form10q.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2011
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
Commission file number: 001-15169
PERFICIENT, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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No. 74-2853258
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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520 Maryville Centre Drive,
Suite 400
Saint Louis, Missouri 63141
(Address of principal executive offices)
(314) 529-3600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements during the past 90 days. þ Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o (Do not check if a smaller reporting company)
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Smaller reporting company o
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
As of August 1, 2011, there were 30,745,108 shares of Common Stock outstanding.
Part I.
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Financial Information
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1 |
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Item 1.
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Financial Statements
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1 |
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Condensed Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010
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1 |
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Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2011 and 2010
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2 |
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Condensed Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2011
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3 |
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Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010
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4 |
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Notes to Unaudited Condensed Consolidated Financial Statements
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5 |
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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13 |
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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19 |
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Item 4.
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Controls and Procedures
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19 |
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Part II.
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Other Information
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20 |
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Item 1A.
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Risk Factors
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20 |
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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20 |
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Item 6.
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Exhibits
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20 |
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Signatures
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21 |
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
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June 30,
2011
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December 31,
2010
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ASSETS
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(In thousands, except share information)
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Current assets:
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Cash and cash equivalents
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$
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12,494
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$
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12,707
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Short-term investments
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--
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11,301
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Total cash, cash equivalents, and short-term investments
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12,494
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24,008
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Accounts receivable, net
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58,308
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48,496
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Prepaid expenses
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1,388
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1,270
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Other current assets
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4,891
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2,584
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Total current assets
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77,081
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76,358
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Long-term investments
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--
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2,254
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Property and equipment, net
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3,448
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2,355
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Goodwill
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120,903
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115,227
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Intangible assets, net
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10,659
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8,829
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Other non-current assets
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3,062
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2,655
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Total assets
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$
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215,153
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$
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207,678
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable
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$
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3,289
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$
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6,072
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Other current liabilities
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22,122
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22,654
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Total current liabilities
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25,411
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28,726
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Other non-current liabilities
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1,948
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1,788
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Total liabilities
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$
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27,359
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$
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30,514
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Stockholders’ equity:
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Common stock (par value $.001 per share; 50,000,000 shares authorized and
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34,635,412 shares issued and 28,037,845 shares outstanding as of June 30, 2011;
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33,373,410 shares issued and 27,275,936 shares outstanding as of December 31, 2010)
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$
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35
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$
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33
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Additional paid-in capital
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236,819
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224,966
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Accumulated other comprehensive loss
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(197
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)
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(225
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)
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Treasury stock, at cost (6,597,567 shares as of June 30, 2011; 6,097,474 shares as of December 31, 2010)
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(48,018
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)
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(42,205
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)
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Accumulated deficit
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(845
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)
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(5,405
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)
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Total stockholders’ equity
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187,794
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177,164
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Total liabilities and stockholders’ equity
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$
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215,153
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$
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207,678
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See accompanying notes to interim unaudited condensed consolidated financial statements.
Perficient, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2011
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2010
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2011
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2010
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Revenues
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(In thousands, except per share data)
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Services
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$
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59,215
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$
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47,931
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$
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109,425
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$
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90,592
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Software and hardware
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3,374
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5,152
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6,750
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9,225
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Reimbursable expenses
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2,998
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2,377
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5,657
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4,558
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Total revenues
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65,587
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55,460
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121,832
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104,375
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Cost of revenues (exclusive of depreciation and amortization, shown separately below)
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Project personnel costs
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36,734
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30,157
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69,732
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58,527
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Software and hardware costs
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2,985
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4,526
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5,798
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8,207
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Reimbursable expenses
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2,998
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2,377
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5,657
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4,558
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Other project related expenses
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1,648
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1,448
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3,134
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2,712
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Total cost of revenues
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44,365
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38,508
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84,321
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74,004
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Gross margin
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21,222
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16,952
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37,511
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30,371
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Selling, general and administrative
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13,222
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12,445
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|
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24,486
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22,827
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Depreciation
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398
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195
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723
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342
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Amortization
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1,536
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1,072
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2,679
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2,014
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Acquisition costs
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727
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--
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1,230
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406
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Adjustment to fair value of contingent consideration
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458
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(30
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)
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518
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(30
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)
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Income from operations
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4,881
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3,270
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7,875
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4,812
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|
|
|
|
|
|
|
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Net interest income
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31
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41
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68
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70
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Net other expense
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(24
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)
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(8
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)
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(19
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)
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(4
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)
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Income before income taxes
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4,888
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3,303
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7,924
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4,878
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Provision for income taxes
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|
2,121
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|
|
1,252
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|
|
|
3,364
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1,959
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|
|
|
|
|
|
|
|
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|
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Net income
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$
|
2,767
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$
|
2,051
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$
|
4,560
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$
|
2,919
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Basic net income per share
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$
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0.10
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$
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0.08
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$
|
0.16
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$
|
0.11
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Diluted net income per share
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$
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0.10
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$
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0.07
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$
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0.16
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$
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0.10
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Shares used in computing basic net income per share
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|
|
27,852
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27,183
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|
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27,647
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|
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27,101
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|
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|
|
|
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|
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Shares used in computing diluted net income per share
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29,002
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28,736
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|
|
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28,821
|
|
|
|
28,609
|
|
See accompanying notes to interim unaudited condensed consolidated financial statements.
Perficient, Inc.
Condensed Consolidated Statement of Stockholders’ Equity
Six Months Ended June 30, 2011
(Unaudited)
(In thousands)
|
|
|
|
|
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Accumulated
|
|
|
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Common
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Common
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Additional
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Other
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Total
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Stock
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Stock
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Paid-in
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Comprehensive
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Treasury
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Accumulated
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Stockholders’
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Shares
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Amount
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Capital
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Loss
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Stock
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Deficit
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Equity
|
|
Balance at December 31, 2010
|
|
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27,276
|
|
|
$
|
33
|
|
|
$
|
224,966
|
|
|
$
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(225
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)
|
|
$
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(42,205
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)
|
|
$
|
(5,405
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)
|
|
$
|
177,164
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|
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan
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|
|
696
|
|
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|
1
|
|
|
|
3,488
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|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
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|
|
3,489
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|
Net tax benefit from stock option exercises and restricted stock vesting
|
|
|
--
|
|
|
|
--
|
|
|
|
1,274
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
1,274
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|
Stock compensation related to restricted stock vesting and retirement savings plan contributions
|
|
|
277
|
|
|
|
--
|
|
|
|
4,333
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
4,333
|
|
Purchases of treasury stock
|
|
|
(500
|
)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
(5,813
|
)
|
|
|
--
|
|
|
|
(5,813
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)
|
Issuance of stock for acquisitions
|
|
|
289
|
|
|
|
1
|
|
|
|
2,758
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
2,759
|
|
Net unrealized loss on investments
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
(19
|
)
|
|
|
--
|
|
|
|
--
|
|
|
|
(19
|
)
|
Foreign currency translation adjustment
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
47
|
|
|
|
--
|
|
|
|
--
|
|
|
|
47
|
|
Net income
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
4,560
|
|
|
|
4,560
|
|
Total comprehensive income
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
4,588
|
|
Balance at June 30, 2011
|
|
|
28,038
|
|
|
$
|
35
|
|
|
$
|
236,819
|
|
|
$
|
(197
|
)
|
|
$
|
(48,018
|
)
|
|
$
|
(845
|
)
|
|
$
|
187,794
|
|
See accompanying notes to interim unaudited condensed consolidated financial statements.
