Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 30, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Wayside Technology Group, Inc. | |
Entity Central Index Key | 945,983 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 4,806,311 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 18,878 | $ 23,124 |
Accounts receivable, net of allowances of $1,196 and $1,819, respectively | 56,006 | 60,782 |
Inventory, net | 2,360 | 1,491 |
Prepaid expenses and other current assets | 1,247 | 933 |
Deferred income taxes | 203 | 245 |
Total current assets | 78,694 | 86,575 |
Equipment and leasehold improvements, net | 396 | 412 |
Accounts receivable-long-term | 5,531 | 7,660 |
Other assets | 104 | 152 |
Deferred income taxes | 182 | 182 |
Total assets | 84,907 | 94,981 |
Current liabilities: | ||
Accounts payable and accrued expenses | 46,309 | 55,414 |
Total current liabilities | $ 46,309 | $ 55,414 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common Stock, $.01 par value; 10,000,000 shares authorized, 5,284,500 shares issued; 4,806,311 and 4,890,756 shares outstanding, respectively | $ 53 | $ 53 |
Additional paid-in capital | 31,744 | 31,013 |
Treasury stock, at cost, 478,189 and 393,744 shares, respectively | (8,431) | (6,166) |
Retained earnings | 16,252 | 15,225 |
Accumulated other comprehensive loss | (1,020) | (558) |
Total stockholders' equity | 38,598 | 39,567 |
Total liabilities and stockholders' equity | $ 84,907 | $ 94,981 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowances (in dollars) | $ 1,196 | $ 1,819 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 10,000,000 | 10,000,000 |
Common Stock, shares issued | 5,284,500 | 5,284,500 |
Common Stock, shares outstanding | 4,806,311 | 4,890,756 |
Treasury stock, shares | 478,189 | 393,744 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Consolidated Statements of Earnings | ||||
Net sales | $ 91,970 | $ 84,399 | $ 184,662 | $ 156,129 |
Cost of sales | 85,545 | 78,260 | 171,880 | 144,452 |
Gross profit | 6,425 | 6,139 | 12,782 | 11,677 |
Selling, general and administrative expenses | 4,449 | 3,957 | 8,916 | 8,002 |
Income from operations | 1,976 | 2,182 | 3,866 | 3,675 |
Other income: | ||||
Interest, net | 99 | 132 | 197 | 255 |
Foreign currency transaction (loss) gain | (4) | 8 | (5) | (4) |
Income before provision for income taxes | 2,071 | 2,322 | 4,058 | 3,926 |
Provision for income taxes | 710 | 839 | 1,394 | 1,384 |
Net income | $ 1,361 | $ 1,483 | $ 2,664 | $ 2,542 |
Income per common share-Basic (in dollars per share) | $ 0.29 | $ 0.32 | $ 0.57 | $ 0.55 |
Income per common share-Diluted (in dollars per share) | $ 0.29 | $ 0.31 | $ 0.57 | $ 0.54 |
Weighted average common shares outstanding-Basic (in shares) | 4,640 | 4,664 | 4,665 | 4,601 |
Weighted average common shares outstanding-Diluted (in shares) | 4,663 | 4,719 | 4,689 | 4,665 |
Dividends paid per common share (in dollars per share) | $ 0.17 | $ 0.17 | $ 0.34 | $ 0.34 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Consolidated Statements of Comprehensive Inc | ||||
Net income | $ 1,361 | $ 1,483 | $ 2,664 | $ 2,542 |
Other comprehensive loss, net of tax: | ||||
Foreign currency translation adjustment | 146 | 218 | (462) | (64) |
Other comprehensive (loss) Income | 146 | 218 | (462) | (64) |
Comprehensive income | $ 1,507 | $ 1,701 | $ 2,202 | $ 2,478 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Stockholders' Equity - 6 months ended Jun. 30, 2015 - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Treasury | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total |
Balance at Dec. 31, 2014 | $ 53 | $ 31,013 | $ (6,166) | $ 15,225 | $ (558) | $ 39,567 |
Balance (in shares) at Dec. 31, 2014 | 5,284,500 | 5,284,500 | ||||
Balance (in shares) at Dec. 31, 2014 | 393,744 | 393,744 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 2,664 | $ 2,664 | ||||
Translation adjustment | (462) | (462) | ||||
Dividends paid | (1,637) | (1,637) | ||||
Share-based compensation expense | 534 | 534 | ||||
Restricted stock grants (net of forfeitures) | (236) | $ 236 | ||||
Restricted stock grants (net of forfeitures) (in shares) | (40,250) | |||||
Stock options exercised | 298 | $ 276 | 574 | |||
Stock options exercised (in shares) | (44,640) | |||||
Tax benefit from share-based compensation | 135 | 135 | ||||
Treasury stock repurchased | $ (2,777) | (2,777) | ||||
Treasury stock repurchased (in shares) | 169,335 | |||||
Balance at Jun. 30, 2015 | $ 53 | $ 31,744 | $ (8,431) | $ 16,252 | $ (1,020) | $ 38,598 |
Balance (in shares) at Jun. 30, 2015 | 5,284,500 | 5,284,500 | ||||
Balance (in shares) at Jun. 30, 2015 | 478,189 | 478,189 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities | ||
Net income | $ 2,664 | $ 2,542 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization expense | 122 | 114 |
Deferred income tax expense (benefit) | 42 | (18) |
Provision for doubtful accounts receivable | 6 | |
Share-based compensation expense | 534 | 575 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 6,515 | 2,834 |
