þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware
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77-0105228
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o (Do not check if a smaller reporting company)
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Smaller reporting company o
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PART I - FINANCIAL INFORMATION
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Page
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||
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ITEM 1.
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Financial Statements (unaudited)
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1
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2
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3
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4
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ITEM 2.
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14
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ITEM 3.
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25
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ITEM 4.
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26
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PART II - OTHER INFORMATION
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||
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ITEM 1.
|
27
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|
|
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ITEM 1A.
|
27
|
|
|
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ITEM 2.
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27
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|
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ITEM 3.
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Defaults upon Senior Securities | 27 | |
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ITEM 4.
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27
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|
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ITEM 5.
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Other Information | 27 | |
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ITEM 6.
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27
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28
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April 30,
|
January 31,
|
||||||
|
2013
|
2013
|
||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and equivalents
|
$
|
73,781
|
$
|
65,009
|
||||
Accounts receivable, net of allowances of $2,505 and $2,510 at April 30, 2013 and January 31, 2013, respectively
|
43,264
|
72,564
|
||||||
Deferred tax assets, net
|
4,415
|
4,414
|
||||||
Other current assets
|
15,184
|
13,806
|
||||||
Total current assets
|
136,644
|
155,793
|
||||||
Property and equipment, net
|
32,531
|
32,526
|
||||||
Capitalized software costs, net
|
3,929
|
4,180
|
||||||
Goodwill
|
11,372
|
11,412
|
||||||
Deferred tax assets, net
|
16,937
|
16,431
|
||||||
Other assets, net
|
5,224
|
5,606
|
||||||
Total assets
|
$
|
206,637
|
$
|
225,948
|
||||
|
||||||||
Liabilities and Stockholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Current portion of long-term debt
|
$
|
376
|
$
|
372
|
||||
Accounts payable
|
8,089
|
12,537
|
||||||
Deferred revenue
|
92,653
|
101,193
|
||||||
Other current liabilities
|
26,688
|
31,415
|
||||||
Total current liabilities
|
127,806
|
145,517
|
||||||
Long-term debt
|
15,376
|
15,474
|
||||||
Other liabilities
|
6,967
|
6,759
|
||||||
Commitments and contingencies
|
||||||||
Stockholders’ equity:
|
||||||||
Preferred stock, $0.001 par value. Authorized 5,000,000 shares; none issued or outstanding
|
—
|
—
|
||||||
Common stock:
|
||||||||
Class A, $0.001 par value. Authorized 71,000,000 shares; issued 14,148,905 shares and 14,148,217 shares at April 30, 2013 and January 31, 2013, respectively
|
14
|
14
|
||||||
Class B, $0.001 par value. Authorized 4,000,000 shares; issued 3,536,952 shares and 3,536,822 shares at April 30, 2013 and January 31, 2013, respectively
|
4
|
4
|
||||||
Additional paid-in capital
|
150,460
|
149,777
|
||||||
Treasury stock, at cost (2,123,263 shares and 2,097,497 shares at April 30, 2013 and January 31, 2013, respectively)
|
(31,349
|
) |
(31,093
|
)
|
||||
Accumulated deficit
|
(54,978
|
) |
(52,468
|
)
|
||||
Accumulated other comprehensive loss
|
(7,663
|
) |
(8,036
|
)
|
||||
Total stockholders’ equity
|
56,488
|
58,198
|
||||||
Total liabilities and stockholders’ equity
|
$
|
206,637
|
$
|
225,948
|
|
Three Months Ended
