v2.3.0.11
Document and Entity Information
9 Months Ended
Sep. 30, 2011
Nov. 08, 2011
Document Information    
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 Sep. 30, 2011
Document Fiscal Year Focus 2011  
Document Fiscal Period Focus Q3  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   36,336,208
v2.3.0.11
Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Thousands, except Share data
3 Months Ended 9 Months Ended
Sep. 30, 2011
Sep. 30, 2010
Sep. 30, 2011
Sep. 30, 2010
Operating revenue $ 42,602 $ 33,281 $ 124,919 $ 97,091
Operating expenses:        
Cost of services provided 8,710 7,418 24,931 21,908
Product development 4,964 3,294 14,385 10,228
Sales and marketing 3,440 1,685 9,553 4,759
General and administrative 5,785 6,249 18,240 16,914
Amortization and depreciation 1,749 1,553 5,617 4,433
Total operating expenses 24,648 20,199 72,726 58,242
Operating income 17,954 13,082 52,193 38,849
Interest income 100 163 429 378
Interest expense (218) (236) (592) (750)
Other non-operating income (loss) 33 3,917 (785) 5,678
Foreign currency exchange gain (230) 523 2,635 859
Income before income taxes 17,639 17,449 53,880 45,014
Income tax benefit (expense) (1,103) (768) 168 (1,939)
Net income $ 16,536 $ 16,681 $ 54,048 $ 43,075
Basic earnings per common share $ 0.44 $ 0.48 $ 1.41 $ 1.24
Diluted earnings per common share $ 0.41 $ 0.43 $ 1.31 $ 1.10
Basic weighted average shares outstanding 37,345 34,592 38,215 34,765
Diluted weighted average shares outstanding 40,449 39,020 41,400 39,218
v2.3.0.11
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands
Sep. 30, 2011
Dec. 31, 2010
Current assets:    
Cash and cash equivalents $ 13,941 $ 23,397
Short-term investments 1,663 6,300
Trade accounts receivable, less allowances of $1,999 as of September 30, 2011 and $1,126 as of December 31, 2010 31,242 26,028
Deferred tax asset, net 3,127 0
Other current assets 4,410 5,057
Total current assets 54,383 60,782
Property and equipment, net 8,718 7,806
Goodwill 237,863 180,602
Intangibles, net 38,380 22,574
Indefinite-lived intangibles 30,493 30,552
Deferred tax asset, net 10,196 0
Other assets 974 984
Total assets 381,007 303,300
Current liabilities:    
Accounts payable and accrued liabilities 20,050 15,344
Accrued payroll and related benefits 4,563 4,536
Short term debt 6,667 5,000
Convertible debt, net of discount of $0 as of September 30, 2011 and $56 thousand as of December 31, 2010 0 4,944
Current portion of long term debt and capital lease obligations 154 426
Deferred revenue 16,380 8,610
Current deferred rent 250 207
Put option liability 1,430 0
Other current liabilities 998 18
Total current liabilities 50,492 39,085
Revolving line of credit 10,250 25,000
Long term debt and capital lease obligations, less current portion 10,159 205
Other liabilities 3,635 2,991
Deferred tax liability, net 0 3,534
Put option liability 0 537
Deferred revenue 139 126
Long term deferred rent 1,012 554
Total liabilities 75,687 72,032
Commitments and Contingencies, Note 6    
Stockholders’ equity:    
Preferred stock, $0.10 par value, 500,000 shares authorized, no shares issued and outstanding at September 30, 2011 and December 31, 2010 0 0
Common stock, $0.10 par value, 60,000,000 shares authorized, 36,534,976 issued and 36,494,467 outstanding at September 30, 2011 and 36,057,791 issued and 36,017,282 outstanding at December 31, 2010 3,649 3,602
Additional paid-in capital 179,619 153,221
Treasury stock (40,509 shares as of September 30, 2011 and December 31, 2010) (76) (76)
Retained earnings 121,690 67,642
Accumulated other comprehensive income 438 6,879
Total stockholders’ equity 305,320 231,268
Total liabilities and stockholders’ equity $ 381,007 $ 303,300
v2.3.0.11
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $)
In Thousands, except Share data
Sep. 30, 2011
Dec. 31, 2010
Current Assets:    
Allowance for doubtful accounts $ 1,999 $ 1,126
Current Liabilities:    
Unamortize Discount, convertible debt $ 0 $ 56
Stockholders' Equity:    
Preferred stock, par value $ 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 $ 0.1 $ 0.10
