þ | QUARTERLY REPORT UNDER 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 | 75-2303920 | |
(State or other jurisdiction of | (I.R.S. employer | |
incorporation or organization) | identification no.) |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller Reporting Company o |
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Software licenses |
$ | 7,631 | $ | 9,260 | $ | 22,761 | $ | 26,444 | ||||||||
Subscriptions |
7,989 | 6,020 | 22,230 | 17,080 | ||||||||||||
Software services |
17,644 | 16,718 | 52,400 | 52,280 | ||||||||||||
Maintenance |
37,011 | 34,729 | 107,579 | 101,357 | ||||||||||||
Appraisal services |
5,761 | 5,612 | 17,945 | 14,812 | ||||||||||||
Hardware and other |
1,148 | 1,430 | 4,397 | 4,216 | ||||||||||||
Total revenues |
77,184 | 73,769 | 227,312 | 216,189 | ||||||||||||
Cost of revenues: |
||||||||||||||||
Software licenses |
536 | 912 | 2,320 | 2,471 | ||||||||||||
Acquired software |
243 | 398 | 782 | 1,194 | ||||||||||||
Software services, maintenance and subscriptions |
35,689 | 34,708 | 106,371 | 104,184 | ||||||||||||
Appraisal services |
3,776 | 3,434 | 11,302 | 9,442 | ||||||||||||
Hardware and other |
808 | 1,110 | 3,645 | 3,197 | ||||||||||||
Total cost of revenues |
41,052 | 40,562 | 124,420 | 120,488 | ||||||||||||
Gross profit |
36,132 | 33,207 | 102,892 | 95,701 | ||||||||||||
Selling, general and administrative expenses |
18,755 | 17,337 | 54,509 | 52,337 | ||||||||||||
Research and development expense |
4,196 | 3,233 | 13,780 | 10,493 | ||||||||||||
Amortization of customer and trade name intangibles |
801 | 806 | 2,408 | 2,419 | ||||||||||||
Operating income |
12,380 | 11,831 | 32,195 | 30,452 | ||||||||||||
Other expense, net |
(562 | ) | (568 | ) | (1,586 | ) | (712 | ) | ||||||||
Income before income taxes |
11,818 | 11,263 | 30,609 | 29,740 | ||||||||||||
Income tax provision |
4,312 | 4,540 | 11,751 | 11,896 | ||||||||||||
Net income |
$ | 7,506 | $ | 6,723 | $ | 18,858 | $ | 17,844 | ||||||||
Earnings per common share: |
||||||||||||||||
Basic |
$ | 0.24 | $ | 0.20 | $ | 0.60 | $ | 0.52 | ||||||||
Diluted |
$ | 0.23 | $ | 0.19 | $ | 0.57 | $ | 0.50 | ||||||||
Basic weighted average common shares outstanding |
31,097 | 34,103 | 31,247 | 34,075 | ||||||||||||
Diluted weighted average common shares outstanding |
32,960 | 35,410 | 33,027 | 35,475 |
1
September 30, | ||||||||
2011 | December 31, | |||||||
(Unaudited) | 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 5,280 | $ | 2,114 | ||||
Short-term investments available-for-sale |
| 25 | ||||||
Accounts receivable (less allowance for losses of $916 in 2011
and $1,603 in 2010) |
75,456 | 81,860 | ||||||
Prepaid expenses |
8,008 | 7,801 | ||||||
Other current assets |
2,483 | 3,543 | ||||||
Deferred income taxes |
3,106 | 3,106 | ||||||
Total current assets |
94,333 | 98,449 | ||||||
Accounts receivable, long-term portion |
1,212 | 1,231 | ||||||
Property and equipment, net |
40,780 | 34,851 | ||||||
Non-current investments available-for-sale |
2,101 | 2,126 | ||||||
Other assets: |
||||||||
Goodwill |
92,831 | 92,831 | ||||||
Other intangibles, net |
28,812 | 32,307 | ||||||
Sundry |
1,667 | 2,237 | ||||||
$ | 261,736 | $ | 264,032 | |||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 3,736 | $ | 2,626 | ||||
Accrued liabilities |
21,202 | 19,433 | ||||||
Deferred revenue |
108,114 | 102,590 | ||||||
Total current liabilities |
133,052 | 124,649 | ||||||
Revolving line of credit |
58,000 | 26,500 | ||||||
Deferred income taxes |
5,972 | 5,911 | ||||||
Commitments and contingencies |
||||||||
Shareholders equity: |
||||||||
Preferred stock, $10.00 par value; 1,000,000 shares authorized,
none issued |
| | ||||||
Common stock, $0.01 par value; 100,000,000 shares authorized;
48,147,969 shares issued in 2011 and 2010 |
481 | 481 | ||||||
Additional paid-in capital |
153,766 | 153,576 | ||||||
Accumulated other comprehensive loss, net of tax |
(275 | ) | (275 | ) | ||||
Retained earnings |
121,416 | 102,558 | ||||||
Treasury stock, at cost; 18,407,024 and 15,854,205 shares
in 2011 and 2010, respectively |
(210,676 | ) | (149,368 | ) | ||||
Total shareholders equity |
64,712 | 106,972 | ||||||
$ | 261,736 | $ | 264,032 | |||||
2
Nine months ended September 30, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net income |
$ | 18,858 | $ | 17,844 | ||||||||||||
Adjustments to reconcile net income to net cash
provided by operations: |
||||||||||||||||
Depreciation and amortization |
7,778 | 8,077 | ||||||||||||||
Share-based compensation expense |
4,585 | 4,617 | ||||||||||||||
Excess tax benefit from exercises of share-based arrangements |
(1,721 | ) | (1,209 | ) | ||||||||||||
Changes in operating assets and liabilities, exclusive of
effects of acquired companies: |
||||||||||||||||
Accounts receivable |
6,423 | 3,837 | ||||||||||||||
Income tax payable |
3,225 | (78 | ) | |||||||||||||