Inventory | (870) | 94 |
Prepaid expenses and other current assets | (321) | 1,142 |
Accounts payable and accrued expenses | (8,930) | (12,493) |
Other assets | 46 | (5) |
Net cash used in operating activities | (192) | (5,215) |
Cash flows used in investing activities | ||
Purchase of equipment and leasehold improvements | (105) | (116) |
Net cash used in investing activities | (105) | (116) |
Cash flows (used in) provided by financing activities | ||
Dividends paid | (1,637) | (1,592) |
Purchase of treasury stock | (2,776) | (315) |
Tax benefit from share-based compensation | 135 | 664 |
Proceeds from stock option exercises | 574 | 1,791 |
Net cash (used in) provided by financing activities | (3,704) | 548 |
Effect of foreign exchange rate on cash | (245) | (110) |
Net decrease in cash and cash equivalents | (4,246) | (4,893) |
Cash and cash equivalents at beginning of period | 23,124 | |
Cash and cash equivalents at end of period | 18,878 | 14,716 |
Supplementary disclosure of cash flow information: | ||
Income taxes paid | $ 1,803 | $ 1,414 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Basis of Presentation | |
Basis of Presentation | 1. The accompanying unaudited condensed consolidated financial statements of Wayside Technology Group, Inc. and its subsidiaries (collectively, the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. GAAP for complete audited financial statements. The preparation of these condensed consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to product returns, bad debts, inventories, investments, intangible assets, income taxes, stock-based compensation, and contingencies and litigation. The Company bases its estimates on its historical experience and on various other 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. In the opinion of the Company’s management, all adjustments that are of a normal recurring nature, considered necessary for fair presentation, have been included in the accompanying financial statements. The Company’s actual results may differ from these estimates under different assumptions or conditions. The unaudited condensed consolidated statements of earnings for the interim periods are not necessarily indicative of results for the full year. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K filed with the Securities Exchange Commission for the year ended December 31, 2014. |
New Accounting Pronouncements
New Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2015 | |
New Accounting Pronouncements | |
New Accounting Pronouncements | 2. In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance for revenue recognition for contracts, superseding the previous revenue recognition requirements, along with most existing industry-specific guidance. The guidance requires an entity to review contracts in five steps: 1) identify the contract, 2) identify performance obligations, 3) determine the transaction price, 4) allocate the transaction price, and 5) recognize revenue. The new standard will result in enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue arising from contracts with customers. The FASB approved a one-year deferral in July 2015, making the standard effective for reporting periods beginning after December 15, 2017, with early adoption permitted only for reporting periods beginning after December 15, 2016. We are currently evaluating the impact of this new accounting pronouncement, if any, the pronouncement will have on our financial statements. |
Foreign Currency Translation
Foreign Currency Translation | 6 Months Ended |
Jun. 30, 2015 | |
Foreign Currency Translation | |
Foreign Currency Translation | 3. Assets and liabilities of the Company’s foreign subsidiaries have been translated at current exchange rates, and related sales and expenses have been translated at average rates of exchange in effect during the period. The sales from our Canadian operations in the first six months of 2015 were $11.0 million as compared to $11.5 million for the first six months of 2014. The sales from our Canadian operations for the second quarter of 2015 were $5.4 million as compared to $5.9 million for the second quarter of 2014. |
Comprehensive Income
Comprehensive Income | 6 Months Ended |
Jun. 30, 2015 | |
Comprehensive Income | |
Comprehensive Income | 4. Cumulative translation adjustments have been classified within accumulated other comprehensive income, which is a separate component of stockholders’ equity in accordance with FASB Accounting Standards Codification (“ASC”) Topic 220, “Comprehensive Income.” |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2015 | |
Revenue Recognition | |
