☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the fiscal year ended December 31, 2016 | |||
or | |||
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the transition period from to | |||
Commission file number: 0-24347 |
Delaware | 65-0694077 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
2000 Ultimate Way, | 33326 |
Weston, FL | (Zip Code) |
(Address of principal executive offices) |
Title of Each Class: | Name of Each Exchange on which Registered: |
Common Stock, par value $.01 per share | The Nasdaq Stock Market LLC |
Large accelerated filer | ☑ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | (Do not check if a smaller reporting company) | Smaller reporting company | ☐ |
Page(s) | ||
PART I | ||
Item 1. | ||
Item 1A. | ||
Item 1B. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 5. | ||
Item 6. | ||
Item 7. | ||
Item 7A. | ||
Item 8. | ||
Item 9. | ||
Item 9A. | ||
Item 9B. | ||
PART III | ||
Item 10. | ||
Item 11. | ||
Item 12. | ||
Item 13. | ||
Item 14. | ||
PART IV | ||
Item 15. | ||
• | Multi-tenant model (multiple instances of UltiPro for different organizations can reside on one server) that allows each application component to run on a separate farm, or cluster, of load-balanced servers while still providing customer data security and segregation. |
• | Configurability that enables customers to achieve a highly tailored UltiPro experience for their businesses without incurring the high expense of custom software. |
• | Web services, with a focus on micro-services (a set of platform-neutral and vendor-independent protocols that enable application interactions over the Internet using Extensible Markup Language, or XML, and other Web technologies) that enable UltiPro customers to connect with other applications and data services easily and securely. |
• | Domain-driven, user-centered design framework that leverages industry-leading tools and technologies, including, but not limited to, Microsoft's .NET platform, Openstack, JavaScript, jQuery, Bootstrap, AngularJS, and Docker to streamline the complexities of our HCM domain and focus on how our users want to use UltiPro rather than expect them to change their behavior to accommodate our product. |
• | HTML-5 framework and responsive Web design for mobile-centric computing that enables a rich, dynamic user experience for UltiPro users on the smartphones or tablets of their choice. |
• | Increased expenses from one quarter to another (especially as they relate to product development and sales and marketing); |
• | Spending patterns of our customers; |
• | Timing of our product releases; |
• | Increased competition; |
• | A drop in the near-term demand for our products, particularly in relation to professional services; and |
• | Announcements of new products by Ultimate or by our competitors. |
• | Human error; |
• | Natural disasters; |
• | Power loss or telecommunication failures; |
• | Sabotage or other intentional acts of vandalism; and |
• | Unforeseen interruption or damages experienced in moving hardware to a new location. |
• | Result in interruptions in the services we provide to our customers, during which time our customers may be unable to retrieve their data; |
• | Require us to spend substantial amounts of money replacing existing equipment and/or purchasing services from an alternative data center; |
• | Cause existing customers to cancel their contracts; |
• | Cause our customers to seek damages for losses incurred; or |
• | Make it more difficult for us to attract new customers. |
• | Enhance our current products and introduce new products in order to keep pace with products offered by our competitors; |
• | Adapt to technological advancements and changing industry standards; and |
• | Expand the functionality of our products to address the increasingly sophisticated requirements of our customers. |
• | The volatility inherent in stock prices within the sector in which we conduct business; |
• | The volume of trading in our Common Stock, including sales upon exercise of outstanding stock options and upon the vesting of restricted stock and restricted stock units; |
• | Failure to achieve earnings expectations; |
• | Changes in our earnings estimates by analysts; |
• | Variations in our actual and anticipated operating results, including, but not limited to, prospective financial guidance provided by Ultimate to our investors and research analysts; and |
• | The announcement of a merger or acquisition. |
• | expenses to rectify the consequences of the security breach or cyber-attack; |
• | liability for stolen assets or information; |
• | costs of repairing damage to our systems; |
• | lost revenue and income resulting from any system downtime caused by such breach or attack; |
• | loss of competitive advantage if our proprietary information is obtained by competitors as a result of such breach or attack; |
• | increased costs of cyber security protection; |
• | costs of incentives we may be required to offer to our customers or business partners to retain their business; and |
• | damage to our reputation. |
• | Large service bureaus, primarily ADP and, to a lesser extent, Ceridian; |
• | A number of companies, such as Oracle, Lawson, and Workday that offer HCM software products for use on mainframes, client/server environments and/or Web servers; and, in the UltiPro mid-market and strategic markets, payroll service providers such as ADP, Ceridian and Paychex that service companies on the smaller end of the mid-market; and |
• | The internal HR/payroll departments of potential customers which use custom-written software. |
• | difficulties integrating the acquired operations, personnel, technologies, products or infrastructure; |
• | diversion of management's attention or other resources from other critical business operations and strategic priorities; |
• | unexpected difficulties encountered when we enter new markets in which we have little or no experience, or where competitors may have stronger market positions; |
• | inability to maintain relationships with customers and partners of the acquired business; |
• | the difficulty of incorporating acquired technology and rights into our products and services; |
• | potential unknown liabilities associated with an acquired business; |
• | unanticipated expenses related to integrating acquired technology with our existing technology; |
• | the impact on our results of operations due to depreciation and amortization related to acquired intangible assets, fixed assets and deferred compensation; |
• | the tax effects of any such acquisitions; |
• | potential litigation, such as claims by third parties related to intellectual property of the businesses we acquire; |
• | potential write-offs of our investments in acquired businesses; |
• | the need to implement controls, procedures and policies appropriate for a public company at companies that prior to the acquisition lacked such controls, procedures and policies; and |
• | challenges caused by distance, language and cultural differences. |
• | Cause delays in product introductions and shipments; |
• | Result in increased costs and diversion of development resources; |
• | Require design modifications; or |
• | Decrease market acceptance of, or customer satisfaction with, our products. |
2016 | 2015 | ||||||
High | Low | High | Low | ||||
First Quarter | $194.70 | $148.26 | $174.12 | $139.32 | |||
Second Quarter | 213.35 | 183.30 | 183.25 | 158.31 | |||
Third Quarter | 224.07 | 200.19 | 195.18 | 162.01 | |||
Fourth Quarter | 218.25 | 180.29 | 216.27 | 174.50 |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Cumulative 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 | |||||||||
October 1 – 31, 2016 | — | — | 4,657,995 | 1,342,005 | |||||||||
November 1 – 30, 2016 | 212,707 (1) | $ | 210.59 | 4,657,995 | 1,342,005 | ||||||||
December 1 – 31, 2016 | 324 (1) | $ | 182.35 | 4,657,995 | 1,342,005 |
Years Ended December 31, | |||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
Statements of Income: (in thousands, except per share data) | |||||||||||||||||||
Revenues: | |||||||||||||||||||
Recurring | $ | 654,199 | $ | 516,400 | $ | 419,771 | $ | 335,287 | $ | 267,705 | |||||||||
Services | 127,092 | 101,681 | 86,165 | 75,110 | 64,563 | ||||||||||||||
Total revenues | 781,291 | 618,081 | 505,936 | 410,397 | 332,268 | ||||||||||||||
Cost of revenues: | |||||||||||||||||||
Recurring | 172,676 | 138,587 | 117,700 | 92,101 | 78,401 | ||||||||||||||
Services | 127,433 | 99,948 | 85,939 | 76,577 | 66,063 | ||||||||||||||
Total cost of revenues | 300,109 | 238,535 | 203,639 | 168,678 | 144,464 | ||||||||||||||
Gross profit | 481,182 | 379,546 | 302,297 | 241,719 | 187,804 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Sales and marketing | 224,416 | 169,664 | 117,033 | 93,879 | 72,565 | ||||||||||||||
Research and development | 120,650 | 93,671 | 83,542 | 67,757 | 60,693 | ||||||||||||||
General and administrative | 94,432 | 72,893 | 47,379 | 36,869 | 25,433 | ||||||||||||||
Total operating expenses | 439,498 | 336,228 | 247,954 | 198,505 | 158,691 | ||||||||||||||
Operating income | 41,684 | 43,318 | 54,343 | 43,214 | 29,113 | ||||||||||||||
Other (expense) income: | |||||||||||||||||||
Interest expense and other, net | (717 | ) | (491 | ) | (353 | ) | (229 | ) | (476 | ) | |||||||||
Other income, net | 451 | 256 | 339 | 104 | 102 | ||||||||||||||
Total other expense, net | (266 | ) | (235 | ) | (14 | ) | (125 | ) | (374 | ) | |||||||||
Income before income taxes | 41,418 | 43,083 | 54,329 | 43,089 | 28,739 | ||||||||||||||
Provision for income taxes | (11,165 | ) | (20,384 | ) | (9,592 | ) | (17,559 | ) | (14,107 | ) | |||||||||
Net income | 30,253 | 22,699 | 44,737 | 25,530 | 14,632 | ||||||||||||||
Net income per share: (1) | |||||||||||||||||||
Basic | $ | 1.04 | $ | 0.79 | $ | 1.58 | $ | 0.92 | $ | 0.55 | |||||||||
Diluted | $ | 0.99 | $ | 0.76 | $ | 1.52 | $ | 0.88 | $ | 0.52 | |||||||||
Weighted average shares outstanding: (1) | |||||||||||||||||||
Basic | 28,976 | 28,634 | 28,293 | 27,773 | 26,778 | ||||||||||||||
Diluted | 30,414 | 29,721 | 29,343 | 29,013 | 28,375 | ||||||||||||||
Balance Sheet Data: | As of December 31, | ||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
Cash and cash equivalents | $ | 73,773 | $ | 109,325 | $ | 108,298 | $ | 79,794 | $ | 58,817 | |||||||||
Corporate investments in marketable securities | 24,088 | 20,058 | 10,156 | 10,453 | 10,534 | ||||||||||||||
Total assets | 1,152,581 | 1,465,569 | 1,190,298 | 598,194 | 525,284 | ||||||||||||||
Deferred revenue | 173,976 | 145,727 | 109,705 | 103,184 | 91,976 | ||||||||||||||
Long-term borrowings, including capital lease obligations | 3,985 | 3,665 | 3,759 | 2,833 | 5,070 | ||||||||||||||
Stockholders’ equity | $ | 432,108 | $ | 334,066 | $ | 271,749 | $ | 188,217 | $ | 114,670 |
(1) | See Note 11 of the Notes to the Consolidated Financial Statements for information regarding the computation of net earnings per share. |
• | persuasive evidence of an arrangement exists; |
• | delivery has occurred; |
• | the fees are fixed and determinable; and |
• | collection is considered probable. |
For the Years Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Revenues: | ||||||||
Recurring | 83.7 | % | 83.5 | % | 83.0 | % | ||
Services | 16.3 | 16.5 | 17.0 | |||||
Total revenues | 100.0 | 100.0 | 100.0 | |||||
Cost of revenues: | ||||||||
Recurring | 22.1 | 22.4 | 23.2 | |||||
Services | 16.3 | 16.2 | 17.0 | |||||
Total cost of revenues | 38.4 | 38.6 | 40.2 | |||||
Gross profit | 61.6 | 61.4 | 59.8 | |||||
Operating expenses: | ||||||||
Sales and marketing | 28.7 | 27.4 | 23.1 | |||||
Research and development | 15.5 | 15.2 | 16.5 | |||||
General and administrative | 12.1 | 11.8 | 9.4 | |||||
Total operating expenses | 56.3 | 54.4 | 49.0 | |||||
Operating income | 5.3 | 7.0 | 10.8 | |||||
Other income (expense): | ||||||||
Interest expense and other, net | (0.1 | ) | (0.1 | ) | (0.1 | ) | ||
Total other expense, net | 0.1 | — | — | |||||
Total other income (expense), net | — | (0.1 | ) | (0.1 | ) | |||
Income before income taxes | 5.3 | 6.9 | 10.7 | |||||
Provision for income taxes | (1.4 | ) | (3.2 | ) | (1.9 | ) | ||
Net income | 3.9 | % | 3.7 | % | 8.8 | % |
For the Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Cost of recurring revenues | $ | 8,613 | $ | 6,303 | $ | 5,495 | |||||
Cost of services revenues | 6,198 | 5,017 | 4,446 | ||||||||
Sales and marketing | 59,187 | 41,059 | 20,767 | ||||||||
Research and development | 8,238 | 6,180 | 4,788 | ||||||||
General and administrative | 31,641 | 23,857 | 10,689 | ||||||||
Total stock-based compensation expense | $ | 113,877 | $ | 82,416 | $ | 46,185 |
For the Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Stock-based compensation expense: | |||||||||||
Stock-based compensation expense | $ | 71,119 | $ | 59,390 | $ | 46,185 | |||||
Stock-based compensation expense related to CIC modifications | 42,758 | 23,026 | — | ||||||||
Total non-cash stock-based compensation expense | $ | 113,877 | $ | 82,416 | $ | 46,185 |
• | For the year ended December 31, 2016, the increases in cloud costs were principally as a result of the growth in cloud operations from increased sales, including increased labor costs and, to a lesser extent, increased variable costs associated with our cloud operations. |
• | The increase in Customer Support costs for the year ended December 31, 2016 was primarily due to higher labor costs commensurate with the growth in the number of cloud customers serviced. |
• | The increase in cloud revenues was primarily based on the revenue impact of incremental units sold that have gone Live since December 31, 2014, including the UltiPro core product and, to a lesser extent, Optional Capabilities of UltiPro. Cloud subscription revenues are recognized as recurring revenues over the initial contract period, as those services are delivered, typically commencing with the Live date. |
• | Effective January 1, 2015, we no longer had maintenance revenues associated with our Legacy customers. Since the time we announced that we would stop supporting our Legacy product in 2012, we successfully converted the majority of our Legacy customers to the cloud. Those customers that did not convert terminated. |
• | For the year ended December 31, 2015, the increases in cloud costs were principally as a result of the growth in cloud operations from increased sales, including increased labor costs and, to a lesser extent, increased variable costs associated with our cloud operations and an increase in labor costs related to UltiPro managed services. |
• | The increase in Customer Support costs for the year ended December 31, 2015 was primarily due to higher labor costs commensurate with the growth in the number of cloud customers serviced. |
Quarters Ended | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | ||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
Recurring | $ | 175,944 | $ | 167,025 | $ | 158,479 | $ | 152,751 | 141,116 | 131,768 | 124,407 | 119,109 | ||||||||||||||||||||
Services | 34,605 | 29,966 | 28,058 | 34,463 | 29,534 | 23,556 | 22,823 | 25,768 | ||||||||||||||||||||||||
Total revenues | 210,549 | 196,991 | 186,537 | 187,214 | 170,650 | 155,324 | 147,230 | 144,877 | ||||||||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||||||||||
Recurring | 46,173 | 44,095 | 42,951 | 39,457 | 36,554 | 34,856 | 34,388 | 32,789 | ||||||||||||||||||||||||
Services | 33,218 | 32,069 | 29,342 | 32,804 | 26,982 | 25,027 | 23,621 | 24,318 | ||||||||||||||||||||||||
Total cost of revenues | 79,391 | 76,164 | 72,293 | 72,261 | 63,536 | 59,883 | 58,009 | 57,107 | ||||||||||||||||||||||||
Gross profit | 131,158 | 120,827 | 114,244 | 114,953 | 107,114 | 95,441 | 89,221 | 87,770 | ||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||
Sales and marketing | 58,074 | 55,212 | 54,548 | 56,582 | 48,019 | 41,687 | 39,195 | 40,763 | ||||||||||||||||||||||||
Research and development | 32,383 | 31,699 | 29,053 | 27,515 | 25,340 | 23,027 | 23,906 | 21,398 | ||||||||||||||||||||||||
General and administrative | 25,439 | 25,284 | 22,180 | 21,529 | 19,433 | 19,120 | 18,488 | 15,852 | ||||||||||||||||||||||||
Total operating expenses | 115,896 | 112,195 | 105,781 | 105,626 | 92,792 | 83,834 | 81,589 | 78,013 | ||||||||||||||||||||||||
Operating income | 15,262 | 8,632 | 8,463 | 9,327 | 14,322 | 11,607 | 7,632 | 9,757 | ||||||||||||||||||||||||
Other (expense) income: | ||||||||||||||||||||||||||||||||
Interest expense and other, net | (174 | ) | (179 | ) | (180 | ) | (184 | ) | (123 | ) | (118 | ) | (135 | ) | (115 | ) | ||||||||||||||||
Other income, net | 135 | 111 | 102 | 103 | 91 | 62 | 46 | 57 | ||||||||||||||||||||||||
Total other expense, net | (39 | ) | (68 | ) | (78 | ) | (81 | ) | (32 | ) | (56 | ) | (89 | ) | (58 | ) | ||||||||||||||||
Income before income taxes | 15,223 | 8,564 | 8,385 | 9,246 | 14,290 | 11,551 | 7,543 | 9,699 | ||||||||||||||||||||||||
Provision for income taxes | (2,452 | ) | (3,801 | ) | (2,264 | ) | (2,648 | ) | (5,259 | ) | (5,700 | ) | (3,886 | ) | (5,539 | ) | ||||||||||||||||
Net income | $ | 12,771 | $ | 4,763 | $ | 6,121 | $ | 6,598 | $ | 9,031 | $ | 5,851 | $ | 3,657 | $ | 4,160 | ||||||||||||||||
Earnings per share: | ||||||||||||||||||||||||||||||||
Basic | $ | 0.44 | $ | 0.16 | $ | 0.21 | $ | 0.23 | $ | 0.31 | $ | 0.20 | $ | 0.13 | $ | 0.15 | ||||||||||||||||
Diluted | $ | 0.42 | $ | 0.16 | $ | 0.20 | $ | 0.22 | $ | 0.30 | $ | 0.20 | $ | 0.12 | $ | 0.14 | ||||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||||||||||||||
Basic | 29,200 | 28,977 | 28,895 | 28,825 | 28,756 | 28,603 | 28,591 | 28,583 | ||||||||||||||||||||||||
Diluted | 30,469 | 30,475 | 30,240 | 30,108 | 29,873 | 29,715 | 29,591 | 29,567 |
For the Year Ended | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Non-GAAP operating income reconciliation: | ||||||||||||
Operating income | $ | 41,684 | $ | 43,318 | $ | 54,343 | ||||||
Operating income, as a % of total revenues | 5.3 | % | 7.0 | % | 10.7 | % | ||||||
Add back: | ||||||||||||
Non-cash stock-based compensation expense | 113,877 | 82,416 | 46,185 | |||||||||
Non-cash amortization of acquired intangible assets | 1,115 | 1,034 | 1,142 | |||||||||
Transaction costs related to business combinations | 874 | — | — | |||||||||
Non-GAAP operating income | $ | 157,550 | $ | 126,768 | $ | 101,670 | ||||||
Non-GAAP operating income, as a % of total revenues | 20.2 | % | 20.5 | % | 20.1 | % |
Payments Due by Period | |||||||||||||||||||
Total | Less Than 1 Year | 1-3 Years | 4-5 Years | More than 5 Years | |||||||||||||||
Capital lease obligations (1) | $ | 9,041 | $ | 5,056 | $ | 3,985 | $ | — | $ | — | |||||||||
Other long-term obligations (2) | 60,369 | 14,425 | 22,046 | 19,175 | 4,723 | ||||||||||||||
Other long-term liabilities (3) | 7,241 | 7,241 | — | — | — | ||||||||||||||
Total contractual cash obligations | $ | 76,651 | $ | 26,722 | $ | 26,031 | $ | 19,175 | $ | 4,723 |
(1) | We lease certain computer equipment under non-cancelable agreements, which are accounted for as capital leases and expire at various dates through 2019. See Note 13 of the Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for information regarding capital lease obligations. |
(2) | Included in other long-term obligations were Ultimate’s leases for corporate office space and certain equipment under non-cancelable operating lease agreements expiring at various dates. |
(3) | Ultimate has an income tax payable related to the unrecognizable benefit of an uncertain tax position. As of the date of this report, it is not reasonable to estimate the timing of this payment. Ultimate does not have any other long-term liabilities as of December 31, 2016. |
• | Maximum safety of principal; |
• | Maintenance of appropriate liquidity for regular cash needs; |
• | Maximum yields in relationship to guidelines and market conditions; |
• | Diversification of risks; and |
• | Fiduciary control of all investments. |
Page(s) | |
As of December 31, | |||||||
2016 | 2015 | ||||||
(In thousands, except share data) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 73,773 | $ | 109,325 | |||
Investments in marketable securities | 15,541 | 10,780 | |||||
Accounts receivable, net of allowance for doubtful accounts of $900 for 2016 and 2015 | 162,240 | 130,106 | |||||
Prepaid expenses and other current assets | 61,901 | 46,804 | |||||
Deferred tax assets, net | 1,125 | 883 | |||||
Total current assets before funds held for customers | 314,580 | 297,898 | |||||
Funds held for customers | 465,167 | 923,308 | |||||
Total current assets | 779,747 | 1,221,206 | |||||
Property and equipment, net | 179,558 | 125,492 | |||||
Goodwill | 35,322 | 24,410 | |||||
Investments in marketable securities | 8,547 | 9,278 | |||||
Intangible assets, net | 23,860 | 5,167 | |||||
Other assets, net | 47,432 | 31,107 | |||||
Deferred tax assets, net | 78,115 | 48,909 | |||||
Total assets | $ | 1,152,581 | $ | 1,465,569 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 13,519 | $ | 7,395 | |||
Accrued expenses | 50,973 | 42,097 | |||||
Deferred revenue | 171,669 | 142,793 | |||||
Capital lease obligations | 5,056 | 4,488 | |||||
Other borrowings | — | 400 | |||||
Total current liabilities before customer funds obligations | 241,217 | 197,173 | |||||
Customer funds obligations | 466,423 | 923,366 | |||||
Total current liabilities | 707,640 | 1,120,539 | |||||
Deferred revenue | 2,307 | 2,934 | |||||
Deferred rent | 6,022 | 3,719 | |||||
Capital lease obligations | 3,985 | 3,665 | |||||
Deferred income tax liability | 519 | 646 | |||||
Total liabilities | 720,473 | 1,131,503 | |||||
Commitments and contingencies (Note 16) | — | — | |||||
Stockholders’ equity: | |||||||
Series A Junior Participating Preferred Stock, $.01 par value, 500,000 shares authorized, no shares issued | — | — | |||||
Preferred Stock, $.01 par value, 2,000,000 shares authorized, no shares issued | — | — | |||||
Common Stock, $.01 par value, 50,000,000 shares authorized, 34,003,036 and 33,260,879 shares issued in 2016 and 2015, respectively | 340 | 333 | |||||
Additional paid-in capital | 520,524 | 463,609 | |||||
Accumulated other comprehensive loss | (7,023 | ) | (7,829 | ) | |||
Accumulated earnings | 129,626 | 59,627 | |||||
643,467 | 515,740 | ||||||
Treasury stock, 4,657,995 and 4,467,595 shares, at cost, for 2016 and 2015, respectively | (211,359 | ) | (181,674 | ) | |||
Total stockholders’ equity | 432,108 | 334,066 | |||||
Total liabilities and stockholders’ equity | $ | 1,152,581 | $ | 1,465,569 |
For the Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(in thousands, except per share data) | |||||||||||
Revenues: | |||||||||||
Recurring | $ | 654,199 | $ | 516,400 | $ | 419,771 | |||||
Services | 127,092 | 101,681 | 86,165 | ||||||||
Total revenues | 781,291 | 618,081 | 505,936 | ||||||||
Cost of revenues: | |||||||||||
Recurring | 172,676 | 138,587 | 117,700 | ||||||||
Services | 127,433 | 99,948 | 85,939 | ||||||||
Total cost of revenues | 300,109 | 238,535 | 203,639 | ||||||||
Gross profit | 481,182 | 379,546 | 302,297 | ||||||||
Operating expenses: | |||||||||||
Sales and marketing | 224,416 | 169,664 | 117,033 | ||||||||
Research and development | 120,650 | 93,671 | 83,542 | ||||||||
General and administrative | 94,432 | 72,893 | 47,379 | ||||||||
Total operating expenses | 439,498 | 336,228 | 247,954 | ||||||||
Operating income | 41,684 | 43,318 | 54,343 | ||||||||
Other (expense) income: | |||||||||||
Interest expense and other, net | (717 | ) | (491 | ) | (353 | ) | |||||
Other income, net | 451 | 256 | 339 | ||||||||
Total other expense, net | (266 | ) | (235 | ) | (14 | ) | |||||
Income before income taxes | 41,418 | 43,083 | 54,329 | ||||||||
Provision for income taxes | (11,165 | ) | (20,384 | ) | (9,592 | ) | |||||
Net income | $ | 30,253 | $ | 22,699 | $ | 44,737 | |||||
Net income per share: | |||||||||||
Basic | $ | 1.04 | $ | 0.79 | $ | 1.58 | |||||
Diluted | $ | 0.99 | $ | 0.76 | $ | 1.52 | |||||
Weighted average shares outstanding: | |||||||||||
Basic | 28,976 | 28,634 | 28,293 | ||||||||
Diluted | 30,414 | 29,721 | 29,343 |
For the Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Net income | $ | 30,253 | $ | 22,699 | $ | 44,737 | |||||