Prepaid expenses and other current assets |
(655 | ) | 425 | |||||||||||||
Accounts payable |
1,110 | (1,939 | ) | |||||||||||||
Accrued liabilities |
(22 | ) | (3,551 | ) | ||||||||||||
Deferred revenue |
5,524 | (759 | ) | |||||||||||||
Net cash provided by operating activities |
45,105 | 27,264 | ||||||||||||||
Cash flows from investing activities: |
||||||||||||||||
Proceeds from sale of investments |
50 | 75 | ||||||||||||||
Cost of acquisitions, net of cash acquired |
| (9,661 | ) | |||||||||||||
Additions to property and equipment |
(9,926 | ) | (4,197 | ) | ||||||||||||
Decrease in restricted investments |
| 6,000 | ||||||||||||||
Decrease (increase) in other |
199 | (3 | ) | |||||||||||||
Net cash used by investing activities |
(9,677 | ) | (7,786 | ) | ||||||||||||
Cash flows from financing activities: |
||||||||||||||||
Purchase of treasury shares |
(68,525 | ) | (41,674 | ) | ||||||||||||
Increase in net borrowings on revolving line of credit |
31,500 | 16,500 | ||||||||||||||
Contributions from employee stock purchase plan |
1,472 | 1,404 | ||||||||||||||
Proceeds from exercise of stock options |
1,570 | 1,863 | ||||||||||||||
Debt issuance costs |
| (2,027 | ) | |||||||||||||
Excess tax benefit from exercises of share-based arrangements |
1,721 | 1,209 | ||||||||||||||
Net cash used by financing activities |
(32,262 | ) | (22,725 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents |
3,166 | (3,247 | ) | |||||||||||||
Cash and cash equivalents at beginning of period |
2,114 | 9,696 | ||||||||||||||
Cash and cash equivalents at end of period |
$ | 5,280 | $ | 6,449 | ||||||||||||
3
Level 1 Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; |
Level 2 Inputs other than Level 1 inputs that are either directly or indirectly observable; and |
Level 3 Unobservable inputs, for which little or no market data exist, therefore requiring an entity to develop its own assumptions. |
Quoted prices in | ||||||||||||||||
active markets for | Significant other | Significant | ||||||||||||||
identical assets | observable inputs | unobservable inputs | ||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Cash and cash equivalents |
$ | 5,280 | $ | 5,280 | $ | | $ | | ||||||||
Investments available-for-sale |
2,101 | | | 2,101 | ||||||||||||
Total |
$ | 7,381 | $ | 5,280 | $ | | $ | 2,101 | ||||||||
4
Par Value | Temporary Impairment |
Carrying Value | |||||||
$ | 2,525 |
$ | 424 | $ | 2,101 |
Balance as of December 31, 2010 |
$ | 2,126 | ||
Transfers into level 3 |
| |||
Transfers out of level 3 |
| |||
Unrealized gains included in accumulated other comprehensive loss |
| |||
Balance as of March 31, 2011 |
2,126 | |||
Transfers into level 3 |
| |||
Transfers out of level 3 |
(25 | ) | ||
Unrealized losses included in accumulated other comprehensive loss |
| |||
Balance as of June 30, 2011 |
2,101 | |||
Transfers into level 3 |
| |||
Transfers out of level 3 |
| |||
Unrealized gains included in accumulated other comprehensive loss |
| |||
Balance as of September 30, 2011 |
$ | 2,101 | ||
Nine months ended September 30, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Purchases of common stock |
(2,951 | ) | $ | (70,480 | ) | (3,350 | ) | $ | (61,549 | ) | ||||||
Stock option exercises |
325 | 1,570 | 367 | 1,863 | ||||||||||||
Employee stock plan purchases |
73 | 1,472 | 91 | 1,371 |
5
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Numerator for basic and diluted earnings per share: |
||||||||||||||||
Net income |
$ | 7,506 | $ | 6,723 | $ | 18,858 | $ | 17,844 | ||||||||
Denominator: |
||||||||||||||||
Weighted-average basic common shares outstanding |
31,097 | 34,103 | 31,247 | 34,075 | ||||||||||||
Assumed conversion of dilutive securities: |
||||||||||||||||
Stock options |
1,863 | 1,307 | 1,780 | 1,400 | ||||||||||||
Denominator for diluted earnings
per share Adjusted weighted-average shares |
32,960 | 35,410 | 33,027 | 35,475 | ||||||||||||
Earnings per common share: |
||||||||||||||||
Basic |
$ | 0.24 | $ | 0.20 | $ | 0.60 | $ | 0.52 | ||||||||
Diluted |
$ | 0.23 | $ | 0.19 | $ | 0.57 | $ | 0.50 | ||||||||
6
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Cost of software services, maintenance and
subscriptions |
$ | 239 | $ | 184 | $ | 649 | $ | 529 | ||||||||
Selling, general and administrative expense |
1,377 | 1,360 | 3,936 | 4,088 | ||||||||||||
Total share-based compensation expense |
$ | 1,616 | $ | 1,544 | $ | 4,585 | $ | 4,617 | ||||||||
| financial management and education software solutions; |
| financial management, municipal courts, and land and vital records software solutions; |
| courts and justice software solutions; and |
| appraisal and tax software solutions and property appraisal services. |
7
ESS | ATSS | Corporate | Totals | |||||||||||||
Revenues |
||||||||||||||||
Software licenses |
$ | 7,081 | $ | 550 | $ | | $ | 7,631 | ||||||||
Subscriptions |
