Delaware
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52-2091509
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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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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
o
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PART I
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FINANCIAL INFORMATION
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II
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OTHER INFORMATION
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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Financial Statements
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
||||||||||||
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2013
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2012
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2013
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2012
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||||||||
Revenues
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$
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112,301
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$
|
96,001
|
|
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$
|
325,333
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$
|
249,853
|
|
Cost of revenues
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31,724
|
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30,882
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97,431
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83,388
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||||
Gross margin
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80,577
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65,119
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227,902
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166,465
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Operating expenses:
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Selling and marketing
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23,625
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22,010
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74,139
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|
57,576
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||||
Software development
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11,562
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9,722
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35,152
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22,714
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||||
General and administrative
|
21,940
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19,617
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74,457
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59,602
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||||
Purchase amortization
|
3,680
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|
4,824
|
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11,699
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9,038
|
|
||||
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60,807
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|
56,173
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|
|
195,447
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|
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148,930
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|
||||
Income from operations
|
19,770
|
|
|
8,946
|
|
|
32,455
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|
|
17,535
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|
||||
Interest and other income
|
52
|
|
|
59
|
|
|
239
|
|
|
440
|
|
||||
Interest and other expense
|
(1,736
|
)
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(1,822
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)
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(5,249
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)
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(3,022
|
)
|
||||
Income before income taxes
|
18,086
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7,183
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27,445
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14,953
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||||
Income tax expense, net
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7,034
|
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|
404
|
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10,510
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|
9,752
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Net income
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$
|
11,052
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|
$
|
6,779
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$
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16,935
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$
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5,201
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||||||||
Net income per share — basic
|
$
|
0.40
|
|
|
$
|
0.25
|
|
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$
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0.61
|
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$
|
0.20
|
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Net income per share — diluted
|
$
|
0.39
|
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$
|
0.24
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$
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0.60
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$
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0.19
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||||||||
Weighted average outstanding shares — basic
|
27,758
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27,243
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27,607
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26,279
|
|
||||
Weighted average outstanding shares — diluted
|
28,349
|
|
|
27,673
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|
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28,137
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26,691
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
||||||||||||
|
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2013
|
|
2012
|
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2013
|
|
2012
|
||||||||
Net income
|
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$