Revenue Recognition | 5. Revenue on product (software and hardware) and maintenance agreement sales are recognized once four criteria are met: (1) persuasive evidence of an arrangement exists, (2) the price is fixed and determinable, (3) delivery (software and hardware) or fulfillment (maintenance) has occurred, and (4) there is reasonable assurance of collection of the sales proceeds. Revenues from the sales of hardware products, software products and licenses and maintenance agreements are recognized on a gross basis with the selling price to the customer recorded as sales and the acquisition cost of the product recorded as cost of sales. Product delivery to customers occur in a variety of ways, including (i) as physical product shipped from the Company’s warehouse, (ii) via drop-shipment by the vendor, or (iii) via electronic delivery for software licenses. The Company leverages drop-ship arrangements with many of its vendors and suppliers to deliver products to customers without having to physically hold the inventory at its warehouse, thereby increasing efficiency and reducing costs. The Company recognizes revenue for drop-ship arrangements on a gross basis. Furthermore, in such drop-ship arrangements, the Company negotiates price with the customer, pays the supplier directly for the product shipped and bears credit risk of collecting payment from its customers. The Company serves as the principal with the customer and, therefore, recognizes the sale and cost of sale of the product upon receiving notification from the supplier that the product has shipped. Maintenance agreements allow customers to obtain technical support directly from the software publisher and to upgrade, at no additional cost, to the latest technology if new applications are introduced by the software publisher during the period that the maintenance agreement is in effect. Sales are recorded net of discounts, rebates, and returns. Vendor rebates and price protection are recorded when earned as a reduction to cost of sales or merchandise inventory, as applicable. Cooperative reimbursements from vendors, which are earned and available, are recorded in the period the related advertising expenditure is incurred. Cooperative reimbursements are recorded as a reduction of cost of sales in accordance with FASB ASC Topic 605-50 “Accounting by a Customer (including reseller) for Certain Consideration Received from a Vendor.” Provisions for returns are estimated based on historical sales returns and credit memo analysis which are adjusted to actual on a periodic basis. Accounts receivable-long-term result from product sales with extended payment terms that are discounted to their present values at the prevailing market rates. In subsequent periods, the accounts receivable are increased to the amounts due and payable by the customers through the accretion of interest income on the unpaid accounts receivable due in future years. The amounts due under these long-term accounts receivable due within one year are reclassified to the current portion of accounts receivable. |
Marketable securities
Marketable securities | 6 Months Ended |
Jun. 30, 2015 | |
Marketable securities | |
Marketable securities | 6. The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximated fair value at June 30, 2015 and December 31, 2014 because of the relative short maturity of these instruments. The Company’s accounts receivable long-term is discounted to their present value at prevailing market rates so the balances approximate fair value. |
Balance Sheet Detail
Balance Sheet Detail | 6 Months Ended |
Jun. 30, 2015 | |
Balance Sheet Detail | |
Balance Sheet Detail | 7. Balance Sheet Detail: Equipment and leasehold improvements consist of the following as of June 30, 2015 and December 31, 2014: June 30, 2015 December 31, 2014 Equipment $ $ Leasehold improvements Less accumulated depreciation and amortization ) ) $ $ Accounts payable and accrued expenses consist of the following as of June 30, 2015 and December 31, 2014: June 30, 2015 December 31, 2014 Trade accounts payable $ $ Accrued expenses $ $ Accumulated other comprehensive loss consists of the following as of June 30, 2015 and December 31, 2014: June 30, 2015 December 31, 2014 Foreign currency translation adjustment $ ) $ ) $ ) $ ) |
Credit Facility
Credit Facility | 6 Months Ended |
Jun. 30, 2015 | |
Credit Facility. | |
Credit Facility | 8. On January 4, 2013, the Company entered into a $10,000,000 revolving credit facility (the “Credit Facility”) with Citibank, N.A. (“Citibank”) pursuant to a Business Loan Agreement (the “Loan Agreement”), Promissory Note (the “Note”), Commercial Security Agreements (the “Security Agreements”) and Commercial Pledge Agreement (the “Pledge Agreement”). The Credit Facility, which will be used for business and working capital purposes, including financing of larger extended payment terms sales transactions. The Credit Facility matures on January 4, 2016, at which time the Company must pay this loan in one payment of any outstanding principal plus all accrued unpaid interest. In addition, the Company will pay regular monthly payments of all accrued unpaid interest. The interest rate for any borrowings under the Credit Facility is subject to change from time to time based on the changes in an independent index which is the LIBOR Rate (the “Index”). If the Index becomes