Reorganization, we became taxed as a Subchapter C Corporation, effective January 1, 2014. The pro forma net income applied in computing the pro forma EPS for the years ended December 31, 2013, 2012 and 2011 was based on our historical net income as adjusted to reflect our conversion to a Subchapter C Corporation as if it had occurred as of January 1, 2011. The pro forma net income includes an adjustment to income tax expense, the amount of which was determined at an effective tax rate of 47%, 20%, 43% which resulted in an incremental pro forma income tax (benefit) expense of ($0.1) million, less than ($0.1) million and less than $0.1 million for the years ended December 31, 2013, 2012 and 2011, respectively. See Note 12 for more information about pro forma income taxes. | |||||||||||||||||||||||||||||
The following is a reconciliation of pro forma net income (loss) for the years ended December 31, 2013, 2012 and 2011 and the shares of stock used in the computation of pro forma basic and diluted net income (loss) per share (dollars in thousands). | ||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
September 30, | September 30, | Year Ended December 31, | ||||||||||||||||||||||||||||
2013 | 2013 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||||
Pro forma numerator: | Pro Forma EPS Table | |||||||||||||||||||||||||||||
Net income (loss) attributable to the Company | $ | (421 | ) | $ | 2,552 | Pro forma numerator: | ||||||||||||||||||||||||
Pro forma additional income tax (expense) benefit (Note 12) | (93 | ) | 563 | Net income (loss) attributable to the Company | $ | 601 | $ | (403 | ) | $ | 886 | |||||||||||||||||||
Pro forma additional income tax expense (benefit) | (137 | ) | (14 | ) | 35 | |||||||||||||||||||||||||
Pro forma net income (loss) attributable to the Company (Note 12) | $ | (328 | ) | $ | 1,989 | |||||||||||||||||||||||||
Pro forma net income (loss) attributable to the Company | $ | 738 | $ | (389 | ) | $ | 851 | |||||||||||||||||||||||
Pro forma denominator: | ||||||||||||||||||||||||||||||
Pro forma weighted average shares outstanding | 44,560,053 | 44,560,053 | Pro forma denominator: | |||||||||||||||||||||||||||
Adjustment for vested restricted stock | 1,147,749 | 838,880 | Pro forma weighted average shares outstanding | 44,560,053 | 44,560,053 | 44,560,053 | ||||||||||||||||||||||||
Adjustment for vested restricted stock | 916,842 | 211,506 | — | |||||||||||||||||||||||||||
Pro forma shares for calculating basic EPS | 45,707,802 | 45,398,933 | ||||||||||||||||||||||||||||
Pro forma shares for calculating basic EPS | 45,476,895 | 44,771,559 | 44,560,053 | |||||||||||||||||||||||||||
Pro forma weighted average shares outstanding | 45,707,802 | 44,560,053 | ||||||||||||||||||||||||||||
Effect of dilutive restricted stock | — | 3,415,495 | Pro forma weighted average shares outstanding | 44,560,053 | 44,560,053 | 44,560,053 | ||||||||||||||||||||||||
Adjustment for vested restricted stock | 916,842 | 211,506 | ||||||||||||||||||||||||||||
Pro forma shares for calculating diluted EPS | 45,707,802 | 47,975,548 | Effect of dilutive restricted stock | 2,585,180 | — | 851,318 | ||||||||||||||||||||||||
Pro forma net income per share: | Pro forma shares for calculating diluted EPS | 48,062,075 | 44,771,559 | 45,411,371 | ||||||||||||||||||||||||||
Basic | $ | (0.01 | ) | $ | 0.04 | |||||||||||||||||||||||||
Diluted | $ | (0.01 | ) | $ | 0.04 | Pro forma net income (loss) per share: | ||||||||||||||||||||||||
See “Note 12 Income Taxes” for additional information regarding pro forma income tax expense. | Basic | $ | 0.02 | $ | (0.01 | ) | $ | 0.02 | ||||||||||||||||||||||
Diluted | $ | 0.02 | $ | (0.01 | ) | $ | 0.02 | |||||||||||||||||||||||
Stockholders_Equity_and_Incent
Stockholders' Equity and Incentive Compensation | 9 Months Ended | 12 Months Ended | |||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||
Stockholders' Equity and Incentive Compensation | 9 | STOCKHOLDERS’ EQUITY AND INCENTIVE COMPENSATION | 9 | STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION | |||||||||||
Prior to the 2014 Reorganization, Holdings had four authorized classes of limited liability company interests (each a “unit”). Series A Preferred Units were voting units with first priority of distribution, entitled to a preferred yield (as defined within our limited liability company agreement) of 9% with regard to certain future asset distributions and conversion features. Series B Preferred Units were non-voting units, entitled to receive distributions only after certain conditions were met. Common units were voting units. Incentive units were non-voting units reserved for issuance to our employees, officers, directors and other service providers. | Prior to the 2014 Reorganization, Holdings had four authorized classes of limited liability company interests (each a “unit”). Series A Preferred Units were voting units with first priority of distribution, entitled to a preferred yield (as defined within our limited liability company agreement) of 9% with regard to certain future asset distributions and conversion features. Series B Preferred Units were non-voting units, entitled to receive distributions only after certain conditions were met. Common units were voting units. Incentive units were non-voting units reserved for issuance to our employees, officers, directors and other service providers. During the year ended December 31, 2013, we redeemed some of our incentive units through total cash payments of $1.1 million, resulting in total incremental compensation cost of $0.8 million, of which $0.2 million has been capitalized on the date of redemptions. | ||||||||||||||
On January 1, 2014, we consummated the 2014 Reorganization, pursuant to which: (i) affiliates of Welsh, Carson, Anderson & Stowe, L.P., contributed WCAS Holdings and CP IV Blocker, which collectively owned all of the Series A Preferred Units of Holdings, to Software in exchange for shares of common stock of Software and (ii) the owners of outstanding Series B Preferred Units of Holdings contributed their Series B Preferred Units of Holdings to Software in exchange for shares of common stock of Software. Immediately after these contributions, Merger Sub merged with and into Holdings with Holdings surviving the merger. Upon consummation of the merger, the remaining holders of outstanding common and incentive units of Holdings received shares of common stock of Software for their common and incentive units by operation of Delaware law and Holdings’ ownership interest in Software was cancelled. Outstanding common units, Series B Preferred Units and WCAS Holdings and CP IV Blocker were contributed to Software in exchange for, or converted into, 45,708,573 shares of common stock and 8,121,101 shares of restricted stock of Software. | On January 1, 2014, we consummated the 2014 Reorganization, pursuant to which: (i) affiliates of Welsh, Carson, Anderson & Stowe, L.P., contributed WCAS Holdings and CP IV Blocker, which collectively owned all of the Series A Preferred Units of Holdings, to Software in exchange for shares of common stock of Software and (ii) the owners of outstanding Series B Preferred Units of Holdings contributed their Series B Preferred Units of Holdings to Software in exchange for shares of common stock of Software. Immediately after these contributions, Merger Sub merged with and into Holdings with Holdings surviving the merger. Upon consummation of the merger, the remaining holders of outstanding common and incentive units of Holdings received shares of common stock of Software for their common and incentive units by operation of Delaware law and Holdings’ ownership interest in Software was cancelled. Outstanding common units, Series B Preferred Units and WCAS Holdings and CP IV Blocker were contributed to Software in exchange for, or converted into, 45,708,573 shares of common stock and 8,121,101 shares of restricted stock of Software. | ||||||||||||||
The shares of restricted stock were issued subject to various vesting conditions. A portion of the restricted stock is subject to time-based vesting conditions, while a portion is subject to performance-based vesting conditions. The performance-based vesting conditions are based on our total enterprise value exceeding certain specified thresholds. For additional information concerning the vesting conditions of the restricted stock, see “Executive Compensation—Narrative Discussion Regarding Summary Compensation Table—Equity Incentive Units and Restricted Stock Awards” included elsewhere in this prospectus. | The shares of restricted stock were issued subject to various vesting conditions. A portion of the restricted stock is subject to time-based vesting conditions, while a portion is subject to performance-based vesting conditions. The performance-based vesting conditions are based on our total enterprise value exceeding certain specified thresholds. For additional information concerning the vesting conditions of the restricted stock, see “Executive Compensation—Narrative Discussion Regarding Summary Compensation Table—Equity Incentive Units and Restricted Stock Awards” included elsewhere in this prospectus. | ||||||||||||||
Following these transactions, all outstanding Series C Preferred Units were eliminated in an intercompany transaction between Holdings and WCAS Holdings, and we assumed the 2017 Note. As a result of the 2014 Reorganization, we recorded a one-time reclassification of $29.3 million of historical accumulated deficit to additional paid in capital on January 1, 2014. Following the 2014 Reorganization, Software became a holding company with its principal asset being the Series A Preferred Units of Holdings. | Following these transactions, all outstanding Series C Preferred Units were eliminated in an intercompany transaction between Holdings and WCAS Holdings, and we assumed the 2017 Note. As a result of the 2014 Reorganization, we recorded a one-time reclassification of $29.3 million of historical accumulated deficit to additional paid in capital on January 1, 2014. Following the 2014 Reorganization, Software became a holding company with its principal asset being the Series A Preferred Units of Holdings. | ||||||||||||||
As of September 30, 2014 and December 31, 2013, there was $1.0 million and $1.3 million, respectively, of total unrecognized compensation cost related to unvested restricted stock issued to employees. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.9 years. On April 21, 2014, 217,378 shares of restricted stock automatically vested and converted into shares of common stock. | The fair value of each share of restricted stock issued is estimated on the date of grant using a Monte Carlo simulation model. This model considers a range of assumptions related to volatility, risk-free interest rate, expected term, and expected dividend yield. Expected volatilities utilized in the model are based on historical volatilities of comparable guideline companies until information regarding the volatility of our own pricing becomes available. An expected dividend yield of 0% is applied given we have not paid and do not expect to pay dividends in the future. The risk-free rate is derived from the implied yield available on 5 year U.S. Treasury securities with a remaining term equivalent to that of the respective shares as of the valuation date. The expected term represents the period that our restricted stock is expected to be outstanding. We determined the expected term assumption based on the vesting terms and contractual terms of the restricted stock. We are required to estimate forfeitures and only record compensation costs for those awards that are expected to vest. | ||||||||||||||
In conjunction with the 2014 Reorganization, unvested incentive units were converted to shares of restricted stock at various conversion ratios that ranged from 1:24 to 1:47. The conversion to restricted stock was determined based on the underlying conditions of the pre-conversion incentive units. The conversion to the grant-date fair values of restricted stock granted was determined by applying the applicable conversion ratio to the respective original grant-date fair value of incentive units granted. The following table presents a summary of the grant-date fair values of restricted stock granted and the related assumptions: | |||||||||||||||
Years Ended December 31, | 2013 | 2012 | 2011 | ||||||||||||
Grant-date fair value | |||||||||||||||
Restricted Shares | $0.11 - $0.92 | $ | 0.18 - $1.88 | $ | 1.09 | ||||||||||
Risk-free interest rates | 0.71% - 1.41 | % | 0.72 | % | 1.74 | % | |||||||||
Estimated volatility | 50 | % | 60 | % | 60 | % | |||||||||
Expected life (in years) | 5 | 5 | 5 | ||||||||||||
The following table presents stock-based compensation resulting from employee incentive share arrangements and is in the following line items in the accompanying audited consolidated statements of operations for the years ended December 31, 2013, 2012 and 2011: | |||||||||||||||
Years Ended December 31, (in thousands) | 2013 | 2012 | 2011 | ||||||||||||
Operating expense | $ | 222 | $ | 87 | $ | 36 | |||||||||
Sales and marketing | 114 | 83 | 57 | ||||||||||||
Research and development | 345 | 100 | 25 | ||||||||||||
General and administrative | 253 | 233 | 47 | ||||||||||||
Total stock-based compensation expense | $ | 934 | $ | 503 | $ | 165 | |||||||||
We do not receive any cash proceeds from the conversion of our restricted stock. There was no income tax benefit recognized as a result of our stock-based compensation expense for each of the years ended December 31, 2013, 2012 and 2011. | |||||||||||||||
The capitalized non-cash stock-based compensation expense related to software developed for internal use of $0.2 million and $0.1 million was included in software and capitalized software costs in property, plant and equipment, net in our consolidated balance sheets as of December 31, 2013 and 2012, respectively. | |||||||||||||||
Compensation costs for restricted stock awards with service only conditions are measured based on the fair value of the award on the grant date and recognized over the requisite service period. The performance-based vesting conditions will vest 50% upon us reaching a total enterprise value of $1.4 billion and 50% upon our reaching a total enterprise value of $1.8 billion, provided that the person is employed by us on that date. Compensation expense relating to the issuance of performance-based restricted stock is measured based upon the fair value of the award on the grant date and recognized on a straight-line basis over the vesting period, based upon the probability that the performance target will be met. | |||||||||||||||
A summary of the status of our non-vested restricted stock as of December 31, 2013 and related changes during the year ended December 31, 2013: | |||||||||||||||
Restricted Stock: | |||||||||||||||
Year ended December 31, 2013 | Number | Weighted | |||||||||||||
of shares | average grant- | ||||||||||||||
date fair value | |||||||||||||||
(in dollars) | |||||||||||||||
Restricted stock outstanding at January 1, 2013 | 7,895,692 | $ | 0.26 | ||||||||||||
Restricted stock granted | 1,062,945 | $ | 0.37 | ||||||||||||
Restricted stock vested | (781,411 | ) | $ | 0.48 | |||||||||||
Restricted stock forfeited | (56,125 | ) | $ | 0.43 | |||||||||||
Restricted stock outstanding at December 31, 2013 | 8,121,101 | $ | 0.25 | ||||||||||||
The fair market value of the restricted stock awards shown in the preceding table are based on our estimated enterprise value at the date of grant, with consideration given to rights and terms of such shares. | |||||||||||||||
Our restricted stock does not have an exercise price and therefore the intrinsic value of the restricted stock equals the fair value. | |||||||||||||||
During the year ended December 31, 2012, there was one modification that affected two employees. The modification amended the vesting period from the original 50% on the third and 50% on the fourth anniversaries, to immediate vesting of 100% of the shares. This modification resulted in total incremental compensation costs of $0.1 million for the year ended December 31, 2012. There were no modifications to the restricted stock during the years ended December 31, 2013 or 2011. | |||||||||||||||
There was $1.3 million of total unrecognized compensation cost related to unvested restricted stock issued to employees as of December 31, 2013 and December 31, 2012. The unrecognized compensation cost is expected to be recognized over a weighted average period of 3.7 years. |
RelatedParty_Transactions
Related-Party Transactions | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2013 | |||
Related-Party Transactions | 10 | RELATED-PARTY TRANSACTIONS | 10 | RELATED-PARTY TRANSACTIONS |
Our Dallas office building is owned by 417 Oakbend, LP, a Texas limited partnership. Jeff York, our Chief Sales Officer, owns a .01% general partnership interest and a 10.49% limited partnership interest in 417 Oakbend, LP. During each of the three months ended September 30, 2014 and 2013, we paid rent on our Dallas office space in the amounts of less than $0.1 million. During each of the nine months ended September 30, 2014 and 2013, we paid rent on our Dallas office space in the amounts of $0.2 million. | During each of the years ended December 31, 2013, 2012 and 2011, we paid rent on our Dallas office space in the amounts of $0.3 million. The Dallas office building is owned by 417 Oakbend, LP, a Texas limited partnership. Our Chief Sales Officer owns a .01% general partnership interest and a 10.49% limited partnership interest in 417 Oakbend, LP. | |||