Common stock, shares authorized 60,000,000 60,000,000
Common stock, shares issued 36,534,976 36,057,791
Common stock, shares outstanding 36,494,467 36,017,282
Treasury stock, shares 40,509 40,509
v2.3.0.11
Condensed Consolidated Statements of Stockholders' Equity and Comprehensive Income (Unaudited) (USD $)
In Thousands, except Share data
Total
Comprehensive Income Total
Common Stock
Treasury Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income
Beginning Balance, Value at Dec. 31, 2010 $ 231,268   $ 3,602 $ (76) $ 153,221 $ 67,642 $ 6,879
Beginning Balance, Issued Shares at Dec. 31, 2010 36,057,791   36,057,791        
Beginning Balance, Treasury Shares at Dec. 31, 2010       40,509      
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income 54,048 54,048       54,048  
Cumulative translation adjustment (6,441) (6,441)         (6,441)
Comprehensive income   47,607          
Repurchase and retirement of common stock, Shares     (3,322,973)        
Repurchase and retirement of common stock, Value (61,002)   (332)   (60,670)    
Vesting of restricted stock, Shares     127,735        
Vesting of restricted stock, Value     12   (12)    
Stock Issued During Period, Value, Conversion of Convertible Securities (1,850)       (1,850)    
Exercise of stock options, Shares     21,509        
Stock Issued During Period, Value, Stock Options Exercised     2        
Exercise of stock options, Value 14       12    
Deferred compensation and amortization related to options and restricted stock 1,737       1,737    
Share subscribed for business acquisition, Shares     3,650,914        
Share subscribed for business acquisition, Value 87,476   365   87,111    
Tax benefit related to share-based compensation 70       70    
Ending Balance, Value at Sep. 30, 2011 $ 305,320   $ 3,649 $ (76) $ 179,619 $ 121,690 $ 438
Ending Balance, Issued Shares at Sep. 30, 2011 36,534,976   36,534,976        
Ending Balance, Treasury Shares at Sep. 30, 2011       40,509      
v2.3.0.11
Condensed Consolidated Statements of Cash Flow (Unaudited) (USD $)
In Thousands
9 Months Ended
Sep. 30, 2011
Sep. 30, 2010
Cash flows from operating activities:    
Net income $ 54,048 $ 43,075
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 5,617 4,433
Share based compensation 1,737 1,376
Provision for doubtful accounts 747 341
Provision (benefit) for deferred taxes (5,870) (89)
Debt discount amortization on convertible debt 21 303
Unrealized foreign exchange gain (loss) on forward contracts 909 (1,270)
Unrealized foreign currency exchange gain (loss) (4,047) (277)
(Gain) loss on put option 893 (5,416)
Reduction of acquisition earnout accruals (3,048) 0
Changes in assets and liabilities, net of effects from acquisitions:    
Accounts receivable (2,985) (5,020)
Other assets 422 (1,219)
Accounts payable and accrued expenses 1,916 (1,140)
Accrued payroll and related benefits (959) (369)
Deferred revenue 1,024 (859)
Deferred rent (188) (70)
Other current liabilities 1,696 41
Net cash provided by operating activities 51,933 33,840
Cash flows from investing activities:    
Maturities of marketable securities 7,600 0
Purchases of marketable securities (2,963) (4,952)
Capital expenditures (1,863) (1,325)
Net cash provided by/(used in) investing activities 5,726 (24,139)
Cash flows from financing activities:    
Repayments on revolving line of credit, (net of proceeds) (14,750) (2,100)
Proceeds from term loan 16,250 10,000
Principal payments of term loan obligation (4,740) (3,751)
Repurchases of common stock (56,548) (10,649)
Settlement on conversion of convertible debt (6,761) (12,021)
Proceeds from the exercise of stock options 14 231
Payments of capital lease obligations (253) (683)
Net cash used in financing activities (66,788) (18,973)
Effect of foreign exchange rates on cash (327) 1,308
Net change in cash and cash equivalents (9,456) (7,964)
Cash and cash equivalents at the beginning of the period 23,397 19,227
Cash and cash equivalents at the end of the period 13,941 11,263
Supplemental disclosures of cash flow information:    
Interest paid 579 410
Income taxes paid 1,757 1,589
ADAM
   