April 30,
|
|||||||
|
2013
|
2012
|
||||||
|
||||||||
Revenue:
|
||||||||
License fees
|
$
|
6,218
|
$
|
7,865
|
||||
Maintenance and other
|
35,201
|
34,520
|
||||||
Subscription fees
|
4,042
|
3,223
|
||||||
Professional services
|
16,466
|
18,100
|
||||||
Total revenue
|
61,927
|
63,708
|
||||||
Costs of revenue:
|
||||||||
License fees
|
955
|
881
|
||||||
Maintenance, subscription and other
|
11,062
|
10,000
|
||||||
Professional services
|
16,608
|
15,738
|
||||||
Total cost of revenue
|
28,625
|
26,619
|
||||||
Gross profit
|
33,302
|
37,089
|
||||||
|
||||||||
Operating expenses:
|
||||||||
Sales and marketing
|
16,056
|
15,496
|
||||||
Research and development
|
10,845
|
9,534
|
||||||
General and administrative
|
7,946
|
8,105
|
||||||
Amortization of intangibles from acquisitions
|
176
|
—
|
||||||
Total operating expenses
|
35,023
|
33,135
|
||||||
|
||||||||
Operating (loss) income
|
(1,721
|
)
|
3,954
|
|||||
|
||||||||
Other (income) expense:
|
||||||||
Interest income
|
(97
|
)
|
(163
|
)
|
||||
Interest expense
|
203
|
286
|
||||||
Other (income) expense, net
|
(273
|
)
|
446
|
|||||
Total other (income) expense, net
|
(167
|
)
|
569
|
|||||
|
||||||||
(Loss) income before income taxes
|
(1,554
|
)
|
3,385
|
|||||
Income tax (benefit) expense
|
(291
|
)
|
1,541
|
|||||
|
||||||||
Net (loss) income
|
$
|
(1,263
|
)
|
$
|
1,844
|
|||
|
||||||||
Basic net (loss) income per share
|
||||||||
Class A
|
$
|
(0.08
|
)
|
$
|
0.12
|
|||
Class B
|
$
|
(0.07
|
)
|
$
|
0.10
|
|||
Diluted net (loss) income per share
|
||||||||
Class A
|
$
|
(0.08
|
)
|
$
|
0.12
|
|||
Class B
|
$
|
(0.07
|
)
|
$
|
0.10
|
|||
|
||||||||
Comprehensive (loss) income:
|
||||||||
Foreign currency translation adjustment, net of tax
|
373
|
145
|
||||||
Total comprehensive (loss) income
|
$
|
(890
|
)
|
$
|
1,989
|
|
Three Months Ended
|
|||||||
|
April 30,
|
|||||||
|
2013
|
2012
|
||||||
|
||||||||
Cash flows from operating activities:
|
||||||||
Net (loss) income
|
$
|
(1,263
|
)
|
$
|
1,844
|
|||
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
1,473
|
1,115
|
||||||
Provision for (recovery of) doubtful accounts and sales adjustments
|
181
|
(36
|
)
|
|||||
Stock compensation expense
|
944
|
1,039
|
||||||
Change in fair value of a derivative instrument
|
287
|
—
|
||||||
Excess tax benefits from share-based payment arrangements
|
(51
|
)
|
(51
|
)
|
||||
Other, net
|
12
|
—
|
||||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
28,373
|
19,644
|
||||||
Other assets
|
(1,490
|
)
|
(1,845
|
)
|
||||
Accounts payable
|
(4,313
|
)
|
(3,152
|
)
|
||||
Deferred revenue
|
(6,937
|
)
|
(8,475
|
)
|
||||
Other liabilities
|
(4,943
|
)
|
(4,996
|
)
|
||||
Net cash provided by operating activities
|
12,273
|
5,087
|
||||||
Cash flows from investing activities:
|
||||||||
Purchase of property and equipment
|
(1,130
|
)
|
(685
|
)
|
||||
Capitalized software costs
|
(54
|
)
|
(105
|
)
|
||||
Other
|
4
|
1
|
||||||
Net cash used in investing activities
|
(1,180
|
)
|
(789
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Repayments of debt
|
(94
|
)
|
(80
|
)
|
||||
Tax payments, net of proceeds, related to stock awards
|
(133
|
)
|
(338
|
)
|
||||
Excess tax benefits from share-based payment arrangements
|
51
|
51
|
||||||
Dividends paid
|
(947
|
)
|
(948
|
)
|
||||
Repurchase of common stock
|
(686
|
)
|
(1,791
|
)
|
||||
Net cash used in financing activities
|
(1,809
|
)
|
(3,106
|
)
|
||||
|
||||||||
Effect of exchange rates on cash and equivalents
|
(512
|
)
|
234
|
|||||
|
||||||||
Net increase in cash and equivalents
|
8,772
|
1,426
|
||||||
|
||||||||
Cash and equivalents at beginning of period
|
65,009
|
76,927
|
||||||
|
||||||||
Cash and equivalents at end of period
|
$
|
73,781
|
$
|
78,353
|
||||
|
||||||||
Supplemental disclosure of non-cash activities:
|
||||||||
Obligations associated with dividend declaration
|
$
|
1,083
|
$
|
1,100
|
||||
Dividends paid in stock
|
145
|
128
|
|
Three Months Ended
|
|||||||
|
April 30,
|
|||||||
|
2013
|
2012
|
||||||
|
(in thousands except per share data)
|
|||||||
Net (loss) income
|
$
|
(1,263
|
)
|
$
|
1,844
|
|||
Less: Dividends declared
|
(1,088
|
)
|
(1,078
|
)
|
||||
Undistributed net (loss) income
|
$
|
(2,351
|
)
|
$
|
766
|
|||
|
||||||||
Net (loss) income per share – Class A Common Stock
|
||||||||
Dividends declared
|
$
|
899
|
$
|
890
|
||||
Allocation of undistributed net (loss) income
|
(1,942
|
)
|
634
|
|||||
Net (loss) income attributable to Class A common stock
|
$
|
(1,043
|
)
|
$
|
1,524
|
|||
|
||||||||
Weighted average shares of Class A common stock outstanding—basic