In connection with the corporate reorganization in April 2012, we entered into the 2022 Note with WCAS CP IV, a related party. We paid off the balance of this note in April 2014 with proceeds from our IPO and with existing cash on hand. | In November 2013 and December 2012, we purchased approximately 18.3 acres and 17.6 acres of land, respectively, for future expansion at our corporate headquarters. The land was purchased from Kilpatrick Partners, L.L.C., for a total cost of $4.8 million and $2.3 million, respectively. The manager of Kilpatrick Partners, L.L.C. is our President and Chief Executive Officer. | |||
In connection with the 2014 Reorganization, we assumed the 2017 Note that was issued by WCAS Holdings and was payable to WCAS X. We paid off the balance of this note in April 2014 with proceeds from our IPO. | In connection with the April 2012 Corporate Reorganization, we entered into the 2022 Note with WCAS Capital Partners IV, L.P., a related party as described in Note 5. The 2022 Note is due on April 3, 2022 and interest is payable at an annual rate of 10%, payable semiannually in arrears on December 31 and June 30 of each year. | |||
We entered into a Limited Liability Company Unit Redemption Agreement, effective as of January 26, 2013, pursuant to which we purchased 2,605 incentive units from a former employee at a purchase price of $260.21 per unit, which price was based on a third party appraisal and an internal appraisal. The incentive units were purchased from the former employee for an aggregate purchase price of approximately $0.7 million. The former employee is the brother of William X. Kerber III, our Chief Information Officer. | At both December 31, 2013 and 2012, Holdings owed $0.1 million to Welsh, Carson, Anderson & Stowe, L.P. and certain of their affiliates, representing tax distributions and travel expenses paid by Welsh, Carson, Anderson & Stowe, L.P. and charged to Holdings. | |||
We entered into a Limited Liability Company Unit Redemption Agreement, effective as of January 26, 2013, pursuant to which we purchased 2,605 incentive units from John Kerber at a purchase price of $260.21 per unit, which price was based on a third party appraisal and an internal appraisal. The incentive units were purchased from John Kerber for an aggregate purchase price of approximately $0.7 million. John Kerber is one of our former employees and the brother of William X. Kerber III, our Chief Information Officer. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||
Commitments and Contingencies | 11 | COMMITMENTS AND CONTINGENCIES | 11 | COMMITMENTS AND CONTINGENCIES | ||||||
Funding Agreement | Funding Agreement | |||||||||
In March 2010, we entered into a funding agreement with the Oklahoma City Economic Development Trust (the “Trust”) and the city of Oklahoma City. The Trust provided $2.0 million as an up-front job creation payment for the construction of certain public infrastructure improvements related to our new principal executive offices in northwest Oklahoma City. In exchange for the funding, we agreed to create at least 492 jobs over a five year period, with an average first year salary in excess of $37 thousand and make a minimum capital investment in the project of at least $15.0 million. We further agreed that we would be responsible for repayment of any amount that was not offset by earned job creation payments. As of September 30, 2014 and December 31, 2013, we had earned $1.9 million and $1.5 million of job creation payments, respectively. We believe that we will fulfill the obligations under this agreement within the time frame specified. | In March 2010, we entered into a funding agreement with the Oklahoma City Economic Development Trust (the “Trust”) and the city of Oklahoma City. The Trust provided $2.0 million as an up-front job creation payment for the construction of certain public infrastructure improvements related to our new principal executive offices in northwest Oklahoma City. In exchange for the funding, we agreed to create at least 492 jobs over a five year period, with an average first year salary in excess of $37 thousand and make a minimum capital investment in the project of at least $15 million. We further agreed that we would be responsible for repayment of any amount that was not offset by earned job creation payments. As of December 31, 2013 and 2012, we had earned $1.5 million and $0.9 million of job creation payments, respectively. We believe that we will fulfill the obligations under this agreement within the time frame specified. | |||||||||
Legal Proceedings | Legal Proceedings | |||||||||
In July 2013, Dr. Lakshmi Arunachalam filed a complaint against Paycom Payroll, LLC (“Paycom”) in the U.S. District Court for the District of Delaware alleging that Paycom infringes on U.S. Patent No. 8,244,833 assigned to her. Paycom denied all claims made against it by Dr. Arunachalam in her complaint, asserted various defenses and counterclaims for non-infringement and challenged the validity and enforceability of U.S. Patent No. 8,244,833. The initial lawsuit was dismissed and a complaint was filed by Pi-Net International, Inc. on April 18, 2014, along with the claims of infringement of two additional patents, U.S. Patent No. 5,987,500 and U.S. Patent No. 8,108,492. On July 1, 2014, Paycom, Webexchange, Inc., Dr. Arunachalam, and Pi-Net International, Inc. entered into a confidential settlement agreement. As part of this settlement agreement, Pi-Net International, Inc. and Paycom entered a stipulation of dismissal with prejudice on July 1, 2014. | In July 2013, Dr. Lakshmi Arunachalam filed a complaint against Paycom Payroll, LLC (“Paycom”) in the U.S. District Court for the District of Delaware alleging that Paycom infringes on U.S. Patent No. 8,244,833 assigned to her. Paycom denied all claims made against it by Dr. Arunachalam in her complaint, asserted various defenses and counterclaims for non-infringement and challenged the validity and enforceability of U.S. Patent No. 8,244,833. The initial lawsuit was dismissed and a complaint was filed by Pi-Net International, Inc. on April 18, 2014, along with the claims of infringement of two additional patents, U.S. Patent No. 5,987,500 and U.S. Patent No. 8,108,492. On July 1, 2014, Paycom, Webexchange, Inc., Dr. Arunachalam, and Pi-Net International, Inc. entered into a confidential settlement agreement. As part of this settlement agreement, Pi-Net International, Inc. and Paycom entered a stipulation of dismissal with prejudice on July 1, 2014. | |||||||||
On September 23, 2014, we filed a complaint against National Financial Partners Corp. in the United States District Court for the Western District of Oklahoma (Civil Action No. 5:14-cv-01029-R) seeking a declaratory judgment that we have not engaged in any trademark infringement or unfair competition in connection with the use of our logo. On September 23, 2014, National Financial Partners Corp. filed a complaint against Software in the United States District Court for the Northern District of Illinois (Civil Action No. 1:14-cv-07424). The complaint alleges trademark infringement, unfair competition, deceptive trade practices, consumer fraud and deceptive business practices related to the adoption and use of our logo and seeks preliminary and permanent injunctions prohibiting us from continued infringement as well as money damages, including an accounting for sales and profits, attorneys’ fees and disgorgement of profits. On October 16, 2014, National Financial Partners Corp. filed a motion to dismiss the action pending in the Western District of Oklahoma. On October 20, 2014, we filed a motion to transfer the action from the Northern District of Illinois to the Western District of Oklahoma, and a memorandum in support of the motion to transfer, in the Northern District of Illinois. On December 12, 2014, the United States District Court for the Western District of Oklahoma granted National Financial Partners Corp.’s motion to dismiss. We intend to vigorously defend this litigation. National Financial Partners Corp. has moved for an order preliminarily enjoining us from using our logo. We intend to oppose that motion. In the event that a court ultimately determines that we have infringed any of the asserted trademarks or grants National Financial Partners Corp.’s motion for a preliminary injunction, we may be subject to damages, which may include treble damages, and/or be enjoined from using our current logo while the parties are litigating the merits of their claims or be required to modify our logo and/or undergo a rebranding of our solution and applications. We cannot predict with any degree of certainty the outcome of the litigation or determine the extent of any potential liability or damages. | On September 23, 2014, we filed a complaint against National Financial Partners Corp. in the United States District Court for the Western District of Oklahoma (Civil Action No. 5:14-cv-01029-R) seeking a declaratory judgment that we have not engaged in any trademark infringement or unfair competition in connection with the use of our logo. On September 23, 2014, National Financial Partners Corp. filed a complaint against Software in the United States District Court for the Northern District of Illinois (Civil Action No. 1:14-cv-07424). The complaint alleges trademark infringement, unfair competition, deceptive trade practices, consumer fraud and deceptive business practices related to the adoption and use of our logo and seeks preliminary and permanent injunctions prohibiting us from continued infringement as well as money damages, including an accounting for sales and profits, attorneys’ fees and disgorgement of profits. On October 16, 2014, National Financial Partners Corp. filed a motion to dismiss the action pending in the Western District of Oklahoma. On October 20, 2014, we filed a motion to transfer the action from the Northern District of Illinois to the Western District of Oklahoma, and a memorandum in support of the motion to transfer, in the Northern District of Illinois. On December 12, 2014, the United States District Court for the Western District of Oklahoma granted National Financial Partners Corp.’s motion to dismiss. We intend to vigorously defend this litigation. National Financial Partners Corp. has moved for an order preliminarily enjoining us from using our logo. We intend to oppose that motion. In the event that a court ultimately determines that we have infringed any of the asserted trademarks or grants National Financial Partners Corp.’s motion for a preliminary injunction, we may be subject to damages, which may include treble damages, be enjoined from using our current logo while the parties are litigating the merits of the claims or be required to modify our logo and/or undergo a rebranding of our solution and applications. We cannot predict with any degree of certainty the outcome of the litigation or determine the extent of any potential liability or damages. | |||||||||
We are involved in various other legal proceedings in the ordinary course of business. Although we cannot predict the outcome of these proceedings, legal matters are subject to inherent uncertainties and there exists the possibility that the ultimate resolution of these matters could have a material adverse effect on our business, financial condition, results of operations or cash flows. | ||||||||||
We are involved in various other legal proceedings in the ordinary course of business. Although we cannot predict the outcome of these proceedings, legal matters are subject to inherent uncertainties and there exists the possibility that the ultimate resolution of these matters could have a material adverse effect on our business, financial condition, results of operations or cash flows. | Operating Leases | |||||||||
Operating Leases | We lease office space under several noncancellable operating leases with contractual terms expiring from 2014 to 2019. Minimum rent expenses are recognized over the lease term. The lease term is defined as the fixed noncancellable term of the lease plus all periods, if any, for which failure to renew the lease imposes a penalty on us in an amount that a renewal appears, at the inception of the lease, to be reasonably assured. When a lease contains a predetermined fixed escalation of the minimum rent, we recognize the related rent expense on a straight-line basis and record the difference between the recognized rent expense and the amount payable under the lease as a liability. | |||||||||
We lease office space under several noncancellable operating leases with contractual terms expiring from 2014 to 2019. Minimum rent expense is recognized over the lease term. The lease term is defined as the fixed noncancellable term of the lease plus all periods, if any, for which failure to renew the lease imposes a penalty on us in an amount that a renewal appears, at the inception of the lease, to be reasonably assured. When a lease contains a predetermined fixed escalation of the minimum rent, we recognize the related rent expense on a straight-line basis and record the difference between the recognized rent expense and the amount payable under the lease as a liability. | Future annual minimum lease payments under noncancellable operating leases with initial or remaining terms of one year or more as of December 31, 2013 were as follows (dollars in thousands): | |||||||||
Future annual minimum lease payments under noncancellable operating leases with initial or remaining terms of one year or more at September 30, 2014 were as follows: | ||||||||||
Year Ending | Operating | |||||||||
Year Ending December 31, | Operating | December 31, | ||||||||
2014 | $ | 927 | 2014 | $ | 2,222 | |||||
2015 | 3,811 | 2015 | 2,092 | |||||||
2016 | 3,542 | 2016 | 1,767 | |||||||
2017 | 3,181 | 2017 | 1,465 | |||||||
2018 | 2,622 | 2018 | 705 | |||||||
Thereafter | 1,772 | Thereafter | 53 | |||||||
Total minimum lease payments | $ | 15,855 | Total minimum lease payments | $ | 8,304 | |||||
Rent expense under operating leases for the years ended December 31, 2013, 2012 and 2011 was $2.0 million, $1.5 million and $1.6 million, respectively. |
Income_Taxes
Income Taxes | 9 Months Ended | 12 Months Ended | |||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||
Income Taxes | 12 | INCOME TAXES | 12 | INCOME TAXES | |||||||||||
The provision for income taxes is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items. Significant management judgment is required in estimating operating income in order to determine our estimated effective income tax rate. The effective income tax rate was 39% and 32% for the nine months ended September 30, 2014 and 2013, respectively. The higher effective income tax rate for the nine months ended September 30, 2014 is primarily a result of our 2014 Reorganization, as the 2013 effective income tax rate only includes WCAS Holdings which has historically been treated as a consolidated corporation that is taxed under Subchapter C of the United States Internal Revenue Code of 1986, as amended (a “Subchapter C Corporation”). | The items comprising income tax expense are as follows (dollars in thousands): | ||||||||||||||
As a result of the 2014 Reorganization, we are treated as a Subchapter C Corporation and, therefore, subject to both federal and state income taxes. Holdings continues to be recognized as a wholly-owned partnership for income tax purposes. Accordingly, we recorded a one-time non-cash charge to equity of $0.2 million during the nine months ended September 30, 2014 for the amount of the deferred tax liability resulting from the exchange of common units, incentive units and Series B Preferred Units of Holdings for common stock and restricted stock of Software as part of the 2014 Reorganization. | |||||||||||||||
Pro Forma Income Tax Expense | Year Ended December 31, | ||||||||||||||
In connection with the 2014 Reorganization, we became taxed as a Subchapter C Corporation, effective January 1, 2014. The pro forma net income applied in computing the pro forma EPS for the three and nine months ended September 30, 2013 is based on our historical net income as adjusted to reflect our conversion to a Subchapter C Corporation as if it had occurred as of January 1, 2013. The pro forma net income includes an adjustment to income tax expense, the amount of which was determined at an effective income tax rate of 47%, which resulted in an incremental pro forma income tax expense (benefit) of $(0.1) million and $0.6 million for the three and nine months ended September 30, 2013, respectively. | 2013 | 2012 | 2011 | ||||||||||||
Provision (benefit) for current income taxes | |||||||||||||||
Federal | $ | — | $ | — | $ | — | |||||||||
State | 275 | 80 | 57 | ||||||||||||
Total provision for current income taxes | 275 | 80 | 57 | ||||||||||||
Provision (benefit) for deferred income taxes, net | |||||||||||||||
Federal | 347 | (51 | ) | 444 | |||||||||||
State | 170 | (113 | ) | 100 | |||||||||||
Total provision (benefit) for deferred income taxes, net | 517 | (164 | ) | 544 | |||||||||||
Total income tax expense (benefit) | $ | 792 | $ | (84 | ) | $ | 601 | ||||||||
The following schedule reconciles the statutory Federal tax rate to the effective income tax rate: | |||||||||||||||
Year Ended December 31, | |||||||||||||||
2013 | 2012 | 2011 | |||||||||||||
Federal statutory tax rate | 34% | 34% | 34% | ||||||||||||
Increase (decrease) resulting from: | |||||||||||||||
Earnings excluded from federal income tax | (14% | ) | (10% | ) | (8% | ) | |||||||||
State income taxes, net of federal income tax benefit | 29% | 7% | 11% | ||||||||||||
Nondeductible expenses from investment in partnership | 4% | (13% | ) | 3% | |||||||||||
Other | 3% | (1% | ) | 0% | |||||||||||
