v2.4.0.6
Document and Entity Information Document
3 Months Ended
Mar. 31, 2013
May 08, 2013
Document and Entity Information [Abstract]    
Entity Registrant Name EBIX INC  
Entity Central Index Key 0000814549  
Current Fiscal Year End Date --12-31  
Entity Filer Category Accelerated Filer  
Document Type 10-Q  
Document Period End Date Mar. 31, 2013  
Document Fiscal Year Focus 2013  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   37,169,961
v2.4.0.6
Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Income Statement [Abstract]    
Operating revenue $ 52,566 $ 43,827
Operating expenses:    
Cost of services provided 9,891 9,029
Product development 7,035 4,272
Sales and marketing 3,912 3,812
General and administrative 9,971 6,444
Amortization and depreciation 2,452 1,941
Total operating expenses 33,261 25,498
Operating income 19,305 18,329
Interest income 93 167
Interest expense (362) (253)
Other non-operating income 82 0
Foreign currency exchange loss (170) (296)
Income before income taxes 18,948 17,947
Income tax expense (1,604) (2,262)
Net income $ 17,344 $ 15,685
Basic earnings per common share $ 0.47 $ 0.43
Diluted earnings per common share $ 0.45 $ 0.40
Basic weighted average shares outstanding 37,168 36,450
Diluted weighted average shares outstanding 38,779 39,523
v2.4.0.6
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Statement of Other Comprehensive Income [Abstract]    
Net income $ 17,344 $ 15,685
Other comprehensive income (loss):    
Foreign currency translation adjustments (518) 4,327
Total other comprehensive income (loss) (518) 4,327
Comprehensive income $ 16,826 $ 20,012
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Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Current assets:    
Cash and cash equivalents $ 43,005 $ 36,449
Short-term investments 778 971
Trade accounts receivable, less allowances of $1,075 and $1,157, respectively 39,533 37,298
Deferred tax asset, net 1,899 1,835
Other current assets 4,680 5,116
Total current assets 89,895 81,669
Property and equipment, net 9,676 10,082
Goodwill 326,223 326,748
Intangibles, net 50,654 52,591
Indefinite-lived intangibles 30,887 30,887
Deferred tax asset, net 18,764 11,245
Other assets 3,654 3,724
Total assets 529,753 516,946
Current liabilities:    
Accounts payable and accrued liabilities 20,151 15,497
Accrued payroll and related benefits 4,800 5,431
Short term debt 9,625 11,344
Contingent liability for accrued earn-out acquisition consideration 2,406 3,265
Current portion of long term debt and capital lease obligations, net of discount of $0 and $13, respectively 905 915
Deferred revenue 19,584 19,888
Current deferred rent 226 237
Other current liabilities 74 113
Total current liabilities 57,771 56,690
Revolving line of credit 37,840 37,840
Long term debt and capital lease obligations, less current portion, net of discount of $78 29,117 31,592
Other liabilities 6,471 6,429
Contingent liability for accrued earn-out acquisition consideration 14,027 14,230
Put option liability 1,105 1,186
Deferred revenue 270 375
Long term deferred rent 1,465 1,449
Total liabilities 148,066 149,791
Commitments and Contingencies      
Temporary equity, Note 10 5,000 5,000
Stockholders’ equity:    
Preferred stock, $0.10 par value, 500,000 shares authorized, no shares issued and outstanding at March 31, 2013 and December 31, 2012 0 0
Common stock, $0.10 par value, 60,000,000 shares authorized, 37,208,639 issued and 37,168,130 outstanding at March 31, 2013 and 37,131,777 issued and 37,091,268 outstanding at December 31, 2012 3,717 3,709
Additional paid-in capital 164,838 164,346
Treasury stock (40,509 shares as of March 31, 2013 and December 31, 2012) (76) (76)
Retained earnings 215,644 201,094
Accumulated other comprehensive loss (7,436) (6,918)
Total stockholders’ equity 376,687 362,155
Total liabilities and stockholders’ equity $ 529,753 $ 516,946
v2.4.0.6
Condensed Consolidated Balance Sheets (Parentheticals) (USD $)
In Thousands, except Share data, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts $ 1,075 $ 1,157
Unamortized debt discount, current 0 13
Unamortized debt discount, noncurrent $ 78 $ 0
Preferred stock, par value (per share) $ 0.1 $ 0.10
Preferred stock, shares authorized 500,000 500,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value (per share) $ 0.1 $ 0.10
Common stock, shares authorized 60,000,000 60,000,000
Common stock, shares issued 37,208,639 37,131,777
Common stock, shares outstanding 37,168,130 37,091,268
Treasury stock, shares 40,509 40,509
v2.4.0.6
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Common Stock
Treasury Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Beginning Balance, Value at Dec. 31, 2012 $ 362,155 $ 3,709 $ (76) $ 164,346 $ 201,094 $ (6,918)
Beginning Balance, Issued Shares at Dec. 31, 2012 37,131,777 37,131,777        
Beginning Balance, Treasury Shares at Dec. 31, 2012     (40,509)      
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income 17,344       17,344  
Cumulative translation adjustment (518)         (518)
Vesting of restricted stock, Shares   31,449        
Vesting of restricted stock, Value 0 3   (3)    
Exercise of stock options, Shares   79,044        
Exercise of stock options, Value 553 8   545    
Share based compensation 511     511    
Tax benefit related to share-based compensation 0     0    
Forfeiture of certain shares to satisfy exercise costs and the recipients income tax obligations related to stock options exercised and restricted stock vested, Shares   (33,631)        
Forfeiture of certain shares to satisfy exercise costs and the recipients income tax obligations related to stock options exercised and restricted stock vested, Value (564) (3)   (561)    
Dividends paid (2,794)       (2,794)  
Ending Balance, Value at Mar. 31, 2013 $ 376,687 $ 3,717 $ (76) $ 164,838 $ 215,644 $ (7,436)
Ending Balance, Issued Shares at Mar. 31, 2013 37,208,639 37,208,639        
Ending Balance, Treasury Shares at Mar. 31, 2013     (40,509)      
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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Cash flows from operating activities:    
Net income $ 17,344 $ 15,685
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 2,452 1,941
Benefit for deferred taxes (7,538) (1,428)
Share based compensation 511 548
Provision for doubtful accounts 0 266
Debt discount amortization on convertible debt 13 0
Unrealized foreign exchange loss 9 661
Gain on put option (81) 0
Reduction of acquisition earnout accruals (299) 0
Changes in assets and liabilities, net of effects from acquisitions:    
Accounts receivable (2,234) 1,771
Other assets 357 (302)
Accounts payable and accrued expenses 4,719 (861)
Accrued payroll and related benefits (643) (1,575)
Deferred revenue (350) (560)
Deferred rent 44 (75)
Other current liabilities (39) (2,336)
Net cash provided by operating activities 14,265 13,735
Cash flows from investing activities:    
Investment in USIX (570) 0
Maturities of marketable securities (net of purchases) 208 979
Capital expenditures (345) (673)
Net cash provided by/(used in) investing activities (707) 306
Cash flows from financing activities:    
Principal payments of term loan obligation (4,125) 0
Excess tax benefit from share-based compensation 0 27
Proceeds from the exercise of stock options 553 14
Forfeiture of certain shares to satisfy exercise costs and the recipients income tax obligations related to stock options exercised and restricted stock vested, Value (564) 0
Dividend payments (2,794) (1,464)
Principal payments of debt obligations (12) 0
Payments of capital lease obligations (80) (45)
Net cash provided used in financing activities (7,022) (1,468)
Effect of foreign exchange rates on cash 20 871
Net change in cash and cash equivalents 6,556 13,444
Cash and cash equivalents at the beginning of the period 36,449 23,696
Cash and cash equivalents at the end of the period 43,005 37,140
Supplemental disclosures of cash flow information:    
Interest paid 352 312
Income taxes paid $ 3,548 $ 3,030
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Description of Business and Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2013
Accounting Policies [Abstract]  
Description of Business and Summary of Significant Accounting Policies
Description of Business and Summary of Significant Accounting Policies
Description of Business— Ebix, Inc. and subsidiaries (“Ebix” or the “Company”) is an international supplier of on-demand software and e-commerce solutions to the insurance industry. Ebix provides various application software products for the insurance industry ranging from data exchanges, carrier systems, and agency systems, to custom software development for business entities across the insurance industry. The Company's products feature fully customizable and scalable on-demand software designed to streamline the way insurance professionals manage distribution, marketing, sales, customer service, and accounting activities. The Company has its headquarters in Atlanta, Georgia and also conducts operating activities in Australia, Canada, China, India, Japan, New Zealand, Singapore, United Kingdom and Brazil. International revenue accounted for 31.1% and 30.4% of the Company’s total revenue for the three months ended March 31, 2013 and 2012, respectively.
The Company’s revenues are derived from four product/service groups. Presented in the table below is the breakout of our revenue streams for each of those product/service groups for the three months ended March 31, 2013 and 2012.

