þ
|
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2012
|
o
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
(State or other jurisdiction of incorporation or organization)
|
No. 74-2853258
(I.R.S. Employer Identification No.)
|
Title of each class:
Common Stock, $0.001 par value
|
Name of each exchange on which registered:
The Nasdaq Global Select Market
|
PART I
|
|||||
Item 1.
|
Business.
|
1 | |||
Item 1A.
|
Risk Factors.
|
5 | |||
Item 1B.
|
Unresolved Staff Comments.
|
13 | |||
Item 2.
|
Properties.
|
13 | |||
Item 3.
|
Legal Proceedings.
|
13 | |||
Item 4.
|
Mine Safety Disclosures.
|
13 | |||
PART II
|
|||||
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
14 | |||
Item 6.
|
Selected Financial Data.
|
15 | |||
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
15 | |||
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
25 | |||
Item 8.
|
Financial Statements and Supplementary Data.
|
26 | |||
Item 9.
|
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.
|
46 | |||
Item 9A.
|
Controls and Procedures.
|
46 | |||
Item 9B.
|
Other Information.
|
46 | |||
PART III
|
|||||
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
47 | |||
Item 11.
|
Executive Compensation.
|
48 | |||
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
48 | |||
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
48 | |||
Item 14.
|
Principal Accounting Fees and Services.
|
48 | |||
PART IV
|
|||||
Item 15.
|
Exhibits, Financial Statement Schedules.
|
49 |
(1)
|
the impact of the general economy and economic uncertainty on our business;
|
(2)
|
risks associated with the operation of our business generally, including:
|
a.
|
client demand for our services and solutions;
|
b.
|
maintaining a balance of our supply of skills and resources with client demand;
|
c.
|
effectively competing in a highly competitive market;
|
d.
|
protecting our clients’ and our data and information;
|
e.
|
risks from international operations;
|
f.
|
obtaining favorable pricing to reflect services provided;
|
g.
|
adapting to changes in technologies and offerings; and
|
h.
|
risk of loss of one or more significant software vendors;
|
(3)
|
legal liabilities, including intellectual property protection and infringement;
|
(4)
|
risks associated with managing growth through acquisitions and organically; and
|
(5)
|
the risks detailed from time to time with our filings with the Securities and Exchange Commission (the “SEC”).
|
Item 1.
|
Business.
|
·
|
give managers and executives the information they need to make quality business decisions and dynamically adapt their business processes and systems to respond to client demands, market opportunities, or business problems;
|
·
|
improve the quality and lower the cost of customer acquisition and care through web-based customer self-service and provisioning;
|
·
|
reduce supply chain costs and improve logistics by flexibly and quickly integrating processes and systems and making relevant real-time information and applications available online to suppliers, partners, and distributors;
|
·
|
increase the effectiveness and value of legacy enterprise technology infrastructure investments by enabling faster application development and deployment, increased flexibility, and lower management costs; and
|
·
|
increase employee productivity through better information flow and collaboration capabilities and by automating routine processes to enable focus on unique problems and opportunities.
|
·
|
Business integration and service oriented architectures (“SOA”)
. We design, develop, and implement business integration and SOA solutions that allow our clients to integrate all of their business processes end-to-end and across the enterprise. Truly innovative companies are extending those processes and eliminating functional friction between the enterprise, core customers, and partners. Our business integration solutions can extend and extract core applications, reduce infrastructure strains and cost, web-enable legacy applications, provide real-time insight into business metrics, and introduce efficiencies for customers, suppliers, and partners.
|
·
|
Enterprise portals and collaboration
. We design, develop, implement, and integrate secure and scalable enterprise portals and collaboration solutions for our clients and their customers, suppliers, and partners that include searchable data systems, collaborative systems for process improvement, transaction processing, unified and extended reporting, content management, social media/networking tools, and personalization.
|
·
|
Custom applications
. We design, develop, implement, and integrate custom application solutions that deliver enterprise-specific functionality to meet the unique requirements and needs of our clients. Our substantial experience with platforms including J2EE, .Net, and Open-source enables enterprises of all types to leverage cutting-edge technologies to meet business-driven needs.
|
·
|
Technology platform implementations
. We design, develop, and implement technology platform implementations that allow our clients to establish a robust, reliable Internet-based infrastructure for integrated business applications which extend enterprise technology assets to employees, customers, suppliers, and partners. Our platform services include application server selection, architecture planning, installation and configuration, clustering for availability, performance assessment and issue remediation, security services, and technology migrations.
|
·
|
Customer relationship management (“CRM”)
. We design, develop, and implement advanced CRM solutions that facilitate customer acquisition, service and support, and sales and marketing by understanding our customers’ needs through interviews, requirement gathering sessions, call center analysis, developing an iterative prototype driven solution, and integrating the solution to legacy processes and applications.
|
·
|
Enterprise performance management (“EPM”)
. We design, develop, and implement EPM solutions that allow our clients to quickly adapt their business processes to respond to new market opportunities or competitive threats by taking advantage of business strategies supported by flexible business applications and information technology infrastructures.
|
·
|
Enterprise content management (“ECM”)
. We design, develop, and implement ECM solutions that enable the management of all unstructured information regardless of file type or format. Our ECM solutions can facilitate the creation of new content and/or provide easy access and retrieval of existing digital assets from other enterprise tools such as enterprise resource planning, customer relationship management, or legacy applications. Our ECM solutions include Enterprise Imaging and Document Management, Web Content Management, Digital Asset Management, Enterprise Records Management, Compliance and Control, Business Process Management and Collaboration, and Enterprise Search.
|
·
|
Business intelligence
. We design, develop, and implement business intelligence solutions that allow companies to interpret and act upon accurate, timely, and integrated information. Business intelligence solutions help our clients make more informed business decisions by classifying, aggregating, and correlating data into meaningful business information. Our business intelligence solutions allow our clients to transform data into knowledge for quick and effective decision making and can include information strategy, data warehousing, and business analytics and reporting.
|
·
|
Domain Expertise
. We have acquired significant domain expertise in a core set of technology solutions and software platforms. These
solutions include business integration, portals and collaboration, custom applications, technology platform implementations, customer relationship management, enterprise performance management, enterprise content management, and business intelligence, among others.
The platforms in which we have significant domain expertise and on which these solutions are built include IBM, Oracle and Microsoft, among others.
|
·
|
Industry Expertise
. We serve many of the world’s largest and most respected companies with deep business process experience across a variety of industries. These industries include healthcare, financial services and banking, telecommunications, automotive, and energy, among others.
|
·
|
Delivery Model and Methodology
. We believe our significant domain expertise enables us to provide high-value solutions through expert project teams that deliver measurable results by working collaboratively with clients through a user-centered, technology-based, and business-driven solutions methodology. Our methodology includes a proven execution process map we developed, which allows for repeatable, high quality services delivery. The methodology leverages the thought leadership of our senior strategists and practitioners to support the client project team and focuses on transforming our clients’ business processes to provide enhanced customer value and operating efficiency, enabled by web technology. As a result, we believe we are able to offer our clients the dedicated attention that small firms usually provide and the delivery and project management that larger firms usually offer.
|
·
|
Client Relationships
. We have built a track record of quality solutions and client satisfaction through the timely, efficient, and successful completion of numerous projects for our clients. As a result, we have established long-term relationships with many of our clients who continue to engage us for additional projects and serve as references for us. For the years ending December 31, 2012, 2011 and 2010, 84%, 81% and 84%, respectively, of services revenues were derived from clients who continued to utilize our services from the prior year, excluding any revenues from acquisitions completed in that year.