|
12,429
|
12,693
|
||||||
Weighted average potential shares of Class A common stock
|
—
|
519
|
||||||
Weighted average shares of Class A common stock and potential common shares outstanding—diluted
|
12,429
|
13,212
|
||||||
|
||||||||
Basic net (loss) income per Class A common share
|
$
|
(0.08
|
)
|
$
|
0.12
|
|||
Diluted net (loss) income per Class A common share
|
$
|
(0.08
|
)
|
$
|
0.12
|
|||
|
||||||||
Net (loss) income per share – Class B Common Stock
|
||||||||
Dividends declared
|
$
|
189
|
$
|
188
|
||||
Allocation of undistributed net (loss) income
|
(409
|
)
|
132
|
|||||
Net (loss) income attributable to Class B common stock
|
$
|
(220
|
)
|
$
|
320
|
|||
|
||||||||
Weighted average shares of Class B common stock outstanding—basic
|
3,145
|
3,168
|
||||||
Weighted average potential shares of Class B common stock
|
—
|
119
|
||||||
Weighted average shares of Class B common stock and potential common shares outstanding—diluted
|
3,145
|
3,287
|
||||||
|
||||||||
Basic net (loss) income per Class B common share
|
$
|
(0.07
|
)
|
$
|
0.10
|
|||
Diluted net (loss) income per Class B common share
|
$
|
(0.07
|
)
|
$
|
0.10
|
|
Three Months Ended
|
|||||||
|
April 30,
|
|||||||
|
2013
|
2012
|
||||||
|
(in thousands)
|
|||||||
Class A
|
2,804
|
2,086
|
||||||
Class B
|
456
|
377
|
|
Fair value measurement at reporting date using
|
|||||||||||
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
|||||||||
|
(in thousands)
|
|||||||||||
Money market mutual funds as of April 30,2013
|
$
|
50,112
|
$
|
—
|
$
|
—
|
||||||
Money market mutual funds as of January 31, 2013
|
$
|
44,871
|
$
|
—
|
$
|
—
|
||||||
Liability related to interest rate swap as of April 30, 2013
|
$
|
—
|
$
|
(671
|
)
|
$
|
—
|
|||||
Liability related to interest rate swap as of January 31, 2013
|
$
|
—
|
$
|
(384
|
)
|
$
|
—
|
|
Asset/(Liability) Derivative
|
||||||||
|
|
Fair Value
|
|||||||
Balance Sheet
Location
|
April 30,
2013
|
January 31,
2013
|
|||||||
Derivative instrument: | |||||||||
Interest rate swap
|
Other liabilities
|
$
|
(671
|
)
|
$
|
(384
|
)
|
||
Total
|
|
$
|
(671
|
)
|
$
|
(384
|
)
|
Tangible assets, including cash acquired of $0.4 million
|
$
|
1,423
|
||
Goodwill
|
2,456
|
|||
Other intangible assets
|
3,450
|
|||
Total assets acquired
|
7,329
|
|||
Liabilities assumed
|
(1,233
|
)
|
||
Deferred tax liability
|
(1,209
|
)
|
||
Net assets acquired
|
$
|
4,887
|
|
Estimated
useful life
(years)
|
Fair
value
|
Estimated
annual
amortization
|
Statement of operations
classification
|
|||||||||
Software technology
|
2 - 5
|
$
|
1,750
|
$
|
320-395
|
Cost of license fees
|
|||||||
Customer relationships
|
5
|
1,500
|
300
|
Amortization of intangibles from acquisitions
|
|||||||||
Trade name
|
5
|
200
|
40
|
Amortization of intangibles from acquisitions
|
|||||||||
|
|
||||||||||||
|
$
|
3,450
|
|
Tangible assets, including cash acquired of $2.8 million
|
$
|
4,250
|
||
Goodwill
|
2,231
|
|||
Other intangible assets
|
3,500
|
|||
Total assets acquired
|
9,981
|
|||
Liabilities assumed
|
(2,032
|
)
|
||
Deferred tax liability
|
(450
|
)
|
||
Net assets acquired
|
$
|
7,499
|
|
Estimated
useful life
(years)
|
Fair
value
|
Estimated
annual
amortization
|
Statement of operations
classification
|
|||||||||
Software technology
|
5
|
$
|
1,800
|
$
|
360
|
Cost of license fees
|
|||||||
Customer relationships
|
5
|
1,400
|
280
|
Amortization of intangibles from acquisitions
|
|||||||||
Trade name
|
5
|
300
|
60
|
Amortization of intangibles from acquisitions
|
|||||||||
|
|
||||||||||||
|
$
|
3,500
|
|
|
April 30,
|
January 31,
|
||||||
|
2013
|
2013
|
||||||
|
(in thousands)
|
|||||||
Capitalized software costs:
|
||||||||
Acquired software technology (1)
|
$
|
3,742
|
$
|
3,741
|
||||
Capitalized software development costs (1)
|
1,246
|
1,253
|
||||||
|
4,988
|
4,994
|
||||||
Less accumulated amortization
|
(1,059
|
)
|
(814
|
)
|
||||
Capitalized software costs, net
|
$
|
3,929
|
$
|
4,180
|
(1) | Acquired software technology and capitalized software development costs include the impact of foreign currency translation. |
Fiscal Years
|
(in thousands)
|
|||
2014 remaining
|
$
|
864
|
||
2015
|
1,033
|
|||
2016
|
886
|
|||
2017
|
720
|
|||
2018
|
426
|
|||
|
$
|
3,929
|
|
Gross Carrying
|
Accumulated
|
||||||||||
|
Amount
|
Impairment
|
Goodwill, Net
|
|||||||||
|
(in thousands)
|
|||||||||||
Balance at January 31, 2013
|
$
|
27,020
|
$
|
(15,608
|
)
|
$
|
11,412
|
|||||
Impact of foreign currency translation
|
(40
|
)
|
−
|
(40
|
)
|
|||||||
Balance at April 30, 2013
|
$
|
26,980
|
$
|
(15,608
|
)
|
$
|
11,372
|
|
April 30,
|
January 31,