 
 
Three Months Ended
 
 
March 31,
(dollar amounts in thousands)
 
2013
 
2012
Exchanges
 
$
41,686

 
$
34,646

Broker Systems
 
4,722

 
4,754

Business Process Outsourcing (“BPO”)
 
4,164

 
3,571

Carrier Systems
 
1,994

 
856

Totals
 
$
52,566

 
$
43,827


Summary of Significant Accounting Policies
Basis of Presentation—The accompanying unaudited condensed consolidated financial statements and these notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") with the effect of inter-company balances and transactions eliminated. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP and SEC rules have been condensed or omitted as permitted by and pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements contain adjustments (consisting only of normal recurring items) necessary to fairly present the consolidated financial position of the Company and its consolidated results of operations and cash flows. Operating results for the three months ended March 31, 2013 and 2012 are not necessarily indicative of the results that may be expected for the full year. The condensed consolidated December 31, 2012 balance sheet included in this interim period filing has been derived from the audited financial statements at that date but does not include all of the information and related notes required by GAAP for complete financial statements. These condensed interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
Fair Value of Financial Instrument—The Company follows the relevant GAAP guidance concerning fair value measurements which provides a consistent framework to define, measure, and disclose the fair value of assets and liabilities in financial statements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction. This guidance establishes a three-level hierarchy priority for disclosure of assets and liabilities recorded at fair value. The ordering of priority reflects the degree to which objective data from external active markets are available to measure fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable.
Level 1 Inputs - Unadjusted quoted prices available in active markets for identical investments to the reporting entity at the measurement date
Level 2 Inputs - Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 Inputs - Unobservable inputs, which are used to the extent that observable inputs are not available, and used in situations where there is little or no market activity for the asset or liability and wherein the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk.

     A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

As of March 31, 2013 the Company had the following financial instruments to which it had to consider fair values and had to make fair assessments:
Common share-based put option for which the fair value was measured as a Level 2 instrument.
Short-term investments for which the fair values are measured as a Level 1 instrument.
Contingent accrued earn-out business acquisition consideration liabilities for which fair values are measured as Level 3 instruments. These contingent consideration liabilities were recorded at fair value on the acquisition date and are remeasured quarterly based on the then assessed fair value and adjusted if necessary. The increases or decreases in the fair value of contingent consideration payable can result from changes in anticipated revenue levels and changes in assumed discount periods and rates. As the fair value measure is based on significant inputs that are not observable in the market, they are categorized as Level 3.

Other financial instruments not measured at fair value on the Company's unaudited consolidated balance sheet at March 31, 2013 but which require disclosure of their fair values include: cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, accrued payroll and related benefits, capital lease obligations, and debt under the revolving line of credit and term loans with Citibank. The estimated fair value of such instruments at March 31, 2013 approximates their carrying value as reported on the unaudited consolidated balance sheet. The fair values of all of these instruments are categorized as Level 2 of the fair value hierarchy, with the exception of cash, which is categorized as Level 1.
Additional information regarding the Company's assets and liabilities that are measured at fair value on a recurring basis is presented in the following table:

 
 
Fair Values at Reporting Date Using*
Descriptions
 
Balance, March 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
 
$
778

$
778

$

$

Total assets measured at fair value
 
$
778

$
778

$

$

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Derivatives:
 
 
 
 
 
Common share-based put option (a)
 
$
1,105

$

$
1,105

$

Foreign exchange contracts (b)
 




Contingent accrued earn-out acquisition consideration (c)
 
16,433



16,433

Total liabilities measured at fair value
 
$
17,538

$

$
1,105

$
16,433

 
 
 
 
 
 
(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, which represents a 10% discount off of the per-share value established on the effective date of the closing of Ebix's acquisition of PlanetSoft. A portion of the total purchase consideration was allocated to this put liability based on its initial fair value, which was determined to be $1.4 million using a Black-Scholes model. 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.
(b) The market valuation approach is applied and the valuation inputs include foreign currency exchange spot rates, forward premiums, forward foreign currency exchange rates, term, and maturity dates. As of March 31, 2013 all the Company's derivative instruments in the form of foreign currency hedge instruments had been settled.
(c) 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 three months ended March 31, 2013 there were no transfers between fair value Levels 1, 2 or 3.

    
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 three months ending March 31, 2013:
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
 
 
Contingent Liability for Accrued Earn-out Acquisition Consideration
 
 
(in thousands)
 
 
 
Beginning balance at January 1, 2013
 
$
17,495

 
 
 
Total remeasurement adjustments:
 
 
       (Gains) or losses included in earnings **
 
(299
)
       (Gains) or losses recorded against goodwill
 

       Foreign currency translation adjustments ***
 
(193
)
 
 
 
Acquisitions and settlements
 
 
       Business acquisitions
 

       Settlements
 
(570
)
 
 
 
Ending balance at March 31, 2013
 
$
16,433

 
 
 
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.
 
$
(344
)
 
 
 
** recorded as an adjustment to reported general and administrative expenses
*** recorded as a component of other comprehensive income within stockholders' equity


Quantitative Information about Level 3 Fair Value Measurements
The significant unobservable inputs used in the fair value measurement of the Company's contingent consideration liabilities designated as Level 3 are as follows:
  
 
 
 
 
 
 
(in thousands, unaudited)
 
Fair Value at  March 31, 2013
 
             Valuation Technique
 
Significant Unobservable
Input
Contingent acquisition consideration:
(USIX, Taimma, Planetsoft, and TriSystems acquisitions)
 