|
·
|
Vendor Relationship and Endorsements
. We have built meaningful relationships with software providers, whose products we use to design and implement solutions for our clients. These relationships enable us to reduce our cost of sales and sales cycle times and increase win rates by leveraging our partners’ marketing efforts and endorsements. We also serve as a sales channel for our partners, helping them market and sell their software products. We are an IBM Premier Business Partner, an Oracle Platinum Partner, a Microsoft Gold Certified Partner and National Systems Integrator, a Team TIBCO Partner, and an EMC Consulting Preferred Partner. Our vendors have recognized our relationships with several awards. In 2012, we received the IBM Information Management Integration Excellence Award and the IBM Business Analytics Solution Provider Achievement Award. We were also named Microsoft Healthcare Provider Partner of the Year and received the Microsoft Northeast Area Cloud Practice Award and the Microsoft Best Practices Award.
|
·
|
Offshore Capability
. We serve our clients from locations in 20 markets throughout North America and, in addition, we operate global development centers in Hangzhou, China and Chennai, India. These facilities are staffed with colleagues who have specializations that include application development, adapter and interface development, quality assurance and testing, monitoring and support, product development, platform migration, and portal development with expertise in IBM, Oracle and Microsoft technologies. In addition to our offshore capabilities, we employ a number of foreign nationals in the United States on H1-B visas. The facility in Chennai, India is also a recruiting and development facility used to continue to grow our base of H1-B foreign national colleagues. As of December 31, 2012, we had 178 colleagues at the Hangzhou, China facility, 38 colleagues at the Chennai, India facility, and 191 colleagues with H1-B visas. We intend to continue to leverage our existing offshore capabilities to support our growth and provide our clients flexible options for project delivery.
|
·
|
small local consulting firms that operate in no more than one or two geographic regions;
|
·
|
boutique consulting firms, such as Prolifics and Avanade;
|
·
|
national consulting firms, such as Accenture, Deloitte Consulting and Sapient;
|
·
|
in-house professional services organizations of software companies; and
|
·
|
offshore providers, such as Infosys Technologies Limited and Wipro Limited.
|
Item 1A.
|
Risk Factors.
|
·
|
political and economic instability;
|
·
|
global health conditions and potential natural disasters;
|
·
|
unexpected changes in regulatory requirements;
|
·
|
international currency controls and exchange rate fluctuations;
|
·
|
reduced protection for intellectual property rights in some countries; and
|
·
|
additional vulnerability from terrorist groups targeting U.S. interests abroad.
|
·
|
general economic and political conditions;
|
·
|
the competitive environment in our industry, as described below;
|
·
|
our clients’ desire to reduce their costs;
|
·
|
our ability to accurately estimate, attain, and sustain contract revenues, margins, and cash flows over the full contract period; and
|
·
|
procurement practices of clients and their use of third-party advisors.
|
·
|
changes in macroeconomic or political factors unrelated to our business;
|
·
|
general or industry-specific market conditions or changes in financial markets;
|
·
|
announcements by us or competitors about developments in our business or prospects;
|
·
|
projections or speculation about our business or that of competitors by the media or investment analysts; and
|
·
|
our failure to meet our growth and financial objectives, including with respect to our overall revenue growth, revenue growth for our priority emerging markets and earnings per share growth.
|
·
|
the business decisions of our clients to begin to curtail or reduce the use of our services, including in response to changes in macroeconomic or political conditions unrelated to our business or general market conditions;
|
·
|
periodic differences between our clients’ estimated and actual levels of business activity associated with ongoing work, as well as the stage of completion of existing projects and/or their termination or restructuring;
|
·
|
contract delivery inefficiencies, such as those due to poor delivery or changes in forecasts;
|
·
|
our ability to transition employees quickly from completed to new projects and maintain an appropriate headcount in each of our workforces;
|
·
|
acquisition, integration and operational costs related to businesses acquired;
|
·
|
the introduction of new products or services by us, competitors or partners;
|
·
|
changes in our pricing or competitors’ pricing;
|
·
|
our ability to manage costs, including those for our own or subcontracted personnel, travel, support services and severance;
|
·
|
our ability to limit and manage the incurrence of pre-contract costs, which must be expensed without corresponding revenues, which are then recognized in later periods without the corresponding costs;
|
·
|
changes in, or the application of changes in, accounting principles or pronouncements under U.S. generally accepted accounting principles, particularly those related to revenue recognition;
|
·
|
currency exchange rate fluctuations;
|
·
|
changes in estimates, accruals or payments of variable compensation to our employees;
|
·
|
global, regional and local economic and political conditions and related risks, including acts of terrorism; and
|
·
|
seasonality, including number of workdays and holidays and summer vacations.
|
Item 1B.
|
Unresolved Staff Comments.
|
Item 2.
|
Properties.
|
Item 3.
|
Legal Proceedings.
|
Item 4.
|
Mine Safety Disclosures.
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
High
|
Low
|
|||||||
Year Ending December 31, 2012:
|
||||||||
First Quarter
|
$
|
12.80
|
$
|
10.24
|
||||
Second Quarter
|
12.95
|
10.62
|
||||||
Third Quarter
|
13.54
|
9.79
|
||||||
Fourth Quarter
|
12.38
|
9.78
|
||||||
Year Ending December 31, 2011:
|
||||||||
First Quarter
|
$
|
13.16
|
$
|
10.68
|
||||
Second Quarter
|
12.76
|
9.22
|
||||||
Third Quarter
|
11.32
|
7.09
|
||||||
Fourth Quarter
|
10.32
|
6.41
|
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
|
||||||
Beginning Balance as of October 1, 2012
|
7,423,767
|
$
|
7.35
|
7,423,767
|
$
|
15,398,879
|
||||
October 1-31, 2012
|
--
|
--
|
--
|
$
|
15,398,879
|
|||||
November 1-30, 2012
|
--
|
--
|
--
|
$
|
15,398,879
|
|||||
December 1-31, 2012
|
497,103
|
10.90
|
497,103
|
$
|
9,978,590
|
|||||
Ending Balance as of December 31, 2012
|
7,920,870
|
$
|
7.58
|
7,920,870
|
I
tem 6.
|
Selected Financial Data.