7,800 | 189 | | 7,989 | ||||||||||||
Software services |
15,199 | 2,445 | | 17,644 | ||||||||||||
Maintenance |
33,152 | 3,859 | | 37,011 | ||||||||||||
Appraisal services |
| 5,761 | | 5,761 | ||||||||||||
Hardware and other |
1,148 | | 1,148 | |||||||||||||
Intercompany |
599 | | (599 | ) | | |||||||||||
Total revenues |
$ | 64,979 | $ | 12,804 | $ | (599 | ) | $ | 77,184 | |||||||
Segment operating income |
$ | 14,165 | $ | 2,514 | $ | (3,255 | ) | $ | 13,424 |
ESS | ATSS | Corporate | Totals | |||||||||||||
Revenues |
||||||||||||||||
Software licenses |
$ | 20,930 | $ | 1,831 | $ | | $ | 22,761 | ||||||||
Subscriptions |
21,726 | 504 | | 22,230 | ||||||||||||
Software services |
45,087 | 7,313 | | 52,400 | ||||||||||||
Maintenance |
96,099 | 11,480 | | 107,579 | ||||||||||||
Appraisal services |
| 17,945 | | 17,945 | ||||||||||||
Hardware and other |
3,300 | | 1,097 | 4,397 | ||||||||||||
Intercompany |
1,469 | | (1,469 | ) | | |||||||||||
Total revenues |
$ | 188,611 | $ | 39,073 | $ | (372 | ) | $ | 227,312 | |||||||
Segment operating income |
$ | 38,933 | $ | 7,556 | $ | (11,104 | ) | $ | 35,385 |
ESS | ATSS | Corporate | Totals | |||||||||||||
Revenues |
||||||||||||||||
Software licenses |
$ | 8,613 | $ | 647 | $ | | $ | 9,260 | ||||||||
Subscriptions |
5,943 | 77 | | 6,020 | ||||||||||||
Software services |
14,199 | 2,519 | | 16,718 | ||||||||||||
Maintenance |
30,987 | 3,742 | | 34,729 | ||||||||||||
Appraisal services |
| 5,612 | | 5,612 | ||||||||||||
Hardware and other |
1,431 | (1 | ) | | 1,430 | |||||||||||
Intercompany |
602 | | (602 | ) | | |||||||||||
Total revenues |
$ | 61,775 | $ | 12,596 | $ | (602 | ) | $ | 73,769 | |||||||
Segment operating income |
$ | 14,211 | $ | 2,611 | $ | (3,787 | ) | $ | 13,035 |
8
ESS | ATSS | Corporate | Totals | |||||||||||||
Revenues |
||||||||||||||||
Software licenses |
$ | 24,781 | $ | 1,663 | $ | | $ | 26,444 | ||||||||
Subscriptions |
16,840 | 240 | | 17,080 | ||||||||||||
Software services |
44,613 | 7,667 | | 52,280 | ||||||||||||
Maintenance |
90,202 | 11,155 | | 101,357 | ||||||||||||
Appraisal services |
| 14,812 | | 14,812 | ||||||||||||
Hardware and other |
4,075 | 6 | 135 | 4,216 | ||||||||||||
Intercompany |
1,388 | | (1,388 | ) | | |||||||||||
Total revenues |
$ | 181,899 | $ | 35,543 | $ | (1,253 | ) | $ | 216,189 | |||||||
Segment operating income |
$ | 38,733 | $ | 6,358 | $ | (11,026 | ) | $ | 34,065 |
For the three months ended | For the nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
Reconciliation of reportable segment operating income to the Companys consolidated totals: | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Total segment operating income |
$ | 13,424 | $ | 13,035 | $ | 35,385 | $ | 34,065 | ||||||||
Amortization of acquired software |
(243 | ) | (398 | ) | (782 | ) | (1,194 | ) | ||||||||
Amortization of customer and trade name intangibles |
(801 | ) | (806 | ) | (2,408 | ) | (2,419 | ) | ||||||||
Other expense, net |
(562 | ) | (568 | ) | (1,586 | ) | (712 | ) | ||||||||
Income before income taxes |
$ | 11,818 | $ | 11,263 | $ | 30,609 | $ | 29,740 | ||||||||
9
10
Percentage of Total Revenues | ||||||||||||||||
Third Quarter | Nine Months | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Software licenses |
9.9 | % | 12.5 | % | 10.0 | % | 12.2 | % | ||||||||
Subscriptions |
10.3 | 8.2 | 9.8 | 7.9 | ||||||||||||
Software services |
22.9 | 22.7 | 23.1 | 24.2 | ||||||||||||
Maintenance |
48.0 | 47.1 | 47.3 | 46.9 | ||||||||||||
Appraisal services |
7.5 | 7.6 | 7.9 | 6.8 | ||||||||||||
Hardware and other |
1.4 | 1.9 | 1.9 | 2.0 | ||||||||||||
Total revenues |
100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||
Operating Expenses: |
||||||||||||||||
Cost of software licenses and acquired software |
1.0 | 1.8 | 1.4 | 1.7 | ||||||||||||
Cost of software services, maintenance and subscriptions |
46.3 | 47.0 | 46.8 | 48.2 | ||||||||||||
Cost of appraisal services |
4.9 | 4.7 | 5.0 | 4.3 | ||||||||||||
Cost of hardware and other |
1.0 | 1.5 | 1.6 | 1.5 | ||||||||||||
Selling, general and administrative expenses |
24.3 | 23.5 | 24.0 | 24.2 | ||||||||||||
Research and development expense |
5.5 | 4.4 | 6.0 | 4.9 | ||||||||||||
Amortization of customer base and trade name intangibles |
1.0 | 1.1 | 1.0 | 1.1 | ||||||||||||
Operating income |
16.0 | 16.0 | 14.2 | 14.1 | ||||||||||||
Other expenses, net |
(0.7 | ) | (0.8 | ) | (0.7 | ) | (0.3 | ) | ||||||||
Income before income taxes |
15.3 | 15.2 | 13.5 | 13.8 | ||||||||||||
Income tax provision |
5.6 | 6.1 | 5.2 | 5.5 | ||||||||||||
Net income |
9.7 | % | 9.1 | % | 8.3 | % | 8.3 | % | ||||||||
11
Third Quarter | Change | Nine Months | Change | |||||||||||||||||||||||||||||
($ in thousands) | 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | ||||||||||||||||||||||||
ESS |
$ | 7,081 | $ | 8,613 | $ | (1,532 | ) | (18 | )% | $ | 20,930 | $ | 24,781 | $ | (3,851 | ) | (16 | )% | ||||||||||||||
