v2.4.0.6
Document and Entity Information Document
9 Months Ended
Sep. 30, 2012
Nov. 07, 2012
Entity Information [Line Items]    
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, 2012  
Document Fiscal Year Focus 2012  
Document Fiscal Period Focus Q3  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   37,280,409
v2.4.0.6
Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Operating revenue $ 53,804 $ 42,602 $ 145,347 $ 124,919
Operating expenses:        
Cost of services provided 9,500 8,710 27,686 24,931
Product development 7,102 4,964 17,188 14,385
Sales and marketing 4,346 3,440 12,454 9,553
General and administrative 9,679 5,785 24,700 18,240
Amortization and depreciation 2,469 1,749 6,571 5,617
Total operating expenses 33,096 24,648 88,599 72,726
Operating income 20,708 17,954 56,748 52,193
Interest income 88 100 365 429
Interest expense (440) (218) (1,005) (592)
Other non-operating income (loss) 414 33 676 (785)
Foreign currency exchange gain (loss) (536) (230) 1,759 2,635
Income before income taxes 20,234 17,639 58,543 53,880
Income tax benefit (expense) (2,162) (1,103) (6,719) 168
Net income $ 18,072 $ 16,536 $ 51,824 $ 54,048
Basic earnings per common share $ 0.49 $ 0.44 $ 1.41 $ 1.41
Diluted earnings per common share $ 0.46 $ 0.41 $ 1.32 $ 1.31
Basic weighted average shares outstanding 37,214 37,345 36,859 38,215
Diluted weighted average shares outstanding 39,120 40,449 39,158 41,400
v2.4.0.6
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Net income $ 18,072 $ 16,536 $ 51,824 $ 54,048
Other comprehensive income (loss):        
Foreign currency translation adjustments 1,196 (11,323) (2,182) (6,441)
Total other comprehensive income 1,196 (11,323) (2,182) (6,441)
Comprehensive income $ 19,268 $ 5,213 $ 49,642 $ 47,607
v2.4.0.6
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Current assets:    
Cash and cash equivalents $ 29,491 $ 23,696
Short-term investments 1,506 1,505
Trade accounts receivable, less allowances of $1,316 and $1,719, respectively 37,203 31,133
Deferred tax asset, net 1,594 2,981
Other current assets 6,632 4,502
Total current assets 76,426 63,817
Property and equipment, net 10,383 8,834
Goodwill 337,249 259,218
Intangibles, net 51,483 38,386
Indefinite-lived intangibles 30,798 30,453
Deferred tax asset, net 6,011 9,412
Other assets 3,483 1,062
Total assets 515,833 411,182
Current liabilities:    
Accounts payable and accrued liabilities 19,729 11,129
Accrued payroll and related benefits 4,620 5,034
Short term debt 11,000 6,667
Business Acquisition, Contingent Consideration, at Fair Value, Current 6,227 7,590
Current portion of long term debt and capital lease obligations, net of discount of $26 and $0, respectively 876 165
Deferred revenue 17,845 16,460
Current deferred rent 258 266
Other current liabilities 106 2,468
Total current liabilities 60,661 49,779
Revolving line of credit 37,840 31,750
Long term debt and capital lease obligations, less current portion, net of discount of $78 and $0, respectively 33,905 8,468
Other liabilities 4,443 3,803
Business Acquisition, Contingent Consideration, at Fair Value, Noncurrent 23,740 0
Put option liability 700 0
Deferred revenue 200 328
Long term deferred rent 1,519 939
Total liabilities 163,008 95,067
Commitments and Contingencies      
Stockholders’ equity:    
Preferred stock, $0.10 par value, 500,000 shares authorized, no shares issued and outstanding at September 30, 2012 and December 31, 2011 0 0
Common stock, $0.10 par value, 60,000,000 shares authorized, 37,214,128 issued and 37,173,619 outstanding at September 30, 2012 and 36,418,385 issued and 36,377,876 outstanding at December 31, 2011 3,717 3,638
Additional paid-in capital 171,668 179,518
Treasury stock (40,509 shares as of September 30, 2012 and December 31, 2011) (76) (76)
Retained earnings 184,222 137,559
Accumulated other comprehensive loss (6,706) (4,524)
Total stockholders’ equity 352,825 316,115
Total liabilities and stockholders’ equity $ 515,833 $ 411,182
v2.4.0.6
Condensed Consolidated Balance Sheets (Parentheticals) (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Current Assets:    
