Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 15, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | HARTE HANKS INC | |
Entity Central Index Key | 45,919 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 61,458,282 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 11,676 | $ 17,613 |
Accounts receivable (less allowance for doubtful accounts of $1,251 at March 31, 2016 and $1,249 at December 31, 2015) | 93,142 | 115,155 |
Inventory | 1,122 | 963 |
Prepaid expenses | 11,626 | 9,548 |
Prepaid taxes and income tax receivable | 3,263 | 1,760 |
Other current assets | 4,628 | 6,459 |
Total current assets | 125,457 | 151,498 |
Property, plant and equipment (less accumulated depreciation of $175,238 at March 31, 2016 and $171,415 at December 31, 2015) | 35,165 | 33,913 |
Goodwill | 222,452 | 218,972 |
Other intangible assets (less accumulated amortization of $855 at March 31, 2016 and $650 at December 31, 2015) | 3,918 | 4,123 |
Other assets (including deferred income taxes of $4,756 at March 31, 2016 and $3,000 at December 31, 2015) | 7,426 | 5,907 |
Total assets | 394,418 | 414,413 |
Current liabilities | ||
Current maturities of long-term debt | 4,125 | 3,000 |
Accounts payable | 28,080 | 38,287 |
Accrued payroll and related expenses | 9,734 | 8,340 |
Deferred revenue and customer advances | 25,459 | 27,426 |
Income taxes payable | 819 | 1,246 |
Customer postage and program deposits | 13,935 | 12,513 |
Other current liabilities | 4,228 | 6,628 |
Total current liabilities | 86,380 | 97,440 |
Long-term debt | 74,718 | 74,105 |
Pensions | 54,721 | 55,491 |
Contingent consideration | 20,358 | 20,277 |
Other long-term liabilities (including deferred income taxes of $22,733 at March 31, 2016 and $20,672 at December 31, 2015) | 28,832 | 26,784 |
Total liabilities | 265,009 | 274,097 |
Stockholders’ equity | ||
Common stock, $1 par value, 250,000,000 shares authorized 120,264,526 shares issued at March 31, 2016 and 120,146,720 shares issued at December 31, 2015 | 120,265 | 120,147 |
Additional paid-in capital | 352,680 | 353,050 |
Retained earnings | 962,650 | 973,538 |
Less treasury stock, 58,892,253 shares at cost at March 31, 2016 and 58,879,742 shares at cost at December 31, 2015 | (1,262,678) | (1,262,859) |
Accumulated other comprehensive loss | (43,508) | (43,560) |
Total stockholders’ equity | 129,409 | 140,316 |
Total liabilities and stockholders’ equity | $ 394,418 | $ 414,413 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 1,251 | $ 1,249 |
Property, plant and equipment, accumulated depreciation | 175,238 | 171,415 |
Other intangible assets, accumulated amortization | 855 | 650 |
Other assets, deferred income taxes | 4,756 | 3,000 |
Other long-term liabilities, deferred income taxes | $ 22,733 | $ 20,672 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, shares issued (in shares) | 120,264,526 | 120,146,720 |
Treasury stock, shares (in shares) | 58,892,253 | 58,879,742 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
Operating revenues | $ 110,723 | $ 121,173 |
Operating expenses | ||
Labor | 68,339 | 64,663 |
Production and distribution | 30,135 | 35,959 |
Advertising, selling, general and administrative | 15,070 | 14,099 |
Depreciation, software and intangible asset amortization | 3,548 | 3,437 |
Total operating expenses | 117,092 | 118,158 |
Operating income (loss) | (6,369) | 3,015 |
Other (income) and expenses | ||
Interest expense, net | 1,381 | 609 |
Other, net | (172) | (407) |
Total other expenses | 1,209 | 202 |
Income (loss) from operations before income taxes | (7,578) | 2,813 |
Income tax expense (benefit) | (1,975) | 1,198 |
Net Income (loss) | $ (5,603) | $ 1,615 |
Declared dividends per share (in dollars per share) | $ 0.09 | $ 0.09 |
Basic earnings per common share (in dollars per share) | $ (0.09) | $ 0.03 |
Weighted-average common shares outstanding (in shares) | 61,331 | 61,872 |
Diluted earnings per common share (in dollars per share) | $ (0.09) | $ 0.03 |
Weighted-average common and common equivalent shares outstanding (in shares) | 61,331 | 62,201 |
Other comprehensive income (loss), net of tax | ||
Adjustment to pension liability | $ 522 | $ 807 |
Foreign currency translation adjustments | (470) | (1,487) |
Total other comprehensive income (loss), net of tax | 52 | (680) |
Comprehensive income (loss) | $ (5,551) | $ 935 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ (5,603) | $ 1,615 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||
Depreciation and software amortization | 3,343 | 3,396 |
Intangible asset amortization | 205 | 41 |
Stock-based compensation | 563 | 1,316 |
Net pension cost (payments) | 100 | (82) |
Interest accretion on contingent consideration | 328 | 0 |
Deferred income taxes | (675) | 138 |
Other, net | (220) | 0 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Decrease in accounts receivable, net | 22,013 | 18,611 |
Increase in inventory | (159) | 4 |
Decrease in prepaid expenses and other current assets | (1,501) | 218 |
Increase (decrease) in accounts payable | (10,213) | 1,148 |
Decrease in other accrued expenses and liabilities | (1,783) | (6,130) |
Other, net | 0 | 153 |
Net cash provided by operating activities | 6,398 | 20,428 |
Cash Flows from Investing Activities | ||
Acquisitions, net of cash acquired | (3,500) | (29,863) |
Purchases of property, plant and equipment | (4,590) | (2,709) |
Proceeds from sale of property, plant and equipment | 21 | 0 |
Net cash used in investing activities | (8,069) | (32,572) |
Cash Flows from Financing Activities | ||
Borrowings | 81,008 | 0 |
Repayment of borrowings | (77,313) | (4,593) |
Debt financing costs | (2,165) | 0 |
Issuance of common stock | (81) | (84) |
Issuance of treasury stock | 40 | 63 |
Dividends paid | (5,285) | (5,323) |
Net cash used in financing activities | (3,796) | (9,937) |
Effect of exchange rate changes on cash and cash equivalents | (470) | (1,487) |
Net decrease in cash and cash equivalents | (5,937) | (23,568) |
Cash and cash equivalents at beginning of period | 17,613 | 56,749 |
Cash and cash equivalents at end of period | $ 11,676 | $ 33,181 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) |
Balance at Dec. 31, 2014 | $ 326,676 | $ 119,607 | $ 346,239 | $ 1,165,707 | $ (1,257,648) | $ (47,229) |
Increase (Decrease) in Stockholders' Equity | ||||||
Exercise of stock options and release of unvested shares | (84) | 186 | 25 | (295) | ||
Net tax effect of stock options exercised and release of unvested shares | (1,168) | (1,168) | ||||
Stock-based compensation | 1,316 | 1,316 | ||||
Dividends paid ($0.26 and $0.34 per share for the three months ended March 31, 2016 and twelve months ended December 31, 2015, respectively) | (5,323) | (5,323) | ||||
Treasury stock issued | 63 | (178) | 241 | |||
Purchase of treasury stock | 0 | |||||
Net income | 1,615 | 1,615 | ||||
Other comprehensive income | (680) | (680) | ||||
Balance at Mar. 31, 2015 | 322,415 | 119,793 | 346,234 | 1,161,999 | (1,257,702) | (47,909) |
Balance at Dec. 31, 2015 | 140,316 | 120,147 | 353,050 | 973,538 | (1,262,859) | (43,560) |
Increase (Decrease) in Stockholders' Equity | ||||||
Exercise of stock options and release of unvested shares | (81) | 118 | (118) | (81) | ||
Net tax effect of stock options exercised and release of unvested shares | (593) | (593) | ||||
Stock-based compensation | 563 | 563 | ||||
Dividends paid ($0.26 and $0.34 per share for the three months ended March 31, 2016 and twelve months ended December 31, 2015, respectively) | (5,285) | (5,285) | ||||
Treasury stock issued | 40 | (222) | 262 | |||
Net income | (5,603) | (5,603) | ||||
Other comprehensive income | 52 | 52 | ||||
Balance at Mar. 31, 2016 | $ 129,409 | $ 120,265 | $ 352,680 | $ 962,650 | $ (1,262,678) | $ (43,508) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends paid (in dollars per share) | $ 0.085 | $ 0.34 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Consolidation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Harte Hanks, Inc. and subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. As used in this report, the terms “Harte Hanks,” “the company,” “we,” “us,” or “our” may refer to Harte Hanks, Inc., one or more of its consolidated subsidiaries, or all of them taken as a whole. Interim Financial Information The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 . The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2015 . Reclassifications Certain amounts in the financial statements for the prior years have been reclassified to conform to the current year's presentation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results and outcomes could differ from those estimates and assumptions. On an ongoing basis, management reviews its estimates based on currently available information. Changes in facts and circumstances could result in revised estimates and assumptions. Operating Expense Presentation in Consolidated Statements of Comprehensive Income (Loss) “Labor” in the Consolidated Statements of Comprehensive Income (Loss) includes all employee payroll and benefits, including stock-based compensation, along with temporary labor costs. “Production and distribution” and “Advertising, selling, general and administrative” do not include labor, depreciation, or amortization. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On March 30, 2016 the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-based Payment Accounting, which requires entities with share-based payment awards to recognize all related excess tax benefits and tax deficiencies as income tax expenses or benefit in the income statement. This ASU is effective for interim and annual periods beginning after December 15, 2016. Early adoption is permitted. We are evaluating the effect that this will have on our consolidated financial statements and related disclosures. On March 17, 2016, the FASB issue ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which amends the principal-versus-agent implementation guidance and illustrations in ASU 2014-09 (see below). This ASU is intended to provide clarification related to determining the appropriate unit of account under the revenue standard's principal-versus-agent guidance and applying the indicators of whether an entity is a principal or an agent in accordance with ASU 2014-09's control principal. The effective date and the transition retirements are the same as the effective date and transition requirements of ASU 2014-09. We are evaluating the effect that ASU 2016-08 will have on our consolidated financial statements and related disclosures. On February 25, 2016, the FASB issued ASU 2016-02, Leases , which requires all operating leases to be recorded on the balance sheet. The lessee will record a liability for its lease obligations (initially measured at the present value of the future lease payments not yet paid over the lease term, and an asset for its right to use the underlying asset equal to the lease liability, adjusted for lease payments made at or before lease commencement). This ASU is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. We are evaluating the effect that this will have on our consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs , which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU is effective for annual periods beginning after December 15, 2015, and interim periods within those annual periods. As a result, in conjunction with the closing of the 2016 Term Facility and 2016 Revolving Credit Facility, we recorded $2.2 million in unamortized debt discount and debt issuance costs as a reduction of the total debt balance. We also reclassified $0.2 million in unamortized debt issuance costs as a reduction of the debt balance as of December 31, 2015 that were previously included in Other Assets (see Note E, Long-Term Debt ). In April 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement , which provides explicit guidance to help companies evaluate the accounting for fees paid by a customer in a cloud computing arrangement. This ASU is effective for interim and annual periods beginning after December 15, 2015. The adoption of this ASU did not have a material impact on our consolidated financial statements. In January 2015, the FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items , which eliminates the concept of extraordinary items from U.S. GAAP as part of its simplification initiative. The ASU does not affect disclosure guidance for events or transactions that are unusual in nature or infrequent in their occurrence. The ASU is effective for interim and annual periods in fiscal years beginning after December 15, 2015. The ASU allows prospective or retrospective application. Early adoption is permitted if applied from the beginning of the fiscal year of adoption. The adoption of this ASU did not have a material impact on our consolidated financial statements; however, future impact on the company will be dependent on any transaction or event that is within the scope of the new guidance. On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. On July 9, 2015, the FASB decided to delay the effective date of the new revenue standard by one year. The new effective date is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted beginning January 1, 2017 (original effective date of the ASU). We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor has we determined the effect of the standard on our ongoing financial reporting. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy that prioritizes the inputs used in valuation methodologies into three levels: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Because of their maturities and/or variable interest rates, certain financial instruments have fair values approximating their carrying values. These instruments include cash and cash equivalents, accounts receivable, and trade payables. The fair value of our outstanding debt is disclosed in Note E, Long-Term Debt. Our calculation of goodwill using the residual purchase price methodology and the acquisition related contingent consideration accounted for at fair value on a recurring basis is disclosed in Note M, Acquisition and Disposition. |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill As of March 31, 2016 and December 31, 2015 , we had goodwill of $222.5 million and $219.0 million , respectively. On March 4, 2016, the company completed the purchase of substantially all of the assets of Aleutian Consulting, Inc. The company performed a valuation to determine the estimate of the total purchase consideration and to estimate values for the tangible and identifiable intangible assets. As a result of the calculation, we recorded $3.5 million in goodwill. The residual purchase price methodology used in the calculation relied on management's assumptions. These assumptions, which are significant to the calculated fair values, are considered Level 3 inputs under the fair value hierarchy established by ASC350, as they are unobservable. See Note M, Acquisition and Disposition . This goodwill will be tax deductible. On March 16, 2015 the company acquired the stock of 3Q Digital, Inc., a digital marketing agency. The company paid some consideration upon closing, with additional consideration payable upon the achievement of revenue performance goals over the three -year period following the closing. The company performed a valuation to determine the estimate of the total purchase consideration and to estimate values for the tangible and identifiable intangible assets. As a result of the calculation, we recorded $41.8 million of goodwill. Under the provisions of FASB ASC 350, Intangibles-Goodwill and Other (ASC 350), goodwill is tested for impairment at least annually, or more frequently if events or circumstances indicate that it is “more likely than not” that goodwill might be impaired. Such events could include a significant change in business conditions, a significant negative regulatory outcome or other events that could negatively affect our business and financial performance. We perform our annual goodwill impairment assessment as of November 30th of each year for each of our reportable segments. We continuously monitor potential triggering events, including changes in the business climate in which we operate, attrition of key personnel, the current volatility in the capital markets, the company’s market capitalization compared to our book value, our recent operating performance, and financial projections. During the quarter ended March 31, 2016 , we did not identify any additional triggering events that require testing for impairment. The occurrence of one or more triggering events could require additional impairment testing, which could result in impairment charges in the future. The changes in the carrying amount of goodwill are as follows: In thousands Customer Interaction Trillium Software Total Balance at December 31, 2015 $ 69,699 149,273 $ 218,972 Additions to goodwill 3,480 — 3,480 Balance at March 31, 2016 $ 73,179 149,273 $ 222,452 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt On March 10, 2016, we entered into a secured credit facility with Wells Fargo Bank , N.A. as Administrative Agent, consisting of a maximum $65.0 million revolving credit facility (the 2016 Revolving Credit Facility) and a $45.0 million term loan facility (the 2016 Term Loan, and together with the 2016 Revolving Credit Facility, the Secured Credit Facilities). The Secured Credit Facilities are secured by substantially all of the company's assets and its material domestic subsidiaries. The Secured Credit Facilities will be used for general corporate purposes, and were used to replace, and repay remaining outstanding balances on, the company's (i) 2013 Revolving Credit Facility, and (ii) 2011 Term Loan Facility. The credit and guarantee agreements related to the 2013 Revolving Credit Facility and 2011 Term Loan Facility were likewise terminated. The 2016 Revolving Credit Facility allows for borrowings up to the lesser of (a) $65.0 million or (b) the sum of (i) 85.0% of eligible domestic accounts receivable, (ii) subject