Perficient, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
Six Months Ended
June 30,
|
|
|
|
2011
|
|
2010
|
|
|
|
(In thousands)
|
|
OPERATING ACTIVITIES
|
|
|
|
Net income
|
|
$
|
4,560
|
|
|
$
|
2,919
|
|
Adjustments to reconcile net income to net cash provided by (used in) operations:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
723
|
|
|
|
342
|
|
Amortization
|
|
|
2,679
|
|
|
|
2,014
|
|
Deferred income taxes
|
|
|
124
|
|
|
|
(270
|
)
|
Non-cash stock compensation and retirement savings plan contributions
|
|
|
4,333
|
|
|
|
5,047
|
|
Tax benefit from stock option exercises and restricted stock vesting
|
|
|
(1,519
|
)
|
|
|
(582
|
)
|
Adjustment to fair value of contingent consideration
|
|
|
518
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(7,971
|
)
|
|
|
(2,867
|
)
|
Other assets
|
|
|
(1,123
|
)
|
|
|
889
|
|
Accounts payable
|
|
|
(2,849
|
)
|
|
|
(668
|
)
|
Other liabilities
|
|
|
(3,600
|
)
|
|
|
2,921
|
|
Net cash provided by (used in) operating activities
|
|
|
(4,125
|
)
|
|
|
9,715
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from sale and maturity of investments
|
|
|
13,555
|
|
|
|
--
|
|
Purchase of investments
|
|
|
--
|
|
|
|
(6,371
|
)
|
Purchase of property and equipment
|
|
|
(1,728
|
)
|
|
|
(494
|
)
|
Capitalization of software developed for internal use
|
|
|
(54
|
)
|
|
|
(81
|
)
|
Purchase of business
|
|
|
(6,760
|
)
|
|
|
(1,500
|
)
|
Net cash provided by (used in) investing activities
|
|
|
5,013
|
|
|
|
(8,446
|
)
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Payment of credit facility financing fees
|
|
|
(298
|
)
|
|
|
--
|
|
Tax benefit on stock option exercises and restricted stock vesting
|
|
|
1,519
|
|
|
|
582
|
|
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan
|
|
|
3,489
|
|
|
|
765
|
|
Purchase of treasury stock
|
|
|
(5,813
|
)
|
|
|
(5,959
|
)
|
Net cash used in financing activities
|
|
|
(1,103
|
)
|
|
|
(4,612
|
)
|
Effect of exchange rate on cash and cash equivalents
|
|
|
2
|
|
|
|
2
|
|
Change in cash and cash equivalents
|
|
|
(213
|
)
|
|
|
(3,341
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
12,707
|
|
|
|
17,975
|
|
Cash and cash equivalents at end of period
|
|
$
|
12,494
|
|
|
$
|
14,634
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures:
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
4,037
|
|
|
$
|
1,406
|
|
|
|
|
|
|
|
|
|
|
Non-cash activity:
|
|
|
|
|
|
|
|
|
Stock issued for purchase of business
|
|
$
|
2,759
|
|
|
$
|
1,103
|
|
Estimated fair value of contingent consideration for purchase of business
|
|
$
|
2,054
|
|
|
$
|
2,618
|
|
See accompanying notes to interim unaudited condensed consolidated financial statements.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
The accompanying unaudited interim condensed consolidated financial statements of Perficient, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States and are presented in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial information. Accordingly, certain footnote disclosures have been condensed or omitted. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the periods presented. These financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. Operating results for the three and six months ended June 30, 2011 may not be indicative of the results for the full fiscal year ending December 31, 2011.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and such differences could be material to the financial statements.
Revenues are primarily derived from professional services provided on a time and materials basis. For time and material contracts, revenues are recognized and billed by multiplying the number of hours expended in the performance of the contract by the established billing rates. For fixed fee projects, revenues are generally recognized using an input method based on the ratio of hours expended to total estimated hours. Amounts invoiced and collected in excess of revenues recognized are classified as deferred revenues. On many projects the Company is also reimbursed for out-of-pocket expenses such as airfare, lodging, and meals. These reimbursements are included as a component of revenues. Revenues from software and hardware sales are generally recorded on a gross basis considering the Company’s role as a principal in the transaction. On rare occasions, the Company enters into a transaction where it is not the principal. In these cases, revenue is recorded on a net basis.
Unbilled revenues represent the project time and expenses that have been incurred, but not yet billed to the client, prior to the end of the fiscal period. For time and materials projects, the client is invoiced for the amount of hours worked multiplied by the billing rates as stated in the contract. For fixed fee arrangements, the client is invoiced according to the agreed-upon schedule detailing the amount and timing of payments in the contract. Clients are typically billed monthly for services provided during that month, but can be billed on a more or less frequent basis as determined by the contract. If the time and expenses are worked/incurred and approved at the end of a fiscal period and the invoice has not yet been sent to the client, the amount is recorded as unbilled revenue once the Company verifies all other revenue recognition criteria have been met.
Revenues are recognized when the following criteria are met: (1) persuasive evidence of the customer arrangement exists, (2) fees are fixed and determinable, (3) delivery and acceptance have occurred, and (4) collectibility is deemed probable. The Company’s policy for revenue recognition in instances where multiple deliverables are sold contemporaneously to the same counterparty is in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 985-605, Software – Revenue Recognition (“ASC Subtopic 985-605”), ASC Subtopic 605-25, Revenue Recognition – Multiple-Element Arrangements, and ASC Section 605-10-S99 (Staff Accounting Bulletin Topic 13, Revenue Recognition). Specifically, if the Company enters into contracts for the sale of services and software or hardware, then the Company evaluates whether each element should be accounted for separately by considering the following criteria: (1) whether the deliverables have value to the client on a stand-alone basis; and (2) whether delivery or performance of the undelivered item or items is considered probable and substantially in the control of the Company (only if the arrangement includes a general right of return related to the delivered item). Further, for sales of software and services, the Company also evaluates whether the services are essential to the functionality of the software and has fair value evidence for each deliverable. If the Company has concluded that the separation criteria are met, then it accounts for each deliverable in the transaction separately, based on the relevant revenue recognition policies. Generally, all deliverables of the Company’s multiple element arrangements meet these criteria and are accounted for separately, with the arrangement consideration allocated among the deliverables using vendor specific objective evidence of the selling price. As a result, the Company generally recognizes software and hardware sales upon delivery to the customer and services consistent with the policies described herein.
The Company may provide multiple services under the terms of an arrangement and is required to assess whether one or more units of accounting are present. Service fees are typically accounted for as one unit of accounting, as fair value evidence for individual tasks or milestones is not available. The Company follows the guidelines discussed above in determining revenues; however, certain judgments and estimates are made and used to determine revenues recognized in any accounting period. If estimates are revised, material differences may result in the amount and timing of revenues recognized for a given period.
Revenues are presented net of taxes assessed by governmental authorities. Sales taxes are generally collected and subsequently remitted on all software and hardware sales and certain services transactions as appropriate.
Goodwill, Other Intangible Assets, and Impairment of Long-Lived Assets
Goodwill represents the excess purchase price over the fair value of net assets acquired, or net liabilities assumed, in a business combination. In accordance with ASC Topic 350, Intangibles – Goodwill and Other (“ASC Topic 350”), the Company performs an annual impairment test of goodwill. The Company evaluates goodwill as of October 1 each year and more frequently if events or changes in circumstances indicate that goodwill might be impaired. As required by ASC Topic 350, the impairment test is accomplished using a two-step approach. The first step screens for impairment and, when impairment is indicated, a second step is employed to measure the impairment.
Other intangible assets include customer relationships, non-compete arrangements, customer backlog, trade name, and internally developed software, which are being amortized over the assets’ estimated useful lives using the straight-line method. Estimated useful lives range from seven months to eight years. Amortization of customer relationships, non-compete arrangements, customer backlog, trade name, and internally developed software is considered an operating expense and is included in “Amortization” in the accompanying Condensed Consolidated Statements of Operations. The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in a lack of recoverability or revised useful life.
Stock-based compensation is accounted for in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC Topic 718”). Under this method, the Company recognizes share-based compensation ratably using the straight-line attribution method over the requisite service period. In addition, pursuant to ASC Topic 718, the Company estimates the amount of expected forfeitures when calculating share-based compensation, instead of accounting for forfeitures as they occur. Refer to Note 3, Stock-Based Compensation, for further discussion.
Fair Value of Financial Instruments
Cash equivalents, accounts receivable, accounts payable, other accrued liabilities, and debt are stated at amounts which approximate fair value due to the near term maturities of these instruments. Investments are stated at amounts which approximate fair value based on quoted market prices or other observable inputs.
3. Stock-Based Compensation
Stock Award Plans
The Company made various stock option and award grants under the 1999 Stock Option/Stock Issuance Plan prior to May 2009. In April 2009, the Company’s stockholders approved the 2009 Long-Term Incentive Plan (the “Incentive Plan”), which had been previously approved by the Company’s Board of Directors. The Incentive Plan allows for the granting of various types of stock awards, not to exceed a total of 1.5 million shares, to eligible individuals. The Compensation Committee of the Board of Directors administers the Incentive Plan and determines the terms of all stock awards made under the Incentive Plan.
Stock-based compensation cost recognized for the three and six months ended June 30, 2011 was approximately $2.3 million and $4.4 million, respectively, which included $0.3 million and $0.6 million, respectively, of expense for retirement savings plan contributions. The associated current and future income tax benefits recognized for the three and six months ended June 30, 2011 were approximately $0.8 million and $1.5 million, respectively. Stock-based compensation cost recognized for the three and six months ended June 30, 2010 was approximately $2.6 million and $5.1 million, respectively, which included $0.2 million and $0.4 million, respectively, of expense for retirement savings plan contributions. The associated current and future income tax benefits recognized for the three and six months ended June 30, 2010 were approximately $0.9 million and $1.7 million, respectively. As of June 30, 2011, there was $16.0 million of total unrecognized compensation cost related to non-vested share-based awards. This cost is expected to be recognized over a weighted-average period of three years.