Other comprehensive (loss) income: | |||||||||||
Unrealized loss on investments in marketable available for sale securities | (61 | ) | (56 | ) | (10 | ) | |||||
Unrealized gain (loss) on foreign currency translation adjustments | 843 | (4,195 | ) | (2,143 | ) | ||||||
Other comprehensive income (loss), before tax | 782 | (4,251 | ) | (2,153 | ) | ||||||
Income tax benefit related to items of other comprehensive income | 24 | 12 | 1 | ||||||||
Other comprehensive income (loss), net of tax | $ | 806 | $ | (4,239 | ) | $ | (2,152 | ) | |||
Comprehensive income | $ | 31,059 | $ | 18,460 | $ | 42,585 |
Common Stock | Additional Paid -in Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated (Deficit) Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
Balance, December 31, 2013 | 32,133 | $ | 321 | $ | 315,691 | $ | (1,442 | ) | $ | (7,809 | ) | 4,054 | $ | (118,544 | ) | $ | 188,217 | ||||||||||||
Net income | — | — | — | — | 44,737 | — | — | 44,737 | |||||||||||||||||||||
Unrealized gain on investments in marketable securities available-for-sale, net of tax | — | — | — | (5 | ) | — | — | — | (5 | ) | |||||||||||||||||||
Unrealized loss on foreign exchange | — | — | — | (2,143 | ) | — | — | — | (2,143 | ) | |||||||||||||||||||
Shares acquired to settle employee tax withholding liability | — | — | (19,883 | ) | — | — | — | — | (19,883 | ) | |||||||||||||||||||
Excess tax benefits from employee stock plan | — | — | 27,499 | — | — | — | — | 27,499 | |||||||||||||||||||||
Repurchases of Common Stock | — | — | — | — | — | 163 | (19,981 | ) | (19,981 | ) | |||||||||||||||||||
Stock consideration for acquisitions | 13 | — | (818 | ) | — | — | — | — | (818 | ) | |||||||||||||||||||
Issuances of Common Stock from exercises of stock options | 310 | 3 | 6,205 | — | — | — | — | 6,208 | |||||||||||||||||||||
Issuances of Common Stock from restricted stock releases | 267 | 3 | — | — | — | — | — | 3 | |||||||||||||||||||||
Non-cash stock-based compensation expense | — | — | 47,915 | — | — | — | — | 47,915 | |||||||||||||||||||||
Balance, December 31, 2014 | 32,723 | $ | 327 | $ | 376,609 | $ | (3,590 | ) | $ | 36,928 | 4,217 | $ | (138,525 | ) | $ | 271,749 | |||||||||||||
Net income | — | — | — | — | 22,699 | — | — | 22,699 | |||||||||||||||||||||
Unrealized loss on investments in marketable securities available-for-sale, net of tax | — | — | — | (44 | ) | — | — | — | (44 | ) | |||||||||||||||||||
Unrealized loss on foreign exchange | — | — | — | (4,195 | ) | — | — | — | (4,195 | ) | |||||||||||||||||||
Shares acquired to settle employee tax withholding liability | — | — | (34,989 | ) | — | — | — | — | (34,989 | ) | |||||||||||||||||||
Excess tax benefits from employee stock plan | — | — | 31,859 | — | — | — | — | 31,859 | |||||||||||||||||||||
Repurchases of Common Stock | — | — | — | — | — | 251 | (43,149 | ) | (43,149 | ) | |||||||||||||||||||
Stock consideration for acquisitions | 13 | 1 | — | — | — | — | — | 1 | |||||||||||||||||||||
Issuances of Common Stock from exercises of stock options | 189 | 2 | 4,701 | — | — | — | — | 4,703 | |||||||||||||||||||||
Issuances of Common Stock from restricted stock releases | 336 | 3 | — | — | — | — | — | 3 | |||||||||||||||||||||
Non-cash stock-based compensation expense | — | — | 85,429 | — | — | — | — | 85,429 | |||||||||||||||||||||
Balance, December 31, 2015 | 33,261 | $ | 333 | $ | 463,609 | $ | (7,829 | ) | $ | 59,627 | 4,468 | $ | (181,674 | ) | $ | 334,066 |
Common Stock | Additional Paid -in Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated (Deficit) Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
Cumulative impact of adoption of ASU 2016-09 | — | — | — | — | 39,746 | — | — | 39,746 | |||||||||||||||||||||
Net income | — | — | — | — | 30,253 | — | — | 30,253 | |||||||||||||||||||||
Unrealized loss on investments in marketable securities available-for-sale, net of tax | — | — | — | (37 | ) | — | — | — | (37 | ) | |||||||||||||||||||
Unrealized loss on foreign exchange | — | — | — | 843 | — | — | — | 843 | |||||||||||||||||||||
Shares acquired to settle employee tax withholding liability | — | — | (65,522 | ) | — | — | — | — | (65,522 | ) | |||||||||||||||||||
Repurchases of Common Stock | — | — | — | — | — | 190 | (29,685 | ) | (29,685 | ) | |||||||||||||||||||
Stock consideration for acquisitions | 7 | — | — | — | — | — | — | — | |||||||||||||||||||||
Issuances of Common Stock from exercises of stock options | 183 | 2 | 4,657 | — | — | — | — | 4,659 | |||||||||||||||||||||
Issuances of Common Stock from restricted stock releases | 552 | 5 | — | — | — | — | — | 5 | |||||||||||||||||||||
Non-cash stock-based compensation expense | — | — | 117,780 | — | — | — | — | 117,780 | |||||||||||||||||||||
Balance, December 31, 2016 | 34,003 | $ | 340 | $ | 520,524 | $ | (7,023 | ) | $ | 129,626 | 4,658 | $ | (211,359 | ) | $ | 432,108 |
For the Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
(in thousands) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 30,253 | $ | 22,699 | $ | 44,737 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 27,098 | 21,738 | 19,263 | ||||||||
Provision for doubtful accounts | 3,213 | 4,687 | 2,264 | ||||||||
Non-cash stock-based compensation expense | 113,877 | 82,416 | 46,185 | ||||||||
Income taxes | 10,195 | 19,739 | 9,030 | ||||||||
Net amortization of premiums and accretion of discounts on available-for-sale securities | 755 | — | — | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (35,004 | ) | (34,575 | ) | (16,806 | ) | |||||
Prepaid expenses and other current assets | (14,973 | ) | (12,016 | ) | (5,414 | ) | |||||
Other assets | (16,325 | ) | (10,496 | ) | (3,271 | ) | |||||
Accounts payable | 5,850 | (23 | ) | 996 | |||||||
Accrued expenses and deferred rent | 7,403 | 12,507 | 4,582 | ||||||||
Deferred revenue | 27,179 | 36,022 | 6,521 | ||||||||
Net cash provided by operating activities | 159,521 | 142,698 | 108,087 | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of marketable securities | (207,676 | ) | (91,528 | ) | (10,355 | ) | |||||
Maturities of marketable securities | 123,895 | 11,711 | 10,377 | ||||||||
Payments for acquisitions | (25,636 | ) | — | (257 | ) | ||||||
Net change in money market securities and other cash equivalents held to satisfy client fund obligations | 537,077 | (94,306 | ) | (496,860 | ) | ||||||
Purchases of property and equipment, including capitalized software development | (69,415 | ) | (50,634 | ) | (38,100 | ) | |||||
Net cash provided by (used in) investing activities | 358,245 | (224,757 | ) | (535,195 | ) | ||||||
Cash flows from financing activities: | |||||||||||
Repurchases of Common Stock | (29,685 | ) | (43,149 | ) | (19,981 | ) | |||||
Net proceeds from issuances of Common Stock | 4,659 | 4,703 | 6,208 | ||||||||
Shares acquired to settle employee tax withholding liabilities | (65,522 | ) | (34,989 | ) | (19,883 | ) | |||||
Principal payments on capital lease obligations | (5,831 | ) | (4,810 | ) | (4,082 | ) | |||||
Repayments of other borrowings | (400 | ) | (567 | ) | (2,690 | ) | |||||
Net (decrease) increase in customer fund obligations | (456,943 | ) | 164,279 | 496,860 | |||||||
Net cash (used in) provided by financing activities | (553,722 | ) | 85,467 | 456,432 | |||||||
Effect of exchange rate changes on cash | 404 | (2,381 | ) | (820 | ) | ||||||
Net (decrease) increase in cash and cash equivalents | (35,552 | ) | 1,027 | 28,504 | |||||||
Cash and cash equivalents, beginning of year | 109,325 | 108,298 | 79,794 | ||||||||
Cash and cash equivalents, end of year | $ | 73,773 | $ | 109,325 | $ | 108,298 | |||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid for interest | $ | 426 | $ | 371 | $ | 327 | |||||
Cash paid for taxes | $ | 1,758 | $ | 815 | $ | 582 | |||||
Non-cash investing and financing activities: | |||||||||||
Capital lease obligations to acquire new equipment | $ | 6,719 | $ | 5,949 | $ | 5,907 | |||||
Stock consideration adjustment recorded for acquisitions | $ | — | $ | — | $ | (818 | ) | ||||
Cash held in escrow for business combinations | $ | 3,600 | $ | — | $ | — | |||||
License agreement with third-party vendor, financed | $ | — | $ | — | $ | 800 | |||||
Stock based compensation for capitalized software | $ | 3,903 | $ | 3,013 | $ | 1,730 |
• | persuasive evidence of an arrangement exists; |
• | delivery has occurred; |
• | the fees are fixed and determinable; and |
• | collection is considered probable. |
For the Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
SBC - Statements of income | $ | 113,877 | $ | 82,416 | $ | 46,185 | |||||
SBC - Capitalized software | 3,903 | 3,013 | 1,730 | ||||||||
SBC - Statements of stockholders' equity | $ | 117,780 | $ | 85,429 | $ | 47,915 |
As of December 31, 2016 | As of December 31, 2015 | ||||||||||||||||||||||
Amortized Cost | Net Unrealized (Loss) Gain | Fair Value (1) | Amortized Cost | Net Unrealized (Loss) | Fair Value (1) | ||||||||||||||||||
Type of issue: | |||||||||||||||||||||||
Funds held for customers – money market securities and other cash equivalents | $ | 316,353 | $ | — | $ | 316,353 | $ | 853,392 | $ | — | $ | 853,392 | |||||||||||
Available-for-sale securities: | |||||||||||||||||||||||
Corporate debentures – bonds | 10,175 | (3 | ) | 10,172 | 13,232 | (31 | ) | 13,201 | |||||||||||||||
Commercial paper | 1,446 | — | 1,446 | 2,097 | — | 2,097 | |||||||||||||||||
U.S. Agency bonds | 148,939 | (125 | ) | 148,814 | 70,208 | (44 | ) | 70,164 | |||||||||||||||
U.S. Treasury bills | 9,586 | (18 | ) | 9,568 | 703 | (3 | ) | 700 | |||||||||||||||
Asset-Backed Securities | 2,901 | 1 | 2,902 | 3,818 | (6 | ) | 3,812 | ||||||||||||||||
Total corporate investments and funds held for customers | $ | 489,400 | $ | (145 | ) | $ | 489,255 | $ | 943,450 | $ | (84 | ) | $ | 943,366 |
Securities in unrealized loss position less than 12 months | Securities in unrealized loss position greater than 12 months | Total | ||||||||||||||||||||||
Unrealized losses | Fair market value | Unrealized losses | Fair market value | Gross unrealized losses | Fair market value | |||||||||||||||||||
Corporate debentures – bonds | $ | (4 | ) | $ | 6,125 | $ | — | $ | — | $ | (4 | ) | $ | 6,125 | ||||||||||
Commercial paper | — | — | — | — | — | — | ||||||||||||||||||
U.S. Agency bonds | (131 | ) | 118,810 | — | — | (131 | ) | 118,810 | ||||||||||||||||
U.S. Treasury bills | (18 | ) | 9,568 | — | — | (18 | ) | 9,568 | ||||||||||||||||
Asset-Backed Securities | (1 | ) | 751 | — | — | (1 | ) | 751 | ||||||||||||||||
Total | $ | (154 | ) | $ | 135,254 | $ | — | $ | — | $ | (154 | ) | $ | 135,254 |
Securities in unrealized loss position less than 12 months | Securities in unrealized loss position greater than 12 months | Total | ||||||||||||||||||||||
Unrealized losses | Fair market value | Unrealized losses | Fair market value | Gross unrealized losses | Fair market value | |||||||||||||||||||
Corporate debentures – bonds | $ | (31 | ) | $ | 12,451 | $ | (1 | ) | $ | 300 | $ | (32 | ) | $ | 12,751 | |||||||||
Commercial paper | — | — | — | — | — | — | ||||||||||||||||||
U.S. Agency bonds | (51 | ) | 70,004 | — | — | (51 | ) | 70,004 | ||||||||||||||||
U.S. Treasury bills | (3 | ) | 700 | — | — | (3 | ) | 700 | ||||||||||||||||
Asset-Backed Securities | (6 | ) | 3,813 | — | — | (6 | ) | 3,813 | ||||||||||||||||
Total | $ | (91 | ) | $ | 86,968 | $ | (1 | ) | $ | 300 | $ | (92 | ) | $ | 87,268 |
As of December 31, 2016 | |||||||
Amortized Cost | Fair Value | ||||||
Due in one year or less | $ | 120,234 | $ | 120,190 | |||
Due after one year | 52,813 | 52,712 | |||||
Total | $ | 173,047 | $ | 172,902 |
Level 1: | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities. |
Level 2: | Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly. |
Level 3: | Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. |
As of December 31, 2016 | As of December 31, 2015 | ||||||||||||||||||||||||||||||
Total | Quoted Prices in Active Markets (Level 1) | Other Observable Inputs (Level 2) | Un- Observable Inputs (Level 3) | Total | Quoted Prices in Active Markets (Level 1) | Other Observable Inputs (Level 2) | Un- Observable Inputs (Level 3) | ||||||||||||||||||||||||
Corporate debentures and bonds | $ | 10,172 | $ | — | $ | 10,172 | $ | — | $ | 13,201 | $ | — | $ | 13,201 | $ | — | |||||||||||||||
Commercial paper | 1,446 | — | 1,446 | — | 2,097 | — | 2,097 | — | |||||||||||||||||||||||
U.S. Agency bonds | 148,814 | — | 148,814 | — | 70,164 | — | 70,164 | — | |||||||||||||||||||||||
U.S. Treasury bills | 9,568 | — | 9,568 | — | 700 | — | 700 | — | |||||||||||||||||||||||
Asset-Backed Securities | 2,902 | — | 2,902 | — | 3,812 | — | 3,812 | — | |||||||||||||||||||||||
Total | $ | 172,902 | $ | — | $ | 172,902 | $ | — | $ | 89,974 | $ | — | $ | 89,974 | $ | — |
For the Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Balance at beginning of year | $ | 900 | $ | 675 | $ | 675 | |||||
Charged to expense | 3,213 | 4,687 | 2,264 | ||||||||
Write-offs | (3,213 | ) | (4,462 | ) | (2,264 | ) | |||||
Balance at end of year | $ | 900 | $ | 900 | $ | 675 |
As of December 31, | |||||||
2016 | 2015 | ||||||
Prepaid commissions on cloud sales | $ | 29,842 | $ | 22,119 | |||
Other prepaid expenses | 16,753 | 11,978 | |||||
Other current assets | 15,306 | 12,707 | |||||
Total prepaid expenses and other current assets | $ | 61,901 | $ | 46,804 |
As of December 31, | |||||||
2016 | 2015 | ||||||
Computer equipment | $ | 166,420 | $ | 140,297 | |||
Internal-use software | 113,407 | 75,529 | |||||
Leasehold improvements | 36,095 | 25,246 | |||||
Furniture and fixtures | 16,932 | 12,316 | |||||
Building | 1,074 | 1,005 | |||||
Land | 655 | 655 | |||||
Property and equipment | 334,583 | 255,048 | |||||
Less: accumulated depreciation and amortization | 155,025 | 129,556 | |||||
Property and equipment, net | $ | 179,558 | $ | 125,492 |
As of December 31, | |||||||
2016 | 2015 | ||||||
Computer equipment | $ | 51,581 | $ | 44,862 | |||
Less: accumulated amortization | 43,732 | 38,389 | |||||
Computer equipment, net | $ | 7,849 | $ | 6,473 |
For the Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Realized foreign currency translation (loss) gains | $ | — | $ | — | $ | — | |||||
Unrealized foreign currency translation gains (losses) | $ | 843 | $ | (4,195 | ) | $ | (2,143 | ) |
As of December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Computer software development costs | $ | 113,407 | 75,529 | 49,464 | |||||
Less: accumulated amortization | (2,925 | ) | (1,742 | ) | (670 | ) | |||
Computer software development costs, net | 110,482 | 73,787 | 48,794 |
For the Years Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Basic weighted average shares outstanding | 28,976 | 28,634 | 28,293 | |||||
Effect of dilutive equity instruments (1) | 1,438 | 1,087 | 1,050 | |||||
Dilutive shares outstanding | 30,414 | 29,721 | 29,343 | |||||
Anti-dilutive equity instruments (1) | 24 | 19 | 40 |
As of December 31, | |||||||
2016 | 2015 | ||||||
Goodwill, December 31, 2015 | $ | 24,410 | $ | 25,696 | |||
Goodwill from Vestrics Acquisition (1) | 4,305 | — | |||||
Goodwill from Kanjoya Acquisition (2) | 6,394 | — | |||||
Translation adjustment (3) | 213 | (1,286 | ) | ||||
Goodwill, December 31, 2016 | $ | 35,322 | $ | 24,410 |
As of December 31, 2016 | |||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Cumulative Translation Adjustment (1) | Net Carrying Amount | Weighted Average Remaining Useful Life | |||||||||||||
Developed technology | $ | 23,300 | $ | (2,036 | ) | $ | (1,026 | ) | $ | 20,238 | 6.7 | ||||||
Customer relationships | 4,700 | (1,194 | ) | — | 3,506 | 5.3 | |||||||||||
Non-compete agreements | 300 | (300 | ) | — | — | 0.0 | |||||||||||
$ | 28,300 | $ | (3,530 | ) | $ | (1,026 | ) | $ | 23,744 | 6.5 | |||||||
As of December 31, 2015 | |||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Cumulative Translation Adjustment (1) | Net Carrying Amount | Weighted Average Remaining Useful Life | |||||||||||||
Developed technology | $ | 5,200 | $ | (1,463 | ) | $ | (1,112 | ) | $ | 2,625 | 4.8 | ||||||
Customer relationships | 3,200 | (736 | ) | (4 | ) | 2,460 | 7.8 | ||||||||||
Non-compete agreements | 300 | (216 | ) | (2 | ) | 82 | 0.9 | ||||||||||
$ | 8,700 | $ | (2,415 | ) | $ | (1,118 | ) | $ | 5,167 | 6.2 |
Year | Amount | |||
2017 | $ | 1,812 | ||
2018 | 3,109 | |||
2019 | 3,412 | |||
2020 | 3,323 | |||
2021 | 2,896 | |||
Thereafter | 9,192 | |||
Total | $ | 23,744 |
Year | Amount | |||
2017 | $ | 5,346 | ||
2018 | 3,223 | |||
2019 | 883 | |||
9,452 | ||||
Less amount representing interest | (411 | ) | ||
Lease obligations reflected as current ($5,056) and non-current ($3,985) | $ | 9,041 |
For the Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Current taxes: | |||||||||||
Federal | $ | 34 | $ | (26,111 | ) | $ | (22,406 | ) | |||
State and local | (170 | ) | (6,021 | ) | (5,078 | ) | |||||
Foreign | (856 | ) | (200 | ) | (567 | ) | |||||
Deferred taxes, net | |||||||||||
Federal | (8,034 | ) | 9,548 | 16,607 | |||||||
State and local | (2,289 | ) | 2,193 | 1,535 | |||||||
Foreign | 150 | 207 | 317 | ||||||||
Income tax provision | $ | (11,165 | ) | $ | (20,384 | ) | $ | (9,592 | ) |
For the Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Income tax provision at statutory federal tax rate | $ | (14,490 | ) | $ | (15,079 | ) | $ | (19,015 | ) | ||
State and local income taxes, net of the federal benefit | (1,598 | ) | (2,488 | ) | (2,303 | ) | |||||
Non-deductible expenses | (19,824 | ) | (6,250 | ) | (2,068 | ) | |||||
Change in tax rates | 216 | 117 | 80 | ||||||||
Recognition of ASU 2016-09 excess tax benefits, federal benefit | 20,966 | — | — | ||||||||
Research credit, federal benefit | 3,727 | 3,239 | 13,873 | ||||||||
Other, net | (162 | ) | 77 | (159 | ) | ||||||
Income tax provision | $ | (11,165 | ) | $ | (20,384 | ) | $ | (9,592 | ) |
As of December 31, | |||||||
2016 | 2015 | ||||||
Deferred tax assets: | |||||||
Net operating losses | $ | 60,026 | $ | 402 | |||
Tax credit carryforwards | 911 | 817 | |||||
Research credit | 22,768 | 18,758 | |||||
Deferred revenue | 918 | 16 | |||||
Accruals not currently deductible | 1,012 | 790 | |||||
Allowance for doubtful accounts | 338 | 338 | |||||
Charitable contributions | 1,777 | 1,275 | |||||
Stock-based compensation | 38,154 | 58,323 | |||||
Deferred rent adjustment | 3,081 | 1,891 | |||||
Gross deferred tax assets | 128,985 | 82,610 | |||||
Less valuation allowance | — | — | |||||
Deferred tax assets | $ | 128,985 | $ | 82,610 | |||
Deferred tax liabilities: | |||||||
Property and equipment | $ | (49,745 | ) | $ | (32,818 | ) | |
Foreign, primarily acquired intangible assets | (519 | ) | (646 | ) | |||
Gross deferred tax liabilities | (50,264 | ) | (33,464 | ) | |||
Net deferred tax assets | $ | 78,721 | $ | 49,146 |
As of December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Balance at January 1, | $ | 5,957 | $ | 4,950 | $ | — | |||||
Tax positions taken in prior period | |||||||||||
Gross increases | 205 | 133 | — | ||||||||
Gross decreases | — | — | — | ||||||||
Tax positions taken in current period | |||||||||||
Gross increases | 1,079 | 874 | 4,950 | ||||||||
Settlements | — | — | — | ||||||||
Statute expiration | — | — | — | ||||||||
Balance at December 31, | $ | 7,241 | $ | 5,957 | $ | 4,950 |
For the Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Cost of recurring revenues | $ | 8,613 | $ | 6,303 | $ | 5,495 | |||||
Cost of services revenues | 6,198 | 5,017 | 4,446 | ||||||||
Sales and marketing | 59,187 | 41,059 | 20,767 | ||||||||
Research and development | 8,238 | 6,180 | 4,788 | ||||||||
General and administrative | 31,641 | 23,857 | 10,689 | ||||||||
Total stock-based compensation expense | $ | 113,877 | $ | 82,416 | $ | 46,185 |
For the Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Stock-based compensation expense: | |||||||||||
Stock-based compensation expense | $ | 71,119 | $ | 59,390 | $ | 46,185 | |||||
Stock-based compensation expense related to CIC modifications | 42,758 | 23,026 | — | ||||||||
Total non-cash stock-based compensation expense | $ | 113,877 | $ | 82,416 | $ | 46,185 |
Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in Years) | Aggregate Intrinsic Value | |||||||||
Outstanding at December 31, 2013 | 1,032 | $ | 24.69 | ||||||||||
Granted | — | — | |||||||||||
Exercised | (310 | ) | 20.05 | ||||||||||
Forfeited or expired | — | — | |||||||||||
Outstanding and exercisable at December 31, 2014 | 722 | $ | 26.68 | 2.6 | $ | 86,758 | |||||||
Outstanding at December 31, 2014 | 722 | $ | 26.68 | ||||||||||
Granted | — | — | |||||||||||
Exercised | (189 | ) | 24.85 | ||||||||||
Forfeited or expired | (1 | ) | 14.36 | ||||||||||
Outstanding and exercisable at December 31, 2015 | 532 | $ | 27.36 | 1.8 | $ | 89,373 | |||||||
Outstanding at December 31, 2015 | 532 | $ | 27.36 | ||||||||||
Granted | — | — | |||||||||||
Exercised | (188 | ) | 24.79 | ||||||||||
Forfeited or expired | — | — | |||||||||||
Outstanding and exercisable at December 31, 2016 | 344 | $ | 28.76 | 1.1 | $ | 52,797 |
Restricted Stock Awards | Restricted Stock Unit Awards | ||||||||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | ||||||||||
Outstanding at December 31, 2013 | 968 | $ | 91.28 | 501 | $ | 88.58 | |||||||
Granted | 245 | 152.39 | 207 | 157.64 | |||||||||
Vested | — | — | — | — | |||||||||
Released | (153 | ) | 40.38 | (242 | ) | 80.00 | |||||||
Forfeited or expired | — | — | (22 | ) | 115.18 | ||||||||
Outstanding at December 31, 2014 | 1,060 | $ | 112.77 | 444 | $ | 124.07 | |||||||
Granted | 589 | 169.52 | 241 | 169.89 | |||||||||
Vested | — | — | — | — | |||||||||
Released | (283 | ) | 86.91 | (233 | ) | 109.79 | |||||||
Forfeited or expired | — | — | (17 | ) | 147.24 | ||||||||
Outstanding at December 31, 2015 | 1,366 | $ | 142.61 | 435 | $ | 156.18 | |||||||
Granted | 463 | 168.94 | 363 | 173.28 | |||||||||
Vested | — | — | — | — | |||||||||
Released | (668 | ) | 122.37 | (214 | ) | 145.47 | |||||||
Forfeited or expired | — | — | (22 | ) | 170.36 | ||||||||
Outstanding at December 31, 2016 | 1,161 | $ | 164.77 | 562 | $ | 170.73 |
Options Outstanding | Options Exercisable | |||||||||||||||
Range of Exercise Prices | Number | Weighted Average Remaining Contractual Term (Years) | Weighted- Average Exercise Price | Number | Weighted Average Exercise Price | |||||||||||
$14.72—$27.02 | 60,052 | 0.84 | $ | 20.40 | 60,052 | $ | 20.40 | |||||||||
$28.41—$28.41 | 127,977 | 1.10 | 28.41 | 127,977 | 28.41 | |||||||||||
$30.34—$30.34 | 34,125 | 0.56 | 30.34 | 34,125 | 30.34 | |||||||||||
$32.39—$32.39 | 72,385 | 1.57 | 32.39 | 72,385 | 32.39 | |||||||||||
$32.54—$34.89 | 49,225 | 1.12 | 33.47 | 49,225 | 33.47 | |||||||||||
$14.72—$34.89 | 343,764 | 1.10 | $ | 28.76 | 343,764 | $ | 28.76 |
Year | Market Value of Restricted Stock Awards Granted | Number of Restricted Stock Awards Granted | |||||
2014 | $ | 164.87 | 2,625 | ||||
118.03 | 2,625 | ||||||
132.23 | 2,570 | ||||||
152.59 | 2,555 | ||||||
2015 | $ | 160.92 | 2,535 | ||||
163.99 | 2,480 | ||||||
183.19 | 2,440 | ||||||
203.94 | 2,455 | ||||||
2016 | $ | 156.12 | 2,550 | ||||
191.67 | 2,425 | ||||||
210.29 | 2,445 | ||||||
210.59 | 2,395 |
Year | Amount | |||
2017 | $ | 14,425 | ||
2018 | 11,599 | |||
2019 | 10,447 | |||
2020 | 9,843 | |||
2021 | 9,332 | |||
Thereafter | 4,723 | |||
$ | 60,369 |
Name | Age | Position(s) | |||
Scott Scherr | 64 | Chairman of the Board, President and Chief Executive Officer | |||
Marc D. Scherr | 59 | Vice Chairman of the Board and Chief Operating Officer | |||
Mitchell K. Dauerman | 59 | Executive Vice President, Chief Financial Officer and Treasurer | |||
Adam Rogers | 42 | Senior Vice President, Chief Technology Officer | |||
Greg Swick | 53 | Senior Vice President, Chief Enterprise Sales Officer | |||
Robert Manne | 63 | Senior Vice President, General Counsel | |||
Chris Phenicie | 45 | Senior Vice President, Chief Mid-Market Sales Officer | |||
James A. FitzPatrick, Jr. | 67 | Director | |||
Alois T. Leiter | 51 | Director | |||
LeRoy A. Vander Putten | 82 | Director | |||
Rick A. Wilber | 70 | Director | |||
Robert A. Yanover | 80 | Director | |||
Julie Dodd | 47 | Senior Vice President, Chief Services Officer | |||
Bill Hicks | 51 | Senior Vice President, Chief Relationship Officer | |||