to certain sublimits, 85.0% of eligible foreign accounts receivable, and (iii) the lower of (x) $15.0 million or (y) 85.0% of eligible unbilled accounts receivable, all of which are subject to customary reserves and eligibility criteria. The outstanding amount of the 2016 Term Loan is repayable, on a monthly basis, in an amount equal to 1/120th of its original principal amount. Any amount remaining unpaid will be due and payable in full on the Maturity Date March 10, 2021. So long as an established amount of availability under the 2016 Revolving Credit Facility is maintained (described below), the 2016 Term Loan may be prepaid in whole or in part at any time, subject to prior written notice and payment of a prepayment premium ( 3.0% in the first year, 2.0% in the second year, and 1.0% in the third year) of the outstanding principal balance of the amount of the 2016 Term Loan prepaid during such year. The 2016 Term Loan is subject to mandatory prepayments from the net proceeds of certain asset dispositions (subject to limited customary reinvestment exceptions), and the incurrence of certain indebtedness, which prepayments are subject to the prepayment premium. Additionally, if our leverage ratio is greater than 2.0 to 1 in 2016 or 1.75 to 1 in any subsequent year, the 2016 Term Loan is subject to mandatory prepayments in an amount equal to 50.0% of our excess cash flow. Prepayments made with respect to excess cash flow are not subject to the prepayment premium. Voluntary prepayments of the 2016 Term Loan and mandatory prepayments of the 2016 Term Loan from excess cash flow are not permitted if availability under the 2016 Revolving Credit Facility is less than the greater of (a) 13.5% of the maximum amount of the 2016 Revolving Credit Facility and (b) $14.9 million with respect to voluntary prepayments, and the greater of 10.0% of the maximum amount of the 2016 Revolving Credit Facility and $11.0 million with respect to excess cash flow payments. The loans under the Secured Credit Facilities will accrue interest at a rate equal to, at the company's option, (i) the base rate plus the applicable margin, or (b) the LIBOR rate (as defined and limited in the Secured Credit Facilities) plus the applicable margin. The base rate is the greatest of (i) the prime lending rate as publicly announced from time to time by Wells Fargo, (ii) the federal funds rate plus 0.5% , and (iii) the LIBOR rate for one month interest plus 1.0% per annum. The applicable margin for the 2016 Revolving Credit Facility is determined based upon the amount available to be borrowed under the 2016 Revolving Credit Facility in excess of trade payables aged in excess of historical levels and book overdrafts and ranges between 1.0 to 1.5% for loans accruing interest at the base rate and 2.0 to 2.5% for loans accruing interest at the LIBOR rate. The applicable margin for the 2016 Term Loan is 7.22% for loans accruing interest at the LIBOR rate and 6.22% for loans accruing interest at the base rate. We also pay an unused line of credit fee in an amount between 0.25 and 0.375% on the unused capacity on the 2016 Revolving Credit Facility outstanding amount. Under the Secured Credit Facilities, we are required to maintain certain financial covenants: a fixed charge coverage ratio of at least 1.0 to 1 for the 12 month period at each month through June 30, 2016 and 1.1 to 1 for the 12 month period at each month end thereafter; a leverage ratio of 2.25 to 1 at each month end from March 31, 2016 to December 31, 2016 and 2.0 to 1 at each month end thereafter; a minimum rolling four quarter period ending recurring revenue amount of $35.0 million at each quarter end from March 31, 2016 to September 30, 2016, and increasing quarterly from $35.2 million to $42.8 million each quarter thereafter; and capital expenditures not to exceed $14.0 million for the period from March 10, 2016 to December 31, 2016, and each fiscal year thereafter. The Secured Credit Facilities also contain customary covenants restricting the company and its subsidiaries’ ability to create, incur, assume or become liable to indebtedness; create, incur or assume liens; consummate acquisitions; liquidate, dissolve, suspend, or cease subsidiaries or a substantial portion of the business; convey, sell, lease, license, assign, transfer or dispose of assets; change the nature of business; make prepayments and amendments to other obligations and indebtedness; pay dividends and distributions and repurchase capital stock; modify accounting methods (other than as required by U.S. GAAP); make or acquire investments; enter into certain transactions with affiliates; use proceeds; issue equity interests; and amend, increase, fail to pay amounts due to, or terminate certain employee benefits, including a pension plan or multi-employer plan. The Secured Credit Facilities include certain customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments and a change of control. If an event of default occurs, the administrative agent, at the direction of the lenders under the Secured Credit Facilities, will be entitled to take various actions, including the acceleration of all amounts due under the Secured Credit Facilities and all actions permitted to be taken by a secured creditor. As of March 31, 2016, the Company was not in compliance with the Secured Credit Facilities' minimum fixed charge coverage ratio for the period. For the April 1, 2015 to March 31, 2016 covenant reference period, our fixed charge coverage ratio was 0.9 to 1 as compared with the covenant minimum of 1.0 to 1. This covenant violation existing as of March 31, 2016 was waived by Wells Fargo. Our long-term debt obligations were as follows: March 31, December 31, In thousands 2016 2015 2016 Revolving Credit Facility, various interest rates based on the Base rate, due March 10, 2021 ($8.8 million capacity and effective rate of 4.75% at March 31, 2016) $ 36,008 N/A 2016 Term Loan Facility, various interest rates based on the Base rate plus the applicable margin (effective rate of 9.72% at March 31, 2016), due March 10, 2021 45,000 N/A 2013 Revolving Credit Facility ($60.6 million capacity), various interest rates based on the highest of (a) the Agent's prime rate, (b) the Federal Funds Rate plus 0.50% per annum, (c) Eurodollar rate plus 1.00% per annum, plus a spread with is determined based on our total debt-to-EBITDA ratio then in effect, due August 16, 2016 (effective rate of 4.75% at December 31, 2015) N/A 13,000 2011 Term Loan Facility, various interest rates based on LIBOR (effective rate of 2.42% at December 31, 2015), due August 16, 2016 N/A 64,313 Less: unamortized discount and debt issuance costs (2,165 ) (208 ) Total debt 78,843 77,105 Less current maturities 4,125 3,000 Total long-term debt 74,718 74,105 The carrying values and estimated fair values of our outstanding debt were as follows: March 31, 2016 December 31, 2015 In thousands Carrying Fair Value Carrying Fair Value Total Debt $ 78,843 $ 78,843 $ 77,105 $ 77,105 Based on the recent entry into the Secured Credit Facilities, carrying values estimate fair value. These current rates are considered Level 2 inputs under the fair value hierarchy established by ASC 820, Fair Value Measurement . |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation We recognized $0.6 million and $1.3 million of stock-based compensation expense during the three months ended March 31, 2016 and 2015 , respectively. Equity awards granted during the quarter were as follows: March 31, 2016 Number of Shares Weighted- Average Grant- Date Fair Value Stock options 120,371 $ 1.25 Unvested shares 73,684 $ 2.85 The equity awards granted during the three months ended March 31, 2016 were granted to our Chief Operating Officer as a material inducement to his acceptance of such position. These option and restricted stock awards were not submitted for shareholder approval, and were listed separately with the NYSE. |
Components of Net Periodic Bene
Components of Net Periodic Benefit Cost | 3 Months Ended |
Mar. 31, 2016 | |
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |
Components of Net Periodic Benefit Cost | Components of Net Periodic Benefit Cost Prior to January 1, 1999, we maintained a defined benefit pension plan for which most of our employees were eligible (the Qualified Pension Plan). We elected to freeze benefits under the Qualified Pension Plan as of December 31, 1998. In 1994, we adopted a non-qualified, unfunded, supplemental pension plan (the Restoration Pension Plan) covering certain employees, which provides for incremental pension payments so that total pension payments equal those amounts that would have been payable from our Qualified Pension Plan were it not for limitations imposed by income tax regulation. The benefits under the Restoration Pension Plan were intended to provide benefits equivalent to our Qualified Pension Plan as if such plan had not been frozen. We elected to freeze benefits under the Restoration Pension Plan as of April 1, 2014. Net pension cost for both plans included the following components: Three Months Ended March 31, In thousands 2016 2015 Interest cost $ 1,950 $ 1,931 Expected return on plan assets (2,061 ) (2,159 ) Recognized actuarial loss 597 1,557 Net periodic benefit cost $ 486 $ 1,329 The period over which the net loss from the Qualified Pension Plan is amortized into net periodic benefit cost has been changed effective in 2016 from the average future service of active participants (approximately 9 years) to the average future lifetime of all participants (approximately 24 years). This change reflects that the Qualified Pension Plan is frozen and that almost all of the plan's participants are not active employees. We are not required to make, and do not intend to make, any contributions to our Qualified Pension Plan in 2016 . Based on current estimates we will not be required to make any contributions to our Qualified Pension Plan until 2018. We are not required to make, and do not intend to make, any contributions to our Restoration Pension Plan in 2016 other than to the extent needed to cover benefit payments. We made benefit payments under this supplemental plan of $0.4 million in the three months ended March 31, 2016 . In the event of a change of control, as defined in the plan document, the Restoration Pension Plan is required to be fully funded. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our first quarter 2016 income tax benefit of $2.0 million resulted in an effective income tax rate of 26.1% . Our first quarter 2015 income tax expense of $1.2 million resulted in an effective income tax rate of 42.6% . We have historically, including for 2015, calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full calendar year to ordinary income or loss for the reporting period. However, we have used a discrete effective tax rate method to calculate income taxes for the three months ended March 31, 2016 because we determined that small changes in estimated ordinary income would result in significant changes in the estimated annual effective tax rate, such that the historical method would not provide a reliable estimate for the three months ended March 31, 2016 . The effective income tax benefit calculated for the first quarter of 2016 differs from the federal statutory rate of 35.0% , primarily due to foreign tax credit limitations on dividends paid from foreign subsidiaries. Harte Hanks, or one of our subsidiaries, files income tax returns in the U.S. federal, U.S. state, and foreign jurisdictions. For U.S. state returns, we are no longer subject to tax examinations for tax years prior to 2011. For U.S. federal and foreign returns, we are no longer subject to tax examinations for tax years prior to 2012. We have elected to classify any interest expense and penalties related to income taxes within income tax expense in our Consolidated Statements of Comprehensive Income (Loss). We did not have a significant amount of interest or penalties accrued at March 31, 2016 or December 31, 2015 . |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share In periods in which the company has net income, the company is required to calculate earnings per share using the two-class method. The two-class method is required because the company's unvested shares are considered participating securities. Participating securities have the right to receive dividends should the company declare dividends on its common stock. Under the two-class method, undistributed and distributed earnings are allocated on a pro-rata basis to the common and restricted stockholders. The weighted-average number of common and restricted shares outstanding during the period is then used to calculate earnings per share (EPS) for each class of shares. In periods in which the company has a net loss, basic loss per share is calculated using the treasury stock method. The treasury stock method is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period. The two-class is method is not used, because the two-class calculation is anti-dilutive. Reconciliations of basic and diluted EPS are as follows: Three Months Ended March 31, In thousands, except per share amounts 2016 2015 Basic Earnings (Loss) per Share Net income (loss) $ (5,603 ) $ 1,615 Weighted-average common shares outstanding used in earnings (loss) per share computations 61,331 61,872 Earnings (loss) per common share $ (0.09 ) $ 0.03 Diluted Earnings (Loss) per Share Net income (loss) $ (5,603 ) $ 1,615 Shares used in diluted earnings per share computations 61,331 62,201 Earnings (loss) per common share $ (0.09 ) $ 0.03 Computation of Shares Used in Earnings (Loss) Per Share Computations Weighted-average common shares outstanding 61,331 61,872 Weighted-average common equivalent shares-dilutive effect of stock options and awards — 329 Shares used in diluted earnings (loss) per share computations 61,331 62,201 4.4 million and 3.2 million of anti-dilutive market price options have been excluded from the calculation of shares used in the diluted EPS calculation for the three months ended March 31, 2016 and 2015 , respectively. 0.9 million anti-dilutive unvested shares were excluded from the calculation of shares used in the diluted EPS calculation for the three months ended March 31, 2016 . No anti-dilutive unvested shares were excluded from the calculation of shares used in the diluted EPS calculation for the three months ended March 31, 2015 . |
Comprehensive Income
Comprehensive Income | 3 Months Ended |
Mar. 31, 2016 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Comprehensive Income | Comprehensive Income Comprehensive income for a period encompasses net income and all other changes in equity other than from transactions with our stockholders. Our comprehensive income (loss) was as follows: Three Months Ended March 31, In thousands 2016 2015 Net income (loss) $ (5,603 ) $ 1,615 Other comprehensive income (loss): Adjustment to pension liability 870 1,345 Tax expense (348 ) (538 ) Adjustment to pension liability, net of tax 522 807 Foreign currency translation adjustment (470 ) (1,487 ) Total other comprehensive loss 52 (680 ) Total comprehensive income (loss) $ (5,551 ) $ 935 Changes in accumulated other comprehensive loss by component are as follows: In thousands Defined Foreign Total Balance at December 31, 2015 $ (43,915 ) $ 355 $ (43,560 ) Other comprehensive income (loss), net of tax, before reclassifications — (470 ) (470 ) Amounts reclassified from accumulated other comprehensive income (loss), net of tax 522 — 522 Net current period other comprehensive income (loss), net of tax 522 (470 ) 52 Balance at March 31, 2016 $ (43,393 ) $ (115 ) $ (43,508 ) In thousands Defined Foreign Total Balance at December 31, 2014 $ (49,560 ) $ 2,331 $ (47,229 ) Other comprehensive income (loss), net of tax, before reclassifications — (1,487 ) (1,487 ) Amounts reclassified from accumulated other comprehensive income (loss), net of tax 807 — 807 Net current period other comprehensive income (loss), net of tax 807 (1,487 ) (680 ) Balance at March 31, 2015 $ (48,753 ) $ 844 $ (47,909 ) Reclassification amounts related to the defined pension plans are included in the computation of net periodic pension benefit cost (see Note G, Components of Net Periodic Pension Benefit Cost ). |
Litigation Contingencies
Litigation Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation Contingencies | Litigation Contingencies In the normal course of our business, we are obligated under some agreements to indemnify our clients as a result of claims that we infringe on the proprietary rights of third parties. The terms and duration of these commitments vary and, in some cases, may be indefinite, and certain of these commitments do not limit the maximum amount of future payments we could become obligated to make thereunder; accordingly, our actual aggregate maximum exposure related to these types of commitments cannot be reasonably estimated. Historically, we have not been obligated to make significant payments for obligations of this nature, and no liabilities have been recorded for these obligations in our financial statements. We are also currently subject to various other legal proceedings in the course of conducting our businesses and, from time to time, we may become involved in additional claims and lawsuits incidental to our businesses. In the opinion of management, after consultation with counsel, none of these matters is currently considered to be reasonably possible of resulting in a material adverse effect on our consolidated financial position or results of operations. Nevertheless, we cannot predict the impact of future developments affecting our pending or future claims and lawsuits and any resolution of a claim or lawsuit within a particular fiscal quarter may adversely impact our results of operations for that quarter. We expense legal costs as incurred, and all recorded legal liabilities are adjusted as required as better information becomes available to us. The factors we consider when recording an accrual for contingencies include, among others: (i) the opinions and views of our legal counsel; (ii) our previous experience; and (iii) the decision of our management as to how we intend to respond to the complaints. |