$16,433
 
Discounted cash flow
 
Annualized revenue and probability of achievement



Sensitivity to Changes in Significant Unobservable Inputs
As presented in the table above, the significant unobservable inputs used in the fair value measurement of contingent consideration related to business acquisitions are annualized revenue forecasts developed by the Company's management and the probability of achievement of those revenue forecasts. The discount rate used in these calculations is 1.75%. Significant increases (decreases) in these unobservable inputs in isolation would result in a significantly (lower) higher fair value measurement.
Revenue Recognition—The Company derives its revenues primarily from subscription and transaction fees pertaining to services delivered over our exchanges or from our ASP platforms, fees for business process outsourcing services, and fees for software development projects including associated fees for consulting, implementation, training, and project management provided to customers with installed systems. Sales and value-added taxes are not included in revenues, but rather are recorded as a liability until the taxes assessed are remitted to the respective taxing authorities.
In accordance with Financial Accounting Standard Board (“FASB”) and SEC accounting guidance on revenue recognition, the Company considers revenue earned and realizable when: (a) persuasive evidence of the sales arrangement exists, provided that the arrangement fee is fixed or determinable, (b) delivery or performance has occurred, (c) customer acceptance has been received, if contractually required, and (d) collectability of the arrangement fee is probable. The Company uses signed contractual agreements as persuasive evidence of a sales arrangement. We apply the provisions of the relevant generally accepted accounting principles related to all transactions involving the license of software where the software deliverables are considered more than inconsequential to the other elements in the arrangement.
For contracts that contain multiple deliverables, we analyze the revenue arrangements in accordance with the relevant technical accounting guidance, which provides criteria governing how to determine whether goods or services that are delivered separately in a bundled sales arrangement should be considered as separate units of accounting for the purpose of revenue recognition. Generally these types of arrangements include deliverables pertaining to software licenses, system set-up, and professional services associated with product customization or modification. Delivery of the various contractual elements typically occurs over periods of less than eighteen months. These arrangements generally do not have refund provisions or have very limited refund terms.
Software development arrangements involving significant customization, modification or production are accounted for in accordance with the appropriate technical accounting guidance issued by FASB using the percentage-of-completion method. The Company recognizes revenue using periodic reported actual hours worked as a percentage of total expected hours required to complete the project arrangement and applies the percentage to the total arrangement fee.
Accounts Receivable and the Allowance for Doubtful Accounts Receivable—Reported accounts receivable include $28.7 million of trade receivables stated at invoice billed amounts net of the estimated allowance for doubtful accounts receivable, and $10.8 million of unbilled receivables. Approximately $7.4 million of deferred revenue is included in accounts receivable at March 31, 2013. The Company recognized and recorded bad debt expense for the three-month periods ended March 31, 2013 and 2012 in the amounts of $0 and $266 thousand, respectively. Accounts receivable are written off against the allowance account when the Company has exhausted all reasonable collection efforts.
Goodwill and Other Indefinite-Lived Intangible Assets—Goodwill represents the cost in excess of the fair value of the net assets of acquired businesses. Indefinite-lived intangible assets represent the fair value of acquired contractual customer relationships for which future cash flows are expected to continue indefinitely. In accordance with the relevant FASB accounting guidance, goodwill and indefinite-lived intangible assets are not amortized but are tested for impairment at the reporting unit level on an annual basis or on an interim basis if an event occurs or circumstances change that would likely have reduced the fair value of a reporting unit below its carrying value. Potential impairment indicators include a significant change in the business climate, legal factors, operating performance indicators, competition, and the sale or disposition of a significant portion of the business. The impairment evaluation process involves an assessment of certain qualitative factors to determine whether the existence of events or circumstances would indicate that it is more likely than not that the fair value of any of our reporting units was less than its carrying amount. If after assessing the totality of events or circumstances, we were to determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company would not perform the two-step quantitative impairment testing described further below.
The aforementioned two-step quantitative testing process involves comparing the reporting unit carrying values to their respective fair values; we determine fair value of our reporting units by applying the discounted cash flow method using the present value of future estimated net cash flows. If the fair value of a reporting unit exceeds its carrying value, then no further testing is required. However, if a reporting unit's fair value were to be less than its carrying value, we would then determine the amount of the impairment charge, if any, which would be the amount that the carrying value of the reporting unit's goodwill exceeded its implied value. Projections of cash flows are based on our views of growth rates, operating costs, anticipated future economic conditions and the appropriate discount rates relative to risk and estimates of residual values. We believe that our estimates are consistent with assumptions that marketplace participants would use in their estimates of fair value. The use of different estimates or assumptions for our projected discounted cash flows (e.g., growth rates, future economic conditions, discount rates and estimates of terminal values) when determining the fair value of our reporting units could result in different values and may result in a goodwill impairment charge. We perform our annual goodwill impairment evaluation and testing as of September 30th of each year. This evaluation is done during the fourth quarter each year. During the year ended December 31, 2012 we had no impairment of our reporting unit goodwill balances.
Changes in the carrying amount of goodwill for the three months ended March 31, 2013 are as follows:

 
March 31, 2013
 
(In thousands)
Beginning Balance at January 1, 2013
$
326,748

Additions, net

Foreign currency translation adjustments
(525
)
Ending Balance at March 31, 2013
$
326,223


Finite-lived Intangible Assets—Purchased intangible assets represent the estimated acquisition date fair value of customer relationships, developed technology, trademarks and non-compete agreements obtained in connection with the businesses we acquire. We amortize these intangible assets on a straight-line basis over their estimated useful lives, as follows:

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

The carrying value of finite-lived and indefinite-lived intangible assets at March 31, 2013 and December 31, 2012 are as follows:

 
March 31,
2013
 
December 31,
2012
 
(In thousands)
Finite-lived intangible assets:
 
 
 
Customer relationships
$
57,486

 
$
57,638

Developed technology
13,963

 
14,025

Trademarks
2,611

 
2,638

Non-compete agreements
538

 
538

Backlog
140

 
140

Database
212

 
212

Total intangibles
74,950

 
75,191

Accumulated amortization
(24,296
)
 
(22,600
)
Finite-lived intangibles, net
$
50,654

 
$
52,591

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

 
$
30,887


Amortization expense recognized in connection with acquired intangible assets was $1.7 million for the three months ended March 31, 2013 and $1.2 million for the three months ended March 31, 2012.
Foreign Currency Translation-Historically the functional currency for the Company's foreign subsidiaries in India and Singapore had been the Indian rupee and Singapore dollar, respectively. As a result of the Company's rapid growth, including its acquisition of PlanetSoft in 2012, the expansion of its intellectual property research and development activities in its Singapore subsidiary, and its product development activities and information technology enabled services for the insurance industry provided by its India subsidiary in support of Ebix's operating divisions across the world (both of which are transacted in U.S. dollars), management undertook a reconsideration of functional currency designations for these two foreign subsidiaries in India and Singapore, and concluded that effective July 1, 2012 the functional currency for these entities should be changed to the U.S. dollar. The Company believes that the acquisition of PlanetSoft along with the other four business acquisitions completed in 2012 during the current year combined with the cumulative effect of business acquisitions made over the last few years which necessitated the rapid growth of the Company's operations in India and Singapore, were indicative of a significant change in the economic facts and circumstances that justified the reconsideration and ultimate change in the functional currency.
The functional currency of the Company's other foreign subsidiaries is the local currency of the country in which the subsidiary operates. The assets and liabilities of these foreign subsidiaries are translated into U.S. dollars at the rates of exchange at the balance sheet dates. Income and expense accounts are translated at the average exchange rates in effect during the period. Gains and losses resulting from translation adjustments are included as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets, and are included in the condensed consolidated statements of comprehensive income. Foreign exchange transaction gains and losses that are derived from transactions denominated in a currency other than the subsidiary's functional currency are included in the determination of net income.
Income Taxes—Deferred income taxes are recorded to reflect the estimated future tax effects of differences between the financial statement and tax basis of assets, liabilities, operating losses, and tax credit carry forwards using the tax rates expected to be in effect when the temporary differences reverse. Valuation allowances, if any, are recorded to reduce deferred tax assets to the amount management considers more likely than not to be realized. Such valuation allowances are recorded for the portion of the deferred tax assets that are not expected to be realized based on the levels of historical taxable income and projections for future taxable income over the periods in which the temporary differences will be deductible.
The Company also applies FASB accounting guidance on accounting for uncertainty in income taxes positions. This guidance clarifies the accounting for uncertainty in income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. In this regard we recognize the tax benefit from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
Recent Relevant Accounting Pronouncements—The following is a brief discussion of recently released accounting pronouncements that are pertinent to the Company's business:

In July 2012, the FASB issued new Accounting Standards Update No. 2012-02, "Testing Indefinite-Lived Intangible Assets for Impairment" (the revised standard). The revised standard is intended to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment. It allows companies to perform a qualitative assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, similar in approach to the goodwill impairment test. The revised standard is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The Company will adopt this new standard in 2013 for use in its annual impairment evaluations of indefinite-lived intangible assets, which is performed as of September of each year.
    
In September 2011, the FASB issued technical guidance regarding an entity's evaluation of goodwill for possible impairment. Under this new guidance an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events or circumstances, an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step quantitative impairment test is unnecessary. This new technical guidance was effective for fiscal years beginning after December 15, 2011. Early adoption was permitted for annual and interim goodwill impairment evaluations performed as of a date before September 2011, if an entity's financial statements for the most recent annual or interim period had not yet been issued. The Company elected to adopt this technical guidance early and accordingly applied it to the 2011 and 2012 annual impairment evaluation of goodwill.