|
Year Ended December 31,
|
||||||||||||||||||||
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
Income Statement Data:
|
(In thousands, except per share information)
|
|||||||||||||||||||
Revenues
|
$
|
327,096
|
$
|
262,439
|
$
|
214,952
|
$
|
188,150
|
$
|
231,488
|
||||||||||
Gross margin
|
$
|
103,403
|
$
|
81,134
|
$
|
62,767
|
$
|
48,333
|
$
|
73,502
|
||||||||||
Selling, general and administrative
|
$
|
64,853
|
$
|
51,672
|
$
|
45,477
|
$
|
40,042
|
$
|
47,242
|
||||||||||
Depreciation and amortization
|
$
|
10,078
|
$
|
8,095
|
$
|
4,784
|
$
|
5,750
|
$
|
6,949
|
||||||||||
Acquisition costs
|
$
|
1,871
|
$
|
1,249
|
$
|
993
|
$
|
--
|
$
|
--
|
||||||||||
Adjustment to fair value of contingent consideration
|
$
|
517
|
$
|
1,586
|
$
|
(4
|
)
|
$
|
--
|
$
|
--
|
|||||||||
Impairment of intangible assets
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
1,633
|
||||||||||
Income from operations
|
$
|
26,084
|
$
|
18,532
|
$
|
11,517
|
$
|
2,541
|
$
|
17,678
|
||||||||||
Net interest (expense) income
|
$
|
(143
|
)
|
$
|
68
|
$
|
163
|
$
|
209
|
$
|
528
|
|||||||||
Net other income (expense)
|
$
|
44
|
$
|
45
|
$
|
68
|
$
|
260
|
$
|
(915
|
)
|
|||||||||
Income before income taxes
|
$
|
25,985
|
$
|
18,645
|
$
|
11,748
|
$
|
3,010
|
$
|
17,291
|
||||||||||
Net income
|
$
|
16,107
|
$
|
10,747
|
$
|
6,480
|
$
|
1,463
|
$
|
10,000
|
||||||||||
Basic net income per share
|
$
|
0.54
|
$
|
0.39
|
$
|
0.24
|
$
|
0.05
|
$
|
0.34
|
||||||||||
Diluted net income per share
|
$
|
0.52
|
$
|
0.37
|
$
|
0.23
|
$
|
0.05
|
$
|
0.33
|
As of December 31,
|
||||||||||||||||||||
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
Balance Sheet Data:
|
(In thousands)
|
|||||||||||||||||||
Cash, cash equivalents, and short-term investments
|
$
|
5,813
|
$
|
9,732
|
$
|
24,008
|
$
|
24,302
|
$
|
22,909
|
||||||||||
Working capital
|
$
|
52,277
|
$
|
51,476
|
$
|
47,632
|
$
|
50,205
|
$
|
56,176
|
||||||||||
Long-term investments
|
$
|
--
|
$
|
--
|
$
|
2,254
|
$
|
3,652
|
$
|
--
|
||||||||||
Property and equipment, net
|
$
|
4,398
|
$
|
3,490
|
$
|
2,355
|
$
|
1,278
|
$
|
2,345
|
||||||||||
Goodwill and intangible assets, net
|
$
|
178,286
|
$
|
142,166
|
$
|
124,056
|
$
|
111,773
|
$
|
115,634
|
||||||||||
Total assets
|
$
|
267,194
|
$
|
223,932
|
$
|
207,678
|
$
|
184,810
|
$
|
194,247
|
||||||||||
Long-term debt
|
$
|
2,800
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
||||||||||
Total stockholders’ equity
|
$
|
234,413
|
$
|
198,959
|
$
|
177,164
|
$
|
168,348
|
$
|
174,818
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
Revenues:
|
2012
|
2011
|
2010
|
|||||||||
Services revenues
|
87.6
|
%
|
88.8
|
%
|
86.1
|
%
|
||||||
Software and hardware revenues
|
7.7
|
6.0
|
9.6
|
|||||||||
Reimbursable expenses
|
4.7
|
5.2
|
4.3
|
|||||||||
Total revenues
|
100.0
|
100.0
|
100.0
|
|||||||||
Cost of revenues (depreciation and amortization, shown separately below):
|
||||||||||||
Project personnel costs
|
55.9
|
56.9
|
55.5
|
|||||||||
Software and hardware costs
|
6.6
|
5.2
|
8.4
|
|||||||||
Reimbursable expenses
|
4.7
|
5.2
|
4.3
|
|||||||||
Other project-related expenses
|
1.2
|
1.8
|
2.6
|
|||||||||
Total cost of revenues
|
68.4
|
69.1
|
70.8
|
|||||||||
Services gross margin
|
34.8
|
33.9
|
32.6
|
|||||||||
Software and hardware gross margin
|
14.5
|
13.5
|
11.9
|
|||||||||
Total gross margin
|
31.6
|
30.9
|
29.2
|
|||||||||
Selling, general and administrative
|
19.8
|
19.7
|
21.2
|
|||||||||
Depreciation and amortization
|
3.1
|
3.1
|
2.2
|
|||||||||
Acquisition costs
|
0.6
|
0.5
|
0.5
|
|||||||||
Adjustment to fair value of contingent consideration
|
0.2
|
0.5
|
0.0
|
|||||||||
Income from operations
|
7.9
|
7.1
|
5.3
|
|||||||||
Net interest income
|
0.0
|
0.0
|
0.1
|
|||||||||
Net other income
|
0.0
|
0.0
|
0.0
|
|||||||||
Income before income taxes
|
7.9
|
7.1
|
5.4
|
|||||||||
Provision for income taxes
|
3.0
|
3.0
|
2.5
|
|||||||||
Net income
|
4.9
|
%
|
4.1
|
%
|
2.9
|
%
|
Financial Results
|
Explanation for Increases Over Prior Year Period
|
|||||||||||||||||||
(in thousands)
|
(in thousands)
|
|||||||||||||||||||
For the Year Ended December
31, 2012
|
For the Year Ended December
31, 2011
|
Total Increase Over Prior Year Period
|
Increase Attributable to Acquired Companies
|
Increase Attributable to Base Business
|
||||||||||||||||
Services Revenues
|
$
|
286,548
|
$
|
233,166
|
$
|
53,382
|
$
|
39,457
|
$
|
13,925
|
||||||||||
Software and Hardware Revenues
|
25,188
|
15,624
|
9,564
|
1,690
|
7,874
|
|||||||||||||||
Reimbursable Expenses
|
15,360
|
13,649
|
1,711
|
1,384
|
327
|
|||||||||||||||
Total Revenues
|
$
|
327,096
|
$
|
262,439
|
$
|
64,657
|
$
|
42,531
|
$
|
22,126
|
For the Year Ended
|
For the Year Ended
|
Increase/
|
||||||||||
Selling, General and Administrative Expense (in millions)
|
December 31, 2012
|
December 31, 2011
|
(Decrease)
|
|||||||||
Sales-related costs
|
$
|
21.4
|
$
|
14.9
|
$
|
6.5
|
||||||
Salary expense
|
13.1
|
11.3
|
1.8
|
|||||||||
Stock compensation expense
|
7.0
|
6.9
|
0.1
|
|||||||||
Recruiting expense
|
4.1
|
3.9
|
0.2
|
|||||||||
Variable compensation expense
|
1.7
|
0.7
|
1.0
|
|||||||||
Bad debt expense
|
0.7
|
1.0
|
(0.3
|
)
|
||||||||
Other
|
16.9
|
13.0
|
3.9
|
|||||||||
Total
|
$
|
64.9
|
$
|
51.7
|
$
|
13.2
|
Financial Results
|
Explanation for Increases Over Prior Year Period
|
|||||||||||||||||||
(in thousands)
|
(in thousands)
|
|||||||||||||||||||
For the Year Ended December
31, 2011
|
For the Year Ended December
31, 2010
|
Total Increase/ (Decrease) Over Prior Year Period
|
Increase Attributable to Acquired Companies
|
Increase/ (Decrease) Attributable to Base Business
|
||||||||||||||||
Services Revenues
|
$
|
233,166
|
$
|
185,173
|
$
|
47,993
|
$
|
34,949
|
$
|
13,044
|
||||||||||
Software and Hardware Revenues
|
15,624
|
20,556
|
(4,932
|
)
|
1,215
|
(6,147
|
)
|
|||||||||||||
Reimbursable Expenses
|
13,649
|
9,223
|
4,426
|
1,107
|
3,319
|
|||||||||||||||
Total Revenues
|
$
|
262,439
|
$
|
214,952
|
$
|
47,487
|
$
|
37,271
|
$
|
10,216
|
For the Year Ended
|
For the Year Ended
|
Increase/
|
||||||||||
Selling, General and Administrative Expense (in millions)
|
December 31, 2011
|
December 31, 2010
|
(Decrease)
|
|||||||||
Sales-related costs
|
$
|
14.9
|
$
|
11.9
|
$
|
3.0
|
||||||
Salary expense
|
11.3
|
9.2
|
2.1
|
|||||||||
Stock compensation expense
|
6.9
|
8.6
|
(1.7
|
)
|
||||||||
Recruiting expense
|
3.9
|
2.3
|
1.6
|
|||||||||
Bad debt expense
|
1.0
|
--
|
1.0
|
|||||||||
Variable compensation expense
|
0.7
|
2.3
|
(1.6
|
)
|
||||||||
Other
|
13.0
|
11.2
|
1.8
|
|||||||||
Total
|
$
|
51.7
|
$
|
45.5
|
$
|
6.2
|
As of December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Cash, cash equivalents, and investments
|
$
|
5.8
|
$
|
9.7
|
$
|
26.3
|
||||||
Working capital (including cash and cash equivalents)
|
$
|
52.3
|
$
|
51.5
|
$
|
47.6
|
||||||
Amounts available under credit facilities
|
$
|
47.2
|
$
|
50.0
|
$
|
50.0
|
Payments Due by Period
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
Less Than
1 Year
|
1-3
Years
|
3-5
Years
|
More
Than 5
Years
|
|||||||||||||||
Operating lease obligations
|
$
|
13,773
|
$
|
3,661
|
$
|
5,251
|
$
|
3,594
|
$
|
1,267
|
||||||||||
Total
|
$
|
13,773
|
$
|
3,661
|
$
|
5,251
|
$
|
3,594
|
$
|
1,267
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 8.
|
Financial Statements and Supplementary Data.
