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Share Name | Share Symbol | Market | Type |
---|---|---|---|
(MM) | NASDAQ:USMO | NASDAQ | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 15.74 | 0.00 | 01:00:00 |
|
FORM 10-Q
|
x
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
SPŌK HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
|
DELAWARE
|
|
16-1694797
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
Large accelerated filer
|
¨
|
Accelerated filer
|
x
|
|
|
|
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
|
|
Page
|
|
PART I.
|
|
||
|
Item 1.
|
|
|
|
|
Condensed Consolidated Balance Sheets as of June 30, 2014 (Unaudited) and December 31, 2013
|
|
|
|
Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2014 and 2013 (Unaudited)
|
|
|
|
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013 (Unaudited)
|
|
|
|
||
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
|
|
|
Item 3.
|
||
|
Item 4.
|
||
PART II.
|
|
||
|
Item 1.
|
||
|
Item 1A.
|
||
|
Item 6.
|
||
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
|
(In thousands)
|
||||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
97,035
|
|
|
$
|
89,075
|
|
Accounts receivable, net
|
22,964
|
|
|
18,084
|
|
||
Prepaid expenses and other
|
6,681
|
|
|
7,399
|
|
||
Inventory
|
2,070
|
|
|
2,221
|
|
||
Deferred income tax assets, net
|
3,389
|
|
|
3,389
|
|
||
Total current assets
|
132,139
|
|
|
120,168
|
|
||
Property and equipment, net
|
20,936
|
|
|
21,122
|
|
||
Goodwill
|
133,031
|
|
|
133,031
|
|
||
Other intangible assets, net
|
22,653
|
|
|
25,368
|
|
||
Deferred income tax assets, net
|
20,542
|
|
|
25,494
|
|
||
Other assets
|
1,586
|
|
|
1,715
|
|
||
TOTAL ASSETS
|
$
|
330,887
|
|
|
$
|
326,898
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
9,796
|
|
|
$
|
9,885
|
|
Accrued compensation and benefits
|
11,287
|
|
|
13,919
|
|
||
Deferred revenue
|
24,571
|
|
|
23,023
|
|
||
Total current liabilities
|
45,654
|
|
|
46,827
|
|
||
Deferred revenue
|
645
|
|
|
862
|
|
||
Other long-term liabilities
|
9,231
|
|
|
9,259
|
|
||
TOTAL LIABILITIES
|
55,530
|
|
|
56,948
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock
|
—
|
|
|
—
|
|
||
Common stock
|
2
|
|
|
2
|
|
||
Additional paid-in capital
|
128,988
|
|
|
127,264
|
|
||
Retained earnings
|
146,367
|
|
|
142,684
|
|
||
TOTAL STOCKHOLDERS’ EQUITY
|
275,357
|
|
|
269,950
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
330,887
|
|
|
$
|
326,898
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
(Unaudited and in thousands except share and per share amounts)
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
||||||||
Wireless revenue
|
|
$
|
33,518
|
|
|
$
|
37,771
|
|
|
$
|
67,869
|
|
|
$
|
76,550
|
|
Software revenue
|
|
15,576
|
|
|
14,497
|
|
|
31,344
|
|
|
28,848
|
|
||||
Total revenue
|
|
49,094
|
|
|
52,268
|
|
|
99,213
|
|
|
105,398
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
|
7,180
|
|
|
6,961
|
|
|
13,985
|
|
|
13,628
|
|
||||
Service, rental and maintenance
|
|
11,420
|
|
|
12,018
|
|
|
23,212
|
|
|
24,209
|
|
||||
Selling and marketing
|
|
7,780
|
|
|
6,538
|
|
|
15,026
|
|
|
12,932
|
|
||||
General and administrative
|
|
10,990
|
|
|
11,022
|
|
|
23,125
|
|
|
23,353
|
|
||||
Severance and restructuring
|
|
4