    

v2.4.0.6
Earnings per Share
3 Months Ended
Mar. 31, 2013
Earnings Per Share [Abstract]  
Earnings Per Share
Earnings per Share

A reconciliation between basic and diluted earnings per share is as follows (in thousands, except per share data):

 
Three Months Ended
 
 
March 31,
 
 
2013
 
2012
 
 
(In thousands, except per share data)
Net income for basic and diluted earnings per share
$
17,344

 
$
15,685

 
Basic Weighted Average Shares Outstanding
37,168

 
36,450

 
Dilutive effect of stock options and restricted stock awards
1,611

 
3,073

 
Diluted weighted average shares outstanding
38,779

 
39,523

 
Basic earnings per common share
$
0.47

 
$
0.43

 
Diluted earnings per common share
$
0.45

 
$
0.40

 


v2.4.0.6
Business Combinations
3 Months Ended
Mar. 31, 2013
Business Combinations [Abstract]  
Business Combinations
Business Combinations
    The Company executes accretive business acquisitions in combination with organic growth initiatives as part of its comprehensive business growth and expansion strategy. The Company looks to acquire businesses that are complementary to Ebix's existing products and services. During 2012 the Company executed and completed five business acquisitions including PlanetSoft, Inc. which is discussed further below.
A significant component of the purchase price consideration for many of the Company's business acquisitions is a potential future cash earnout based on reaching certain specified future revenue targets. The Company recognizes these potential obligations as contingent liabilities as reported on its Condensed Consolidated Balance Sheets. As discussed in more detail in Note 1, these contingent consideration liabilities are recorded at fair value on the acquisition date and are remeasured quarterly based on the then assessed fair value and adjusted if necessary. As of March 31, 2013, the total of these contingent liabilities was $16.4 million, of which $14.0 million is reported in long-term liabilities, and $2.4 million is included in current liabilities in the Company's Condensed Consolidated Balance Sheet. As of December 31, 2012 the total of these contingent liabilities was $17.5 million, of which $14.2 million is reported in long-term liabilities, and $3.3 million is included in current liabilities in the Company's Condensed Consolidated Balance Sheet.
Consideration paid by the Company for the businesses it purchases is allocated to the assets and liabilities acquired based upon their estimated fair values as of the date of the acquisition. The excess of the purchase price over the estimated fair values of assets acquired and liabilities assumed is recorded as goodwill. Recognized goodwill pertains to the value of the expected synergies to be derived from combining the operations of the businesses we acquire including the value of the acquired workforce.
During the three months ended March 31, 2012 the Company received a termination fee in connection with a failed business acquisition. In this regard the Company recorded a reduction to general and administrative expense in the approximate amount of $971 thousand (net of directly related internal operating costs incurred by the Company and a portion of the fee that was paid to our investment banker).
Effective June 1, 2012 Ebix closed the merger of California based PlanetSoft, Inc. ("PlanetSoft"). Under the terms of the merger agreement the former PlanetSoft shareholders received $35.0 million cash and 296,560 shares of Ebix common stock valued at $16.86 per share or $5.0 million in the aggregate. Furthermore, under the terms of the agreement the PlanetSoft shareholders hold a put option 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 shares of common stock back to the Company at a 10% discount off of the per-share value established on the effective date of the closing of Ebix's acquisition of PlanetSoft. The initial fair value of this put option liability was determined to be $1.4 million. This put option is described in more detail in Note 7. Included in the Company's revenues as reported in its condensed consolidated statement of income for the three months ended March 31, 2013 is $4.0 million of PlanetSoft's operating revenue. The revenue derived from PlanetSoft's operations is included in the Company's Exchange division. The Company accounted for this acquisition by recording $44.1 million of goodwill, $9.8 million of intangible assets pertaining to customer relationships, and $540 thousand of intangible assets pertaining to acquired technology. The former shareholders of PlanetSoft retain the right to earn up to an additional cash consideration if certain incremental revenue targets are achieved over the two-year anniversary date subsequent to the effective date of the acquisition. The Company has determined that the approximate fair value of this contingent consideration liability to be $10.2 million as of March 31, 2013.

The aggregated unaudited pro forma financial information pertaining to the all of the Company's acquisitions made during 2012, which includes the acquisitions of BSI, Taimma, PlanetSoft, Fintechnix, and TriSystems as presented in the table below is provided for informational purposes only and does not project the Company's expected results of operations for any future period. No effect has been given in this pro forma information for future synergistic benefits that may still be realized as a result of combining these companies or costs that may yet be incurred in integrating their operations. The 2012 pro forma financial information below assumes that all such business acquisitions were made on January 1, 2012, whereas the Company's reported financial statements for the three months ended March 31, 2012 do not include the operating results from the businesses since the effective date that they were acquired by Ebix were all after March 31, 2012.

 
Three Months Ending March 31, 2013
 
Three Months Ending March 31, 2012
 
As Reported
Pro Forma
 
As Reported
Pro Forma
 
(unaudited)
 
(unaudited)
 
(In thousands, except per share data)
Revenue
$
52,566

$
52,566

 
$
43,827

$
50,892

Net Income
$
17,344

$
17,344

 
$
15,685

$
14,743

Basic EPS
$
0.47

$
0.47

 
$
0.43

$
0.40

Diluted EPS
$
0.45

$
0.45

 
$
0.40

$
0.37



In the above table, the unaudited pro forma revenue for the three months ended March 31, 2013 increased by $1.7 million from the unaudited pro forma revenue during the same period in 2012 of $50.9 million to $52.6 million , representing a 3.3% increase. Correspondingly, the reported revenue for the three months ended March 31, 2013 increased by $8.7 million or 19.9% from the reported revenue during the same period in 2012.
v2.4.0.6
Debt with Commercial Bank
3 Months Ended
Mar. 31, 2013
Debt Disclosure [Abstract]  
Debt with Commercial Bank
Debt with Commercial Bank

On April 26, 2012, Ebix entered into a credit agreement providing for a $100 million secured syndicated credit facility (the “Secured Syndicated Credit Facility”) with Citibank, N.A. ("Citibank") as administrative agent and Citibank, Wells Fargo Capital Finance, LLC, and RBS Citizens, N.A. as joint lenders. The financing is comprised of a four-year, $45 million secured revolving credit facility, a $45 million secured term loan which amortizes over a four year period with quarterly principal and interest payments commencing on June 30, 2012 and a final payment of all remaining outstanding principal and accrued interest due on April 26, 2016, and an accordion feature that provides for the expansion of the credit facility by an additional $10 million. This new $100 million credit facility with Citibank, as administrative agent, replaced the former $55 million facility that the Company had in place with Bank of America, N.A.  The initial interest rate applicable to the Secured Syndicated Credit Facility is LIBOR plus 1.50% or currently 1.70%. Under the Secured Syndicated Credit Facility the maximum interest rate that could be charged depending upon the Company's leverage ratio is LIBOR plus 2.00%. The credit facility is used by the Company to fund working capital requirements primarily in support of current operations, organic growth, and accretive business acquisitions. The Company incurred $744 thousand of origination costs in connection with this new credit facility, and is amortizing these costs into interest expense over the four-year life of the credit agreement. As of March 31, 2013 the Company's consolidated balance sheet includes $574 thousand of remaining deferred financing costs. The underlying financing agreement contains financial covenants regarding the Company's annualized EBITDA, fixed charge coverage ratio, and leverage ratio, as well as certain restrictive covenants pertaining to such matters as the incurrence of new debt, the aggregate amount of repurchases of the Company's equity shares, and the consummation of new business acquisitions. The Company currently is in compliance with all such financial and restrictive covenants.
    