Cash flows from investing activities:    
Acquisition of businesses, net of cash acquired 3,529 0
MCN
   
Cash flows from investing activities:    
Investment, net of cash acquired (381) (2,931)
Trades Monitor
   
Cash flows from investing activities:    
Acquisition of businesses, net of cash acquired 0 (2,749)
Connective Technologies
   
Cash flows from investing activities:    
Acquisition of businesses, net of cash acquired 0 (1,337)
E-Trek
   
Cash flows from investing activities:    
Acquisition of businesses, net of cash acquired 0 (1,011)
USIX
   
Cash flows from investing activities:    
Acquisition of businesses, net of cash acquired 0 (6,844)
ConfirmNet
   
Cash flows from investing activities:    
Investment, net of cash acquired (184) (2,975)
Facts
   
Cash flows from investing activities:    
Investment, net of cash acquired (12) (11)
Periculum
   
Cash flows from investing activities:    
Investment, net of cash acquired $ 0 $ (4)
v2.3.0.11
Description of Business and Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2011
Description of Business and Summary of Significant Accounting Policies [Abstract]  
Business Description and Accounting Policies [Text Block]
Description of Business and Summary of Significant Accounting Policies
Description of Business—Ebix, Inc. and subsidiaries (“Ebix” or the “Company”) provides a variety of on-demand software products and e-commerce services for the insurance and financial industries ranging from carrier systems, agency systems and exchanges to custom software development for carriers, brokers, and agents involved in insurance and financial services. The Company has its worldwide headquarters in Atlanta, Georgia with its international operations being managed from its Singapore offices, and also operates in several foreign countries including Australia, Brazil, New Zealand, UK, China, Japan, Canada, and India. International revenue accounted for 28.5% and 27.5% of the Company’s total revenue for the nine months ended September 30, 2011 and 2010, 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 and nine months ended September 30, 2011 and 2010.

 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
(dollar amounts in thousands)
 
2011
 
2010
 
2011
 
2010
Carrier Systems
 
$
1,274

 
$
2,228

 
$
4,266

 
$
6,718

Exchanges
 
33,021

 
23,505

 
96,308

 
69,125

BPO
 
3,576

 
4,096

 
10,948

 
11,574

Broker Systems
 
4,731

 
3,452

 
13,397

 
9,674

Totals
 
$
42,602

 
$
33,281

 
$
124,919

 
$
97,091

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 and in accordance with U.S. generally accepted accounting principles 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 generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. In the opinion of management 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 nine months ended September 30, 2011 and 2010 are not necessarily indicative of the results that may be expected for the full year. The condensed consolidated December 31, 2010 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, 2010.
Fair Value of Financial Instruments—The Company believes the carrying amount of cash and cash equivalents, short-term investments, accounts receivable, accounts payable, accrued expenses, accrued payroll and related benefits, line of credit, long-term debt obligations, put option liability, and capital lease obligations is a reasonable estimate of their fair value due to the short remaining maturity of these items and/or their fluctuating interest rates.
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 Securities and Exchange Commission ("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 $23.8 million of trade receivables stated at invoice billed amounts net of the estimated allowance for doubtful accounts receivable, and $7.4 million of unbilled receivables. Approximately $9.7 million of deferred revenue is included in accounts receivable at September 30, 2011. Bad debt expense incurred during the three and nine month periods ended September 30, 2011 was approximately $410 thousand and $747 thousand, respectively and $140 thousand and $341 thousand for the three and nine month periods ended September 30, 2010. 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 reduce 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. We perform our annual impairment tests on September 30 each year. Our annual impairment evaluation considers both qualitative and quantitative factors. The testing involves comparing the reporting unit and intangible asset carrying values to their respective fair values; we determine fair value by applying the discounted cash flow method using the present value of future estimated net cash flows. These projections of cash flows are based on our views of growth rates, 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 impairment charges. Our 2010 impairment test indicated that there was no impairment of our reporting unit goodwill and indefinite-lived intangible asset balances. The Company will be conducting its 2011 annual impairment evaluation of goodwill and indefinite-lived intangible assets during the fourth quarter.
Changes in the carrying amount of goodwill for the nine months ended September 30, 2011 are as follows:

 
(In thousands)
Beginning Balance (December 31, 2010)
$
180,602

Additions, net (see Note 3)
58,389

Foreign currency translation adjustments
(1,128
)
Ending Balance (September 30, 2011)
$
237,863