Business Segments
Business Segments | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Business Segments | Business Segments We conduct our operations by organizing into two distinct operating divisions: Customer Interaction and Trillium Software. In accordance with FASB ASC 280, Segment Reporting , we report the two operating divisions as two reportable segments; Customer Interaction and Trillium Software. Our reportable segments are described below. Corporate expense consists primarily of pension, workers’ compensation expense, and litigation items from businesses we no longer own. Customer Interaction Our Customer Interaction services offer a wide variety of integrated, multi-channel, data-driven solutions for top brands around the globe. We help our clients gain insight into their customers’ behaviors from their data and use that insight to create innovative multi-channel marketing programs to deliver a return on marketing investment. We believe our clients’ success is determined not only by how good their tools are, but how well we help them use the tools to gain insight and analyze their consumers. This results in a strong and enduring relationship between our clients and their customers which is key to being leaders in Customer Interaction. We offer a full complement of capabilities and resources to provide a broad range of marketing services, in media from direct mail to email, including: • agency and digital services; • database marketing solutions and business-to-business lead generation; • direct mail; and • contact centers. Customer Interaction’s largest cost components are labor, outsourced costs and mail supply chain costs. Trillium Software Trillium Software is a leading global enterprise data quality solutions provider. Our data quality specialists help organizations achieve increased business from their data management initiatives and existing business-critical processes by providing enterprise data profiling and data cleansing software and services. We offer industry-specific business solutions that help solve data problems experienced by financial services, banking, retail, healthcare, manufacturing, and risk professionals. Our full complement of technologies and services includes global data profiling, data cleansing, enrichment, and data linking for e-business, Big Data customer relationship management, data governance, enterprise resource planning, supply chain management, data warehouse, and other enterprise applications. Revenues from the Trillium Software segment are comprised primarily of perpetual software licenses, annual maintenance and professional services. Trillium Software’s largest cost component is software development, which is comprised primarily of labor. Information about the operations of our two business segments is as follows: Three Months Ended March 31, In thousands 2016 2015 Operating revenues Customer Interaction $ 99,563 $ 109,315 Trillium Software 11,160 11,858 Total operating revenues $ 110,723 $ 121,173 Operating income (loss) Customer Interaction $ (7,909 ) $ 1,527 Trillium Software 2,242 3,013 Corporate (702 ) (1,525 ) Total operating income (loss) $ (6,369 ) $ 3,015 Operating income (loss) $ (6,369 ) $ 3,015 Interest expense, net 1,381 609 Other, Net (172 ) (407 ) Total income (loss) from operations before income taxes $ (7,578 ) $ 2,813 |
Acquisition and Disposition
Acquisition and Disposition | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
Acquisition and Disposition | Acquisition and Disposition On March 4, 2016, we completed the acquisition of Aleutian Consulting, which now operates as Harte Hanks Consulting. The results of Harte Hanks Consulting Operations have been included in our financial statements since that date and are reported in the Customer Interaction segment. The purchase price was $3.5 million in cash. The fair value of identified tangible assets residual purchase price methodology used in the calculation to determine goodwill allocation relied on management's assumptions. These assumptions, which are significant to the calculated fair values, are considered Level 3 inputs under the fair value hierarchy established by ASC350, as they are unobservable. On March 16, 2015, we completed the acquisition of 3Q Digital. The results of 3Q Digital’s operations have been included in our consolidated financial statements since that date and are reported in the Customer Interaction segment. The initial purchase price was $30.2 million in cash. In addition, the purchase agreement includes a contingent consideration arrangement that requires us to pay the former owners of 3Q Digital an additional cash payment depending on achievement of certain revenue growth goals. The potential undiscounted amount of all future payments that could be required to be paid under the contingent consideration arrangement is between $0 and $35.0 million in cash in 2018. The intangible assets include customer relationships, trade names and non-compete agreements. The following table summarizes the consideration paid and the amounts of estimated fair value of the assets acquired and liabilities assumed at the acquisition date. (in thousands) Cash consideration per purchase agreement $ 30,245 Estimated fair value of contingent consideration 17,940 Fair value of total consideration $ 48,185 (in thousands) Recognized amounts of tangible assets and liabilities: Current assets $ 4,135 Property and equipment 164 Other assets 389 Current liabilities (822 ) Other liabilities — Total tangible assets and liabilities: 3,866 Identifiable intangible assets 4,773 Goodwill (including deferred tax adjustment of $2,298) 41,845 Total $ 50,484 The fair value of the tangible net assets, identifiable intangible assets and goodwill recognized on acquisition is $48.2 million . The acquired intangible assets, which are being amortized, are as follows: customer relationships of $4.3 million (amortized over seven years), trade names and trademarks of $0.3 million (amortized over two years) and non-compete agreements of $0.2 million (amortized over three years). In accordance with ASC 805-30-35, Business Combinations, Goodwill or gain from bargain purchase, including consideration transferred, we consider re-measurement of contingent consideration at each reporting date until the contingency is resolved, with the changes in fair value recognized in earnings. We determined that a re-measurement was appropriate as of the end of the first quarter, 2016. As such, we determined that the contingent consideration fair value had decreased slightly, and recorded a $0.2 million adjustment to the present value of the liability as of the quarter ended March 31, 2016. Significant assumptions were used in the fair value calculation of the contingent consideration, including (i) discount rate, (ii) weighted-average cost of capital, (iii) risk premium, and (iv) tax rate. These assumptions are considered Level 3 inputs under the fair value hierarchy established by FASB ASC 820, Fair Value Measurements and Disclosures. A reconciliation of the beginning and ending accrued balances of the contingent consideration for the three months ended March 31, 2016 follows: (in thousands) Fair Value Contingent consideration at acquisition date $ 17,940 Accretion of interest 2,665 Adjustment to fair value $ (247 ) Accrued earnout liability as of March 31, 2016 $ 20,358 The purchase price has been allocated based on the estimated fair values of assets described above and are subject to achievement of revenue goals. On April 14, 2015, Harte Hanks sold its B2B research business. The B2B research business represented less than 5% of our total 2014 revenues. The related asset group does not meet the criteria to be classified as a component of an entity. Expenses are possible in future periods based upon certain working capital settlement provisions. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation | Consolidation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Harte Hanks, Inc. and subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. As used in this report, the terms “Harte Hanks,” “the company,” “we,” “us,” or “our” may refer to Harte Hanks, Inc., one or more of its consolidated subsidiaries, or all of them taken as a whole. |
Interim Financial Information | Interim Financial Information The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 . The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2015 . |
Reclassifications | Reclassifications Certain amounts in the financial statements for the prior years have been reclassified to conform to the current year's presentation. |
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 reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results and outcomes could differ from those estimates and assumptions. On an ongoing basis, management reviews its estimates based on currently available information. Changes in facts and circumstances could result in revised estimates and assumptions. |