At March 31, 2013, the outstanding balance on the revolving line of credit was $37.8 million and the facility carried an interest rate of 1.70%. This balance is included in the long-term liabilities section of the Condensed Consolidated Balance Sheets. During the three month period ending March 31, 2013, the average and maximum outstanding balances on the revolving line of credit were $37.8 million and $37.8 million, respectively.
    At March 31, 2013, the outstanding balance on the term loan was $36.8 million of which $9.6 million is due within the next twelve months. This term loan also carried an interest rate of 1.70%. During the three months ended March 31, 2013, $4.1 million of scheduled payments were made against the existing term loan with Citibank. The current and long-term portions of the term loan are included in the respective current and long-term sections of the Condensed Consolidated Balance Sheets, the amounts of which were $9.6 million and $27.2 million respectively at March 31, 2013.
v2.4.0.6
Commitments and Contingencies
3 Months Ended
Mar. 31, 2013
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
Contingencies-Between July 14, 2011 and July 21, 2011, securities class action complaints were filed against the Company and certain of its officers in the United States District Court for the Southern District of New York and in the United States District Court for the Northern District of Georgia. The complaints assert claims against (i) the Company and the Company's CEO and CFO for alleged violations of Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder and (ii) the Company's CEO and CFO as alleged controlling persons. The complaints generally allege false statements in earnings reports, SEC filings, press releases, and other public statements that allegedly caused the Company's stock to trade at artificially inflated prices. Plaintiffs seek an unspecified amount of damages. The New York action has been transferred to Georgia and has been consolidated with the Georgia action, now styled In re: Ebix, Inc. Securities Litigation, Civil Action No. 1:11-CV-02400-RSW (N.D. Ga.). A Consolidated Amended Complaint (“CAC”) was filed by Plaintiffs on November 28, 2011. On January 12, 2012, the Company filed a Motion to Dismiss the CAC, which raised various defenses that the CAC failed to state a claim. On September 28, 2012, the Court entered an order denying the Company's Motion to Dismiss. The parties are now in the fact discovery phase of the litigation. In connection with this shareholder class action suit, there have been three derivative complaints brought by certain shareholders on behalf of the Company, which name certain of the Company's officers and its entire board of directors as Defendants. The first such derivative action was brought by a shareholder named Paul Nauman styled Nauman v. Raina, et al., Civil Action File No. 2011-cv-205276 (Superior Court of Fulton County, Georgia). The second such derivative action was brought by a shareholder named Gilbert Spagnola styled Spagnola v. Bhalla, et al., Civil Action No. 1:13-CV-00062-RWS (N.D. Ga.), filed January 7, 2013. The third such derivative action was brought by a shareholder named Hotel Trades Council and Hotel Association of New York City Pension Fund styled Hotel Trades Council and Hotel Association of New York City, Inc. Pension Fund v. Raina, et al., Civil Action No. 1:13-CV-00246-RWS (N.D. Ga.), filed January 23, 2013. These derivative actions are based on substantially the same factual allegations in the shareholder class action suit, but also variously claim breach of fiduciary duties, abuse of control, gross mismanagement, the wasting of corporate assets, negligence, unjust enrichment by the Company's directors, and violation of Section 14 of the Exchange Act. The Nauman case has been stayed pending the completion of expert discovery in the shareholder class action suit. On April 12, 2013, the Court entered an Order consolidating the Spagnola and Hotel derivative cases under the style In re Ebix, Inc. Derivative Litigation, File No. 1:13-CV-00062- RWS (N.D. Ga.) and appointing the law firm Cohen Milstein Sellers & Toll PLLC as Lead Derivative Counsel and The Law Offices of David A. Bain LLC as Liaison Counsel. Lead Derivative Counsel has stated that it intends to file a consolidated amended complaint on or about May 13, 2013. Thereafter, the parties will meet and confer regarding future case scheduling. The Company denies any liability and intends to defend the federal and derivative actions vigorously. The likelihood of an unfavorable outcome for this matter is not estimable.
In the normal course of business, the Company is involved in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate likely disposition of these matters will not have a material adverse effect on the Company's business, consolidated financial position, results of operations or liquidity.
Lease Commitments—The Company leases office space under non-cancelable operating leases with expiration dates ranging through 2019, with various renewal options. Capital leases range from three to five years and are primarily for computer equipment. There were multiple assets under various individual capital leases at March 31, 2013 and 2012. Rental expense for office facilities and certain equipment subject to operating leases for the three months ended March 31, 2013 and 2012 was $1.6 million and $1.3 million, respectively.
Self Insurance—For most of the Company’s U.S. employees the Company is self-insured for its health insurance program and has a stop loss policy that limits the individual liability to $100 thousand per person and the aggregate liability to 125% of the expected claims based upon the number of participants and historical claims. As of March 31, 2013, the amount accrued on the Company’s Condensed Consolidated Balance Sheet for the self-insured component of the Company’s employee health insurance was $243 thousand. The maximum potential estimated cumulative liability for the annual contract period, which ends in September 2013, is $3.0 million.

v2.4.0.6
Income Taxes
3 Months Ended
Mar. 31, 2013
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Company's consolidated world-wide effective tax rate reflects the tax benefits  of conducting operating activities in  certain foreign jurisdictions where earnings are taxed at rates lower than U.S. statutory rates and where certain components of the Company's income are exempt from taxation. Furthermore, the Company's world-wide product development operations and intellectual property ownership have been centralized into our India and Singapore subsidiaries. Our operations in India benefit from a tax holiday which will continue through 2015; and as such the income generated by our India operations, other than passive interest  income, is not taxed. After the tax holiday expires in 2015 the income generated by our India operations will be taxed at 50% of the normal 33.99% corporate tax rate for a period of five years. The Company also has a relatively low income tax rate in Singapore in which our operations are taxed at a 10% marginal tax rate as a result of concessions granted by the local Singapore Economic Development Board for the benefit of in-country intellectual property owners. The concessionary 10% income tax rate will expire after 2015, at which time our Singapore operations will be subject to the prevailing corporate tax rate in Singapore, which is currently 17%, unless the Company reaches a subsequent agreement to extend the incentive period and the then applicable concessionary rate.
The Company recognized income tax expense of $1.6 million for the three months ended March 31, 2013. The Company's interim period income tax provisions are based on an estimate of the effective income tax rate expected to be applicable to the corresponding annual period, after eliminating discrete items unique to the respective interim period being reported. The calculated estimated annual effective tax rate used by the Company to determine the interim income tax provision for the first quarter of 2013 was 8.32% as compared to 12.52% for the same period in 2012. The effective rate decreased primarily due to increased taxable income from jurisdictions with lower tax rates.
At March 31, 2013, the Company had remaining available domestic net operating loss (“NOL”) carry-forwards of approximately $51.2 million which are available to offset future federal and certain state income taxes. The Company reviews its NOL positions to validate that all NOL carry-forwards will be utilized before they begin to expire in 2020.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With the exception of NOL carry-forwards, the Company is no longer subject to U.S. federal or state tax examinations by tax authorities for years before 2007 due to the expiration of the statute of limitations. There is an open federal income tax audit for taxable years 2008 through 2010. In connection with this open audit, the Company has responded to a number of information requests from the IRS, but there have been no substantive discussions or identification of potential deficiencies to date. Regarding our foreign operations as of December 31, 2012, the tax years that remain open and possibly subject to examination by the tax authorities in those jurisdictions are Australia (2006 to 2012), Singapore and Brazil (2007 to 2012), New Zealand (2008 to 2012), and India (2010 to 2012).
Accounting for Uncertainty in Income Taxes—The Company has applied the FASB’s accounting guidance on accounting for uncertain income tax positions. As of March 31, 2013 the Company’s Condensed Consolidated Balance Sheet includes a liability of $6.0 million for unrecognized tax benefits which is included in other long-term liabilities. During the three months ended March 31, 2013 there were $68 thousand in changes to this liability. A reconciliation of the beginning and ending amounts of the Company’s liability reserves for unrecognized tax benefits is as follows:
 
(in thousands)
Balance at January 1, 2013
$
5,925

Additions for tax positions related to current year

Additions for tax positions of prior years
68

Reductions for tax position of prior years

Balance at March 31, 2013
$
5,993


The Company recognizes interest accrued and penalties related to unrecognized tax benefits as part of income tax expense. As of March 31, 2013 approximately $698 thousand of estimated interest and penalties is included in other long-term liabilities in the accompanying Condensed Consolidated Balance Sheet, and is part of the balance of the liability for unrecognized tax benefits in the above table.