ATSS |
550 | 647 | (97 | ) | (15 | ) | 1,831 | 1,663 | 168 | 10 | ||||||||||||||||||||||
Total software license revenues |
$ | 7,631 | $ | 9,260 | $ | (1,629 | ) | (18 | )% | $ | 22,761 | $ | 26,444 | $ | (3,683 | ) | (14 | )% | ||||||||||||||
Third Quarter | Change | Nine Months | Change | |||||||||||||||||||||||||||||
($ in thousands) | 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | ||||||||||||||||||||||||
ESS |
$ | 7,800 | $ | 5,943 | $ | 1,857 | 31 | % | $ | 21,726 | $ | 16,840 | $ | 4,886 | 29 | % | ||||||||||||||||
ATSS |
189 | 77 | 112 | 145 | 504 | 240 | 264 | 110 | ||||||||||||||||||||||||
Total subscriptions revenues |
$ | 7,989 | $ | 6,020 | $ | 1,969 | 33 | % | $ | 22,230 | $ | 17,080 | $ | 5,150 | 30 | % | ||||||||||||||||
12
Third Quarter | Change | Nine Months | Change | |||||||||||||||||||||||||||||
($ in thousands) | 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | ||||||||||||||||||||||||
ESS |
$ | 15,199 | $ | 14,199 | $ | 1,000 | 7 | % | $ | 45,087 | $ | 44,613 | $ | 474 | 1 | % | ||||||||||||||||
ATSS |
2,445 | 2,519 | (74 | ) | (3 | ) | 7,313 | 7,667 | (354 | ) | (5 | ) | ||||||||||||||||||||
Total software services revenues |
$ | 17,644 | $ | 16,718 | $ | 926 | 6 | % | $ | 52,400 | $ | 52,280 | $ | 120 | 0 | % | ||||||||||||||||
Third Quarter | Change | Nine Months | Change | |||||||||||||||||||||||||||||
($ in thousands) | 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | ||||||||||||||||||||||||
ESS |
$ | 33,152 | $ | 30,987 | $ | 2,165 | 7 | % | $ | 96,099 | $ | 90,202 | $ | 5,897 | 7 | % | ||||||||||||||||
ATSS |
3,859 | 3,742 | 117 | 3 | 11,480 | 11,155 | 325 | 3 | ||||||||||||||||||||||||
Total maintenance revenues |
$ | 37,011 | $ | 34,729 | $ | 2,282 | 7 | % | $ | 107,579 | $ | 101,357 | $ | 6,222 | 6 | % | ||||||||||||||||
Third Quarter | Change | Nine Months | Change | |||||||||||||||||||||||||||||
($ in thousands) | 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | ||||||||||||||||||||||||
ESS |
$ | | $ | | $ | | | % | $ | | $ | | $ | | | % | ||||||||||||||||
ATSS |
5,761 | 5,612 | 149 | 3 | 17,945 | 14,812 | 3,133 | 21 | ||||||||||||||||||||||||
Total appraisal services revenues |
$ | 5,761 | $ | 5,612 | $ | 149 | 3 | % | $ | 17,945 | $ | 14,812 | $ | 3,133 | 21 | % | ||||||||||||||||
13
Third Quarter | Change | Nine Months | Change | |||||||||||||||||||||||||||||
($ in thousands) | 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | ||||||||||||||||||||||||
Software licenses |
$ | 536 | $ | 912 | $ | (376 | ) | (41 | )% | $ | 2,320 | $ | 2,471 | $ | (151) | (6 | )% | |||||||||||||||
Acquired software |
243 | 398 | (155 | ) | (39 | ) | 782 | 1,194 | (412) | (35 | ) | |||||||||||||||||||||
Software services, maintenance and subscriptions |
35,689 | 34,708 | 981 | 3 | 106,371 | 104,184 | 2,187 | 2 | ||||||||||||||||||||||||
Appraisal services |
3,776 | 3,434 | 342 | 10 | 11,302 | 9,442 | 1,860 | 20 | ||||||||||||||||||||||||
Hardware and other |
808 | 1,110 | (302 | ) | (27 | ) | 3,645 | 3,197 | 448 | 14 | ||||||||||||||||||||||
Total cost of revenues |
$ | 41,052 | $ | 40,562 | $ | 490 | 1 | % | $ | 124,420 | $ | 120,488 | $ | 3,932 | 3 | % | ||||||||||||||||
Third Quarter | Change | Nine Months | Change | |||||||||||||||||||||
Gross margin percentage | 2011 | 2010 | % | 2011 | 2010 | % | ||||||||||||||||||
Software license and acquired software |
89.8 | % | 85.9 | % | 3.9 | % | 86.4 | % | 86.1 | % | 0.3 | % | ||||||||||||
Software services, maintenance and subscriptions |
43.0 | 39.6 | 3.4 | 41.6 | 39.0 | 2.6 | ||||||||||||||||||
Appraisal services |
34.5 | 38.8 | (4.3 | ) | 37.0 | 36.3 | 0.7 | |||||||||||||||||
Hardware and other |
29.6 | 22.4 | 7.2 | 17.1 | 24.2 | (7.1 | ) | |||||||||||||||||
Overall gross margin |
46.8 | % | 45.0 | % | 1.8 | % | 45.3 | % | 44.3 | % | 1.0 | % |
14
Third Quarter | Change | Nine Months | Change | |||||||||||||||||||||||||||||
($ in thousands) | 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | ||||||||||||||||||||||||
Selling, general
and administrative
expenses |
$ | 18,755 | $ | 17,337 | $ | 1,418 | 8 | % | $ | 54,509 | $ | 52,337 | $ | 2,172 | 4 | % |
Third Quarter | Change | Nine Months | Change | |||||||||||||||||||||||||||||
($ in thousands) | 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | ||||||||||||||||||||||||
Research and development expense |
$ | 4,196 | $ | 3,233 | $ | 963 | 30 | % | $ | 13,780 | $ | 10,493 | $ | 3,287 | 31 | % |
15
Third Quarter | Change | Nine Months | Change | |||||||||||||||||||||||||||||
($ in thousands) | 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | ||||||||||||||||||||||||
Amortization of
customer and trade
name intangibles |
$ | 801 | $ | 806 | $ | (5 | ) | (1 | )% | $ | 2,408 | $ | 2,419 | $ | (11 | ) | (0 | )% |
Third Quarter | Change | Nine Months | Change | |||||||||||||||||||||||||||||