Effective income tax rate | 56% | 17% | 40% | ||||||||||||
Our net deferred tax assets and liabilities consist of the following (dollars in thousands): | |||||||||||||||
Year Ended December 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
Current deferred income tax assets | |||||||||||||||
Net operating losses | $ | 3,643 | $ | 4,184 | |||||||||||
Federal tax credits | 29 | — | |||||||||||||
Current deferred income tax assets, net | $ | 3,672 | $ | 4,184 | |||||||||||
Non-current deferred income tax liabilities | |||||||||||||||
Investment in Paycom Payroll Holdings, LLC | 2,895 | 2,890 | |||||||||||||
Non-current deferred income tax liabilities, net | $ | 2,895 | $ | 2,890 | |||||||||||
At December 31, 2013, we had net operating loss carryforwards for federal income tax purposes of approximately $9.5 million and state income tax purposes of approximately $10.3 million which are available to offset future federal and state taxable income through 2033. | |||||||||||||||
At December 31, 2013 and 2012, we had no material unrecognized tax benefits related to uncertain tax positions. | |||||||||||||||
We file income tax returns with the United States federal government and various state jurisdictions. With few exceptions, we are no longer subject to U.S federal tax examinations by tax authorities for years prior to 2011 or state and local examinations by tax authorities for years prior to 2010. | |||||||||||||||
Pro Forma Income Tax Expense | |||||||||||||||
In connection with the 2014 Reorganization, we became taxed as a Subchapter C Corporation, effective January 1, 2014. The pro forma net income applied in computing the pro forma EPS for the years ended December 31, 2013, 2012 and 2011 is based on our historical net income as adjusted to reflect our conversion to a Subchapter C Corporation as if it had occurred as of January 1, 2011. The pro forma net income includes an adjustment to income tax expense, the amount of which was determined at an effective income tax rate of 47%, 20% and 43% for the years ended December 31, 2013, 2012 and 2011, respectively. This resulted in an incremental pro forma income tax (benefit) expense of $(137) thousand, $(14) thousand and $35 thousand for the years ended December 31, 2013, 2012 and 2011, respectively. |
Subsequent_Events
Subsequent Events | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2013 | |||
Subsequent Events | 13 | SUBSEQUENT EVENTS | 13 | SUBSEQUENT EVENTS |
We had no material subsequent events that have not already been disclosed in the notes to these condensed consolidated financial statements. | On April 21, 2014, we closed our initial public offering whereby an aggregate of 7,641,750 shares of the Company’s common stock were sold to the public (including 4,606,882 shares of common stock issued and sold by the Company and 3,034,868 shares of common stock sold by certain named selling stockholders) at a public offering price of $15.00 per share. We did not receive any proceeds from the sale of shares by the selling stockholders. The total gross proceeds we received from the offering were $69.1 million. After deducting underwriting discounts and commissions and offering expenses payable by us, the aggregate net proceeds we received totaled approximately $64.3 million. We used all of the net proceeds from the offering, together with approximately $3.3 million from existing cash, for the repayment in full of the 2022 Note and the 2017 Note. | |||
We completed construction of a second building at our corporate headquarters in July 2014. In connection with the completion of our headquarters building, we consolidated a portion of our outstanding debt as described below. | ||||
As of June 30, 2014, the 2011 Consolidated Loan and the 2013 Construction Loan were consolidated into a term note under a Loan Agreement (the “2021 Consolidated Loan”) with an outstanding principal balance of $27.2 million as of September 30, 2014. The 2021 Consolidated Loan is due to Kirkpatrick Bank and matures on May 30, 2021. Under the 2021 Consolidated Loan, interest is payable monthly and accrues at a fixed rate of 4.75% per annum. The 2021 Consolidated Loan is secured by a mortgage covering our headquarters buildings and certain personal property relating to our headquarters buildings. | ||||
2,723,233 shares of our restricted stock that were issued in connection with the 2014 Reorganization subject to performance-based vesting conditions upon the Company reaching a total enterprise value of $1.4 billion vested, effective as of December 1, 2014. The vesting of this restricted stock did not have an impact on our historical financial statements. | ||||
Subsequent to December 31, 2013, we signed 14 new office leases for our sales offices and entered into five amendments to our existing leases thereby resulting in an additional $9.5 million in future commitments of noncancellable operating leases with initial or remaining terms of one year or more. |
Consolidation_Basis_of_Present1
Consolidation, Basis of Presentation, Organization and Description of Business (Policies) | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||
The Reorganization | The Reorganization | The Reorganization | ||||
Paycom Software, Inc. (“Software”) and its wholly-owned subsidiary, Payroll Software Merger Sub, LLC (“Merger Sub”) were formed as Delaware entities on October 31, 2013, and December 23, 2013, respectively, in anticipation of an initial public offering (“IPO”) and were wholly-owned subsidiaries of Paycom Payroll, LLC (“Paycom”) prior to December 31, 2013. | Paycom Software, Inc. (“Software”) and its wholly-owned subsidiary, Payroll Software Merger Sub, LLC (“Merger Sub”) were formed as Delaware entities on October 31, 2013, and December 23, 2013, respectively, in anticipation of an initial public offering (“IPO”) and were wholly-owned subsidiaries of Paycom Payroll, LLC (“Paycom”) prior to December 31, 2013. | |||||
On January 1, 2014, we consummated a reorganization pursuant to which: (i) affiliates of Welsh, Carson, Anderson & Stowe, L.P. contributed WCAS Paycom Holdings, Inc. (“WCAS Holdings”) and WCAS CP IV Blocker, Inc. (“CP IV Blocker”), which collectively own all of the Series A Preferred Units of Paycom Payroll Holdings, LLC (“Holdings”), to Software in exchange for shares of common stock of Software and (ii) the owners of outstanding Series B Preferred Units of Holdings contributed their Series B Preferred Units of Holdings to Software in exchange for shares of common stock of Software. Immediately after these contributions, Merger Sub merged with and into Holdings with Holdings surviving the merger. Upon consummation of the merger, the remaining holders of outstanding common and incentive units of Holdings received shares of common stock of Software for their common and incentive units by operation of Delaware law and Holdings’ ownership interest in Software was cancelled. Outstanding common units, Series B Preferred Units and WCAS Holdings and CP IV Blocker were contributed to Software in exchange for, or converted into, 45,708,573 shares of common stock and 8,121,101 shares of restricted stock of Software. Following these transactions, all outstanding Series C Preferred Units were eliminated in an intercompany transaction between Holdings and WCAS Holdings, and we assumed the 14% Note due 2017 issued by WCAS Holdings (the “2017 Note”). Following the reorganization, Software became a holding company with its principal asset being the Series A Preferred Units of Holdings (collectively, the “2014 Reorganization”). | On January 1, 2014, we consummated a reorganization pursuant to which: (i) affiliates of Welsh, Carson, Anderson & Stowe, L.P. contributed WCAS Paycom Holdings, Inc. (“WCAS Holdings”) and WCAS CP IV Blocker, Inc. (“CP IV Blocker”), which collectively own all of the Series A Preferred Units of Paycom Payroll Holdings, LLC (“Holdings”), to Software in exchange for shares of common stock of Software and (ii) the owners of outstanding Series B Preferred Units of Holdings contributed their Series B Preferred Units of Holdings to Software in exchange for shares of common stock of Software. Immediately after these contributions, Merger Sub merged with and into Holdings with Holdings surviving the merger. Upon consummation of the merger, the remaining holders of outstanding common and incentive units of Holdings received shares of common stock of Software for their common and incentive units by operation of Delaware law and Holdings’ ownership interest in Software was cancelled. Outstanding common units, Series B Preferred Units and WCAS Holdings and CP IV Blocker were contributed to Software in exchange for, or converted into, 45,708,573 shares of common stock and 8,121,101 shares of restricted stock of Software. Following these transactions, all outstanding Series C Preferred Units were eliminated in an intercompany transaction between Holdings and WCAS Holdings, and we assumed the 14% Note due 2017 issued by WCAS Holdings (the “2017 Note”). Following the reorganization, Software became a holding company with its principal asset being the Series A Preferred Units of Holdings (collectively, the “2014 Reorganization”). | |||||
Software’s acquisition of WCAS Holdings and Holdings in the 2014 Reorganization represented transactions under common control and were required to be retrospectively applied to the financial statements for all prior periods when the financial statements were issued for a period that included the date the transactions occurred. This includes a retrospective presentation for all equity related disclosures, including share, per share, and restricted stock disclosures, which have been revised to reflect the effects of the 2014 Reorganization. Therefore, our consolidated financial statements are presented as if WCAS Holdings and Holdings were wholly-owned subsidiaries in periods prior to the 2014 Reorganization. The acquisition of CP IV Blocker was not deemed to be a reorganization under common control and therefore our historical consolidated financial statements for periods prior to January 1, 2014 include the ownership of a minority equity interest in CP IV Blocker, which was eliminated upon the acquisition of CP IV Blocker in the 2014 Reorganization on January 1, 2014. | Software’s acquisition of WCAS Holdings and Holdings in the 2014 Reorganization represented transactions under common control and were required to be retrospectively applied to the financial statements for all prior periods when the financial statements were issued for a period that included the date the transactions occurred. This includes a retrospective presentation for all equity related disclosures, including share, per share, and restricted stock disclosures, which have been revised to reflect the effects of the 2014 Reorganization. Therefore, our consolidated financial statements are presented as if WCAS Holdings and Holdings were wholly-owned subsidiaries in periods prior to the 2014 Reorganization. The acquisition of CP IV Blocker was not deemed to be a reorganization under common control and therefore our historical consolidated financial statements include the ownership of a minority equity interest in CP IV Blocker, which was eliminated upon the acquisition of CP IV Blocker in the 2014 Reorganization on January 1, 2014. | |||||
Our unaudited interim condensed consolidated financial statements include the financial results of Software, WCAS Holdings, CP IV Blocker and Holdings, effective January 1, 2014. Intercompany balances and transactions were eliminated in consolidation. | Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our” and the “Company” refer, prior to the 2014 Reorganization, to Holdings, Holdings’ consolidated subsidiaries and WCAS Holdings collectively and, after the 2014 Reorganization, to Software and its consolidated subsidiaries. | |||||
Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our” and the “Company” refer, prior to the 2014 Reorganization, to Holdings, Holdings’ consolidated subsidiaries and WCAS Holdings collectively, and after the 2014 Reorganization, to Software and its consolidated subsidiaries. | ||||||
Basis of Presentation | Basis of Presentation | |||||
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial statements that permit reduced disclosure for interim periods. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary to fairly present our condensed consolidated financial position as of September 30, 2014 and December 31, 2013, our condensed consolidated results of operations for the nine months ended September 30, 2014 and 2013 and our condensed consolidated cash flows for the nine months ended September 30, 2014 and 2013. Such adjustments are of a normal recurring nature. The information in this prospectus should be read in conjunction with our consolidated financial statements for the years ended December 31, 2013 and 2012 included elsewhere in this prospectus. | ||||||
Use of Estimates | Use of Estimates | Use of Estimates | ||||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include the useful life for long-lived and intangible assets, the life of our client relationships, the fair market value of our equity incentive awards and the fair value of our financial instruments. These estimates are based on historical experience where applicable and other assumptions that management believes are reasonable under the circumstances. As such, actual results could materially differ from these estimates. | The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include the useful life for long-lived and intangible assets, the life of our client relationships, the fair market value of our equity incentive awards and the fair value of our financial instruments. These estimates are based on historical experience where applicable and other assumptions that management believes are reasonable under circumstances. As such, actual results could materially differ from these estimates. | |||||
Segment Information | Segment Information | Segment Information | ||||
We operate in a single operating segment and a single reporting segment and all required financial segment information is presented in the condensed consolidated financial statements. | We operate in a single operating segment and a single reporting segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief executive officer in deciding how to allocate resources and assessing performance. Our chief executive officer allocates resources and assesses performance based upon financial information at the consolidated level. Since we operate in one operating segment, all required financial segment information is presented in the consolidated financial statements. | |||||
Recently Adopted and Issued Accounting Pronouncements | Recently Issued and Adopted Accounting Pronouncements | Recently Adopted and Issued Accounting Pronouncements | ||||
In July 2013, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance which requires entities to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. We adopted this new guidance during the nine months ended September 30, 2014, which did not have a material impact on our condensed consolidated financial statements. | In February 2013, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance which adds new disclosure requirements for items reclassified out of Accumulated Other Comprehensive Income (“AOCI”). The update requires that an entity present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of AOCI based on its source and the income statement line items affected by the reclassification. The amendment is effective for fiscal years and interim periods beginning on after December 15, 2012. We adopted this new guidance for the year ended December 31, 2013, which did not have a material impact on our consolidated financial statements. | |||||
In May 2014, the FASB issued authoritative guidance which included a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is not permitted. Accordingly, the standard is effective for us on January 1, 2017. We are currently evaluating the impact that the standard will have on our condensed consolidated financial statements. | In February 2013, the FASB issued authoritative guidance, which added new disclosure requirements to measure obligations resulting from joint and several liability arrangement for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date and disclose the arrangements and the total outstanding amount of obligation for all joint parties. These disclosures are in addition to existing related party disclosure requirements. The amendment is effective for fiscal years and interim periods beginning after December 15, 2013 and we do not expect the adoption of such guidance to have a material impact on our consolidated financial statements. | |||||
In June 2014, the FASB issued authoritative guidance for share-based payments which requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Accordingly, the standard is effective for us on January 1, 2016. We do not anticipate that the adoption of this standard will have a material impact on our condensed consolidated financial statements. | In July 2013, the FASB issued authoritative guidance which requires entities to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. We adopted this new guidance for the year ended December 31, 2013, which did not have a material impact on our consolidated financial statements. | |||||
In May 2014, the FASB issued authoritative guidance which included a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is not permitted. Accordingly, the standard is effective for us on January 1, 2017. We are currently evaluating the impact that the standard will have on our consolidated financial statements. | ||||||