|
||||||
|
2013
|
2013
|
||||||
|
(in thousands)
|
|||||||
Amortizable intangible assets
|
||||||||
Customer relationships (1)
|
$
|
2,996
|
$
|
3,049
|
||||
Trade name
|
532
|
532
|
||||||
|
3,528
|
3,581
|
||||||
Less: accumulated amortization
|
(449
|
)
|
(279
|
)
|
||||
Net amortizable intangible assets
|
$
|
3,079
|
$
|
3,302
|
(1) | Customer relationships include the impact of foreign currency translation. |
Fiscal Years
|
(in thousands)
|
|||
2014 remaining
|
$
|
529
|
||
2015
|
706
|
|||
2016
|
706
|
|||
2017
|
706
|
|||
2018
|
432
|
|||
|
$
|
3,079
|
|
April 30,
|
January 31,
|
||||||
|
2013
|
2013
|
||||||
|
(in thousands)
|
|||||||
Note payable
|
$
|
15,752
|
$
|
15,846
|
||||
Less current maturities
|
(376
|
)
|
(372
|
)
|
||||
Long-term debt
|
$
|
15,376
|
$
|
15,474
|
Declaration
Date
|
Record Date
|
Payable
|
Dividend
Class A
|
Dividend
Class B
|
Amount Paid
in Cash
|
Class A
Shares Issued
|
Fair Value of
Shares Issued
|
|||||||||||||||
4/24/2013
|
5/8/2013
|
5/15/2013
|
$
|
0.072
|
$
|
0.06
|
$
|
1,083,000
|
—
|
—
|
||||||||||||
12/11/2012
|
12/26/2012
|
2/08/2013
|
$
|
0.072
|
$
|
0.06
|
947,000
|
10,000
|
145,000
|
|
Three Months Ended
April 30,
|
|||||||
|
2013
|
2012
|
||||||
|
(in thousands)
|
|||||||
Cost of maintenance, subscription and other revenue
|
$
|
38
|
$
|
48
|
||||
Cost of professional services
|
98
|
111
|
||||||
Sales and marketing
|
167
|
188
|
||||||
Research and development
|
139
|
153
|
||||||
General and administrative
|
502
|
539
|
||||||
Total stock-based compensation expense
|
$
|
944
|
$
|
1,039
|
|
Stock Options/
SARs
(in thousands)
|
Weighted
Average
Exercise
Price per
Share
|
Weighted
Average
Remaining
Contractual
Term (years)
|
Aggregate
Intrinsic Value
(in thousands)
|
||||||||||||
Outstanding at January 31, 2013
|
2,920
|
$
|
11.11
|
|||||||||||||
Exercised
|
(41
|
)
|
8.63
|
|||||||||||||
Expired
|
(15
|
)
|
14.59
|
|||||||||||||
Forfeited
|
(9
|
)
|
10.18
|
|||||||||||||
Outstanding at April 30, 2013
|
2,855
|
$
|
11.13
|
4.5
|
$
|
4,550
|
||||||||||
Vested and expected to vest at April 30, 2013 (1)
|
2,817
|
$
|
11.13
|
4.5
|
$
|
4,505
|
||||||||||
Vested and exercisable at April 30, 2013
|
1,479
|
$
|
11.29
|
3.0
|
$
|
2,671
|
(1) | The expected-to-vest SARs are the result of applying the pre-vesting forfeiture rate assumptions to total outstanding SARs. |
|
RSUs
|
Weighted
Average
Grant Date
Fair Value
|
||||||
|
(in thousands)
|
|||||||
Restricted stock at January 31, 2013
|
385
|
$
|
10.49
|
|||||
Vested (1)
|
(14
|
)
|
7.48
|
|||||
Forfeited
|
(4
|
)
|
11.11
|
|||||
Restricted stock at April 30, 2013
|
367
|
$
|
10.60
|
(1) | The number of RSUs vested includes shares withheld on behalf of employees to satisfy statutory tax withholding requirements. |
|
Three Months Ended
April 30,
|
|||||||
|
2013
|
2012
|
||||||
Revenue:
|
(in thousands)
|
|||||||
North America (1)
|
$
|
26,566
|
$
|
28,518
|
||||
EMEA
|
19,807
|
18,549
|
||||||
Asia Pacific
|
11,654
|
11,759
|
||||||
Latin America
|
3,900
|
4,882
|
||||||
|
$
|
61,927
|
$
|
63,708
|
(1) | Sales into Canada accounted for 3% of North America total revenue in the three months ended April 30, 2013 and 2012. |
· | Licenses of our integrated suite of software applications; |
· | Maintenance and support, including technical support, training materials, product enhancements and upgrades; |
· | Subscription of our Enterprise Applications through our On Demand offering in a Software as a Service model as well as other hosted Internet applications; |
· | Professional services, including implementations, technical and application consulting, training, migrations and upgrades. |
|
Increase (Decrease)
|
|||||||||||||||
|
Three Months
Ended
|
Compared to Prior
Period
|
Three Months
Ended
|
|||||||||||||
|
April 30, 2013
|
$
|
%
|
April 30, 2012
|
||||||||||||
(in thousands)
|
||||||||||||||||
Revenue
|
||||||||||||||||
License fees
|
$
|
6,218
|
$
|
(1,647
|
)
|
-21
|
%
|
$
|
7,865
|
|||||||
Percentage of total revenue
|
10
|
%
|
12
|
%
|
||||||||||||
Maintenance and other
|
35,201
|
681
|
2
|
%
|
34,520
|
|||||||||||
Percentage of total revenue
|
57
|
%
|
54
|
%
|
||||||||||||
Subscription fees
|
4,042
|
819
|
25
|
%
|
3,223
|
|||||||||||
Percentage of total revenue
|
6
|
%
|
5
|
%
|
||||||||||||
Professional services
|
16,466
|
(1,634
|
)
|
-9
|
%
|
18,100
|
||||||||||
Percentage of total revenue
|
27
|
%
|
29
|
%
|
||||||||||||
Total revenue
|
$
|
61,927
|
$
|
(1,781
|
)
|
-3
|
%
|
$
|
63,708
|
|
Increase
|
|||||||||||||||
|
Three Months
Ended
|
Compared
to Prior Period
|
Three Months
Ended
|
|||||||||||||
|
April 30, 2013
|