Allowance for doubtful accounts $ 1,316 $ 1,719
Current Liabilities:    
Unamortized debt discount, current 26 0
Unamortized debt discount, noncurrent $ 78 $ 0
Stockholders' Equity:    
Preferred stock, par value (per share) $ 0.10 $ 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) $ 0.10 $ 0.10
Common stock, shares authorized 60,000,000 60,000,000
Common stock, shares issued 37,214,128 36,418,385
Common stock, shares outstanding 37,173,619 36,377,876
Treasury stock, shares 40,509 40,509
v2.4.0.6
Condensed Consolidated Statements 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, 2011 $ 316,115 $ 3,638 $ (76) $ 179,518 $ 137,559 $ (4,524)
Beginning Balance, Issued Shares at Dec. 31, 2011 36,418,385 36,418,385        
Beginning Balance, Treasury Shares at Dec. 31, 2011     (40,509)      
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income 51,824       51,824  
Cumulative translation adjustment (2,182)         (2,182)
Repurchase and retirement of common stock, Shares   (787,518)        
Repurchase and retirement of common stock, Value (15,150) (79)   (15,071)    
Vesting of restricted stock, Shares   77,159        
Vesting of restricted stock, Value 0 6   (6)    
Exercise of stock options, Shares   1,209,542        
Exercise of stock options, Value 739 122   617    
Share based compensation 1,567     1,567    
Share subscribed for business acquisition, Shares   296,560        
Share subscribed for business acquisition, Value 5,000 30   4,970    
Tax benefit related to share-based compensation 73     73    
Dividends paid (5,161)       (5,161)  
Ending Balance, Value at Sep. 30, 2012 $ 352,825 $ 3,717 $ (76) $ 171,668 $ 184,222 $ (6,706)
Ending Balance, Issued Shares at Sep. 30, 2012 37,214,128 37,214,128        
Ending Balance, Treasury Shares at Sep. 30, 2012     (40,509)      
v2.4.0.6
Condensed Consolidated Statements of Cash Flow (Unaudited) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Cash flows from operating activities:    
Net income $ 51,824 $ 54,048
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 6,571 5,617
Benefit for deferred taxes (605) (5,940)
Share based compensation 1,567 1,737
Provision for doubtful accounts 416 747
Debt discount amortization on convertible debt 13 21
Unrealized foreign exchange gain on forward contracts 0 909
Unrealized foreign currency exchange (gain) loss 397 (4,047)
(Gain) loss on put option (677) 893
Reduction of acquisition earnout accruals 0 (3,048)
Changes in assets and liabilities, net of effects from acquisitions:    
Accounts receivable (1,859) (2,985)
Other assets (1,715) 422
Accounts payable and accrued expenses 2,758 1,916
Accrued payroll and related benefits (1,415) (959)
Deferred revenue (811) 1,024
Deferred rent (92) (188)
Other current liabilities (2,370) 1,696
Net cash provided by operating activities 54,002 51,863
Cash flows from investing activities:    
Maturities of marketable securities 931 7,600
Purchases of marketable securities (785) (2,963)
Capital expenditures (1,468) (1,863)
Net cash provided by/(used in) investing activities (58,922) 5,738
Cash flows from financing activities:    
Repayments on revolving line of credit, (net of proceeds) 6,090 (14,750)
Proceeds from term loan 45,000 16,250
Principal payments of term loan obligation (17,062) (4,740)
Repurchases of common stock (15,150) (56,548)
Settlement on conversion of convertible debt 0 (6,761)
Excess tax benefit from share-based compensation 73 70
Proceeds from the exercise of stock options 739 14
Dividend payments (5,161) 0
Principal payments of debt obligations (600) 0
Payments of capital lease obligations (229) (253)
Net cash provided by/(used in) financing activities 13,700 (66,718)
Effect of foreign exchange rates on cash (2,985) (327)
Net change in cash and cash equivalents 5,795 (9,444)
Cash and cash equivalents at the beginning of the period 23,696 23,397
Cash and cash equivalents at the end of the period 29,491 13,953
Supplemental disclosures of cash flow information:    
Interest paid 929 579
Income taxes paid 6,308 1,757
ADAM
   