Jody Kaminsky | 42 | Senior Vice President, Marketing | |||
Vivian Maza | 55 | Senior Vice President, Chief People Officer and Secretary |
Equity Compensation Plan Information | ||||||||||
Plan Category | (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | (c) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column ( a )) | |||||||
Equity compensation plans approved by security holders | 343,764 | $ | 28.76 | 1,162,546 | ||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||
Total | 343,764 | $ | 28.76 | 1,162,546 |
(a) | Documents filed as part of this Form 10-K: |
1. | The following consolidated financial statements of Ultimate, together with the report thereon, of KPMG LLP, our Independent Registered Public Accounting Firm, are included in Part II, Item 8, of this Form 10-K: |
Number | Description | |
3.1 | Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1 (File 333-47881), initially filed March 13, 1998 (the "Registration Statement")) | |
3.2 | Certificate of Designations of Series A Junior Preferred Stock (incorporated by reference to Exhibit 2 to Ultimate’s Current Report on Form 8-K dated October 23, 1998) | |
3.3 | Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.2 to Ultimate's Current Report on Form 8-K dated February 6, 2013) | |
4.1 | Form of Certificate for the Common Stock, par value $0.01 per share (incorporated by reference to Exhibit 4.1 to the Registration Statement) | |
4.2 | Form of Warrant for Common Stock (incorporated by reference to Exhibit 4.4 to Ultimate's Registration Statement on Form S-3 (File No. 333-107527), initially filed July 31, 2003) | |
4.3 | Amended and Restated Rights Agreement, dated as of August 26, 2008, between Ultimate and Computershare Trust Company, N.A., as Rights Agent. The Rights Agreement includes the Form of Certificate of Designations of Series A Junior Preferred Stock as Exhibit A, the Form of Rights Certificate as Exhibit B and the Summary of Rights as Exhibit C (incorporated by reference to Exhibit 4.1 to Ultimate’s Current Report on Form 8-K dated September 2, 2008). | |
10.1 | Shareholders Rights Agreement, dated June 6, 1997 among Ultimate and certain stockholders named therein (incorporated by reference to Exhibit 10.1 to the Registration Statement) | |
10.2 | Commercial Office Lease by and between ROHO Ultimate, LTD. II, a Florida limited partnership (“Landlord”) and Ultimate dated May 23, 2001 (incorporated by reference to Exhibit 10.32 to Ultimate's Annual Report on Form 10-K dated March 15, 2006) | |
10.3 | Weston Town Center South Office Building Lease between South Office Building-DLB, LLC, a Florida Limited Liability Company, South Office Building Bagtrust, LLC, a Florida Limited Liability Company, and South Office Building-BJB, LLC, a Florida Limited Liability Company, and Ultimate and Weston Common Area LTD., dated August 18, 2005 (incorporated by reference to Exhibit 10.35 to Ultimate’s Annual Report on Form 10-K, dated March 15, 2006) | |
10.4 | Galleria Atlanta office lease agreement between Galleria 600, LLC, a Delaware limited liability company, and Ultimate, dated April 27, 2006 (incorporated by reference to Exhibit 10.36 to Ultimate’s Quarterly Report on Form 10-Q, dated August 8, 2006) | |
10.5 | Lease of Office Space by and between OMERS Realty Corporation CPP Investment Board Real Estate Holdings Inc., and The Ultimate Group of Canada, Inc., dated August 22, 2006 (incorporated by reference to Exhibit 10.37 to Ultimate’s Quarterly Report on Form 10-Q, dated November 8, 2006) | |
10.6 | Indemnity Agreement between OMERS Realty Corporation, CPP Investment Board Real Estate Holdings, Inc., and Ultimate dated August 22, 2006 (incorporated by reference to Exhibit 10.38 to Ultimate’s Quarterly Report on Form 10-Q, dated November 8, 2006) | |
10.7 | Amendment to Lease by and between ROHO Ultimate, Ltd. I (“Landlord”) and Ultimate Group. Inc. (“Tenant”) for Demised premises at 2000 Ultimate Way, Weston, FL 33326 (the “Premises”) dated February 15, 2000 (incorporated by reference to Exhibit 10.39 to Ultimate’s Annual Report on Form 10-K, dated March 16, 2007) | |
10.8 | First Amendment to Lease between Galleria 600, LLC (“Landlord”) and Ultimate, dated August 18, 2006 (incorporated by reference to Exhibit 10.42 to Ultimate’s Annual Report on Form 10-K, dated March 16, 2007) | |
10.9 | Amended and Restated 2005 Equity and Incentive Plan (incorporated by reference to Exhibit 10.1 to Ultimate’s Current Report on Form 8-K, dated May 17, 2016) † | |
10.10 | Commercial lease between Weston Office, LLC (“Landlord”) and Ultimate, dated January 18, 2008 (incorporated by reference to Exhibit 10.45 to Ultimate’s Annual Report on Form 10-K, dated March 13, 2008) | |
10.11 | Commercial lease between AGF Woodfield Owner, L.L.C., (“Landlord”) and Ultimate, dated October 31, 2008 (incorporated by reference to Exhibit 10.47 to Ultimate’s Annual Report on Form 10-K, dated March 2, 2009) | |
10.12 | Commercial lease between 300 Galleria Parkway Associates, L.P., (“Landlord”) and Ultimate, dated September 8, 2009 (incorporated by reference to Exhibit 10.33 to Ultimate’s Quarterly Report on Form 10-Q, dated November 9, 2009) |
10.13 | Commercial lease between RT Twenty-Sixth Pension Properties Limited (“Landlord”) and Ultimate, dated September 4, 2009 (incorporated by reference to Exhibit 10.34 to Ultimate’s Quarterly Report on Form 10-Q, dated November 9, 2009) | |
10.14 | Master Space Agreement between Quality Technology Services Miami LLC and Ultimate, dated June 1, 2009 (incorporated by reference to Exhibit 10.1 to Ultimate’s Quarterly Report on Form 10-Q, dated August 9, 2010) ü | |
10.15 | Master Space Agreement between Quality Technology Services Metro LLC and Ultimate, dated June 1, 2009 (incorporated by reference to Exhibit 10.2 to Ultimate’s Quarterly Report on Form 10-Q, dated August 9, 2010) ü | |
10.16 | Service Order Form between Verizon Canada Ltd. and Ultimate, dated September 23, 2009 (incorporated by reference to Exhibit 10.3 to Ultimate’s Quarterly Report on Form 10-Q, dated August 9, 2010) ü | |
10.17 | Amended and Restated Change in Control Bonus Plan for Executive Officers dated April 26, 2010 (incorporated by reference to Exhibit 10.1 to Ultimate’s Current Report on Form 8-K, dated February 2, 2016) † | |
10.18 | Commercial lease between 2000 Main Street Associates, LLC (“Landlord”) and Ultimate, dated November 3, 2010 (incorporated by reference to Exhibit 10.54 to Ultimate’s Annual Report on Form 10-K, dated March 1, 2011) | |
10.19 | Commercial lease between Micari Holdings, LLC (“Landlord”) and Ultimate, dated November 5, 2010 (incorporated by reference to Exhibit 10.55 to Ultimate’s Annual Report on Form 10-K, dated March 1, 2011) | |
10.20 | Commercial lease between Galleria 400, LLC (“Landlord”) and Ultimate, dated December 29, 2010 (incorporated by reference to Exhibit 10.56 to Ultimate’s Annual Report on Form 10-K, dated March 1, 2011) | |
10.21 | Commercial lease between AG/LPC Griffin Towers, L.P., (“Landlord”) and Ultimate, dated February 23, 2011 (incorporated by reference to Exhibit 10.1 to Ultimate's Quarterly Report on Form 10-Q, dated May 10, 2011) | |
10.22 | Commercial lease between TCS-CB LLC, ("Landlord") and Ultimate, dated July 25, 2012 (incorporated by reference to Exhibit 10.1 to Ultimate's Quarterly Report on Form 10-Q, dated November 9, 2012) | |
10.23 | License and Master Services Agreement between IO Phoenix One, LLC and Ultimate, dated February 27, 2012, as amended (incorporated by reference to Exhibit 10.2 to Ultimate's Quarterly Report on Form 10-Q, dated November 9, 2012) ü | |
10.24 | Master Services Agreement between Savvis Communications Canada, Inc. and Ultimate, dated April 30, 2013 (incorporated by reference to Exhibit 10.1 to Ultimate's Quarterly Report on Form 10-Q, dated August 8, 2013) ü | |
10.25 | Service Schedule between Savvis Communications Canada, Inc. and Ultimate, dated April 30, 2013 (incorporated by reference to Exhibit 10.2 to Ultimate's Quarterly Report on Form 10-Q, dated August 8, 2013) ü | |
10.26 | Colocation Services Service Level Attachment between Savvis Communications Canada, Inc. and Ultimate, dated April 30, 2013 (incorporated by reference to Exhibit 10.3 to Ultimate's Quarterly Report on Form 10-Q, dated August 8, 2013) ü | |
10.27 | Commercial lease between DP Weston Pointe III, LLC, ("Landlord") and Ultimate, dated December 8, 2014 (incorporated by reference to Exhibit 10.27 to Ultimate's Annual Report on Form 10-K, dated February 27, 2015) | |
10.28 | Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 to Ultimate's Quarterly Report on Form 10-Q, dated August 5, 2016) † | |
10.29 | Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 to Ultimate's Quarterly Report on Form 10-Q, dated August 5, 2016) † | |
21.1 | Subsidiaries of the Registrant * | |
23.1 | Consent of Independent Registered Public Accounting Firm * | |
31.1 | Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended * | |
31.2 | Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended * | |
32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended * | |
32.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended * | |
101.1 | Interactive Data Files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of December 31, 2016 and 2015, (ii) Consolidated Statements of Income for the Years Ended December 31, 2016, 2015 and 2014, (iii) Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2016, 2015 and 2014; (iv) Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2016, 2015 and 2014; (v) Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2015 and 2014; and (vi) Notes to Consolidated Financial Statements. |
ü | Confidential treatment has been granted with respect to certain portions of this exhibit pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934, as amended, and such portions have been omitted and filed separately with the SEC. |
Signature | Title | Date |
/s/ Scott Scherr | President, Chief Executive Officer and Chairman of the Board | February 24, 2017 |
Scott Scherr | ||
/s/ Mitchell K. Dauerman | Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) | February 24, 2017 |
Mitchell K. Dauerman | ||
/s/ Marc D. Scherr | Vice Chairman of the Board and Chief Operating Officer | February 24, 2017 |
Marc D. Scherr | ||
/s/ James A. FitzPatrick, Jr. | Director | February 24, 2017 |
James A. FitzPatrick, Jr. | ||
/s/ LeRoy A. Vander Putten | Director | February 24, 2017 |
LeRoy A. Vander Putten | ||
/s/ Rick Wilber | Director | February 24, 2017 |
Rick Wilber | ||
/s/ Robert A. Yanover | Director | February 24, 2017 |
Robert A. Yanover | ||
/s/ Alois T. Leiter | Director | February 24, 2017 |
Alois T. Leiter |
Name | Jurisdiction of Incorporation | |
The Ultimate Software Group of Canada, Inc. | Ontario, Canada | |
The Ultimate Software Group of Asia, PTE. LTD. | Singapore |
1. | I have reviewed this Form 10-K of The Ultimate Software 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(s) 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 controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant's other certifying officer(s) 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): |
1. | I have reviewed this Form 10-K of The Ultimate Software 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(s) 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 controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant's other certifying officer(s) 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): |
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Document And Entity Information - USD ($) $ in Billions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Feb. 20, 2017 |
Jun. 30, 2016 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Ultimate Software Group Inc | ||
Entity Central Index Key | 0001016125 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 5.7 | ||
Entity Common Stock, Shares Outstanding | 29,663,502 | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Current assets: | ||
Allowance for doubtful accounts | $ 900 | $ 900 |
Stockholders’ equity: | ||
Preferred Stock, par value | $ 0.01 | $ 0.01 |
Preferred Stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Common Stock, par value | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 50,000,000 | 50,000,000 |
Common Stock, shares issued | 34,003,036 | 33,260,879 |
Treasury Stock, shares | 4,657,995 | 4,467,595 |
Series A Junior Preferred Stock | ||
Stockholders’ equity: | ||
Preferred Stock, par value | $ 0.01 | $ 0.01 |
Preferred Stock, shares authorized | 500,000 | 500,000 |
Preferred Stock, shares issued | 0 | 0 |
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Revenues: | |||
Recurring | $ 654,199 | $ 516,400 | $ 419,771 |
Services | 127,092 | 101,681 | 86,165 |
Total revenues | 781,291 | 618,081 | 505,936 |
Cost of revenues: | |||
Recurring | 172,676 | 138,587 | 117,700 |
Services | 127,433 | 99,948 | 85,939 |
Total cost of revenues | 300,109 | 238,535 | 203,639 |
Gross profit | 481,182 | 379,546 | 302,297 |
Operating expenses: | |||
Sales and marketing | 224,416 | 169,664 | 117,033 |
Research and development | 120,650 | 93,671 | 83,542 |
General and administrative | 94,432 | 72,893 | 47,379 |
Total operating expenses | 439,498 | 336,228 | 247,954 |
Operating income | 41,684 | 43,318 | 54,343 |
Other (expense) income: | |||
Interest expense and other, net | (717) | (491) | (353) |
Other income, net | 451 | 256 | 339 |
Total other expense, net | (266) | (235) | (14) |
Income before income taxes | 41,418 | 43,083 | 54,329 |
Provision for income taxes | (11,165) | (20,384) | (9,592) |
Net income | $ 30,253 | $ 22,699 | $ 44,737 |
Net income per share: | |||
Basic (in dollars per share) | $ 1.04 | $ 0.79 | $ 1.58 |
Diluted (in dollars per share) | $ 0.99 | $ 0.76 | $ 1.52 |
Weighted average shares outstanding: | |||
Basic (in shares) | 28,976 | 28,634 | 28,293 |
Diluted (in shares) | 30,414 | 29,721 | 29,343 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 30,253 | $ 22,699 | $ 44,737 |
Other comprehensive (loss) income : | |||
Unrealized loss on investments in marketable available for sale securities | (61) | (56) | (10) |
Unrealized gain (loss) on foreign currency translation adjustments | 843 | (4,195) | (2,143) |
Other comprehensive income (loss), before tax | 782 | (4,251) | (2,153) |
Income tax benefit related to items of other comprehensive income | 24 | 12 | 1 |
Other comprehensive income (loss), net of tax | 806 | (4,239) | (2,152) |
Comprehensive income | $ 31,059 | $ 18,460 | $ 42,585 |
Nature of Operations |
12 Months Ended |
---|---|
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Nature of Operations The Ultimate Software Group, Inc. and subsidiaries (“Ultimate,” “we,” “us” or “our”) is a leading cloud provider of people management solutions, often referred to as human capital management (“HCM”). Ultimate's UltiPro product suite (“UltiPro”) is a comprehensive, engaging solution that has human resources ("HR"), payroll, and benefits management at its core and includes global people management, available in twelve languages with more than 35 country-specific localizations. The solution is delivered via software-as-a-service to organizations based in the United States and Canada, including those with global workforces. UltiPro is designed to deliver the functionality businesses need to manage the complete employment life cycle from recruitment to retirement. We market our UltiPro solutions primarily to enterprise companies, which we define as organizations with 2,501 or more employees, including those with 10,000 or more employees; mid-market companies, which we define as those having 501-2,500 employees; and strategic market companies, which we define as those having 100-500 employees. UltiPro is marketed primarily through our enterprise, mid-market and strategic direct sales teams. |
Basis of Presentation, Consolidation and the Use of Estimates |
12 Months Ended |
---|---|
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation, Consolidation and the Use of Estimates | Basis of Presentation, Consolidation and the Use of Estimates The accompanying consolidated financial statements of Ultimate have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The consolidated financial statements included herein reflect all adjustments, which are, in the opinion of Ultimate’s management, necessary for a fair presentation of the information for the periods presented. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, revenue recognition, income taxes, the allowance for doubtful accounts, the valuation of deferred tax assets and long-lived assets, among others discussed below. Actual results could differ from those estimates. The consolidated financial statements reflect the financial position and operating results of Ultimate and include its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. |
Summary of Significant Accounting Policies and Recent Accounting Pronouncements |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements [Text Block] | Summary of Significant Accounting Policies and Recent Accounting Pronouncements Cash and Cash Equivalents All highly liquid instruments with an original maturity of three months or less when acquired are considered cash equivalents and are comprised of interest-bearing accounts. Accounts Receivable Accounts receivable are principally from end-users of Ultimate’s products. We maintain an allowance for doubtful accounts at an amount estimated to be sufficient to provide adequate protection against losses resulting from collecting less than full payment on accounts receivable. A considerable amount of judgment is required when the realization of receivables is assessed, including assessing the probability of collection and current credit-worthiness of each customer. If the financial condition of our customers were to deteriorate, resulting in a further impairment of their ability to make payments, an additional provision for doubtful accounts may be required. We charge off uncollectible amounts against the allowance for doubtful accounts in the period in which we determine they are uncollectible. Funds Held for Customers and Customers’ Funds Obligations Ultimate has the right to market and distribute an independent third party’s tax filing solution that Ultimate has branded UltiPro Payment Services. Ultimate’s UltiPro Payment Services offering provides payment services to our customers. These payment services are being sold directly by us to our customers only on a per-employee-per-month (“PEPM”) basis in conjunction with UltiPro, our core product. In connection with our UltiPro Payment Services product, we receive funds from our customers and hold such funds for purposes of paying the appropriate taxing authorities on behalf of such customers. We invest a portion of our customer funds in available for sale securities in addition to our corporate funds in accordance with our internal investment strategies. The portfolio predominantly consists of investment grade securities with long-term ratings of AAA and AA+ and short-term ratings A-1/P-1. These funds held for customers and the corresponding customer funds obligations are included in current assets and current liabilities, respectively, in our consolidated balance sheets as of December 31, 2016 and 2015. We have reported the cash flows for purchases of securities with funds received from UltiPro Payment Services customers in the investing activities section of the consolidated statements of cash flows for the years ended December 31, 2016, 2015 and 2014. We have reported the cash flows related to the funds received and paid on behalf of such customers to the applicable taxing authorities in the financing activities section of the consolidated statements of cash flows for the years ended December 31, 2016, 2015 and 2014. The associated PEPM fees for UltiPro Payment Services are included in recurring revenues in the consolidated statements of income for the years ended December 31, 2016, 2015 and 2014. The associated interest earned was not material for the years ended December 31, 2016, 2015 and 2014. Fair Value of Financial Instruments Ultimate’s financial instruments, consisting of cash and cash equivalents, investments in marketable securities, funds held for customers and the related obligations, accounts receivable, accounts payable, and capital lease obligations and other borrowings, approximated fair value (due to their relatively short maturity) as of December 31, 2016 and 2015. Funds Held for Customers and Corporate Investments We classify our investments in marketable securities with readily determinable fair values as available-for-sale. Available-for-sale securities consist of debt and equity securities not classified as trading securities or as securities to be held to maturity. Unrealized gains and losses, net of tax, on available-for-sale securities are reported as a net amount in accumulated other comprehensive income in stockholders’ equity until realized. Gains and losses on the sale of available-for-sale securities are determined using the specific identification method. Interest earned on investments from funds held for customers is included in recurring revenue and was not material in the years presented. If the fair value of an available-for-sale debt security is below its amortized cost, Ultimate assesses whether we intend to sell the security or if it is more likely than not we will be required to sell the security before recovery. If either of those two conditions are met, Ultimate would recognize a charge in earnings equal to the entire difference between the security's amortized cost basis and its fair value. If we do not intend to sell a security or it is not more likely than not that it will be required to sell the security before recovery, the unrealized loss is separated into an amount representing the credit loss, which is recognized in earnings, and the amount related to all other factors, which is recognized in accumulated other comprehensive income. Prepaid Expenses and Other Current Assets Ultimate’s financial statements include prepaid expenses and other current assets which include prepaid commissions on cloud sales. Prepaid expenses are amortized over the life of the asset (typically within one year) and commissions on cloud sales are amortized over the initial contract term (typically 24-36 months) typically commencing on the day the customer processes its first live payroll using UltiPro (also referred to as going “Live”), which corresponds with the related cloud revenue recognition. The portion of prepaid commissions that extends beyond one year is classified in other assets, net, in the consolidated balance sheets as of December 31, 2016 and 2015. Long-Lived Assets We evaluate the carrying value of long-lived assets when indicators of impairment exist. For the year ended December 31, 2016, no such events or circumstances were identified. The carrying value of a long-lived asset is considered impaired when the undiscounted expected future cash flows from such asset (or asset group) are separately identifiable and less than the asset’s (or asset group’s) carrying value. In that event, a loss is recognized to the extent that the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. For the years ended December 31, 2016, 2015 and 2014, we recorded no impairment of our long-lived assets. Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation and amortization. Property and equipment is depreciated using the straight-line method over the estimated useful lives of the assets, which range from 2 to 15 years. Leasehold improvements and assets under capital leases are amortized over the shorter of the life of the asset or the term of the lease over periods ranging from approximately 3 to 15 years. Maintenance and repairs are charged to expense when incurred; betterments are capitalized. Upon the sale or retirement of assets, the cost, accumulated depreciation and amortization are removed from the accounts and any gain or loss is recognized. Computer Software Development Costs Computer software development costs related to software developed for internal use falls under the accounting guidance of ASC Topic 350-40, Intangibles Goodwill and Other–Internal Use Software, in which computer software costs are expensed as incurred during the preliminary project stage and capitalization begins in the application development stage once the capitalization criteria are met. Costs associated with post implementation activities are expensed as incurred. Costs capitalized during the application development stage include external direct costs of materials and services consumed in developing or obtaining internal-use software and payroll and payroll-related costs for employees who are directly associated with, and who devote time to, the internal-use computer software. In addition to capitalizing costs for software (which are used by us in our general operations, for internal purposes), we also capitalize costs under ASC Topic 350-40 for certain software development projects related to our suite of products sold to our customers exclusively on a subscription basis under our software-as-a-service offering of UltiPro. Deferred Revenue Deferred revenue is primarily comprised of deferrals for recurring revenues for cloud services which are recognized over the term of the related contract as the services are performed, typically 24-36 months and commencing with the related Live date; and implementation consulting services for which the services have not yet been rendered which are primarily recognized prior to the respective Live date. Guarantees The standard commercial terms in our sales contracts for UltiPro include an indemnification clause that indemnifies the customer against certain liabilities and damages arising from any claims of patent, copyright, or other proprietary rights of any third party. Due to the nature of the intellectual property indemnification provided to our customers, we cannot estimate the fair value, or determine the total nominal amount, of the indemnification until such time as a claim for such indemnification is made. In the event of a claim made against us under such provision, we evaluate estimated losses for such indemnification considering such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. To date, Ultimate has not had any claims made against it under such provision and, accordingly, has not accrued any liabilities related to such indemnifications in its consolidated financial statements. Segment Information Public companies are required to report selected information about operating segments in annual and interim financial reports to shareholders, as well as related disclosures about an enterprise’s business segments, products, services, geographic areas and major customers. Ultimate operates its business as a single segment and is comprised as a single reporting unit. Revenue Recognition We recognize revenues in accordance with Accounting Standards Update No. 2009-13, “Multiple-Deliverable Revenue Arrangements” (“ASU 2009-13”). We use the relative selling price method to allocate the total consideration to units of accounting in a multiple element arrangement. We allocate revenue in an arrangement using the estimated selling price (“ESP”) of deliverables if it does not have vendor-specific objective evidence (“VSOE”) or third-party evidence (“TPE”) of selling price. VSOE is the price charged when the same or similar product or service is sold separately. We define VSOE as a median price of recent stand-alone transactions that are priced within a narrow range. TPE is determined based on the prices charged by our competitors for a similar deliverable when sold separately. However, due to the difficulty in obtaining sufficient information on competitor pricing and differences in our product offerings when compared with those of our peers, we generally are unable to reliably determine TPE. ESP is our best estimate of the selling price of an element in a transaction. If we are unable to establish selling price using either VSOE or TPE, we will use ESP in our allocation of arrangement consideration. The objective of ESP is to determine the price at which we would transact business if the product or service were sold by us on a stand-alone basis. Our determination of ESP involves the use of a customary discount from the list (or book) price for each element, with the discounted price applied within a narrow range. The customary discount is derived from historical data that has been analyzed to determine trends and patterns. We analyze the customary discount used for determining ESP on no less than an annual basis. We evaluate each deliverable in our arrangements to determine whether it represents a separate unit of accounting. A deliverable constitutes a separate unit of accounting when it has stand-alone value to our customers. Our products and services continue to qualify as separate units of accounting under ASU 2009-13. There are two major elements in our multiple element arrangements for the delivery of our UltiPro offering, which are recurring revenues (i.e., cloud subscription revenues) and services revenues (mostly implementation consulting services). For multiple element arrangements, the consideration allocated to cloud subscription revenues is recognized as recurring revenues over the initial contract period, as those subscription-based services are delivered, typically commencing with the Live date of the related product. The consideration allocated to fixed fee implementation consulting services in multiple element arrangements is recognized as services revenues on a percentage of completion basis, using reasonably dependable estimates with respect to milestones achieved (in relation to progression through implementation phases), by product. Single element arrangements typically consist of renewals for cloud subscriptions and implementation consulting services sold on a time and materials basis. Under these single element arrangements, cloud subscription revenues are recognized over the related renewal period, as the services are delivered, and implementation consulting services are recognized as the related time and materials services are performed. We recognize revenues when all of the following criteria are met:
If collection is not considered probable, we recognize revenues when the fees are collected. If the fees are not fixed and determinable, we recognize revenues when the fees become due from the customer. If non-standard acceptance periods or non-standard performance criteria are required, we recognize revenue when the acceptance period expires or upon the satisfaction of the acceptance/performance criteria, as applicable. The majority of services revenues are recognized over the implementation period, which is from the contract execution date until the Live date. Cloud revenues are recognized over the initial contract term, typically beginning in the month the customer goes Live. Recurring Revenues Recurring revenues primarily consist of subscription revenues recognized from our customers' use of UltiPro after they have gone Live. i) Cloud subscription revenues are principally derived from PEPM fees earned from UltiPro units that are Live. Ongoing PEPM fees are recognized as subscription revenues as the services are delivered, typically commencing when the customer goes Live. ii) Effective January 1, 2015, we no longer have maintenance revenues associated with our Legacy customers. Since the time we announced that we would stop supporting our Legacy product in 2012, we successfully converted the majority of our Legacy customers to the cloud. Those customers that did not convert terminated. With UltiPro, our customers do not have the right to take possession of our software and these arrangements are considered service contracts. The selling price of multiple deliverables in cloud arrangements is derived for each element based on the guidance provided by ASU 2009-13. The multiple elements that typically exist in cloud arrangements include (1) recurring revenues from the combination of hosting services, the right to use UltiPro, and maintenance of UltiPro (i.e., product enhancements, updates and customer support) and (2) professional services (i.e., primarily implementation consulting services). The pricing for the three elements that pertain to recurring revenues (i.e., hosting services, the right to use UltiPro and maintenance of UltiPro (as described above) is bundled. Since these three bundled elements are components of recurring revenues in the consolidated statements of income, allocation of selling price to each of the three elements is not necessary and they are not reported separately. Selling price, which is established through VSOE, for the bundled elements, as a whole, is determined on the basis of renewal pricing, without taking into consideration potential price increases or potential changes in the number of employees of the customer in the future due to the uncertainties surrounding these potential occurrences. These bundled elements are provided on an ongoing basis, represent undelivered elements and are recognized on a monthly basis as the related services are performed, commencing once the customer goes Live. Services Revenues Services revenues primarily include revenues from fees charged for implementation consulting services in connection with the implementation of our product solutions and, to a much lesser extent, fees for other services, including the provision of payroll-related forms, sales of time clocks and the printing of W-2 forms for certain customers, as well as certain client reimbursable out-of-pocket expenses. Our multiple element contracts contain recurring cloud revenues and implementation consulting services priced on a fixed fee basis. Time and materials implementation consulting services are sold as stand-alone sales not directly related to the basic implementation of the cloud product. The total arrangement consideration is allocated to services elements in the arrangement based on relative selling prices, using the prices established when the services are sold on a stand-alone basis. Selling price is established through ESP for fixed fee implementation consulting services that are included in our multiple element contracts. Revenues from implementation consulting services sold on a fixed-fee basis are recognized using the percentage of completion accounting method, which involves the use of estimates. Percentage of completion is measured at each reporting date based on progress made to date, using reasonably dependable estimates with respect to milestones achieved or billable hours, as applicable. Revenues from implementation consulting services, billed on a time and materials basis (at an hourly rate), are recognized as these services are performed. Other services are recognized as the product is shipped or as the services are rendered, depending on the specific terms of the related arrangement. Goodwill and Intangible Assets The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business with the residual of the purchase price recorded as goodwill. The determination of the value of the intangible assets acquired involves certain judgments and estimates. These judgments and estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital. At December 31, 2016, our goodwill totaled $35.3 million and our identifiable net intangible assets totaled $23.9 million. We assess the impairment of goodwill of our reporting unit annually, or more often if events or changes in circumstances indicate that the carrying value may not be recoverable. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit's carrying value is compared to its fair value. We consider both market and discounted cash flow approaches to determine the fair value of the reporting unit. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow approach uses expected future operating results. Failure to achieve these expected results may cause a future impairment of goodwill at the reporting unit. We conducted our annual impairment test of goodwill as of December 31, 2016, and 2015. As a result of this test, we determined that no adjustment to the carrying value of goodwill for our reporting unit was required. We evaluate our amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable based on expected undiscounted cash flows attributable to that asset or group of assets. The amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. We also evaluate the estimated remaining useful lives of intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization. Assumptions and estimates about future values and remaining useful lives of our intangible assets are complex and subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends and internal factors such as changes in our business strategy and our internal forecasts. Cost of Revenues Cost of revenues primarily consists of the costs of recurring and services revenues. Cost of recurring revenues primarily consists of costs to provide maintenance and technical support to our customers, the cost of providing periodic updates and the cost of recurring subscription revenues, including amortization of capitalized software. Cost of services revenues primarily consists of costs to provide implementation consulting services and, to a lesser degree, training to our customers, costs related to sales of payroll-related forms, time clocks and costs associated with certain client reimbursable out-of-pocket expenses. Stock-Based Compensation Our Amended and Restated 2005 Equity and Incentive Plan (the “Plan”) authorizes the grant of options to non-employee directors, officers and employees of Ultimate to purchase shares of Ultimate’s Common Stock. The Plan also authorizes the grant to such persons of restricted and non-restricted shares of Common Stock, stock appreciation rights, stock units and cash performance awards (collectively, together with stock options, the “Awards”). Prior to the adoption of the Plan, options to purchase shares of Common Stock were issued under our Nonqualified Stock Option Plan (the “Prior Plan”). Beginning in 2009, we began making grants to employees of restricted stock units in lieu of stock options. As of December 31, 2016, the aggregate number of shares of Common Stock that were available to be issued under all Awards granted under the Plan was 1,162,546 shares. The Plan provides broad discretion to the Compensation Committee of the Board of Directors to create appropriate equity incentives for directors, officers and employees of Ultimate. The Plan is intended to attract and retain talented employees and align employee and stockholder interests. For purposes of calculating and accounting for stock-based compensation expense (“SBC”) in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”) for restricted stock awards and restricted stock units, we measure compensation based on the closing market price of our Common Stock at the date of grant and it is recognized on a straight-line basis over the vesting period. We estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The weighted-average forfeiture rate is based on historical data. In accordance with ASC 718, Ultimate capitalizes the portion of SBC expense attributed to personnel whose labor costs are being capitalized pursuant to ASC Topic 350-40, Intangibles Goodwill and Other-Internal Use Software, related to software development. The following table summarizes SBC recognized by the Company (in thousands):
Rental Costs Incurred in Relation to a Construction Period We have incurred rental costs associated with operating leases during the construction period. Rental costs incurred during a construction period are costs incurred for the right to control the use of a leased asset during and after construction of a leased asset. Since there is no distinction between the right to use a leased asset during the construction period and the right to use that asset after the construction period, rental costs associated with ground or building operating leases that are incurred during a construction period are recognized as rental expense on a straight-line basis. Income Taxes We are subject to Federal, foreign and state corporate income taxes. We account for income taxes using an asset and liability approach under which deferred income taxes are provided based upon enacted tax laws and rates applicable to the periods in which the taxes become payable. We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. We assess the likelihood that Ultimate will be able to recover its deferred tax assets. Management considers all available evidence, both positive and negative, including historical levels of pre-tax book income, expiration of net operating losses, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies, as well as current tax laws and interpretation of current tax laws, in assessing the need for a valuation allowance. If recovery is not likely, we record a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. The available positive evidence at December 31, 2016 included, among other factors, three years of cumulative historical pre-tax book income and a projection of future pre-tax book income and taxable income sufficient to realize all of our remaining deferred tax assets. As a result of our analysis of all available evidence, both positive and negative, we believe that it is more likely than not that the results of future operations will generate sufficient taxable income to realize all of the deferred tax assets as of December 31, 2016. See Note 14 for further discussion. ASC 740, "Income Taxes" ("ASC 740") provides guidance on the related de-recognition, classification, interest and penalties, accounting for interim periods, disclosure and transition of uncertain tax positions. Our accounting policy is to record the tax effects of a change in the opening balance of the unrecognized tax benefits (including unrecognized tax benefits related to prior-period discontinued operations) in current-period income (loss) from continuing operations. We recognize interest and penalties accrued related to unrecognized tax benefits as components of our income tax provision. We did not have any interest and penalties accrued upon the adoption of ASC 740, and, as of December 31, 2016 and 2015, we did not have any interest and penalties accrued related to unrecognized tax benefits. Reimbursable Out-Of-Pocket Expenses Reimbursable out-of-pocket expenses, which are included in services revenues and cost of services revenues in our accompanying consolidated statements of operations, were $2.4 million, $1.9 million and $1.8 million for 2016, 2015 and 2014, respectively. Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers: (Topic 606)” and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016 and May 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10 and ASU 2016-12, respectively (ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10 and ASU 2016-12 collectively, Topic 606). Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Topic 606 defines a five-step process (ASC 606-10-05-4(a) through 4 (e)) to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others. Topic 606 also provides guidance on the recognition of costs related to obtaining customer contracts. During 2016 we began discussions that addressed the potential impact Topic 606 would have on the consolidated financial statements and the required resources to implement the new standard. Assessment to the impact on the consolidated financial statements included an evaluation of the five steps outlined in ASC 606-10-05-4 (a) through (e) of 2016 along with enhancement of disclosures that will be required under paragraphs 606-10-50-1 through 50-21. In Ultimate’s evaluation of the standard, it has developed its initial plan for implementing the standard, which includes, but is not limited to, identifying contract populations and “in scope” contracts, identifying performance obligations in the “in scope” customer contracts, and evaluating impacts of variable consideration. It also includes determining the impacts the standard will have on the revenue reporting processes, ensuring the internal controls will operate effectively with the new standard and performing gap analyses on collected data and determining the relative accounting positions where applicable. Included in our assessment of the standard, we will focus on the potential impact on sales commissions and the term over which they will amortize. We have preliminarily determined that the implementation revenues that we recognize represent distinct performance obligations and do not believe the standard will materially alter the way we recognize revenues. We are still evaluating the overall effect the standard will have on the consolidated financial statements and related disclosures. Topic 606 is effective for Ultimate on January 1, 2018 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic 606. Ultimate has not yet selected a transition method. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): "Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17”). ASU 2015-17 requires entities to offset all deferred tax assets and liabilities (and valuation allowances) for each tax-paying jurisdiction within each tax-paying component and present the net deferred tax as a single noncurrent amount in a classified balance sheet. The new standard was effective for Ultimate on January 1, 2017. The standard permits the use of either the prospective or retrospective method. We are evaluating the effect that ASU 2015-17 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method. In February 2016, the FASB issued ASU 2016-02, "Leases" ("ASU 2016-02"), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new standard is effective for Ultimate on January 1, 2019 and early adoption is permitted. The standard requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are evaluating the effect that ASU 2016-02 will have on our consolidated financial statements and related disclosures. We have not yet determined the effect the standard will have on our ongoing financial reporting. Recently Adopted Accounting Standards In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). The standard amends the accounting for certain aspects of share-based payments to employees. The standard requires transition for specific objectives of the standard. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, and forfeitures should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement should be applied prospectively. Further, an entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. The new standard is effective for us beginning January 1, 2017, with early adoption permitted. We elected to early adopt the new guidance in the third quarter of fiscal year 2016 which requires us to reflect any cumulative-effect and prospective method adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. The primary impact of adoption was the recognition of excess tax benefits in our provision for income taxes rather than additional paid-in capital for all periods in fiscal year 2016. Prior to the adoption of ASU 2016-09, companies could not recognize excess tax benefits (the amount by which the tax deduction exceeds the financial statement expense previously recorded) when a restricted stock unit or restricted stock award vested or an option was exercised if the related tax deduction resulted in an increase to a net operating loss carryforward rather than a reduction in income taxes payable. Consequently, the excess tax benefits were credited to additional paid-in-capital and a deferred tax asset was established, only to the extent realized through a reduction in income taxes payable, which resulted in the excess tax benefits being included in Ultimate’s net operating loss carryforwards, while being excluded from deferred tax assets on the balance sheet. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. Adoption of the new standard resulted in a $39.7 million cumulative-effect adjustment as of January 1, 2016 to record a deferred tax asset with the offset to retained earnings in the balance sheet, representing the amount of our net operating loss carryforwards attributable to excess tax benefits. Additional amendments to the accounting for minimum statutory withholding tax requirements had no impact to retained earnings as of January 1, 2016, where the cumulative effect of these changes is required to be recorded. We have elected to continue to estimate forfeitures expected to occur to determine the amount of non-cash stock-based compensation costs to be recognized in each period. We elected to apply the presentation requirements for cash flows related to excess tax benefits retrospectively to all periods presented which resulted in a reclassification of previously reported amounts to increase both net cash from operations and net cash used in financing of $31.9 million and $27.5 million for the years ended December 31, 2015 and 2014, respectively. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact to any of the periods presented in our consolidated cash flows statements since such cash flows have historically been presented as a financing activity. Adoption of the new standard resulted in the recognition of excess tax benefits in our provision for income taxes rather than additional paid-in capital of $23.7 million for the year ended December 31, 2016. In April 2015, the FASB issued ASU 2015-05, “Customer's Accounting for Fees Paid in a Cloud Computing Arrangement" ("ASU 2015-05"), which requires that if a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. Further, it requires that if a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 will not change GAAP for a customer’s accounting for service contracts. The new standard became effective for Ultimate on January 1, 2016. The effect of the adoption of ASU 2015-05 has had no material impact on our consolidated financial statements and related disclosures. |