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
ASSETS
|
(In thousands, except share information)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
5,813
|
$
|
9,732
|
||||
Accounts receivable, net of allowance for doubtful accounts of $724 in 2012 and $1,057 in 2011
|
69,662
|
60,892
|
||||||
Prepaid expenses
|
1,649
|
1,246
|
||||||
Other current assets
|
3,717
|
3,118
|
||||||
Total current assets
|
80,841
|
74,988
|
||||||
Property and equipment, net
|
4,398
|
3,490
|
||||||
Goodwill
|
160,936
|
132,038
|
||||||
Intangible assets, net
|
17,350
|
10,128
|
||||||
Other non-current assets
|
3,669
|
3,288
|
||||||
Total assets
|
$
|
267,194
|
$
|
223,932
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
7,959
|
$
|
5,029
|
||||
Other current liabilities
|
20,605
|
18,483
|
||||||
Total current liabilities
|
28,564
|
23,512
|
||||||
Long-term debt
|
2,800
|
--
|
||||||
Other non-current liabilities
|
1,417
|
1,461
|
||||||
Total liabilities
|
$
|
32,781
|
$
|
24,973
|
||||
Commitments and contingencies (see Note 12)
|
||||||||
Stockholders’ equity:
|
||||||||
Common stock ($0.001 par value per share; 50,000,000 shares authorized and 39,024,337 shares issued and 30,825,123 shares outstanding as of December 31, 2012; 36,217,914 shares issued and 28,742,906 shares outstanding as of December 31, 2011)
|
$
|
39
|
$
|
36
|
||||
Additional paid-in capital
|
276,201
|
248,855
|
||||||
Accumulated other comprehensive loss
|
(306
|
)
|
(279
|
)
|
||||
Treasury stock, at cost (8,199,214 shares as of December 31, 2012; 7,475,008 shares as of December 31, 2011)
|
(62,970
|
)
|
(54,995
|
)
|
||||
Retained earnings
|
21,449
|
5,342
|
||||||
Total stockholders’ equity
|
234,413
|
198,959
|
||||||
Total liabilities and stockholders’ equity
|
$
|
267,194
|
$
|
223,932
|
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Revenues:
|
(In thousands, except per share information)
|
|||||||||||
Services
|
$
|
286,548
|
$
|
233,166
|
$
|
185,173
|
||||||
Software and hardware
|
25,188
|
15,624
|
20,556
|
|||||||||
Reimbursable expenses
|
15,360
|
13,649
|
9,223
|
|||||||||
Total revenues
|
327,096
|
262,439
|
214,952
|
|||||||||
Cost of revenues (exclusive of depreciation and amortization, shown separately below):
|
||||||||||||
Project personnel costs
|
182,719
|
149,243
|
119,304
|
|||||||||
Software and hardware costs
|
21,536
|
13,521
|
18,108
|
|||||||||
Reimbursable expenses
|
15,360
|
13,649
|
9,223
|
|||||||||
Other project-related expenses
|
4,078
|
4,892
|
5,550
|
|||||||||
Total cost of revenues
|
223,693
|
181,305
|
152,185
|
|||||||||
Gross margin
|
103,403
|
81,134
|
62,767
|
|||||||||
Selling, general, and administrative
|
64,853
|
51,672
|
45,477
|
|||||||||
Depreciation
|
2,251
|
1,754
|
830
|
|||||||||
Amortization
|
7,827
|
6,341
|
3,954
|
|||||||||
Acquisition costs
|
1,871
|
1,249
|
993
|
|||||||||
Adjustment to fair value of contingent consideration
|
517
|
1,586
|
(4
|
)
|
||||||||
Income from operations
|
26,084
|
18,532
|
11,517
|
|||||||||
Net interest (expense) income
|
(143
|
)
|
68
|
163
|
||||||||
Net other income
|
44
|
45
|
68
|
|||||||||
Income before income taxes
|
25,985
|
18,645
|
11,748
|
|||||||||
Provision for income taxes
|
9,878
|
7,898
|
5,268
|
|||||||||
Net income
|
$
|
16,107
|
$
|
10,747
|
$
|
6,480
|
||||||
Basic net income per share
|
$
|
0.54
|
$
|
0.39
|
$
|
0.24
|
||||||
Diluted net income per share
|
$
|
0.52
|
$
|
0.37
|
$
|
0.23
|
||||||
Shares used in computing basic net income per share
|
29,536
|
27,745
|
26,856
|
|||||||||
Shares used in computing diluted net income per share
|
31,086
|
29,184
|
28,304
|
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Net Income
|
$
|
16,107
|
$
|
10,747
|
$
|
6,480
|
||||||
Other comprehensive income, net of reclassification adjustments:
|
||||||||||||
Foreign currency translation adjustment
|
(27
|
)
|
(35
|
)
|
23
|
|||||||
Net unrealized gain (loss) on investments
|
--
|
(19
|
)
|
25
|
||||||||
Comprehensive income
|
$
|
16,080
|
$
|
10,693
|
$
|
6,528
|
||||||
Common
|
Common
|
Additional
|
Accumulated
Other
|
Retained
|
Total
|
|||||||||||||||||||||||
Stock
|
Stock
|
Paid-in
|
Comprehensive
|
Treasury
|
Earnings
|
Stockholders'
|
||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Loss
|
Stock
|
(Deficit)
|
Equity
|
||||||||||||||||||||||
Balance at December 31, 2009
|
27,083 | $ | 32 | $ | 208,003 | $ | (273 | ) | $ | (27,529 | ) | $ | (11,885 | ) | $ | 168,348 | ||||||||||||
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan
|
381 | -- | 1,468 | -- | -- | -- | 1,468 | |||||||||||||||||||||
Net tax benefit from stock option exercises and restricted stock vesting
|
-- | -- | 1,038 | -- | -- | -- | 1,038 | |||||||||||||||||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions
|
920 | 1 | 10,830 | -- | -- | -- | 10,831 | |||||||||||||||||||||
Purchases of treasury stock
|
(1,559 | ) | -- | -- | -- | (14,676 | ) | -- | (14,676 | ) | ||||||||||||||||||
Issuance of stock for acquisitions
|
451 | -- | 3,627 | -- | -- | -- | 3,627 | |||||||||||||||||||||
Net income
|
-- | -- | -- | -- | -- | 6,480 | 6,480 | |||||||||||||||||||||
Foreign currency translation adjustment
|
-- | -- | -- | 23 | -- | -- | 23 | |||||||||||||||||||||
Net unrealized gain on investments
|
-- | -- | -- | 25 | -- | -- | 25 | |||||||||||||||||||||
Balance at December 31, 2010
|
27,276 | $ | 33 | $ | 224,966 | $ | (225 | ) | $ | (42,205 | ) | $ | (5,405 | ) | $ | 177,164 | ||||||||||||
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan
|
814 | 1 | 3,711 | -- | -- | -- | 3,712 | |||||||||||||||||||||
Net tax benefit from stock option exercises and restricted stock vesting
|
-- | -- | 1,219 | -- | -- | -- | 1,219 | |||||||||||||||||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions
|
929 | 1 | 9,177 | -- | -- | -- | 9,178 | |||||||||||||||||||||
Purchases of treasury stock and buyback of shares for taxes
|
(1,378 | ) | -- | -- | -- | (12,790 | ) | -- | (12,790 | ) | ||||||||||||||||||
Issuance of stock for acquisitions
|
1,102 | 1 | 9,782 | -- | -- | -- | 9,783 | |||||||||||||||||||||
Net income
|
-- | -- | -- | -- | -- | 10,747 | 10,747 | |||||||||||||||||||||
Foreign currency translation adjustment
|
-- | -- | -- | (35 | ) | -- | -- | (35 | ) | |||||||||||||||||||