v2.4.0.6
Derivative Instruments
3 Months Ended
Mar. 31, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments
Derivative Instruments
The Company periodically uses derivative instruments that are not designated as hedges under FASB accounting guidance related to the accounting for derivative instruments, to hedge the fluctuations in foreign exchange rates for recognized balance sheet items such as intercompany receivables. As of March 31, 2013, all of the Company's pre-existing foreign currency hedge contracts have matured. The inputs that were used in the valuation of the hedge contracts included the USD/INR foreign currency exchange spot rates in effect at the inception date of the contract, forward premiums, forward foreign currency exchange rates, term, and contract maturity date.
The intended purpose of these hedging instruments was to offset the income statement impact of recorded foreign exchange transaction gains and losses resulting from U.S. dollar denominated intercompany invoices issued by our Indian subsidiary whose functional currency had been the Indian rupee until it was changed to the U.S. dollar effective July 1, 2012. The change in the fair value of these derivatives was recorded in foreign currency exchange gains in the Condensed Consolidated Statements of Income and was $0 and $1.2 million for the three months ended March 31, 2013 and 2012, respectively. These gains are in addition to the consolidated foreign exchange losses equivalent to $(170) thousand and $(1.5) million recorded during the three months ended March 31, 2013 and 2012, respectively, incurred by our subsidiaries for settlement of transactions denominated in other than their functional currency. The Company classifies its foreign currency hedges, for which the fair value is remeasured on a recurring basis at each reporting date, as a Level 2 instrument (i.e. wherein fair value is determined and based on observable inputs other than quoted market prices), which we believe is the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. This disclosure specifically pertains to the hedging instruments outstanding at March 31, 2012, rather the current year, in that as of March 31, 2013, all of the Company's pre-existing foreign currency hedge contracts have matured and there were no such other hedging instruments outstanding on this date.
    In connection with the acquisition of PlanetSoft effective June 1, 2012, Ebix issued a put option to 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, which represents a 10% discount off of the per-share value established on the effective date of the closing of Ebix's acquisition of PlanetSoft. In accordance with the relevant authoritative accounting literature a portion of the total purchase consideration was allocated to this put liability based on its initial fair value, which was determined to be $1.4 million using a Black-Scholes model. 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. At March 31, 2013 the fair value of the put option liability was re-measured and was determined to have decreased $81 thousand during the three month period then ended with this amount reflected as a gain included in other non-operating income in the accompanying Condensed Consolidated Statement of Income. As of March 31, 2013, the aggregate fair value of this derivative instrument, which is included in long-term liabilities on the Condensed Consolidated Balance Sheet, was $1.1 million. The Company has classified the put option, for which the fair value is re-measured on a recurring basis at each reporting date, as a Level 2 instrument (i.e. wherein fair value is partially determined and based on observable inputs other than quoted market prices), which we believe is the most appropriate level within the fair value hierarchy based on the inputs used to determine its fair value at the measurement date.
v2.4.0.6
Geographic Information
3 Months Ended
Mar. 31, 2013
Segment Reporting [Abstract]  
Geographic Information
Geographic Information
The Company operates with one reportable segment whose results are regularly reviewed by the Company's chief operating decision maker as to performance and allocation of resources. External customer revenues in the tables below were attributed to a particular country based on whether the customer had a direct contract with the Company which was executed in that particular country for the sale of the Company's products/services with an Ebix subsidiary located in that country.
The following enterprise wide information relates to the Company's geographic locations (all amounts in thousands):
As of and for the Three Months Ended March 31, 2013
 
United States
 
Canada
 
Latin America
 
Australia
 
Singapore
 
New Zealand
 
India
 
Europe
 
Total
External Revenues
$
36,232

 
$
1,657

 
$
1,303

 
$
10,518

 
$
724

 
$
526

 
$
218

 
$
1,388

 
$
52,566

Long-lived assets
$
317,727

 
$
9,467

 
$
12,840

 
$
1,195

 
$
69,878

 
$
235

 
$
17,364

 
$
11,223

 
$
439,929


As of and for the Three Months Ended March 31, 2012
 
United States
 
Canada
 
Latin America
 
Australia
 
Singapore
 
New Zealand
 
India
 
Europe
 
Total
External Revenues
$
30,490

 
$
382

 
$
2,422

 
$
9,167

 
$
795

 
$
571

 
$

 
$

 
$
43,827

Long-lived assets
$
261,713

 
$

 
$
14,452

 
$
1,441

 
$
65,749

 
$
260

 
$
11,064

 
$

 
$
354,679

v2.4.0.6
Minority Business Investment
3 Months Ended
Mar. 31, 2013
Investments, All Other Investments [Abstract]  
Minority Business Investment
Minority Business Investment

During the three months ending June 30, 2012, Ebix acquired a strategic 19.8% interest in CurePet, Inc. ("CurePet") for cash consideration in the amount of $2.0 million. CurePet's insurance exchange connects pet owners, referring veterinarians, animal hospitals, academic institutes, and suppliers of medical and general pet supplies, while providing a wide variety of services related to pet insurance to each constituent including practice management, electronic medical records, and billing. CurePet is also a customer of Ebix; during the three month period ending March 31, 2013 the Company recognized $600 thousand of revenue from CurePet, and as of March 31, 2013 there was an $812 thousand outstanding balance due from CurePet in the Company's reported trade accounts receivable. Ebix also has a revenue share arrangement with CurePet pertaining to certain customer revenues recognized by CurePet; for the three months ended March 31, 2013, there have been no revenue sharing earned or accrued.
v2.4.0.6
Temporary Equity
3 Months Ended
Mar. 31, 2013
Temporary Equity Disclosure [Abstract]  
Temporary Equity [Text Block]
Temporary Equity

The $5.0 million of temporary equity reported on the Company's consolidated balance sheet as of March 31, 2013 and December 31, 2012 is in connection with the June 1, 2012 acquisition of PlanetSoft. As part of the consideration paid for PlanetSoft in accordance with terms of the merger agreement the former PlanetSoft shareholders received 296,560 shares of Ebix common stock valued at $16.86 per share or $5.0 million in the aggregate. In regard to these shares of Ebix common stock, and as discussed in Note 7 "Derivative Instruments," the Company issued a put option to 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. Furthermore as per the terms of the PlanetSoft merger agreement, if Ebix consummates a merger or acquisition agreement whereby it ceases to be a public reporting company as under the SEC Exchange Act, then the put option shall become immediately exercisable. Accordingly and in compliance with Accounting Standards Codification ("ASC") 480 "Accounting for Redeemable Equity Instruments," in that the common stock is redeemable for cash at the option of the holders, and not within control of the Company, it is presented outside of the stockholders equity section of the consolidated balance sheet, and is shown as a separate line referred to as "temporary equity" appearing after liabilities, and before the stockholders equity section, and will remain so until the second quarter of 2014.
v2.4.0.6
Subsequent Events
3 Months Ended
Mar. 31, 2013
Subsequent Events [Abstract]  
Subsequent Events
Subsequent Events

Entry into a Material Definitive Merger Agreement
On May 1, 2013, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Exchange Parent Corp., a Delaware corporation (“Parent”), and Exchange Merger Corp., a Delaware corporation and wholly owned subsidiary of Parent (“MergerSub” and, together with Parent, the “Acquiring Parties”). Parent is owned by Broad Street Principal Investments, L.L.C., an affiliate of Goldman, Sachs & Co.

The Merger Agreement provides for, upon the terms and subject to the conditions contained therein, the merger of MergerSub with and into the Company, with the Company surviving the Merger as a wholly-owned subsidiary of Parent (the “Merger”). At the effective time of the Merger, on the terms and subject to the conditions contained in the Merger Agreement, each share of common stock of the Company outstanding immediately prior to the effective time will be converted into the right to receive $20.00 in cash, without interest (the “Merger Consideration”). Shares of common stock (i) held by the Company as treasury stock, (ii) owned by Parent, MergerSub or any subsidiary of the Company, and the Rollover Shares (as described below), and (iii) held by stockholders who have demanded appraisal for such shares in accordance with Delaware law, will not be entitled to receive the Merger Consideration.