unavailable during the term of this loan, Citibank may designate a substitute index after notifying the Company. Interest on the unpaid principal balance of the Note will be calculated using a rate of 1.500 percentage points over the Index. The Credit Facility is secured by the assets of the Company. Among other affirmative covenants set forth in the Loan Agreement, the Company must maintain (i) a ratio of Total Liabilities to Tangible Net Worth (each as defined in the Loan Agreement) of not greater than 2.50 to 1.00, to be tested quarterly and (ii) a minimum Debt Service Coverage Ratio (as defined in the Loan Agreement) of 2.00 to 1.00. Additionally, the Loan Agreement contains negative covenants related to, among other items, prohibitions against the creation of certain liens, engaging in any business activities substantially different than those currently engaged in by the Company, and paying dividends on the Company’s stock other than (i) dividends payable in its stock and (ii) cash dividends in amounts and frequency consistent with past practice, without first securing the written consent of Citibank. The Company is in compliance with all covenants at June 30, 2015. At June 30, 2015, the Company had no borrowings outstanding under the Credit Facility. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share | |
Earnings Per Share | 9. Basic Earnings Per Share (“EPS”) is calculated by dividing net income attributable to common stockholders by the weighted average number of shares of Common Stock outstanding during the period. Diluted EPS is calculated by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding, adjusted for potentially dilutive securities including unexercised stock option grants and nonvested shares of restricted stock. A reconciliation of the numerators and denominators of the basic and diluted per share computations follows: Six months Ended Three months ended June 30, June 30, 2015 2014 2015 2014 Numerator: Net income $ $ $ $ Denominator: Weighted average shares (Basic) Dilutive effect of outstanding options and non-vested shares of restricted stock Weighted average shares including assumed conversions (Diluted) Basic income per share $ $ $ $ Diluted income per share $ $ $ $ |
Major Customers and Vendor
Major Customers and Vendor | 6 Months Ended |
Jun. 30, 2015 | |
Major Customers and Vendors | |
Major Customers and Vendor | 10. The Company had three major vendors that accounted for 23.3%, 10.2% and 9.3%, respectively, of total purchases during the six months ended June 30, 2015, and 20.9%, 10.4% and 10.2% of total purchases for the three months ended June 30, 2015. The Company had one major vendor that accounted for 11.5% and 13.2% of total purchases during the six months and three months, respectively, that ended June 30, 2014. The Company had two major customers that accounted for 17.9% and 17.8%, respectively, of its total net sales during the six months ended June 30, 2015, and 17.9%, and 17.0% of total net sales for the three months ended June 30, 2015. These same customers accounted for 9.4% and 20.4%, respectively, of total net accounts receivable as of June 30, 2015. The Company had three major customers that accounted for 16.7%, 15.1% and 11.1% of its total net sales during the six months ended June 30, 2014, and 17.5%, 14.5% and 11.5% of total net sales for the three months ended June 30, 2014. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Taxes | |
Income Taxes | 11. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions. The Company has identified its federal consolidated tax return and its state tax return in New Jersey and its Canadian tax return as major tax jurisdictions. As of June 30, 2015 the Company’s 2013 and 2014 Federal tax returns remain open for examination, as the Company recently concluded an Internal Revenue Service examination for the 2011 and 2012 tax years. This examination resulted in no change to the previously filed Federal corporate tax returns. The Company’s New Jersey and Canadian tax returns are open for examination for the years 2011 through 2014. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. The effective tax rate for each of the six and three months ended June 30, 2015 was 34.4% and 34.3% respectively, compared with 35.3% and 36.1%, respectively, for the six and three months ended June 30, 2014. |
Stockholders' Equity and Stock
Stockholders' Equity and Stock Based Compensation | 6 Months Ended |
Jun. 30, 2015 | |
Stockholders' Equity and Stock Based Compensation | |
