Description of Business and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2014

Business Combination, Segment Allocation

The following table summarizes the goodwill recorded in connection with the acquisitions that occurred during 2014 and 2013:



Company acquired	Date acquired	(in thousands)
CurePet, Inc. ("CurePet")	January 2014	$	2,687
HealthCare Magic Private Limited ("HealthCare Magic")	May 2014	5,619
Vertex, Incorporated ("Vertex")	October 2014	27,728
Oakstone Publishing, LLC ("Oakstone")	December 2014	28,769
DCM Group Inc. (d.b.a. i3 Software) ("i3")	December 2014	3,700
Total during 2014		$	68,503

Qatarlyst ("Qatarlyst")	April 2013	$	11,136
Total during 2013		$	11,136

Schedule of Revenue by Product/Service Groups

Presented in the table below is the breakout of our revenue streams for each of those product/service groups for the years ended December 31, 2014 , 2013 and 2012.



	For the Year Ended
	December 31,
(dollar amounts in thousands)		2014		2013		2012
Exchanges		$	169,437	$	163,925	$	159,678
Broker Systems		17,948		18,378		18,612
Risk Compliance Solutions (“RCS”), fka Business Process Outsourcing (“BPO”)		21,813		15,678		16,140
Carrier Systems		5,123		6,729		4,940
Totals		$	214,321	$	204,710	$	199,370

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Additional information regarding the Company's assets and liabilities that are measured at fair value on a recurring basis is presented in the following tables:



	Fair Values at Reporting Date Using*
Descriptions	Balance at December 31, 2014		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets
Available-for-sale securities:
Commercial bank certificates of deposits	$	281	$	281	$	—	$	—
Total assets measured at fair value	$	281	$	281	$	—	$	—

Liabilities
Derivatives:
Common share-based put option (a)	$	—	$	—	$	—	$	—
Contingent accrued earn-out acquisition consideration (b)	5,367		—		—		5,367
Total liabilities measured at fair value	$	5,367	$	—	$	—	$	5,367

(a) In connection with the acquisition of PlanetSoft effective June 1, 2012, Ebix issued a put option to the PlanetSoft's three shareholders. The put option, which expired in June 2014, was exercisable during the thirty-day period immediately following the two-year anniversary date of the business acquisition, which if exercised would enable them to sell the underlying 296,560 shares of Ebix common stock they received as part of the purchase consideration, back to the Company at a price of $16.86 per share, which represents the per-share value established on the effective date of the closing of Ebix's acquisition of PlanetSoft. The inputs used in the valuation of the put option include term, stock price volatility, current stock price, exercise price, and the risk free rate of return. During the months of July and August 2014 the former shareholders of PlanetSoft elected to exercise their put option rights with respect to the remaining 209,656 shares of Ebix common stock they still held. Accordingly the shareholders put those shares back to the Company at $16.86 per share plus interest at the rate of 20% as per the PlanetSoft acquisition agreement. The total consideration paid by the Company in connection with the exercise of these put options was $3.6 million.
(b) The income valuation approach is applied and the valuation inputs include the contingent payment arrangement terms, projected cash flows, rate of return, and probability assessments.
* During the year ended December 31, 2014 there were no transfers between fair value Levels 1, 2 or 3.



	Fair Values at Reporting Date Using*
Descriptions	Balance at December 31, 2013		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets
Available-for-sale securities:
Commercial bank certificates of deposits	$	801	801		—		—
Total assets measured at fair value	$	801	$	801	$	—	$	—

Liabilities
Derivatives:
Common share-based put option (a)	$	845	—		845		—
Contingent accrued earn-out acquisition consideration (b)	14,420		—		—		14,420
Total liabilities measured at fair value	$	15,265	$	—	$	845	$	14,420

