| Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies
Basis of Presentation The consolidated and combined financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and include the accounts of our wholly-owned, and majority-owned and controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. For the periods prior to the Spin-Off, the carve-out financial statements have been prepared on a basis that management believes to be reasonable to reflect the financial position, results of operations and cash flows of the Company's operations, including portions of DG's corporate costs and administrative shared services.
Revenue Recognition We derive the majority of our revenue from volume-based fees for using our online ad serving platform. We recognize revenue only when all of the following criteria have been met:
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Persuasive evidence of an arrangement exists,
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Delivery has occurred or services have been rendered,
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Our price to the customer is fixed or determinable, and
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Collectability of the related receivable is reasonably assured. We offer online advertising campaign management and deployment products. These products allow publishers, advertisers, and their agencies to manage the process of deploying online advertising campaigns. We charge our customers on a cost per thousand ("CPM") impressions basis, and recognize revenue when the impressions are served. In some instances, we charge a flat fee for a campaign and recognize revenue ratably over the period of the campaign. We also offer programmatic managed services. In providing these services, we enter into arrangements with third parties to facilitate our customer's online advertising. The determination of whether we should recognize revenue on a gross or net basis is based on an assessment of whether we are acting as the principal, or an agent, in the transaction. In determining whether we are acting as the principal or an agent, we follow the accounting guidance for principal-agent considerations. While none of the factors identified in this guidance is individually considered presumptive or determinative, because we are the primary obligor in the arrangement and we are responsible for (i) selecting and contracting with third party suppliers for the purchase of inventory, (ii) managing the advertising process including selecting or advising on campaign parameters, monitoring campaign results, and adjusting parameters and modifying publishers throughout the campaign to optimize results, (iii) establishing the selling price, and (iv) assuming credit risk in the transaction, we act as the principal in these arrangements and therefore we report revenues earned and costs incurred on a gross basis. For 2015, 2014 and 2013, we reported revenues and cost of revenues from programmatic managed services as follows (dollars in thousands):
For The Years Ended December 31,
2015
2014
2013
Revenues $ 27,250 $ 17,652 $ 10,530
% of total revenues 15.8 % 10.3 % 6.5 %
Cost of revenues (1) 21,026 12,372 7,915
Net $ 6,224 $ 5,280 $ 2,615
(1)
Includes the cost of purchasing media, but does not include personnel and other overhead related costs that are recorded in cost of revenues.
Seasonality Our business is seasonal. Our revenues follow the advertising patterns of our customers. Historically, we have experienced the lowest revenues in the first quarter and the highest revenues in the fourth quarter, with the second quarter being slightly stronger than the third quarter. Fourth quarter revenues tend to be the highest due to increased customer advertising volumes for the holiday selling season.
Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to the recoverability and useful lives of our long-lived assets, the adequacy of our allowance for doubtful accounts and credit memo reserves, contingent consideration and income taxes. We base our estimates on historical experience, future expectations and on other relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Effective November 1, 2014, we shortened the estimated remaining useful life of our Sizmek MDX platform assets from an average of 46 months to 20 months in anticipation of our new Sizmek MDX-NXT platform, which is currently in development. We anticipate the new platform will be substantially complete by mid-2016. Once the Sizmek MDX-NXT platform is fully operational and we have transitioned our workflow over to the new platform, we expect to retire the Sizmek MDX platform. For 2015 and 2014, this change increased our net loss by $3.1 million and $0.5 million, and our loss per share by $0.11 and $0.02, respectively. As discussed in Note 5 under 2015 Long-Lived Asset Impairment and Shortening of Useful Lives Effective December 31, 2015, we shortened the estimated useful life of our internally developed software costs from five years to three years. We also reduced, where necessary, the estimated remaining useful life of our customer relationships and developed technology assets acquired prior to 2015 to a maximum of three years. Further, we reduced the estimated useful life of our patents to three years. See Intangible Assets
Risk of Future Goodwill and Long-Lived Asset Impairments See Note 5 for a discussion of the risk of a future impairment of our goodwill and long-lived assets.