Cash flows from investing activities:    
Acquisition of businesses, net of cash acquired 0 3,529
MCN
   
Cash flows from investing activities:    
Investment, net of cash acquired (1,537) (381)
BSI
   
Cash flows from investing activities:    
Acquisition of businesses, net of cash acquired (992) 0
Taimma
   
Cash flows from investing activities:    
Acquisition of businesses, net of cash acquired (5,003) 0
Fintechnix
   
Cash flows from investing activities:    
Acquisition of businesses, net of cash acquired (4,713) 0
Planetsoft
   
Cash flows from investing activities:    
Acquisition of businesses, net of cash acquired (34,078) 0
TriSystems [Member]
   
Cash flows from investing activities:    
Acquisition of businesses, net of cash acquired (9,277) 0
ConfirmNet
   
Cash flows from investing activities:    
Investment, net of cash acquired 0 (184)
Curepet, Inc. [Member]
   
Cash flows from investing activities:    
Payments to Acquire Investments $ (2,000) $ 0
v2.4.0.6
Supplemental schedule of noncash financing activities (USD $)
In Millions, except Share data, unless otherwise specified
0 Months Ended
Jun. 02, 2012
Planetsoft
Feb. 07, 2011
ADAM
Business acquisition, cost of acquired entity, purchase price $ 40.0 $ 88.4
Business acquisition, number of common shares issued 296,560 3,650,000
Fair value of equity issued in business acquisition $ 5.0 $ 87.5
v2.4.0.6
Description of Business and Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2012
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 and financial industries. 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 29.1% and 28.5% of the Company’s total revenue for the nine months ended September 30, 2012 and 2011, 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, 2012 and 2011.

 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
(dollar amounts in thousands)
 
2012
 
2011
 
2012
 
2011
Exchanges
 
$
43,592

 
$
33,021

 
$
116,420

 
$
96,308

Broker Systems
 
4,537

 
4,731

 
13,713

 
13,397

Business Process Outsourcing (“BPO”)

 
4,252

 
3,576

 
11,713

 
10,948

Carrier Systems
 
1,423

 
1,274

 
3,501

 
4,266

Totals
 
$
53,804

 
$
42,602

 
$
145,347

 
$
124,919


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 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, 2012 and 2011 are not necessarily indicative of the results that may be expected for the full year. The condensed consolidated December 31, 2011 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, 2011.
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 September 30, 2012 the Company has 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 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 September 30, 2012 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 September 30, 2012 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 at September 30, 2012
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
 
$
1,506

$
1,506

$

$

Total assets measured at fair value
 
$
1,506

$
1,506

$

$

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Derivatives:
 
 
 
 
 
Common share-based put option (a)
 
$
700

$

$
700

$

Foreign exchange contracts (b)
 
$

$

$

$

Contingent accrued earn-out acquisition consideration (c)
 
$
29,967

$

$

$
29,967

Total liabilities measured at fair value
 
$
30,667

$

$
700

$
29,967

 
 
 
 
 
 
(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. 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.
(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 September 30, 2012 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 nine months ended September 30, 2012 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 nine months ending September 30, 2012:
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
 
 
Contingent Liability for Accrued Earn-out Acquisition Consideration
 
 
(in thousands)
 
 
 
Beginning balance at January 1, 2012
 
$
7,590

 
 
 
Total remeasurement adjustments:
 
 
       (Gains) or losses included in earnings **
 

       (Gains) or losses recorded against goodwill
 

       Foreign currency translation adjustments ***
 
231

 
 
 
Acquisitions and settlements
 

       Business acquisitions
 
24,192

       Settlements
 
(2,046
)
 
 
 
Ending balance at September 30, 2012
 
$
29,967

 
 
 
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.
 