$
|
%
|
April 30, 2012
|
||||||||||||
(in thousands)
|
||||||||||||||||
Cost of revenue
|
||||||||||||||||
Cost of license fees
|
$
|
955
|
$
|
74
|
8
|
%
|
$
|
881
|
||||||||
Cost of maintenance, subscription and other
|
11,062
|
1,062
|
11
|
%
|
10,000
|
|||||||||||
Cost of professional services
|
16,608
|
870
|
6
|
%
|
15,738
|
|||||||||||
Total cost revenue
|
$
|
28,625
|
$
|
2,006
|
8
|
%
|
$
|
26,619
|
||||||||
Percentage of revenue
|
46
|
%
|
42
|
%
|
Increase
|
||||||||||||||||
Three Months
Ended
|
Compared
to Prior Period |
Three Months
Ended |
||||||||||||||
April 30, 2013
|
$
|
%
|
April 30, 2012
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Sales and marketing
|
$
|
16,056
|
$
|
560
|
4
|
%
|
$
|
15,496
|
||||||||
Percentage of revenue
|
26
|
%
|
24
|
%
|
|
Increase
|
|||||||||||||||
|
Three Months
Ended
|
Compared
to Prior Period
|
Three Months
Ended
|
|||||||||||||
|
April 30, 2013
|
$
|
|
%
|
April 30, 2012
|
|||||||||||
(in thousands)
|
||||||||||||||||
Research and development
|
$
|
10,845
|
$
|
1,311
|
14
|
%
|
$
|
9,534
|
||||||||
Percentage of revenue
|
18
|
%
|
15
|
%
|
|
Increase (Decrease)
|
|||||||||||||||
|
Three Months
Ended
|
Compared
to Prior Period
|
Three Months
Ended
|
|||||||||||||
|
April 30, 2013
|
$
|
|
%
|
April 30, 2012
|
|||||||||||
(in thousands)
|
||||||||||||||||
General and administrative
|
$
|
7,946
|
$
|
(159
|
)
|
-2
|
%
|
$
|
8,105
|
|||||||
Percentage of revenue
|
13
|
%
|
13
|
%
|
|
Increase (Decrease)
|
|||||||||||||||
|
Three Months
Ended
|
Compared
to Prior Period
|
Three Months
Ended
|
|||||||||||||
|
April 30, 2013
|
$
|
%
|
April 30, 2012
|
||||||||||||
(in thousands)
|
||||||||||||||||
Other (income) expense
|
||||||||||||||||
Interest income
|
$
|
(97
|
)
|
$
|
66
|
40
|
%
|
$
|
(163
|
)
|
||||||
Interest expense
|
203
|
(83
|
)
|
-29
|
%
|
286
|
||||||||||
Other (income) expense, net
|
(273
|
)
|
(719
|
)
|
-161
|
%
|
446
|
|||||||||
Total other (income) expense, net
|
$
|
(167
|
)
|
$
|
(736
|
)
|
-129
|
%
|
$
|
569
|
||||||
Percentage of revenue
|
0
|
%
|
1
|
%
|
|
Increase (Decrease)
|
|||||||||||||||
|
Three Months
Ended
|
Compared
to Prior Period
|
Three Months
Ended
|
|||||||||||||
|
April 30, 2013
|
$
|
%
|
April 30, 2012
|
||||||||||||
(in thousands)
|
||||||||||||||||
Income tax (benefit) expense
|
$
|
(291
|
)
|
$
|
(1,832
|
)
|
-119
|
%
|
$
|
1,541
|
||||||
Percentage of revenue
|
1
|
%
|
2
|
%
|
||||||||||||
Effective tax rate
|
19
|
%
|
46
|
%
|
(in thousands)
|
Three Months
Ended
April 30, 2013
|
Three Months
Ended
April 30, 2012
|
||||||
Net cash provided by operating activities
|
$
|
12,273
|
$
|
5,087
|
||||
Net cash used in investing activities
|
(1,180
|
)
|
(789
|
)
|
||||
Net cash used in financing activities
|
(1,809
|
)
|
(3,106
|
)
|
||||
Effect of foreign exchange rates on cash and equivalents
|
(512
|
)
|
234
|
|||||
Net increase in cash and equivalents
|
$
|
8,772
|
$
|
1,426
|
Period
|
Shares
Repurchased
Class A
|
Average
Price
per Share
Class A
|
Shares
Repurchased
Class B
|
Average
Price
per Share
Class B
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plan
|
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plan (1)
|
||||||||||||||||||
|
||||||||||||||||||||||||
February 1 through February 28, 2013
|
||||||||||||||||||||||||
Shares repurchased
|
20,347
|
$
|
13.58
|
2,496
|
$
|
12.67
|
22,843
|
29,323
|
||||||||||||||||
March 1 through March 31, 2013
|
||||||||||||||||||||||||
Shares repurchased
|
24,173
|
$
|
13.14
|
5,150
|
$
|
11.71
|
29,323
|
-
|
||||||||||||||||
April 1 through April 30, 2013
|
||||||||||||||||||||||||
Shares repurchased
|
-
|
$
|
-
|
-
|
$
|
-
|
-
|
-
|
||||||||||||||||
Total
|
44,520
|
7,646
|
52,166
|
-
|
(1) | On September 22, 2011, the Company announced a share repurchase plan. A total of one million shares were repurchased under the plan. The plan ended in March, 2013. |
Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
QAD Inc.
(Registrant)
|
||
|
|
|
Date: June 7, 2013
|
By:
|
/s/ DANIEL LENDER
|
|
|
Daniel Lender
|
|
|
Executive Vice President, Chief Financial Officer
|
|
|
(on behalf of the Registrant)
|
|
|
|
|
By:
|
/s/ KARA BELLAMY
|
|
|
Kara Bellamy
|
|
|
Senior Vice President, Corporate Controller
|
|
|
(Chief Accounting Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of QAD 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 control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer(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 Registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
/s/ KARL F. LOPKER
|
|
Karl F. Lopker
|
|
Chief Executive Officer
|
|
QAD Inc.