Cash Equivalents Cash equivalents consist of liquid investments with original maturities of three months or less at the date of acquisition. We maintain substantially all of our cash and cash equivalents with a few major financial institutions in the United States and Israel.
Restricted Cash Restricted cash principally relates to (i) funding of Israeli statutory employee compensation, (ii) required cash balances for foreign currency forward contracts / options and other banking arrangements, and (iii) security deposits on office leases.
Accounts Receivable and Allowances Accounts receivable are recorded at the amount invoiced, provided the revenue recognition criteria have been met, less allowances for doubtful accounts and credit memos. We maintain allowances for doubtful accounts and credit memos on an aggregate basis, at a level we consider sufficient to cover estimated losses in the collection of our accounts receivable and credit memos expected to be issued. The allowance is based primarily on known troubled accounts, the collectability of specific customer accounts and customer concentrations, with consideration given to current economic conditions and trends. We charge off accounts that remain uncollected after reasonable collection efforts are made.
Property and Equipment, Net Property and equipment are stated at cost. Depreciation is computed over the estimated useful lives of the assets using the straight-line method. Leasehold improvements are amortized on a straight-line basis over the shorter of the remaining lease term plus expected renewals or the estimated useful life of the asset. The estimated useful lives of our property and equipment at December 31, 2015 (excluding property and equipment acquired in a business combination) were principally as follows:
Category
Useful Life
Software—internally developed software costs
3 years
Software—purchased
3 years
Computer equipment
3 years
Furniture and fixtures
6 - 14 years
Network equipment
3 years
Machinery and equipment
3 years
Leases We lease certain properties under operating leases, generally for periods of 3 to 10 years. Some of our leases contain renewal options and escalating rent provisions. For leases that provide for escalating rent payments or free-rent occupancy periods, we recognize rent expense on a straight-line basis over the non-cancelable lease term plus option renewal periods that, at the inception of the lease, appear to be reasonably assured. Deferred rent is included in both accrued liabilities and other non-current liabilities in the accompanying balance sheets. See Note 12 for additional information regarding our lease commitments.
Software Development Costs Costs incurred to create software for internal use are expensed during the preliminary project stage and only costs incurred during the application development stage are capitalized. Upon placing the completed project in service, capitalized software development costs are generally amortized over three years. Depreciation of capitalized software development costs for the years ended December 31, 2015, 2014 and 2013 was $9.5, $4.3 million and $1.9 million, respectively. During 2015, capitalized software development costs were written down by $12.5 million. See 2015 Long-Lived Asset Impairment and Shortening of Useful Lives
Assets and Liabilities of DG's TV Business Pursuant to the Separation and Redemption Agreement (see Note 1), DG contributed to us substantially all of its television business current assets and certain other assets existing on February 7, 2014, and we agreed to assume substantially all of DG's television business liabilities that existed on February 7, 2014 or were attributable to periods up to and including February 7, 2014. These net assets contributed were recorded at $78.5 million. The details of these assets and liabilities outstanding as of December 31, 2015 and 2014 were as follows (in thousands):
December 31,
Description
2015
2014
Current assets of television business:
Income tax receivables $ 515 $ 1,943
Trade accounts receivable 163 367
Springbox revenue sharing — 160
​Total $ 678 $ 2,470
Current liabilities of television business:
Trade accounts payable $ — $ 165
Accrued liabilities 930 230
Uncertain tax positions 273 —
​Total $ 1,203 $ 395
Non-current liabilities of television business:
​Uncertain tax positions $ — $ 260