Stockholders' Equity and Stock Based Compensation | 12. The 2012 Stock-Based Compensation Plan (the “2012 Plan”) authorizes the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses and other equity-based awards. The total number of shares of Common Stock initially available for award under the 2012 Plan was 600,000. As of June 30, 2015, the number of shares of Common stock available for future award grants to employees and directors under the 2012 Plan is 473,598. The 2006 Stock-Based Compensation Plan (the “2006 Plan”) authorizes the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses, and other equity-based awards. The total number of shares of Common Stock initially available for award under the 2006 Plan was 800,000. As of June 30, 2015, there are no shares of Common Stock available for future award grants to employees and directors under the 2006 Plan. During 2010, the Company granted a total of 150,500 shares of Restricted Stock to officers and employees. These shares of Restricted Stock vest over 20 equal quarterly installments. In 2010, a total of 5,875 shares of Restricted Stock were forfeited as a result of employees and officers terminating employment with the Company. During 2011, the Company granted a total of 15,000 shares of Restricted Stock to employees. These shares of Restricted Stock vest over 20 equal quarterly installments. In 2011, a total of 8,375 shares of Restricted Stock were forfeited as a result of employees terminating employment with the Company. During 2012, the Company granted a total of 92,000 shares of Restricted Stock to officers, directors, and employees. These shares of Restricted Stock vest over 20 equal quarterly installments. A total of 3,525 shares of Restricted Stock were forfeited as a result of employees terminating employment with the Company. During 2013, the Company granted a total of 56,500 shares of Restricted Stock to officers and employees. Included in these grants were 40,000 Restricted Shares granted to the Company’s CEO in accordance with the satisfaction of certain performance criteria included in his compensation plan. These 40,000 Restricted Shares vest over 16 equal quarterly installments. The remaining grants of Restricted Stock vest over 20 equal quarterly installments. A total of 775 shares of Restricted Stock were forfeited as a result of employees terminating employment with the Company. During 2014, the Company granted a total of 98,689 shares of Restricted Stock to officers, directors and employees. These shares of Restricted Stock vest between one and twenty equal quarterly installments. A total of 34,487 shares of Restricted Stock were forfeited as a result of officers and employees terminating employment with the Company. During 2015, the Company granted a total of 44,000 shares of Restricted Stock to officers. These shares of Restricted Stock vest over sixteen equal quarterly installments. A total of 3,750 shares of Restricted Stock were forfeited as a result of officers and employees terminating employment with the Company. Changes during 2015 in options outstanding under the Company’s combined plans (i.e., the 2012 Plan, the 2006 Plan, the 1995 Non-Employee Director Plan and the 1995 Stock Option Plan) were as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value ($M)(1) Outstanding at January 1, 2015 $ Granted in 2015 — — Canceled in 2015 ) Exercised in 2015 ) Outstanding at June 30, 2015 — — — — Exercisable at June 30, 2015 — — — — (1) The intrinsic value of an option is calculated as the difference between the market value on the last trading day of the quarter (June 30, 2015) and the exercise price of the outstanding options. The market value as of June 30, 2015 was $19.82 per share represented by the closing price as reported by The NASDAQ Global Market on that day. A summary of nonvested shares of Restricted Stock awards outstanding under the Company’s the 2012 Plan and 2006 Plan as of June 30, 2015, and changes during the six months then ended is as follows: Shares Weighted Average Grant Date Fair Value Nonvested shares at January 1, 2015 $ Granted in 2015 Vested in 2015 ) Forfeited in 2015 ) Nonvested shares at June 30, 2015 $ As of June 30, 2015, there is approximately $2.3 million of total unrecognized compensation costs related to nonvested share-based compensation arrangements. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 2.8 years. For the six months ended June 30, 2015 and 2014, the Company recognized share-based compensation cost of $534,000 and $575,000 respectively, which is included in the Company’s general and administrative expense. |
Industry, Segment and Geographi
Industry, Segment and Geographic Information | 6 Months Ended |
Jun. 30, 2015 | |
Industry, Segment and Geographic Information | |