Operating Expense Presentation in Consolidated Statements of Comprehensive Income (Loss) | Operating Expense Presentation in Consolidated Statements of Comprehensive Income (Loss) “Labor” in the Consolidated Statements of Comprehensive Income (Loss) includes all employee payroll and benefits, including stock-based compensation, along with temporary labor costs. “Production and distribution” and “Advertising, selling, general and administrative” do not include labor, depreciation, or amortization. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On March 30, 2016 the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-based Payment Accounting, which requires entities with share-based payment awards to recognize all related excess tax benefits and tax deficiencies as income tax expenses or benefit in the income statement. This ASU is effective for interim and annual periods beginning after December 15, 2016. Early adoption is permitted. We are evaluating the effect that this will have on our consolidated financial statements and related disclosures. On March 17, 2016, the FASB issue ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which amends the principal-versus-agent implementation guidance and illustrations in ASU 2014-09 (see below). This ASU is intended to provide clarification related to determining the appropriate unit of account under the revenue standard's principal-versus-agent guidance and applying the indicators of whether an entity is a principal or an agent in accordance with ASU 2014-09's control principal. The effective date and the transition retirements are the same as the effective date and transition requirements of ASU 2014-09. We are evaluating the effect that ASU 2016-08 will have on our consolidated financial statements and related disclosures. On February 25, 2016, the FASB issued ASU 2016-02, Leases , which requires all operating leases to be recorded on the balance sheet. The lessee will record a liability for its lease obligations (initially measured at the present value of the future lease payments not yet paid over the lease term, and an asset for its right to use the underlying asset equal to the lease liability, adjusted for lease payments made at or before lease commencement). This ASU is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. We are evaluating the effect that this will have on our consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs , which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU is effective for annual periods beginning after December 15, 2015, and interim periods within those annual periods. As a result, in conjunction with the closing of the 2016 Term Facility and 2016 Revolving Credit Facility, we recorded $2.2 million in unamortized debt discount and debt issuance costs as a reduction of the total debt balance. We also reclassified $0.2 million in unamortized debt issuance costs as a reduction of the debt balance as of December 31, 2015 that were previously included in Other Assets (see Note E, Long-Term Debt ). In April 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement , which provides explicit guidance to help companies evaluate the accounting for fees paid by a customer in a cloud computing arrangement. This ASU is effective for interim and annual periods beginning after December 15, 2015. The adoption of this ASU did not have a material impact on our consolidated financial statements. In January 2015, the FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items , which eliminates the concept of extraordinary items from U.S. GAAP as part of its simplification initiative. The ASU does not affect disclosure guidance for events or transactions that are unusual in nature or infrequent in their occurrence. The ASU is effective for interim and annual periods in fiscal years beginning after December 15, 2015. The ASU allows prospective or retrospective application. Early adoption is permitted if applied from the beginning of the fiscal year of adoption. The adoption of this ASU did not have a material impact on our consolidated financial statements; however, future impact on the company will be dependent on any transaction or event that is within the scope of the new guidance. On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. On July 9, 2015, the FASB decided to delay the effective date of the new revenue standard by one year. The new effective date is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted beginning January 1, 2017 (original effective date of the ASU). We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor has we determined the effect of the standard on our ongoing financial reporting. |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill are as follows: In thousands Customer Interaction Trillium Software Total Balance at December 31, 2015 $ 69,699 149,273 $ 218,972 Additions to goodwill 3,480 — 3,480 Balance at March 31, 2016 $ 73,179 149,273 $ 222,452 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt obligations | Our long-term debt obligations were as follows: March 31, December 31, In thousands 2016 2015 2016 Revolving Credit Facility, various interest rates based on the Base rate, due March 10, 2021 ($8.8 million capacity and effective rate of 4.75% at March 31, 2016) $ 36,008 N/A 2016 Term Loan Facility, various interest rates based on the Base rate plus the applicable margin (effective rate of 9.72% at March 31, 2016), due March 10, 2021 45,000 N/A 2013 Revolving Credit Facility ($60.6 million capacity), various interest rates based on the highest of (a) the Agent's prime rate, (b) the Federal Funds Rate plus 0.50% per annum, (c) Eurodollar rate plus 1.00% per annum, plus a spread with is determined based on our total debt-to-EBITDA ratio then in effect, due August 16, 2016 (effective rate of 4.75% at December 31, 2015) N/A 13,000 2011 Term Loan Facility, various interest rates based on LIBOR (effective rate of 2.42% at December 31, 2015), due August 16, 2016 N/A 64,313 Less: unamortized discount and debt issuance costs (2,165 ) (208 ) Total debt 78,843 77,105 Less current maturities 4,125 3,000 Total long-term debt 74,718 74,105 |
Schedule of carrying values and estimated fair values of outstanding debt | The carrying values and estimated fair values of our outstanding debt were as follows: March 31, 2016 December 31, 2015 In thousands Carrying Fair Value Carrying Fair Value Total Debt $ 78,843 $ 78,843 $ 77,105 $ 77,105 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of shares granted and weighted-average grant-date fair value | Equity awards granted during the quarter were as follows: March 31, 2016 Number of Shares Weighted- Average Grant- Date Fair Value Stock options 120,371 $ 1.25 Unvested shares 73,684 $ 2.85 |
Components of Net Periodic Be25
Components of Net Periodic Benefit Cost (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |
Schedule of net pension cost of plans | Net pension cost for both plans included the following components: Three Months Ended March 31, In thousands 2016 2015 Interest cost $ 1,950 $ 1,931 Expected return on plan assets (2,061 ) (2,159 ) Recognized actuarial loss 597 1,557 Net periodic benefit cost $ 486 $ 1,329 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Reconciliation of basic and diluted earnings per share | Reconciliations of basic and diluted EPS are as follows: Three Months Ended March 31, In thousands, except per share amounts 2016 2015 Basic Earnings (Loss) per Share Net income (loss) $ (5,603 ) $ 1,615 Weighted-average common shares outstanding used in earnings (loss) per share computations 61,331 61,872 Earnings (loss) per common share $ (0.09 ) $ 0.03 Diluted Earnings (Loss) per Share Net income (loss) $ (5,603 ) $ 1,615 Shares used in diluted earnings per share computations 61,331 62,201 Earnings (loss) per common share $ (0.09 ) $ 0.03 Computation of Shares Used in Earnings (Loss) Per Share Computations Weighted-average common shares outstanding 61,331 61,872 Weighted-average common equivalent shares-dilutive effect of stock options and awards — 329 Shares used in diluted earnings (loss) per share computations 61,331 62,201 |
Comprehensive Income (Tables)
Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Schedule of comprehensive income | Our comprehensive income (loss) was as follows: Three Months Ended March 31, In thousands 2016 2015 Net income (loss) $ (5,603 ) $ 1,615 Other comprehensive income (loss): Adjustment to pension liability 870 1,345 Tax expense (348 ) (538 ) Adjustment to pension liability, net of tax 522 807 Foreign currency translation adjustment (470 ) (1,487 ) Total other comprehensive loss 52 (680 ) Total comprehensive income (loss) $ (5,551 ) $ 935 |