In June 2014, the FASB issued authoritative guidance for share-based payments which requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Accordingly, the standard is effective for us on January 1, 2016. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. | ||||||
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation | |||||
Our consolidated financial statements include the financial results of Software, Holdings, Paycom and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Intercompany balances and transactions have been eliminated in consolidation. | ||||||
Reclassifications | Reclassifications | |||||
Certain reclassifications were made to the 2012 and 2011 consolidated financial statements to conform to the 2013 presentation. These reclassifications were not material to the financial statements and had no effect on the consolidated stockholders’ equity or net income (loss). | ||||||
Cash Equivalents | Cash Equivalents | |||||
We consider all highly liquid debt instruments purchased with a maturity of three months or less and money market mutual funds to be cash equivalents. We maintain cash and cash equivalents in bank deposit accounts and money market funds, which may not be federally insured. The fair value of our cash and cash equivalents approximates carrying value. As of December 31, 2013 and 2012, all amounts were held in deposit on demand. We have not experienced any losses in such accounts and do not believe there is exposure to any significant credit risk on such accounts. | ||||||
Restricted Cash | Restricted Cash | |||||
Restricted cash in our consolidated balance sheets primarily consists of cash held in restricted accounts due to requirements under an existing office building lease and our corporate building loan agreements. As of both December 31, 2013 and 2012, we had restricted cash of $0.4 million. | ||||||
Accounts Receivable | Accounts Receivable | |||||
We generally collect revenue from our customers via automatic deduction from clients’ bank accounts at the time processing occurs. Accounts receivable on our consolidated balance sheets consists primarily of revenue fees related to the last day of the period, which are collected on the following business day. As accounts receivable are collected via automatic deduction on the following business day, the Company has not recorded an allowance for doubtful accounts. | ||||||
Deferred offering costs | Deferred offering costs | |||||
Deferred offering costs represent legal, accounting and other direct costs related to our efforts to raise capital through an IPO. Costs related to IPO activities were deferred until the completion of the IPO, at which time they were offset against the IPO proceeds. As of December 31, 2013, we had capitalized $0.6 million associated with IPO activities and included such amount in prepaid expenses on the consolidated balance sheets. There were no deferred offering costs capitalized as of December 31, 2012. | ||||||
Inventory | Inventory | |||||
Our inventory consists of five types of time clocks sold to clients as part of our time and attendance services and are stated at the lower of cost or market. Cost is determined using the first-in first-out (“FIFO”) cost method. | ||||||
Time clocks are purchased as finished goods from a third party and as such we do not have any inventory classified as raw materials or work in process inventory. Rental clocks issued to clients under month-to-month operating leases are classified as property, plant, and equipment. We retain inventory in certain lines primarily as replacements for those clients who use the various clocks and have determined that no write-downs for obsolete items was required based on inventory turnover and our historical experience during the years ended December 31, 2013, 2012 and 2011. | ||||||
Property, Plant and Equipment | Property, Plant and Equipment | |||||
Property, plant and equipment is stated at cost, net of accumulated depreciation. Depreciation is determined using the straight line method over the estimated useful lives of the assets as follows: | ||||||
Office equipment and furniture & fixtures | 5 years | |||||
Computer equipment and software | 3 years | |||||
Buildings | 30 years | |||||
Leasehold improvements | 3 years | |||||
Rental clocks | 5 years | |||||
Vehicles | 3 years | |||||
Our leasehold improvements are depreciated over the shorter of their estimated useful lives or the related lease terms. Costs incurred during construction of long-lived assets are recorded as construction in progress and are not depreciated until the asset is placed in service. | ||||||
We capitalize interest incurred related to construction in progress. For the years ended December 31, 2013, 2012 and 2011, we incurred interest costs of $2.6 million, $2.0 million and $0.4 million, respectively. For the years ended December 31, 2013, 2012 and 2011, interest expense of $0.1 million, less than $0.1 million and $0.3 million, respectively, was capitalized. | ||||||
Internal Use Software | Internal Use Software | |||||
Expenditures for major software purchases and software developed or obtained for internal use are capitalized and amortized over a three-year period on a straight-line basis. Capitalized costs include external direct costs of materials and services associated with developing or obtaining internal use computer software and certain payroll and payroll-related costs for employees who are directly associated with internal use computer software projects. The amount of payroll costs that are capitalized with respect to these employees is limited to the time directly spent on such projects. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred. We also expense internal costs related to minor upgrades and enhancements, as it is impractical to separate these costs from normal maintenance activities. | ||||||
The total capitalized payroll costs related to internal use computer software projects was $1.2 million and $0.6 million as of December 31, 2013 and 2012, respectively, which have been included in property, plant and equipment. Amortization expense related to capitalized software costs of $0.6 million, $0.4 million and $0.4 million was charged to expense for the years ended December 31, 2013, 2012 and 2011, respectively. | ||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets | |||||
Goodwill is not amortized, but is instead tested for impairment annually, or earlier if, at the reporting unit level, an indicator of impairment arises. The estimates and assumptions about future results of operations and cash flows made in connection with the impairment testing could differ from future actual results of operations and cash flows. If impairment exists, a write-down to fair value (normally measured by discounting estimated future cash flows) is recorded. Our business is largely homogeneous and, as a result, goodwill is associated with one reporting unit. We have selected June 30 as our annual goodwill impairment testing date and determined there was no impairment as of June 30, 2013. For the years ended December 31, 2013, 2012 and 2011, there were no indicators of impairment. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. | ||||||
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets | |||||
Long-lived assets, including intangible assets with finite lives, are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset. We have determined that there was no impairment of long-lived assets for the years ended December 31, 2013, 2012 and 2011. | ||||||
Funds Held for Clients and Client Funds Obligation | Funds Held for Clients and Client Funds Obligation | |||||
As part of our payroll and tax filing application, we collect funds for federal, state and local employment taxes from clients, handle applicable regulatory tax filings, correspondence and amendments, remit the funds to appropriate tax agencies, and handle other employer-related services. Amounts collected by us from clients for their federal, state and local employment taxes earn interest during the interval between receipt and disbursement, as we invest these funds in money market funds and certificates of deposit. The interest earned from these investments is included in the consolidated statements of income as other income, net. These investments are shown in the consolidated balance sheets as funds held for clients, and the offsetting liability for the tax filings is shown as client funds obligation. | ||||||
As of December 31, 2013 and 2012, the funds held for clients were invested in demand deposits, short-term certificates of deposit and money market funds. | ||||||
Revenue Recognition | Revenue Recognition | |||||
Our total revenue is comprised of recurring revenues and implementation and other revenues. We recognize revenue in accordance with accounting standards for software and service companies when all of the following criteria have been met: | ||||||
• | There is persuasive evidence of an arrangement; | |||||
• | The service has been or is being provided to the client; | |||||
• | Collection of the fees is reasonably assured; and | |||||
• | The amount of fees to be paid by the client is fixed or determinable. | |||||
Recurring | ||||||
Recurring revenues are derived primarily from our talent acquisition, time and labor management, payroll, talent management and human resources applications. Talent acquisition includes application tracking, employment and background checks, on/off-boarding, e-verify and tax credit services. Time and labor management includes time and attendance, scheduling, time-off requests, labor allocation and labor management reports. Payroll includes payroll and tax management, paycom pay, expense management and garnishment management. Talent management includes employee self-service, compensation budgeting, performance management and executive dashboard. Human resources management includes document management, government and compliance, benefits and COBRA administration and personnel action forms. | ||||||
The services related to recurring revenues are rendered during each client’s payroll period, with the agreed-upon fee being charged and collected as part of our processing of the client’s payroll. Recurring revenues are recognized at the conclusion of processing of each client’s payroll-period, when each respective payroll client is billed. Collectability is reasonably assured as the fees are collected through an Automated Clearing House (“ACH”) as part of the client’s payroll cycle or through direct wire transfer, which minimizes the default risk. | ||||||
Implementation and other | ||||||
Implementation and other revenues represent non-refundable conversion fees which are charged to new clients to offset the expense of new client set-up and revenue from the sale of time clocks as part of our employee time and attendance services. Because these conversion fees and sale of time clocks relate to our recurring revenue, we have evaluated such arrangements under the accounting guidance that governs multiple element arrangements. | ||||||
For arrangements with multiple elements, we evaluate whether each element represents a separate unit of accounting. In order to treat deliverables in a multiple element arrangement as separate units of accounting, the deliverables must have standalone value upon delivery. If the deliverables have stand-alone value upon delivery, we account for each deliverable separately and revenue is recognized for the respective deliverables as they are delivered. If one or more of the deliverables does not have stand-alone value upon delivery, the deliverables that do not have stand-alone value are generally combined with the final deliverable within the arrangement and treated as a single unit of accounting. | ||||||
When multiple deliverables included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified separate units of accounting based on their relative selling price. Multiple deliverable arrangements accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting. Vendor-specific objective evidence (“VSOE”) of selling price, based on the price at which the item is regularly sold by the vendor on a stand-alone basis, should be used if it exists. If VSOE of selling price is not available, third-party evidence (“TPE”) of selling price is used to establish the selling price if it exists, and if not it would be based on our best estimate of selling price. | ||||||
For the years ended December 31, 2013, 2012 and 2011, we have determined that there is no stand-alone value associated with the upfront conversion fees as they do not have value to our clients on a stand-alone basis nor are they offered as an individual service; therefore, the conversion fees are deferred and recognized ratably over the estimated life of our clients, which we have estimated to be ten years. | ||||||
For the years ended December 31, 2013, 2012, and 2011, we have determined that the revenues from the employee time and attendance services, and the revenues from the sale of time clocks as part of our time and attendance services, have VSOE of selling price as they are sold on a stand-alone basis. Revenue is therefore recognized for the respective deliverables as they are delivered. | ||||||
Cost of Revenues | Cost of Revenues | |||||
Our costs and expenses applicable to total revenues represent total operating expenses and systems support and technology costs, including labor and related expenses, bank fees, shipping fees and costs of paper stock, envelopes, etc. In addition, costs included to derive gross margins are comprised of support labor and related expenses, related hardware costs and applicable depreciation costs. | ||||||
Advertising Costs | Advertising Costs | |||||
Advertising costs are expensed the first time that advertising takes place. Advertising costs for the years ended December 31, 2013, 2012 and 2011 were $3.4 million, $2.3 million and $1.7 million, respectively. | ||||||
Sales Taxes | Sales Taxes | |||||
We collect and remit sales tax on sales of time and attendance clocks and on payroll services in certain states. These taxes are shown on a net basis, and as such, excluded from revenue. For the years ended December 31, 2013, 2012 and 2011, sales taxes collected and remitted were $2.2 million, $1.6 million and $1.1 million, respectively. | ||||||
Employee Stock-Based Compensation | Employee Stock-Based Compensation | |||||
All stock-based compensation awards to employees are recognized pro rata over the respective vesting period as compensation costs in the consolidated statements of income based on their fair values measured as of the date of grant. | ||||||
Income Taxes | Income Taxes | |||||
Our consolidated financial statements include a provision for income taxes incurred for WCAS Holdings for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. | ||||||
Prior to the 2014 Reorganization, we operated under Holdings as a limited liability company (“LLC”) that was taxed as a partnership. Business income passed through the business to the LLC members, who reported their share of profits or losses on their respective income tax returns. | ||||||
We file income tax returns in the U.S. and various state jurisdictions. We evaluate tax positions taken or expected to be taken in the course of preparing our tax returns and disallow the recognition of tax positions not deemed to meet a “more-likely-than-not” threshold of being sustained by the applicable tax authority. We do not believe there are any tax positions taken within the consolidated financial statements that would not meet this threshold. Our policy is to record interest and penalties, if any, related to uncertain tax positions as a component of general and administrative expenses. We are not aware of any ongoing or potential examinations as of December 31, 2013. However, the tax years 2010 through 2013 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions. |
Property_Plant_and_Equipment_T
Property, Plant and Equipment (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||
Schedule of Property, Plant and Equipment and Accumulated Depreciation | Property, plant and equipment and accumulated depreciation were as follows (dollars in thousands): | Property, plant and equipment and accumulated depreciation were as follows (dollars in thousands): | ||||||||||||||||
September 30, | December 31, | December 31, | ||||||||||||||||
2014 | 2013 | 2013 | 2012 | |||||||||||||||
Property, plant and equipment | Property, plant and equipment | |||||||||||||||||
Buildings | $ | 28,154 | $ | 14,828 | Furniture, fixtures and equipment | $ | 3,189 | $ | 2,887 | |||||||||
Software and capitalized software costs | 7,635 | 5,578 | Computer equipment | 4,832 | 3,498 | |||||||||||||
Computer equipment | 6,613 | 4,832 | Software and capitalized software costs | 5,578 | 3,588 | |||||||||||||
Rental clocks | 6,111 | 4,865 | Rental clocks | 4,865 | 3,480 | |||||||||||||
Furniture, fixtures and equipment | 4,073 | 3,189 | Vehicles | 421 | 468 | |||||||||||||
Vehicles | 421 | 421 | Buildings | 14,828 | 14,828 | |||||||||||||
Leasehold improvements | 159 | 135 | Leasehold improvements | 135 | 135 | |||||||||||||
53,166 | 33,848 | 33,848 | 28,884 | |||||||||||||||
Less: accumulated depreciation | (15,517 | ) | (11,540 | ) | Less: accumulated depreciation | (11,540 | ) | (8,015 | ) | |||||||||
37,649 | 22,308 | 22,308 | 20,869 | |||||||||||||||
Land | 8,993 | 8,993 | Land | 8,993 | 4,205 | |||||||||||||
Construction in process | — | 7,370 | Construction in process | 7,370 | 65 | |||||||||||||
Property, plant and equipment, net | $ | 46,642 | $ | 38,671 | Property, plant and equipment, net | $ | 38,671 | $ | 25,139 | |||||||||