Industry, Segment and Geographic Information | 13. FASB ASC Topic 280, “Segment Reporting,” requires that public companies report profits and losses and certain other information on their “reportable operating segments” in their annual and interim financial statements. The internal organization used by the public company’s Chief Operating Decision Maker (CODM) to assess performance and allocate resources determines the basis for reportable operating segments. The Company’s CODM is the Chief Executive Officer. The Company is organized into two reportable operating segments. The “Lifeboat Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide. The “TechXtend” segment is a value-added reseller of software, hardware and services for corporations, government organizations and academic institutions in the United States and Canada. As permitted by FASB ASC Topic 280, the Company has utilized the aggregation criteria in combining its operations in Canada with the domestic segments as the Canadian operations provide the same products and services to similar clients and are considered together when the Company’s CODM decides how to allocate resources. Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to an individual segment business unit. The Company only identifies accounts receivable and inventory by segment as shown below as “Selected Assets” by segment; it does not allocate its other assets, including capital expenditures by segment. The following segment reporting information of the Company is provided: Six months ended Three months ended June 30, June 30 2015 2014 2015 2014 Revenue: Lifeboat Distribution $ $ $ $ TechXtend Gross Profit: Lifeboat Distribution $ $ $ $ TechXtend Direct Costs: Lifeboat Distribution $ $ $ TechXtend Segment Income: Lifeboat Distribution $ $ $ $ TechXtend Segment Income General and administrative $ $ $ $ Interest, net Foreign currency translation (loss) ) ) ) Income before taxes $ $ $ $ Selected Assets By Segment: As of June 30, 2015 As of December 31, 2014 Lifeboat Distribution $ $ TechXtend Segment Select Assets Corporate Assets Total Assets $ $ |
New Accounting Pronouncements (
New Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
New Accounting Pronouncements | |
New Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance for revenue recognition for contracts, superseding the previous revenue recognition requirements, along with most existing industry-specific guidance. The guidance requires an entity to review contracts in five steps: 1) identify the contract, 2) identify performance obligations, 3) determine the transaction price, 4) allocate the transaction price, and 5) recognize revenue. The new standard will result in enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue arising from contracts with customers. The FASB approved a one-year deferral in July 2015, making the standard effective for reporting periods beginning after December 15, 2017, with early adoption permitted only for reporting periods beginning after December 15, 2016. We are currently evaluating the impact of this new accounting pronouncement, if any, the pronouncement will have on our financial statements. |
Balance Sheet Detail (Tables)
Balance Sheet Detail (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Balance Sheet Detail | |
Schedule of equipment and leasehold improvements, net | June 30, 2015 December 31, 2014 Equipment $ $ Leasehold improvements Less accumulated depreciation and amortization ) ) $ $ |
Schedule of accounts payable and accrued expenses | June 30, 2015 December 31, 2014 Trade accounts payable $ $ Accrued expenses $ $ |
Schedule of accumulated other comprehensive loss | June 30, 2015 December 31, 2014 Foreign currency translation adjustment $ ) $ ) $ ) $ ) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share | |
Schedule of reconciliation of the numerators and denominators for computations of the basic and diluted per share | Six months Ended Three months ended June 30, June 30, 2015 2014 2015 2014 Numerator: Net income $ $ $ $ Denominator: Weighted average shares (Basic) Dilutive effect of outstanding options and non-vested shares of restricted stock Weighted average shares including assumed conversions (Diluted) Basic income per share $ $ $ $ Diluted income per share $ $ $ $ |
Stockholders' Equity and Stoc24
Stockholders' Equity and Stock Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Stockholders' Equity and Stock Based Compensation | |
Schedule of changes in options outstanding under the combined plans | Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value ($M)(1) Outstanding at January 1, 2015 $ Granted in 2015 — — Canceled in 2015 ) Exercised in 2015 ) Outstanding at June 30, 2015 — — — — Exercisable at June 30, 2015 — — — — (1) The intrinsic value of an option is calculated as the difference between the market value on the last trading day of the quarter (June 30, 2015) and the exercise price of the outstanding options. The market value as of June 30, 2015 was $19.82 per share represented by the closing price as reported by The NASDAQ Global Market on that day. |
Summary of nonvested shares of Restricted Stock awards outstanding and the changes during the period | Shares Weighted Average Grant Date Fair Value Nonvested shares at January 1, 2015 $ Granted in 2015 Vested in 2015 ) Forfeited in 2015 ) Nonvested shares at June 30, 2015 $ |
Industry, Segment and Geograp25
Industry, Segment and Geographic Information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Industry, Segment and Geographic Information | |