Schedule of changes in accumulated other comprehensive income | Changes in accumulated other comprehensive loss by component are as follows: In thousands Defined Foreign Total Balance at December 31, 2015 $ (43,915 ) $ 355 $ (43,560 ) Other comprehensive income (loss), net of tax, before reclassifications — (470 ) (470 ) Amounts reclassified from accumulated other comprehensive income (loss), net of tax 522 — 522 Net current period other comprehensive income (loss), net of tax 522 (470 ) 52 Balance at March 31, 2016 $ (43,393 ) $ (115 ) $ (43,508 ) In thousands Defined Foreign Total Balance at December 31, 2014 $ (49,560 ) $ 2,331 $ (47,229 ) Other comprehensive income (loss), net of tax, before reclassifications — (1,487 ) (1,487 ) Amounts reclassified from accumulated other comprehensive income (loss), net of tax 807 — 807 Net current period other comprehensive income (loss), net of tax 807 (1,487 ) (680 ) Balance at March 31, 2015 $ (48,753 ) $ 844 $ (47,909 ) |
Business Segments (Tables)
Business Segments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Business segment reporting information | Information about the operations of our two business segments is as follows: Three Months Ended March 31, In thousands 2016 2015 Operating revenues Customer Interaction $ 99,563 $ 109,315 Trillium Software 11,160 11,858 Total operating revenues $ 110,723 $ 121,173 Operating income (loss) Customer Interaction $ (7,909 ) $ 1,527 Trillium Software 2,242 3,013 Corporate (702 ) (1,525 ) Total operating income (loss) $ (6,369 ) $ 3,015 Operating income (loss) $ (6,369 ) $ 3,015 Interest expense, net 1,381 609 Other, Net (172 ) (407 ) Total income (loss) from operations before income taxes $ (7,578 ) $ 2,813 |
Acquisition and Disposition (Ta
Acquisition and Disposition (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
Schedule of estimated fair value of the assets acquired | The following table summarizes the consideration paid and the amounts of estimated fair value of the assets acquired and liabilities assumed at the acquisition date. (in thousands) Cash consideration per purchase agreement $ 30,245 Estimated fair value of contingent consideration 17,940 Fair value of total consideration $ 48,185 (in thousands) Recognized amounts of tangible assets and liabilities: Current assets $ 4,135 Property and equipment 164 Other assets 389 Current liabilities (822 ) Other liabilities — Total tangible assets and liabilities: 3,866 Identifiable intangible assets 4,773 Goodwill (including deferred tax adjustment of $2,298) 41,845 Total $ 50,484 |
Schedule of reconciliation of beginning and ending balances of contingent earnout consideration | A reconciliation of the beginning and ending accrued balances of the contingent consideration for the three months ended March 31, 2016 follows: (in thousands) Fair Value Contingent consideration at acquisition date $ 17,940 Accretion of interest 2,665 Adjustment to fair value $ (247 ) Accrued earnout liability as of March 31, 2016 $ 20,358 |
Recent Accounting Pronounceme30
Recent Accounting Pronouncements Recent Accounting Pronouncements (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Debt issuance costs | $ 2.2 | |
Other Assets | Accounting Standards Update 2015-03 | ||
Debt Instrument [Line Items] | ||
Debt issuance costs | $ (0.2) | |
Long-term Debt | Accounting Standards Update 2015-03 | ||
Debt Instrument [Line Items] | ||
Debt issuance costs | $ 0.2 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | Mar. 16, 2015 | Mar. 31, 2016 | Dec. 31, 2015 |
Goodwill [Line Items] | |||
Goodwill | $ 222,452 | $ 218,972 | |
Customer Interaction | |||
Goodwill [Line Items] | |||
Goodwill | $ 73,179 | $ 69,699 | |
3Q Digital Inc | |||
Goodwill [Line Items] | |||
Goodwill | $ 41,845 | ||
Period for achievement for revenue performance goals | 3 years |
Goodwill - (Details 2)
Goodwill - (Details 2) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Goodwill [Roll Forward] | |
Balance at December 31, 2015 | $ 218,972 |
Additions to goodwill | 3,480 |
Balance at March 31, 2016 | 222,452 |
Customer Interaction | |
Goodwill [Roll Forward] | |
Balance at December 31, 2015 | 69,699 |
Additions to goodwill | 3,480 |
Balance at March 31, 2016 | 73,179 |
Trillium Software | |
Goodwill [Roll Forward] | |
Balance at December 31, 2015 | 149,273 |
Additions to goodwill | 0 |
Balance at March 31, 2016 | $ 149,273 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 10, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | |||
Less: unamortized discount and debt issuance costs | $ 2,165 | $ 208 | |
Total debt | 78,843 | 77,105 | |
Current maturities of long-term debt | 4,125 | 3,000 | |
Long-term debt | 74,718 | 74,105 | |
2016 Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Long-term debt gross | 36,008 | ||
Remaining borrowing capacity | $ 8,800 | ||
Effective rate of interest (as a percent) | 4.75% | ||
2016 Revolving Credit Facility | Federal Funds Rate | |||
Debt Instrument [Line Items] | |||
Rate spread on variable rate | 0.50% | ||
2016 Term Loan | |||
Debt Instrument [Line Items] | |||
Long-term debt gross | $ 45,000 | ||
Total debt | $ 45,000 | ||
Effective rate of interest (as a percent) | 9.72% | ||
2013 Revolving Credit Facility, due August 16, 2016 | |||
Debt Instrument [Line Items] | |||
Total debt | $ 13,000 | ||
Effective rate of interest (as a percent) | 4.75% | ||
2013 Revolving Credit Facility, due August 16, 2016 | Federal Funds Rate | |||
Debt Instrument [Line Items] | |||
Rate spread on variable rate | 0.50% | ||
2013 Revolving Credit Facility, due August 16, 2016 | Eurodollar | |||
Debt Instrument [Line Items] | |||
Rate spread on variable rate | 1.00% | ||
2011 Term Loan Facility, due August 16, 2016 | |||
Debt Instrument [Line Items] | |||
Total debt | $ 64,313 | ||
Effective rate of interest (as a percent) | 2.42% |
Long-Term Debt (Details 2)
Long-Term Debt (Details 2) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Carrying Value | ||
Carrying values and estimated fair values of outstanding debt | ||
Total debt | $ 78,843 | $ 77,105 |
Fair Value | Significant Other Observable Inputs (Level 2) | ||
Carrying values and estimated fair values of outstanding debt | ||
Total debt | $ 78,843 | $ 77,105 |
Long-Term Debt (Details 3)
Long-Term Debt (Details 3) - USD ($) | Mar. 10, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Line of Credit Facility [Line Items] | |||
Term loan | $ 78,843,000 | $ 77,105,000 | |
2016 Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Long-term line of credit | $ 65,000,000 | ||
Percentage of eligible trade A/R | 85.00% | ||
Percentage of eligible A/R additional borrowing amount | $ 15,000,000 | ||
Percentage of eligible unbilled A/R | 85.00% | ||
Prepayment premium, year one | 3.00% | ||
Prepayment premium, year two | 2.00% | ||
Prepayment premium, year three | 1.00% | ||
Minimum rolling four quarter revenue amount | $ 35,000,000 | ||
Maximum capital expenditures | $ 14,000,000 | ||
2016 Revolving Credit Facility | Debt Covenant, Time Period One | |||
Line of Credit Facility [Line Items] | |||
Minimum fixed charge coverage ratio | 1 | ||
Debt Instrument, Required Leverage Ratio | 2.25 | ||
Fixed charge coverage ratio | 0.9 | ||
2016 Revolving Credit Facility | Debt Covenant, Time Period Two | |||
Line of Credit Facility [Line Items] | |||
Minimum fixed charge coverage ratio | 1.1 | ||
Debt Instrument, Required Leverage Ratio | 2 | ||
2016 Revolving Credit Facility | Federal Funds Rate | |||
Line of Credit Facility [Line Items] | |||
Rate spread on variable rate | 0.50% | ||
2016 Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |||
Line of Credit Facility [Line Items] | |||
Rate spread on variable rate | 1.00% | ||
2016 Revolving Credit Facility | Minimum | |||
Line of Credit Facility [Line Items] | |||
Unused capacity commitment fee percentage | 0.25% | ||
Minimum subsequent rolling four quarter revenue amount | $ 35,200,000 | ||
2016 Revolving Credit Facility | Minimum | London Interbank Offered Rate (LIBOR) | |||
Line of Credit Facility [Line Items] | |||
Average excess availability | 200.00% | ||
2016 Revolving Credit Facility | Minimum | Base Rate | |||
Line of Credit Facility [Line Items] | |||
Average excess availability | 100.00% | ||
2016 Revolving Credit Facility | Maximum | |||
Line of Credit Facility [Line Items] | |||
Unused capacity commitment fee percentage | 0.375% | ||
Minimum subsequent rolling four quarter revenue amount | $ 42,800,000 | ||
2016 Revolving Credit Facility | Maximum | London Interbank Offered Rate (LIBOR) | |||
Line of Credit Facility [Line Items] | |||
Average excess availability | 2.50% | ||
2016 Revolving Credit Facility | Maximum | Base Rate | |||
Line of Credit Facility [Line Items] | |||
Average excess availability | 1.50% | ||
2016 Term Loan | |||
Line of Credit Facility [Line Items] | |||
Term loan | $ 45,000,000 | ||
Leverage ratio, current year | 2 | ||
Leverage ratio, subsequent years | 1.75 | ||
Mandatory prepayment percentage of excess cash flows | 50.00% | ||
Maximum percentage of the revolving credit facility | 13.50% | ||
Voluntary prepayment maximum amount | $ 14,900,000 | ||
Excess cash flow payment, minimum percentage of the maximum amounts of the revolving credit facility | 10.00% | ||