Net unrealized loss on investments
|
-- | -- | -- | (19 | ) | -- | -- | (19 | ) | |||||||||||||||||||
Balance at December 31, 2011
|
28,743 | $ | 36 | $ | 248,855 | $ | (279 | ) | $ | (54,995 | ) | $ | 5,342 | $ | 198,959 | |||||||||||||
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan
|
56 | -- | 202 | -- | -- | -- | 202 | |||||||||||||||||||||
Net tax benefit from stock option exercises and restricted stock vesting
|
-- | -- | 855 | -- | -- | -- | 855 | |||||||||||||||||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions
|
950 | 1 | 9,589 | -- | -- | -- | 9,590 | |||||||||||||||||||||
Purchases of treasury stock and buyback of shares for taxes
|
(724 | ) | -- | -- | -- | (7,975 | ) | -- | (7,975 | ) | ||||||||||||||||||
Issuance of stock for acquisitions
|
1,800 | 2 | 16,700 | -- | -- | -- | 16,702 | |||||||||||||||||||||
Net income
|
-- | -- | -- | -- | -- | 16,107 | 16,107 | |||||||||||||||||||||
Foreign currency translation adjustment
|
-- | -- | -- | (27 | ) | -- | -- | (27 | ) | |||||||||||||||||||
Balance at December 31, 2012
|
30,825 | $ | 39 | $ | 276,201 | $ | (306 | ) | $ | (62,970 | ) | $ | 21,449 | $ | 234,413 |
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
OPERATING ACTIVITIES
|
(In thousands)
|
|||||||||||
Net income
|
$
|
16,107
|
$
|
10,747
|
$
|
6,480
|
||||||
Adjustments to reconcile net income to net cash provided by operations:
|
||||||||||||
Depreciation
|
2,251
|
1,754
|
830
|
|||||||||
Amortization
|
7,827
|
6,341
|
3,954
|
|||||||||
Deferred income taxes
|
(613
|
)
|
531
|
205
|
||||||||
Non-cash stock compensation and retirement savings plan contributions
|
9,590
|
9,178
|
10,831
|
|||||||||
Tax benefit from stock option exercises and restricted stock vesting
|
(1,061
|
)
|
(1,838
|
)
|
(1,531
|
)
|
||||||
Adjustment to fair value of contingent consideration for purchase of business
|
517
|
1,586
|
(4
|
)
|
||||||||
Changes in operating assets and liabilities, net of acquisitions:
|
||||||||||||
Accounts receivable
|
(818
|
)
|
(7,587
|
)
|
(5,491
|
)
|
||||||
Other assets
|
1,074
|
(320
|
)
|
1,626
|
||||||||
Accounts payable
|
2,190
|
(1,522
|
)
|
642
|
||||||||
Other liabilities
|
2,147
|
(4,550
|
)
|
1,189
|
||||||||
Net cash provided by operating activities
|
39,211
|
14,320
|
18,731
|
|||||||||
INVESTING ACTIVITIES
|
||||||||||||
Proceeds from maturity of investments
|
--
|
13,555
|
--
|
|||||||||
Purchase of investments
|
--
|
--
|
(4,252
|
)
|
||||||||
Purchase of property and equipment
|
(1,923
|
)
|
(2,776
|
)
|
(1,161
|
)
|
||||||
Capitalization of software developed for internal use
|
(187
|
)
|
(179
|
)
|
(160
|
)
|
||||||
Purchase of businesses
|
(36,560
|
)
|
(19,385
|
)
|
(4,941
|
)
|
||||||
Net cash used in investing activities
|
(38,670
|
)
|
(8,785
|
)
|
(10,514
|
)
|
||||||
FINANCING ACTIVITIES
|
||||||||||||
Payments for credit facility financing fees
|
--
|
(306
|
)
|
--
|
||||||||
Proceeds from line of credit
|
134,900
|
14,000
|
--
|
|||||||||
Payments on line of credit
|
(132,100
|
)
|
(14,000
|
)
|
--
|
|||||||
Payment of contingent consideration for purchase of business
|
(556
|
)
|
(1,244
|
)
|
(1,875
|
)
|
||||||
Tax benefit from stock option exercises and restricted stock vesting
|
1,061
|
1,838
|
1,531
|
|||||||||
Proceeds from the exercise of stock options and sales of stock through the Employee Stock Purchase Plan
|
202
|
3,712
|
1,468
|
|||||||||
Purchases of treasury stock
|
(6,118
|
)
|
(11,791
|
)
|
(14,676
|
)
|
||||||
Remittance of taxes withheld as part of a net share settlement of restricted stock vesting
|
(1,857
|
)
|
(747
|
)
|
--
|
|||||||
Net cash used in financing activities
|
(4,468
|
)
|
(8,538
|
)
|
(13,552
|
)
|
||||||
Effect of exchange rate on cash and cash equivalents
|
8
|
28
|
67
|
|||||||||
Change in cash and cash equivalents
|
(3,919
|
)
|
(2,975
|
)
|
(5,268
|
)
|
||||||
Cash and cash equivalents at beginning of period
|
9,732
|
12,707
|
17,975
|
|||||||||
Cash and cash equivalents at end of period
|
$
|
5,813
|
$
|
9,732
|
$
|
12,707
|
||||||
Supplemental disclosures:
|
||||||||||||
Cash paid for interest
|
$
|
168
|
$
|
5
|
$
|
22
|
||||||
Cash paid for income taxes
|
$
|
9,687
|
$
|
7,810
|
$
|
4,265
|
||||||
Non-cash activities:
|
||||||||||||
Stock issued for purchase of businesses (net of stock reacquired for escrow claim)
|
$
|
14,411
|
$
|
6,616
|
$
|
2,859
|
||||||
Stock issued for settlement of contingent consideration for purchase of business
|
$
|
2,199
|
$
|
2,915
|
$
|
768
|
||||||
Estimated fair value of contingent consideration for purchase of business
|
$
|
--
|
$
|
2,377
|
$
|
3,339
|
|
Year Ended December 31,
|
|||||||||||
2012
|
2011
|
2010
|
||||||||||
Net income
|
$
|
16,107
|
$
|
10,747
|
$
|
6,480
|
||||||
Basic:
|
||||||||||||
Weighted-average shares of common stock outstanding
|
29,536
|
27,745
|
26,856
|
|||||||||
Shares used in computing basic net income per share
|
29,536
|
27,745
|
26,856
|
|||||||||
Effect of dilutive securities:
|
||||||||||||
Stock options
|
194
|
279
|
659
|
|||||||||
Warrants (1)
|
--
|
5
|
7
|
|||||||||
Restricted stock subject to vesting
|
621
|
578
|
774
|
|||||||||
Contingently issuable shares (2)
|
81
|
222
|
--
|
|||||||||
Shares issuable for acquisition consideration (3)
|
654
|
355
|
8
|
|||||||||
Shares used in computing diluted net income per share
|
31,086
|
29,184
|
28,304
|
|||||||||
Basic net income per share
|
$
|
0.54
|
$
|
0.39
|
$
|
0.24
|
||||||
Diluted net income per share
|
$
|
0.52
|
$
|
0.37
|
$
|
0.23
|
||||||
Anti-dilutive options and restricted stock not included in the calculation of diluted net income per share
|
12
|
278
|
538
|
(1)
|
All outstanding warrants expired on December 30, 2011.
|
(2)
|
Represents the Company’s estimate of shares to be issued to Exervio
Consulting, Inc. (“Exervio”)
pursuant to the Asset Purchase Agreement. Refer to Note 7 for further discussion.
|
(3)
|
Represents the shares held in escrow pursuant to the Agreements and Plans of Merger with speakTECH and Northridge Systems, Inc. (“Northridge”) and pursuant to the Asset Purchase Agreements with
PointBridge Solutions, LLC (“PointBridge”) and Nascent Systems, LP (“Nascent”)
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.