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

Category
 
Life (yrs)
Customer relationships
 
4–20
Developed technology
 
3–10
Trademarks
 
3–15
Non-compete agreements
 
5
Database
 
10

The carrying value of finite-lived and indefinite-lived intangible assets at September 30, 2011 and December 31, 2010 are as follows:

 
September 30,
2011
 
December 31,
2010
 
(In thousands)
Finite-lived intangible assets:
 
 
 
Customer relationships
$
39,359

 
$
24,001

Developed technology
11,439

 
9,343

Trademarks
2,157

 
218

Non-compete agreements
418

 
418

Backlog
140

 
140

Database
207

 
213

Total intangibles
53,720

 
34,333

Accumulated amortization
(15,340
)
 
(11,759
)
Finite-lived intangibles, net
$
38,380

 
$
22,574

 
 
 
 
Indefinite-lived intangibles:
 
 
 
Customer/territorial relationships
$
30,493

 
$
30,552

Amortization expense recognized in connection with acquired intangible assets were $1.2 million and $3.6 million for the three and nine ended September 30, 2011 and $1 million and $2.7 million for the three and nine ended September 30, 2010, respectively.
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 June 2011, the Financial Accounting Standards Board ("FASB") issued new financial reporting guidance regarding the reporting of "other comprehensive income, or (OCI)". This guidance revises the manner in which entities present comprehensive income in their financial statements. The new guidance requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income, or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, which is consistent with the income statement format used currently, and the second statement would include components of OCI. Under either method, entities must display adjustments for items that are reclassified from OCI to net income in both net income and OCI. The new reporting guidance does not change the items that must be reported in OCI. This new reporting standard is effective for interim and annual periods beginning after December 15, 2011. After adoption, the guidance must be applied retrospectively for all periods presented in the financial statements. The Company will adopt this new guidance in the first quarter of 2012.

In September 2011, the FASB issued new 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 is effective for annual and interim goodwill impairment evaluations performed as of a date before September 15, 2011, if an entity's financial statements for the most recent annual or interim period have not yet been issued. The Company will apply this new guidance to its 2011 annual impairment evaluation of goodwill and indefinite-lived intangible assets to be completed during the fourth quarter.
  
In December 2010, the Emerging Issues Task Force of FASB reached consensus regarding the disclosure of pro forma information for business combinations. This new guidance addressed the diversity in practice concerning the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations. The guidance specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments affect any public entity that enters into business combinations that are material on an individual or aggregate basis. The new guidance is applicable to business combinations for which the acquisition date is on or after the first annual reporting period beginning on or after December 15, 2010. The Company adopted this new guidance during 2011 and applied it to the disclosures regarding our recent acquisition of ADAM, completed in February 2011.

In September 2009, FASB issued amended revenue recognition guidance related to revenue arrangements with multiple deliverables. This new pronouncement: (a) provides application guidance on whether multiple deliverables exist in an arrangement with a customer, and if so, how the arrangement consideration should be separated and allocated; (b) requires an entity to allocate revenue using estimated selling prices of deliverables if vendor-specific objective evidence or third party evidence of selling prices is not available; and, (c) eliminates the use of the “residual method” to allocate revenue. This guidance is to be applied on a prospective basis for revenue arrangements entered into in fiscal years beginning on or after June 15, 2010, with earlier application permitted. Alternatively, an entity can elect to adopt new guidance on a retrospective basis. The Company has adopted this new guidance in 2011 and its adoption did not have a material impact on the Company's consolidated results of operation.

v2.3.0.11
Earnings per Share
9 Months Ended
Sep. 30, 2011
Earnings Per Share [Abstract]  
Earnings Per Share [Text Block]
Earnings per Share
To calculate diluted earnings per share, interest expense related to convertible debt excluding imputed interest, was added back to net income as follows:

 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2011
 
2010
 
2011
 
2010
 
(In thousands, except per share data)
Net income
$
16,536

 
$
16,681

 
$
54,048

 
$
43,075

Convertible debt interest (excludes imputed interest)

 

 

 
10

Net income for diluted earnings per share purposes
$
16,536

 
$
16,681

 
$
54,048

 
$
43,085

Diluted shares outstanding
40,449

 
39,020

 
41,400

 
39,218

Diluted earnings per common share
$
0.41

 
$
0.43

 
$
1.31

 
$
1.10

Diluted shares outstanding were determined as follows for the three and nine months ended September 30, 2011 and 2010, respectively:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2011
 
2010
 
2011
 
2010
 
(In thousands)
Basic Weighted Average Shares Outstanding
37,345

 
34,592

 
38,215

 
34,765

Incremental Shares
3,104

 
4,428

 
3,185

 
4,453

Diluted Shares Outstanding
40,449

 
39,020

 
41,400

 
39,218

v2.3.0.11
Business Combinations
9 Months Ended
Sep. 30, 2011
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]
Business Combinations
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 nine months ended September 30, 2011, Ebix completed the acquisition of ADAM, Inc. ("ADAM") as more fully described below.