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets, Net (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||||||||
Components of Intangible Assets | The components of intangible assets were as follows (dollars in thousands): | The components of intangible assets are as follows (dollars in thousands): | ||||||||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||||
Weighted Avg. | Gross | Accumulated | Net | Weighted Avg. | Gross | Accumulated | Net | |||||||||||||||||||||||||||
Remaining | Amortization | Remaining | Amortization | |||||||||||||||||||||||||||||||
Useful Life | Useful Life | |||||||||||||||||||||||||||||||||
(Years | ) | (Years) | ||||||||||||||||||||||||||||||||
Intangibles: | Intangibles: | |||||||||||||||||||||||||||||||||
Customer relationships | 2.8 | $ | 13,997 | $ | (10,147 | ) | $ | 3,850 | Customer relationships | 3.5 | $ | 13,997 | $ | (9,098 | ) | $ | 4,899 | |||||||||||||||||
Trade name | 7.8 | 3,194 | (1,545 | ) | 1,649 | Trade name | 8.5 | 3,194 | (1,384 | ) | 1,810 | |||||||||||||||||||||||
Total | $ | 17,191 | $ | (11,692 | ) | $ | 5,499 | Total | $ | 17,191 | $ | (10,482 | ) | $ | 6,709 | |||||||||||||||||||
December 31, 2013 | December 31, 2012 | |||||||||||||||||||||||||||||||||
Weighted Avg. | Gross | Accumulated | Net | Weighted Avg. | Gross | Accumulated | Net | |||||||||||||||||||||||||||
Remaining | Amortization | Remaining | Amortization | |||||||||||||||||||||||||||||||
Useful Life | Useful Life | |||||||||||||||||||||||||||||||||
(Years | ) | (Years) | ||||||||||||||||||||||||||||||||
Intangibles: | Intangibles: | |||||||||||||||||||||||||||||||||
Customer relationships | 3.5 | $ | 13,997 | $ | (9,098 | ) | $ | 4,899 | Customer relationships | 4.5 | $ | 13,997 | $ | (7,699 | ) | $ | 6,298 | |||||||||||||||||
Trade name | 8.5 | 3,194 | (1,384 | ) | 1,810 | Trade name | 9.5 | 3,194 | (1,171 | ) | 2,023 | |||||||||||||||||||||||
Total | $ | 17,191 | $ | (10,482 | ) | $ | 6,709 | Total | $ | 17,191 | $ | (8,870 | ) | $ | 8,321 | |||||||||||||||||||
Schedule of Estimated Amortization Expense of Intangible Assets | Estimated amortization expense as of September 30, 2014 for our existing intangible assets for the next five years and thereafter was as follows (dollars in thousands): | Estimated amortization expense for our existing intangible assets for the next five years and thereafter is as follows (dollars in thousands): | ||||||||||||||||||||||||||||||||
Year Ending | Amortization | Year Ending | Amortization | |||||||||||||||||||||||||||||||
December 31, | Expense | December 31, | ||||||||||||||||||||||||||||||||
2014 | $ | 403 | 2014 | $ | 1,613 | |||||||||||||||||||||||||||||
2015 | 1,613 | 2015 | 1,613 | |||||||||||||||||||||||||||||||
2016 | 1,613 | 2016 | 1,613 | |||||||||||||||||||||||||||||||
2017 | 913 | 2017 | 913 | |||||||||||||||||||||||||||||||
2018 | 213 | 2018 | 213 | |||||||||||||||||||||||||||||||
Thereafter | 744 | Thereafter | 744 | |||||||||||||||||||||||||||||||
$ | 5,499 | $ | 6,709 | |||||||||||||||||||||||||||||||
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||
Schedule of Long-Term Debt | Our long-term debt consisted of the following (dollars in thousands): | Our long-term debt consisted of the following (dollars in thousands): | ||||||||||||||||
September 30, | December 31, | December 31, | December 31, | |||||||||||||||
2014 | 2013 | 2013 | 2012 | |||||||||||||||
Term note to bank due December 15, 2018(1) | $ | — | $ | 11,963 | Term note to bank due December 15, 2018(1)(3) | $ | 11,963 | $ | 12,360 | |||||||||
Construction note to bank(2) | — | 9,127 | Construction note to bank(2)(3) | 9,127 | 1,750 | |||||||||||||
Term note to bank due June 1, 2021(3) | 27,186 | — | Note to related party due April 3, 2017(4) | 46,193 | 46,193 | |||||||||||||
Note to related party due April 3, 2017(4) | — | 46,193 | Note to related party due April 3, 2022(5) | 18,807 | 18,807 | |||||||||||||
Note to related party due April 3, 2022(5) | — | 18,807 | Less: Unamortized debt discounts | (4,125 | ) | (4,367 | ) | |||||||||||
Less: Unamortized debt discounts | — | (4,125 | ) | |||||||||||||||
Total long-term debt (including current portion) | 81,965 | 74,743 | ||||||||||||||||
Total long-term debt (including current portion) | 27,186 | 81,965 | Less: Current portion | (9,545 | ) | (2,151 | ) | |||||||||||
Less: Current portion | (845 | ) | (9,545 | ) | ||||||||||||||
Total long-term debt, net | $ | 72,420 | $ | 72,592 | ||||||||||||||
Total long-term debt, net | $ | 26,341 | $ | 72,420 | ||||||||||||||
-1 | In December 2011, we consolidated pre-existing construction loans for the construction of a new corporate headquarters, processing center and gymnasium into a term note. As of December 31, 2013 and 2012, we had a term note with an outstanding principal amount of $12.0 million and $12.4 million, respectively, from Kirkpatrick Bank, due December 15, 2018 (the “2011 Consolidated Loan”). Under the 2011 Consolidated Loan, principal and interest is payable monthly based on a 20 year amortization at an annual rate of 5.0%. The 2011 Consolidated Loan was collateralized by a first mortgage covering our original corporate headquarters building and is secured by a first lien security interest in certain personal property relating to our original corporate headquarters building. | |||||||||||||||||
-1 | In March 2013, we entered into a construction loan agreement for the construction of a second building at our corporate headquarters with Kirkpatrick Bank due May 1, 2015, which allowed for a maximum principal amount of $12.3 million (the “2013 Construction Loan”). The 2013 Construction Loan was secured by a first mortgage covering the second headquarters building and a first lien security interest in certain personal property relating to the second headquarters building. Under the 2013 Construction Loan, interest accrued monthly at the Wall Street Journal U.S. Prime Rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. Interest on the 2013 Construction Loan was payable monthly on the first day of each month. The 2013 Construction Loan, along with the 2011 Consolidated Loan, was converted into a term loan in July 2013 (the “2013 Term Loan”). | |||||||||||||||||
In November 2013, we entered into a loan agreement for the purchase of approximately 18.3 acres for future expansion at our headquarters with Kirkpatrick Bank, which allowed for a maximum principal amount of $3.0 million (“2013 Land Loan”). Under the 2013 Land Loan, interest accrued monthly at the Wall Street Journal U.S. Prime Rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. | -2 | In December 2012, we entered into a loan agreement for the purchase of approximately 17.6 acres for future expansion at our headquarters. As of December 31, 2012, the loan agreement had an outstanding principal amount of $1.8 million from Kirkpatrick Bank, due April 21, 2013 (the “December 2012 Loan”). Under the December 2012 Loan, interest accrues monthly at the Wall Street Journal U.S. Prime Rate plus 0.5%, adjusted from time to time, but not more often than each day, on the 21st day of each month. As of December 31, 2012, this equated to a rate of 3.25%. Principal on the note was due in one payment on the maturity date, collateralized by a first mortgage covering our corporate headquarters and a first security interest in certain personal property relating to our corporate headquarters. The December 2012 Loan was paid in full during the year ended December 31, 2013 with an advance from the construction loan entered into on March 2013, which is described below. | ||||||||||||||||
In December 2013, we consolidated the 2013 Term Loan and the 2013 Land Loan (“2013 Consolidated Loan”) under a modification agreement that increased the combined maximum principal amount of the 2013 Consolidated Loan to $14.6 million. The 2013 Consolidated Loan was secured by a first mortgage covering all of the second headquarters building and a first lien security interest in certain personal property relating to the second headquarters building. Under the 2013 Consolidated Loan, interest accrued monthly at the Wall Street Journal U.S. Prime rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. In the second quarter of 2014, the 2013 Consolidated Loan was consolidated into the 2021 Consolidated Loan. | ||||||||||||||||||
-3 | In March 2013, we entered into a construction loan agreement for the construction of a second building at our corporate headquarters with Kirkpatrick Bank due May 1, 2015, which allowed for a maximum principal amount of $12.3 million (the “2013 Construction Loan”). The 2013 Construction Loan was secured by a first mortgage covering all of the second headquarters building and a first lien security interest in certain personal property relating to the second headquarters building. Under the 2013 Construction Loan, interest accrued monthly at the Wall Street Journal U.S. Prime Rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. Interest on the 2013 Construction Loan was payable monthly on the first day of each month. During the year ended December 31, 2013, a portion of the advancement was drawn to repay the December 2012 Loan. The 2013 Construction Loan, along with the 2011 Consolidated Loan, was converted into a term loan in July 2013 (the “2013 Term Loan”). | |||||||||||||||||
The 2011 Consolidated Loan and the 2013 Consolidated Loan were subject to certain financial covenants, as defined in the applicable agreement, including maintaining a debt coverage ratio of EBITDA to indebtedness (defined as current maturities of long-term debt, interest expense and distributions) of greater than 1.5 to 1.0. As of December 31, 2013, we were not in compliance with the financial covenant related to the debt coverage ratio. We obtained a letter of waiver from the lender that excluded this item from the calculation as of December 31, 2013 and which remains in effect through April 30, 2015. | ||||||||||||||||||
In November 2013, we entered into a loan agreement for the purchase of approximately 18.3 acres for future expansion at our headquarters with Kirkpatrick Bank, which allowed for a maximum principal amount of $3.0 million (“2013 Land Loan”). Under the 2013 Land Loan, interest accrues monthly at the Wall Street Journal U.S. Prime Rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4% per annum. | ||||||||||||||||||
-2 | In December 2011, we consolidated pre-existing construction loans for the construction of a new corporate headquarters, processing center and gymnasium into a term note (the “2011 Consolidated Loan”). Under the 2011 Consolidated Loan, principal and interest were payable monthly based on a 20 year amortization rate of 5.0%. The 2011 Consolidated Loan was collateralized by a first mortgage covering our original corporate headquarters building and was secured by a first lien security interest in certain personal property relating to our original corporate headquarters building. In the second quarter of 2014, the 2011 Consolidated Loan was consolidated into the 2021 Consolidated Loan. See Note (3) below for the definition of, and more information about, the 2021 Consolidated Loan. | In December 2013, we consolidated the 2013 Term Loan and the 2013 Land Loan (“2013 Consolidated Loan”) under a modification agreement that increased the combined maximum principal amount of the 2013 Consolidated Loan to $14.6 million. The 2013 Consolidated Loan was secured by a first mortgage covering all of the second headquarters building and a first lien security interest in certain personal property relating to the second headquarters building. Under the 2013 Consolidated Loan, interest accrued monthly at the Wall Street Journal U.S. Prime rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. As of December 31, 2013, the 2013 Consolidated Loan had an outstanding principal amount of $9.1 million and availability of $5.5 million from Kirkpatrick Bank. | ||||||||||||||||
The 2013 Consolidated Loan, December 2012 Loan, and 2011 Consolidated Loan were subject to certain financial covenants, as defined in the applicable agreement, including maintaining a debt coverage ratio of EBITDA to indebtedness (defined as current maturities of long-term debt, interest expense and distributions) of greater than 1.5 to 1.0. As of December 31, 2013 and 2012, we were not in compliance with the financial covenant related to the debt coverage ratio. We obtained a letter of waiver from the lender that excluded these items from the calculation as of December 31, 2013 and 2012, which remains in effect through April 30, 2015. | ||||||||||||||||||
-3 | At September 30, 2014, our outstanding indebtedness consisted of a term note under a Loan Agreement (the “2021 Consolidated Loan”) with an outstanding principal balance of $27.2 million as of September 30, 2014. In June 2014, we consolidated outstanding amounts under the 2011 Consolidated Loan and 2013 Consolidated Loan into the 2021 Consolidated Loan under a modification agreement. The 2021 Consolidated Loan is due to Kirkpatrick Bank and matures on May 30, 2021. Under the 2021 Consolidated Loan, interest is payable monthly and accrues at a fixed rate of 4.75% per annum. The 2021 Consolidated Loan is secured by a mortgage covering our headquarters buildings and certain personal property relating to our headquarters buildings. | |||||||||||||||||
The 2021 Consolidated Loan includes certain financial covenants, including maintaining a debt coverage ratio of EBITDA to indebtedness (defined as current maturities of long-term debt, interest expense and distributions), as defined in the applicable agreement, of greater than 1.5 to 1.0. We were in compliance with the financial covenant related to the debt coverage ratio as of September 30, 2014. | -4 | In connection with the 2014 Reorganization, we assumed the 2017 Note that was issued by WCAS Holdings payable to Welsh, Carson, Anderson & Stowe X, L.P., a related party (“WCAS X”). The 2017 Note was due on April 3, 2017 and interest was payable at a rate of 14% per annum, payable semiannually in arrears on June 30 and December 31 of each year. We may, at our option, choose to defer all or a portion of the accrued interest on the note that is due and payable on any payment date, provided that such amount of accrued interest shall be added to the principal amount of the note on such interest payment date (with the accrued but unpaid interest bearing interest at an annual rate of 14.0%). As of December 31, 2013 and 2012, we had elected to pay accrued interest in cash. | ||||||||||||||||
-4 | In April 2014, we paid off the balance of the 2017 Note that was issued by WCAS Holdings and was payable to Welsh, Carson, Anderson & Stowe X, L.P., a related party (“WCAS X”) with proceeds from our IPO. The 2017 Note accrued interest at a rate of 14% per annum. As of December 31, 2013, the outstanding principal balance of the 2017 Note was $46.2 million. | -5 | In April 2012, we entered into a 10% Senior Note due 2022 (the “2022 Note”) with WCAS Capital Partners IV, L.P., a related party (“WCAS CP IV”). The 2022 Note is due on April 3, 2022 and interest accrued at a rate of 10% per annum, payable semiannually in arrears on December 31st and June 30th of each year. We may, at our option, choose to defer all or a portion of the accrued interest on the note that is due and payable on any payment date, provided that such amount of accrued interest shall be multiplied by 1.3 and added to the principal amount of the note on such interest payment date (with the result that such interest shall have accrued at an effective rate of 13.0% instead of 10.0% through such payment date). As of December 31, 2013 and 2012, we had elected to pay accrued interest in cash. | |||||||||||||||
-5 | In April 2014, we paid off the balance of the 10% Senior Note due 2022 (the “2022 Note”) with WCAS Capital Partners IV, L.P., a related party (“WCAS CP IV”) with proceeds from our IPO and from existing cash. The 2022 Note accrued interest at a rate of 10% per annum. As of December 31, 2013, the outstanding principal amount of the 2022 Note was $18.8 million. The 2022 Note was issued at a discount of $2.4 million. The total unamortized discount related to this note was $4.1 million. As of December 31, 2013, in conjunction with the payoff of this note, we wrote off the remaining unamortized discount of $0.5 million. | |||||||||||||||||
Aggregate Future Maturities of Long-Term Debt | Aggregate future maturities of long-term debt for the next five years and thereafter (including current portion) as of December 31, 2013 are as follows (dollars in thousands): | |||||||||||||||||
Year Ending December 31, | ||||||||||||||||||
2014 | $ | 9,545 | ||||||||||||||||
2015 | 440 | |||||||||||||||||
2016 | 461 | |||||||||||||||||
2017 | 46,679 | |||||||||||||||||
2018 | 10,158 | |||||||||||||||||
Thereafter | 14,682 | |||||||||||||||||
$ | 81,965 | |||||||||||||||||
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||||||||
Summary of Fair Value of Financial Instruments Measured on Recurring Basis | The following tables provide a summary of the fair value of financial instruments that are measured on a recurring basis using the above input categories as of December 31, 2013 (dollars in thousands): | The following tables provide a summary of the fair value of financial instruments that are measured on a recurring basis using the above input categories (dollars in thousands): | ||||||||||||||||||||||||||||||||
December 31, 2013 | December 31, 2013 | |||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||
Liabilities | Liabilities | |||||||||||||||||||||||||||||||||
Derivative liability | $ | — | $ | — | $ | 1,107 | $ | 1,107 | Derivative liability | $ | — | $ | — | $ | 1,107 | $ | 1,107 | |||||||||||||||||