$

 
 
 
** 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  September 30, 2012
 
             Valuation Technique
 
Significant Unobservable
Input
Contingent acquisition consideration:
(USIX, HealthConnect, Taimma, Planetsoft, Fintechnix, and TriSystems acquisitions)
 
$29,967
 
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 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 $28.1 million of trade receivables stated at invoice billed amounts net of the estimated allowance for doubtful accounts receivable, and $9.1 million of unbilled receivables. Approximately $7.7 million of deferred revenue is included in accounts receivable at September 30, 2012. Bad debt expense incurred during the three and nine month periods ended September 30, 2012 was approximately $100 thousand and $416 thousand, respectively and $410 thousand and $747 thousand for the three and nine month periods ended September 30, 2011, 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 their 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 we 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, 2011 we had no impairment of our reporting unit goodwill balances.
Changes in the carrying amount of goodwill for the nine months ended September 30, 2012 are as follows:

 
(In thousands)
Beginning Balance (December 31, 2011)
$
259,218

Additions, net (see Note 3)
77,468

Foreign currency translation adjustments
563

Ending Balance (September 30, 2012)
$
337,249


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
 
7-15
Developed technology
 
3–20
Trademarks
 
3–15
Non-compete agreements
 
5
Database
 
10

The carrying value of finite-lived and indefinite-lived intangible assets at September 30, 2012 and December 31, 2011 are as follows:

 
September 30,
2012
 
December 31,
2011
 
(In thousands)
Finite-lived intangible assets:
 
 
 
Customer relationships
$
55,744

 
$
40,289

Developed technology
13,565

 
11,640

Trademarks
2,188

 
2,188

Non-compete agreements
418

 
418

Backlog
140

 
140

Database
211

 
207

Total intangibles
72,266

 
54,882

Accumulated amortization
(20,783
)
 
(16,496
)
Finite-lived intangibles, net
$
51,483

 
$
38,386

 
 
 
 
Indefinite-lived intangibles:
 
 
 
Customer/territorial relationships
$
30,798

 
$
30,453


Amortization expense recognized in connection with acquired intangible assets was $1.7 million and $4.3 million for the three and nine months ended September 30, 2012 and $1.2 million and $3.6 million for the three and nine months ended September 30, 2011, respectively.
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 recent acquisition of PlanetSoft, and 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. Management believes that the acquisition of PlanetSoft in combination with the other four business acquisitions completed during the current year and the cumulative effect of business acquisitions made over the last few years which in turn has 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. Had the change in the functional currency designation for our India and Singapore subsidiaries not been made, the Company would have incurred and recognized approximately $1.25 million of foreign currency exchange losses for the three months ended September 30, 2012. Furthermore, a portion of monetary assets and liabilities for these two foreign subsidiaries that are denominated in foreign currencies are re-measured into U.S. dollars at the exchange rates in effect at each reporting date. These corresponding re-measurement gains and losses are included as a component of foreign currency exchange gains and losses in the accompanying Condensed Consolidated Statements of Income and amounted to a $422 thousand loss for the three months ended September 30, 2012.
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 other comprehensive income in the accompanying consolidated balance sheets. 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.
    
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 annual impairment evaluation of goodwill.

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 adopted this new guidance in the first quarter of 2012.

In December 2010, the Emerging Issues Task Force of the 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 was 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 in 2011.

v2.4.0.6
Earnings per Share
9 Months Ended
Sep. 30, 2012
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
 
Nine Months Ended
 
September 30,
 
September 30,
 
2012
 
2011
 
2012
 
2011
 
(In thousands, except per share data)
Net income for basic and diluted earnings per share
$
18,072