On February 7, 2011 Ebix closed the merger of Atlanta, Georgia based ADAM with a wholly owned subsidiary of Ebix. Under the terms of the merger agreement, all of the ADAM shareholders received, at a fixed exchange ratio, 0.3122 shares of Ebix common stock for every share of ADAM common stock. Ebix issued approximately 3.65 million shares of Ebix common stock with a fair value of $87.5 million pursuant to the merger. This issuance of shares increased the Company's diluted common share count to approximately 42.07 million shares as of acquisition date. In addition Ebix paid approximately $944 thousand in cash for unexercised ADAM stock options. ADAM is a leading provider of health information and benefits technology solutions in the United States. $16.9 million of Adam's operating revenues recognized since February 7, 2011 are included in the Company's revenues reported on its condensed consolidated statement of income for the nine months ended September 30, 2011. Due to the fact that many of ADAM specific functions were immediately integrated into Ebix's operations it is neither practical nor feasible to separately track and disclose specific earnings from this business combination after the acquisition date. The revenue derived from ADAM's portfolio of products and services is included in the Company's Exchange division. The Company initially accounted for this acquisition by recording $15.4 million of intangible assets pertaining to customer relationships, $2.1 million of intangible assets pertaining to acquired technology, and $2.0 million of intangible assets pertaining to acquired trademarks and the excess purchase price of $65.6 million to goodwill. During the 2nd quarter the Company completed its purchase accounting for the ADAM acquisition for certain tax related matters, resulting in a $6.3 million increase to deferred tax assets and a corresponding reduction to goodwill, bringing the recognized goodwill amount down to $59.3 million.

Furthermore and unrelated to the ADAM acquisition, during the 2nd and 3rd quarters of 2011 the Company recorded $4.2 million of reductions to previously recorded contingency based earn-out accruals pertaining to business acquisitions made during 2010. The Company reduced these estimated accruals after analyzing the ongoing performance of these businesses since they were acquired and considering information available at the date of the business acquisitions which accounted for $1.1 million of the reduction and was recorded as a decrease to goodwill, and information currently available which accounted for $3.1 million of the reduction and was recorded as a decrease to general and administrative expenses.
The unaudited pro forma financial information below, which specifically pertains to the ADAM acquisition, 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 be realized as a result of combining the two companies or costs that may be incurred in integrating their operations. The pro forma financial information below includes nine months of pro forma results for ADAM as if it had been acquired on January 1, 2010, whereas the Company's reported financial statements for the nine months ended September 30, 2011 excludes ADAM's financial results for the period January 1, 2011 thru February 6, 2011 and thus only include the actual financial results of ADAM since the effective date of its acquisition on February 7, 2011. The Company's historical reported financial statements for the nine months ended September 30, 2010 include no financial results of ADAM. The unaudited pro forma diluted earnings per share below reflects a $0.25 per share increase from $1.07 per share for the nine months ended September 30, 2010 to $1.32 per share for the nine months ended September 30, 2011.


 
Nine Months Ending September 30, 2011
Nine Months Ending September 30, 2010
 
As Reported
Pro Forma
As Reported
Pro Forma
 
(unaudited)
(unaudited)
 