Schedule of segment reporting information | Six months ended Three months ended June 30, June 30 2015 2014 2015 2014 Revenue: Lifeboat Distribution $ $ $ $ TechXtend Gross Profit: Lifeboat Distribution $ $ $ $ TechXtend Direct Costs: Lifeboat Distribution $ $ $ TechXtend Segment Income: Lifeboat Distribution $ $ $ $ TechXtend Segment Income General and administrative $ $ $ $ Interest, net Foreign currency translation (loss) ) ) ) Income before taxes $ $ $ $ Selected Assets By Segment: As of June 30, 2015 As of December 31, 2014 Lifeboat Distribution $ $ TechXtend Segment Select Assets Corporate Assets Total Assets $ $ |
Foreign Currency Translation (D
Foreign Currency Translation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenue from external customers | ||||
Net sales | $ 91,970 | $ 84,399 | $ 184,662 | $ 156,129 |
Canadian operations | ||||
Revenue from external customers | ||||
Net sales | $ 5,400 | $ 5,900 | $ 11,000 | $ 11,500 |
Revenue Recognition (Details)
Revenue Recognition (Details) - 6 months ended Jun. 30, 2015 $ in Thousands | USD ($)item |
Revenue Recognition | |
Number of criteria | item | 4 |
Additional cost to obtain technical support directly from the software publisher and upgrade to latest technology | $ 0 |
Balance Sheet Detail_ (Details)
Balance Sheet Detail: (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Equipment and leasehold improvements | ||
Gross | $ 3,409 | $ 3,309 |
Less accumulated depreciation and amortization | (3,013) | (2,897) |
Net | 396 | 412 |
Accounts payable and accrued expenses | ||
Trade accounts payable | 43,333 | 52,328 |
Accrued expenses | 2,976 | 3,086 |
Accounts payable and accrued expenses | 46,309 | 55,414 |
Accumulated other comprehensive income | ||
Foreign currency translation adjustment | (1,020) | (558) |
Accumulated other comprehensive income | (1,020) | (558) |
Equipment | ||
Equipment and leasehold improvements | ||
Gross | 2,847 | 2,744 |
Leasehold improvements | ||
Equipment and leasehold improvements | ||
Gross | $ 562 | $ 565 |
Credit Facility (Details)
Credit Facility (Details) - Credit Facility | Jan. 04, 2013USD ($)item | Jun. 30, 2015USD ($) |
Credit Facility | ||
Maximum borrowing capacity | $ 10,000,000 | |
Number of payments | item | 1 | |
Total liabilities to tangible net worth ratio, maximum | 2.50 | |
Interest coverage ratio, minimum | 2 | |
Borrowings outstanding | $ 0 | |
Index | ||
Credit Facility | ||
Interest rate margin (as a percent) | 1.50% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Numerator: | ||||
Net income | $ 1,361 | $ 1,483 | $ 2,664 | $ 2,542 |
Denominator: | ||||
Weighted average shares (Basic) | 4,640 | 4,664 | 4,665 | 4,601 |
Dilutive effect of outstanding options and non-vested shares of restricted stock (in shares) | 23 | 55 | 24 | 64 |
Weighted average shares including assumed conversions (Diluted) | 4,663 | 4,719 | 4,689 | 4,665 |
Basic income per share (in dollars per share) | $ 0.29 | $ 0.32 | $ 0.57 | $ 0.55 |
Diluted income per share (in dollars per share) | $ 0.29 | $ 0.31 | $ 0.57 | $ 0.54 |
Major Customers and Vendors (De
Major Customers and Vendors (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Mar. 31, 2015customer | Jun. 30, 2014entity | Jun. 30, 2015entity | Jun. 30, 2014entitycustomer | |
Purchases | Vendor concentration risk | |||||
Significant Customers and Vendors | |||||
Number of vendors | 1 | 3 | 1 | ||
Purchases | Vendor concentration risk | One major vendor | |||||
Significant Customers and Vendors | |||||
Percentage of concentration risk | 20.90% | 13.20% | 23.30% | 11.50% | |
Purchases | Vendor concentration risk | Two major vendor | |||||
Significant Customers and Vendors | |||||
Percentage of concentration risk | 10.40% | 10.20% | |||
Purchases | Vendor concentration risk | Three major vendor | |||||
Significant Customers and Vendors | |||||
Percentage of concentration risk | 10.20% | 9.30% | |||
Net sales | Customer concentration risk | |||||
Significant Customers and Vendors | |||||
Number of customers | customer | 2 | 3 | |||
Net sales | Customer one | Customer concentration risk | |||||
Significant Customers and Vendors | |||||
Percentage of concentration risk | 17.90% | 17.50% | 17.90% | 16.70% | |
Net sales | Customer two | Customer concentration risk | |||||
Significant Customers and Vendors | |||||
Percentage of concentration risk | 17.00% | 14.50% | 17.80% | 15.10% | |
Net sales | Customer three | Customer concentration risk | |||||
Significant Customers and Vendors | |||||
Percentage of concentration risk | 11.50% | 11.10% | |||
Net accounts receivable | Customer one | Customer concentration risk | |||||
Significant Customers and Vendors | |||||
Percentage of concentration risk | 9.40% | ||||
Net accounts receivable | Customer two | Customer concentration risk | |||||
Significant Customers and Vendors | |||||
Percentage of concentration risk | 20.40% |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Taxes | ||||
Effective tax rate (as a percent) | 34.30% | 36.10% | 34.40% | 35.30% |
Stockholders' Equity and Stoc33
Stockholders' Equity and Stock Based Compensation (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2015installmentshares | Jun. 30, 2015shares | Dec. 31, 2014installmentshares | Dec. 31, 2013installmentshares | Dec. 31, 2012installmentshares | Dec. 31, 2011installmentshares | Dec. 31, 2010installmentshares | |