 
$
16,536

 
$
51,824

 
$
54,048

Basic Weighted Average Shares Outstanding
37,214

 
37,345

 
36,859

 
38,215

Dilutive effect of stock options and restricted stock awards
1,906

 
3,104

 
2,299

 
3,185

Diluted weighted average shares outstanding
39,120

 
40,449

 
39,158

 
41,400

Basic earnings per common share
$
0.49

 
$
0.44

 
$
1.41

 
$
1.41

Diluted earnings per common share
$
0.46

 
$
0.41

 
$
1.32

 
$
1.31



v2.4.0.6
Business Combinations
9 Months Ended
Sep. 30, 2012
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 the nine months ended September 30, 2012 the Company executed and completed five business acquisitions including PlanetSoft, Inc. which is discussed further below; the other acquisitions were not material individually or in the aggregate. The valuation and purchase price allocation for these other individually immaterial business acquisitions, including the valuation of contingent future earnout consideration based on revenue levels, is preliminary as of September 30, 2012. In the fourth quarter the Company will finalize the valuations of these business acquisitions and the related future contingent consideration, and may adjust the amounts recorded as of September 30, 2012 to reflect any revised evaluations of the assets acquired or liabilities assumed.
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 Sheet. 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 September 30, 2012, the total of these contingent liabilities was $30.0 million, of which $23.7 million is reported in long-term liabilities, and $6.2 million is included in current liabilities in the Company's Condensed Consolidated Balance Sheet. As of December 31, 2011 the total of these contingent liabilities was $7.6 million which were included in current liabilities in the Company's 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 nine months ended September 30, 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. PlanetSoft is in the business of powering data exchanges that streamline core insurance operations in the areas of client acquisition, underwriting, and distribution management. Due to the fact that PlanetSoft's sales, marketing, and operating functions were immediately integrated into Ebix's operations it is impractical to separately track and disclose specific earnings from this business combination after its acquisition date. The revenue derived from PlanetSoft's operations is included in the Company's Exchange division. The Company accounted for this acquisition by recording $49.4 million of goodwill, $11.1 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 tentatively determined that the approximate fair value of this contingent consideration liability is to be $16.3 million.

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 3.65 million shares of Ebix common stock with a fair value of $87.5 million pursuant to the merger. In addition Ebix paid approximately $944 thousand in cash for then unexercised ADAM stock options. ADAM was 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 were included in the Company's revenues reported in its condensed and consolidated statement of income for the nine months ended September 30, 2011. Correspondingly included in the Company's revenues as reported in its condensed and consolidated statement of income for the nine months ended September 30, 2012 is $18.0 million of ADAM's operating revenue. The revenue derived from ADAM portfolio of products and services is included in the Company's Exchange division. The Company accounted for this acquisition by recording $60.1 million of goodwill, $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.
    
The aggregated unaudited pro forma financial information pertaining to the all of the Company's acquisitions made during 2011 and 2012 through September 30, 2012, including the acquisitions of PlanetSoft and ADAM 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 includes three and nine months of pro forma results for PlanetSoft and ADAM as if they had been acquired on January 1, 2011, whereas the Company's reported financial statements for the nine months ended September 30, 2012, only includes four months of actual financial results of PlanetSoft since the effective date of its acquisition on June 1, 2012. Similarly, the 2011 pro forma financial information below includes three and nine months of pro forma results for PlanetSoft and ADAM as if they had been acquired on January 1, 2011, whereas the Company's reported financial statements for the nine months ended September 30, 2011 only includes the actual financial results of ADAM since the effective date of its acquisition on February 7, 2011, and no revenues from PlanetSoft.


 
Three Months Ending September 30, 2012
 
Three Months Ending September 30, 2011
 
As Reported
Pro Forma
 
As Reported
Pro Forma
 
(unaudited)
 
(unaudited)
 
(In thousands, except per share data)
Revenue
$
53,804

$
54,197

 
$
42,602

$
52,360

Net Income
$
18,072

$
18,038

 
$
16,536

$
16,513

Basic EPS
$
0.49

$
0.48

 
$
0.44

$
0.44

Diluted EPS
$
0.46

$
0.46

 
$
0.41

$
0.41



In the above table, the unaudited pro forma revenue for the three months ended September 30, 2012 increased by $1.8 million from the unaudited pro forma revenue during the same period in 2011 of $52.4 million to $54.2 million , representing an 3.5% increase. Correspondingly, the reported revenue for the three months ended September 30, 2012 increased by $11.2 million or 26.3% from the reported revenue during the same period in 2011.