(In thousands)
Revenue
$
124,919

$
127,493

$
97,091

$
117,439

Net Income
$
54,048

$
55,323

$
43,075

$
45,968

Basic EPS
$
1.41

$
1.43

$
1.24

$
1.20

Diluted EPS
$
1.31

$
1.32

$
1.10

$
1.07


The pro forma figures for both periods presented above have been adjusted to remove one-time nonrecurring expenses directly associated with the acquisition of ADAM (specifically a $1.39 million investment banking fee and $400 thousand employee severance costs). These combined expenses of $1.79M were included in the as reported amounts for the nine months ending September 30, 2011. All pro forma figures above reflect the removal of interest expense related to ADAM's operations, as ADAM's debt was fully repaid as a condition precedent to the closing of the acquisition; this resulted in a reduction in the pro forma expenses of $258 thousand in 2010 and $38 thousand in 2011. Additional expense related to amortization of acquired intangible assets has been included in the pro forma's for both years which resulted in additional expense of $1.2 million in 2010 and $150 thousand in 2011.
As a result of the 2011 acquisition of ADAM, certain qualified costs were capitalized as part of goodwill. These costs were $75 thousand for legal fees related to registering Ebix stock tendered as purchase consideration, and $665 thousand of officer severance costs associated with the terms of pre-existing employment contracts.
v2.3.0.11
Debt with Commercial Bank
9 Months Ended
Sep. 30, 2011
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]
Debt with Commercial Bank

On April 20, 2011 the Company entered into a seventh amendment to a credit agreement (the “Seventh Amendment”) with Bank of America, N.A. ("BOA"), as administrative agent, which materially amended the initial credit agreement dated February 12, 2010.  The Seventh Amendment increased the existing revolving credit facility from $25 million to $35 million with its term ending on April 20, 2014, and the $10 million secured term loan was increased to $20 million and now amortizes over a three year period with quarterly principal and interest payments that commenced on June 30, 2011 and a final payment of all remaining outstanding principal and accrued interest due on April 20, 2014. The entire credit facility has a variable interest rate currently set at LIBOR plus 1.50%. The Company deferred the origination costs in connection with this expanded and amended credit facility, and is amortizing these costs into interest expense over the three-yeart life of the credit agreement. As of September 30, 2011 the Company's Condensed Consolidated Balance Sheet includes $164 thousand of remaining deferred financing costs. The revolving 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 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, and there have been no violations thereof or in the event of noncompliance, appropriate waivers having been obtained.
At September 30, 2011, the outstanding balance on the revolving line of credit was $10.2 million and the facility carried an interest rate of 1.71%. This balance is included in the long-term liabilities section of the Condensed Consolidated Balance Sheets. During the nine month period ending September 30, 2011 the average and maximum outstanding balance on the revolving line of credit was $19.5 million and $34.3 million, respectively.
At September 30, 2011, the outstanding balance on the term loan was $16.7 million of which $6.7 million is due within the next twelve months. This term loan also carried an interest rate of 1.71%. During the nine months ended September 30, 2011 payments in the aggregate amount of $4.6 million were made against the term loan. 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.

v2.3.0.11
Convertible Debt
9 Months Ended
Sep. 30, 2011
Convertible Debt [Abstract]  
Convertible Debt [Text Block]
Convertible Debt
On August 25, 2009, the Company entered into a Convertible Note Purchase Agreement with the Rennes Foundation in an original amount of $5.0 million, which amount is convertible into shares of common stock at a conversion price of $16.66 per share (the "Note"). The Note had a 0.0% stated interest rate and no warrants were issued. The Note was payable in full at its maturity date of August 25, 2011. The Company applied imputed interest on these convertible notes using an interest rate of 1.75% and discounted their carrying value accordingly. During the nine months ending September 30, 2011 the Company recognized $21 thousand of interest expense on the Note. With respect to this convertible note, and in accordance with the terms of the notes, as understood between the Company and the holder, upon a conversion election by the holder the Company had to satisfy the related original principal balance in cash and could have satisfied the conversion spread (that being the excess of the conversion value over the related original principal component) in either cash or stock at option of the Company. On April 18, 2011, the Rennes Foundation elected to fully convert the Note. The Company settled this conversion election by paying $5.00 million in cash with respect to the principal component, and paying $1.76 million in cash with respect to the conversion spread.
Regarding the above discussed convertible promissory note, the Company applied the FASB’s accounting guidance related to the accounting for convertible debt instruments that may be partially or wholly settled in cash upon conversion. This guidance required us to account separately for the liability and equity components of these types of convertible debt instruments in a manner that reflects the Company’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. This guidance further required a bifurcation of the debt and equity components, re-classification of the then derived equity component, and then accretion of the resulting discount on the debt as part of interest expense recognized in the income statement. The application of this accounting guidance resulted in the Company recording $4.83 million as the original carrying amount of the debt component, and $170 thousand as debt discount and the carrying amount for the equity component. The bifurcation of this convertible debt instrument was based on the calculated fair value of similar debt instruments at August 2009 that did not have a conversion feature and associated equity component. The annual interest rate determined for such similar debt instruments in August 2009 was 1.75%. The resulting discount has been amortized to interest expense over the two year term of the convertible notes. We recognized non-cash interest expense of $21 thousand for the nine months ended September 30, 2011 related to the amortization of the discount on the liability component. Because the principal amount of the convertible notes must be settled in cash upon conversion, the convertible note only impacted diluted earnings per share when the average price of our common stock exceeded the conversion price, and then only to the extent of the incremental shares associated with the conversion spread. For all periods in which the Note was outstanding we included the effect of the additional shares that may be issued from conversion in our diluted net income per share calculation using the treasury stock method in periods in which the conversion prices are less than the average price of our common stock.
As of September 30, 2011 the Company has no remaining convertible debt obligations.