$ | — | $ | — | $ | 1,107 | $ | 1,107 | $ | — | $ | — | $ | 1,107 | $ | 1,107 | |||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||
Derivative liability | $ | — | $ | — | $ | 1,767 | $ | 1,767 | ||||||||||||||||||||||||||
$ | — | $ | — | $ | 1,767 | $ | 1,767 | |||||||||||||||||||||||||||
Schedule of Fair Value Inputs Liabilities Quantitative Information | Quantitative information regarding significant unobservable inputs used for recurring Level 3 fair value measurements of financial instruments were as follows as of December 31, 2013: | Quantitative information regarding significant unobservable inputs used for recurring Level 3 fair value measurements of financial instruments as of December 31, 2013 and 2012 were as follows: | ||||||||||||||||||||||||||||||||
December 31, 2013 | December 31, 2013 | |||||||||||||||||||||||||||||||||
Valuation Technique | Key Inputs | Range | Valuation Technique | Key Inputs | Range | |||||||||||||||||||||||||||||
Derivative Liability | Lattice Model | Probability of exit | 90% | Derivative Liability | Lattice Model | Probability of exit | 90% | |||||||||||||||||||||||||||
Remaining term | 0.8 years - 8.3 years | Remaining term | 0.8 years - 8.3 years | |||||||||||||||||||||||||||||||
Yield Volatility | 21.4% - 31.1% | Yield Volatility | 21.4% - 31.1% | |||||||||||||||||||||||||||||||
Credit Spread | 8.90% | Credit Spread | 8.90% | |||||||||||||||||||||||||||||||
Risk-free rate | 0.13% - 2.45% | Risk-free rate | 0.13% - 2.45% | |||||||||||||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||||||||||||||||
Valuation Technique | Key Inputs | Range | ||||||||||||||||||||||||||||||||
Derivative Liability | Lattice Model | Probability of exit | 90% | |||||||||||||||||||||||||||||||
Remaining term | 3.3 years - 9.3 years | |||||||||||||||||||||||||||||||||
Yield Volatility | 20.4% - 28.5% | |||||||||||||||||||||||||||||||||
Credit Spread | 11.94% | |||||||||||||||||||||||||||||||||
Risk-free rate | 0.36% - 1.78% | |||||||||||||||||||||||||||||||||
Summary of Change in Fair Value of Level 3 Financial Instruments | The following table summarizes the changes in fair value of our Level 3 financial instruments for the three and nine months ended September 30, 2014 and 2013 (dollars in thousands): | The following table summarizes the change in fair value of our Level 3 financial instruments for the years ended December 31, 2013 and 2012 (dollars in thousands). | ||||||||||||||||||||||||||||||||
Three Months | Nine Months | 2013 | 2012 | |||||||||||||||||||||||||||||||
Ended | Ended | Balance, beginning of year | $ | 1,767 | $ | — | ||||||||||||||||||||||||||||
September 30, 2014 | September 30, 2014 | Issuances | — | 2,100 | ||||||||||||||||||||||||||||||
Beginning Balance | $ | — | $ | 1,107 | Change in fair value of derivative liability | (660 | ) | (333 | ) | |||||||||||||||||||||||||
Issuances | — | — | ||||||||||||||||||||||||||||||||
Change in fair value of derivative liability | — | (635 | ) | Balance, end of year | $ | 1,107 | $ | 1,767 | ||||||||||||||||||||||||||
Write-off to Other income (expense) | — | (472 | ) | |||||||||||||||||||||||||||||||
Ending Balance | $ | — | $ | — | ||||||||||||||||||||||||||||||
Three Months | Nine Months | |||||||||||||||||||||||||||||||||
Ended | Ended | |||||||||||||||||||||||||||||||||
September 30, 2013 | September 30, 2013 | |||||||||||||||||||||||||||||||||
Beginning Balance | $ | 1,766 | $ | 1,767 | ||||||||||||||||||||||||||||||
Issuances | — | — | ||||||||||||||||||||||||||||||||
Change in fair value of derivative liability | (659 | ) | (660 | ) | ||||||||||||||||||||||||||||||
Ending Balance | $ | 1,107 | $ | 1,107 | ||||||||||||||||||||||||||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||||
Computation of Basic and Diluted Net Income Per Share | The following is a reconciliation of net income (loss) and the shares of common stock used in the computation of basic and diluted net earnings per share (dollars in thousands): | The following is a reconciliation of net income and the shares of common stock used in the computation of basic and diluted net earnings per share (dollars in thousands): | ||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Year Ended December 31, | ||||||||||||||||||||||||||||
September 30, | September 30, | September 30, | September 30, | 2013 | 2012 | 2011 | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | Numerator: | ||||||||||||||||||||||||||
Numerator: | Net income (loss) | $ | 607 | $ | (406 | ) | $ | 886 | ||||||||||||||||||||||
Net income (loss) | $ | 2,690 | $ | (424 | ) | $ | 3,157 | $ | 2,571 | Net income (loss) attributable to the non-controlling interest | (6 | ) | 3 | — | ||||||||||||||||
Net income (loss) attributable to the non-controlling interest | — | (3 | ) | — | 19 | |||||||||||||||||||||||||
Net income (loss) attributable to the Company | $ | 601 | $ | (403 | ) | $ | 886 | |||||||||||||||||||||||
Net income (loss) attributable to the Company | $ | 2,690 | $ | (421 | ) | $ | 3,157 | $ | 2,552 | |||||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||||||
Denominator: | Weighted average shares outstanding | 44,560,053 | 44,560,053 | 44,560,053 | ||||||||||||||||||||||||||
Weighted average shares outstanding | 51,056,462 | 44,560,053 | 49,040,344 | 44,560,053 | Adjustment for vested restricted stock | 916,842 | 211,506 | — | ||||||||||||||||||||||
Adjustment for vested restricted stock | — | 1,147,749 | — | 838,880 | ||||||||||||||||||||||||||
Shares for calculating basic EPS | 45,476,895 | 44,771,559 | 44,560,053 | |||||||||||||||||||||||||||
Shares for calculating basic EPS | 51,056,462 | 45,707,802 | 49,040,344 | 45,398,933 | ||||||||||||||||||||||||||
Weighted average shares outstanding | 44,560,053 | 44,560,053 | 44,560,053 | |||||||||||||||||||||||||||
Weighted average shares outstanding | 51,056,462 | 45,707,802 | 49,040,344 | 44,560,053 | Dilutive effect of unvested restricted stock | 3,502,022 | 211,506 | 851,318 | ||||||||||||||||||||||
Dilutive effect of unvested restricted stock | 1,921,589 | — | 2,182,704 | 3,415,495 | ||||||||||||||||||||||||||
Shares for calculating diluted EPS | 48,062,075 | 44,771,559 | 45,411,371 | |||||||||||||||||||||||||||
Shares for calculating diluted EPS | 52,978,051 | 45,707,802 | 51,223,048 | 47,975,548 | ||||||||||||||||||||||||||
Net income per share: | ||||||||||||||||||||||||||||||
Net income (loss) per share: | Basic | $ | 0.01 | $ | (0.01 | ) | $ | 0.02 | ||||||||||||||||||||||
Basic | $ | 0.05 | $ | (0.01 | ) | $ | 0.06 | $ | 0.06 | Diluted | $ | 0.01 | $ | (0.01 | ) | $ | 0.02 | |||||||||||||
Diluted | $ | 0.05 | $ | (0.01 | ) | $ | 0.06 | $ | 0.05 | |||||||||||||||||||||
Pro Forma [Member] | ||||||||||||||||||||||||||||||
Computation of Basic and Diluted Net Income Per Share | The following is a reconciliation of pro forma net income for the three and nine months ended September 30, 2013 and the shares of stock used in the computation of pro forma basic and diluted net income per share (dollars in thousands): | The following is a reconciliation of pro forma net income (loss) for the years ended December 31, 2013, 2012 and 2011 and the shares of stock used in the computation of pro forma basic and diluted net income (loss) per share (dollars in thousands). | ||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Year Ended December 31, | ||||||||||||||||||||||||||||
September 30, | September 30, | 2013 | 2012 | 2011 | ||||||||||||||||||||||||||
2013 | 2013 | Pro Forma EPS Table | ||||||||||||||||||||||||||||
Pro forma numerator: | Pro forma numerator: | |||||||||||||||||||||||||||||
Net income (loss) attributable to the Company | $ | (421 | ) | $ | 2,552 | Net income (loss) attributable to the Company | $ | 601 | $ | (403 | ) | $ | 886 | |||||||||||||||||
Pro forma additional income tax (expense) benefit (Note 12) | (93 | ) | 563 | Pro forma additional income tax expense (benefit) | (137 | ) | (14 | ) | 35 | |||||||||||||||||||||
Pro forma net income (loss) attributable to the Company (Note 12) | $ | (328 | ) | $ | 1,989 | Pro forma net income (loss) attributable to the Company | $ | 738 | $ | (389 | ) | $ | 851 | |||||||||||||||||
Pro forma denominator: | Pro forma denominator: | |||||||||||||||||||||||||||||
Pro forma weighted average shares outstanding | 44,560,053 | 44,560,053 | Pro forma weighted average shares outstanding | 44,560,053 | 44,560,053 | 44,560,053 | ||||||||||||||||||||||||
Adjustment for vested restricted stock | 1,147,749 | 838,880 | Adjustment for vested restricted stock | 916,842 | 211,506 | — | ||||||||||||||||||||||||
Pro forma shares for calculating basic EPS | 45,707,802 | 45,398,933 | Pro forma shares for calculating basic EPS | 45,476,895 | 44,771,559 | 44,560,053 | ||||||||||||||||||||||||
Pro forma weighted average shares outstanding | 45,707,802 | 44,560,053 | Pro forma weighted average shares outstanding | 44,560,053 | 44,560,053 | 44,560,053 | ||||||||||||||||||||||||
Effect of dilutive restricted stock | — | 3,415,495 | Adjustment for vested restricted stock | 916,842 | 211,506 | |||||||||||||||||||||||||
Effect of dilutive restricted stock | 2,585,180 | — | 851,318 | |||||||||||||||||||||||||||
Pro forma shares for calculating diluted EPS | 45,707,802 | 47,975,548 | ||||||||||||||||||||||||||||
Pro forma shares for calculating diluted EPS | 48,062,075 | 44,771,559 | 45,411,371 | |||||||||||||||||||||||||||
Pro forma net income per share: | ||||||||||||||||||||||||||||||
Basic | $ | (0.01 | ) | $ | 0.04 | Pro forma net income (loss) per share: | ||||||||||||||||||||||||
Diluted | $ | (0.01 | ) | $ | 0.04 | Basic | $ | 0.02 | $ | (0.01 | ) | $ | 0.02 | |||||||||||||||||
Diluted | $ | 0.02 | $ | (0.01 | ) | $ | 0.02 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||
Schedule of Future Annual Minimum Lease Payments | Future annual minimum lease payments under noncancellable operating leases with initial or remaining terms of one year or more at September 30, 2014 were as follows: | Future annual minimum lease payments under noncancellable operating leases with initial or remaining terms of one year or more as of December 31, 2013 were as follows (dollars in thousands): | ||||||||
Year Ending December 31, | Operating | Year Ending | Operating | |||||||
2014 | $ | 927 | December 31, | |||||||
2015 | 3,811 | 2014 | $ | 2,222 | ||||||
2016 | 3,542 | 2015 | 2,092 | |||||||
2017 | 3,181 | 2016 | 1,767 | |||||||
2018 | 2,622 | 2017 | 1,465 | |||||||
Thereafter | 1,772 | 2018 | 705 | |||||||
Thereafter | 53 | |||||||||
Total minimum lease payments | $ | 15,855 | ||||||||
Total minimum lease payments | $ | 8,304 | ||||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Estimated Useful Lives | Depreciation is determined using the straight line method over the estimated useful lives of the assets as follows: | ||||
Office equipment and furniture & fixtures | 5 years | ||||
Computer equipment and software | 3 years | ||||
Buildings | 30 years | ||||
Leasehold improvements | 3 years | ||||
Rental clocks | 5 years | ||||
Vehicles | 3 years |
Stockholders_Equity_and_Incent1
Stockholders' Equity and Incentive Compensation (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Stock-Based Compensation Resulting from Employee Incentive Share Arrangements | The following table presents stock-based compensation resulting from employee incentive share arrangements and is in the following line items in the accompanying audited consolidated statements of operations for the years ended December 31, 2013, 2012 and 2011: | ||||||||||||
Years Ended December 31, (in thousands) | 2013 | 2012 | 2011 | ||||||||||
Operating expense | $ | 222 | $ | 87 | $ | 36 | |||||||
Sales and marketing | 114 | 83 | 57 | ||||||||||
Research and development | 345 | 100 | 25 | ||||||||||
General and administrative | 253 | 233 | 47 | ||||||||||
Total stock-based compensation expense | $ | 934 | $ | 503 | $ | 165 | |||||||
Nonvested Restricted Stock Unit Awards | A summary of the status of our non-vested restricted stock as of December 31, 2013 and related changes during the year ended December 31, 2013: | ||||||||||||
Restricted Stock: | |||||||||||||
Year ended December 31, 2013 | Number | Weighted | |||||||||||
of shares | average grant- | ||||||||||||
date fair value | |||||||||||||
(in dollars) | |||||||||||||
Restricted stock outstanding at January 1, 2013 | 7,895,692 | $ | 0.26 | ||||||||||
Restricted stock granted | 1,062,945 | $ | 0.37 | ||||||||||
Restricted stock vested | (781,411 | ) | $ | 0.48 | |||||||||
Restricted stock forfeited | (56,125 | ) | $ | 0.43 | |||||||||
Restricted stock outstanding at December 31, 2013 | 8,121,101 | $ | 0.25 | ||||||||||
Restricted Stock [Member] | |||||||||||||
Summary of Grant-Date Fair Values of Restricted Stock Granted and Related Assumptions | The following table presents a summary of the grant-date fair values of restricted stock granted and the related assumptions: | ||||||||||||
Years Ended December 31, | 2013 | 2012 | 2011 | ||||||||||
Grant-date fair value | |||||||||||||
Restricted Shares | $0.11 - $0.92 | $ | 0.18 - $1.88 | $ | 1.09 | ||||||||
Risk-free interest rates | 0.71% - 1.41 | % | 0.72 | % | 1.74 | % | |||||||
Estimated volatility | 50 | % | 60 | % | 60 | % | |||||||
Expected life (in years) | 5 | 5 | 5 |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Income Tax Expense | The items comprising income tax expense are as follows (dollars in thousands): | ||||||||||||
Year Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Provision (benefit) for current income taxes | |||||||||||||
Federal | $ | — | $ | — | $ | — | |||||||
State | 275 | 80 | 57 | ||||||||||
Total provision for current income taxes | 275 | 80 | 57 | ||||||||||
Provision (benefit) for deferred income taxes, net | |||||||||||||
Federal | 347 | (51 | ) | 444 | |||||||||
State | 170 | (113 | ) | 100 | |||||||||
Total provision (benefit) for deferred income taxes, net | 517 | (164 | ) | 544 | |||||||||
Total income tax expense (benefit) | $ | 792 | $ | (84 | ) | $ | 601 | ||||||
Reconciles Statutory Federal Tax Rate to Effective Income Tax Rate | The following schedule reconciles the statutory Federal tax rate to the effective income tax rate: | ||||||||||||
Year Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Federal statutory tax rate | 34% | 34% | 34% | ||||||||||
Increase (decrease) resulting from: | |||||||||||||
Earnings excluded from federal income tax | (14% | ) | (10% | ) | (8% | ) | |||||||
State income taxes, net of federal income tax benefit | 29% | 7% | 11% | ||||||||||
Nondeductible expenses from investment in partnership | 4% | (13% | ) | 3% | |||||||||
Other | 3% | (1% | ) | 0% | |||||||||
Effective income tax rate | 56% | 17% | 40% | ||||||||||
Net Deferred Tax Assets and Liabilities | Our net deferred tax assets and liabilities consist of the following (dollars in thousands): | ||||||||||||
Year Ended December 31, | |||||||||||||
2013 | 2012 | ||||||||||||
Current deferred income tax assets | |||||||||||||
Net operating losses | $ | 3,643 | $ | 4,184 | |||||||||
Federal tax credits | 29 | — | |||||||||||
Current deferred income tax assets, net | $ | 3,672 | $ | 4,184 | |||||||||
Non-current deferred income tax liabilities | |||||||||||||
Investment in Paycom Payroll Holdings, LLC | 2,895 | 2,890 | |||||||||||
Non-current deferred income tax liabilities, net | $ | 2,895 | $ | 2,890 | |||||||||
Consolidation_Organization_Des
Consolidation, Organization, Description of Business and Basis of Presentation - Additional Information (Detail) | 0 Months Ended |
Dec. 31, 2013 | |
14% Note due 2017 [Member] | |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |
Debt instrument, interest rate | 14.00% |
Restricted Stock [Member] | |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |
Conversion of units to shares | 8,121,101 |
Common Stock [Member] | |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |
Conversion of units to shares | 45,708,573 |
Property_Plant_and_Equipment_S
Property, Plant and Equipment - Schedule of Property, Plant and Equipment and Accumulated Depreciation (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, gross | $53,166 | $33,848 | $28,884 |
Less: accumulated depreciation | -15,517 | -11,540 | -8,015 |
Property, plant and equipment, net | 46,642 | 38,671 | 25,139 |
Buildings [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, gross | 28,154 | 14,828 | 14,828 |
Software and Capitalized Software Costs [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, gross | 7,635 | 5,578 | 3,588 |
Computer Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, gross | 6,613 | 4,832 | 3,498 |
Rental Clocks [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, gross | 6,111 | 4,865 | 3,480 |
Furniture, Fixtures and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, gross | 4,073 | 3,189 | 2,887 |
Vehicles [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, gross | 421 | 421 | 468 |
Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment, gross | 159 | 135 | 135 |
Excluded Land and Construction in Process [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, net | 37,649 | 22,308 | 20,869 |
Land [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, net | 8,993 | 8,993 | 4,205 |
Construction in Process [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, net | $7,370 | $65 |
Property_Plant_and_Equipment_A
Property, Plant and Equipment - Additional Information (Detail) (USD $) | 1 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | |||||
In Millions, unless otherwise specified | Nov. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2014 | Sep. 30, 2013 |
acre | acre | acre | |||||||
Property, Plant and Equipment [Line Items] | |||||||||
Interest cost paid | $0.90 | $0.60 | $2.60 | $2 | $0.40 | ||||