 
Nine Months Ending September 30, 2012
 
Nine Months Ending September 30, 2011
 
As Reported
Pro Forma
 
As Reported
Pro Forma
 
(unaudited)
 
(unaudited)
 
(In thousands, except per share data)
Revenue
$
145,347

$
158,336

 
$
124,919

$
156,259

Net Income
$
51,824

$
51,242

 
$
54,048

$
54,389

Basic EPS
$
1.41

$
1.38

 
$
1.41

$
1.39

Diluted EPS
$
1.32

$
1.30

 
$
1.31

$
1.29



In the above table, the unaudited pro forma revenue for the nine months ended September 30, 2012 increased by $2.1 million from the unaudited pro forma revenue during the same period in 2011 of $156.3 million to $158.3 million , representing an 1.3% increase. Correspondingly, the reported revenue for the nine months ended September 30, 2012 increased by $20.4 million or 16.4% from the reported revenue during the same period in 2011.
v2.4.0.6
Debt with Commercial Bank
9 Months Ended
Sep. 30, 2012
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, N.A., 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, N.A., 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 1.74%. 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 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.

On April 26, 2012, Ebix fully paid all of its obligations and related fees then outstanding to Bank of America N.A. (“BOA”) and as pertaining to the Credit Agreement dated February 12, 2010 (as amended). The aggregate amount of the payment was $45.14 million and was funded from a portion of the proceeds of the Citibank led Secured Syndicated Credit Facility discussed immediately above. Upon the effective date of this payoff, BOA's commitment to extend further credit to the Company terminated.
At September 30, 2012, the outstanding balance on the revolving line of credit was $37.8 million and the facility carried an interest rate of 1.74%. This balance is included in the long-term liabilities section of the Condensed Consolidated Balance Sheets. During the nine month period ending September 30, 2012, the average and maximum outstanding balances on the revolving line of credit were $30.6 million and $37.8 million, respectively.
    At September 30, 2012, the outstanding balance on the term loan was $42.9 million of which $11 million is due within the next twelve months. This term loan also carried an interest rate of 1.74%. During the nine months ended September 30, 2012, $2.1 million of scheduled payments were against the existing term loan with Citibank and $1.7 million of scheduled payments were made against the term loan previously with BOA. 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.
v2.4.0.6
Commitments and Contingencies
9 Months Ended
Sep. 30, 2012
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. 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 (“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 will now move into the discovery phase of the litigation. 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 was stayed pending resolution of the Defendants' Motion to Dismiss in the federal action.  Pursuant to a Stipulation and Order entered on November 2, 2012, the Plaintiff will file an amended complaint in the derivative action no later than January 14, 2013, which the Defendants will answer within forty-five (45) days. Thereafter, the derivative action will be stayed pending the conclusion of expert discovery in the federal action. 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 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, 2012 and 2011. Rental expense for office facilities and certain equipment subject to operating leases for the nine months ended September 30, 2012 and 2011 was $4.2 million and $3.4 million, respectively.
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, 2012, the amount accrued on the Company’s Condensed Consolidated Balance Sheet for the self-insured component of the Company’s employee health insurance was $334 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
9 Months Ended
Sep. 30, 2012
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 $6.7 million for the nine months ended September 30, 2012. 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 third quarter of 2012 was 10.35% as compared to 8.94% for the same period in 2011. The effective rate increased primarily due to increased taxable income from jurisdictions with higher tax rates.
At September 30, 2012, the Company had remaining available domestic net operating loss (“NOL”) carry-forwards of approximately $53.5 million which are available to offset future federal and certain state income taxes. Approximately $35.9 million of these remaining NOL carry-forwards were obtained as a result of the recent acquisition of ADAM in February 2011. The Company reviews its NOL positions to validate that all NOL carry-forwards will be utilized before they begin to expire in 2020.
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, 2012 the Company’s Condensed Consolidated Balance Sheet includes a liability of $4.4 million for unrecognized tax benefits which is included in other long-term liabilities. During the nine months ended September 30, 2012 there were $1.2 million 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, 2012
$
3,180