v2.3.0.11
Commitments and Contingencies
9 Months Ended
Sep. 30, 2011
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]
Commitments and Contingencies
Lease Commitments—The Company leases office space under non-cancelable operating leases with expiration dates ranging through 2018, 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 September 30, 2011 and 2010. Rental expense for office facilities and certain equipment subject to operating leases for the nine months ended September 30, 2011 and 2010 was $3.4 million and $3.0 million, respectively. Sublease income was $0 and $108 thousand, respectively for the nine months ended September 30, 2011 and 2010.
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 allegedly caused the Company's stock to trade at artificially inflated prices. Plaintiff seeks 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 will be filed by Lead Plaintiff on or about November 28, 2011. In September 2011, a related derivative complaint was filed against the Company and each of its Directors in the Superior Court of Fulton County, Georgia, styled Nauman v. Raina, et al., Civil Action File No. 2011-cv-205276. The derivative action has been stayed pending resolution of the Defendants' Motion to Dismiss the Amended Consolidated Complaint in the federal action. The Company believes that the complaints are legally insufficient and we intend to seek dismissal.  As of September 30, 2011 no liability in the Company's financial statements has been recognized with respect to these class action complaints, as  presently a loss is not probable nor able to be reasonably estimated.

The Company is not involved in any other significant legal action or claim that, in the opinion of management, could have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.
Self Insurance—For most of the Company’s U.S. employees the Company is currently 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 September 30, 2011, the amount accrued on the Company’s Condensed Consolidated Balance Sheet for the self-insured component of the Company’s employee health insurance was $269 thousand. The maximum potential estimated cumulative liability for the annual contract period, which ends in September 2011, is $2.5 million.

v2.3.0.11
Income Taxes
9 Months Ended
Sep. 30, 2011
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
Income Taxes
Effective Tax Rate— The Company’s effective tax rate for 2011 reflects the significant tax benefits from having a higher mix of a portion of our operations in 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. 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 related annual period, after eliminating discrete items unique to the respective interim period being reported. The Company’s effective income tax rate, excluding the effect of discrete items, for the three months ended September 30, 2011 rate was 8.94% as compared to 4.25% for the same period in 2010. The effective rate increased primarily due to increased taxable income from jurisdictions with higher tax rates.
The Company recognized a net tax benefit of $167 thousand for the nine months ended September 30, 2011. The Company's interim period tax provision, exclusive of discrete items, for this nine month period was an expense of $4.8 million which is reflective of the 8.94% effective tax rate. Included in the discrete items recognized during the nine months ending September 30, 2011 were the releases of the remaining valuation allowances held against deferred tax assets associated with tax net operating losses carry forwards obtained from earlier business acquisitions. These valuation allowances had been previously retained due to uncertainty as to the recoverability of the deferred tax asset in regards to sufficient levels of future expected taxable income, and due to uncertainties as to their utilization posed by the requirements of IRC Section 382. The valuation allowances were released based on analysis of the levels of taxable income being generated by these business units and an analysis of the relevant income tax regulations. As a result of the release of the valuation allowances the Company recognized a tax benefit of $4.6 million (net of charges associated with the offsetting of windfall gains realized from the tax deductions pertaining to exercised stock options and vested restricted stock grants). Also included in recognized discrete items was the recording of enhanced research and development tax deductions applicable to our Singapore operations which was retroactive back to the year 2010 and reduced tax expense by $403 thousand.
At September 30, 2011, the Company had remaining available domestic net operating loss (“NOL”) carry-forwards of approximately $57.2 million which are available to offset future federal and certain state income taxes. Approximately $40.0 million of these NOL carry-forwards were obtained as a result of the recent acquisition of ADAM in February 2011. The Company expects to fully utilize these NOLs before they begin to expire in 2019.
Accounting for Uncertainty in Income Taxes—The Company has applied the FASB’s accounting guidance on accounting for uncertain income tax positions. As of September 30, 2011 the Company’s Condensed Consolidated Balance Sheet includes a liability of $2.98 million for unrecognized tax benefits which is included in other long-term liabilities. During the three and nine months ended September 30, 2011 there were no changes to this liability. A reconciliation of the beginning and ending amount of the Company’s liability reserves for unrecognized tax benefits is as follows:
 