|
Acquired tangible assets
|
$
|
2.7
|
||
Acquired intangible assets
|
4.5
|
|||
Liabilities assumed
|
(1.2
|
)
|
||
Goodwill
|
5.2
|
|||
Total purchase price
|
$
|
11.2
|
Acquired tangible assets
|
$
|
3.1
|
||
Acquired intangible assets
|
3.0
|
|||
Liabilities assumed
|
(1.2
|
)
|
||
Goodwill
|
11.7
|
|||
Total purchase price
|
$
|
16.6
|
Acquired tangible assets
|
$
|
5.0
|
||
Acquired intangible assets
|
6.2
|
|||
Liabilities assumed
|
(1.1
|
)
|
||
Goodwill
|
10.4
|
|||
Total purchase price
|
$
|
20.5
|
Acquired tangible assets
|
$
|
3.9
|
||
Acquired intangible assets
|
4.4
|
|||
Liabilities assumed
|
(1.0
|
)
|
||
Goodwill
|
9.2
|
|||
Total purchase price
|
$
|
16.5
|
Acquired tangible assets
|
$
|
3.5
|
||
Acquired intangible assets
|
4.1
|
|||
Liabilities assumed
|
(3.3
|
)
|
||
Goodwill
|
9.6
|
|||
Total purchase price
|
$
|
13.9
|
Acquisition Date to
December 31
, 2012
|
||||
Revenues
|
$ | 32,424 | ||
Net income
|
$ | 1,804 |
December 31,
|
||||||||
2012
|
2011
|
|||||||
Revenues
|
$ | 342,226 | $ | 319,527 | ||||
Net income
|
$ | 18,991 | $ | 13,278 | ||||
Basic net income per share
|
$ | 0.63 | $ | 0.46 | ||||
Diluted net income per share
|
$ | 0.61 | $ | 0.43 | ||||
Shares used in computing basic net income per share
|
30,216 | 28,647 | ||||||
Shares used in computing dilute net income per share
|
31,086 | 30,766 |
2012
|
2011
|
|||||||
Balance, beginning of year
|
$
|
132,038
|
$
|
115,227
|
||||
Preliminary purchase price allocations for acquisitions (Note 7)
|
29,132
|
17,169
|
||||||
Purchase accounting adjustments
|
(234
|
)
|
(358
|
)
|
||||
Balance, end of year
|
$
|
160,936
|
$
|
132,038
|
Year ended December 31,
|
||||||||||||||||||||||||
2012
|
2011
|
|||||||||||||||||||||||
Gross Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying Amount
|
Gross Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying Amount
|
|||||||||||||||||||
Customer relationships
|
$
|
22,682
|
$
|
(7,299
|
)
|
$
|
15,383
|
$
|
20,713
|
$
|
(11,976
|
)
|
$
|
8,737
|
||||||||||
Non-compete agreements
|
1,156
|
(425
|
)
|
731
|
1,073
|
(309
|
)
|
764
|
||||||||||||||||
Customer backlog
|
306
|
(184
|
)
|
122
|
--
|
--
|
--
|
|||||||||||||||||
Trade name
|
265
|
(204
|
)
|
61
|
152
|
(84
|
)
|
68
|
||||||||||||||||
Internally developed software
|
1,642
|
(589
|
)
|
1,053
|
1,036
|
(477
|
)
|
559
|
||||||||||||||||
Total
|
$
|
26,051
|
$
|
(8,701
|
)
|
$
|
17,350
|
$
|
22,974
|
$
|
(12,846
|
)
|
$
|
10,128
|
Customer relationships
|
2 – 7 years
|
Non-compete agreements
|
1 – 5 years
|
Internally developed software
|
3 – 5 years
|
Trade name
|
1 – 3 years
|
Customer backlog
|
7 – 11 months
|
2013
|
$
|
5,906
|
||
2014
|
$
|
4,664
|
||
2015
|
$
|
3,128
|
||
2016
|
$
|
2,516
|
||
2017
|
$
|
1,013
|
||
Thereafter
|
$
|
123
|
Shares
|
Weighted-Average Exercise Price
|
Weighted-Average Remaining Contractual Terms (In Years) (1)
|
Aggregate Intrinsic Value
|
|||||||||||||
Options outstanding at December 31, 2011
|
358
|
$
|
4.61
|
2.50
|
$
|
1,932
|
||||||||||
Options exercised (2)
|
(47
|
)
|
2.12
|
$
|
441
|
|||||||||||
Options canceled
|
(8
|
)
|
1.45
|
|||||||||||||
Options outstanding at December 31, 2012
|
303
|
$
|
5.08
|
1.69
|
$
|
2,027
|
||||||||||
Options vested, December 31, 2012
|
303
|
$
|
5.08
|
1.69
|
$
|
2,027
|
(1)
|
Generally stock options have a maximum contractual term of 10 years.
|
(2)
|
The total aggregate intrinsic value of stock options exercised during 2011 and 2010 was $5.6 million and $2.5 million, respectively.
|
Shares
|
Weighted-Average
Grant Date Fair
Value
|
|||||||
Restricted stock awards outstanding at December 31, 2011
|
2,043
|
$
|
9.16
|
|||||
Awards granted (1)
|
869
|
$
|
11.31
|
|||||
Awards vested (2)
|
(826
|
)
|
$
|
9.59
|
||||
Awards forfeited
|
(147
|
)
|
$
|
8.91
|
||||
Restricted stock awards outstanding at December 31, 2012
|
1,939
|
$
|
9.93
|
(1)
|
The weighted average grant date fair value of shares granted during 2011 and 2010 was $10.31 and $10.42, respectively.
|
(2)
|
The total fair value of restricted shares vesting during the years ended December 31, 2012, 2011 and 2010 was $9.7 million, $7.8 million and $9.3 million, respectively.