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of QAD 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 control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer(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 Registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
/s/ DANIEL LENDER
|
|
Daniel Lender
|
|
Chief Financial Officer
|
|
QAD Inc.
|
|
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
/s/ KARL F. LOPKER
|
|
Karl F. Lopker
|
|
Chief Executive Officer
|
|
QAD Inc.
|
|
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
/s/ DANIEL LENDER
|
|
Daniel Lender
|
|
Chief Financial Officer
|
|
QAD Inc.
|
|
BUSINESS SEGMENT INFORMATION
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS SEGMENT INFORMATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS SEGMENT INFORMATION | 12. BUSINESS SEGMENT INFORMATION The Company markets its products and services worldwide, primarily to companies in the manufacturing industry, including automotive, consumer products, food and beverage, high technology, industrial products and life sciences industries. The Company sells and licenses its products through its direct sales force in four geographic regions: North America, EMEA, Asia Pacific and Latin America and through distributors where third parties can extend sales reach more effectively or efficiently. The North America region includes the United States and Canada. The EMEA region includes Europe, the Middle East and Africa. The Asia Pacific region includes Asia and Australia. The Latin America region includes South America, Central America and Mexico. The Company's Chief Operating Decision Maker, the Chief Executive Officer, reviews the consolidated results within one operating segment. License and subscription revenues are assigned to the geographic regions based on both the proportion of users in each region and sales effort. Maintenance revenue is allocated to the region where the end user customer is located. Services revenue is assigned based on the region where the services are performed.
_____________________________________ (1) Sales into Canada accounted for 3% of North America total revenue in the three months ended April 30, 2013 and 2012. |
CAPITALIZED SOFTWARE COSTS
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CAPITALIZED SOFTWARE COSTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CAPITALIZED SOFTWARE COSTS | 5. CAPITALIZED SOFTWARE COSTS Capitalized software costs and accumulated amortization at April 30, 2013 and January 31, 2013 were as follows:
__________________________
Acquired software technology costs relate to technology purchased as a result of the Company's fiscal 2013 acquisitions of DynaSys and CEBOS, as described in Note 4 "Business Combinations" within these Notes to Condensed Consolidated Financial Statements. In addition to the acquired software technology, the Company has capitalized costs related to translations and localizations of QAD Enterprise Applications. Amortization of capitalized software costs was $0.3 million and $0.1 million for the three months ended April 30, 2013 and 2012, respectively. Amortization of capitalized software costs is included in "Cost of license fees" in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The following table summarizes the estimated amortization expense relating to the Company's capitalized software costs as of April 30, 2013:
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STOCKHOLDERS' EQUITY (Tables)
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Apr. 30, 2013
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STOCKHOLDERS' EQUITY [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared and/or paid | The following table sets forth the dividends declared and/or paid by the Company during fiscal 2014:
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COMPUTATION OF NET (LOSS) INCOME PER SHARE (Tables)
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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COMPUTATION OF NET (LOSS) INCOME PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of basic and diluted net (loss) income per share | The following table sets forth the computation of basic and diluted net (loss) income per share:
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Number of potential common shares not included in the calculation of diluted earnings per share | The following table sets forth the number of potential common shares not included in the calculation of diluted earnings per share because their effects were anti-dilutive:
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BUSINESS SEGMENT INFORMATION (Tables)
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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BUSINESS SEGMENT INFORMATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
License and subscription revenues assigned to geographic regions | License and subscription revenues are assigned to the geographic regions based on both the proportion of users in each region and sales effort. Maintenance revenue is allocated to the region where the end user customer is located. Services revenue is assigned based on the region where the services are performed.
_____________________________________ (1) Sales into Canada accounted for 3% of North America total revenue in the three months ended April 30, 2013 and 2012. |
INCOME TAXES (Details) (USD $)
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3 Months Ended | 12 Months Ended | |
---|---|---|---|
Apr. 30, 2013
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Apr. 30, 2012
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Jan. 31, 2013
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Income Tax Contingency [Line Items] | |||
Income tax (benefit) expense | $ (291,000) | $ 1,541,000 | $ 1,500,000 |
Effective income tax rate (in hundredths) | 19.00% | 46.00% | |
Estimated annual effective tax rate (in hundredths) | 30.00% | 30.00% | |
Unrecognized tax benefits that will impact effective tax rate | 2,700,000 | ||
Unrecognized tax benefits recognized in next twelve months | 200,000 | ||
Unrecognized tax benefits, income tax penalties and interest accrued | $ 300,000 | ||
California [Member]
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Income Tax Contingency [Line Items] | |||
Open tax years | 2004 and 2005 | ||
India [Member]
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Income Tax Contingency [Line Items] | |||
Open tax years | Years ended March 31, 1998, 1999, 2008, 2009, 2010 and 2011 | ||
South Africa and Thailand [Member]
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Income Tax Contingency [Line Items] | |||
Open tax years | 2012 |
CAPITALIZED SOFTWARE COSTS (Details) (USD $)
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3 Months Ended | ||||||
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Apr. 30, 2013
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Apr. 30, 2012
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Jan. 31, 2013
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CAPITALIZED SOFTWARE COSTS [Abstract] | |||||||
Acquired software technology | $ 3,742,000 | [1] | $ 3,741,000 | [1] | |||
Capitalized software development costs | 1,246,000 | [1] | 1,253,000 | [1] | |||
Capitalized software, gross | 4,988,000 | 4,994,000 | |||||
Less accumulated amortization | (1,059,000) | (814,000) | |||||
Capitalized software costs, net | 3,929,000 | 4,180,000 | |||||