(in thousands)
Balance at January 1, 2011
$
2,980

Additions for tax positions related to current year
$

Additions for tax positions of prior years
$

Reductions for tax position of prior years
$

Balance at September 30, 2011
$
2,980

The Company recognizes interest accrued and penalties related to unrecognized tax benefits as part of income tax expense. As of September 30, 2011 approximately $602 thousand of estimated interest and penalties is included in other long-term liabilities in the accompanying Condensed Consolidated Balance Sheet.
Based on its current knowledge and the probability assessment of potential outcomes, the Company believes that recorded tax reserves, as determined in accordance with the requisite income tax guidance, are adequate.
v2.3.0.11
Derivative Instruments
9 Months Ended
Sep. 30, 2010
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Disclosure [Text Block]
Derivative Instruments
The Company uses derivative instruments that are not designated as hedges under FASB accounting guidance related to the accounting for derivative instruments and hedging activity, to hedge the fluctuations in foreign exchange rates for recognized balance sheet items such as intercompany receivables. As of September 30, 2011, the Company has in place foreign currency hedge contracts maturing March 2012 with a notional value totaling $22.0 million. The intended purpose of these hedging instruments is 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 is the Indian rupee. The change in the fair value of these derivatives was recorded in foreign currency exchange gains (losses) in the Condensed Consolidated Statements of Income and was $(1.1) million and $1.3 million for the nine months ended September 30, 2011 and 2010, respectively. These losses (gains) are in addition to the consolidated foreign exchange gains (losses) equivalent to $3.7 million and $(401) thousand recorded during the nine months ended September 30, 2011 and 2010, respectively, incurred by our subsidiaries for settlement of transactions denominated in other than their functional currency. As of September 30, 2011, the aggregate fair value of these derivative instruments, which are included in other current liabilities, in the Condensed Consolidated Balance Sheet was $909 thousand. The Company has classified 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 its the fair value at the measurement date.
In connection with the acquisition of E-Z Data effective October 1, 2009, Ebix issued a put option to the each of E-Z Data’s two stockholders. The put option, which expired October 31, 2011, was exercisable during the thirty-day period immediately following the two-year anniversary date of the business acquisition, which if exercised would have enabled them to sell the underlying 1.49 million shares of Ebix common stock they received as part of the purchase consideration, back to the Company at a price of $15.11 per share. At September 30, 2011 the fair value of the put option liability was remeasured and was determined to have increased $893 thousand during the nine month period then ended and with the amount reflected as a loss and is included in other non-operating income (losses) in the accompanying Condensed Consolidated Statement of Income. As of September 30, 2011, the aggregate fair value of this derivative instrument, which is included as in current liabilities in the Condensed Consolidated Balance Sheet, was $1.4 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 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 the fair value at the measurement date.
v2.3.0.11
Geographic Information
9 Months Ended
Sep. 30, 2011
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]
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. The following enterprise wide information is provided. The following revenue information relates to the Company's geographic locations (all amounts in thousands):
Nine Months Ended September 30, 2011
 
The
Americas
 
Asia-Pacific
 
Total
Revenue
$
97,100

 
$
27,819

 
$
124,919

Nine Months Ended September 30, 2010
 
The
Americas
 
Asia-Pacific
 
Total
Revenue
$
73,161

 
$
23,930

 
$
97,091

v2.3.0.11
Subsequent Events
9 Months Ended
Sep. 30, 2011
Subsequent Events [Abstract]  
Subsequent Events [Text Block]
Subsequent Events
Repurchases of Common Stock
Since September 30, 2011 and through November 8, 2011 the Company has purchased an additional 188,000 shares of its outstanding common stock for aggregate consideration in the amount of $2.7 million and at an average rate of $14.14 per share. All share repurchases were done in accordance with Rule 10b-18 of the Securities Act of 1934 as to the timing, pricing, and volume of such transactions, and were completed using available cash resources and cash generated from the Company's operating activities.