($ in thousands) | 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | ||||||||||||||||||||||||
Other expense, net |
$ | (562 | ) | $ | (568 | ) | $ | 6 | 1 | % | $ | (1,586 | ) | $ | (712 | ) | $ | (874 | ) | (123 | )% |
Third Quarter | Change | Nine Months | Change | |||||||||||||||||||||||||||||
($ in thousands) | 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | ||||||||||||||||||||||||
Income tax provision |
$ | 4,312 | $ | 4,540 | $ | (228 | ) | (5 | )% | $ | 11,751 | $ | 11,896 | $ | (145 | ) | (1 | )% | ||||||||||||||
Effective income tax rate |
36.5 | % | 40.3 | % | 38.4 | % | 40.0 | % |
16
($ in thousands) | 2011 | 2010 | ||||||
Cash flows provided (used) by: |
||||||||
Operating activities |
$ | 45,105 | $ | 27,264 | ||||
Investing activities |
(9,677 | ) | (7,786 | ) | ||||
Financing activities |
(32,262 | ) | (22,725 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
$ | 3,166 | $ | (3,247 | ) | |||
17
Additional number | Maximum number of | |||||||||||||||
Total number | of shares authorized | shares that may be | ||||||||||||||
of shares | that may be | Average price | repurchased under | |||||||||||||
(Shares in thousands) | repurchased | repurchased | paid per share | current authorization | ||||||||||||
January 1 through January 31 |
335 | | $ | 20.43 | 2,369 | |||||||||||
February 1 through February 28 |
| | | 2,369 | ||||||||||||
March 1 through March 31 |
| | | 2,369 | ||||||||||||
April 1 through April 30 |
67 | | 23.90 | 2,302 | ||||||||||||
May 1 through May 31 |
119 | | 24.30 | 2,183 | ||||||||||||
June 1 through June 30 |
392 | | 24.34 | 1,791 | ||||||||||||
July 1 through July 31 |
| | | 1,791 | ||||||||||||
August 1 through August 31 |
1,097 | | 24.11 | 694 | ||||||||||||
Additional authorization by the board of directors |
2,000 | | 2,694 | |||||||||||||
September 1 through September 30 |
941 | | 24.60 | 1,753 | ||||||||||||
Total nine months ended September 30, 2011 |
2,951 | 2,000 | $ | 23.88 | ||||||||||||
18
19
20
Exhibit 31.1
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
Exhibit 31.2
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
Exhibit 32.1
|
Certifications Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
Exhibit 101
|
Instance Document | |
Exhibit 101
|
Schema Document | |
Exhibit 101
|
Calculation Linkbase Document | |
Exhibit 101
|
Labels Linkbase Document | |
Exhibit 101
|
Presentation Linkbase Document |
21
TYLER TECHNOLOGIES, INC. |
||||
By: | /s/ Brian K. Miller | |||
Brian K. Miller | ||||
Executive Vice President and Chief Financial Officer (principal financial officer and an authorized signatory) | ||||
22
1. | I have reviewed this quarterly report on Form 10-Q of Tyler Technologies, Inc.; | |
2. | Based on my knowledge, this quarterly 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 quarterly 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 registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated divisions, 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants third quarter in the case of this quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrants 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 registrants internal controls over financial reporting. |
Dated: October 27, 2011 | By: | /s/ John S. Marr, Jr. | ||
John S. Marr, Jr. | ||||
President and Chief Executive Officer |
23
1. | I have reviewed this quarterly report on Form 10-Q of Tyler Technologies, Inc.; | |
2. | Based on my knowledge, this quarterly 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 quarterly 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 registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated divisions, 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants third quarter in the case of this quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrants 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 registrants internal controls over financial reporting. |
Dated: October 27, 2011 | By: | /s/ Brian K. Miller | ||
Brian K. Miller | ||||
Executive Vice President and Chief Financial Officer |
24
1. | The Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2011, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and | ||
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ John S. Marr, Jr. | |||
John S. Marr, Jr. | ||||
President and Chief Executive Officer | ||||
By: | /s/ Brian K. Miller | |||
Brian K. Miller | ||||
Executive Vice President and Chief Financial Officer | ||||
25
Condensed Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Condensed Balance Sheets [Abstract] | ||
Accounts receivable, allowance for losses | $ 916 | $ 1,603 |
Preferred stock, par value | $ 10 | $ 10 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 48,147,969 | 48,147,969 |
Treasury stock, shares | 18,407,024 | 15,854,205 |
M!'+%0T:"7Z4:`.GD`K<4_5 3C[DTB_L=K'+;R8L)8D+7`?\A)+#%!'=`B2G_NNZS_N/%W\