Interest cost capitalized | 0.4 | 0.1 | |||||||
Land purchased | 18.3 | 17.6 | 17.6 | ||||||
Purchase cost of land | 4.8 | 2.3 | |||||||
Maximum [Member] | |||||||||
Property, Plant and Equipment [Line Items] | |||||||||
Interest cost capitalized | 0.1 | 0.1 | 0.3 | ||||||
Property, Plant and Equipment [Member] | |||||||||
Property, Plant and Equipment [Line Items] | |||||||||
Depreciation | $4 | $2.80 | $3.90 | $3.10 | $2 | $1.40 | $1 |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets, Net - Additional Information (Detail) (USD $) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Finite-Lived Intangible Assets [Line Items] | ||||||||
Goodwill | $51,889,000 | $51,889,000 | $51,889,000 | $51,889,000 | ||||
Goodwill, Impairment Loss | 0 | 0 | 0 | 0 | ||||
Weighted average remaining useful life | 4 years 3 months 18 days | 4 years 10 months 6 days | ||||||
Amortization of intangible assets | $400,000 | $400,000 | $1,200,000 | $1,200,000 | $1,600,000 | $2,400,000 | $3,200,000 |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets, Net - Components of Intangible Assets (Detail) (USD $) | 9 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Finite-Lived Intangible Assets [Line Items] | |||
Weighted average remaining useful life | 4 years 3 months 18 days | 4 years 10 months 6 days | |
Gross | $17,191 | $17,191 | $17,191 |
Accumulated amortization | -11,692 | -10,482 | -8,870 |
Net | 5,499 | 6,709 | 8,321 |
Customer Relationships [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted average remaining useful life | 2 years 9 months 18 days | 3 years 6 months | 4 years 6 months |
Gross | 13,997 | 13,997 | 13,997 |
Accumulated amortization | -10,147 | -9,098 | -7,699 |
Net | 3,850 | 4,899 | 6,298 |
Trade Name [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted average remaining useful life | 7 years 9 months 18 days | 8 years 6 months | 9 years 6 months |
Gross | 3,194 | 3,194 | 3,194 |
Accumulated amortization | -1,545 | -1,384 | -1,171 |
Net | $1,649 | $1,810 | $2,023 |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets, Net - Schedule of Estimated Amortization Expense of Intangible Assets (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Finite-Lived Intangible Assets [Line Items] | |||
2014 | $403 | ||
2014 | 1,613 | ||
2015 | 1,613 | 1,613 | |
2016 | 1,613 | 1,613 | |
2017 | 913 | 913 | |
2018 | 213 | 213 | |
Thereafter | 744 | 744 | |
Net | $5,499 | $6,709 | $8,321 |
Funds_Held_for_Clients_and_Cli1
Funds Held for Clients and Client Funds Obligation - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2014 | |
Accounts Payable And Accrued Expenses [Line Items] | |
Maximum holding period for funds collected from clients | 120 days |
Minimum [Member] | |
Accounts Payable And Accrued Expenses [Line Items] | |
Disbursement period of funds collected from clients | 1 day |
Maximum [Member] | |
Accounts Payable And Accrued Expenses [Line Items] | |
Disbursement period of funds collected from clients | 30 days |
LongTerm_Debt_Schedule_of_Long
Long-Term Debt - Schedule of Long-Term Debt (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Apr. 22, 2012 |
In Thousands, unless otherwise specified | ||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||
Less: Unamortized debt discounts | ($4,125) | ($4,367) | ||
Total long-term debt (including current portion) | 27,186 | 81,965 | 74,743 | |
Less: Current portion | -845 | -9,545 | -2,151 | |
Total long-term debt, net | 26,341 | 72,420 | 72,592 | |
2017 Related Party Note [Member] | ||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||
Related party note | 46,193 | 46,193 | ||
2013 Consolidated Loan [Member] | ||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||
Construction loan | 11,963 | 12,360 | ||
Total long-term debt (including current portion) | 9,100 | |||
2013 Construction Loan [Member] | ||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||
Construction loan | 9,127 | 1,750 | ||
2022 Note [Member] | ||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||
Related party note | 18,807 | 18,807 | ||
Less: Unamortized debt discounts | -2,400 | -2,400 | ||
Total long-term debt (including current portion) | 18,800 | |||
2021 Consolidated Loan [Member] | ||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||
Construction loan | 27,186 | |||
Total long-term debt (including current portion) | $27,200 |
LongTerm_Debt_Schedule_of_Long1
Long-Term Debt - Schedule of Long-Term Debt (Parenthetical) (Detail) (USD $) | 9 Months Ended | 12 Months Ended | 0 Months Ended | |||
Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2013 | Apr. 22, 2012 | |
acre | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Land purchased | 17.6 | 18.3 | ||||
Debt instrument, restrictive covenants | Maintaining a debt coverage ratio of EBITDA to indebtedness (defined as current maturities of long-term debt, interest expense and distributions) of greater than 1.5 to 1.0. | Maintaining a debt coverage ratio of EBITDA to indebtedness (defined as current maturities of long-term debt, interest expense and distributions) of greater than 1.5 to 1.0. | ||||
Carrying value, long term debt | $27,186,000 | $81,965,000 | $81,965,000 | $74,743,000 | ||
Notes issued at discount | 4,125,000 | 4,125,000 | 4,367,000 | |||
2013 Consolidated Loan [Member] | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Debt instrument maturity date | 15-Dec-18 | 15-Dec-18 | ||||
Construction loan | 11,963,000 | 11,963,000 | 12,360,000 | |||
Long-term debt | 14,600,000 | 14,600,000 | ||||
Debt Instrument, Interest Rate Terms | U.S. Prime rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. | U.S. Prime rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. | ||||
Debt instrument, basis spread on variable rate | 0.50% | |||||
Debt instrument, interest rate, stated percentage rate range, minimum | 4.00% | |||||
Carrying value, long term debt | 9,100,000 | 9,100,000 | ||||
Availability amount | 5,500,000 | 5,500,000 | ||||
2013 Construction Loan [Member] | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Construction loan | 9,127,000 | 9,127,000 | 1,750,000 | |||
Long-term debt | 12,300,000 | 12,300,000 | 1,750,000 | |||
Debt Instrument, Interest Rate Terms | U.S. Prime Rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. | U.S. Prime Rate plus 0.5%, adjusted from time to time, but not more often than each day, on the 21st day of each month. | ||||
Debt instrument, basis spread on variable rate | 0.50% | 0.50% | ||||
Debt instrument, interest rate, stated percentage rate range, minimum | 4.00% | 3.25% | ||||
Two Thousand and Eleven Consolidated Loan [Member] | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Debt instrument, amortization period | 20 years | |||||
Debt instrument, interest rate | 5.00% | 5.00% | ||||
14% Note due 2017 [Member] | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Debt instrument, interest rate | 14.00% | 14.00% | ||||
Carrying value, long term debt | 46,200,000 | 46,200,000 | ||||
2022 Note [Member] | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Debt instrument maturity date | 3-Apr-22 | 3-Apr-22 | ||||
Debt Instrument, Interest Rate Terms | The 2022 Note is due on AprilB 3, 2022 and interest accrued at a rate of 10%B per annum, payable semiannually in arrears on DecemberB 31st and JuneB 30th of each year. We may, at our option, choose to defer all or a portion of the accrued interest on the note that is due and payable on any payment date, provided that such amount of accrued interest shall be multiplied by 1.3 and added to the principal amount of the note on such interest payment date (with the result that such interest shall have accrued at an effective rate of 13.0% instead of 10.0% through such payment date) | |||||
Debt instrument, interest rate | 10.00% | 10.00% | ||||
Carrying value, long term debt | 18,800,000 | 18,800,000 | ||||
Notes issued at discount | 2,400,000 | 2,400,000 | 2,400,000 | |||
Remaining unamortized discount | 500,000 | 500,000 | ||||
Total unamortized discount | 4,100,000 | 4,100,000 | ||||
Debt Instrument, Interest Rate, Effective Percentage | 13.00% | 13.00% | ||||
2021 Consolidated Loan [Member] | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Debt instrument maturity date | 1-Jun-21 | |||||
Construction loan | 27,186,000 | |||||
Debt instrument, restrictive covenants | Maintaining a debt coverage ratio of EBITDA to indebtedness (defined as current maturities of long-term debt, interest expense and distributions), as defined in the applicable agreement, of greater than 1.5 to 1.0. | |||||
Debt instrument, interest rate | 4.75% | |||||
Carrying value, long term debt | 27,200,000 | |||||
2017 Related Party Note [Member] | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Debt instrument maturity date | 3-Apr-17 | 3-Apr-17 | ||||
2013 Land Loan [Member] | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Construction loan | 3,000,000 | 3,000,000 | ||||
Debt Instrument, Interest Rate Terms | U.S. Prime Rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4.0% per annum. | U.S. Prime Rate plus 0.5%, adjusted monthly, subject to a minimum interest rate of 4% per annum. | ||||
Debt instrument, basis spread on variable rate | 0.50% | |||||
Debt instrument, interest rate, stated percentage rate range, minimum | 4.00% | |||||
Land purchased | 18.3 | |||||
2013 Consolidated Loan [Member] | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Long-term debt | $11,963,000 | $11,963,000 | $12,360,000 | |||
Debt instrument, amortization period | 20 years | |||||
Debt instrument, interest rate | 5.00% | 5.00% | ||||
Minimum [Member] | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Debt coverage ratio of indebtedness | 1.5 | 1.5 | ||||
Maximum [Member] | 2021 Consolidated Loan [Member] | ||||||
Schedule of Capitalization, Long-term Debt [Line Items] | ||||||
Debt coverage ratio of indebtedness | 1.5 |
LongTerm_Debt_Additional_Infor
Long-Term Debt - Additional Information (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Apr. 22, 2012 |
Debt Instrument [Line Items] | ||||
Carrying value, long term debt | $27,186,000 | $81,965,000 | $74,743,000 | |
Fair value of long term debt including current maturities | 27,200,000 | 84,900,000 | 75,900,000 | |
Notes issued at discount | 4,125,000 | 4,367,000 | ||
Derivative liability | 1,107,000 | 1,767,000 | 2,100,000 | |
2022 Note [Member] | ||||
Debt Instrument [Line Items] | ||||
Carrying value, long term debt | 18,800,000 | |||
Notes issued at discount | $2,400,000 | $2,400,000 |
Employee_Savings_Plan_Addition
Employee Savings Plan - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Defined Contribution Plan Disclosure [Line Items] | |||||||
401(k) eligibility minimum service period | 90 days | 90 days | |||||
401(k) description of plan contributions | Contribution equal to 100% of the first 1% of salary deferrals and 50% of salary deferrals between 2% and 6%, up to a maximum matching contribution of 3.5% of salary each plan year for our employees. | Contribution equal to 100% of the first 1% of salary deferrals and 50% of salary deferrals between 2% and 6%, up to a maximum matching contribution of 3.5% of salary each plan year for our employees. | |||||
Employee vested percentage in salary deferrals and roll over contributions | 100.00% | 100.00% | |||||
Minimum period for vesting 100% contributions | 2 years | 2 years | |||||
Discretionary contributions vested period | 6 years | 6 years | |||||
Matching contribution amount | $0.40 | $0.30 | $1.30 | $0.90 | $1.20 | $1 | $0.70 |
One Hundred Percent Match For Percent Of Participants Contribution [Member] | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Employer contribution percentage | 100.00% | 100.00% | |||||
Percentage of salary deferrals | 1.00% | 1.00% | |||||
50% Matching Contribution [Member] | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Employer contribution percentage | 50.00% | 50.00% | |||||
Two Years of Service [Member] | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Matching contributions, vesting percentage | 100.00% | 100.00% | |||||
Minimum [Member] | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
401(k) eligible age of employee | 21 years | 21 years | |||||
Minimum [Member] | 50% Matching Contribution [Member] | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Percentage of salary deferrals | 2.00% | 2.00% | |||||
Maximum [Member] | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Percentage of salary deferrals | 3.50% | 3.50% | |||||
Maximum [Member] | 50% Matching Contribution [Member] | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Percentage of salary deferrals | 6.00% | 6.00% |
Fair_Value_of_Financial_Instru2
Fair Value of Financial Instruments - Summary of Fair Value of Financial Instruments Measured on Recurring Basis (Detail) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Apr. 22, 2012 |
In Thousands, unless otherwise specified | |||
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items] | |||
Liabilities | $1,107 | $1,767 | $2,100 |
Derivative liability [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items] | |||
Liabilities | 1,107 | 1,767 | |
Level 1 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items] | |||
Liabilities | |||
Level 1 [Member] | Derivative liability [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items] | |||
Liabilities | |||
Level 2 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items] | |||
Liabilities | |||
Level 2 [Member] | Derivative liability [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items] | |||
Liabilities | |||
Level 3 [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items] | |||
Liabilities | 1,107 | 1,767 | |
Level 3 [Member] | Derivative liability [Member] | |||
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items] | |||
Liabilities | $1,107 | $1,767 |
Fair_Value_of_Financial_Instru3
Fair Value of Financial Instruments - Schedule of Fair Value Inputs Liabilities Quantitative Information (Detail) (Derivative liability [Member], Lattice Model [Member]) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Probability of exit | 90.00% | 90.00% |
Credit Spread | 8.90% | 11.94% |
Minimum [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Remaining term | 9 months 18 days | 3 years 3 months 18 days |
Yield Volatility | 21.40% | 20.40% |
Risk-free rate | 0.13% | 1.78% |
Maximum [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Remaining term | 8 years 3 months 18 days | 9 years 3 months 18 days |
Yield Volatility | 31.10% | 28.50% |
Risk-free rate | 2.45% | 0.36% |
Fair_Value_of_Financial_Instru4
Fair Value of Financial Instruments - Summary of Change in Fair Value of Level 3 Financial Instruments (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Beginning Balance | $1,766 | $1,107 | $1,767 | $1,767 | ||
Issuances | 2,100 | |||||
Change in fair value of derivative liability | -659 | -635 | -660 | -660 | -333 | |
Write-off to Other income (expense) | -472 | |||||
Ending Balance | $1,107 | $1,107 | $1,107 | $1,767 |
Fair_Value_of_Financial_Instru5
Fair Value of Financial Instruments - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Fair Value Disclosures [Line Items] | |||||||
Change in fair value of derivative liability recognized as other income (expenses), net | $0 | ($0.70) | ($1.10) | ($0.70) | $0.70 | $0.30 | $0 |
Earnings_Per_Share_Additional_
Earnings Per Share - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 |
Earnings Per Share [Line Items] | ||||||
Effective income tax rate | 47.00% | 47.00% | 20.00% | 43.00% | ||
Income tax expense (benefit) | ($93) | $563 | ($137) | ($14) | $35 | |
Minimum [Member] | ||||||
Earnings Per Share [Line Items] | ||||||
Income tax expense (benefit) | -100 | |||||
Maximum [Member] | ||||||
Earnings Per Share [Line Items] | ||||||
Income tax expense (benefit) | ($100) | $100 | ||||
Restricted Stock [Member] | ||||||
Earnings Per Share [Line Items] | ||||||
Conversion of units to shares | 8,121,101 | |||||
Anti-dilutive securities excluded from dilutive earning per share calculation | 2,301,603 | 2,683,822 | ||||
Common Stock [Member] | ||||||
Earnings Per Share [Line Items] | ||||||
Conversion of units to shares | 45,708,573 |
Earnings_Per_Share_Computation
Earnings Per Share - Computation of Basic and Diluted Net Income Per Share (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Numerator: | |||||||
Net income (loss) | $2,690 | ($424) | $3,157 | $2,571 | $607 | ($406) | $886 |
Net income (loss) attributable to the non-controlling interest | -3 | 19 | 6 | -3 | |||
Net income (loss) attributable to the Company | $2,690 | ($421) | $3,157 | $2,552 | $601 | ($403) | $886 |
Denominator: | |||||||
Weighted average shares outstanding | 51,056,462 | 44,560,053 | 49,040,344 | 44,560,053 | 44,560,053 | 44,560,053 | 44,560,053 |
Adjustment for vested restricted stock | 1,147,749 | 838,880 | 916,842 | 211,506 | |||
Shares for calculating basic EPS | 51,056,462 | 45,707,802 | 49,040,344 | 45,398,933 | 45,476,895 | 44,771,559 | 44,560,053 |
Weighted average shares outstanding | 51,056,462 | 45,707,802 | 49,040,344 | 44,560,053 | |||
Weighted average shares outstanding | 51,056,462 | 44,560,053 | 49,040,344 | 44,560,053 | 44,560,053 | 44,560,053 | 44,560,053 |
Dilutive effect of unvested restricted stock | 1,921,589 | 2,182,704 | 3,415,495 | 2,585,180 | 851,318 | ||
Dilutive effect of unvested restricted stock | 3,502,022 | 211,506 | 851,318 | ||||
Shares for calculating diluted EPS | 52,978,051 | 45,707,802 | 51,223,048 | 47,975,548 | 48,062,075 | 44,771,559 | 45,411,371 |
Net income (loss) per share: | |||||||
Basic | $0.05 | ($0.01) | $0.06 | $0.06 | $0.01 | ($0.01) | $0.02 |
Diluted | $0.05 | ($0.01) | $0.06 | $0.05 | $0.01 | ($0.01) | $0.02 |