The Merger Agreement was approved by the Board of Directors of the Company (the “Board”), acting upon the unanimous recommendation of a special committee composed of independent directors of the Board. The consummation of the Merger is subject to certain closing conditions, including receipt of all necessary regulatory clearances, the approval of a majority of the outstanding shares of Company common stock and other conditions as set forth in the Merger Agreement.
Concurrently with the execution of the Merger Agreement, Robin Raina, the Company's Chairman and Chief Executive Officer, and the Robin Raina Foundation, Inc., a non-profit corporation of which Mr. Raina is the President, (collectively, the “Raina Investors”) entered into an Investment Letter Agreement with Parent that governs a portion of the payments due to the Raina Investors under the Merger Agreement with respect to certain shares of common stock owned by them, and due to Mr. Raina as a result of his ownership of restricted common stock and options to purchase common stock. Pursuant to the Investment Letter Agreement, (i) the Raina Investors will invest proceeds received by them in the Merger in the aggregate amount of $36,658,720 and $3,341,280, respectively, in Parent's immediate parent, an offshore partnership (“Parent Holdco”), or Parent, in exchange for a capital interest in Parent Holdco or Parent and (ii) the Acquisition Bonus Agreement between Mr. Raina and the Company dated July 15, 2009 will be terminated in full immediately prior to the closing of the Merger. Additionally, concurrently with the execution of the Merger Agreement, the Rennes Foundation entered into a Rollover Letter Agreement pursuant to which the Rennes Foundation will exchange, at the effective time of the Merger, 3,000,000 shares of common stock it holds (the “Rollover Shares”) for a capital interest in Parent Holdco or Parent. Rolf Herter, a member of the Company's Board of Directors, is also a director of the Rennes Foundation. The Raina Investors and the Rennes Foundation (collectively, the “Rollover Stockholders”) collectively currently own approximately 19% of the Company's outstanding shares. After the Merger is completed, the Raina Investors will indirectly retain an ownership interest of approximately 29% of the Company (including restricted ownership interests to be granted upon effectiveness of employment), and the Rennes Foundation will indirectly retain an ownership interest of approximately 15% of the Company.
In addition, concurrently with the execution of the Merger Agreement each of the Rollover Stockholders entered into a voting agreement (the “Voting Agreement”) with Parent pursuant to which the Rollover Stockholders agreed to vote their respective shares of common stock in favor of the Merger and against any alternative business combination transaction, and granted Parent a proxy to vote such shares in the event the Rollover Stockholders do not act in accordance with their obligations thereunder. The Voting Agreement will terminate upon the termination of the Merger Agreement.
In connection with the Merger, Credit Suisse AG, Credit Suisse Securities (USA) LLC and Goldman Sachs Lending Partners LLC have committed to provide debt financing for the Merger consisting of a $450 million senior secured facility consisting of (i) a $400 million senior secured term loan facility and (ii) a $50 million senior secured revolving credit facility and a $150 million senior secured second lien term loan facility, on the terms and subject to the conditions set forth in a debt commitment letter, dated as May 1, 2013.

For further information on the Merger, the Merger Agreement and related agreements please refer to the Current Report on Form 8-K filed on May 3, 2013. The foregoing descriptions of the Merger Agreement and Voting Agreements are subject to, and qualified in their entirety by, the full text of those agreements as attached as Exhibits 2.1 and 99.1 respectively to the Form 8-K filed on May 3, 2013, each of which is incorporated by reference herein.

Other Matters
On April 16, 2013, the Company received a second subpoena from the SEC seeking additional documents in their formal, non-public fact-finding inquiry and investigation styled In the Matter of Ebix, Inc. (A-3318), which primarily relates to the issues raised in the matter styled In re: Ebix, Inc. Securities Litigation, Civil Action No. 1:11-CV-02400-RWS (N.D. Ga.). This follows the receipt by the Company on December 3, 2012 of the first subpoena from the SEC dated November 30, 2012, stating that the SEC is conducting this non-public fact-finding inquiry and investigation and seeking documents relating to the issues raised therein and in an online news article based on unnamed sources, published on November 3, 2012 speculating about the existence of such an investigation. The Company is cooperating fully with the SEC to provide the requested documents and otherwise assist in the SEC's review, and advised the Acquiring Parties of the existence of this matter as well as the open tax audit discussed in Note 6, prior to the execution of the Merger Agreement.

On May 6, 2013, a putative shareholder class action was filed by Navin Shah, a purported shareholder of the Company, against the Company and its Board of Directors, among others, in the Court of Chancery for the State of Delaware styled Shah v. Ebix, Inc., et al., Case No. 8526. The complaint generally alleges, among other things, that the members of the Company's board breached their fiduciary duties to the Company's shareholders by entering into the Merger Agreement, approving the proposed Merger and failing to take steps to maximize the Company's value to its shareholders, and that the other defendants aided and abetted such breaches of fiduciary duties. In addition, the complaint alleges, among other things, that the Merger improperly favors the Acquiring Parties and that certain provisions of the Merger Agreement unduly restrict the Company's ability to negotiate with other potential bidders.

The complaint seeks to enjoin the defendants preliminarily and permanently from proceeding with, consummating, or closing the Merger and the related transactions, to rescind the Merger and the related transactions if consummated, an accounting of the damages allegedly sustained by the putative class, and attorneys' fees. It is possible that additional complaints may be filed as well. The defendants believe that the litigation is without merit and intends to defend it.

On May 7, 2013, a related second putative shareholder class action was filed by Tomas Lloret Llinares, a purported shareholder of the Company, in the Court of Chancery for the State of Delaware styled Llinares v. Ebix, Inc., et al., Case No. 8533. The Llinares action names the same defendants and makes similar allegations as the Shah action described above.

On May 9, 2013, a related third putative shareholder class action was filed by TBD Investments, LLC, a purported shareholder of the Company, in the Court of Chancery for the State of Delaware styled TBD Investments, LLC v. Ebix, Inc., et al., Case No. 8539.  The TBD Investments action names virtually the same defendants and makes similar allegations as the Shah and Llinares actions described above.   

It is possible that additional complaints may be filed as well. The defendants believe that these actions are without merit and intends to defend them vigorously.
 
Completion of Business Acquisition
On April 7, 2013 the Company acquired Qatarlyst, an electronic trading exchange for the global insurance and reinsurance industry. Ebix acquired all of the outstanding stock and the business operations of Qatarlyst for a cash purchase price of $5.0 million and funded the transaction using existing available internal cash resources. The former shareholders of Qatarlyst retain the right to an earn-out payment. The earn-out payment shall be equal to the product of 2.07 and Qatarlysts's average annual revenue over the financial years 2014, 2015 and 2016 (such three years, the “Earnout Period”) over $2.7 million. Total aggregate revenue of the acquired company over the earn-out period divided by three less $2.7 million multiplied by 2.07 will equal the amount of earn-out payment.
v2.4.0.6
Description of Business and Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2013
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation—The accompanying unaudited condensed consolidated financial statements and these notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") with the effect of inter-company balances and transactions eliminated. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP and SEC rules have been condensed or omitted as permitted by and pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements contain adjustments (consisting only of normal recurring items) necessary to fairly present the consolidated financial position of the Company and its consolidated results of operations and cash flows. Operating results for the three months ended March 31, 2013 and 2012 are not necessarily indicative of the results that may be expected for the full year. The condensed consolidated December 31, 2012 balance sheet included in this interim period filing has been derived from the audited financial statements at that date but does not include all of the information and related notes required by GAAP for complete financial statements. These condensed interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
Fair Value of Financial Instruments
Fair Value of Financial Instrument—The Company follows the relevant GAAP guidance concerning fair value measurements which provides a consistent framework to define, measure, and disclose the fair value of assets and liabilities in financial statements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction. This guidance establishes a three-level hierarchy priority for disclosure of assets and liabilities recorded at fair value. The ordering of priority reflects the degree to which objective data from external active markets are available to measure fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable.
Level 1 Inputs - Unadjusted quoted prices available in active markets for identical investments to the reporting entity at the measurement date
Level 2 Inputs - Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 Inputs - Unobservable inputs, which are used to the extent that observable inputs are not available, and used in situations where there is little or no market activity for the asset or liability and wherein the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk.

     A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

As of March 31, 2013 the Company had the following financial instruments to which it had to consider fair values and had to make fair assessments:
Common share-based put option for which the fair value was measured as a Level 2 instrument.
Short-term investments for which the fair values are measured as a Level 1 instrument.
Contingent accrued earn-out business acquisition consideration liabilities for which fair values are measured as Level 3 instruments. These contingent consideration liabilities were recorded at fair value on the acquisition date and are remeasured quarterly based on the then assessed fair value and adjusted if necessary. The increases or decreases in the fair value of contingent consideration payable can result from changes in anticipated revenue levels and changes in assumed discount periods and rates. As the fair value measure is based on significant inputs that are not observable in the market, they are categorized as Level 3.