M19C0<<@M:TDUK6S])JQ$U\1/_S,Q=/U_P74*+4$5"#TK.G^DH_T=^JA,2T8A
MF*&M6B(Q1I']A4:-IV11!_-R-!&I2!K\YE)K1ET99,'>40\7:Y77'%#176=H
MJ0';,6!&WH#Y(%J<8,'D(1[6V.`?0/`XGH2*9Q)7@D/FK?^:@42^6F*9&QQ1
M]4$1OT##,+X_:MV!F.WG#=1$;UV$DI(S-^3[A[>63"32CE!WZ9Q!MP.X`7][
M?F0-J-661KY1'G10XQF!QV&F2OX.*<,8`6.$E@)^&IRQ@WWZ2XWB(#YZ:#OA
M0LYV P[_/@8L"*(W(`W0%4-T6PQMZ&ATC@H(8RM0
M(AY!G`$,=^\#L`Z.7H)5!-BM5I#?/GP?JJA#'3&JJ,L,NO-6Z4W;>XMZ$HCK
M@_8)L<;&&.,C4)LCP"X!975RMFI[5Q9'J(1\V=Z)(IY9KA`_L/K=L&=JX)M<
M(1;R;4EL5&T?N)(#+UZ>X\ZOE+?VG3[L]_KQ._$8H[%U4CXBMDA+ L.`"AP%DO'"%,;5O_,;"Y"?_'$VO2&&80.=\DDR8@9>G#+J%5=L[.*[VY[*
MID`.C/9E=^SF?+/_.'WO9,4YACJ8*,*F"_/%B*>,>`K0;/.\+E2.CS;0
M=P*HVVJ"^;,%+KIE]V#X;$(A$RT.TD]10K(I):$?4C)C8YFFA(9C.B;W-,[H
M;$@3J.Q%=%53SXSGCO+6<3@'LHD9PO(J+)A$W@H+ADGDN/""Y#\P28Z_.I_4
MB,(Q`,3F8&RLE5#OP_U])<1#Q.1#S.&(W7UA0"$\LL+S/DIB^!5%C*3%B&<6
MIKCUW1XW&K>^)?#C/N>IN/NX"8B'/&$-6I8C[)SH"`E"@I`@)&V#9-VU0F\8
MO6&4F!J52)3S
M83I*?%&>7`97[WP^)G(*>IA[KP0T8VP=Q571`3H%J5\!0G,'",/984#75%+8
MF*(:+$L(>JOHK9YP_;,X-"6#XW@*WQ37/]$[/:729ZI1T0;H`YW$F.J*:5I(
M:G0W$3;0/(YBFR;ZELW[EN<2'!21%YW:7Z&^-A2#'E$9?,TS.KG(*.CCGM#2
M&(:B63JJIU/XN(;B6AA.H(^+L'%I"B#X]?L)7(`
M^I!H@!&VVJ2W%,?&C%^4$(1M9PG!JB\'^*Y8]:66[_JSEXSYWG_9;5`*=Q-]
M5_1=.Z3B-44S7;2FZ`1U$#:DSAGT![J(Z"*>RD7\6"VRW:AGUN]+X1^^.DQD
MD&/61KQ`$MKG.'UCO9QYBEC)@U73?BIB>VYLR143O[<(D<00-2=^F':`:0='
M
:C'SPK]&?1@LC@S^]L]]MZ-8IF!:=
M[@LR9\V?"E0L1ST)FZ('WW7]:MC.23@)W7?4=_OK.[2`T=/__#N_N)Z_,NOA7>N93.H)/^
MK^LK=X"U=(M*8QI9&U9/MH9J119;:^)B(-='CX3R[=(.\B*H$$99#39+[S#8
MWPZF%6OB+<\C$;CR._(0N#5@A&E`!NDI*@?"MRE"*U;(WR@:N[@G)V_I'&^4
M/0QR]:'I+('GMH^E,Y]:%SP,"C5Q6;$P?H_Z""#T(*R:(\KL?U,T#H->4X`Z
M24&%&5M?2>"9#Z]?6D6E6'L
Document And Entity Information | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Oct. 21, 2011 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2011 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2011 | |
Entity Registrant Name | TYLER TECHNOLOGIES INC | |
Entity Central Index Key | 0000860731 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 29,714,000 |
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
Share-Based Compensation | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | (7) Share-Based Compensation
The following table summarizes share-based compensation expense related to share-based awards recorded in the statements of operations, pursuant to ASC 718, Stock Compensation:
|
Shareholders' Equity | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | (3) Shareholders' Equity
The following table details activity in our common stock:
On September 9, 2011 our board of directors authorized the repurchase of up to an additional 2.0 million shares of Tyler common stock. As of September 30, 2011, we had authorization from our board of directors to repurchase up to 1.8 million additional shares of Tyler common stock. |
Commitments And Contingencies | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Commitments And Contingencies [Abstract] | |
Commitments And Contingencies |
(9) Commitments and Contingencies
As of September 30, 2011, our accounts receivable balance includes $4.2 million associated with one customer that terminated its arrangement with us for convenience and, in addition, has disputed certain amounts we invoiced the customer prior to the termination of the arrangement. We believe the receivable is a valid and enforceable claim under the terms of the arrangement, and we intend to aggressively pursue collection. Other than ordinary course, routine litigation incidental to our business and except as described in this Quarterly Report, there are no material legal proceedings pending to which we are party or to which any of our properties are subject. |
New Accounting Pronouncements | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
New Accounting Pronouncements [Abstract] | |
New Accounting Pronouncements |
(10) New Accounting Pronouncements Accounting Standards Update ("ASU") 2011-08 amends existing guidance by giving an entity the option to first assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If this is the case, companies will need to perform a more detailed two-step goodwill impairment test which is used to identify potential goodwill impairments and to measure the amount of goodwill impairment losses to be recognized, if any. ASU 2011-08 will be effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, which for us will be in our 2012 second quarter, with early adoption permitted. We do not believe the adoption of this update will have a material impact on our financial statements. |
Segment And Related Information | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment And Related Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment And Related Information | (8) Segment and Related Information
We are a major provider of integrated information management solutions and services for the public sector, with a focus on local governments.