(a) In connection with the acquisition of PlanetSoft effective June 1, 2012, Ebix issued a put option to the PlanetSoft's three shareholders. The put option, which expires in June 2014, is exercisable during the thirty-day period immediately following the two-year anniversary date of the business acquisition, which if exercised would enable them to sell the underlying 296,560 shares of Ebix common stock they received as part of the purchase consideration, back to the Company at a price of $16.86 per share. The inputs used in the valuation of the put option include term, stock price volatility, current stock price, exercise price, and the risk free rate of return. During the months of July and August 2014 the former shareholders of PlanetSoft elected to exercise their put option rights with respect to the remaining 209,656 shares of Ebix common stock they still held. Accordingly the shareholders put those shares back to the Company at $16.86 per share plus interest at the rate of 20% as per the PlanetSoft acquisition agreement. The total consideration paid by the Company in connection with the exercise of these put options was $3.6 million.
(b) The income valuation approach is applied and the valuation inputs include the contingent payment arrangement terms, projected cash flows, rate of return, and probability assessments.
* During the year ended December 31, 2013 there were no transfers between fair value Levels 1, 2 or 3.

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

For the Company's assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balances for each category therein, and gains or losses recognized during the year.



Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Contingent Liability for Accrued Earn-out Acquisition Consideration	Balance at December 31, 2014			Balance at December 31, 2013
	(in thousands)

Beginning balance	$	14,420		17,495

Total remeasurement adjustments:
(Gains) or losses included in earnings **	(10,237		)	(10,253		)
(Gains) or losses recorded against goodwill	—			—
Foreign currency translation adjustments ***	(314		)	730

Acquisitions and settlements
Business acquisitions	4,312			9,425
Settlements	(2,814		)	(2,977		)

Ending balance	$	5,367		$	14,420

The amount of total (gains) or losses for the year included in earnings or changes to net assets, attributable to changes in unrealized (gains) or losses relating to assets or liabilities still held at year-end.	$	(8,911	)	$	(9,954	)

** recorded as a component of reported general and administrative expenses
*** recorded as a component of other comprehensive income within stockholders' equity

Fair Value, Significant Unobservable Inputs Used in Measurement of Contingent Consideration Liabilities

The significant unobservable inputs used in the fair value measurement of the Company's contingent consideration liabilities designated as Level 3 are as follows:

Schedule of Goodwill

Changes in the carrying amount of goodwill for the years ended December 31, 2014 and 2013 are as follows:



	December 31, 2014			December 31, 2013
	(in thousands)
Beginning Balance	$	337,068		$	326,748
Additions, net (see Note 3)	68,503			11,136
Foreign currency translation adjustments	(3,351		)	(816		)
Ending Balance	$	402,220		$	337,068

Schedule of Finite-Lived Intangible Assets by Major Class, Estimated Useful Lives

We amortize these intangible assets on a straight-line basis over their estimated useful lives, as follows:



	Life
Category	(yrs)
Customer relationships	7-20
Developed technology	3-12
Trademarks	3-15
Non-compete agreements	5
Database	10

Schedule of Intangible Assets, Excluding Goodwill

Intangible assets as of December 31, 2014 and December 31, 2013, are as follows:



	December 31,
	2014			2013
	(In thousands)
Finite-lived intangible assets:
Customer relationships	$	66,783		$	62,408
Developed technology	15,664			14,630
Trademarks	2,751			2,646
Non-compete agreements	751			538
Backlog	140			140
Database	212			212
Total intangibles	86,301			80,574
Accumulated amortization	(36,930		)	(29,840		)
Finite-lived intangibles, net	$	49,371		$	50,734

Indefinite-lived intangibles:
Customer/territorial relationships	$	30,887		$	30,887

Useful Lives of Property and Equipment Used in Computation of Depreciation

The estimated useful lives applied by the Company for property and equipment are as follows:



	Life
Asset Category	(yrs)
Computer equipment	5
Furniture, fixtures and other	7
Buildings	30
Leasehold improvements	Life of the lease

(in thousands)

Fair Value at December 31, 2014

Valuation Technique

Significant Unobservable
Input

Contingent acquisition consideration:
(Vertex, i3 Software, HealthCare Magic, and Qatarlyst acquisitions)

Discounted cash flow

Expected future annual revenue streams and probability of achievement