Capitalized computer software amortization | 300,000 | 100,000 | |||||
Capitalized Software [Member]
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Estimated Amortization Expense [Abstract] | |||||||
2014 remaining | 864,000 | ||||||
2015 | 1,033,000 | ||||||
2016 | 886,000 | ||||||
2017 | 720,000 | ||||||
2018 | 426,000 | ||||||
Amortization expense, total | $ 3,929,000 | ||||||
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STOCK-BASED COMPENSATION (Tables)
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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STOCK-BASED COMPENSATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allocation of stock-based compensation expense | The following table sets forth reported stock-based compensation expense for the three months ended April 30, 2013 and 2012:
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Activity for outstanding stock options and SARs | The following table summarizes the activity for outstanding stock options and SARs for the three months ended April 30, 2013:
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Summary of activity for RSUs | The following table summarizes the activity for RSUs for the three months ended April 30, 2013:
_____________________________________
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BASIS OF PRESENTATION
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3 Months Ended |
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Apr. 30, 2013
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BASIS OF PRESENTATION [Abstract] | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements fairly present the financial information contained therein. These statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In management's opinion, all necessary adjustments, consisting of normal, recurring and non-recurring adjustments, have been included in the accompanying Condensed Consolidated Financial Statements to present fairly the financial position and operating results of QAD Inc. ("QAD" or the "Company"). The Condensed Consolidated Financial Statements do not include all disclosures required by accounting principles generally accepted in the United States of America for annual financial statements and should be read in conjunction with the audited financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended January 31, 2013. The Condensed Consolidated Financial Statements include the results of the Company and its wholly owned subsidiaries. The results of operations for the three months ended April 30, 2013 are not necessarily indicative of the results to be expected for the year ending January 31, 2014. |
FAIR VALUE MEASUREMENTS
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Apr. 30, 2013
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FAIR VALUE MEASUREMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | 3. FAIR VALUE MEASUREMENTS When determining fair value the Company uses a three-tier value hierarchy which prioritizes the inputs used in measuring fair value. Whenever possible, the Company uses observable market data. The Company relies on unobservable inputs only when observable market data is not available. Classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The following table sets forth the financial assets, measured at fair value, as of April 30, 2013 and January 31, 2013:
Money market mutual funds are classified as part of "Cash and equivalents" in the accompanying Condensed Consolidated Balance Sheets. In addition, the amount of cash and equivalents, including cash deposited with commercial banks, was $23.7 million and $20.1 million as of April 30, 2013 and January 31, 2013, respectively. The Company's line of credit and notes payable both bear a variable market interest rate commensurate with the Company's credit standing. Therefore, the carrying amounts outstanding under the line of credit and note payable reasonably approximate fair value based on Level 2 inputs. There have been no transfers between fair value measurements levels during the three months ended April 30, 2013. Derivative Instruments The Company entered into an interest rate swap in May 2012 to mitigate the exposure to the variability of one month LIBOR for its floating rate debt described in Note 7 "Debt" within these Notes to Condensed Consolidated Financial Statements. The fair value of the interest rate swap is reflected as an asset or liability in the Condensed Consolidated Balance Sheets and the change in fair value is reported in "Other (income) expense" in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The fair value of the interest rate swap is estimated as the net present value of projected cash flows based upon forward interest rates at the balance sheet date. The fair values of the derivative instrument at April 30, 2013 and January 31, 2013 were as follows (in thousands):
The change in fair value of the interest rate swap recognized in the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) for the three months ended April 30, 2013 was $287,000. |
GOODWILL AND INTANGIBLE ASSETS
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Apr. 30, 2013
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GOODWILL AND INTANGIBLE ASSETS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | 6. GOODWILL AND INTANGIBLE ASSETS Goodwill The changes in the carrying amount of goodwill for the three months ended April 30, 2013, were as follows:
The Company performed its annual goodwill impairment review during the fourth quarter of fiscal 2013. The analysis compared the Company's market capitalization to its net assets as of the test date, November 30, 2012. As the market capitalization significantly exceeded the Company's net assets, there was no indication of goodwill impairment for fiscal 2013. The Company monitors the indicators for goodwill impairment testing between annual tests. No adverse events occurred during the three months ended April 30, 2013 that would cause the Company to test goodwill for impairment. Intangible Assets
______________________
The Company's intangible assets are related to the DynaSys and CEBOS acquisitions completed in fiscal 2013. Intangible assets are included in "Other assets, net" in the accompanying Condensed Consolidated Balance Sheets. As of April 30, 2013, all of the Company's intangible assets were determined to have finite useful lives, and therefore were subject to amortization. Amortization of intangible assets was $176,000 and zero for the first quarters of fiscal 2014 and 2013 respectively. The following table summarizes the estimated amortization expense relating to the Company's intangible assets as of April 30, 2013:
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BUSINESS COMBINATIONS
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Apr. 30, 2013