2006 Plan | |||||||
Stock-based compensation | |||||||
Number of shares of common stock initially available for award | 800,000 | 800,000 | |||||
Options reserved for future issuance (in shares) | 0 | 0 | |||||
2006 Plan | Restricted stock | |||||||
Stock-based compensation | |||||||
Granted (in shares) | 92,000 | 15,000 | 150,500 | ||||
Number of equal quarterly installments for vesting of awards | installment | 20 | 20 | 20 | ||||
Forfeited (in shares) | 3,525 | 8,375 | 5,875 | ||||
2012 Plan | |||||||
Stock-based compensation | |||||||
Number of shares of common stock initially available for award | 600,000 | 600,000 | |||||
Options reserved for future issuance (in shares) | 473,598 | 473,598 | |||||
2006 Plan and 2012 Plan | Restricted stock | |||||||
Stock-based compensation | |||||||
Granted (in shares) | 44,000 | 98,689 | 56,500 | ||||
Number of equal quarterly installments for vesting of awards | installment | 16 | 20 | |||||
Forfeited (in shares) | 3,750 | 34,487 | 775 | ||||
2006 Plan and 2012 Plan | Restricted stock | Minimum | |||||||
Stock-based compensation | |||||||
Number of equal quarterly installments for vesting of awards | installment | 1 | ||||||
2006 Plan and 2012 Plan | Restricted stock | Maximum | |||||||
Stock-based compensation | |||||||
Number of equal quarterly installments for vesting of awards | installment | 20 | ||||||
2006 Plan and 2012 Plan | Restricted stock | CEO | |||||||
Stock-based compensation | |||||||
Granted (in shares) | 40,000 | ||||||
Number of equal quarterly installments for vesting of awards | installment | 16 |
Stockholders' Equity and Stoc34
Stockholders' Equity and Stock Based Compensation (Details 2) - Jun. 30, 2015 - Options - $ / shares | Total |
Number of Options | |
Outstanding at the beginning of the period (in shares) | 50,640 |
Canceled (in shares) | (6,000) |
Exercised (in shares) | (44,640) |
Weighted Average Exercise Price | |
Outstanding at the beginning of the period (in dollars per share) | $ 12.85 |
Canceled (in dollars per share) | 12.85 |
Exercised (in dollars per share) | 12.85 |
Aggregate Intrinsic Value | |
Market value (in dollars per share) | $ 19.82 |
Stockholders' Equity and Stoc35
Stockholders' Equity and Stock Based Compensation (Details 3) - 2006 Plan and 2012 Plan - Restricted stock - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Shares | ||||
Nonvested shares at the beginning of the period | 162,609 | |||
Granted (in shares) | 44,000 | 98,689 | 56,500 | |
Vested (in shares) | (39,774) | |||
Forfeited (in shares) | (3,750) | (34,487) | (775) | |
Nonvested shares at the end of the period | 163,085 | 162,609 | ||
Weighted Average Grant Date Fair Value | ||||
Nonvested shares at the beginning of period (in dollars per share) | $ 14.36 | |||
Granted (in dollars per share) | 14.99 | |||
Vested (in dollars per share) | 13.67 | |||
Forfeited (in dollars per share) | 12.61 | |||
Nonvested shares at the end of period (in dollars per share) | $ 14.37 | $ 14.36 | ||
Unrecognized compensation cost (in dollars) | $ 2,300,000 | |||
Weighted average period for recognition of unrecognized compensation cost | 2 years 9 months 18 days | |||
Share-based compensation cost (in dollars) | $ 534,000 | $ 575,000 |
Industry, Segment and Geograp36
Industry, Segment and Geographic Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)item | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Industry, Segment and Geographic Information | |||||
Number of reportable operating segments | item | 2 | ||||
Segment reporting information | |||||
Revenue | $ 91,970 | $ 84,399 | $ 184,662 | $ 156,129 | |
Gross Profit | 6,425 | 6,139 | 12,782 | 11,677 | |
Direct Costs | 2,542 | 2,049 | 4,913 | 4,074 | |
Segment Income | 3,883 | 4,090 | 7,869 | 7,603 | |
General and administrative | 1,907 | 1,908 | 4,003 | 3,928 | |
Interest, net | 99 | 132 | 197 | 255 | |
Foreign currency translation (loss) | (4) | 8 | (5) | (4) | |
Income before provision for income taxes | 2,071 | 2,322 | 4,058 | 3,926 | |
Total Assets | 84,907 | 84,907 | $ 94,981 | ||
Segment Total | |||||
Segment reporting information | |||||
Total Assets | 63,897 | 63,897 | 69,933 | ||
Corporate Assets | |||||
Segment reporting information | |||||
Total Assets | 21,010 | 21,010 | 25,048 | ||
Lifeboat Distribution | |||||
Segment reporting information | |||||
Revenue | 81,260 | 69,979 | 164,206 | 129,237 | |
Gross Profit | 5,110 | 4,612 | 10,344 | 8,728 | |
Direct Costs | 1,931 | 1,248 | 3,708 | 2,479 | |
Segment Income | 3,179 | 3,364 | 6,636 | 6,249 | |
Total Assets | 39,100 | 39,100 | 39,780 | ||
TechXtend | |||||
Segment reporting information | |||||
Revenue | 10,710 | 14,420 | 20,456 | 26,892 | |
Gross Profit | 1,315 | 1,527 | 2,438 | 2,949 | |
Direct Costs | 611 | 801 | 1,205 | 1,595 | |
Segment Income | 704 | $ 726 | 1,233 | $ 1,354 | |
Total Assets | $ 24,797 | $ 24,797 | $ 30,153 |