Business Combinations |
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Business Combinations [Abstract] | |
Business Combinations | Business Combinations 2016 Business Combinations During the third quarter of 2016, we completed the acquisition of Kanjoya, Inc. ("Kanjoya"), a California corporation (the “Kanjoya Acquisition”), located in San Francisco, California. During the second quarter of 2016, we completed the acquisition of substantially all of the assets of Capital Analytics, Inc. (d/b/a Vestrics) (hereinafter referred to as "Vestrics") (the “Vestrics Acquisition”), a Delaware limited liability company located in North Carolina. The Kanjoya Acquisition and the Vestrics Acquisition (the “2016 Acquisitions”) were deemed insignificant to the audited condensed consolidated financial statements on an individual basis and in the aggregate. Acquisition of Kanjoya, Inc. On September 29, 2016, pursuant to a merger agreement with Kanjoya, we acquired Kanjoya in exchange for $19.6 million, of which $16.9 million was paid in cash during the twelve months ended December 31, 2016 while the remaining $2.6 million is being held in escrow, and is included in accrued liabilities on our consolidated balance sheet. We recorded the Kanjoya Acquisition using the acquisition method of accounting and recognized assets and liabilities assumed at their fair value as of the date of acquisition. Based on the valuation, the significant classes of assets and liabilities to which we allocated the purchase price of Kanjoya were acquired intangibles for a total of $13.6 million, consisting of $12.1 million for developed technology, $1.5 million for customer relationships, and goodwill for the balance of $6.4 million. Pursuant to the Kanjoya Acquisition we assumed working capital, net, totaling $0.4 million. The fair value of the acquired developed technology was estimated using the cost approach. In accordance with GAAP, direct costs related to the acquisition were expensed as incurred. Kanjoya is a leading cloud workforce intelligence provider for enterprises. Based upon the technology acquired, we launched UltiPro Perception, a feature-set that enables businesses to identify and analyze attitudes and performance traits of their employees, managers, and teams from surveys and other sources of employee feedback. Kanjoya's workforce has joined Ultimate and will serve to establish an additional research and development hub for us in San Francisco. The results of operations from this acquisition have been included in our consolidated financial statements since the closing of the Kanjoya Acquisition. Pro forma results of operations have not been presented because the effects of this business combination were not deemed significant to our audited condensed consolidated results of operations. Acquisition of Capital Analytics, Inc., d/b/a Vestrics On May 11, 2016 (the "Vestrics Closing Date"), pursuant to an asset purchase agreement with Vestrics, we acquired certain assets and liabilities in exchange for $10.1 million, of which $9.1 million was paid in cash during the twelve months ended December 31, 2016 while the remaining $1.0 million is being held in escrow and is included in accrued liabilities on our unaudited condensed consolidated balance sheet. We recorded the Vestrics Acquisition using the acquisition method of accounting and recognized assets and liabilities assumed at their fair value as of the date of acquisition. The valuation of Vestrics has been completed and the significant classes of assets and liabilities to which we allocated the purchase price were goodwill of $4.3 million (which includes working capital, net, totaling $0.2 million, which was assumed pursuant to the Vestrics Acquisition) and identifiable intangible assets of $6.0 million related to developed technology. In accordance with GAAP, direct costs related to the acquisition were expensed as incurred. Vestrics’ predictive technology enables a company to identify and analyze the connections between its investments in human capital and the performance-related business results of those investments. We will leverage Vestrics’ technology as we continue to expand our analytics capabilities across UltiPro. The fair value of the acquired developed technology was estimated using the cost approach. Identifiable intangible assets were assigned a total weighted-average amortization period of 7.0 years. Since the developed predictive technology acquired pursuant to the Vestrics Acquisition will be included in the development project currently being capitalized as internal-use software to be offered as a cloud product in the future, amortization of the Vestrics developed technology will begin when it is ready for its intended use. The results of operations from this acquisition have been included in our audited condensed consolidated financial statements since the Vestrics Closing Date. Pro forma results of operations have not been presented because the effects of this business combination were not deemed significant to our audited condensed consolidated results of operations. |
Funds held for Customers, Corporate Investments in Marketable Securities and Fair Value of Financial Instruments |
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Investments in Marketable Securities and Fair Value of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finds held for Customers, Corporate Investments in Marketable Securities and Fair Value of Financial Instruments | for Customers, Corporate Investments in Marketable Securities and Fair Value of Financial Instruments We classify our investments in marketable securities with readily determinable fair values as available-for-sale. Available-for-sale securities consist of debt and equity securities not classified as trading securities or as securities to be held to maturity. Unrealized gains and losses, net of tax, on available-for-sale securities are reported as a net amount in accumulated other comprehensive loss in stockholders’ equity until realized. Gains and losses on the sale of available-for-sale securities are determined using the specific identification method. Included in accumulated other comprehensive loss was a $145 thousand net unrealized loss and $84 thousand net unrealized loss on available-for-sale securities at December 31, 2016 and December 31, 2015, respectively. Realized gains and losses resulting on available-for-sale securities are included in other (expense) income, net, in the consolidated statements of income. There were no significant reclassifications of realized gains and losses on available-for-sale securities to the consolidated statements of income for the years ended December 31, 2016, 2015 and 2014. The amortized cost, net unrealized (loss) gain and fair value of our investments in marketable available-for-sale securities as of December 31, 2016 and December 31, 2015 are shown below (in thousands): Funds held for customers and corporate investments as of December 31, 2016 and December 31, 2015 are shown below (in thousands):
_________________ (1) Included within available-for-sale securities as of December 31, 2016 and 2015 are corporate investments with fair values of $24.1 million and $20.1 million, respectively. Included within available-for-sale securities as of December 31, 2016 and 2015 are funds held for customers with fair values of $148.8 million and $69.9 million, respectively. All available-for-sale securities were included in Level 2 of the fair value hierarchy. The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2016 are as follows (in thousands):
The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2015 are as follows (in thousands):
The amortized cost and fair value of the marketable available-for-sale securities by contractual maturity at December 31, 2016 are shown below (in thousands):
We classify and disclose fair value measurements in one of the following three categories of fair value hierarchy:
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Our assets that are measured by management at fair value on a recurring basis are generally classified within Level 1 or Level 2 of the fair value hierarchy. The types of instruments valued based on quoted market prices in active markets include most money market securities. Such instruments are generally classified within Level 1 of the fair value hierarchy. We did not have any transfers into and out of Level 1 and Level 2 during the years ended December 31, 2016, 2015 and 2014. The types of instruments valued by management, based on quoted prices in less active markets, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency, include corporate debentures and bonds, commercial paper, U.S. agency bonds, and U.S. Treasury bills. Such instruments are generally classified within Level 2 of the fair value hierarchy. We use consensus pricing, which is based on multiple pricing sources, to value our fixed income investments. The following table sets forth, by level within the fair value hierarchy, financial assets accounted for at fair value as of December 31, 2016 and December 31, 2015 (in thousands):
Assets and liabilities measured at fair value on a recurring basis were presented in the consolidated balance sheets as of December 31, 2016 and as of December 31, 2015 as short-term and long-term investments in marketable securities. There were no financial liabilities accounted for at fair value as of December 31, 2016 and December 31, 2015. |
Allowance for Doubtful Accounts |
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Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Doubtful Accounts | for Doubtful Accounts We have established an allowance for doubtful accounts based on a review of the current status of existing accounts receivable by customer and historical experience. The activity within the allowance for doubtful accounts was as follows (in thousands):
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Prepaid Expenses and Other Current Assets |
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Prepaid Expense and Other Assets, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following (in thousands):
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Property and Equipment |
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Property and Equipment | Property and Equipment, net Property and equipment, net consists of the following (in thousands):
Depreciation and amortization expense on property and equipment, including depreciation and amortization expense on property and equipment under capital leases, totaled $25.5 million, $20.7 million and $18.1 million for the years ended December 31, 2016, 2015 and 2014, respectively. Included in property and equipment, net, is computer equipment acquired under capital leases as follows (in thousands):
Capital leases entered into and included in property and equipment totaled $6.7 million, $5.9 million and $5.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. See Note 10 in the Notes to Consolidated Financial Statements for further discussion of computer software development costs related to internal-use software which is included in property and equipment, net. |
Foreign Currency |
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Foreign Currency [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Currency | rrency The financial statements of Ultimate’s foreign subsidiaries have been translated into U.S. dollars. The functional currency of our wholly-owned subsidiary, The Ultimate Software Group of Canada, Inc., is the Canadian dollar. Assets and liabilities are translated into U.S. dollars at period-end exchange rates. Income and expenses are translated at the average exchange rate for the reporting period. The resulting non-cash foreign currency translation adjustments, representing unrealized gains or losses, are included in consolidated stockholders’ equity as a component of accumulated other comprehensive income (loss). Realized gains and losses resulting from foreign exchange transactions are included in total operating expenses in the consolidated statements of operations. Included in accumulated other comprehensive income (loss), as presented in the accompanying consolidated balance sheets, are $6.9 million of unrealized translation losses at December 31, 2016 and $7.8 million of unrealized translation losses at December 31, 2015. There were no significant reclassifications of realized gains and losses resulting from foreign exchange transactions to the consolidated statements of income for the years ended December 31, 2016, 2015 and 2014. Included in comprehensive income (loss) for the years ended December 31, 2016, 2015 and 2014 were realized foreign currency translation losses and unrealized foreign currency translation gains (losses), as follows (in thousands):
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Computer Software Development Costs |
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Research and Development [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computer Software Development Costs | oftware Development Costs We previously capitalized software costs in accordance with Accounting Standards Codification ("ASC") Topic 985-20, Costs of Software to Be Sold, Leased, or Marketed. Those capitalized software costs were fully amortized as of December 31, 2013. Computer software development costs related to software developed for internal use falls under the accounting guidance of ASC Topic 350-40, Intangibles Goodwill and Other-Internal Use Software. These capitalized costs are included with property and equipment in the consolidated balance sheets and purchases of property and equipment in the statements of cash flows. Internal-use software is amortized on a straight-line basis over its estimated useful life, generally three to seven years, commencing after the software development is substantially complete and the software is ready for its intended use. For the years ended December 31, 2016 and 2015, we capitalized $37.9 million (including $3.9 million in non-cash stock-based compensation) and $26.3 million (including $3.0 million in non-cash stock-based compensation), respectively, of computer software development costs related to an internal-use development project for our UltiPro product offering (the "Development Project"). The capitalized costs for the Development Project were primarily from direct labor costs. For 2016, 2015 and 2014, we recognized $1.2 million, $1.1 million and $0.7 million, respectively, of amortization costs which were associated with certain product modules, of the Development Project which were ready for their intended use. The amortization of capitalized software is included in cost of recurring revenues. At each balance sheet date, we evaluate the useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Capitalized computer software development costs and accumulated amortization of capitalized software, developed for internal use, were as follows (in thousands):
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Earnings Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Earnings per share calculations require a dual presentation — “basic” and “diluted.” Basic earnings per share is computed by dividing income available to common stockholders (the numerator) by the weighted average number of common shares (the denominator) for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. The following is a reconciliation of the shares used in the computation of basic and diluted net income per share (in thousands):
_________________ (1) Includes options to purchase shares of Common Stock and other stock-based awards outstanding. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess of cost over the net tangible and identifiable intangible assets of acquired businesses. Goodwill amounts are not amortized, but rather tested for impairment at least annually. Identifiable intangible assets acquired in business combinations are recorded based upon fair value at the date of acquisition and amortized over their estimated useful lives. The changes in the carrying value of goodwill were as follows (in thousands):
_________________ (1) Represents the goodwill recognized for the Vestrics Acquisition on May 11, 2016. See Note 4 of the Notes to Consolidated Financial Statements. (2) Represents the estimated goodwill recognized for the Kanjoya Acquisition on September 29, 2016. See Note 4 of the Notes to Consolidated Financial Statements. (3) Represents the impact of the foreign currency translation of the portion of goodwill that is recorded by our Canadian subsidiary whose functional currency is also its local currency. Such goodwill is translated into U.S. dollars using exchange rates in effect at period end. Adjustments related to foreign currency translation are included in other comprehensive income (loss). The Company’s amortizable intangible assets have estimated useful lives as follows (in thousands):
_________________ (1) Represents the impact of the foreign currency translation of the portion of acquired intangible assets that is recorded by our Canadian subsidiary whose functional currency is also its local currency. Such intangible assets are translated into U.S. dollars using exchange rates in effect at period end. Adjustments related to foreign currency translation are included in other comprehensive income (loss). Acquired intangible assets are amortized over their estimated useful life, generally three to ten years, in a manner that reflects the pattern in which the economic benefits are consumed. Included in acquired intangible assets as of December 31, 2016, were $0.1 million of assets with indefinite lives. There were no assets, with indefinite lives, as of December 31, 2015. Amortization expense for acquired intangible assets was $1.1 million, $1.0 million and $1.1 million for the years ended December 31, 2016, 2015 and 2014. Future amortization expense for acquired intangible assets is as follows, as of December 31, 2016 (in thousands):
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Capital Lease Obligations |
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Capital Lease Obligations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Capital Lease Obligations | Capital Lease Obligations We lease certain equipment under non-cancelable agreements, which are accounted for as capital leases and expire at various dates through 2019. Interest rates on these leases are 4.25% to 4.50%. The scheduled lease payments of the capital lease obligations are as follows as of December 31, 2016 (in thousands):
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes For the year ended December 31, 2016, the income tax provision of $11.2 million was based on book income from operations before income taxes of $41.4 million. For the year ended December 31, 2015, the income tax provision of $20.4 million was based on book income from operations before income taxes of $43.1 million. For the year ended December 31, 2014, the income tax provision of $9.6 million was based on a book loss from operations before income taxes of $54.3 million. Deferred tax assets and liabilities are determined based on the difference between financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The income tax provision consists of the following (in thousands):
The income tax provision is different from that which would be obtained by applying the statutory federal income tax rate of 35% to income from continuing operations before income taxes as a result of the following (in thousands):
Deferred tax assets and liabilities reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities at December 31, 2016 and 2015 were as follows (in thousands):