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BUSINESS COMBINATIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS COMBINATIONS | 4. BUSINESS COMBINATIONS CEBOS On December 28, 2012, the Company acquired all of the outstanding stock of CEBOS, Ltd. ("CEBOS"), a provider of quality management and regulatory compliance software solutions, in a nontaxable transaction. CEBOS was founded in 1998 and is headquartered in Michigan, USA. The Company completed the acquisition for the purpose of expanding its product offerings and driving revenue growth. The purchase price consisted of $3.5 million in cash and two future payments of $750,000 each, due April 2014 and April 2015, respectively. Each future payment consists of $250,000 guaranteed and $500,000 contingent upon achievement of certain development and sales-based milestones. The contingent liability was estimated by assessing the probability of achieving each milestone and discounting the amount of each potential payment based on expected timing of the payment. The fair value of the liability-classified contingent consideration is remeasured at each reporting period with any changes in the fair value recorded as income or expense. The potential undiscounted amount of all future cash payments that the Company could be required to make for contingent consideration is between $0.5 million and $1.5 million as of April 30, 2013. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):
The Company believes the amount of goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business and the expected synergistic benefits of being able to leverage CEBOS's software with the Company's existing software to provide an integrated suite to the customer bases of both the Company and CEBOS. The acquired goodwill and intangible assets are not deductible for tax purposes. Identified intangible assets will be amortized to cost of license fees and operating expense based upon the nature of the asset ratably over the estimated useful life, as detailed in the table below (in thousands, except year amounts):
The Company has evaluated and continues to reevaluate pre-acquisition contingencies relating to CEBOS that existed as of the acquisition date. The Company has preliminarily determined that certain of these pre-acquisition contingencies are probable in nature and estimable as of the acquisition date and, accordingly, has recorded its best estimates for these contingencies as a part of the purchase price allocation. Although the Company believes the assumptions and estimates made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of previously acquired companies and are inherently uncertain. The purchase price allocation process requires the Company to use significant estimates and assumptions as of the business combination date, including the estimated fair value of accounts receivable acquired. The Company continues to gather information and evaluate pre-acquisition contingencies that it has assumed. If the Company makes changes to the amounts recorded or identifies additional pre-acquisition contingencies during the remainder of the measurement period, such amounts recorded will be included in the purchase price allocation. DynaSys On June 6, 2012, the Company acquired all of the outstanding stock of DynaSys S.A. ("DynaSys"), a provider of demand and supply chain planning software solutions, in a nontaxable transaction. DynaSys was founded in 1985 and is headquartered in Strasbourg, France. The total purchase price of $7.5 million was paid in cash on June 6, 2012. The Company completed the acquisition for the purpose of expanding its product offerings and driving revenue growth. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):
The Company believes the amount of goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business and the expected synergistic benefits of being able to leverage DynaSys' software with the Company's existing software to provide an integrated suite to the customer bases of both the Company and DynaSys. The acquired goodwill and intangible assets are not deductible for tax purposes. Identified intangible assets will be amortized to cost of license fees and operating expense based upon the nature of the asset ratably over the estimated useful life, as detailed in the table below (in thousands, except year amounts):
The results of operations of DynaSys and CEBOS are included in the Condensed Consolidated Financial Statements from the date of acquisition. The acquisitions were not deemed material, thus pro forma supplemental information has not been provided. |
FAIR VALUE MEASUREMENTS (Details) (USD $)
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3 Months Ended | ||||||||||
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Apr. 30, 2013
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Jan. 31, 2013
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Apr. 30, 2013
Interest Rate Swap [Member]
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Apr. 30, 2013
Interest Rate Swap [Member]
Designated as Hedging Instrument [Member]
Other Liabilities [Member]
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Jan. 31, 2013
Interest Rate Swap [Member]
Designated as Hedging Instrument [Member]
Other Liabilities [Member]
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Apr. 30, 2013
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Recurring [Member]
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Jan. 31, 2013
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Recurring [Member]
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Apr. 30, 2013
Significant Other Observable Inputs (Level 2) [Member]
Recurring [Member]
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Jan. 31, 2013
Significant Other Observable Inputs (Level 2) [Member]
Recurring [Member]
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Apr. 30, 2013
Significant Unobservable Inputs (Level 3) [Member]
Recurring [Member]
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Jan. 31, 2013
Significant Unobservable Inputs (Level 3) [Member]
Recurring [Member]
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||
Money market mutual funds | $ 50,112,000 | $ 44,871,000 | $ 0 | $ 0 | $ 0 | $ 0 | |||||
Liability related to interest rate swap | 0 | 0 | (671,000) | (384,000) | 0 | 0 | |||||
Cash deposited with commercial banks | 23,700,000 | 20,100,000 | |||||||||
Derivatives, Fair Value [Line Items] | |||||||||||
Description of variable rate basis | one month LIBOR | ||||||||||
Derivative liability, fair value | (671,000) | (384,000) | |||||||||
Change in fair value recognized in net income | $ (287,000) |
BUSINESS SEGMENT INFORMATION (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |||||
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Apr. 30, 2013
Segment
Region
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Apr. 30, 2012
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BUSINESS SEGMENT INFORMATION [Abstract] | ||||||
Number of geographic regions | 4 | |||||
Number of operating segments | 1 | |||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||||
Revenue | $ 61,927 | $ 63,708 | ||||
Percentage of sales into Canada to North America total revenue (in hundredths) | 3.00% | 3.00% | ||||
North America [Member]
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Revenues From External Customers And Long Lived Assets [Line Items] | ||||||
Revenue | 26,566 | [1] | 28,518 | [1] | ||
EMEA [Member]
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Revenues From External Customers And Long Lived Assets [Line Items] | ||||||
Revenue | 19,807 | 18,549 | ||||
Asia Pacific [Member]
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Revenues From External Customers And Long Lived Assets [Line Items] | ||||||
Revenue | 11,654 | 11,759 | ||||
Latin America [Member]
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Revenues From External Customers And Long Lived Assets [Line Items] | ||||||
Revenue | $ 3,900 | $ 4,882 | ||||
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