Excess cash flow payments maximum amount | $ 11,000,000 | ||
2016 Term Loan | London Interbank Offered Rate (LIBOR) | |||
Line of Credit Facility [Line Items] | |||
Rate spread on variable rate | 7.22% | ||
2016 Term Loan | Base Rate | |||
Line of Credit Facility [Line Items] | |||
Rate spread on variable rate | 6.22% |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock-Based Compensation | ||
Stock-based compensation expense | $ 0.6 | $ 1.3 |
Stock Options | ||
Stock-Based Compensation | ||
Number of options granted (in shares | 120,371 | |
Weighted-Average Grant-Date Fair Value (in dollars per share) | $ 1.25 | |
Unvested Shares | ||
Stock-Based Compensation | ||
Number of shares granted (in shares) | 73,684 | |
Weighted-Average Grant-Date Fair Value (in dollars per share) | $ 2.85 |
Components of Net Periodic Be37
Components of Net Periodic Benefit Cost (Details) - Restoration Pension Plan $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Defined Benefit Plan Disclosure | |
Average future service period of active participants | 9 years |
Average future lifetime of all participants | 24 years |
Benefits paid | $ 0.4 |
Components of Net Periodic Be38
Components of Net Periodic Benefit Cost (Details 2) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net pension cost of plans | ||
Interest cost | $ 1,950 | $ 1,931 |
Expected return on plan assets | (2,061) | (2,159) |
Recognized actuarial loss | 597 | 1,557 |
Net periodic benefit cost | $ 486 | $ 1,329 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Income tax expense (benefit) | $ (1,975) | $ 1,198 | |
Effective income tax rate (as a percent) | 26.10% | 42.60% | |
Statutory income tax rate (as a percent) | 35.00% | ||
Interest and penalties accrued | $ 0 | $ 0 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Basic Earnings (Loss) per Share | ||
Net income (loss) | $ (5,603) | $ 1,615 |
Weighted-average common shares outstanding used in earnings per share computations (in shares) | 61,331 | 61,872 |
Basic earnings per common share (in dollars per share) | $ (0.09) | $ 0.03 |
Diluted Earnings (Loss) per Share | ||
Net income (loss) | $ (5,603) | $ 1,615 |
Shares used in diluted earnings per share computations (in shares) | 61,331 | 62,201 |
Diluted earnings per common share (in dollars per share) | $ (0.09) | $ 0.03 |
Computation of Shares Used in Earnings (Loss) Per Share Computations | ||
Weighted-average common shares outstanding (in shares) | 61,331 | 61,872 |
Weighted-average common equivalent shares - dilutive effect of stock options and awards (in shares) | 0 | 329 |
Shares used in diluted earnings per share computations (in shares) | 61,331 | 62,201 |
Earnings Per Share (Details 2)
Earnings Per Share (Details 2) - shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Weighted-average anti-dilutive shares have been excluded from the EPS calculations (in shares) | 4,400,000 | 3,200,000 |
Unvested Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Weighted-average anti-dilutive shares have been excluded from the EPS calculations (in shares) | 900,000 | 0 |
Comprehensive Income (Details)
Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||
Net income (loss) | $ (5,603) | $ 1,615 |
Other comprehensive income (loss): | ||
Adjustment to pension liability | 870 | 1,345 |
Tax expense | (348) | (538) |
Adjustment to pension liability, net of tax | 522 | 807 |
Foreign currency translation adjustment | (470) | (1,487) |
Total other comprehensive loss, net of tax | 52 | (680) |
Comprehensive income (loss) | (5,551) | 935 |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Balance | 140,316 | 326,676 |
Other comprehensive income (loss), net of tax, before reclassifications | (470) | (1,487) |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | 522 | 807 |
Total other comprehensive income (loss), net of tax | 52 | (680) |
Balance | 129,409 | 322,415 |
Defined Benefit Pension Items | ||
Other comprehensive income (loss): | ||
Total other comprehensive loss, net of tax | 522 | 807 |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Balance | (43,915) | (49,560) |
Other comprehensive income (loss), net of tax, before reclassifications | 0 | 0 |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | 522 | 807 |
Total other comprehensive income (loss), net of tax | 522 | 807 |
Balance | (43,393) | (48,753) |
Foreign Currency Items | ||
Other comprehensive income (loss): | ||
Total other comprehensive loss, net of tax | (470) | (1,487) |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Balance | 355 | 2,331 |
Other comprehensive income (loss), net of tax, before reclassifications | (470) | (1,487) |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | 0 | 0 |
Total other comprehensive income (loss), net of tax | (470) | (1,487) |
Balance | (115) | 844 |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Balance | (43,560) | (47,229) |
Balance | $ (43,508) | $ (47,909) |
Litigation Contingencies (Detai
Litigation Contingencies (Details) | Mar. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation liability | $ 0 |
Business Segments (Details)
Business Segments (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016USD ($)segments | Mar. 31, 2015USD ($) | |
Segment Reporting [Abstract] | ||
Number of operating segments | segments | 2 | |
Number of reportable segments | segments | 2 | |
Business segments, information about operations | ||
Operating revenues | $ 110,723 | $ 121,173 |
Operating income (loss) | (6,369) | 3,015 |
Other, net | (172) | (407) |
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest | (7,578) | 2,813 |
Operating Segments | Customer Interaction | ||
Business segments, information about operations | ||
Operating revenues | 99,563 | 109,315 |
Operating income (loss) | (7,909) | 1,527 |
Operating Segments | Trillium Software | ||
Business segments, information about operations | ||
Operating revenues | 11,160 | 11,858 |
Operating income (loss) | 2,242 | 3,013 |
Corporate, Non-Segment | ||
Business segments, information about operations | ||
Operating income (loss) | (702) | (1,525) |
Segment Reconciling Items | ||
Business segments, information about operations | ||
Interest expense, net | 1,381 | 609 |
Other, net | (172) | (407) |
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest | $ (7,578) | $ 2,813 |
Acquisition and Disposition (De
Acquisition and Disposition (Details) - USD ($) | Mar. 04, 2016 | Mar. 16, 2015 | Mar. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2014 | Dec. 31, 2015 |
Recognized amounts of tangible assets and liabilities: | ||||||
Goodwill (including deferred tax adjustment of $2,298) | $ 222,452,000 | $ 222,452,000 | $ 218,972,000 | |||
Aleutian Consulting Inc | ||||||
Total consideration | ||||||
Cash consideration per purchase agreement | $ 3,500,000 | |||||
Recognized amounts of tangible assets and liabilities: | ||||||
Goodwill (including deferred tax adjustment of $2,298) | $ 3,500,000 | |||||
3Q Digital Inc | ||||||
Acquisition and Disposition | ||||||
Estimate of potential undiscounted future contingent consideration payments, low end of range | $ 0 | |||||
Estimate of potential undiscounted future contingent consideration payments, high end of range | 35,000,000 | |||||
Total consideration | ||||||
Cash consideration per purchase agreement | 30,245,000 | |||||
Estimated fair value of contingent consideration | 17,940,000 | |||||
Business Combination, Consideration Transferred | 48,185,000 | |||||
Recognized amounts of tangible assets and liabilities: | ||||||
Current assets | 4,135,000 | |||||
Property and equipment | 164,000 | |||||
Other assets | 389,000 | |||||
Current liabilities | (822,000) | |||||
Total tangible assets and liabilities: | 3,866,000 | |||||
Identifiable intangible assets | 4,773,000 | |||||
Goodwill (including deferred tax adjustment of $2,298) | 41,845,000 | |||||
Total | 50,484,000 | |||||
Deferred tax adjustment | 2,298,000 | |||||
Increase (decrease) in contingent consideration | (200,000) | |||||
3Q Digital Inc | Customer relationships | ||||||
Recognized amounts of tangible assets and liabilities: | ||||||
Identifiable intangible assets | $ 4,300,000 | |||||
Amortization period | 7 years | |||||
3Q Digital Inc | Tradenames and trademarks | ||||||
Recognized amounts of tangible assets and liabilities: | ||||||
Identifiable intangible assets | $ 300,000 | |||||
Amortization period | 2 years | |||||
3Q Digital Inc | Non-compete agreements | ||||||
Recognized amounts of tangible assets and liabilities: | ||||||
Identifiable intangible assets | $ 200,000 | |||||
Amortization period | 3 years | |||||
3Q Digital Inc | Level 3 | Contingent Consideration | ||||||
Reconciliation of accrued earnout consideration | ||||||
Contingent consideration at acquisition date | 17,940,000 | |||||
Accretion of interest | 2,665,000 | |||||
Adjustment to fair value | (247,000) | |||||
March 31, 2016 | $ 17,940,000 | $ 20,358,000 | $ 20,358,000 | |||
B2B research business | Maximum | ||||||
Sale of business | ||||||
Percent of total Company revenue (less than) | 5.00% |