Earnings_Per_Share_Computation1
Earnings Per Share - Computation of Pro Forma Basic and Diluted Net Income Per Share (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Pro forma numerator: | |||||||
Net income (loss) attributable to the Company | $2,690 | ($421) | $3,157 | $2,552 | $601 | ($403) | $886 |
Pro forma additional income tax expense (benefit) | -93 | 563 | -137 | -14 | 35 | ||
Pro forma net income (loss) attributable to the Company | $2,690 | ($328) | $3,157 | $1,989 | $738 | ($389) | $851 |
Pro forma denominator: | |||||||
Pro forma weighted average shares outstanding | 51,056,462 | 44,560,053 | 49,040,344 | 44,560,053 | 44,560,053 | 44,560,053 | 44,560,053 |
Adjustment for vested restricted stock | 1,147,749 | 838,880 | 916,842 | 211,506 | |||
Pro forma shares for calculating basic EPS | 51,056,462 | 45,707,802 | 49,040,344 | 45,398,933 | 45,476,895 | 44,771,559 | 44,560,053 |
Pro forma weighted average shares outstanding | 51,056,462 | 45,707,802 | 49,040,344 | 44,560,053 | |||
Pro forma weighted average shares outstanding | 51,056,462 | 44,560,053 | 49,040,344 | 44,560,053 | 44,560,053 | 44,560,053 | 44,560,053 |
Adjustment for vested restricted stock | 1,147,749 | 838,880 | 916,842 | 211,506 | |||
Effect of dilutive restricted stock | 1,921,589 | 2,182,704 | 3,415,495 | 2,585,180 | 851,318 | ||
Pro forma shares for calculating diluted EPS | 52,978,051 | 45,707,802 | 51,223,048 | 47,975,548 | 48,062,075 | 44,771,559 | 45,411,371 |
Pro forma net income (loss) per share: | |||||||
Basic | $0.05 | ($0.01) | $0.06 | $0.04 | $0.02 | ($0.01) | $0.02 |
Diluted | $0.05 | ($0.01) | $0.06 | $0.04 | $0.02 | ($0.01) | $0.02 |
Stockholders_Equity_and_Stock_
Stockholders' Equity and Stock Based Compensation - Additional Information (Detail) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | 9 Months Ended | 0 Months Ended | ||
Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Apr. 21, 2014 | |
Employee | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total unrecognized compensation cost related to unvested restricted stock | $1,300,000 | $1,300,000 | $1,300,000 | ||||
Unrecognized compensation cost expected to be recognized, recognition period of restricted stock | 2 years 10 months 24 days | 3 years 8 months 12 days | |||||
Total cash payments for incentive units | 1,100,000 | ||||||
Total incremental compensation cost | 800,000 | ||||||
Capitalized compensation cost | 200,000 | ||||||
Reclassification adjustment recorded of deficit to additional paid in capital | 29,300,000 | ||||||
Restricted stock, expected dividend yield | 0.00% | ||||||
Restricted stock, expected life (in years) | 5 years | 5 years | 5 years | ||||
Recognized income tax benefit, restricted shares | 0 | 0 | 0 | ||||
Number of employees affected | 2 | ||||||
Share-based compensation plan modification description | The modification amended the vesting period from the original 50% on the third and 50% on the fourth anniversaries, to immediate vesting of 100% of the shares. | ||||||
Total incremental compensation costs | 0 | 100,000 | 0 | ||||
Series A Preferred Stock [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of preferred yield entitled | 9.00% | 9.00% | |||||
Vest 50% upon reaching a total enterprise value of $1.4 billion [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Performance-based vesting percentage, restricted shares | 50.00% | ||||||
Total enterprise value | 1,400,000,000 | 1,400,000,000 | |||||
Vest 50% upon reaching a total enterprise value of $1.8 billion [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Performance-based vesting percentage, restricted shares | 50.00% | ||||||
Total enterprise value | 1,800,000,000 | 1,800,000,000 | |||||
Software and Capitalized Software Costs [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Capitalized compensation cost | 200,000 | 100,000 | |||||
Minimum [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unvested incentive units were converted to shares of restricted stock, conversion ratios | 1:24 | ||||||
Maximum [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unvested incentive units were converted to shares of restricted stock, conversion ratios | 1:47 | ||||||
Restricted Stock [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total unrecognized compensation cost related to unvested restricted stock | $1,300,000 | 1,000,000 | $1,300,000 | ||||
Number of restricted stock converted into common stock | 217,378 | ||||||
Conversion of units to shares | 8,121,101 | ||||||
Common Stock [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Conversion of units to shares | 45,708,573 |
RelatedParty_Transactions_Addi
Related-Party Transactions - Additional Information (Detail) (USD $) | 1 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | ||||
In Millions, except Per Share data, unless otherwise specified | Nov. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 |
acre | acre | ||||||||
Related Party Transaction [Line Items] | |||||||||
Land purchased | 18.3 | 17.6 | 17.6 | ||||||
Purchase cost of land | $4.80 | $2.30 | |||||||
2022 Note [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Debt instrument, interest rate | 10.00% | ||||||||
Debt instrument maturity date | 3-Apr-22 | 3-Apr-22 | |||||||
Chief Sales Officer [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
General partnership ownership interest in related party, percentage | 0.01% | 0.01% | 0.01% | ||||||
Limited partnership interest in related party, percentage | 10.49% | 10.49% | 10.49% | ||||||
Payments for rent | 0.3 | 0.3 | 0.3 | ||||||
Chief Sales Officer [Member] | Minimum [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments for rent | 0.1 | 0.1 | |||||||
Chief Sales Officer [Member] | Maximum [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments for rent | 0.2 | 0.2 | |||||||
Former Employee [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Number of incentive units purchased | 2,605 | 2,605 | |||||||
Purchase price per incentive unit | 260 | 260 | |||||||
Incentive units purchased | 0.7 | 0.7 | |||||||
Kilpatrick Partners, L.L.C [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Land purchased | 18.3 | 17.6 | 17.6 | ||||||
Purchase cost of land | 4.8 | 2.3 | |||||||
WCAS Capital Partners IV, L.P., [Member] | 2022 Note [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Debt instrument, interest rate | 10.00% | ||||||||
Debt instrument maturity date | 3-Apr-22 | ||||||||
Welsh, Carson,Anderson & Stowe, L.P. and certain of their affiliates [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Due to affiliate | $0.10 | 0.1 | $0.10 |
Commitments_and_Contingencies_1
Commitments and Contingencies - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 1 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Mar. 31, 2010 | |
Other Commitments [Line Items] | ||||||||
Operating lease expiration period | 2014 to 2019 | 2014 to 2019 | ||||||
Operating lease rent expense | $1,000,000 | $500,000 | $2,400,000 | $1,400,000 | $2,000,000 | $1,500,000 | $1,600,000 | |
Oklahoma City Economic Development Trust [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Up-front job creation payment from Trust | 2,000,000 | |||||||
Term of agreement | 5 years | |||||||
Earned job creation payments | 1,900,000 | 1,900,000 | 1,500,000 | 900,000 | ||||
Oklahoma City Economic Development Trust [Member] | Minimum [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Number of jobs created within a 5 year period | 492 | |||||||
Average first year wage | 37,000 | |||||||
Capital investment in the project | $15,000,000 |
Commitments_and_Contingencies_2
Commitments and Contingencies - Schedule of Future Annual Minimum Lease Payments (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Operating Leased Assets [Line Items] | ||
2014 | $927 | $2,222 |
2015 | 3,811 | 2,092 |
2016 | 3,542 | 1,767 |
2017 | 3,181 | 1,465 |
2018 | 2,622 | 705 |
Thereafter | 1,772 | 53 |
Total minimum lease payments | $15,855 | $8,304 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income Tax [Line Items] | ||||||
Effective tax rate | 39.00% | 32.00% | 56.00% | 17.00% | 40.00% | |
Deferred tax liability charged on equity | $200,000 | |||||
Pro forma effective income tax rate | 47.00% | 47.00% | 20.00% | 43.00% | ||
Income tax expense (benefit) | -93,000 | 563,000 | -137,000 | -14,000 | 35,000 | |
Unrecognized tax benefits | 0 | 0 | ||||
Domestic Tax Authority [Member] | ||||||
Income Tax [Line Items] | ||||||
Net operating loss carryforwards | 9,500,000 | |||||
State and Local Jurisdiction [Member] | ||||||
Income Tax [Line Items] | ||||||
Net operating loss carryforwards | $10,300,000 |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Segment | ||||||
Summary Of Significant Accounting Policy [Line Items] | ||||||
Number of operating segments | 1 | |||||
Restricted cash | $370,000 | $369,000 | $368,000 | |||
Deferred offering costs | 600,000 | 0 | ||||
Interest cost paid | 900,000 | 600,000 | 2,600,000 | 2,000,000 | 400,000 | |
Interest cost capitalized | 400,000 | 100,000 | ||||
Total capitalized payroll costs related to internal use software projects | 1,200,000 | 600,000 | ||||
Amortization expense related to capitalized software costs | 600,000 | 400,000 | 400,000 | |||
Goodwill impairment amount | 0 | 0 | 0 | 0 | ||
Impairment of long-lived assets | 0 | 0 | 0 | |||
Conversion fees, deferred revenue recognition period | 10 years | |||||
Advertising costs | 3,400,000 | 2,300,000 | 1,700,000 | |||
Sales taxes | 2,200,000 | 1,600,000 | 1,100,000 | |||
Internal use Software [Member] | ||||||
Summary Of Significant Accounting Policy [Line Items] | ||||||
Capitalized and amortized period | 3 years | |||||
Maximum [Member] | ||||||
Summary Of Significant Accounting Policy [Line Items] | ||||||
Interest cost capitalized | $100,000 | $100,000 | $300,000 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies - Estimated Useful Lives (Detail) | 12 Months Ended |
Dec. 31, 2013 | |
Furniture, Fixtures and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | 5 years |
Computer Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | 3 years |
Buildings [Member] | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | 30 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | 3 years |
Rental Clocks [Member] | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | 5 years |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | 3 years |
LongTerm_Debt_Aggregate_Future
Long-Term Debt - Aggregate Future Maturities of Long-Term Debt (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Schedule Of Long Term Debt Maturities [Line Items] | |||
2014 | $9,545 | ||
2015 | 440 | ||
2016 | 461 | ||
2017 | 46,679 | ||
2018 | 10,158 | ||
Thereafter | 14,682 | ||
Total long-term debt (including current portion) | $27,186 | $81,965 | $74,743 |
Stockholders_Equity_and_StockB
Stockholders' Equity and Stock-Based Compensation - Summary of Grant-Date Fair Values of Restricted Stock Granted and Related Assumptions (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grant-date fair value, restricted shares | $1.09 | ||
Risk-free interest rates, restricted shares | 0.72% | 1.74% | |
Risk-free interest rates, restricted shares, Minimum | 0.71% | ||
Risk-free interest rates, restricted shares, Maximum | 1.41% | ||
Estimated volatility, restricted shares | 50.00% | 60.00% | 60.00% |
Expected life (in years), restricted shares | 5 years | 5 years | 5 years |
Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grant-date fair value, restricted shares | 0.11 | $0.18 | |
Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grant-date fair value, restricted shares | 0.92 | $1.88 |
Stockholders_Equity_and_StockB1
Stockholders' Equity and Stock-Based Compensation - Stock-Based Compensation Resulting from Employee Incentive Share Arrangements (Detail) (USD $) | 9 Months Ended | 12 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Stock-based compensation expense | $362 | $925 | $934 | $503 | $165 |
Operating Expense [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Stock-based compensation expense | 222 | 87 | 36 | ||
Selling and Marketing Expense [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Stock-based compensation expense | 114 | 83 | 57 | ||
Research and Development Expense [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Stock-based compensation expense | 345 | 100 | 25 | ||
General and Administrative Expense [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Stock-based compensation expense | $253 | $233 | $47 |
Stockholders_Equity_and_StockB2
Stockholders' Equity and Stock-Based Compensation - Nonvested Restricted Stock Unit Awards (Detail) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested at beginning of period, Shares | 7,895,692 |
Restricted stock granted | 1,062,945 |
Restricted stock vested | -781,411 |
Restricted stock forfeited | -56,125 |
Nonvested at end of period, Shares | 8,121,101 |
Nonvested at beginning of period, Weighted-Average Grant Date Fair Value | $0.26 |
Granted, Weighted-Average Grant Date Fair Value | $0.37 |
Vested, Weighted-Average Grant Date Fair Value | $0.48 |
Forfeited, Weighted-Average Grant Date Fair Value | $0.43 |
Nonvested at end of period, Weighted-Average Grant Date Fair Value | $0.25 |
Income_Taxes_Income_Tax_Expens
Income Taxes - Income Tax Expense (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Provision (benefit) for current income taxes | |||||||
Federal | $0 | $0 | $0 | ||||
State | 275 | 80 | 57 | ||||
Total provision for current income taxes | 275 | 80 | 57 | ||||
Provision (benefit) for deferred income taxes, net | |||||||
Federal | 347 | -51 | 444 | ||||
State | 170 | -113 | 100 | ||||
Total provision (benefit) for deferred income taxes, net | 517 | -164 | 544 | ||||
Total income tax expense (benefit) | $1,689 | ($199) | $2,028 | $1,211 | $792 | ($84) | $601 |
Income_Taxes_Reconciliation_of
Income Taxes - Reconciliation of Statutory Federal Tax Rate to Effective Income Tax Rate (Detail) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Schedule Of Effective Income Tax Rate Reconciliation [Line Items] | |||||
Federal statutory tax rate | 34.00% | 34.00% | 34.00% | ||
Earnings excluded from federal income tax | -14.00% | -10.00% | -8.00% | ||
State income taxes, net of federal income tax benefit | 29.00% | 7.00% | 11.00% | ||
Nondeductible expenses from investment in partnership | 4.00% | -13.00% | 3.00% | ||
Other | 3.00% | -1.00% | 0.00% | ||
Effective income tax rate | 39.00% | 32.00% | 56.00% | 17.00% | 40.00% |
Income_Taxes_Net_Deferred_Tax_
Income Taxes - Net Deferred Tax Assets and Liabilities (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Current deferred income tax assets | |||
Net operating losses | $3,643 | $4,184 | |
Federal tax credits | 29 | ||
Current deferred income tax assets, net | 2,422 | 3,672 | 4,184 |
Non-current deferred income tax liabilities | |||
Investment in Paycom Payroll Holdings, LLC | 2,895 | 2,890 | |
Non-current deferred income tax liabilities, net | $3,059 | $2,895 | $2,890 |
Subsequent_Events_Additional_I
Subsequent Events - Additional Information (Detail) (USD $) | 9 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | |||
Sep. 30, 2014 | Apr. 21, 2014 | Sep. 30, 2014 | Jan. 31, 2014 | Dec. 01, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Subsequent Event [Line Items] | |||||||
Proceeds from initial public offering net | $62,842,000 | ||||||
Total long-term debt (including current portion) | 27,186,000 | 27,186,000 | 81,965,000 | 74,743,000 | |||
Oerating leases | 15,855,000 | 15,855,000 | 8,304,000 | ||||
2021 Consolidated Loan [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Total long-term debt (including current portion) | 27,200,000 | 27,200,000 | |||||
Debt instrument, interest rate | 4.75% | 4.75% | |||||
Debt instrument maturity date | 1-Jun-21 | ||||||
Vest 50% upon reaching a total enterprise value of $1.4 billion [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Enterprise value | 1,400,000,000 | ||||||
Subsequent Events [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Repayment of debt | 3,300,000 | ||||||
Subsequent Events [Member] | 2021 Consolidated Loan [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Total long-term debt (including current portion) | 27,186,000 | 27,186,000 | |||||
Debt instrument, interest rate | 4.75% | 4.75% | |||||
Debt instrument maturity date | 30-May-21 | ||||||
Subsequent Events [Member] | IPO [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Issuance of common stock related to IPO | 7,641,750 | ||||||
Issuance of common stock price per share related to IPO | $15 | ||||||
Proceeds from initial public offering | 69,100,000 | ||||||
Proceeds from initial public offering net | 64,300,000 | ||||||
Repayment of debt | 64,300,000 | ||||||
Subsequent Events [Member] | IPO [Member] | Company [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Issuance of common stock related to IPO | 4,606,882 | ||||||
Subsequent Events [Member] | IPO [Member] | Selling Shareholders' [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Issuance of common stock related to IPO | 3,034,868 | ||||||
Subsequent Events [Member] | Non Cancellable Operating Leases [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Number of new office leases | 14 | ||||||
Oerating leases | 9,500,000 | ||||||
Subsequent Events [Member] | Non Cancellable Operating Leases [Member] | Minimum [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Lease term | 1 year | ||||||
Subsequent Events [Member] | Vest 50% upon reaching a total enterprise value of $1.4 billion [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Stock issued during period upon vesting of restricted stock, shares | 2,723,233 | ||||||
Enterprise value | $1,400,000,000 |