Ultimate considers all available evidence, both positive and negative, including historical levels of pre-tax book income, expiration of net operating loss carryforwards, expectations and risks associated with estimates of future taxable income, ongoing prudent and feasible tax planning strategies and reversal of deferred tax liabilities in assessing the need for the valuation allowance. If it is not more likely than not that we will recover our deferred tax assets, we will increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. The available positive evidence at December 31, 2016 included, among other factors, three years of cumulative historical pre-tax book income and a projection of future pre-tax book income and taxable income. As a result of our analysis of all available evidence, both positive and negative, we believe that it is more likely than not that the results of future operations will generate sufficient taxable income to realize all of the deferred tax assets as of December 31, 2016. As such, there was no valuation allowance for the years ended December 31, 2016, 2015 and 2014. Management continues to apply the exception to the comprehensive recognition of deferred income taxes to the undistributed earnings of our foreign subsidiary, Ultimate Canada. The comprehensive recognition of deferred income taxes presumes that all undistributed earnings will be transferred to the parent entity. This presumption may be overcome by the parent entity, and no income taxes would be accrued, if sufficient evidence shows that the subsidiary has invested or will invest the undistributed earnings indefinitely or that the earnings will be remitted in a tax-free liquidation. A parent entity shall have evidence of specific plans for reinvestment of undistributed earnings of a subsidiary which demonstrates that remittance of the earnings will be postponed indefinitely. These criteria required to overcome the presumption are sometimes referred to as the indefinite reversal criteria. Accordingly, deferred income taxes of $0.3 million were not recognized on the undistributed earnings of Ultimate Canada. The deferred tax liability, net of available foreign tax credits, resulting from the cumulative undistributed earnings are not deemed material. We recorded a deferred tax asset, of $13.2 million and $2.3 million during 2014, for the years 1998 through 2013, and 2014, respectively, as a result of a research and development credit study. We recorded a deferred tax asset for research and development credits of $3.2 million and $4.0 million during the years 2015 and 2016, respectively. At December 31, 2016, we had approximately $148.5 million of net operating loss carryforwards for Federal income tax reporting purposes available to offset future taxable income. Prior to January 1, 2016, the tax benefit of net operating loss carryforwards attributable to deductions from the exercise of non-qualified employee, and non-employee director, stock options and the vesting of restricted stock units and restricted stock awards, were credited to paid-in-capital and deferred tax asset only to the extent realized through a reduction of income taxes payable. As a result, prior to January 1, 2016, the excess tax benefits associated with stock-based compensation were included in net operating loss carryforwards but not reflected in deferred tax assets. Upon adoption of ASU 2016-09, the excess tax benefits associated with stock based compensation were reflected in deferred tax assets. These excess tax benefits combined with the associated financial statement expense (previously included in the stock-based compensation line of this footnote), are currently reflected in the Net operating loss line. During 2015, we realized a tax benefit of $42.0 million comprised of a $31.9 million and a $10.1 million credit to paid-in-capital and deferred tax asset, respectively. During 2014, we realized a tax benefit of $33.5 million comprised of a $27.5 million and a $6.0 million credit to paid-in capital and deferred tax asset, respectively. The carryforwards expire from 2018 through 2034 and from 2016 through 2034, for Federal and state income tax reporting purposes, respectively. In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). The standard amends the accounting for share-based payments to employees effective for annual periods beginning after December 15, 2016, with early adoption permitted. The standard requires transition for specific objectives of the standard. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. We elected to early adopt ASU 2016-09 in the third quarter of fiscal year 2016 which requires us to reflect any adjustments as of January 1, 2016. The primary impact of adoption was the recognition of excess tax benefits in our provision for income taxes rather than paid-in capital for all periods in fiscal year 2016. ASU 2016-09 requires entities to recognize all income tax effects of stock-based compensation in the income statement when the restricted stock units and awards vest and when the stock options are exercised. Prior to the adoption of ASU 2016-09, companies could not recognize excess tax benefits (the amount by which the tax deduction exceeds the financial statement expense previously recorded) when a restricted stock unit or award vested or an option was exercised if the related tax deduction increased a net operating loss carryforward rather than a reduction in income taxes payable. Consequently, the excess tax benefits were credited to paid-in-capital and a deferred tax asset only to the extent realized through a reduction of income taxes payable when realized, which resulted in the excess tax benefits being included in Ultimate’s net operating loss carryforwards, while being excluded from deferred tax assets on the balance sheet. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. Adoption of the new standard resulted in a $39.7 million cumulative-effect adjustment as of January 1, 2016 to record a deferred tax asset with the offset to retained earnings in the balance sheet representing the amount of our net operating loss carryforward attributable to excess tax benefits. We recognized $23.7 million of excess tax benefits in our provision for income taxes for the twelve months ended December 31, 2016. Utilization of such net operating loss carryforwards, as well as tax credit carryforwards, may be limited as a result of cumulative ownership changes in Ultimate’s equity instruments due to ownership change provisions of Internal Revenue Code Section 382 and similar state provisions. The Internal Revenue Service examination of our U.S. Federal income tax return for the year ended December 31, 2010 was completed in 2013 with no change to the taxable income or income tax liability as reported. ASC 740, “Income Taxes,” ("ASC 740") requires that a position taken or expected to be taken in a tax return be recognized in the financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. During 2013, the Internal Revenue Service completed their examination of our U.S. Federal income tax return for the year ended December 31, 2010, which resulted in the recognition of previously unrecognized tax benefits of approximately $1.9 million, which decreased our provision for income taxes and our effective tax rate. As of December 31, 2016, we had $5.0 million of gross unrecognized tax benefits resulting from a research and development credit attributable to the 1998-2014 years as a result of the completion of the research and development activities study that if recognized would affect the annual effective tax rate. During 2015 we increased the unrecognized tax benefits by $0.1 million related to the completion of the research credit study for 2014 and increased the unrecognized tax benefits by $0.9 million related to the research credit study estimate for 2015, totaling $6.0 million at December 31, 2015. During 2016, we increased the unrecognized tax benefits by $0.2 million related to the completion of the research credit study for 2015 and increased the unrecognized tax benefits by $1.1 million related to the research credit study estimate for 2016, totaling $7.2 million at December 31, 2016. While it is often difficult to predict the final outcome of any particular uncertain tax position, management does not believe that it is reasonably possible that the estimates of unrecognized tax benefits will change significantly in the next twelve months. Tax years 1998 to 2016 remain subject to future examination by the tax jurisdictions in which we are subject to tax. We recognize interest and penalties accrued related to unrecognized tax benefits as components of our income tax provision. Due to our net operating loss carryover position, we did not have any interest and penalties accrued upon the adoption of ASC 740, and, as of December 31, 2016 and 2015, we did not have any interest and penalties accrued related to unrecognized tax benefits. A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2016, 2015 and 2014 is as follows (in thousands):
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Stock-Based Compensation and Equity |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation and Equity | tock-Based Compensation and Equity Summary of Plans Our Amended and Restated 2005 Equity and Incentive Plan (the “Plan”) authorizes the grant of options (“Options”) to non-employee directors, officers and employees of Ultimate to purchase shares of Ultimate's Common Stock ("Common Stock"). The Plan also authorizes the grant to such persons of restricted and non-restricted shares of Common Stock, stock appreciation rights, stock units and cash performance awards (collectively, together with the Options, the “Awards”). As of December 31, 2016, the aggregate number of shares of Common Stock that were available to be issued under all Awards granted under the Plan was 1,162,546 shares. Stock-Based Compensation The following table sets forth the non-cash stock-based compensation expense resulting from stock-based arrangements that is recorded in our consolidated statements of income for the periods indicated (in thousands):
Stock-based compensation for the twelve months ended December 31, 2016 was $113.9 million, as compared with stock-based compensation of $82.4 million and $46.2 million for the twelve months ended December 31, 2015 and 2014, respectively. The increases of $31.5 million and $67.7 million in stock-based compensation over 2015 and 2014, respectively, included increases of $19.7 million and $42.8 million, respectively, associated with modifications made to the Company’s CIC Plans in March 2015 and February 2016 which significantly reduced the potential payments that could be made under such plans. As previously disclosed, these changes were made to better align management's incentives with long-term value creation for our shareholders. As part of the modifications in connection with unwinding the change in control plans, time-based restricted stock awards (vesting over three years) were granted to certain senior officers in March 2015 and February 2016. The following table sets forth the stock-based compensation expense associated with modifications made to the Company's change in control plans as discussed above (in thousands):
Included in computer equipment in property and equipment, net in our consolidated balance sheet and excluded from purchases of property and equipment in the statements of cash flow at December 31, 2016, 2015 and 2014 was $3.9 million, $3.0 million and $1.7 million, respectively, in non-cash stock-based compensation expense related to capitalized software which was developed for internal use during the fiscal years then ended. These amounts would have otherwise been charged to research and development expense for the years ended December 31, 2016, 2015 and 2014. Net cash proceeds from the exercise of Options were $4.7 million, $4.7 million and $6.2 million for the years ended December 31, 2016, 2015 and 2014, respectively. Fair Value The fair value of restricted stock awards and restricted stock units is equal to the closing price of our Common Stock on NASDAQ on the date of grant. We estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The weighted-average forfeiture rates for the years ended December 31, 2016, 2015 and 2014 were based on historical data. Options There were no Options granted during the years ended December 31, 2016, 2015 and 2014. Options granted to officers and employees under the Plan generally have a 10-year term, vesting 25% immediately and 25% on each of the first three anniversaries of the grant date. Options granted to non-employee directors under the Plan generally have a 10-year term and vest and become exercisable immediately on the grant date. Restricted Stock Awards Under the provisions of the Plan, Ultimate may, at the discretion of the Compensation Committee or the Board, grant restricted stock awards (“Restricted Stock Awards”) to officers, employees and non-employee directors. The shares of Common Stock issued under Restricted Stock Awards are subject to certain vesting requirements and restrictions on transfer. During the years ended December 31, 2016, 2015 and 2014, we granted Restricted Stock Awards for 453,023, 579,320 and 235,000 shares, respectively, of Common Stock to officers and employees and we granted Restricted Stock Awards for 9,815, 9,910 and 10,375 shares, respectively, of Common Stock to non-employee directors. Compensation expense for Restricted Stock Awards is measured based on the closing market price of our Common Stock at the date of grant and is recognized on a straight-line basis over the vesting period. Holders of Restricted Stock Awards have all rights of a stockholder including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto during the vesting period. Each Restricted Stock Award granted to officers and employees vest in three equal annual installments of 33-1/3% of the number of Restricted Stock Unit Awards on the anniversary of the date of grant thereof, subject to the grantee’s continued employment with Ultimate or any of its subsidiaries on each such vesting date and subject further to accelerated vesting in the event of a change in control of Ultimate, death or disability, the termination of employment by Ultimate without cause. Each Restricted Stock Award granted to non-employee directors becomes vested on the fourth anniversary of the respective date of grant, subject to the grantee’s continued board services on each such vesting date and subject further to accelerated vesting in the event of a change in control of Ultimate, death or disability, the termination of employment by Ultimate without cause or, in the case of a non-employee director, at cessation of his board services at the end of his term. Included in our consolidated statements of income for the years ended December 31, 2016, 2015 and 2014 was $79.0 million, $56.3 million and $23.3 million, respectively, of non-cash stock-based compensation expense (which includes amounts capitalized associated with an internal-use development project) for Restricted Stock Awards. Restricted Stock Unit Awards Ultimate may, at the discretion of the Compensation Committee, make Awards of stock units or restricted stock units under the Plan (“Restricted Stock Unit Awards”) to certain officers and employees. A Restricted Stock Unit Award is a grant of a number of hypothetical share units with respect to shares of Common Stock that are subject to vesting and transfer restrictions and conditions under a restricted stock unit award agreement. The value of each unit is equal to the fair value of one share of Common Stock on any applicable date of determination. The payment with respect to each unit under a Restricted Stock Unit Award may be made, at the discretion of the Compensation Committee, (i) in a number of shares of our Common Stock equal to the number of Restricted Stock Units becoming vested, (ii) in cash, in an amount equal to the fair market value of a share of our Common Stock on the vesting date multiplied by the number of restricted stock units becoming vested on such date or (iii) in a combination of both. The grantee of a Restricted Stock Unit Award does not have any rights as a stockholder with respect to the shares subject to a Restricted Stock Unit Award until such time as shares of Common Stock are delivered to the grantee pursuant to the terms of the related stock unit award agreement. Restricted Stock Unit Awards vest in three equal annual installments of 33-1/3% of the number of Restricted Stock Unit Awards on each of the first three anniversaries of the date of grant thereof, subject to the participant’s continued employment with Ultimate or any of its subsidiaries on each such vesting date and subject further to accelerated vesting in the event of a change in control of Ultimate, death or disability, the termination of employment by Ultimate without cause and shall be payable as described above, provided, however, that if any such anniversary is not a date on which our Common Stock is traded on NASDAQ, then the vesting date shall be the last such trading day immediately preceding such anniversary; and provided further, however, that if the Chief Financial Officer (“CFO”) of Ultimate should determine that any such anniversary falls within a period during which the participant is prohibited from trading Ultimate’s Common Stock under our stock trading policy, the CFO shall so advise the participant in writing and the vesting date shall be the date as of which the CFO has determined that such period has ended. There were 363,458, 241,235 and 207,000 Restricted Stock Unit Awards granted to employees during the years ended December 31, 2016, 2015 and 2014, respectively. Non-cash stock-based compensation expense for Restricted Stock Unit Awards is measured based on the fair market value of our Common Stock on the date of grant and recognized on a straight-line basis over the vesting period. Included in Ultimate’s consolidated statements of operations for the years ended December 31, 2016, 2015 and 2014 was $38.8 million, $29.2 million and $22.9 million, respectively, of non-cash stock-based compensation expense (which includes amounts capitalized associated with an internal-use development project) for Restricted Stock Unit Awards. Option, Restricted Stock and Restricted Stock Unit Activity The following table summarizes Option activity for the years ended December 31, 2014, 2015 and 2016, as follows (in thousands, except per share amounts and years):
The aggregate intrinsic value of Options in the table above represents total pretax intrinsic value (i.e., the difference between the closing price of our Common Stock on the last trading day of the reporting period and the exercise price, times the number of shares) that would have been received by the Option holders had all Option holders exercised their Options on December 31, 2016. The amount of the aggregate intrinsic value changes, based on the fair value of our Common Stock. Total intrinsic value of Options exercised during the years ended December 31, 2016, 2015 and 2014 was $32.0 million, $28.7 million and $44.6 million, respectively. There were no Options vested during the years ended December 31, 2014, 2013 and 2012. All options granted under the Plan and the Prior Plan are fully vested as of December 31, 2016. The following table summarizes Restricted Stock and Restricted Stock Unit Award activity for the years ended December 31, 2014, 2015 and 2016, as follows (in thousands, except per share amounts):
As of December 31, 2016, $120.1 million of total unrecognized compensation cost related to non-vested Restricted Stock Awards is expected to be recognized over a weighted average period of 1.57 years. As of December 31, 2016, $62.9 million of total unrecognized compensation costs related to non-vested Restricted Stock Unit Awards is expected to be recognized over a weighted average period of 1.80 years. The following table summarizes information with respect to Options outstanding and Options exercisable under the Plan at December 31, 2016:
Board Compensation Each non-employee director of Ultimate receives compensation for serving on the Board, payable exclusively in the form of Restricted Stock Awards granted under the Plan. Under the Plan, (i) each non-employee director was granted a restricted stock award of 400 shares of Common Stock for each regular meeting of the Board attended during each quarter of 2014, 2015 and 2016 and (ii) each of the Chairmen of the Audit Committee, Compensation Committee and Nominating Committee was granted a restricted stock award of 50 shares of Common Stock for attendance at each regular meeting of the Committee during each quarter of 2014, 2015 and 2016 that he chaired. In addition, in 2016, 2015 and 2014 each non-employee director was granted, for each fiscal quarter during which he served, a restricted stock award of that number of shares of Common Stock equal to the quotient of $12,500 divided by the closing price of the Common Stock on NASDAQ on the date of grant, which is the effective date of the grant determined by the Board for each such quarter, rounded down to the closest full number of shares. Under the arrangement as amended, the date of grant shall not be a date prior to the date of the Board’s determination of the same and such restricted stock awards shall vest on the fourth anniversary of the date of grant, subject to accelerated vesting in the event of a director’s death, disability, cessation of service or the end of his term or the occurrence of a change of control of Ultimate. The following table summarizes information about Restricted Stock Awards granted by us to non-employee directors in exchange for director related services rendered for 2016, 2015 and 2014:
The non-cash compensation expense, recognized in the consolidated statements of income related to the Restricted Stock Awards granted to non-employee directors, including the chairmen of the Audit, Compensation and Nominating Committees, determined pursuant to the application of ASC 718 for the years ended December 31, 2016, 2015 and 2014, was $1,839,000, $1,757,000 and $1,652,000, respectively, and is included in general and administrative expenses in the consolidated statements of income. The non-cash stock-based expense amounts are included in the non-cash stock-based compensation expense for restricted stock awards in the consolidated statements of operations. Common Stock The holders of Common Stock are entitled to one vote per share for each share held of record on all matters submitted to a vote of the stockholders. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Operating Leases We lease corporate office space and certain equipment under non-cancelable operating lease agreements expiring at various dates. Total rent expense under these agreements was $16.7 million, $13.1 million and $8.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. Future minimum annual rental commitments related to these leases are as follows as of December 31, 2016 (in thousands):
Litigation From time-to-time, Ultimate is involved in litigation relating to claims arising out of its operations in the normal course of business. We are not currently a party to any legal proceedings the adverse outcome of which, individually or in the aggregate, could reasonably be expected to have a material adverse effect on our operating results or financial condition. |
Related Party Transactions |
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Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | elated Party Transactions For the years ending December 31, 2016, 2015 and 2014, we had no related party transactions. |
Employee Benefit Plan |
12 Months Ended |
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Dec. 31, 2016 | |
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract] | |
Employee Benefit Plan | Employee Benefit Plan Ultimate provides retirement benefits for eligible employees, as defined, through a defined contribution plan that is qualified under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). Contributions to the 401(k) Plan, which are made at the sole discretion of Ultimate, were $10.5 million, $7.2 million and $5.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Policies) |
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Summary of Significant Accounting Policies and Recent Accounting Pronouncements [Abstract] | |||||||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents All highly liquid instruments with an original maturity of three months or less when acquired are considered cash equivalents and are comprised of interest-bearing accounts. |
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Accounts Receivable | Accounts Receivable Accounts receivable are principally from end-users of Ultimate’s products. We maintain an allowance for doubtful accounts at an amount estimated to be sufficient to provide adequate protection against losses resulting from collecting less than full payment on accounts receivable. A considerable amount of judgment is required when the realization of receivables is assessed, including assessing the probability of collection and current credit-worthiness of each customer. If the financial condition of our customers were to deteriorate, resulting in a further impairment of their ability to make payments, an additional provision for doubtful accounts may be required. We charge off uncollectible amounts against the allowance for doubtful accounts in the period in which we determine they are uncollectible. |
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Funds Held for Customers and Customers' Funds Obligations | Funds Held for Customers and Customers’ Funds Obligations Ultimate has the right to market and distribute an independent third party’s tax filing solution that Ultimate has branded UltiPro Payment Services. Ultimate’s UltiPro Payment Services offering provides payment services to our customers. These payment services are being sold directly by us to our customers only on a per-employee-per-month (“PEPM”) basis in conjunction with UltiPro, our core product. In connection with our UltiPro Payment Services product, we receive funds from our customers and hold such funds for purposes of paying the appropriate taxing authorities on behalf of such customers. We invest a portion of our customer funds in available for sale securities in addition to our corporate funds in accordance with our internal investment strategies. The portfolio predominantly consists of investment grade securities with long-term ratings of AAA and AA+ and short-term ratings A-1/P-1. These funds held for customers and the corresponding customer funds obligations are included in current assets and current liabilities, respectively, in our consolidated balance sheets as of December 31, 2016 and 2015. We have reported the cash flows for purchases of securities with funds received from UltiPro Payment Services customers in the investing activities section of the consolidated statements of cash flows for the years ended December 31, 2016, 2015 and 2014. We have reported the cash flows related to the funds received and paid on behalf of such customers to the applicable taxing authorities in the financing activities section of the consolidated statements of cash flows for the years ended December 31, 2016, 2015 and 2014. The associated PEPM fees for UltiPro Payment Services are included in recurring revenues in the consolidated statements of income for the years ended December 31, 2016, 2015 and 2014. The associated interest earned was not material for the years ended December 31, 2016, 2015 and 2014. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments Ultimate’s financial instruments, consisting of cash and cash equivalents, investments in marketable securities, funds held for customers and the related obligations, accounts receivable, accounts payable, and capital lease obligations and other borrowings, approximated fair value (due to their relatively short maturity) as of December 31, 2016 and 2015. |