Derivative Instruments We enter into foreign currency forward contracts and options to hedge a portion of the exposure to the variability in expected future cash flows resulting from changes in related foreign currency exchange rates between the New Israeli Shekel (“NIS”) and the U.S. Dollar. These transactions were designated as cash flow hedges, as defined by Accounting Standards Codification (“ASC”) Topic 815, “ Derivatives and Hedging Fair Value Measurements and Disclosures Our cash flow hedging strategy is to hedge against the risk of overall changes in cash flows resulting from certain forecasted foreign currency rent and salary payments during the next twelve months. We hedge portions of our forecasted expenses denominated in the NIS with a single counterparty using foreign currency forward contracts and options. At December 31, 2015, we had $14.5 million notional amount of foreign currency forward contracts and options outstanding that had a net fair value liability balance of $0.1 million ($0.3 million liability, net of a $0.2 million asset). At December 31, 2014, we had $14.3 million notional amount of foreign currency forward contracts and options outstanding that had a net fair value liability balance of $0.1 million ($0.2 million liability, net of a $0.1 million asset). The net liability at December 31, 2015 is included in accrued liabilities and is expected to be recognized in our results of operations in the next twelve months. The net liability at December 31, 2014 was also included in accrued liabilities. The vast majority of any gain or loss from hedging activities is included in our various operating expenses. As a result of our hedging activities, we incurred the following gains and losses in our results of operations (in thousands):
Years Ended December 31,
2015
2014
2013
Hedging gain (loss) recognized in operations $ (62 ) $ 115 $ 865 It is our policy to offset fair value amounts recognized for derivative instruments executed with the same counterparty. In connection with our foreign currency forward contracts and options and other banking arrangements, we have agreed to maintain $1.5 million of cash in bank accounts with our counterparty, which we classify as restricted cash on our balance sheet.
Accumulated Other Comprehensive Income (Loss) Components of accumulated other comprehensive income (loss), net of tax, during the years ended December 31, 2015, 2014 and 2013 were as follows (in thousands):
Foreign Currency Translation
Unrealized Gains (Losses) on Foreign Currency Derivatives
Unrealized Gains (Losses) on Available for Sale Securities
Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2012 $ (887 ) $ 373 $ (4 ) $ (518 )
OCI (L) before reclassifications (311 ) 521 1,768 1,978
Amounts reclassified out of AOCL — (778 ) — (778 )
Change during 2013 (311 ) (257 ) 1,768 1,200
Balance at December 31, 2013 (1,198 ) 116 1,764 682
OCI (L) before reclassifications (1,474 ) (111 ) (509 ) (2,094 )
Amounts reclassified out of AOCI — (103 ) — (103 )
Change during 2014 (1,474 ) (214 ) (509 ) (2,197 )
Balance at December 31, 2014 (2,672 ) (98 ) 1,255 (1,515 )
OCI (L) before reclassifications (1,572 ) (29 ) (299 ) (1,900 )
Amounts reclassified out of AOCL — 56 — 56
Change during 2015 (1,572 ) 27 (299 ) (1,844 )
Balance at December 31, 2015 $ (4,244 ) $ (71 ) $ 956 $ (3,359 ) The following table summarizes the reclassifications from accumulated other comprehensive income (loss) to the consolidated and combined statements of operations for the years ended December 31, 2015, 2014 and 2013 (in thousands):
Amounts Reclassified out of AOCI
Affected Line Items in the Statement of Operations
2015
2014
2013
Gains (losses) on cash flow hedges:
Foreign currency derivatives $ (6 ) $ 11 $ 101
Cost of revenues
Foreign currency derivatives (3 ) 5 56
Selling and marketing
Foreign currency derivatives (44 ) 56 571
Research and development
Foreign currency derivatives (11 ) 16 154
General and administrative
Foreign currency derivatives 2 27 (17 )
Other expense, net
Total before taxes (62 ) 115 865
Tax amounts 6 (12 ) (87 )
Income after tax $ (56 ) $ 103 $ 778
Goodwill Goodwill represents the excess of the purchase price over the fair value of net identifiable assets acquired. We test goodwill for potential impairment at the reporting unit level on an annual basis, or more frequently if an event occurs or circumstances exist indicating goodwill may not be recoverable. Such events or circumstances may include operating results lower than previously forecasted or declines in future expectations of our operating results, or other significant negative industry trends. In evaluating goodwill for potential impairment, we perform a two-step process that begins with an estimate of the fair value of each reporting unit that contains goodwill (presently, we operate as a single reporting unit). We use a variety of methods, including discounted cash flow models, to determine fair value. In the event a reporting unit's carrying value exceeds its estimated fair value, evidence of a potential impairment exists. In such a case, the second step of the impairment test is required, which involves allocating the fair value of the reporting unit to its identifiable assets and liabilities, with the excess of fair value over the identifiable net assets representing the implied fair value of its goodwill. An impairment loss is measured as the amount, if any, by which the carrying value of a reporting unit's goodwill exceeds its implied fair value. During 2015 and 2014 we recorded goodwill impairment losses of $47.4 million and $98.2 million, respectively. See Note 5 – Risk of Future Goodwill and Long-Lived Asset Impairments