Additions for tax positions related to current year
$
1,118

Additions for tax positions of prior years
$
93

Reductions for tax position of prior years
$

Balance at September 30, 2012
$
4,391


The Company recognizes interest accrued and penalties related to unrecognized tax benefits as part of income tax expense. As of September 30, 2012 approximately $847 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.
v2.4.0.6
Derivative Instruments
9 Months Ended
Sep. 30, 2012
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 September 30, 2012, 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 $1.2 million and $(1.1) million for the nine months ended September 30, 2012 and 2011, respectively. These gains are in addition to the consolidated foreign exchange gains equivalent to $729 thousand and $3.7 million recorded during the nine months ended September 30, 2012 and 2011, 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 its the fair value at the measurement 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 September 30, 2012 the fair value of the put option liability was re-measured and was determined to have decreased $677 thousand during the nine month period then ended with this amount reflected as a gain included other non-operating income in the accompanying Condensed Consolidated Statement of Income. As of September 30, 2012, the aggregate fair value of this derivative instrument, which is included as in current liabilities in the Condensed Consolidated Balance Sheet, was $700 thousand. 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 fair value at the measurement date.
v2.4.0.6
Geographic Information
9 Months Ended
Sep. 30, 2012
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):
Nine Months Ended September 30, 2012
 
United States
 
Canada
 
Latin America
 
Australia
 
Singapore
 
New Zealand
 
India
 
Europe
 
Total
External Revenues
$
103,086

 
$
4,207

 
$
6,266

 
$
27,039

 
$
2,165

 
$
1,624

 
$
147

 
$
813

 
$
145,347

Long-lived assets
$
320,124

 
$
9,290

 
$
12,908

 
$
1,542

 
$
71,180

 
$
245

 
$
10,422

 
$
13,696

 
$
439,407

Nine Months Ended September 30, 2011
 
United States
 
Canada
 
Latin America
 
Australia
 
Singapore
 
New Zealand
 
India
 
Total
External Revenues
$
89,307

 
$
648

 
$
7,147

 
$
24,153

 
$
2,145

 
$
1,519

 
$

 
$
124,919

Long-lived assets
$
247,174

 
$

 
$
18,599

 
$
1,292

 
$
52,549

 
$
186

 
$
6,824

 
$
326,624

v2.4.0.6
Minority Business Investment
9 Months Ended
Sep. 30, 2012
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 and nine month period ending September 30, 2012 the Company recognized $535 thousand and $887 thousand of revenue from CurePet, and as of September 30, 2012 there were no outstanding balances 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 nine months ended September 30, 2012, there have been no revenue sharing earned or accrued.
v2.4.0.6
Subsequent Events
9 Months Ended
Sep. 30, 2012
Subsequent Events [Abstract]  
Subsequent Events
Subsequent Events

On November 7, 2012 Ebix's Board of Directors increased the regular quarterly dividend by 50% to 7.5 cents per outstanding share of the Company's common stock. This same 7.5 cent quarterly dividend per share will be paid in February 2013.
v2.4.0.6
Description of Business and Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2012
Accounting Policies [Abstract]  
Foreign Currency Disclosure [Text Block]
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 recent acquisition of PlanetSoft, and 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. Management believes that the acquisition of PlanetSoft in combination with the other four business acquisitions completed during the current year and the cumulative effect of business acquisitions made over the last few years which in turn has 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. Had the change in the functional currency designation for our India and Singapore subsidiaries not been made, the Company would have incurred and recognized approximately $1.25 million of foreign currency exchange losses for the three months ended September 30, 2012. Furthermore, a portion of monetary assets and liabilities for these two foreign subsidiaries that are denominated in foreign currencies are re-measured into U.S. dollars at the exchange rates in effect at each reporting date. These corresponding re-measurement gains and losses are included as a component of foreign currency exchange gains and losses in the accompanying Condensed Consolidated Statements of Income and amounted to a $422 thousand loss for the three months ended September 30, 2012.
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 other comprehensive income in the accompanying consolidated balance sheets. 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.
I
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 September 30, 2012 the Company has 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 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