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Funds Held for Customers and Corporate Investments | Funds Held for Customers and Corporate Investments We classify our investments in marketable securities with readily determinable fair values as available-for-sale. Available-for-sale securities consist of debt and equity securities not classified as trading securities or as securities to be held to maturity. Unrealized gains and losses, net of tax, on available-for-sale securities are reported as a net amount in accumulated other comprehensive income in stockholders’ equity until realized. Gains and losses on the sale of available-for-sale securities are determined using the specific identification method. Interest earned on investments from funds held for customers is included in recurring revenue and was not material in the years presented. If the fair value of an available-for-sale debt security is below its amortized cost, Ultimate assesses whether we intend to sell the security or if it is more likely than not we will be required to sell the security before recovery. If either of those two conditions are met, Ultimate would recognize a charge in earnings equal to the entire difference between the security's amortized cost basis and its fair value. If we do not intend to sell a security or it is not more likely than not that it will be required to sell the security before recovery, the unrealized loss is separated into an amount representing the credit loss, which is recognized in earnings, and the amount related to all other factors, which is recognized in accumulated other comprehensive income. |
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Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Ultimate’s financial statements include prepaid expenses and other current assets which include prepaid commissions on cloud sales. Prepaid expenses are amortized over the life of the asset (typically within one year) and commissions on cloud sales are amortized over the initial contract term (typically 24-36 months) typically commencing on the day the customer processes its first live payroll using UltiPro (also referred to as going “Live”), which corresponds with the related cloud revenue recognition. The portion of prepaid commissions that extends beyond one year is classified in other assets, net, in the consolidated balance sheets as of December 31, 2016 and 2015. |
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Long-Lived Assets | Long-Lived Assets We evaluate the carrying value of long-lived assets when indicators of impairment exist. For the year ended December 31, 2016, no such events or circumstances were identified. The carrying value of a long-lived asset is considered impaired when the undiscounted expected future cash flows from such asset (or asset group) are separately identifiable and less than the asset’s (or asset group’s) carrying value. In that event, a loss is recognized to the extent that the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. For the years ended December 31, 2016, 2015 and 2014, we recorded no impairment of our long-lived assets. |
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Property and Equipment | Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation and amortization. Property and equipment is depreciated using the straight-line method over the estimated useful lives of the assets, which range from 2 to 15 years. Leasehold improvements and assets under capital leases are amortized over the shorter of the life of the asset or the term of the lease over periods ranging from approximately 3 to 15 years. Maintenance and repairs are charged to expense when incurred; betterments are capitalized. Upon the sale or retirement of assets, the cost, accumulated depreciation and amortization are removed from the accounts and any gain or loss is recognized. Computer Software Development Costs Computer software development costs related to software developed for internal use falls under the accounting guidance of ASC Topic 350-40, Intangibles Goodwill and Other–Internal Use Software, in which computer software costs are expensed as incurred during the preliminary project stage and capitalization begins in the application development stage once the capitalization criteria are met. Costs associated with post implementation activities are expensed as incurred. Costs capitalized during the application development stage include external direct costs of materials and services consumed in developing or obtaining internal-use software and payroll and payroll-related costs for employees who are directly associated with, and who devote time to, the internal-use computer software. In addition to capitalizing costs for software (which are used by us in our general operations, for internal purposes), we also capitalize costs under ASC Topic 350-40 for certain software development projects related to our suite of products sold to our customers exclusively on a subscription basis under our software-as-a-service offering of UltiPro. |
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Deferred Revenue | Deferred Revenue Deferred revenue is primarily comprised of deferrals for recurring revenues for cloud services which are recognized over the term of the related contract as the services are performed, typically 24-36 months and commencing with the related Live date; and implementation consulting services for which the services have not yet been rendered which are primarily recognized prior to the respective Live date. |
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Guarantees | Guarantees The standard commercial terms in our sales contracts for UltiPro include an indemnification clause that indemnifies the customer against certain liabilities and damages arising from any claims of patent, copyright, or other proprietary rights of any third party. Due to the nature of the intellectual property indemnification provided to our customers, we cannot estimate the fair value, or determine the total nominal amount, of the indemnification until such time as a claim for such indemnification is made. In the event of a claim made against us under such provision, we evaluate estimated losses for such indemnification considering such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. To date, Ultimate has not had any claims made against it under such provision and, accordingly, has not accrued any liabilities related to such indemnifications in its consolidated financial statements. |
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Segment Information | Segment Information Public companies are required to report selected information about operating segments in annual and interim financial reports to shareholders, as well as related disclosures about an enterprise’s business segments, products, services, geographic areas and major customers. Ultimate operates its business as a single segment and is comprised as a single reporting unit. |
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Revenue Recognition | Revenue Recognition We recognize revenues in accordance with Accounting Standards Update No. 2009-13, “Multiple-Deliverable Revenue Arrangements” (“ASU 2009-13”). We use the relative selling price method to allocate the total consideration to units of accounting in a multiple element arrangement. We allocate revenue in an arrangement using the estimated selling price (“ESP”) of deliverables if it does not have vendor-specific objective evidence (“VSOE”) or third-party evidence (“TPE”) of selling price. VSOE is the price charged when the same or similar product or service is sold separately. We define VSOE as a median price of recent stand-alone transactions that are priced within a narrow range. TPE is determined based on the prices charged by our competitors for a similar deliverable when sold separately. However, due to the difficulty in obtaining sufficient information on competitor pricing and differences in our product offerings when compared with those of our peers, we generally are unable to reliably determine TPE. ESP is our best estimate of the selling price of an element in a transaction. If we are unable to establish selling price using either VSOE or TPE, we will use ESP in our allocation of arrangement consideration. The objective of ESP is to determine the price at which we would transact business if the product or service were sold by us on a stand-alone basis. Our determination of ESP involves the use of a customary discount from the list (or book) price for each element, with the discounted price applied within a narrow range. The customary discount is derived from historical data that has been analyzed to determine trends and patterns. We analyze the customary discount used for determining ESP on no less than an annual basis. We evaluate each deliverable in our arrangements to determine whether it represents a separate unit of accounting. A deliverable constitutes a separate unit of accounting when it has stand-alone value to our customers. Our products and services continue to qualify as separate units of accounting under ASU 2009-13. There are two major elements in our multiple element arrangements for the delivery of our UltiPro offering, which are recurring revenues (i.e., cloud subscription revenues) and services revenues (mostly implementation consulting services). For multiple element arrangements, the consideration allocated to cloud subscription revenues is recognized as recurring revenues over the initial contract period, as those subscription-based services are delivered, typically commencing with the Live date of the related product. The consideration allocated to fixed fee implementation consulting services in multiple element arrangements is recognized as services revenues on a percentage of completion basis, using reasonably dependable estimates with respect to milestones achieved (in relation to progression through implementation phases), by product. Single element arrangements typically consist of renewals for cloud subscriptions and implementation consulting services sold on a time and materials basis. Under these single element arrangements, cloud subscription revenues are recognized over the related renewal period, as the services are delivered, and implementation consulting services are recognized as the related time and materials services are performed. We recognize revenues when all of the following criteria are met:
If collection is not considered probable, we recognize revenues when the fees are collected. If the fees are not fixed and determinable, we recognize revenues when the fees become due from the customer. If non-standard acceptance periods or non-standard performance criteria are required, we recognize revenue when the acceptance period expires or upon the satisfaction of the acceptance/performance criteria, as applicable. The majority of services revenues are recognized over the implementation period, which is from the contract execution date until the Live date. Cloud revenues are recognized over the initial contract term, typically beginning in the month the customer goes Live. Recurring Revenues Recurring revenues primarily consist of subscription revenues recognized from our customers' use of UltiPro after they have gone Live. i) Cloud subscription revenues are principally derived from PEPM fees earned from UltiPro units that are Live. Ongoing PEPM fees are recognized as subscription revenues as the services are delivered, typically commencing when the customer goes Live. ii) Effective January 1, 2015, we no longer have maintenance revenues associated with our Legacy customers. Since the time we announced that we would stop supporting our Legacy product in 2012, we successfully converted the majority of our Legacy customers to the cloud. Those customers that did not convert terminated. With UltiPro, our customers do not have the right to take possession of our software and these arrangements are considered service contracts. The selling price of multiple deliverables in cloud arrangements is derived for each element based on the guidance provided by ASU 2009-13. The multiple elements that typically exist in cloud arrangements include (1) recurring revenues from the combination of hosting services, the right to use UltiPro, and maintenance of UltiPro (i.e., product enhancements, updates and customer support) and (2) professional services (i.e., primarily implementation consulting services). The pricing for the three elements that pertain to recurring revenues (i.e., hosting services, the right to use UltiPro and maintenance of UltiPro (as described above) is bundled. Since these three bundled elements are components of recurring revenues in the consolidated statements of income, allocation of selling price to each of the three elements is not necessary and they are not reported separately. Selling price, which is established through VSOE, for the bundled elements, as a whole, is determined on the basis of renewal pricing, without taking into consideration potential price increases or potential changes in the number of employees of the customer in the future due to the uncertainties surrounding these potential occurrences. These bundled elements are provided on an ongoing basis, represent undelivered elements and are recognized on a monthly basis as the related services are performed, commencing once the customer goes Live. Services Revenues Services revenues primarily include revenues from fees charged for implementation consulting services in connection with the implementation of our product solutions and, to a much lesser extent, fees for other services, including the provision of payroll-related forms, sales of time clocks and the printing of W-2 forms for certain customers, as well as certain client reimbursable out-of-pocket expenses. Our multiple element contracts contain recurring cloud revenues and implementation consulting services priced on a fixed fee basis. Time and materials implementation consulting services are sold as stand-alone sales not directly related to the basic implementation of the cloud product. The total arrangement consideration is allocated to services elements in the arrangement based on relative selling prices, using the prices established when the services are sold on a stand-alone basis. Selling price is established through ESP for fixed fee implementation consulting services that are included in our multiple element contracts. Revenues from implementation consulting services sold on a fixed-fee basis are recognized using the percentage of completion accounting method, which involves the use of estimates. Percentage of completion is measured at each reporting date based on progress made to date, using reasonably dependable estimates with respect to milestones achieved or billable hours, as applicable. Revenues from implementation consulting services, billed on a time and materials basis (at an hourly rate), are recognized as these services are performed. Other services are recognized as the product is shipped or as the services are rendered, depending on the specific terms of the related arrangement. |
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Goodwill and Intangible Assets | Goodwill and Intangible Assets The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business with the residual of the purchase price recorded as goodwill. The determination of the value of the intangible assets acquired involves certain judgments and estimates. These judgments and estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital. At December 31, 2016, our goodwill totaled $35.3 million and our identifiable net intangible assets totaled $23.9 million. We assess the impairment of goodwill of our reporting unit annually, or more often if events or changes in circumstances indicate that the carrying value may not be recoverable. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit's carrying value is compared to its fair value. We consider both market and discounted cash flow approaches to determine the fair value of the reporting unit. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow approach uses expected future operating results. Failure to achieve these expected results may cause a future impairment of goodwill at the reporting unit. We conducted our annual impairment test of goodwill as of December 31, 2016, and 2015. As a result of this test, we determined that no adjustment to the carrying value of goodwill for our reporting unit was required. We evaluate our amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable based on expected undiscounted cash flows attributable to that asset or group of assets. The amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. We also evaluate the estimated remaining useful lives of intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization. Assumptions and estimates about future values and remaining useful lives of our intangible assets are complex and subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends and internal factors such as changes in our business strategy and our internal forecasts. |
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Cost of Revenues | Cost of Revenues Cost of revenues primarily consists of the costs of recurring and services revenues. Cost of recurring revenues primarily consists of costs to provide maintenance and technical support to our customers, the cost of providing periodic updates and the cost of recurring subscription revenues, including amortization of capitalized software. Cost of services revenues primarily consists of costs to provide implementation consulting services and, to a lesser degree, training to our customers, costs related to sales of payroll-related forms, time clocks and costs associated with certain client reimbursable out-of-pocket expenses. |
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Stock-Based Compensation | Stock-Based Compensation Our Amended and Restated 2005 Equity and Incentive Plan (the “Plan”) authorizes the grant of options to non-employee directors, officers and employees of Ultimate to purchase shares of Ultimate’s Common Stock. The Plan also authorizes the grant to such persons of restricted and non-restricted shares of Common Stock, stock appreciation rights, stock units and cash performance awards (collectively, together with stock options, the “Awards”). Prior to the adoption of the Plan, options to purchase shares of Common Stock were issued under our Nonqualified Stock Option Plan (the “Prior Plan”). Beginning in 2009, we began making grants to employees of restricted stock units in lieu of stock options. As of December 31, 2016, the aggregate number of shares of Common Stock that were available to be issued under all Awards granted under the Plan was 1,162,546 shares. The Plan provides broad discretion to the Compensation Committee of the Board of Directors to create appropriate equity incentives for directors, officers and employees of Ultimate. The Plan is intended to attract and retain talented employees and align employee and stockholder interests. For purposes of calculating and accounting for stock-based compensation expense (“SBC”) in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”) for restricted stock awards and restricted stock units, we measure compensation based on the closing market price of our Common Stock at the date of grant and it is recognized on a straight-line basis over the vesting period. We estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The weighted-average forfeiture rate is based on historical data. In accordance with ASC 718, Ultimate capitalizes the portion of SBC expense attributed to personnel whose labor costs are being capitalized pursuant to ASC Topic 350-40, Intangibles Goodwill and Other-Internal Use Software, related to software development. |
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Rental Costs Incurred in Relation to a Construction Period | Rental Costs Incurred in Relation to a Construction Period We have incurred rental costs associated with operating leases during the construction period. Rental costs incurred during a construction period are costs incurred for the right to control the use of a leased asset during and after construction of a leased asset. Since there is no distinction between the right to use a leased asset during the construction period and the right to use that asset after the construction period, rental costs associated with ground or building operating leases that are incurred during a construction period are recognized as rental expense on a straight-line basis. |
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Income Taxes | Income Taxes We are subject to Federal, foreign and state corporate income taxes. We account for income taxes using an asset and liability approach under which deferred income taxes are provided based upon enacted tax laws and rates applicable to the periods in which the taxes become payable. We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. We assess the likelihood that Ultimate will be able to recover its deferred tax assets. Management considers all available evidence, both positive and negative, including historical levels of pre-tax book income, expiration of net operating losses, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies, as well as current tax laws and interpretation of current tax laws, in assessing the need for a valuation allowance. If recovery is not likely, we record a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. The available positive evidence at December 31, 2016 included, among other factors, three years of cumulative historical pre-tax book income and a projection of future pre-tax book income and taxable income sufficient to realize all of our remaining deferred tax assets. As a result of our analysis of all available evidence, both positive and negative, we believe that it is more likely than not that the results of future operations will generate sufficient taxable income to realize all of the deferred tax assets as of December 31, 2016. See Note 14 for further discussion. ASC 740, "Income Taxes" ("ASC 740") provides guidance on the related de-recognition, classification, interest and penalties, accounting for interim periods, disclosure and transition of uncertain tax positions. Our accounting policy is to record the tax effects of a change in the opening balance of the unrecognized tax benefits (including unrecognized tax benefits related to prior-period discontinued operations) in current-period income (loss) from continuing operations. We recognize interest and penalties accrued related to unrecognized tax benefits as components of our income tax provision. We did not have any interest and penalties accrued upon the adoption of ASC 740, and, as of December 31, 2016 and 2015, we did not have any interest and penalties accrued related to unrecognized tax benefits. |