Stock option activity for the six months ended June 30, 2011 was as follows (in thousands, except exercise price information):
|
|
Shares
|
|
|
Range of Exercise Prices
|
|
|
Weighted-Average Exercise Price
|
|
Options outstanding at January 1, 2011
|
|
|
1,199
|
|
|
$
|
0.03 – 9.19
|
|
|
$
|
4.56
|
|
|
|
|
(690
|
)
|
|
|
0.03 – 9.19
|
|
|
|
4.97
|
|
Options canceled
|
|
|
(36
|
)
|
|
|
3.75 – 7.48
|
|
|
|
5.93
|
|
Options outstanding at June 30, 2011
|
|
|
473
|
|
|
|
0.03 – 9.19
|
|
|
|
3.87
|
|
Options vested at June 30, 2011
|
|
|
444
|
|
|
$
|
0.03 – 9.19
|
|
|
$
|
3.71
|
|
Restricted stock activity for the six months ended June 30, 2011 was as follows (in thousands, except fair value information):
|
|
Shares
|
|
|
Weighted-Average
Grant Date Fair
Value
|
|
Restricted stock awards outstanding at January 1, 2011
|
|
|
2,606
|
|
|
$
|
8.97
|
|
Awards granted
|
|
|
255
|
|
|
|
12.17
|
|
Awards vested
|
|
|
(232
|
)
|
|
|
10.31
|
|
Awards forfeited
|
|
|
(379
|
)
|
|
|
8.80
|
|
Restricted stock awards outstanding at June 30, 2011
|
|
|
2,250
|
|
|
$
|
9.31
|
|
The following table presents the calculation of basic and diluted net income per share (in thousands, except per share information):
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
Net income
|
|
$
|
2,767
|
|
|
$
|
2,051
|
|
|
$
|
4,560
|
|
|
$
|
2,919
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding
|
|
|
27,852
|
|
|
|
27,183
|
|
|
|
27,647
|
|
|
|
27,101
|
|
Shares used in computing basic net income per share
|
|
|
27,852
|
|
|
|
27,183
|
|
|
|
27,647
|
|
|
|
27,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
279
|
|
|
|
736
|
|
|
|
355
|
|
|
|
742
|
|
Warrants
|
|
|
7
|
|
|
|
7
|
|
|
|
7
|
|
|
|
7
|
|
Restricted stock subject to vesting
|
|
|
601
|
|
|
|
810
|
|
|
|
613
|
|
|
|
759
|
|
Shares issuable for acquisition consideration (1)
|
|
|
263
|
|
|
|
--
|
|
|
|
199
|
|
|
|
--
|
|
Shares used in computing diluted net income per share (2)
|
|
|
29,002
|
|
|
|
28,736
|
|
|
|
28,821
|
|
|
|
28,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share
|
|
$
|
0.10
|
|
|
$
|
0.08
|
|
|
$
|
0.16
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share
|
|
$
|
0.10
|
|
|
$
|
0.07
|
|
|
$
|
0.16
|
|
|
$
|
0.10
|
|
(1)
|
Represents the shares held in escrow pursuant to the Agreement and Plan of Merger with speakTECH and pursuant to the Asset Purchase Agreement with Exervio Consulting, Inc. (“Exervio”) as part of the consideration. These shares were not included in the calculation of basic net income per share due to the uncertainty of their ultimate status.
|
(2)
|
For the three months ended June 30, 2011, approximately 215,000 shares of restricted stock were excluded. For the six months ended June 30, 2011, approximately 220,000 shares of restricted stock were excluded. For the three months ended June 30, 2010, approximately 13,000 options for shares and 483,000 shares of restricted stock were excluded. For the six months ended June 30, 2010, approximately 30,000 options for shares and 634,000 shares of restricted stock were excluded. These shares were excluded from shares used in computing diluted net income per share because they would have had an anti-dilutive effect.
|
The Company invests a portion of its excess cash in short-term and long-term investments. The short-term investments typically consist of U.S. treasury bills, U.S. agency bonds, and corporate bonds with original maturities greater than three months and remaining maturities of less than one year. The long-term investments typically consist of corporate bonds with original maturities of greater than one year.
During the second quarter 2011, the Company sold all of its short- and long-term investments to fund acquisition activity. The realized gains and losses for these investments were immaterial. As of June 30, 2011, the Company’s investments consisted of cash equivalents with original maturities of less than three months.
6. Commitments and Contingencies
The Company leases office space and certain equipment under various operating lease agreements. The Company has the option to extend the term of certain lease agreements. Future minimum commitments under these lease agreements as of June 30, 2011 are as follows (in thousands):
|
|
Operating
Leases
|
|
2011 remaining
|
|
$
|
1,381
|
|
2012
|
|
|
1,874
|
|
2013
|
|
|
1,480
|
|
2014
|
|
|
828
|
|
2015
|
|
|
314
|
|
Thereafter
|
|
|
214
|
|
Total minimum lease payments
|
|
$
|
6,091
|
|
7. Balance Sheet Components
The components of accounts receivable are as follows (in thousands):
|
|
June 30,
2011
|
|
|
December 31,
2010
|
|
Accounts receivable
|
|
$
|
37,099
|
|
|
$
|
33,406
|
|
Unbilled revenues
|
|
|
21,808
|
|
|
|
15,318
|
|
Allowance for doubtful accounts
|
|
|
(599
|
)
|
|
|
(228
|
)
|
Total
|
|
$
|
58,308
|
|
|
$
|
48,496
|
|
The components of other current assets are as follows (in thousands):
|
|
June 30,
2011
|
|
|
December 31,
2010
|
|
Income tax receivable
|
|
$
|
2,164
|
|
|
$
|
546
|
|
Deferred tax asset
|
|
|
430
|
|
|
|
656
|
|
Other current assets
|
|
|
2,297
|
|
|
|
1,382
|
|
Total
|
|
$
|
4,891
|
|
|
$
|
2,584
|
|
The components of other current liabilities are as follows (in thousands):
|
|
June 30,
2011
|
|
|
December 31,
2010
|
|
Accrued variable compensation
|
|
$
|
6,106
|
|
|
$
|
8,456
|
|
Estimated fair value of contingent consideration liability (1)
|
|
|
5,767
|
|
|
|
3,339
|
|
Payroll related costs
|
|
|
2,430
|
|
|
|
1,986
|
|
Accrued subcontractor fees
|
|
|
2,341
|
|
|
|
2,631
|
|
Accrued reimbursable expense
|
|
|
1,242
|
|
|
|
441
|
|
Acquired liabilities
|
|
|
1,136
|
|
|
|
2,244
|
|
Accrued medical claims expense
|
|
|
935
|
|
|
|
810
|
|
Deferred revenues
|
|
|
544
|
|
|
|
1,121
|
|
Other current liabilities
|
|
|
1,621
|
|
|
|
1,626
|
|
Total
|
|
$
|
22,122
|
|
|
$
|
22,654
|
|
(1)
|
Represents the fair value estimate of additional earnings-based contingent consideration that may be realized by: (1) speakTECH’s interest holders 12 months after the speakTECH acquisition; and (2) Exervio’s selling shareholders 12 months and 18 months after the closing date of the Exervio acquisition.
|
The components of other non-current liabilities are as follows (in thousands):
|
|
June 30,
2011
|
|
|
December 31,
2010
|
|
Deferred compensation liability
|
|
$
|
1,433
|
|
|
$
|
1,162
|
|
Deferred income taxes
|
|
|
359
|
|
|
|
417
|
|
Other non-current liabilities
|
|
|
156
|
|
|
|
209
|
|
Total
|
|
$
|
1,948
|
|
|
$
|
1,788
|
|
Property and equipment consists of the following (in thousands):
|
|
June 30,
2011
|
|
|
December 31,
2010
|
|
Computer hardware (useful life of 3 years)
|
|
$
|
5,637
|
|
|
$
|
5,064
|
|
Furniture and fixtures (useful life of 5 years)
|
|
|
1,272
|
|
|
|
1,287
|
|
Leasehold improvements (useful life of 5 years)
|
|
|
1,862
|
|
|
|
1,159
|
|
Software (useful life of 1 year)
|
|
|
1,387
|
|
|
|
1,160
|
|
Less: Accumulated depreciation
|
|
|
(6,710
|
)
|
|
|
(6,315
|
)
|
Total
|
|
$
|
3,448
|
|
|
$
|
2,355
|
|
Acquisition of Kerdock Consulting, LLC (“Kerdock”)
On March 26, 2010, the Company acquired substantially all of the assets of Kerdock pursuant to the terms of an Asset Purchase Agreement. The total allocable purchase price consideration was $5.3 million. The purchase price was comprised of $1.5 million in cash paid and $1.1 million of Company common stock issued at closing, increased by $2.7 million representing the fair value of additional earnings-based contingent consideration. The contingency was achieved and the Company paid $1.9 million in cash and issued stock worth $0.8 million in November 2010. The Company incurred approximately $0.4 million in transaction costs, which were expensed when incurred. The results of the Kerdock operations have been included in the Company’s unaudited interim condensed consolidated financial statements since the acquisition date.