Long-Lived Assets We assess our long-lived assets (other than goodwill), including acquired identifiable intangibles, for potential impairment whenever certain triggering events occur. Events that may trigger an impairment review include the following:
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significant underperformance relative to historical or projected future operating results;
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significant changes in the use of our assets or the strategy for our overall business; and
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significant negative industry or economic trends. If we determine the carrying value of our long-lived or intangible assets may not be recoverable based upon the occurrence of a triggering event, we assess the recoverability of these assets by determining whether amortization of the asset balance over its remaining life can be recovered through undiscounted future operating cash flows. If the asset can be recovered through undiscounted future cash flows the asset is not impaired. If the asset cannot be recovered through undiscounted future cash flows, the amount of the impairment is determined based upon the discounted future cash flows using a discount rate reflecting the risk inherent in the projected cash flows. During 2015 we recorded a $64.2 million impairment of our long-lived assets. See Note 5 – Risk of Future Goodwill and Long-Lived Asset Impairments We determine the useful lives of our identifiable intangible assets after considering the specific facts and circumstances related to each asset. Factors considered when determining useful lives include the contractual term of any agreement, the history of the asset, our long-term strategy for using the asset, any laws or other local regulations that could impact the useful life of the asset, and other economic factors, including competition and specific market conditions. Intangible assets that are deemed to have finite lives are generally amortized on a straight-line basis over their useful lives which generally range from 3 to 10 years. See Note 5 – Intangible Assets
Foreign Currency Translation and Measurement We translate the assets and liabilities of our non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using the average exchange rates that were in effect during the period. Gains and losses from these translations are recognized in foreign currency translation, a component of accumulated other comprehensive income (loss) and part of stockholders' equity (business capital prior to the Spin-Off). Gains and losses from measuring foreign currency transactions into the functional currency are included in our statements of operations. For 2015, 2014 and 2013, we recognized foreign currency transaction gains and (losses) of $(1.1) million, $(1.2) million and $0.1 million, respectively.
Research and Development Expenses Research and development expenses associated with maintaining our technology platform are expensed as incurred. Costs incurred to create software for internal use are capitalized only during the application development stage. See Software Development Costs
Merger, Integration and Other Expenses Merger, integration and other expenses reflect the expenses incurred in (i) DG's Merger with Extreme Reach and our Spin-Off from DG, (ii) acquiring or disposing of a business, (iii) integrating an acquired operation (e.g., severance pay, office closure costs) into the Company and (iv) certain other items of income or expense not deemed to be part of our core operations. A summary of our merger, integration and other expenses is as follows (in thousands):
2015
2014
2013
Merger and Spin-Off (1) $ — $ 5,507 $ 4,078
Severance 2,292 1,200 569
Integration and restructuring costs 5,672 2,400 321
MediaMind preacquisition liability — — 720
Acquisition legal and due diligence fees 834 275 —
TV business net asset charges (recoveries) (2) 455 (3,078 ) —
Other — — 189
Net $ 9,253 $ 6,304 $ 5,877
(1)
Merger and Spin-Off includes costs incurred prior to the transactions while DG was evaluating strategic alternatives. See discussion of Merger and Spin-Off under " Separation from Digital Generation, Inc
(2)
Represents an increase in (a reduction of) expense due to realizing less (more) TV net assets than originally estimated at the time of the Spin-Off.