Revenue Recognition
Revenue Recognition—The Company derives its revenues primarily from subscription and transaction fees pertaining to services delivered over our exchanges or from our ASP platforms, fees for business process outsourcing services, and fees for software development projects including associated fees for consulting, implementation, training, and project management provided to customers with installed systems. Sales and value-added taxes are not included in revenues, but rather are recorded as a liability until the taxes assessed are remitted to the respective taxing authorities.
In accordance with Financial Accounting Standard Board (“FASB”) and SEC accounting guidance on revenue recognition, the Company considers revenue earned and realizable when: (a) persuasive evidence of the sales arrangement exists, provided that the arrangement fee is fixed or determinable, (b) delivery or performance has occurred, (c) customer acceptance has been received, if contractually required, and (d) collectability of the arrangement fee is probable. The Company uses signed contractual agreements as persuasive evidence of a sales arrangement. We apply the provisions of the relevant generally accepted accounting principles related to all transactions involving the license of software where the software deliverables are considered more than inconsequential to the other elements in the arrangement.
For contracts that contain multiple deliverables, we analyze the revenue arrangements in accordance with the relevant technical accounting guidance, which provides criteria governing how to determine whether goods or services that are delivered separately in a bundled sales arrangement should be considered as separate units of accounting for the purpose of revenue recognition. Generally these types of arrangements include deliverables pertaining to software licenses, system set-up, and professional services associated with product customization or modification. Delivery of the various contractual elements typically occurs over periods of less than eighteen months. These arrangements generally do not have refund provisions or have very limited refund terms.
Software development arrangements involving significant customization, modification or production are accounted for in accordance with the appropriate technical accounting guidance issued by FASB using the percentage-of-completion method. The Company recognizes revenue using periodic reported actual hours worked as a percentage of total expected hours required to complete the project arrangement and applies the percentage to the total arrangement fee.
Goodwill and Other Indefinite-Lived Intangible Assets
Goodwill and Other Indefinite-Lived Intangible Assets—Goodwill represents the cost in excess of the fair value of the net assets of acquired businesses. Indefinite-lived intangible assets represent the fair value of acquired contractual customer relationships for which future cash flows are expected to continue indefinitely. In accordance with the relevant FASB accounting guidance, goodwill and indefinite-lived intangible assets are not amortized but are tested for impairment at the reporting unit level on an annual basis or on an interim basis if an event occurs or circumstances change that would likely have reduced the fair value of a reporting unit below its carrying value. Potential impairment indicators include a significant change in the business climate, legal factors, operating performance indicators, competition, and the sale or disposition of a significant portion of the business. The impairment evaluation process involves an assessment of certain qualitative factors to determine whether the existence of events or circumstances would indicate that it is more likely than not that the fair value of any of our reporting units was less than its carrying amount. If after assessing the totality of events or circumstances, we were to determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company would not perform the two-step quantitative impairment testing described further below.
The aforementioned two-step quantitative testing process involves comparing the reporting unit carrying values to their respective fair values; we determine fair value of our reporting units by applying the discounted cash flow method using the present value of future estimated net cash flows. If the fair value of a reporting unit exceeds its carrying value, then no further testing is required. However, if a reporting unit's fair value were to be less than its carrying value, we would then determine the amount of the impairment charge, if any, which would be the amount that the carrying value of the reporting unit's goodwill exceeded its implied value. Projections of cash flows are based on our views of growth rates, operating costs, anticipated future economic conditions and the appropriate discount rates relative to risk and estimates of residual values. We believe that our estimates are consistent with assumptions that marketplace participants would use in their estimates of fair value. The use of different estimates or assumptions for our projected discounted cash flows (e.g., growth rates, future economic conditions, discount rates and estimates of terminal values) when determining the fair value of our reporting units could result in different values and may result in a goodwill impairment charge. We perform our annual goodwill impairment evaluation and testing as of September 30th of each year. This evaluation is done during the fourth quarter each year. During the year ended December 31, 2012 we had no impairment of our reporting unit goodwill balances.
Finite-lived Intangible Assets
Finite-lived Intangible Assets—Purchased intangible assets represent the estimated acquisition date fair value of customer relationships, developed technology, trademarks and non-compete agreements obtained in connection with the businesses we acquire. We amortize these intangible assets on a straight-line basis over their estimated useful lives, as follows:

Category
 
Life (yrs)
Customer relationships
 
7-20
Developed technology
 
3–12
Trademarks
 
3–15
Non-compete agreements
 
5
Database
 
10
Foreign Currency Translation
Foreign Currency Translation-Historically the functional currency for the Company's foreign subsidiaries in India and Singapore had been the Indian rupee and Singapore dollar, respectively. As a result of the Company's rapid growth, including its acquisition of PlanetSoft in 2012, the expansion of its intellectual property research and development activities in its Singapore subsidiary, and its product development activities and information technology enabled services for the insurance industry provided by its India subsidiary in support of Ebix's operating divisions across the world (both of which are transacted in U.S. dollars), management undertook a reconsideration of functional currency designations for these two foreign subsidiaries in India and Singapore, and concluded that effective July 1, 2012 the functional currency for these entities should be changed to the U.S. dollar. The Company believes that the acquisition of PlanetSoft along with the other four business acquisitions completed in 2012 during the current year combined with the cumulative effect of business acquisitions made over the last few years which necessitated the rapid growth of the Company's operations in India and Singapore, were indicative of a significant change in the economic facts and circumstances that justified the reconsideration and ultimate change in the functional currency.
The functional currency of the Company's other foreign subsidiaries is the local currency of the country in which the subsidiary operates. The assets and liabilities of these foreign subsidiaries are translated into U.S. dollars at the rates of exchange at the balance sheet dates. Income and expense accounts are translated at the average exchange rates in effect during the period. Gains and losses resulting from translation adjustments are included as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets, and are included in the condensed consolidated statements of comprehensive income. Foreign exchange transaction gains and losses that are derived from transactions denominated in a currency other than the subsidiary's functional currency are included in the determination of net income.
Income Taxes
Income Taxes—Deferred income taxes are recorded to reflect the estimated future tax effects of differences between the financial statement and tax basis of assets, liabilities, operating losses, and tax credit carry forwards using the tax rates expected to be in effect when the temporary differences reverse. Valuation allowances, if any, are recorded to reduce deferred tax assets to the amount management considers more likely than not to be realized. Such valuation allowances are recorded for the portion of the deferred tax assets that are not expected to be realized based on the levels of historical taxable income and projections for future taxable income over the periods in which the temporary differences will be deductible.
The Company also applies FASB accounting guidance on accounting for uncertainty in income taxes positions. This guidance clarifies the accounting for uncertainty in income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. In this regard we recognize the tax benefit from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
Recent Relevant Accounting Pronouncements
Recent Relevant Accounting Pronouncements—The following is a brief discussion of recently released accounting pronouncements that are pertinent to the Company's business:

In July 2012, the FASB issued new Accounting Standards Update No. 2012-02, "Testing Indefinite-Lived Intangible Assets for Impairment" (the revised standard). The revised standard is intended to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment. It allows companies to perform a qualitative assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, similar in approach to the goodwill impairment test. The revised standard is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The Company will adopt this new standard in 2013 for use in its annual impairment evaluations of indefinite-lived intangible assets, which is performed as of September of each year.
    
In September 2011, the FASB issued technical guidance regarding an entity's evaluation of goodwill for possible impairment. Under this new guidance an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events or circumstances, an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step quantitative impairment test is unnecessary. This new technical guidance was effective for fiscal years beginning after December 15, 2011. Early adoption was permitted for annual and interim goodwill impairment evaluations performed as of a date before September 2011, if an entity's financial statements for the most recent annual or interim period had not yet been issued. The Company elected to adopt this technical guidance early and accordingly applied it to the 2011 and 2012 annual impairment evaluation of goodwill.
v2.4.0.6
Description of Business and Summary of Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2013
Accounting Policies [Abstract]  
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 three months ended March 31, 2013 and 2012.

 
 
Three Months Ended
 
 
March 31,
(dollar amounts in thousands)
 
2013
 
2012
Exchanges
 
$
41,686

 
$
34,646

Broker Systems
 
4,722

 
4,754

Business Process Outsourcing (“BPO”)
 
4,164

 
3,571

Carrier Systems
 
1,994

 
856

Totals
 
$
52,566

 
$
43,827

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 table:

 
 
Fair Values at Reporting Date Using*
Descriptions
 
Balance, March 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
 
$
778