We provide our software systems and services and appraisal services through four business units which focus on the following products: · financial management and education software solutions; · financial management, municipal courts, and land and vital records software solutions; · courts and justice software solutions; and · appraisal and tax software solutions and property appraisal services.
In accordance with ASC 280-10, Segment Reporting, the financial management and education software solutions unit, financial management, municipal courts and land and vital records software solutions unit and the courts and justice software solutions unit meet the criteria for aggregation and are presented in one segment, Enterprise Software Solutions ("ESS"). The ESS segment provides municipal and county governments and schools with software systems to meet their information technology and automation needs for mission-critical "back-office" functions such as financial management and courts and justice processes. The Appraisal and Tax Software Solutions and Services ("ATSS") segment provides systems and software that automate the appraisal and assessment of real and personal property, as well as property appraisal outsourcing services for local governments and taxing authorities. Property appraisal outsourcing services include: the physical inspection of commercial and residential properties; data collection and processing; computer analysis for property valuation; preparation of tax rolls; community education; and arbitration between taxpayers and the assessing jurisdiction.
We evaluate performance based on several factors, of which the primary financial measure is business segment operating income. We define segment operating income as income before noncash amortization of intangible assets associated with their acquisition, share-based compensation expense, interest expense and income taxes. Segment operating income includes intercompany transactions. The majority of intercompany transactions relate to contracts involving more than one unit and are valued based on the contractual arrangement. Segment operating income for corporate primarily consists of compensation costs for the executive management team and certain accounting and administrative staff and share-based compensation expense for the entire company. Segment operating income for corporate also includes our company-wide customer conference revenues and associated expenses.
|
Basis Of Presentation | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Basis Of Presentation [Abstract] | |
Basis Of Presentation | (1) Basis of Presentation We prepared the accompanying condensed financial statements following the requirements of the Securities and Exchange Commission ("SEC") and accounting principles generally accepted in the United States, or GAAP, for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted for interim periods. Balance sheet amounts are as of September 30, 2011 and December 31, 2010 and operating result amounts are for the three and nine months ended September 30, 2011 and 2010, and include all normal and recurring adjustments that we considered necessary for the fair summarized presentation of our financial position and operating results. As these are condensed financial statements, one should also read the financial statements and notes included in our latest Form 10-K for the year ended December 31, 2010. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. |
Revolving Line Of Credit | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Revolving Line Of Credit [Abstract] | |
Revolving Line Of Credit |
(4) Revolving Line of Credit
In August 2010, we entered into a $150.0 million Credit Agreement (the "Credit Facility") and a related pledge and security agreement with a group of seven financial institutions, with Bank of America, N.A., as Administrative Agent. The Credit Facility provides for a revolving credit line of $150.0 million (which may be increased up to $200.0 million subject to our obtaining commitments for such increase), with a $25.0 million sublimit for letters of credit. The Credit Facility matures on August 11, 2014. Borrowings under the Credit Facility may be used for general corporate purposes, including working capital requirements, acquisitions and share repurchases.
Borrowings under the Credit Facility bear interest at a rate of either (1) Bank of America's prime rate plus a margin of 1.50% to 2.75% or (2) the 30, 60, 90 or 180-day LIBOR rate plus a margin of 2.50% to 3.75%, with the margin determined by our consolidated leverage ratio. As of September 30, 2011, our effective average interest rate for borrowings during the three and nine months ended September 30, 2011 was 3.39% and 3.29%, respectively. As of September 30, 2011, our interest rate was 3.23%. The Credit Facility is secured by substantially all of our assets, excluding real property. The Credit Facility requires us to maintain certain financial ratios and other financial conditions and prohibits us from making certain investments, advances, cash dividends or loans, and limits incurrence of additional indebtedness and liens. As of September 30, 2011, we were in compliance with those covenants. As of September 30, 2011, we had $58.0 million in outstanding borrowings and unused available borrowing capacity of $83.7 million under the Credit Facility. In addition, as of September 30, 2011, our bank had issued outstanding letters of credit totaling $8.3 million to secure surety bonds required by some of our customer contracts. These letters of credit reduce our available borrowing capacity and expire through mid-2012. |
Income Tax Provision | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Income Tax Provision [Abstract] | |
Income Tax Provision |
(5) Income Tax Provision
For the three and nine months ended September 30, 2011, we had an effective income tax rate of 36.5% and 38.4%, respectively compared to 40.3% and 40.0% for the three and nine months ended September 30, 2010, respectively. The effective income tax rates for the periods presented were different from the statutory United States federal income tax rate of 35% primarily due to state income taxes, non-deductible share-based compensation expense, the qualified manufacturing activities deduction, research and development tax credit and non-deductible meals and entertainment costs. We made federal and state income tax payments, net of refunds, of $8.5 million in the nine months ended September 30, 2011, compared to $12.0 million in net payments for the same period of the prior year. |
Earnings Per Share | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share |
(6) Earnings Per Share
The following table details the reconciliation of basic earnings per share to diluted earnings per share:
|
Financial Instruments | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments[Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | (2) Financial Instruments
Assets recorded at fair value in the balance sheet as of September 30, 2011 are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, defined by Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures, which are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets, are as follows:
Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2 – Inputs other than Level 1 inputs that are either directly or indirectly observable; and Level 3 – Unobservable inputs, for which little or no market data exist, therefore requiring an entity to develop its own assumptions.