On December 10, 2010, the Company acquired speakTECH pursuant to the terms of an Agreement and Plan of Merger. The Company has estimated total allocable purchase price consideration to be $9.4 million. The purchase price estimate is comprised of $4.3 million in cash paid (included $0.9 million in assumed shareholder debt) and $1.8 million of Company common stock, increased by $3.3 million representing the fair value estimate of additional earnings-based contingent consideration that may be realized by speakTECH’s interest holders 12 months after the closing date of the acquisition. The first 40% of the earnings-based contingent consideration is to be paid in Company common stock while the remaining 60% is to be paid equally in cash and stock. The contingent consideration is recorded in “Other current liabilities” on the Condensed Consolidated Balance Sheet as of June 30, 2011. The Company incurred approximately $0.6 million in transaction costs, which were expensed when incurred. The results of the speakTECH operations have been included in the Company’s unaudited interim condensed consolidated financial statements since the acquisition date.
The Company has estimated the allocation of the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions):
Acquired tangible assets
|
|
$
|
5.0
|
|
Acquired intangible assets
|
|
|
3.2
|
|
Liabilities assumed
|
|
|
(7.2
|
)
|
Goodwill
|
|
|
8.4
|
|
Total purchase price
|
|
$
|
9.4
|
|
The Company estimated the intangible assets acquired to have useful lives of seven months to five years.
The amounts above represent the fair value estimates as of June 30, 2011 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to goodwill or income, as applicable.
On April 1, 2011, the Company acquired substantially all of the assets of Exervio pursuant to the terms of an Asset Purchase Agreement. Exervio is based in Charlotte, North Carolina and is a business and management consulting firm focused on program and project management, process improvement, and data/business analytics. The acquisition of Exervio will enhance the Company’s management consulting skills and qualifications, as well as extend the Company’s presence in North Carolina and Georgia.
The Company has initially estimated the total allocable purchase price consideration to be $11.2 million. The initial purchase price estimate is comprised of $6.5 million in cash paid and $2.8 million of Company common stock issued at closing, increased by $1.9 million representing the initial fair value estimate of additional earnings-based contingent consideration, which may be partially realized by the Exervio selling shareholders 12 months after the closing date of the acquisition, and the remainder potentially realized 18 months after the closing date of the acquisition. If the contingency is achieved, 25% of the earnings-based contingent consideration will be paid in cash and 75% will be issued in stock to the Exervio selling shareholders. The contingent consideration is recorded in “Other current liabilities” on the Condensed Consolidated Balance Sheet as of June 30, 2011. The Company incurred approximately $0.7 million in transaction costs, which were expensed when incurred.
The Company has estimated the allocation of the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions):
Acquired tangible assets
|
|
$
|
2.2
|
|
Acquired intangible assets
|
|
|
4.5
|
|
Liabilities assumed
|
|
|
(1.1
|
)
|
Goodwill
|
|
|
5.6
|
|
Total purchase price
|
|
$
|
11.2
|
|
The Company estimates that the intangible assets acquired have useful lives of nine months to seven years.
The amounts above represent the fair value estimates as of June 30, 2011 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to goodwill or income, as applicable.
The results of the Exervio operations have been included in the Company’s unaudited interim condensed consolidated financial statements since the acquisition date.
The amounts of revenue and net income of Exervio included in the Company’s Condensed Consolidated Statements of Operations from the acquisition date to June 30, 2011 is as follows (in thousands):
|
|
Acquisition Date to
June 30, 2011
|
|
|
|
|
Revenues
|
|
$
|
3,832
|
|
Net income
|
|
$
|
904
|
|
Pro-forma Results of Operations (Unaudited)
The following presents the unaudited pro-forma combined results of operations of the Company with Exervio for the six months ended June 30, 2011 and 2010, after giving effect to certain pro-forma adjustments related to the amortization of acquired intangible assets and assuming Exervio was acquired as of the beginning of each period presented. These unaudited pro-forma results are not necessarily indicative of the actual consolidated results of operations had the acquisition actually occurred on January 1, 2010 and January 1, 2011 or of future results of operations of the consolidated entities (in thousands, except per share information):
|
|
June 30,
|
|
|
|
2011
|
|
|
2010
|
|
Revenues
|
|
$ |
125,774 |
|
|
$ |
108,934 |
|
Net income
|
|
$ |
4,710 |
|
|
$ |
2,745 |
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share
|
|
$ |
0.17 |
|
|
$ |
0.10 |
|
Diluted Earnings Per Share
|
|
$ |
0.16 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
Basic Weighted Average Shares Outstanding
|
|
|
27,649 |
|
|
|
27,259 |
|
Diluted Weighted Average Shares Outstanding
|
|
|
28,823 |
|
|
|
28,898 |
|
The June 30, 2010 pro-forma results shown above include the results of the Kerdock operations since the acquisition date.
JCB Partners, LLC (“JCB”)
In July 2011, the Company acquired substantially all of the assets of JCB. Refer to Note 12, Subsequent Events, for further discussion.
9. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the six months ended June 30, 2011 are as follows (in thousands):
Balance at December 31, 2010
|
|
$
|
115,227
|
|
Preliminary purchase price allocation for Exervio (Note 8)
|
|
|
5,553
|
|
Adjustments to preliminary purchase price allocations for speakTECH
|
|
|
123
|
|
Balance at June 30, 2011
|
|
$
|
120,903
|
|
Intangible Assets with Definite Lives
The following table presents a summary of the Company’s intangible assets that are subject to amortization (in thousands):
|
|
June 30, 2011
|
|
|
December 31, 2010
|
|
|
|
Gross
Carrying
Amounts
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Amounts
|
|
|
Gross
Carrying
Amounts
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Amounts
|
|
Customer relationships
|
|
$
|
23,007
|
|
|
$
|
(14,211
|
)
|
|
$
|
8,796
|
|
|
$
|
19,543
|
|
|
$
|
(12,169
|
)
|
|
$
|
7,374
|
|
Non-compete agreements
|
|
|
1,037
|
|
|
|
(368
|
)
|
|
|
669
|
|
|
|
1,031
|
|
|
|
(413
|
)
|
|
|
618
|
|
Customer backlog
|
|
|
806
|
|
|
|
(295
|
)
|
|
|
511
|
|
|
|
151
|
|
|
|
(100
|
)
|
|
|
51
|
|
Trade name
|
|
|
207
|
|
|
|
(89
|
)
|
|
|
118
|
|
|
|
169
|
|
|
|
(25
|
)
|
|
|
144
|
|
Internally developed software
|
|
|
1,020
|
|
|
|
(455
|
)
|
|
|
565
|
|
|
|
1,039
|
|
|
|
(397
|
)
|
|
|
642
|
|
Total
|
|
$
|
26,077
|
|
|
$
|
(15,418
|
)
|
|
$
|
10,659
|
|
|
$
|
21,933
|
|
|
$
|
(13,104
|
)
|
|
$
|
8,829
|
|
The estimated useful lives of identifiable intangible assets are as follows:
Customer relationships
|
4 – 8 years
|
Non-compete agreements
|
|
Internally developed software
|
3 – 5 years
|
Trade name
|
9 months – 3 years
|
Customer backlog
|
7 – 9 months
|
On May 23, 2011, the Company renewed and extended the term of its Credit Agreement (the “Credit Agreement”) with Silicon Valley Bank (“SVB”), U.S. Bank National Association, and Bank of America, N.A. The Credit Agreement provides for revolving credit borrowings up to a maximum principal amount of $50.0 million, subject to a commitment increase of $25.0 million. The Credit Agreement also allows for the issuance of letters of credit in the aggregate amount of up to $500,000 at any one time; outstanding letters of credit reduce the credit available for revolving credit borrowings. Substantially all of the Company’s assets are pledged to secure the credit facility.
All outstanding amounts owed under the Credit Agreement become due and payable no later than the final maturity date of May 23, 2015. Borrowings under the credit facility bear interest at the Company’s option of SVB’s prime rate (4.00% on June 30, 2011) plus a margin ranging from 0.00% to 0.50% or one-month LIBOR (0.19% on June 30, 2011) plus a margin ranging from 2.50% to 3.00%. The additional margin amount is dependent on the level of outstanding borrowings. As of June 30, 2011, the Company had $50.0 million of maximum borrowing capacity. An annual commitment fee of 0.30% is incurred on the unused portion of the line of credit.
The Company is required to comply with various financial covenants under the Credit Agreement. Specifically, the Company is required to maintain a ratio of earnings before interest, taxes, depreciation, and amortization (“EBITDA”) plus stock compensation and minus income taxes paid and capital expenditures to interest expense and scheduled payments due for borrowings on a trailing three months basis annualized of not less than 2.00 to 1.00 and a ratio of current maturities of long-term debt to EBITDA plus stock compensation and minus income taxes paid and capital expenditures of not more than 2.75 to 1.00.
The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Internal Revenue Service (“IRS”) has completed examinations of the Company’s U.S. income tax returns or the statute has passed on years through 2006. The Company’s 2009 income tax return is currently under examination by the IRS. As of June 30, 2011, the IRS has proposed certain adjustments to the Company’s tax positions; however, these adjustments are not material.
Under the provisions of the ASC Subtopic 740-10-25, Income Taxes - Recognition, the Company had no unrecognized tax benefits as of June 30, 2011.
The Company’s effective tax rate was 43.4% and 42.4% for the respective three and six months ended June 30, 2011 compared to 37.9% and 40.2% for the respective three and six months ended June 30, 2010. The increase in the effective rate is primarily due to lower projected foreign-source income and non-deductible adjustments to the fair value of contingent consideration. The difference between the Company’s federal statutory rate of 35% and effective tax rate relates primarily to state income taxes, net of the federal benefit, and permanent non-deductible items such as non-deductible executive compensation and 50% of meals and entertainment expenses, partially offset by the tax benefits of certain dispositions of incentive stock options by holders. As of June 30, 2011, the Company’s net current deferred tax asset was $0.4 million and its net non-current deferred tax liability was $0.4 million. Generally, deferred tax assets are related to stock compensation, accruals, and net operating losses of acquired companies; and deferred tax liabilities are related to identifiable intangibles and prepaid expenses. Net current deferred tax assets are recorded in “Other current assets” and net non-current deferred tax liabilities are recorded in “Other non-current liabilities” on the Condensed Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010.
On July 1, 2011, the Company acquired substantially all of the assets of JCB pursuant to the terms of an Asset Purchase Agreement for approximately $18.0 million. JCB is based in Denver, Colorado and is a business and technology consulting firm focused on enterprise performance management, analytics, and business intelligence solutions, primarily leveraging the IBM Cognos suite of software products. The acquisition of JCB will further enhance the Company’s position in business intelligence and enterprise performance management and increase access to CFO suites, as well as extend the Company’s presence in Denver, Chicago, and Northern and Southern California.
13. Recent Accounting Pronouncements
Effective January 1, 2011, the Company adopted ASC Subtopic 605-25, Revenue Recognition – Multiple-Element Arrangements (“ASC Subtopic 605-25”). This statement is an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminates the use of the residual method for allocating arrangement consideration and requires an entity to allocate the overall consideration to each deliverable based on an estimated selling price of each individual deliverable in the arrangement in the absence of having vendor-specific objective evidence or other third party evidence of fair value of the undelivered items. This standard also provides further guidance on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of revenue recognition. The adoption of ASC Subtopic 605-25 did not have a material impact on the Company’s unaudited condensed consolidated financial statements.
Effective January 1, 2011, the Company adopted ASC Subtopic 985-605, Software – Revenue Recognition. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product’s essential functionality shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition accounting standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. The adoption of ASC Subtopic 985-605 did not have a material impact on the Company’s unaudited condensed consolidated financial statements.
In June 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, and the second statement would include components of other comprehensive income. This ASU does not change the items that must be reported in other comprehensive income. These provisions are effective prospectively for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. Although adopting ASU 2011-05 will not impact the accounting for comprehensive income, it will affect the presentation of components of comprehensive income by eliminating the practice of showing these items within the Condensed Consolidated Statements of Stockholders’ Equity.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Statements made in this Quarterly Report on Form 10-Q, including without limitation this Management’s Discussion and Analysis of Financial Condition and Results of Operations, other than statements of historical information, are forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may sometimes be identified by such words as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue” or similar words. We believe that it is important to communicate our future expectations to investors. However, these forward-looking statements involve many risks and uncertainties. Our actual results could differ materially from those indicated in such forward-looking statements as a result of certain factors, including but not limited to, those set forth under Risk Factors in our Annual Report on Form 10-K previously filed with the Securities and Exchange Commission (“SEC”) and elsewhere in this Quarterly Report on Form 10-Q. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results.
We are an information technology consulting firm serving Forbes Global 2000 and other large enterprise companies with a primary focus on the United States. We help our clients gain competitive advantage by using Internet-based technologies to make their businesses more responsive to market opportunities and threats, strengthen relationships with their customers, suppliers and partners, improve productivity, and reduce information technology costs. We design, build, and deliver business-driven technology solutions using third party software products. Our solutions include business analysis, portals and collaboration, business integration, user experience, enterprise content management, customer relationship management, interactive design, enterprise performance management, business process management, business intelligence, eCommerce, mobile platforms, custom applications, and technology platform implementations, among others. Our solutions enable our clients to operate a real-time enterprise that dynamically adapts business processes and the systems that support them to meet the changing demands of an increasingly global, Internet-driven, and competitive marketplace.
Services revenues are derived from professional services that include developing, implementing, integrating, automating and extending business processes, technology infrastructure, and software applications. Most of our projects are performed on a time and materials basis, while a smaller portion of our revenues is derived from projects performed on a fixed fee basis. Fixed fee engagements represented approximately 14% and 13% of our services revenues for the respective three and six months ended June 30, 2011 compared to 13% for the three and six months ended June 30, 2010. For time and material projects, revenues are recognized and billed by multiplying the number of hours our professionals expend in the performance of the project by the established billing rates. For fixed fee projects, revenues are generally recognized using an input method based on the ratio of hours expended to total estimated hours. Amounts invoiced and collected in excess of revenues recognized are classified as deferred revenues. On most projects, we are also reimbursed for out-of-pocket expenses such as airfare, lodging, and meals. These reimbursements are included as a component of revenues. The aggregate amount of reimbursed expenses will fluctuate depending on the location of our clients, the total number of our projects that require travel, and whether our arrangements with our clients provide for the reimbursement of travel and other project related expenses.
Software and Hardware Revenues
Software and hardware revenues are derived from sales of third-party software and hardware. Revenues from sales of third-party software and hardware are generally recorded on a gross basis provided we act as a principal in the transaction. On rare occasions, we do not meet the requirements to be considered a principal in the transaction and act as an agent. In these cases, revenues are recorded on a net basis. Software and hardware revenues are expected to fluctuate depending on our clients’ demand for these products.
If we enter into contracts for the sale of services and software or hardware, management evaluates whether each element should be accounted for separately. Management considers the following criteria: (1) whether the deliverables have value to the client on a stand-alone basis; and (2) whether delivery or performance of the undelivered item or items is considered probable and substantially in the control of the Company (only if the arrangement includes a general right of return related to the delivered item). If management has concluded that the separation criteria are met, then it accounts for each deliverable in the transaction separately, based on the relevant revenue recognition policies. Generally, all deliverables of our multiple element arrangements meet these criteria and are accounted for separately using the relative selling price method.
Cost of revenues
Cost of revenues consists primarily of cash and non-cash compensation and benefits, including bonuses and non-cash compensation related to equity awards. Cost of revenues also includes the costs associated with subcontractors. Third-party software and hardware costs, reimbursable expenses, and other unreimbursed project related expenses are also included in cost of revenues. Project related expenses will fluctuate generally depending on outside factors including the cost and frequency of travel and the location of our clients. Cost of revenues does not include depreciation of assets used in the production of revenues which are primarily personal computers, servers, and other information technology related equipment.
Our gross margins for services are affected by the utilization rates of our professionals (defined as the percentage of our professionals’ time billed to clients divided by the total available hours in the respective period), the salaries we pay our professionals, and the average billing rate we receive from our clients. If a project ends earlier than scheduled, we retain professionals in advance of receiving project assignments, or if demand for our services declines, our utilization rate will decline and adversely affect our gross margins. Gross margin percentages of third-party software and hardware sales are typically lower than gross margin percentages for services, and the mix of services and software and hardware for a particular period can significantly impact our total combined gross margin percentage for such period. In addition, gross margin for software and hardware sales can fluctuate due to pricing and other competitive pressures.
Selling, General, and Administrative Expenses
Selling, general and administrative expenses (“SG&A”) are primarily composed of sales related costs, general and administrative salaries, variable compensation costs, office costs, stock compensation expense, bad debts, and other miscellaneous expenses. We work to minimize selling costs by focusing on repeat business with existing clients and by accessing sales leads generated by our software vendors, most notably IBM, Oracle, and Microsoft, whose products we use to design and implement solutions for our clients. These relationships enable us to reduce our selling costs and sales cycle times and increase win rates through leveraging our partners’ marketing efforts and endorsements.
Plans for Growth and Acquisitions
Our goal is to continue to build one of the leading independent information technology consulting firms in North America by expanding our relationships with existing and new clients and through the continuation of our disciplined acquisition strategy. Our future growth plan includes expanding our business with a primary focus on the United States, both organically and through acquisitions. Given the economic conditions during 2008 and 2009 we suspended acquisition activity pending improved visibility into the health of the economy. With the return to growth in 2010 we have resumed our disciplined acquisition strategy as evidenced by our acquisition of Kerdock Consulting, LLC (“Kerdock”) in March 2010, speakTECH in December 2010, Exervio Consulting, Inc. (“Exervio”) in April 2011, and JCB Partners, LLC (“JCB”) in July 2011. We also intend to further leverage our existing offshore capabilities to support our future growth and provide our clients flexible options for project delivery.
Results of Operations
Three months ended June 30, 2011 compared to three months ended June 30, 2010
Revenues. Total revenues increased 18% to $65.6 million for the three months ended June 30, 2011 from $55.5 million for the three months ended June 30, 2010.
|
Financial Results
|
|
Explanation for Increases/(Decreases) Over Prior Year Period
|
|
|
(in thousands)
|
|
(in thousands)
|
|
|
For the Three Months Ended June 30, 2011
|
|
For the Three Months Ended June 30, 2010
|
|
Total Increase/
(Decrease) Over Prior Year Period
|
|
Increase/ (Decrease) Attributable to Acquired Companies*
|
|
Increase/(Decrease) Attributable to Base Business**
|
|
Services Revenues
|
|
$
|
59,215
|
|
|
$
|
47,931
|
|
|
$
|
11,284
|
|
|
$
|
9,975
|
|
|
$
|
1,309
|
|
Software and Hardware Revenues
|
|
|
3,374
|
|
|
|
5,152
|
|
|
|
(1,778
|
)
|
|
|
(217
|
)
|
|
|
(1,561
|
)
|
Reimbursable Expenses
|
|
|
2,998
|
|
|
|
2,377
|
|
|
|
621
|
|
|
|
71
|
|
|
|
550
|
|
Total Revenues
|
|
$
|
65,587
|
|
|
$
|
55,460
|
|
|
$
|
10,127
|
|
|
$
|
9,829
|
|
|
$
|
298
|
|
*Defined as revenues generated by professionals from companies acquired during 2010 and 2011.
**Defined as businesses owned as of January 1, 2010.
Services revenues increased 24% to $59.2 million for the three months ended June 30, 2011 from $47.9 million for the three months ended June 30, 2010. The increase in services revenues is primarily due to acquisitions during 2010 and 2011. Services revenues attributable to our base business increased $1.3 million while services revenues attributable to acquired companies increased $10.0 million, resulting in a total increase of $11.3 million.
Software and hardware revenues decreased 35% to $3.4 million for the three months ended June 30, 2011 from $5.2 million for the three months ended June 30, 2010 primarily due to larger software renewals in the second quarter 2010 that did not renew in the second quarter 2011. Reimbursable expenses increased 26% to $3.0 million for the three months ended June 30, 2011 from $2.4 million for the three months ended June 30, 2010 as a result of the increase in services revenue. We do not realize any profit on reimbursable expenses.
Cost of Revenues. Cost of revenues increased 15% to $44.4 million for the three months ended June 30, 2011 from $38.5 million for the three months ended June 30, 2010. The increase in cost of revenues is related to the increase in revenues, specifically the increase in services revenues. The average number of professionals performing services, including subcontractors, increased to 1,242 for the three months ended June 30, 2011 from 1,066 for the three months ended June 30, 2010.
Costs associated with software and hardware sales decreased 34% to $3.0 million for the three months ended June 30, 2011 from $4.5 million for the three months ended June 30, 2010, which directly relates to the decrease in software and hardware revenues as discussed above.
Gross Margin. Gross margin increased 25% to $21.2 million for the three months ended June 30, 2011 from $17.0 million for the three months ended June 30, 2010. Gross margin as a percentage of revenues increased to 32.4% for the three months ended June 30, 2011 from 30.6% for the three months ended June 30, 2010 due to an increase in services gross margin. Services gross margin, excluding reimbursable expenses, increased to 35.2% or $20.8 million for the three months ended June 30, 2011 from 34.1% or $16.3 million for the three months ended June 30, 2010. The increase in services gross margin is primarily a result of a higher average bill rate. The average bill rate for our professionals, excluding subcontractors, increased to $117 per hour for the three months ended June 30, 2011 from $107 per hour for the three months ended June 30, 2010, primarily due to the improved pricing opportunities as the market for our services continues to improve. The average bill rate for the three months ended June 30, 2011, excluding China, was $127 per hour compared to $120 per hour for the three months ended June 30, 2010. Software and hardware gross margin decreased to 11.5% or $0.4 million for the three months ended June 30, 2011 from 12.2% or $0.6 million for the three months ended June 30, 2010. Software and hardware gross margin decreased primarily due to higher margined software renewals in the second quarter 2010 that did not renew in the second quarter 2011 due to the competition in the marketplace.
Selling, General and Administrative. SG&A expenses increased 6% to $13.2 million for the three months ended June 30, 2011 from $12.4 million for the three months ended June 30, 2010. SG&A expenses, as a percentage of revenues, decreased to 20.2% for the three months ended June 30, 2011 from 22.4% for the three months ended June 30, 2010. Bonus and stock compensation decreased 1.5% and 1.0%, respectively, as a percentage of revenues while bad debt increased 0.4% as a percentage of revenues compared to the prior year comparable period. Bonus decreased as a percentage of revenues primarily due to more aggressive bonus targets in 2011. Bad debt increased as a percentage of revenues primarily due to acquisition-related clients and an overall increase in accounts receivable.
Depreciation. Depreciation expense increased 104% to $0.4 million for the three months ended June 30, 2011 from $0.2 million for the three months ended June 30, 2010. The increase in depreciation expense is mainly attributable to the addition of depreciation related to fixed assets from acquisitions during 2010 and 2011 and the increase in leasehold improvements for the expansion of our facility in China. Depreciation expense as a percentage of revenues was 0.6% and 0.4% for the three months ended June 30, 2011 and 2010, respectively.
Amortization. Amortization expense increased 43% to $1.5 million for the three months ended June 30, 2011 from $1.1 million for the three months ended June 30, 2010. The increase in amortization expense is due to the addition of amortization related to acquired intangible assets during 2010 and 2011.
Acquisition Costs. Acquisition-related costs of $0.7 million were incurred during the three months ended June 30, 2011 related to the acquisition of Exervio and JCB. Acquisition-related costs were incurred for advisory, legal, accounting, and valuation services performed by third parties.
Adjustment to Fair Value of Contingent Consideration. An adjustment of $0.4 million was made during the three months ended June 30, 2011 for the accretion of the fair value estimate for the earnings-based contingent consideration to be paid to speakTECH’s interest holders and Exervio’s selling shareholders.
Provision for Income Taxes. We provide for federal, state and foreign income taxes at the applicable statutory rates adjusted for non-deductible expenses. Our effective tax rate increased to 43.4% for the three months ended June 30, 2011 from 37.9% for the three months ended June 30, 2010 due mainly to lower projected foreign-source income and non-deductible adjustments to the fair value of contingent consideration.
Six months ended June 30, 2011 compared to six months ended June 30, 2010
Revenues. Total revenues increased 17% to $121.8 million for the six months ended June 30, 2011 from $104.4 million for the six months ended June 30, 2010.
|
Financial Results
|
|
Explanation for Increases/(Decreases) Over Prior Year Period
|
|
|
(in thousands)
|
|
(in thousands)
|
|
|
For the Six Months Ended June 30, 2011
|
|
For the Six Months Ended June 30, 2010
|
|
Total Increase/
(Decrease) Over Prior Year Period
|
|
Increase/ (Decrease) Attributable to Acquired Companies*
|
|
Increase/(Decrease) Attributable to Base Business**
|
|
Services Revenues
|
|
$
|
109,425
|
|
|
$
|
90,592
|
|
|
$
|
18,833
|
|
|
$
|
16,711
|
|
|
$
|
2,122
|
|
Software and Hardware Revenues
|
|
|
6,750
|
|
|
|
9,225
|
|
|
|
(2,475
|
)
|
|
|
(117
|
)
|
|
|
(2,358
|
)
|
Reimbursable Expenses
|
|
|
5,657
|
|
|
|
4,558
|
|
|
|
1,099
|
|
|
|
280
|
|
|
|
819
|
|
Total Revenues
|
|
$
|
121,832
|
|
|
$
|
104,375
|
|
|
$
|
17,457
|
|
|
$
|
16,874
|
|
|
$
|
583
|
|
*Defined as revenues generated by professionals from companies acquired during 2010 and 2011.
**Defined as businesses owned as of January 1, 2010.
Services revenues increased 21% to $109.4 million for the six months ended June 30, 2011 from $90.6 million for the six months ended June 30, 2010. The increase in services revenues is primarily due to the acquisitions during 2010 and 2011. Services revenues attributable to our base business increased $2.1 million while services revenues attributable to acquired companies increased $16.7 million, resulting in a total increase of $18.8 million.
Software and hardware revenues decreased 27% to $6.7 million for the six months ended June 30, 2011 from $9.2 million for the six months ended June 30, 2010 due to the decrease in larger software renewals compared to 2010. Reimbursable expenses increased 24% to $5.7 million for the six months ended June 30, 2011 from $4.6 million for the six months ended June 30, 2010. We do not realize any profit on reimbursable expenses.
Cost of Revenues. Cost of revenues increased 14% to $84.3 million for the six months ended June 30, 2011 from $74.0 million for the six months ended June 30, 2010. The increase in cost of revenues is directly related to the increase in revenues, specifically the increase in services revenues. The average number of professionals performing services, including subcontractors, increased to 1,198 for the six months ended June 30, 2011 from 1,038 for the six months ended June 30, 2010.
Costs associated with software and hardware sales decreased 29% to $5.8 million for the six months ended June 30, 2011 from $8.2 million for the six months ended June 30, 2010, which is directly related to the decrease in software and hardware revenues as discussed above.
Gross Margin. Gross margin increased 24% to $37.5 million for the six months ended June 30, 2011 from $30.4 million for the six months ended June 30, 2010. Gross margin as a percentage of revenues increased to 30.8% for the six months ended June 30, 2011 from 29.1% for the six months ended June 30, 2010, primarily due to increases in services gross margin. Services gross margin, excluding reimbursable expenses, increased to 33.4% or $36.6 million for the six months ended June 30, 2011 from 32.4% or $29.4 million for the six months ended June 30, 2010. The increase in services gross margin is primarily a result of higher average bill rates. The average bill rate for our professionals, excluding subcontractors, increased to $116 per hour for the six months ended June 30, 2011 from $106 per hour for the six months ended June 30, 2010, primarily due to the improved pricing opportunities as the market for our services continues to improve. The average bill rate for the six months ended June 30, 2011, excluding China, was $125 per hour compared to $118 per hour for the six months ended June 30, 2010. Software and hardware gross margin increased to 14.1% or $1.0 million for the six months ended June 30, 2011 from 11.0% or $1.0 million for the six months ended June 30, 2010. Software and hardware gross margin increased primarily due to an increase in higher margin hardware sales in the first half of 2011.
Selling, General and Administrative. SG&A expenses increased 7% to $24.5 million for the six months ended June 30, 2011 from $22.8 million for the six months ended June 30, 2010. SG&A expenses, as a percentage of revenues, decreased slightly to 20.1% for the six months ended June 30, 2011 from 21.9% for the six months ended June 30, 2010. Stock compensation and bonus decreased 1.1% and 0.9%, respectively, as a percentage of revenues while bad debt increased 0.4% as a percentage of revenues compared to the prior year comparable period. Stock compensation decreased as a percentage of revenues primarily due to less expense recorded for the separation of our former chairman of the Board of Directors in the prior year period. Bonus decreased as a percentage of revenues primarily due to more aggressive bonus targets in 2011. Bad debt increased as a percentage of revenues primarily due to an additional reserve being recorded for the bankruptcy of a client.
Depreciation. Depreciation expense increased 111% to $0.7 million for the six months ended June 30, 2011 from $0.3 million for the six months ended June 30, 2010. The increase in depreciation expense is mainly attributable to the addition of depreciation related to fixed assets from acquisitions during 2010 and 2011 and the increase in leasehold improvements for the expansion of our facility in China. Depreciation expense as a percentage of revenues was 0.6% and 0.3% for the six months ended June 30, 2011 and 2010, respectively.
Amortization. Amortization expense increased 33% to $2.7 million for the six months ended June 30, 2011 from $2.0 million for the six months ended June 30, 2010. The increase in amortization expense is due to the addition of amortization related to acquired intangible assets during 2010 and 2011.
Acquisition Costs. Acquisition-related costs increased 203% to $1.2 million for the six months ended June 30, 2011 from $0.4 million for the six months ended June 30, 2011. The acquisition-related costs incurred during 2011 are primarily related to the acquisition of Exervio and JCB. Acquisition-related costs were incurred for legal, accounting, and valuation services performed by third parties.
Adjustment to Fair Value of Contingent Consideration. An adjustment of $0.5 million was made during the six months ended June 30, 2011 for the accretion of the fair value estimate for the earnings-based contingent consideration to be paid to speakTECH’s interest holders and Exervio’s selling shareholders.
Provision for Income Taxes. We provide for federal, state, and foreign income taxes at the applicable statutory rates adjusted for non-deductible expenses. Our effective tax rate increased to 42.4% for the six months ended June 30, 2011 from 40.2% for the six months ended June 30, 2010 primarily due to lower projected foreign-source income and non-deductible adjustments to the fair value of contingent consideration.
Liquidity and Capital Resources
Selected measures of liquidity and capital resources are as follows (in millions):
|
|
As of
June 30,
2011
|
|
|
As of
December 31,
2010
|
|
Cash, cash equivalents and investments
|
|
$
|
12.5
|
|
|
$
|
26.3
|
|
Working capital (including cash and cash equivalents)
|
|
$
|
51.7
|
|
|
$
|
47.6
|
|
Amounts available under credit facilities
|
|
$
|
50.0
|
|
|
$
|
50.0
|
|
Net Cash Provided By (Used In) Operating Activities
Net cash used in operating activities for the six months ended June 30, 2011 was $4.1 million compared to net cash provided by operating activities of $9.7 million for the six months ended June 30, 2010. For the six months ended June 30, 2011, the primary components of operating cash flows were net income of $4.6 million plus non-cash charges of $6.9 million, offset by investments in working capital of $15.6 million. The primary components of operating cash flows for the six months ended June 30, 2010 were net income of $2.9 million plus non-cash charges of $6.5 million and net working capital reductions of $0.3 million. The decrease in cash resulting from operating activities is primarily related to the decrease in accounts payable and other liabilities. Accounts payable and other liabilities decreased due to paying down higher accrued software costs and variable compensation liabilities during the first half of 2011. Also, our days sales outstanding as of June 30, 2011 increased to 81 days from 70 days at June 30, 2010. Days sales outstanding have increased as of June 30, 2011 due to slightly slower paying customers, partially related to new customers from existing business and customers acquired from the acquisitions made during 2010 and 2011.
Net Cash Provided by (Used In) Investing Activities
During the six months ended June 30, 2011, we used $6.8 million for acquisition related costs and $1.8 million primarily on leasehold improvements and to develop certain software, offset by $13.6 million in proceeds from the sale and maturity of our investments. During the six months ended June 30, 2010, we used $6.4 million to purchase investments, $1.5 million for the purchase of Kerdock and $0.6 million to purchase equipment and develop certain software.
Net Cash Used In Financing Activities
During the six months ended June 30, 2011, we received proceeds of $3.5 million from exercises of stock options and sales of stock through our Employee Stock Purchase Plan and we realized a tax benefit of $1.5 million related to vesting of stock awards and stock option exercises. We used $5.8 million to repurchase shares of our common stock through the stock repurchase program and $0.3 million in fees related to renewing our credit facility. For the six months ended June 30, 2010, we received proceeds of $0.8 million from exercises of stock options and sales of stock through our Employee Stock Purchase Plan and we realized a tax benefit of $0.6 million related to vesting of stock awards and stock option exercises. We used $6.0 million to repurchase shares of our common stock through the stock repurchase program.
Availability of Funds from Bank Line of Credit Facility
On May 23, 2011, the Company renewed and extended the term of its Credit Agreement (the “Credit Agreement”) with Silicon Valley Bank (“SVB”), U.S. Bank National Association, and Bank of America, N.A. The Credit Agreement provides for revolving credit borrowings up to a maximum principal amount of $50.0 million, subject to a commitment increase of $25.0 million. The Credit Agreement also allows for the issuance of letters of credit in the aggregate amount of up to $500,000 at any one time; outstanding letters of credit reduce the credit available for revolving credit borrowings. Substantially all of our assets are pledged to secure the credit facility.