Severance costs primarily relate to consolidating the workforces of acquired businesses and eliminating redundancy. All costs shown above were paid in the period the expense was recognized, or shortly thereafter.
Share-Based Payments Subsequent to the Spin-Off, the compensation committee of our board of directors authorizes the issuance of stock options, time-based restricted stock units ("RSUs") and performance-based RSUs to our employees, directors and consultants. The committee approves grants only out of shares previously authorized by our stockholders. We recognize compensation expense based on the estimated fair value of the share-based payments. The fair value of our RSUs is based on the closing price of our common stock the day prior to the date of grant. The fair value of our stock options is calculated using the Black-Scholes option pricing model. Share-based awards that do not require future service are expensed immediately. Share-based awards that only require future service are amortized over the relevant service period on a straight-line basis. Share-based awards that require satisfaction of performance conditions, such as performance-based RSUs, are amortized over the performance period provided it is probable that the performance conditions will be satisfied. Subsequently, if the performance conditions are no longer probable of achievement, then all previously recognized compensation expense for that award will be reversed. Prior to the Spin-Off, we participated in DG's compensation programs that included equity-based incentive awards. Those equity-based awards related to shares of DG's common stock, not to our equity. For DG equity awards, we recognized an allocated cost equal to the cost recognized by DG. Allocations of share-based payments also arose from acquisitions when DG agreed to assume the share-based obligations of the acquired company on our behalf; such as the case in our acquisition of MediaMind. In connection with completing the Merger and Spin-Off, all of DG's outstanding equity awards became fully vested and, to the extent the award had an intrinsic value, were converted into shares of DG stock. Equity awards with no intrinsic value were cancelled. Following the Spin-Off, we did not assume any equity award previously issued by DG. We recognized $4.2 million, $9.4 million and $6.4 million in share-based compensation expense related to stock options, restricted stock and RSUs during the years ended December 31, 2015, 2014 and 2013, respectively. For 2014, $2.9 million relates to our equity awards and $6.5 million relates to the allocated cost of DG's equity awards. See Note 10.
Income Taxes For periods subsequent to the Spin-Off, we file our income tax returns on a stand-alone basis. For periods prior to the Spin-Off, our results of operations were included in the combined federal and state income tax returns of DG. For those periods, the income tax amounts reflected in the accompanying financial statements have been allocated to us based on taxable income (loss) directly attributable to us on a stand-alone basis. Management believes that the assumptions underlying the allocation of income taxes are reasonable. However, the amounts allocated for income taxes in the accompanying financial statements are not necessarily indicative of the amount of income taxes that would have been recorded had we operated as a separate, stand-alone entity during those periods. Prior to the Spin-Off, the U.S. federal and state tax losses generated by us were utilized by DG in its consolidated U.S. tax return. We are reflecting these U.S. federal and state tax losses as a distribution to DG for the year they were included in DG's U.S. tax returns. We establish deferred income tax assets and liabilities for temporary differences between the tax and financial accounting bases of our assets and liabilities. The tax effects of such differences are recorded in the balance sheet at the enacted tax rates expected to be in effect when the differences reverse. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets if it is more likely than not that all or a portion of the asset will not be realized. The ultimate realization of our deferred tax assets is primarily dependent upon generating taxable income during the periods in which those temporary differences become deductible. The need for a valuation allowance is assessed each year. We forecast the reversal of our deferred tax assets and liabilities in determining the need for a valuation allowance. For 2015, 2014 and 2013, we recorded a valuation allowance. The tax balances and income tax expense recognized by us are based on our interpretation of the tax statutes of multiple jurisdictions and judgment. Differences between the anticipated and actual outcomes of these future tax consequences could have a material impact on our consolidated results of operations, financial position and cash flows. We account for uncertain tax positions in accordance with ASC 740, which contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining whether the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. We reevaluate our income tax positions periodically to consider factors such as changes in facts or circumstances, changes in or interpretations of tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in recognition of a tax benefit or an additional charge to the tax provision. We include interest related to tax issues as part of income tax expense in our consolidated and combined financial statements. We record any applicable penalties related to tax issues within the income tax provision. See Note 8.