As of September 30, 2011 we held certain items that are required to be measured at fair value on a recurring basis. The following table summarizes the fair value of these financial assets:
Cash and cash equivalents consist primarily of money market funds with original maturity dates of three months or less, for which we determine fair value through quoted market prices. Investments available-for-sale consist of two auction rate municipal securities ("ARS") which are collateralized debt obligations supported by municipal agencies and do not include mortgage-backed securities. These ARS are debt instruments with stated maturities of 21 and 31 years, for which the interest rate is designed to be reset through Dutch auctions approximately every 30 days. However, due to events in the credit markets, auctions for these securities have not occurred since February 2008. Both of our ARS have had a series of very small partial redemptions at par in the period from July 2009 through July 2011. As of September 30, 2011 we have continued to earn and collect interest on both of our ARS.
Because quoted prices in active markets are no longer available we determined the estimated fair values of these securities utilizing a discounted trinomial model. The model considers the probability of three potential occurrences for each auction event through the maturity date of each ARS. The three potential outcomes for each auction are (i) successful auction/early redemption, (ii) failed auction and (iii) issuer default. Inputs in determining the probabilities of the potential outcomes include but are not limited to, the securities' collateral, credit rating, insurance, issuer's financial standing, contractual restrictions on disposition and the liquidity in the market. The fair value of each ARS is determined by summing the present value of the probability-weighted future principal and interest payments determined by the model. Since there can be no assurances that auctions for these securities will be successful in the near future, we have classified our ARS as non-current investments.
The par and carrying values, and related cumulative unrealized loss for our non-current investments available-for-sale as of September 30, 2011 are as follows:
We consider the impairment in our ARS as temporary because we do not have the intent to sell, nor is it more-likely-than-not that we will be required to sell these securities before recovery of their cost basis. We believe that this decline in fair value is temporary, because the underlying assets of these securities are supported by municipal agencies and do not include mortgage-backed securities, have redemption features which call for redemption at 100% of par value and have a current credit rating of A or AA. The ratings on the ARS take into account credit support through insurance policies guaranteeing each of the bonds' payment of principal and accrued interest, if it becomes necessary.In addition, both ARS have had a series of very small partial redemptions at par in the period July 2009 through July 2011. We did not record any unrealized gains or losses on our ARS in the nine months ended September 30, 2011.Based on our cash and cash equivalents balance of $5.3 million, expected operating cash flows and a $150.0 million credit line, we do not believe a lack of liquidity associated with our ARS will adversely affect our ability to conduct business, and believe we have the ability to hold the securities throughout the currently estimated recovery period. We will continue to evaluate any changes in the market value of our ARS and in the future, depending upon existing market conditions, we may be required to record an other-than-temporary decline in market value.
The following table reflects the activity for assets measured at fair value using Level 3 inputs for the nine months ended September 30, 2011:
|
Subsequent Events | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Subsequent Events [Abstract] | |
Subsequent Events |
(11) Subsequent Events On October 14, 2011, we acquired all of the capital stock of Windsor Management Group, L.L.C. ("Windsor") for a cash purchase price of $16.3 million, net of cash acquired of $7.2 million. Windsor provides an integrated suite of financial and human capital management solutions to the K-12 education market, primarily in the Southwest. We have not finalized the allocation of the purchase price. |
Condensed Statements Of Income (USD $) In Thousands, except Per Share data | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Revenues: | ||||
Software licenses | $ 7,631 | $ 9,260 | $ 22,761 | $ 26,444 |
Subscriptions | 7,989 | 6,020 | 22,230 | 17,080 |
Software services | 17,644 | 16,718 | 52,400 | 52,280 |
Maintenance | 37,011 | 34,729 | 107,579 | 101,357 |
Appraisal services | 5,761 | 5,612 | 17,945 | 14,812 |
Hardware and other | 1,148 | 1,430 | 4,397 | 4,216 |
Total revenues | 77,184 | 73,769 | 227,312 | 216,189 |
Cost of revenues: | ||||
Software licenses | 536 | 912 | 2,320 | 2,471 |
Acquired software | 243 | 398 | 782 | 1,194 |
Software services, maintenance and subscriptions | 35,689 | 34,708 | 106,371 | 104,184 |
Appraisal services | 3,776 | 3,434 | 11,302 | 9,442 |
Hardware and other | 808 | 1,110 | 3,645 | 3,197 |
Total cost of revenues | 41,052 | 40,562 | 124,420 | 120,488 |
Gross profit | 36,132 | 33,207 | 102,892 | 95,701 |
Selling, general and administrative expenses | 18,755 | 17,337 | 54,509 | 52,337 |
Research and development expense | 4,196 | 3,233 | 13,780 | 10,493 |
Amortization of customer and trade name intangibles | 801 | 806 | 2,408 | 2,419 |
Operating income | 12,380 | 11,831 | 32,195 | 30,452 |
Other expense, net | (562) | (568) | (1,586) | (712) |
Income before income taxes | 11,818 | 11,263 | 30,609 | 29,740 |
Income tax provision | 4,312 | 4,540 | 11,751 | 11,896 |
Net income | $ 7,506 | $ 6,723 | $ 18,858 | $ 17,844 |
Earnings per common share: | ||||
Basic | $ 0.24 | $ 0.20 | $ 0.60 | $ 0.52 |
Diluted | $ 0.23 | $ 0.19 | $ 0.57 | $ 0.50 |
Basic weighted average common shares outstanding | 31,097 | 34,103 | 31,247 | 34,075 |
Diluted weighted average common shares outstanding | 32,960 | 35,410 | 33,027 | 35,475 |