|
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Current:
|
||||||||||||
Federal
|
$
|
8,405
|
$
|
6,358
|
$
|
4,009
|
||||||
State
|
1,704
|
996
|
1,043
|
|||||||||
Foreign
|
382
|
13
|
11
|
|||||||||
Total current
|
10,491
|
7,367
|
5,063
|
|||||||||
Deferred:
|
||||||||||||
Federal
|
(581
|
)
|
487
|
192
|
||||||||
State
|
(32
|
)
|
44
|
13
|
||||||||
Total deferred
|
(613
|
)
|
531
|
205
|
||||||||
Total provision for income taxes
|
$
|
9,878
|
$
|
7,898
|
$
|
5,268
|
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Domestic
|
$
|
23,533
|
$
|
17,614
|
$
|
9,770
|
||||||
Foreign
|
2,452
|
1,031
|
1,978
|
|||||||||
Total
|
$
|
25,985
|
$
|
18,645
|
$
|
11,748
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
Deferred tax assets:
|
||||||||
Accrued liabilities
|
$
|
849
|
$
|
804
|
||||
Bad debt reserve
|
280
|
297
|
||||||
Net operating losses
|
1,908
|
2,258
|
||||||
Deferred compensation
|
1,936
|
1,908
|
||||||
Intangibles
|
3,256
|
2,382
|
||||||
Acquisition-related costs
|
529
|
295
|
||||||
Total deferred tax assets
|
8,758
|
7,944
|
||||||
Deferred tax liabilities:
|
||||||||
Prepaid expenses
|
421
|
403
|
||||||
Equity in undistributed foreign earnings
|
125
|
123
|
||||||
Goodwill
|
5,893
|
6,367
|
||||||
Accrued liabilities
|
18
|
34
|
||||||
Fixed assets
|
786
|
87
|
||||||
Total deferred tax liabilities
|
7,243
|
7,014
|
||||||
Net deferred tax asset
|
$
|
1,515
|
$
|
930
|
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Federal statutory rate
|
35.0
|
%
|
34.6
|
%
|
34.2
|
%
|
||||||
State taxes, net of federal benefit
|
4.4
|
4.1
|
5.7
|
|||||||||
Effect of foreign operations
|
(1.8
|
)
|
(0.9
|
)
|
(3.7
|
)
|
||||||
Stock compensation
|
1.8
|
1.4
|
4.5
|
|||||||||
Non-deductible acquisition costs
|
0.8
|
2.1
|
1.7
|
|||||||||
Research and development tax credit
|
(2.7
|
)
|
--
|
--
|
||||||||
Other
|
0.5
|
1.1
|
2.4
|
|||||||||
Effective tax rate
|
38.0
|
%
|
42.4
|
%
|
44.8
|
%
|
|
Operating
Leases
|
|||
2013
|
$
|
3,661
|
||
2014
|
2,985
|
|||
2015
|
2,266
|
|||
2016
|
2,074
|
|||
2017
|
1,520
|
|||
Thereafter
|
1,267
|
|||
Total minimum lease payments
|
$
|
13,773
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
(In thousands)
|
||||||||
Accounts receivable:
|
||||||||
Accounts receivable
|
$
|
49,661
|
$
|
44,438
|
||||
Unbilled revenues
|
20,725
|
17,511
|
||||||
Allowance for doubtful accounts
|
(724
|
)
|
(1,057
|
)
|
||||
Total
|
$
|
69,662
|
$
|
60,892
|
Property and Equipment:
|
||||||||
Computer hardware (useful life of 3 years)
|
$
|
6,906
|
$
|
5,710
|
||||
Furniture and fixtures (useful life of 5 years)
|
2,046
|
1,474
|
||||||
Leasehold improvements (useful life of 5 years)
|
1,775
|
1,801
|
||||||
Software (useful life of 1 year)
|
2,006
|
1,494
|
||||||
Less: Accumulated depreciation
|
(8,335
|
)
|
(6,989
|
)
|
||||
Total
|
$
|
4,398
|
$
|
3,490
|
Other current liabilities:
|
||||||||
Accrued variable compensation
|
$
|
8,495
|
$
|
6,998
|
||||
Deferred revenues
|
2,974
|
1,041
|
||||||
Payroll related costs
|
2,544
|
2,504
|
||||||
Accrued subcontractor fees
|
2,294
|
2,392
|
||||||
Accrued medical claims expense
|
1,145
|
902
|
||||||
Acquired liabilities
|
64
|
239
|
||||||
Estimated fair value of contingent consideration liability (Note 7)
|
--
|
2,377
|
||||||
Other current liabilities
|
3,089
|
2,030
|
||||||
Total
|
$
|
20,605
|
$
|
18,483
|
Other non-current liabilities:
|
||||||||
Deferred compensation liability
|
$
|
1,383
|
$
|
1,141
|
||||
Deferred income taxes
|
--
|
309
|
||||||
Other non-current liabilities
|
34
|
11
|
||||||
Total
|
$
|
1,417
|
$
|
1,461
|
Year ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Balance, beginning of year
|
$
|
1,057
|
$
|
228
|
$
|
315
|
||||||
Charges (reductions) to expense
|
744
|
|
1,037
|
(68
|
)
|
|||||||
Uncollected balances written off, net of recoveries
|
(1,077
|
) |
(208
|
)
|
(19
|
)
|
||||||
Balance, end of year
|
$
|
724
|
$
|
1,057
|
$
|
228
|
|
Three Months Ended,
|
|||||||||||||||
March 31,
2012
|
June 30,
2012
|
September 30,
2012
|
December 31,
2012
|
|||||||||||||
(Unaudited)
|
||||||||||||||||
Total revenues
|
$ | 74,698 | $ | 81,796 | $ | 87,474 | $ | 83,128 | ||||||||
Gross margin
|
$ | 22,647 | $ | 26,757 | $ | 28,227 | $ | 25,772 | ||||||||
Income from operations
|
$ | 4,955 | $ | 6,554 | $ | 7,537 | $ | 7,038 | ||||||||
Income before income taxes
|
$ | 4,988 | $ | 6,527 | $ | 7,449 | $ | 7,021 | ||||||||
Net income
|
$ | 2,986 | $ | 3,603 | $ | 5,142 | $ | 4,376 | ||||||||
Basic net income per share
|
$ | 0.10 | $ | 0.12 | $ | 0.17 | $ | 0.14 | ||||||||
Diluted net income per share
|
$ | 0.10 | $ | 0.12 | $ | 0.16 | $ | 0.14 |
|
Three Months Ended,
|
|||||||||||||||
March 31,
2011
|
June 30,
2011
|
September 30,
2011
|
December 31,
2011
|
|||||||||||||
(Unaudited)
|
||||||||||||||||
Total revenues
|
$ | 56,245 | $ | 65,587 | $ | 70,174 | $ | 70,433 | ||||||||
Gross margin
|
$ | 16,289 | $ | 21,222 | $ | 22,317 | $ | 21,306 | ||||||||
Income from operations
|
$ | 3,054 | $ | 4,881 | $ | 5,717 | $ | 4,940 | ||||||||
Income before income taxes
|
$ | 3,036 | $ | 4,888 | $ | 5,729 | $ | 4,992 | ||||||||
Net income
|
$ | 1,793 | $ | 2,767 | $ | 3,466 | $ | 2,721 | ||||||||
Basic net income per share
|
$ | 0.07 | $ | 0.10 | $ | 0.12 | $ | 0.10 | ||||||||
Diluted net income per share
|
$ | 0.06 | $ | 0.10 | $ | 0.12 | $ | 0.09 |
Item 9.
|
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Name
|
Age
|
Position
|
|||
Jeffrey S. Davis
|
48 |
President and Chief Executive Officer
|
|||
Kathryn J. Henely
|
48 |
Chief Operating Officer
|
|||
Paul E. Martin
|
52 |
Chief Financial Officer, Treasurer and Secretary
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Item 14.
|
Principal Accounting Fees and Services.
|
Item 15.
|
Exhibits, Financial Statement Schedules.
|
1.
|
Financial Statements
|
Index
|
Page(s)
|
|||
Consolidated Balance Sheets
|
26
|
|||
Consolidated Statements of Operations
|
27
|
|||
Consolidated Statements of Comprehensive Income
|
28
|
|||
Consolidated Statements of Changes in Stockholders’ Equity
|
29
|
|||
Consolidated Statements of Cash Flows
|
30
|
|||
Notes to Consolidated Financial Statements
|
31
|
|||
Report of Independent Registered Public Accounting Firm
|
44-45
|
2.
|
Financial Statement Schedules
|
3.
|
Exhibits
|
PERFICIENT, INC.
|
By:
|
/s/ Paul E. Martin
|
|
Date: March 7, 2013
|
Paul E. Martin
|
|
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
|
Signature
|
Title
|
Date
|
/s/ Jeffrey S. Davis
|
Director, President and Chief Executive Officer
|
March 7, 2013
|
Jeffrey S. Davis
|
(Principal Executive Officer)
|
|
/s/ Paul E. Martin
|
Chief Financial Officer
|
March 7, 2013
|
Paul E. Martin
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
/s/ Ralph C. Derrickson
|
Director
|
March 7, 2013
|
Ralph C. Derrickson
|
||
/s/ John S. Hamlin
|
Director
|
March 7, 2013
|
John S. Hamlin
|
||
/s/ James R. Kackley
|
Director
|
March 7, 2013
|
James R. Kackley
|
||
/s/ David S. Lundeen
|
Director
|
March 7, 2013
|
David S. Lundeen
|
||
/s/ David D. May
|
Director
|
March 7, 2013
|
David D. May
|
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 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*
|
Amended and Restated Bylaws of Perficient, Inc.