Business Combinations Business combinations are accounted for using the acquisition method. The purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. Any excess purchase price over the fair value of the net identifiable assets acquired is recorded as goodwill. Operating results of an acquired business are included in our results of operations from the date of acquisition. See Note 3.
Financial Instruments and Concentration of Credit Risk Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The vast majority of our cash and cash equivalents is held at large financial institutions in the United States and Israel that management believes to be of high credit quality. At certain financial institutions, our cash and cash equivalents regularly exceeds the federally insured limit. We have not experienced any losses on our cash and cash equivalents to date. We perform ongoing credit evaluations of our customers, generally do not require collateral and maintain a reserve for potential credit losses. We only recognize revenue when collection is reasonably assured. Our receivables are principally from advertising agencies and direct advertisers. Our receivables and the related revenues are not contingent on our customers' sales or collections. We believe the fair value of our accounts receivable approximate their carrying value. For the years ended December 31, 2015, 2014 and 2013, there was no single customer that accounted for more than 10% of our revenue. At December 31, 2015 and 2014, there was no single customer that accounted for more than 10% of our accounts receivables.
Israel Operations The majority of our research and development activities and a large portion of our accounting functions are performed in Herzliya, Israel. In total, about 22% of our workforce is located in Israel. As a result, we are subject to risks associated with operating in the Middle East.
Recently Adopted and Recently Issued Accounting Guidance Adopted Effective October 1, 2015, we adopted ASU 2015-17, "Balance Sheet Classification of Deferred Taxes" on a prospective basis. Prior to the adoption of ASU 2015-17 GAAP required an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. ASU 2015-17 was issued to simplify the presentation of deferred income taxes. ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. We did not retrospectively adjust prior periods. The adoption of ASU 2015-17 did not have a material impact on our financial statements. Issued In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, "Revenue from Contracts with Customers." ASU 2014-09 modifies revenue recognition guidance for GAAP. Previous revenue recognition guidance in GAAP comprised broad revenue recognition concepts together with numerous revenue requirements for particular industries or transactions, which sometimes resulted in different accounting for economically similar transactions. In contrast, International Accounting Standards Board ("IASB") provided limited guidance on revenue recognition. Accordingly, the FASB and IASB initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards ("IFRS"). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB issued ASU 2015-14 to defer the effective date of ASU 2014-09 by one year. As a result, for Sizmek, the amendments in ASU 2014-09 are now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. An entity shall adopt the amendments in ASU 2014-09 by either (i) retrospectively adjusting each prior reporting period presented or (ii) retrospectively adjusting for the cumulative effect of initially applying ASU 2014-09 at the date of initial adoption. We have not as yet determined (i) the extent to which we expect ASU 2014-09 will impact our reported revenues or (ii) the manner in which it will be adopted. In September 2015, the FASB issued ASU 2015-16, "Business Combinations." ASU 2015-16 modifies how changes to provisional amounts determined during the measurement period of a business combination are recognized. Under existing accounting literature, changes to provisional amounts determined during the measurement period of a business combination, resulting from facts and circumstances that existed at the acquisition date, are recognized by retrospectively adjusting the provisional amounts at the acquisition date. However, under ASU 2015-16, an acquirer recognizes adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustments are determined. For Sizmek, ASU 2015-16 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. In January 2016, the FASB issued ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities |