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11,052
|
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$
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6,779
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$
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16,935
|
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$
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5,201
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Other comprehensive income, net of tax
|
|
|
|
|
|
|
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|
||||||||
Foreign currency translation adjustment
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1,652
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|
1,014
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|
20
|
|
|
1,286
|
|
||||
Net change in unrealized gain on investments, net of tax
|
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—
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|
727
|
|
|
63
|
|
|
672
|
|
||||
Total other comprehensive income
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1,652
|
|
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1,741
|
|
|
83
|
|
|
1,958
|
|
||||
Total comprehensive income
|
|
$
|
12,704
|
|
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$
|
8,520
|
|
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$
|
17,018
|
|
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$
|
7,159
|
|
|
Nine Months Ended
September 30, |
||||||
|
2013
|
|
2012
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
16,935
|
|
|
$
|
5,201
|
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Adjustments to reconcile net income to net cash provided by operating activities:
|
|
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|
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Depreciation
|
9,174
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|
|
7,203
|
|
||
Amortization
|
21,063
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|
14,996
|
|
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Amortization of debt issuance costs
|
2,273
|
|
|
1,235
|
|
||
Excess tax expense (benefit) from stock-based compensation
|
(15,405
|
)
|
|
57
|
|
||
Stock-based compensation expense
|
32,270
|
|
|
8,667
|
|
||
Deferred income tax expense (benefit), net
|
(6,448
|
)
|
|
11,828
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Provision for losses on accounts receivable
|
1,819
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|
1,418
|
|
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Changes in operating assets and liabilities, net of acquisitions:
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|
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Accounts receivable
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(8,305
|
)
|
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(3,612
|
)
|
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Prepaid expenses and other current assets
|
(533
|
)
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|
(1,848
|
)
|
||
Deposits and other assets
|
220
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|
|
1,286
|
|
||
Accounts payable and other liabilities
|
17,413
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|
4,222
|
|
||
Deferred revenue
|
2,352
|
|
|
5,905
|
|
||
Net cash provided by operating activities
|
72,828
|
|
|
56,558
|
|
||
|
|
|
|
||||
Investing activities:
|
|
|
|
|
|
||
Proceeds from sale and settlement of investments
|
87
|
|
|
14,620
|
|
||
Purchases of property and equipment and other assets
|
(15,331
|
)
|
|
(9,002
|
)
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(640,929
|
)
|
||
Net cash used in investing activities
|
(15,244
|
)
|
|
(635,311
|
)
|
||
|
|
|
|
||||
Financing activities:
|
|
|
|
|
|
||
Proceeds from long-term debt
|
—
|
|
|
175,000
|
|
||
Payments of long-term debt
|
(13,125
|
)
|
|
(4,375
|
)
|
||
Payments of debt issuance costs
|
—
|
|
|
(11,546
|
)
|
||
Payments of deferred consideration
|
(1,344
|
)
|
|
—
|
|
||
Excess tax benefit (expense) from stock-based compensation
|
15,405
|
|
|
(57
|
)
|
||
Repurchase of restricted stock to satisfy tax withholding obligations
|
(7,563
|
)
|
|
(3,817
|
)
|
||
Proceeds from exercise of stock options and ESPP
|
15,846
|
|
|
7,667
|
|
||
Net cash provided by financing activities
|
9,219
|
|
|
162,872
|
|
||
|
|
|
|
||||
Effect of foreign currency exchange rates on cash and cash equivalents
|
108
|
|
|
63
|
|
||
Net increase (decrease) in cash and cash equivalents
|
66,911
|
|
|
(415,818
|
)
|
||
Cash and cash equivalents at the beginning of period
|
156,027
|
|
|
545,280
|
|
||
Cash and cash equivalents at the end of period
|
$
|
222,938
|
|
|
$
|
129,462
|
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1.
|
ORGANIZATION
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (CONTINUED)
|
|
September 30,
2013 |
|
December 31,
2012 |
||||
Foreign currency translation adjustment
|
$
|
(4,593
|
)
|
|
$
|
(4,613
|
)
|
Accumulated net unrealized loss on investments, net of tax
|
(1,842
|
)
|
|
(1,905
|
)
|
||
Total accumulated other comprehensive loss
|
$
|
(6,435
|
)
|
|
$
|
(6,518
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
Numerator:
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
|||||||||||||||
Net income
|
$
|
11,052
|
|
|
$
|
6,779
|
|
|
$
|
16,935
|
|
|
$
|
5,201
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator for basic net income per share — weighted-average outstanding shares
|
27,758
|
|
|
27,243
|
|
|
27,607
|
|
|
26,279
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock options and restricted stock
|
591
|
|
|
430
|
|
|
530
|
|
|
412
|
|
||||
Denominator for diluted net income per share — weighted-average outstanding shares
|
28,349
|
|
|
27,673
|
|
|
28,137
|
|
|
26,691
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income per share — basic
|
$
|
0.40
|
|
|
$
|
0.25
|
|
|
$
|
0.61
|
|
|
$
|
0.20
|
|
Net income per share — diluted
|
$
|
0.39
|
|
|
$
|
0.24
|
|
|
$
|
0.60
|
|
|
$
|
0.19
|
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (CONTINUED)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Cost of revenues
|
$
|
1,061
|
|
|
$
|
849
|
|
|
$
|
3,353
|
|
|
$
|
1,784
|
|
Selling and marketing
|
944
|
|
|
493
|
|
|
3,763
|
|
|
1,331
|
|
||||
Software development
|
1,608
|
|
|
809
|
|
|
5,439
|
|
|
1,565
|
|
||||
General and administrative
|
4,175
|
|
|
1,588
|
|
|
19,715
|
|
|
3,987
|
|
||||
Total stock-based compensation
|
$
|
7,788
|
|
|
$
|
3,739
|
|
|
$
|
32,270
|
|
|
$
|
8,667
|
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (CONTINUED)
|
3.
|
ACQUISITIONS
|
Cash
|
$
|
746,393
|
|
Equity interest (1,880,300 shares at $72.89)
|
137,055
|
|
|
Fair value of total consideration transferred
|
$
|
883,448
|
|
Cash and cash equivalents
|
$
|
105,464
|
|
Accounts receivable
|
3,021
|
|
|
Goodwill
|
625,174
|
|
|
Acquired trade names and other
|
48,700
|
|
|
Acquired customer base
|
71,500
|
|
|
Acquired database technology
|
52,100
|
|
|
Deferred income taxes, net
|
(32,623
|
)
|
|
Other assets and liabilities
|
10,112
|
|
|
Fair value of identifiable net assets acquired
|
$
|
883,448
|
|
3.
|
ACQUISITIONS — (CONTINUED)
|
4.
|
INVESTMENTS
|
Maturity
|
|
Fair Value
|
||
Due:
|
|
|
||
October 1, 2013 — September 30, 2014
|
|
$
|
—
|
|
October 1, 2014 — September 30, 2018
|
|
606
|
|
|
October 1, 2018 — September 30, 2023
|
|
—
|
|
|
After September 30, 2023
|
|
21,069
|
|
|
Available-for-sale investments
|
|
$
|
21,675
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Auction rate securities
|
$
|
23,517
|
|
|
$
|
164
|
|
|
$
|
(2,006
|
)
|
|
$
|
21,675
|
|
Available-for-sale investments
|
$
|
23,517
|
|
|
$
|
164
|
|
|
$
|
(2,006
|
)
|
|
$
|
21,675
|
|
4.
|
INVESTMENTS — (CONTINUED)
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Government-sponsored enterprise obligations
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37
|
|
Auction rate securities
|
23,567
|
|
|
101
|
|
|
(2,006
|
)
|
|
21,662
|
|
||||
Available-for-sale investments
|
$
|
23,604
|
|
|
$
|
101
|
|
|
$
|
(2,006
|
)
|
|
$
|
21,699
|
|
|
September 30,
2013 |
|
December 31,
2012 |
||||||||||||
|
Aggregate
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Aggregate
Fair
Value
|
|
Gross
Unrealized
Losses
|
||||||||
Government-sponsored enterprise obligations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37
|
|
|
$
|
—
|
|
Auction rate securities
|
21,069
|
|
|
(2,006
|
)
|
|
21,119
|
|
|
(2,006
|
)
|
||||
Investments in an unrealized loss position
|
$
|
21,069
|
|
|
$
|
(2,006
|
)
|
|
$
|
21,156
|
|
|
$
|
(2,006
|
)
|
5.
|
FAIR VALUE
|
5.
|
FAIR VALUE — (CONTINUED)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
136,909
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
136,909
|
|
Money market funds
|
32,338
|
|
|
—
|
|
|
—
|
|
|
32,338
|
|
||||
Commercial paper
|
53,691
|
|
|
—
|
|
|
—
|
|
|
53,691
|
|
||||
Auction rate securities
|
—
|
|
|
—
|
|
|
21,675
|
|
|
21,675
|
|
||||
Total assets measured at fair value
|
$
|
222,938
|
|
|
$
|
—
|
|
|
$
|
21,675
|
|
|
$
|
244,613
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,208
|
|
|
$
|
1,208
|
|
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,208
|
|
|
$
|
1,208
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
135,232
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
135,232
|
|
Money market funds
|
20,775
|
|
|
—
|
|
|
—
|
|
|
20,775
|
|
||||
Commercial paper
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Government-sponsored enterprise obligations
|
—
|
|
|
37
|
|
|
—
|
|
|
37
|
|
||||
Auction rate securities
|
—
|
|
|
—
|
|
|
21,662
|
|
|
21,662
|
|
||||
Total assets measured at fair value
|
$
|
156,027
|
|
|
$
|
37
|
|
|
$
|
21,662
|
|
|
$
|
177,726
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,304
|
|
|
$
|
2,304
|
|
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,304
|
|
|
$
|
2,304
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Balance at beginning of period
|
$
|
21,675
|
|
|
$
|
24,976
|
|
|
$
|
21,662
|
|
|
$
|
24,584
|
|
Auction rate securities upon acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
442
|
|
||||
Change in unrealized gain included in accumulated other comprehensive loss
|
—
|
|
|
735
|
|
|
63
|
|
|
735
|
|
||||
Settlements
|
—
|
|
|
(4,150
|
)
|
|
(50
|
)
|
|
(4,200
|
)
|
||||
Balance at end of period
|
$
|
21,675
|
|
|
$
|
21,561
|
|
|
$
|
21,675
|
|
|
$
|
21,561
|
|
5.
|
FAIR VALUE — (CONTINUED)
|
|
Auction
Rate
Securities
|
||
Balance at December 31, 2007
|
$
|
53,975
|
|
Change in unrealized loss included in accumulated other comprehensive loss
|
(3,710
|
)
|
|
Settlements
|
(20,925
|
)
|
|
Balance at December 31, 2008
|
29,340
|
|
|
Change in unrealized gain included in accumulated other comprehensive loss
|
684
|
|
|
Settlements
|
(300
|
)
|
|
Balance at December 31, 2009
|
29,724
|
|
|
Change in unrealized gain included in accumulated other comprehensive loss
|
40
|
|
|
Settlements
|
(575
|
)
|
|
Balance at December 31, 2010
|
29,189
|
|
|
Change in unrealized gain included in accumulated other comprehensive loss
|
245
|
|
|
Settlements
|
(4,850
|
)
|
|
Balance at December 31, 2011
|
24,584
|
|
|
Auction rate securities upon acquisition
|
442
|
|
|
Change in unrealized gain included in accumulated other comprehensive loss
|
836
|
|
|
Settlements
|
(4,200
|
)
|
|
Balance at December 31, 2012
|
21,662
|
|
|
Change in unrealized gain included in accumulated other comprehensive loss
|
63
|
|
|
Settlements
|
(50
|
)
|
|
Balance at September 30, 2013
|
$
|
21,675
|
|
5.
|
FAIR VALUE — (CONTINUED)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Balance at beginning of period
|
$
|
1,146
|
|
|
$
|
2,072
|
|
|
$
|
2,304
|
|
|
$
|
—
|
|
Deferred consideration upon acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
2,011
|
|
||||
Accretion for period
|
62
|
|
|
113
|
|
|
248
|
|
|
174
|
|
||||
Payments made during period
|
—
|
|
|
—
|
|
|
(1,344
|
)
|
|
—
|
|
||||
Balance at end of period
|
$
|
1,208
|
|
|
$
|
2,185
|
|
|
$
|
1,208
|
|
|
$
|
2,185
|
|
|
Deferred
Consideration
|
||
Balance at December 31, 2011
|
$
|
—
|
|
Deferred consideration upon acquisition
|
2,011
|
|
|
Accretion for 2012
|
293
|
|
|
Balance at December 31, 2012
|
2,304
|
|
|
Accretion from January 1, 2013 – September 30, 2013
|
248
|
|
|
Payments made from January 1, 2013 – September 30, 2013
|
(1,344
|
)
|
|
Balance at September 30, 2013
|
$
|
1,208
|
|
5.
|
FAIR VALUE — (CONTINUED)
|
6.
|
GOODWILL
|
|
United States
|
|
International
|
|
Total
|
||||||
Goodwill, December 31, 2011
|
$
|
67,465
|
|
|
$
|
24,319
|
|
|
$
|
91,784
|
|
Acquisitions
|
625,174
|
|
|
—
|
|
|
625,174
|
|
|||
Effect of foreign currency translation
|
—
|
|
|
1,120
|
|
|
1,120
|
|
|||
Goodwill, December 31, 2012
|
692,639
|
|
|
25,439
|
|
|
718,078
|
|
|||
Effect of foreign currency translation
|
—
|
|
|
(39
|
)
|
|
(39
|
)
|
|||
Goodwill, September 30, 2013
|
$
|
692,639
|
|
|
$
|
25,400
|
|
|
$
|
718,039
|
|
7.
|
INTANGIBLES AND OTHER ASSETS
|
|
September 30,
2013 |
|
December 31,
2012 |
|
Weighted-
Average
Amortization
Period (in years)
|
||||
Capitalized product development cost
|
$
|
2,140
|
|
|
$
|
2,140
|
|
|
4
|
Accumulated amortization
|
(1,981
|
)
|
|
(1,838
|
)
|
|
|
||
Capitalized product development cost, net
|
159
|
|
|
302
|
|
|
|
||
|
|
|
|
|
|
||||
Building photography
|
13,566
|
|
|
12,474
|
|
|
5
|
||
Accumulated amortization
|
(11,830
|
)
|
|
(11,639
|
)
|
|
|
||
Building photography, net
|
1,736
|
|
|
835
|
|
|
|
||
|
|
|
|
|
|
||||
Acquired database technology
|
77,325
|
|
|
77,328
|
|
|
5
|
||
Accumulated amortization
|
(38,284
|
)
|
|
(29,673
|
)
|
|
|
||
Acquired database technology, net
|
39,041
|
|
|
47,655
|
|
|
|
||
|
|
|
|
|
|
||||
Acquired customer base
|
130,662
|
|
|
130,683
|
|
|
10
|
||
Accumulated amortization
|
(70,968
|
)
|
|
(59,218
|
)
|
|
|
||
Acquired customer base, net
|
59,694
|
|
|
71,465
|
|
|
|
||
|
|
|
|
|
|
||||
Acquired trade names and other
(1)
|
59,249
|
|
|
59,255
|
|
|
7
|
||
Accumulated amortization
|
(9,079
|
)
|
|
(8,880
|
)
|
|
|
||
Acquired trade names and other, net
|
50,170
|
|
|
50,375
|
|
|
|
||
|
|
|
|
|
|
||||
Intangibles and other assets, net
|
$
|
150,800
|
|
|
$
|
170,632
|
|
|
|
8.
|
LONG-TERM DEBT
|
8.
|
LONG-TERM DEBT — (CONTINUED)
|
9.
|
INCOME TAXES
|
9.
|
INCOME TAXES — (CONTINUED)
|
10.
|
COMMITMENTS AND CONTINGENCIES
|
10.
|
COMMITMENTS AND CONTINGENCIES — (CONTINUED)
|
11.
|
SEGMENT REPORTING
|
11.
|
SEGMENT REPORTING — (CONTINUED)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
107,230
|
|
|
$
|
91,153
|
|
|
$
|
310,762
|
|
|
$
|
235,606
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
||||
External customers
|
5,071
|
|
|
4,848
|
|
|
14,571
|
|
|
14,247
|
|
||||
Intersegment revenue
|
131
|
|
|
388
|
|
|
277
|
|
|
1,154
|
|
||||
Total international revenue
|
5,202
|
|
|
5,236
|
|
|
14,848
|
|
|
15,401
|
|
||||
Intersegment eliminations
|
(131
|
)
|
|
(388
|
)
|
|
(277
|
)
|
|
(1,154
|
)
|
||||
Total revenues
|
$
|
112,301
|
|
|
$
|
96,001
|
|
|
$
|
325,333
|
|
|
$
|
249,853
|
|
|
|
|
|
|
|
|
|
||||||||
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States
|
$
|
30,855
|
|
|
$
|
22,688
|
|
|
$
|
66,609
|
|
|
$
|
46,302
|
|
International
|
(1,063
|
)
|
|
(3,047
|
)
|
|
(3,917
|
)
|
|
(6,568
|
)
|
||||
Total EBITDA
|
$
|
29,792
|
|
|
$
|
19,641
|
|
|
$
|
62,692
|
|
|
$
|
39,734
|
|
Reconciliation of EBITDA to net income
|
|
|
|
|
|
|
|
||||||||
EBITDA
|
$
|
29,792
|
|
|
$
|
19,641
|
|
|
$
|
62,692
|
|
|
$
|
39,734
|
|
Purchase amortization in cost of revenues
|
(2,954
|
)
|
|
(3,027
|
)
|
|
(9,007
|
)
|
|
(5,607
|
)
|
||||
Purchase amortization in operating expenses
|
(3,680
|
)
|
|
(4,824
|
)
|
|
(11,699
|
)
|
|
(9,038
|
)
|
||||
Depreciation and other amortization
|
(3,388
|
)
|
|
(2,844
|
)
|
|
(9,531
|
)
|
|
(7,554
|
)
|
||||
Interest income
|
52
|
|
|
59
|
|
|
239
|
|
|
440
|
|
||||
Interest expense
|
(1,736
|
)
|
|
(1,822
|
)
|
|
(5,249
|
)
|
|
(3,022
|
)
|
||||
Income tax expense, net
|
(7,034
|
)
|
|
(404
|
)
|
|
(10,510
|
)
|
|
(9,752
|
)
|
||||
Net income
|
$
|
11,052
|
|
|
$
|
6,779
|
|
|
$
|
16,935
|
|
|
$
|
5,201
|
|
11.
|
SEGMENT REPORTING — (CONTINUED)
|
|
September 30,
2013 |
|
December 31,
2012 |
||||
Property and equipment, net
|
|
|
|
||||
United States
|
$
|
51,781
|
|
|
$
|
42,480
|
|
International
|
3,922
|
|
|
3,828
|
|
||
Total property and equipment, net
|
$
|
55,703
|
|
|
$
|
46,308
|
|
|
|
|
|
||||
Goodwill
|
|
|
|
|
|
||
United States
|
$
|
692,639
|
|
|
$
|
692,639
|
|
International
|
25,400
|
|
|
25,439
|
|
||
Total goodwill
|
$
|
718,039
|
|
|
$
|
718,078
|
|
|
|
|
|
||||
Assets
|
|
|
|
|
|
||
United States
|
$
|
1,285,779
|
|
|
$
|
1,215,949
|
|
International
|
41,963
|
|
|
40,933
|
|
||
Total operating segment assets
|
$
|
1,327,742
|
|
|
$
|
1,256,882
|
|
|
|
|
|
||||
Reconciliation of operating segment assets to total assets
|
|
|
|
|
|
||
Total operating segment assets
|
$
|
1,327,742
|
|
|
$
|
1,256,882
|
|
Investment in subsidiaries
|
(18,344
|
)
|
|
(18,344
|
)
|
||
Intersegment receivables
|
(79,024
|
)
|
|
(73,399
|
)
|
||
Total assets
|
$
|
1,230,374
|
|
|
$
|
1,165,139
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
|
||
United States
|
$
|
326,850
|
|
|
$
|
335,855
|
|
International
|
77,209
|
|
|
70,108
|
|
||
Total operating segment liabilities
|
$
|
404,059
|
|
|
$
|
405,963
|
|
|
|
|
|
||||
Reconciliation of operating segment liabilities to total liabilities
|
|
|
|
|
|
||
Total operating segment liabilities
|
$
|
404,059
|
|
|
$
|
405,963
|
|
Intersegment payables
|
(73,004
|
)
|
|
(67,167
|
)
|
||
Total liabilities
|
$
|
331,055
|
|
|
$
|
338,796
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Significant underperformance relative to historical or projected future operating results;
|
•
|
Significant changes in the manner of our use of the acquired assets or the strategy for our overall business;
|
•
|
Significant negative industry or economic trends; or
|
•
|
Significant decline in our market capitalization relative to net book value for a sustained period.
|
•
|
Purchase amortization in cost of revenues may be useful for investors to consider because it represents the use of our acquired database technology, which is one of the sources of information for our database of commercial real estate information. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
|
•
|
Purchase amortization in operating expenses may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of any acquired trade names. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
|
•
|
Depreciation and other amortization may be useful for investors to consider because they generally represent the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
|
•
|
The amount of interest income we generate may be useful for investors to consider and may result in current cash inflows. However, we do not consider the amount of interest income to be a representative component of the day-to-day operating performance of our business.
|
•
|
The amount of interest expense we incur may be useful for investors to consider and may result in current cash outflows. However, we do not consider the amount of interest expense to be a representative component of the day-to-day operating performance of our business.
|
•
|
Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business.
|
•
|
Purchase amortization in cost of revenues, purchase amortization in operating expenses, depreciation and other amortization, interest income, interest expense, and income tax expense as previously described above with respect to the calculation of EBITDA.
|
•
|
Stock-based compensation expense may be useful for investors to consider because it represents a portion of the compensation of our employees and executives. Determining the fair value of the stock-based instruments involves a high degree of judgment and estimation and the expenses recorded may bear little resemblance to the actual value realized upon the future exercise or termination of the related stock-based awards. Therefore, we believe it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business.
|
•
|
The amount of acquisition- and integration-related costs incurred may be useful for investors to consider because they generally represent professional service fees and direct expenses related to the acquisition. Because we do not acquire businesses on a predictable cycle we do not consider the amount of acquisition- and integration-related costs to be a representative component of the day-to-day operating performance of our business.
|
•
|
The amount of restructuring costs incurred may be useful for investors to consider because they generally represent costs incurred in connection with a change in the makeup of our properties or personnel. We do not consider the amount of restructuring related costs to be a representative component of the day-to-day operating performance of our business.
|
•
|
The amount of material settlement and impairment costs incurred outside of our ordinary course of business may be useful for investors to consider because they generally represent gains or losses from the settlement of litigation matters. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net income
|
$
|
11,052
|
|
|
$
|
6,779
|
|
|
$
|
16,935
|
|
|
$
|
5,201
|
|
Purchase amortization in cost of revenues
|
2,954
|
|
|
3,027
|
|
|
9,007
|
|
|
5,607
|
|
||||
Purchase amortization in operating expenses
|
3,680
|
|
|
4,824
|
|
|
11,699
|
|
|
9,038
|
|
||||
Depreciation and other amortization
|
3,388
|
|
|
2,844
|
|
|
9,531
|
|
|
7,554
|
|
||||
Interest income
|
(52
|
)
|
|
(59
|
)
|
|
(239
|
)
|
|
(440
|
)
|
||||
Interest expense
|
1,736
|
|
|
1,822
|
|
|
5,249
|
|
|
3,022
|
|
||||
Income tax expense, net
|
7,034
|
|
|
404
|
|
|
10,510
|
|
|
9,752
|
|
||||
EBITDA
|
$
|
29,792
|
|
|
$
|
19,641
|
|
|
$
|
62,692
|
|
|
$
|
39,734
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flows provided by (used in)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating activities
|
$
|
31,261
|
|
|
$
|
25,980
|
|
|
$
|
72,828
|
|
|
$
|
56,558
|
|
Investing activities
|
(6,410
|
)
|
|
1,267
|
|
|
(15,244
|
)
|
|
(635,311
|
)
|
||||
Financing activities
|
7,858
|
|
|
(1,187
|
)
|
|
9,219
|
|
|
162,872
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Month, 2013
|
|
Total Number of
Shares
Purchased
|
|
Average
Price Paid
per Share
|
|
Total Number of
Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
|
|
Maximum
Number of Shares
that May Yet Be
Purchased Under
the Plans or
Programs
|
|||||
July 1 through July 31
|
|
712
|
|
|
$
|
136.75
|
|
|
—
|
|
|
—
|
|
August 1 through August 31
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
September 1 through September 30
|
|
1,755
|
|
|
152.45
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
2,467
|
|
(1)
|
$
|
147.92
|
|
|
—
|
|
|
—
|
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
|
|
COSTAR GROUP, INC.
|
||
Date:
|
October 24, 2013
|
By:
|
|
/s/ Brian J. Radecki
|
|
|
|
|
Brian J. Radecki
Chief Financial Officer
(Principal Financial and Accounting Officer and Duly Authorized Officer)
|
Exhibit No.
|
|
Description
|
2.1
|
|
Agreement and Plan of Merger, dated as of April 27, 2011, by and among CoStar Group, Inc., Lonestar Acquisition Sub, Inc. and LoopNet, Inc. (Incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed with the Commission on April 28, 2011).
|
2.2
|
|
Amendment No. 1 to the Agreement and Plan of Merger, dated as of May 20, 2011, among LoopNet, Inc., the Registrant and Lonestar Acquisition Sub, Inc. (Incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed with the Commission on May 23, 2011).
|
3.1
|
|
Third Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on June 6, 2013).
|
3.2
|
|
Amended and Restated By-Laws (Incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on September 24, 2013).
|
10.1
|
|
Summary of Non-Employee Director Compensation (filed herewith).
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
32.1
|
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
32.2
|
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
101
|
|
The following materials from CoStar Group, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2013 and 2012, respectively; (ii) Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2013 and 2012, respectively; (iii) Unaudited Condensed Consolidated Balance Sheets at September 30, 2013 and December 31, 2012, respectively; (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012, respectively; and (v) Notes to the Unaudited Condensed Consolidated Financial Statements that have been detail tagged.
|
SUMMARY OF NON-EMPLOYEE DIRECTOR COMPENSATION
(1)
|
||||
|
|
|
||
Annual Cash Retainers
|
|
|||
|
Board Members (other than Chairman)
|
$
|
50,000
|
|
|
Chairman of the Board
|
$
|
120,000
|
|
Annual Equity Awards
(2)
|
|
|||
|
Board Members (including Chairman)
|
$
|
175,000
|
|
|
Audit Committee Chairman
|
$
|
30,000
|
|
|
Compensation Committee Chairman
|
$
|
15,000
|
|
|
Nominating & Corporate Governance Committee Chairman
|
$
|
15,000
|
|
|
Audit Committee Member
|
$
|
15,000
|
|
|
Compensation Committee Member
|
$
|
8,000
|
|
|
Nominating & Corporate Governance Committee Member
|
$
|
6,000
|
|
_______________
|
|
|||
|
|
|
||
(1)
Effective September 19, 2013. The Company generally reimburses all directors for reasonable travel and out-of-pocket expenses incurred in connection with their duties as directors, including attendance at meetings.
|
||||
(2)
Annual equity awards are payable in the form of restricted stock, are valued at the grant date, and vest in equal, annual installments over a 4-year period from the date of grant.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of CoStar Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
October 24, 2013
|
By: Andrew C. Florance
|
|
|
|
|
|
/s/ Andrew C. Florance
|
|
|
Andrew C. Florance
Chief Executive Officer
(Principal Executive Officer and Duly Authorized Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of CoStar Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
October 24, 2013
|
By: Brian J. Radecki
|
|
|
|
|
|
/s/ Brian J. Radecki
|
|
|
Brian J. Radecki
Chief Financial Officer
(Principal Financial and Accounting Officer and Duly Authorized Officer)
|
/s/ Andrew C. Florance
|
Andrew C. Florance
Chief Executive Officer
(Principal Executive Officer and Duly Authorized Officer)
|
/s/ Brian J. Radecki
|
Brian J. Radecki
Chief Financial Officer
(Principal Financial and Accounting Officer and Duly Authorized Officer)
|