All outstanding amounts owed under the Credit Agreement become due and payable no later than the final maturity date of May 23, 2015. Borrowings under the credit facility bear interest at our option of SVB’s prime rate (4.00% on June 30, 2011) plus a margin ranging from 0.00% to 0.50% or one-month LIBOR (0.19% on June 30, 2011) plus a margin ranging from 2.50% to 3.00%. The additional margin amount is dependent on the level of outstanding borrowings. As of June 30, 2011, we had $50.0 million of maximum borrowing capacity. We incur an annual commitment fee of 0.30% on the unused portion of the line of credit.
As of June 30, 2011, we were in compliance with all covenants under our credit facility and we expect to be in compliance during the next twelve months.
Prior to 2011, our Board of Directors authorized the repurchase of up to $50.0 million of our common stock. In 2011, the Board of Directors authorized the repurchase of up to an additional $10.0 million of our common stock for a total repurchase program of $60.0 million at June 30, 2011. The repurchase program expires June 30, 2012.
We established a written trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 (the “Exchange Act”), under which we made a portion of our stock repurchases. Additional repurchases will be at times and in amounts as the Company deems appropriate and will be made through open market transactions in compliance with Rule 10b-18 of the Exchange Act, subject to market conditions, applicable legal requirements, and other factors.
Since the program’s inception on August 11, 2008, we have repurchased approximately $48.0 million of our outstanding common stock through June 30, 2011.
There were no material changes outside the ordinary course of our business in lease obligations or other contractual obligations in the first six months of 2011.
Shelf Registration Statement
In July 2008, we filed a shelf registration statement with the SEC to allow for offers and sales of our common stock from time to time. Approximately four million shares of common stock were eligible to be sold under this registration statement. The shelf registration expired in July 2011.
We believe that the currently available funds, access to capital from our credit facility, and cash flows generated from operations will be sufficient to meet our working capital requirements and other capital needs for the next twelve months.
Critical Accounting Policies
Our accounting policies are fully described in Note 2, Summary of Significant Accounting Policies, to our Consolidated Financial Statements in our 2010 Annual Report on Form 10-K. We believe our most critical accounting policies include revenue recognition, accounting for goodwill and intangible assets, purchase accounting, accounting for stock-based compensation, and income taxes.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Exchange Rate Sensitivity
We are exposed to market risks associated with changes in foreign currency exchange rates because we generate a portion of our revenues and incur a portion of our expenses in currencies other than the U.S. dollar. As of June 30, 2011, we were exposed to changes in exchange rates between the U.S. dollar and the Canadian dollar, between the U.S. dollar and the Chinese Yuan, and between the U.S. dollar and the Indian Rupee. We have not hedged foreign currency exposures related to transactions denominated in currencies other than U.S. dollars because our exposure to foreign currency risk is not significant.
Interest Rate Sensitivity
We had unrestricted cash, cash equivalents, and investments totaling $12.5 million at June 30, 2011 and $26.3 million at December 31, 2010. In 2011, these amounts were invested primarily in money market funds. The unrestricted cash and cash equivalents are held for working capital purposes. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of these investments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. Declines in interest rates, however, will reduce future investment income.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our management, with the participation of our principal executive officer and principal financial officer, concluded that these disclosure controls and procedures were effective.
There was no change in our internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the three months ended June 30, 2011, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1A. Risk Factors
In evaluating all forward-looking statements, you should specifically consider various risk factors that may cause actual results to vary from those contained in the forward-looking statements. Our risk factors are included in our Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on March 3, 2011 and available at www.sec.gov. There have been no material changes to these risk factors since the filing of our Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Securities
On April 1, 2011, we acquired Exervio Consulting, Inc. (“Exervio”). As part of the initial purchase price paid in this acquisition, we issued unregistered shares of our common stock to the interest holders of Exervio. The aggregate initial purchase price paid in this transaction was approximately $9.3 million, which consisted of approximately $6.5 million in cash and 288,600 unregistered shares of our common stock. We relied on Section 4(2) of the Securities Act of 1933, as amended, as the basis for exemption from registration. These shares were issued to Exervio’s interest holders in a privately negotiated transaction and not pursuant to a public solicitation.
Issuer Purchases of Securities
Prior to 2011, our Board of Directors authorized the repurchase of up to $50.0 million of our common stock. In 2011, the Board of Directors authorized the repurchase of up to an additional $10.0 million of our common stock for a total repurchase program of $60.0 million at June 30, 2011. The repurchase program expires June 30, 2012. The program could be suspended or discontinued at any time, based on market, economic, or business conditions. The timing and amount of repurchase transactions will be determined by our management based on its evaluation of market conditions, share price, and other factors.
Since the program’s inception on August 11, 2008, we have repurchased approximately $48.0 million of our outstanding common stock through June 30, 2011.
Period
|
Total Number of Shares Purchased
|
|
Average Price Paid Per
Share (1)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
|
|
Beginning Balance as of March 31, 2011
|
6,292,474
|
|
$
|
7.08
|
|
6,292,474
|
|
$
|
5,426,997
|
|
April 1-30, 2011
|
60,000
|
|
|
12.18
|
|
60,000
|
|
$
|
4,696,117
|
|
May 1-31, 2011
|
245,093
|
|
|
11.07
|
|
245,093
|
|
$
|
11,983,213
|
|
June 1-30, 2011
|
-
|
|
|
-
|
|
-
|
|
$
|
11,983,213
|
|
Ending Balance as of June 30, 2011
|
6,597,567
|
|
$
|
7.28
|
|
6,597,567
|
|
$
|
11,983,213
|
|
(1)
|
Average price paid per share includes commission.
|
(2)
|
On May 3, 2011, our Board of Directors authorized the repurchase of up to an additional $10.0 million of our common stock.
|
The exhibits filed as part of this Report on Form 10-Q are listed in the Exhibit Index immediately preceding the exhibits.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
PERFICIENT, INC.
|
|
|
|
Date: August 4, 2011
|
By:
|
/s/ Jeffrey S. Davis |
|
Jeffrey S. Davis
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
|
|
Date: August 4, 2011
|
By:
|
/s/ Paul E. Martin |
|
Paul E. Martin
|
|
Chief Financial Officer (Principal Financial Officer)
|
Exhibit
Number
|
Description
|
3.1
|
Certificate of Incorporation of Perficient, Inc., previously filed with the Securities and Exchange Commission as an Exhibit to our Registration Statement on Form SB-2 (File No. 333-78337) declared effective on July 28, 1999 by the Securities and Exchange Commission and incorporated herein by reference
|
3.2
|
Certificate of Amendment to Certificate of Incorporation of Perficient, Inc., previously filed with the Securities and Exchange Commission as an Exhibit to our Form 8-A (File No. 000-51167) filed with the Securities and Exchange Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 on February 15, 2005 and incorporated herein by reference
|
3.3
|
Certificate of Amendment to Certificate of Incorporation of Perficient, Inc., previously filed with the Securities and Exchange Commission as an Exhibit to our Registration Statement on form S-8 (File No. 333-130624) filed on December 22, 2005 and incorporated herein by reference
|
3.4
|
Bylaws of Perficient, Inc., previously filed with the Securities and Exchange Commission as an Exhibit to our current Report on Form 8-K (File No. 001-15169) filed November 9, 2007 and incorporated herein by reference
|
4.1
|
Specimen Certificate for shares of Perficient, Inc. common stock, previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q (File No. 001-15169) filed May 7, 2009 and incorporated herein by reference
|
4.2
|
Form of Common Stock Purchase Warrant, previously filed with the Securities and Exchange Commission as an Exhibit to our Current Report on Form 8-K (File No. 001-15169) filed on January 17, 2002 and incorporated herein by reference
|
10.1
|
Amended and Restated Credit Agreement, dated as of May 23, 2011, by and among Perficient, Inc., as Borrower, the guarantors from time to time parties thereto, as Guarantors, the lenders from time to time parties thereto, Silicon Valley Bank, as Administrative Agent, Lead Arranger, Book Manager and Issuing Lender, and Bank of America, N.A. and U.S. Bank, N.A., previously filed with the Securities and Exchange Commission as an Exhibit to our Current Report on Form 8-K filed on May 26, 2011 and incorporated herein by reference
|
31.1*
|
Certification by the Chief Executive Officer of Perficient, Inc. as required by Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2*
|
Certification by the Chief Financial Officer of Perficient, Inc. as required by Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1**
|
Certification by the Chief Executive Officer and Chief Financial Officer of Perficient, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
†
|
Identifies an Exhibit that consists of or includes a management contract or compensatory plan or arrangement.
|
*
|
Filed herewith.
|
**
|
Included but not to be considered “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section.
|