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Recently Issued Accounting Pronouncements | Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers: (Topic 606)” and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016 and May 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10 and ASU 2016-12, respectively (ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10 and ASU 2016-12 collectively, Topic 606). Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Topic 606 defines a five-step process (ASC 606-10-05-4(a) through 4 (e)) to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others. Topic 606 also provides guidance on the recognition of costs related to obtaining customer contracts. During 2016 we began discussions that addressed the potential impact Topic 606 would have on the consolidated financial statements and the required resources to implement the new standard. Assessment to the impact on the consolidated financial statements included an evaluation of the five steps outlined in ASC 606-10-05-4 (a) through (e) of 2016 along with enhancement of disclosures that will be required under paragraphs 606-10-50-1 through 50-21. In Ultimate’s evaluation of the standard, it has developed its initial plan for implementing the standard, which includes, but is not limited to, identifying contract populations and “in scope” contracts, identifying performance obligations in the “in scope” customer contracts, and evaluating impacts of variable consideration. It also includes determining the impacts the standard will have on the revenue reporting processes, ensuring the internal controls will operate effectively with the new standard and performing gap analyses on collected data and determining the relative accounting positions where applicable. Included in our assessment of the standard, we will focus on the potential impact on sales commissions and the term over which they will amortize. We have preliminarily determined that the implementation revenues that we recognize represent distinct performance obligations and do not believe the standard will materially alter the way we recognize revenues. We are still evaluating the overall effect the standard will have on the consolidated financial statements and related disclosures. Topic 606 is effective for Ultimate on January 1, 2018 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic 606. Ultimate has not yet selected a transition method. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): "Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17”). ASU 2015-17 requires entities to offset all deferred tax assets and liabilities (and valuation allowances) for each tax-paying jurisdiction within each tax-paying component and present the net deferred tax as a single noncurrent amount in a classified balance sheet. The new standard was effective for Ultimate on January 1, 2017. The standard permits the use of either the prospective or retrospective method. We are evaluating the effect that ASU 2015-17 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method. In February 2016, the FASB issued ASU 2016-02, "Leases" ("ASU 2016-02"), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new standard is effective for Ultimate on January 1, 2019 and early adoption is permitted. The standard requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are evaluating the effect that ASU 2016-02 will have on our consolidated financial statements and related disclosures. We have not yet determined the effect the standard will have on our ongoing financial reporting. Recently Adopted Accounting Standards In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). The standard amends the accounting for certain aspects of share-based payments to employees. The standard requires transition for specific objectives of the standard. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, and forfeitures should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement should be applied prospectively. Further, an entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. The new standard is effective for us beginning January 1, 2017, with early adoption permitted. We elected to early adopt the new guidance in the third quarter of fiscal year 2016 which requires us to reflect any cumulative-effect and prospective method adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. The primary impact of adoption was the recognition of excess tax benefits in our provision for income taxes rather than additional paid-in capital for all periods in fiscal year 2016. Prior to the adoption of ASU 2016-09, companies could not recognize excess tax benefits (the amount by which the tax deduction exceeds the financial statement expense previously recorded) when a restricted stock unit or restricted stock award vested or an option was exercised if the related tax deduction resulted in an increase to a net operating loss carryforward rather than a reduction in income taxes payable. Consequently, the excess tax benefits were credited to additional paid-in-capital and a deferred tax asset was established, only to the extent realized through a reduction in income taxes payable, which resulted in the excess tax benefits being included in Ultimate’s net operating loss carryforwards, while being excluded from deferred tax assets on the balance sheet. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. Adoption of the new standard resulted in a $39.7 million cumulative-effect adjustment as of January 1, 2016 to record a deferred tax asset with the offset to retained earnings in the balance sheet, representing the amount of our net operating loss carryforwards attributable to excess tax benefits. Additional amendments to the accounting for minimum statutory withholding tax requirements had no impact to retained earnings as of January 1, 2016, where the cumulative effect of these changes is required to be recorded. We have elected to continue to estimate forfeitures expected to occur to determine the amount of non-cash stock-based compensation costs to be recognized in each period. We elected to apply the presentation requirements for cash flows related to excess tax benefits retrospectively to all periods presented which resulted in a reclassification of previously reported amounts to increase both net cash from operations and net cash used in financing of $31.9 million and $27.5 million for the years ended December 31, 2015 and 2014, respectively. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact to any of the periods presented in our consolidated cash flows statements since such cash flows have historically been presented as a financing activity. Adoption of the new standard resulted in the recognition of excess tax benefits in our provision for income taxes rather than additional paid-in capital of $23.7 million for the year ended December 31, 2016. In April 2015, the FASB issued ASU 2015-05, “Customer's Accounting for Fees Paid in a Cloud Computing Arrangement" ("ASU 2015-05"), which requires that if a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. Further, it requires that if a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 will not change GAAP for a customer’s accounting for service contracts. The new standard became effective for Ultimate on January 1, 2016. The effect of the adoption of ASU 2015-05 has had no material impact on our consolidated financial statements and related disclosures. |
Sumary of Significant Accounting Policies and Recent Accounting Pronouncements (Tables) |
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Summary of Significant Accounting Policies and Recent Accounting Pronouncements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-cash stock-based compensation expense | The following table summarizes SBC recognized by the Company (in thousands):
The following table sets forth the non-cash stock-based compensation expense resulting from stock-based arrangements that is recorded in our consolidated statements of income for the periods indicated (in thousands):
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Investments in Marketable Securities and Fair Value of Financial Instruments (Tables) |
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Investments in Marketable Securities and Fair Value of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized cost, net unrealized gain and fair value of investments in marketable available-for-sale securities | The amortized cost, net unrealized (loss) gain and fair value of our investments in marketable available-for-sale securities as of December 31, 2016 and December 31, 2015 are shown below (in thousands): Funds held for customers and corporate investments as of December 31, 2016 and December 31, 2015 are shown below (in thousands):
_________________ (1) Included within available-for-sale securities as of December 31, 2016 and 2015 are corporate investments with fair values of $24.1 million and $20.1 million, respectively. Included within available-for-sale securities as of December 31, 2016 and 2015 are funds held for customers with fair values of $148.8 million and $69.9 million, respectively. All available-for-sale securities were included in Level 2 of the fair value hierarchy. |
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Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Table Text Block] | The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2016 are as follows (in thousands):
The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2015 are as follows (in thousands):
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Amortized costs and fair value of marketable available-for-sale securities by contractual maturity | The amortized cost and fair value of the marketable available-for-sale securities by contractual maturity at December 31, 2016 are shown below (in thousands):
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Fair value of financial assets and liabilities, by level within the fair value hierarchy | The following table sets forth, by level within the fair value hierarchy, financial assets accounted for at fair value as of December 31, 2016 and December 31, 2015 (in thousands):
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Allowance for Doubtful Accounts (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for doubtful account | The activity within the allowance for doubtful accounts was as follows (in thousands):
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Prepaid Expenses and Other Current Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expense and Other Assets, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid expenses and other current assets | Prepaid expenses and other current assets consist of the following (in thousands):
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Property and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property and equipment, net consists of the following (in thousands):
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Schedule of Capital Leased Assets | Included in property and equipment, net, is computer equipment acquired under capital leases as follows (in thousands):
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Foreign Currency (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Currency [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation loss and unrealized foreign currency translation gain (loss) | Included in comprehensive income (loss) for the years ended December 31, 2016, 2015 and 2014 were realized foreign currency translation losses and unrealized foreign currency translation gains (losses), as follows (in thousands):
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Computer Software Development Costs (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Research and Development [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized software | Capitalized computer software development costs and accumulated amortization of capitalized software, developed for internal use, were as follows (in thousands):
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Earnings Per Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of shares used in the computation of basic and diluted net income per share | The following is a reconciliation of the shares used in the computation of basic and diluted net income per share (in thousands):
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Goodwill and Intangible Assets Goodwill and Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in carrying balance of goodwill | The changes in the carrying value of goodwill were as follows (in thousands):
_________________ (1) Represents the goodwill recognized for the Vestrics Acquisition on May 11, 2016. See Note 4 of the Notes to Consolidated Financial Statements. (2) Represents the estimated goodwill recognized for the Kanjoya Acquisition on September 29, 2016. See Note 4 of the Notes to Consolidated Financial Statements. (3) Represents the impact of the foreign currency translation of the portion of goodwill that is recorded by our Canadian subsidiary whose functional currency is also its local currency. Such goodwill is translated into U.S. dollars using exchange rates in effect at period end. Adjustments related to foreign currency translation are included in other comprehensive income (loss). |
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Schedule of estimated useful lives of intangible assets | The Company’s amortizable intangible assets have estimated useful lives as follows (in thousands):
_________________ (1) Represents the impact of the foreign currency translation of the portion of acquired intangible assets that is recorded by our Canadian subsidiary whose functional currency is also its local currency. Such intangible assets are translated into U.S. dollars using exchange rates in effect at period end. Adjustments related to foreign currency translation are included in other comprehensive income (loss). |
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Schedule of expected amortization expense | Future amortization expense for acquired intangible assets is as follows, as of December 31, 2016 (in thousands):
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Capital Lease Obligations (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Capital Lease Obligations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Scheduled lease payments of the capital lease obligations | The scheduled lease payments of the capital lease obligations are as follows as of December 31, 2016 (in thousands):
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax (provision) benefit components | The income tax provision consists of the following (in thousands):
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Income tax reconciliation to statutory rate | The income tax provision is different from that which would be obtained by applying the statutory federal income tax rate of 35% to income from continuing operations before income taxes as a result of the following (in thousands):
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Deferred tax assets and liabilities | Significant components of our deferred tax assets and liabilities at December 31, 2016 and 2015 were as follows (in thousands):
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Reconciliation of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2016, 2015 and 2014 is as follows (in thousands):
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Stock-Based Compensation and Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-cash stock-based compensation expense | The following table summarizes SBC recognized by the Company (in thousands):
The following table sets forth the non-cash stock-based compensation expense resulting from stock-based arrangements that is recorded in our consolidated statements of income for the periods indicated (in thousands):
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Allocation of share-based compensation costs by plan | The following table sets forth the stock-based compensation expense associated with modifications made to the Company's change in control plans as discussed above (in thousands):
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Summary of stock option activity | The following table summarizes Option activity for the years ended December 31, 2014, 2015 and 2016, as follows (in thousands, except per share amounts and years):
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Summary of restricted stock award and restricted stock unit activity | The following table summarizes Restricted Stock and Restricted Stock Unit Award activity for the years ended December 31, 2014, 2015 and 2016, as follows (in thousands, except per share amounts):
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Options outstanding and exercisable by exercise price range | The following table summarizes information with respect to Options outstanding and Options exercisable under the Plan at December 31, 2016:
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Stock options and restricted stock awards granted to non-employee directors | The following table summarizes information about Restricted Stock Awards granted by us to non-employee directors in exchange for director related services rendered for 2016, 2015 and 2014:
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Future minimum annual rental commitments related to operating leases | Future minimum annual rental commitments related to these leases are as follows as of December 31, 2016 (in thousands):
|
Business Combinations - Acquisition of Kanjoya, Inc (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Sep. 29, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Business Acquisition [Line Items] | ||||
Cash payment to acquire business | $ 25,636 | $ 0 | $ 257 | |
Goodwill | 35,322 | $ 24,410 | $ 25,696 | |
Kanjoya, Inc. | ||||
Business Acquisition [Line Items] | ||||
Consideration transferred | $ 19,600 | |||
Cash payment to acquire business | 16,900 | |||
Escrow Deposit | $ 2,600 | |||
Intangible assets | 13,600 | |||
Goodwill | 6,400 | |||
Working capital | 400 | |||
Developed Technology Rights | Kanjoya, Inc. | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | 12,100 | |||
Customer relationships | Kanjoya, Inc. | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 1,500 |
Business Combinations - Acquisition of Capital Analytics, Inc., d/b/a Vestrics (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
May 11, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Business Acquisition [Line Items] | ||||
Cash payment to acquire business | $ 25,636 | $ 0 | $ 257 | |
Goodwill | 35,322 | $ 24,410 | $ 25,696 | |
Vestrics Acquisition | ||||
Business Acquisition [Line Items] | ||||
Consideration transferred | $ 10,100 | |||
Cash payment to acquire business | 9,100 | |||
Consideration held In escrow | $ 1,000 | |||
Goodwill | 4,300 | |||
Working capital | 200 | |||
Finite-lived intangibles | $ 6,000 | |||
Weighted average useful life | 7 years |
Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||
Balance at beginning of year | $ 900 | $ 675 | $ 675 |
Charged to expenses | 3,213 | 4,687 | 2,264 |
Write-offs | (3,213) | (4,462) | (2,264) |
Balance at end of year | $ 900 | $ 900 | $ 675 |
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepaid commissions on cloud sales | $ 29,842 | $ 22,119 |
Other prepaid expense | 16,753 | 11,978 |
Other current assets | 15,306 | 12,707 |
Total prepaid expenses and other current assets | $ 61,901 | $ 46,804 |
Property and Equipment 1 (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Capital Leased Assets [Line Items] | |||
Depreciation and amortization expense | $ 6,700 | $ 5,900 | $ 5,900 |
Computer Equipment [Member] | |||
Capital Leased Assets [Line Items] | |||
Capital leased assets, gross | 51,581 | 44,862 | |
Capital Leases, accumulated amortization | 43,732 | 38,389 | |
Capital Leases, net | $ 7,849 | $ 6,473 |
Foreign Currency (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Foreign Currency [Abstract] | |||
Unrealized foreign currency translation gains (losses) | $ 6,900 | $ (7,800) | |
Realized foreign currency translation (losses) | 0 | 0 | $ 0 |
Unrealized foreign currency translation gains (losses) | $ 843 | $ (4,195) | $ (2,143) |
Computer Software Development Costs (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Property, Plant and Equipment [Line Items] | |||
Capitalized software development costs | $ 37,900 | $ 26,300 | |
Capitalized software | 113,407 | 75,529 | $ 49,464 |
Accumulated amortization | (2,925) | (1,742) | (670) |
Capitalized software, net | $ 110,482 | 73,787 | 48,794 |
Internal Use Software | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life | 3 years | ||
Internal Use Software | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life | 7 years | ||
UltiPro Recruiting | |||
Property, Plant and Equipment [Line Items] | |||
Amortization | $ 1,200 | 1,100 | $ 700 |
Stock Compensation Plan | |||
Property, Plant and Equipment [Line Items] | |||
Capitalized software development costs | $ 3,900 | $ 3,000 |
Earnings Per Share (Details) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Earnings Per Share [Abstract] | |||
Basic weighted average shares outstanding | 28,976 | 28,634 | 28,293 |
Effect of dilutive equity instruments | 1,438 | 1,087 | 1,050 |
Dilutive weighted average shares outstanding | 30,414 | 29,721 | 29,343 |
Options to purchase shares of Common Stock and other stock-based awards outstanding which are not included in the calculation of diluted income per share because their impact is anti-dilutive | 24 | 19 | 40 |
Goodwill and Intangible Assets Goodwill and Intangible Assets (Goodwill) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Goodwill [Roll Forward] | ||
Goodwill, December 31, 2015 | $ 24,410 | $ 25,696 |
Translation Adjustments | 213 | (1,286) |
Goodwill, December 31, 2016 | 35,322 | 24,410 |
Vestrics Acquisition | ||
Goodwill [Roll Forward] | ||
Goodwill, Acquired During Period | 4,305 | 0 |
Kanjoya, Inc. | ||
Goodwill [Roll Forward] | ||
Goodwill, Acquired During Period | $ 6,394 | $ 0 |
Capital Lease Obligations (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Scheduled lease payments of capital lease obligations [Abstract] | ||
2017 | $ 5,346 | |
2018 | 3,223 | |
2019 | 883 | |
Future minimum payments due, total | 9,452 | |
Less amount representing interest | (411) | |
Lease obligations reflected as current ($5,056) and non-current ($3,985) | 9,041 | |
Lease obligations, current | 5,056 | $ 4,488 |
Lease obligations, non-current | $ 3,985 | $ 3,665 |
Minimum [Member] | ||
Capital Leased Assets [Line Items] | ||
Interest rate on capital leases | 4.25% | |
Maximum [Member] | ||
Capital Leased Assets [Line Items] | ||
Interest rate on capital leases | 4.50% |
Stock-Based Compensation and Equity 5 (Details) - $ / shares |
3 Months Ended | 12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Stock Options and Restricted Stock Awards, non-employee directors in exchange for services [Abstract] | |||||||||||||||
Exercise price of options granted (in dollars per share) | $ 0.00 | $ 0.00 | $ 0.00 | ||||||||||||
Number of options granted (in shares) | 0 | 0 | 0 | ||||||||||||
Market value of restricted stock awards granted (in dollars per share) | $ 210.59 | $ 210.29 | $ 191.67 | $ 156.12 | $ 203.94 | $ 183.19 | $ 163.99 | $ 160.92 | $ 152.59 | $ 132.23 | $ 118.03 | $ 164.87 | |||
Number of restricted stock awards granted (in shares) | 2,395 | 2,445 | 2,425 | 2,550 | 2,455 | 2,440 | 2,480 | 2,535 | 2,555 | 2,570 | 2,625 | 2,625 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Operating Leases [Abstract] | |||
Total rent expense under operating lease agreements | $ 16,700 | $ 13,100 | $ 8,500 |
Future minimum annual rental commitments [Abstract] | |||
2016 | 14,425 | ||
2017 | 11,599 | ||
2018 | 10,447 | ||
2019 | 9,843 | ||
2020 | 9,332 | ||
Thereafter | 4,723 | ||
Operating leases, future minimum payment due, Total | $ 60,369 |
Employee Benefit Plan (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract] | |||
Employer contributions to the defined contribution plan | $ 10.5 | $ 7.2 | $ 5.5 |
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