|
||
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
|
||
10.1†
|
Perficient, Inc. Amended and Restated 1999 Stock Option/Stock Issuance Plan, previously filed with the Securities and Exchange Commission as an Exhibit to our Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference
|
||
10.2†
|
Perficient, Inc. 2009 Long-Term Incentive Plan, as amended, previously filed with the Securities and Exchange Commission as an Exhibit to our Current Report on Form 8-K filed February 25, 2010 and incorporated herein by reference
|
||
10.3†
|
Form of Stock Option Agreement, previously filed with the Securities and Exchange Commission as an Exhibit to our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004 and incorporated herein by reference
|
||
10.4†
|
Perficient, Inc. Employee Stock Purchase Plan, previously filed with the Securities and Exchange Commission as Appendix A to our Schedule 14A (File No. 001-15169) on October 13, 2005 and incorporated herein by reference
|
||
10.5†
|
Form of Restricted Stock Agreement, previously filed with the Securities and Exchange Commission as an Exhibit to our Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference
|
||
10.6†
|
Form of Restricted Stock Agreement, previously filed with the Securities and Exchange Commission as an Exhibit to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 and incorporated herein by reference
|
||
10.7
|
Amended and Restated Credit Agreement by and among Silicon Valley Bank, Bank of America, N.A., and U.S. Bank, N.A., and Perficient, Inc. dated effective as of May 23, 2011, 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 May 26, 2011 and incorporated herein by reference
|
||
10.8†
|
Perficient, Inc. 2012 Long-Term Incentive Plan, previously filed with the Securities and Exchange Commission as Appendix A to our Schedule 14A (File No. 001-15169) on April 19, 2012 and incorporated herein by reference
|
||
21.1*
|
Subsidiaries
|
||
23.1*
|
Consent of KPMG LLP
|
||
24.1*
|
Power of Attorney (included on the signature page hereto)
|
||
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
|
||
101*
|
The following financial information from Perficient, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2012 and 2011, (ii) Consolidated Statements of Operations for the years ended December 31, 2012, 2011, and 2010, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011, and 2010, (iv) Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2012, 2011, and 2010, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011, and 2010, and (vi) the Notes to Consolidated Financial Statements
|
†
|
Identifies an Exhibit that consists of or includes a management contract or compensatory plan or arrangement.
|
*
|
Filed herewith.
|
Table of Contents
|
|
ARTICLE I - OFFICES
|
1
|
Section 1.1. REGISTERED OFFICE
|
1
|
Section 1.2. OTHER OFFICES
|
1
|
ARTICLE II - CORPORATE SEAL
|
1
|
Section 2.1. CORPORATE SEAL
|
1
|
ARTICLE III - STOCKHOLDERS’ MEETINGS
|
1
|
Section 3.1. PLACE OF MEETINGS
|
1
|
Section 3.2. ANNUAL MEETING.
|
1
|
Section 3.3. SPECIAL MEETINGS.
|
3
|
Section 3.4. NOTICE OF MEETINGS
|
5
|
Section 3.5. QUORUM
|
5
|
Section 3.6. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS
|
6
|
Section 3.7. VOTING RIGHTS
|
6
|
Section 3.8. JOINT OWNERS OF STOCK
|
6
|
Section 3.9. LIST OF STOCKHOLDERS
|
7
|
Section 3.10. NO ACTION WITHOUT MEETING
|
7
|
Section 3.11. ORGANIZATION.
|
7
|
ARTICLE IV – DIRECTORS
|
8
|
Section 4.1. NUMBER AND TERM OF OFFICE; CLASSIFICATION
|
8
|
Section 4.2. POWERS
|
8
|
Section 4.3. VACANCIES AND NEWLY CREATED DIRECTORSHIPS
|
8
|
Section 4.4. RESIGNATION
|
8
|
Section 4.5. MEETINGS.
|
8
|
Section 4.6. QUORUM AND VOTING.
|
9
|
Section 4.7. ACTION WITHOUT MEETING
|
10
|
Section 4.8. FEES AND COMPENSATION
|
10
|
Section 4.9. COMMITTEES.
|
10
|
Section 4.10. ORGANIZATION
|
11
|
ARTICLE V - OFFICERS
|
11
|
Section 5.1. OFFICERS DESIGNATED
|
11
|
Section 5.2. TENURE AND DUTIES OF OFFICERS.
|
11
|
Section 5.3. DELEGATION OF AUTHORITY
|
14
|
Section 5.4. RESIGNATIONS
|
14
|
Section 5.5. REMOVAL
|
14
|
ARTICLE VI - EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION
|
14
|
Section 6.1. EXECUTION OF CORPORATE INSTRUMENTS
|
14
|
Section 6.2. VOTING OF SECURITIES OWNED BY THE CORPORATION
|
15
|
ARTICLE VII - SHARES OF STOCK
|
15
|
Section 7.1. FORM AND EXECUTION OF CERTIFICATES
|
15
|
Section 7.2. LOST CERTIFICATES
|
15
|
Section 7.3. TRANSFERS.
|
16
|
Section 7.4. FIXING RECORD DATES.
|
16
|
Section 7.5. REGISTERED STOCKHOLDERS
|
17
|
ARTICLE VIII - OTHER SECURITIES OF THE CORPORATION
|
17
|
Section 8.1. EXECUTION OF OTHER SECURITIES
|
17
|
ARTICLE IX - DIVIDENDS
|
17
|
Section 9.1. DECLARATION OF DIVIDENDS
|
17
|
Section 9.2. DIVIDEND RESERVE
|
17
|
ARTICLE X - FISCAL YEAR
|
18
|
ARTICLE XI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS
|
18
|
Section 11.1. DIRECTORS AND EXECUTIVE OFFICERS
|
18
|
Section 11.2. OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS
|
18
|
Section 11.3. GOOD FAITH.
|
18
|
Section 11.4. EXPENSES
|
19
|
Section 11.5. ENFORCEMENT
|
19
|
Section 11.6. NON-EXCLUSIVITY OF RIGHTS
|
20
|
Section 11.7. SURVIVAL OF RIGHTS
|
20
|
Section 11.8. INSURANCE
|
20
|
Section 11.9. AMENDMENTS
|
20
|
Section 11.10. SAVINGS CLAUSE
|
20
|
Section 11.11. CERTAIN DEFINITIONS
|
20
|
ARTICLE XII - NOTICES
|
21
|
Section 12.1. NOTICE TO STOCKHOLDERS
|
21
|
Section 12.2. NOTICE TO DIRECTORS
|
21
|
Section 12.3. ADDRESS UNKNOWN
|
21
|
Section 12.4. AFFIDAVIT OF MAILING
|
22
|
Section 12.5. TIME NOTICES DEEMED GIVEN
|
22
|
Section 12.6. FAILURE TO RECEIVE NOTICE
|
22
|
Section 12.7. NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL
|
22
|
Section 12.8. NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS
|
22
|
ARTICLE XIII - AMENDMENTS
|
23
|
Section 13.1. AMENDMENTS
|
23
|
Section 13.2. APPLICATION OF BYLAWS
|
23
|
ARTICLE XIV - LOANS TO OFFICERS
|
23
|
ARTICLE XV - ANNUAL REPORT
|
23
|
Subsidiaries
|
Jurisdiction
|
Perficient, Inc.
|
Delaware
|
Perficient Canada Corp.
|
Province of Ontario, Canada
|
BoldTech International LLC
|
Colorado
|
Perficient China, Ltd.
|
People’s Republic of China
|
Perficient India Private Limited
|
India
|
Patriot MS Co.
|
Delaware
|
Date: March 7, 2013
|
By:
|
/s/ Jeffrey S. Davis |
Jeffrey S. Davis
|
||
Chief Executive Officer and President
|
Date: March 7, 2013
|
By:
|
/s/ Paul E. Martin |
Paul E. Martin
|
||
Chief Financial Officer
|
Date: March 7, 2013
|
By:
|
/s/ Jeffrey S. Davis |
Jeffrey S. Davis
|
||
Chief Executive Officer and President
|
Date: March 7, 2013
|
By:
|
/s/ Paul E. Martin |
Paul E. Martin
|
||
Chief Financial Officer
|