|
|
|
2
|
|
|
24
|
|
|
2
|
|
||||
Depreciation, amortization and accretion
|
|
4,352
|
|
|
3,822
|
|
|
8,381
|
|
|
7,629
|
|
||||
Total operating expenses
|
|
41,726
|
|
|
40,363
|
|
|
83,753
|
|
|
81,753
|
|
||||
Operating income
|
|
7,368
|
|
|
11,905
|
|
|
15,460
|
|
|
23,645
|
|
||||
Interest expense, net
|
|
(64
|
)
|
|
(64
|
)
|
|
(131
|
)
|
|
(128
|
)
|
||||
Other income, net
|
|
(194
|
)
|
|
(75
|
)
|
|
(178
|
)
|
|
6
|
|
||||
Income before income tax expense
|
|
7,110
|
|
|
11,766
|
|
|
15,151
|
|
|
23,523
|
|
||||
Income tax expense
|
|
(2,819
|
)
|
|
(4,938
|
)
|
|
(5,970
|
)
|
|
(9,770
|
)
|
||||
Net income
|
|
$
|
4,291
|
|
|
$
|
6,828
|
|
|
$
|
9,181
|
|
|
$
|
13,753
|
|
Basic net income per common share
|
|
$
|
0.20
|
|
|
$
|
0.32
|
|
|
$
|
0.42
|
|
|
$
|
0.63
|
|
Diluted net income per common share
|
|
$
|
0.19
|
|
|
$
|
0.31
|
|
|
$
|
0.42
|
|
|
$
|
0.63
|
|
Basic weighted average common shares outstanding
|
|
21,642,163
|
|
|
21,644,281
|
|
|
21,640,191
|
|
|
21,666,096
|
|
||||
Diluted weighted average common shares outstanding
|
|
22,099,791
|
|
|
21,827,149
|
|
|
22,073,254
|
|
|
21,921,742
|
|
||||
Cash dividends declared per common share
|
|
$
|
0.125
|
|
|
$
|
0.125
|
|
|
$
|
0.250
|
|
|
$
|
0.250
|
|
|
|
For the Six Months Ended June 30,
|
||||||
|
|
2014
|
|
2013
|
||||
|
|
(Unaudited and
in thousands) |
||||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
9,181
|
|
|
$
|
13,753
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation, amortization and accretion
|
|
8,381
|
|
|
7,629
|
|
||
Amortization of deferred financing costs
|
|
129
|
|
|
129
|
|
||
Deferred income tax expense
|
|
4,952
|
|
|
8,849
|
|
||
Amortization of stock based compensation
|
|
1,710
|
|
|
1,254
|
|
||
Provision for doubtful accounts, service credits and other
|
|
597
|
|
|
833
|
|
||
Adjustment of non-cash transaction taxes
|
|
(229
|
)
|
|
(251
|
)
|
||
Loss on disposals of property and equipment
|
|
3
|
|
|
167
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(5,478
|
)
|
|
2,812
|
|
||
Prepaid expenses and other assets
|
|
850
|
|
|
(367
|
)
|
||
Accounts payable, accrued liabilities and accrued compensation and benefits
|
|
(3,076
|
)
|
|
(7,578
|
)
|
||
Deferred revenue
|
|
1,331
|
|
|
(4,088
|
)
|
||
Net cash provided by operating activities
|
|
18,351
|
|
|
23,142
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchase of property and equipment
|
|
(5,036
|
)
|
|
(5,268
|
)
|
||
Proceeds from disposals of property and equipment
|
|
59
|
|
|
9
|
|
||
Net cash used in investing activities
|
|
(4,977
|
)
|
|
(5,259
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Cash dividends to stockholders
|
|
(5,414
|
)
|
|
(6,900
|
)
|
||
Net cash used in financing activities
|
|
(5,414
|
)
|
|
(6,900
|
)
|
||
Net increase in cash and cash equivalents
|
|
7,960
|
|
|
10,983
|
|
||
Cash and cash equivalents, beginning of period
|
|
89,075
|
|
|
61,046
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
97,035
|
|
|
$
|
72,029
|
|
Supplemental disclosure:
|
|
|
|
|
||||
Interest paid
|
|
$
|
3
|
|
|
$
|
6
|
|
Income taxes paid
|
|
$
|
884
|
|
|
$
|
831
|
|
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
|
|
(Dollars in thousands)
|
||||||
Other receivables
|
|
$
|
758
|
|
|
$
|
748
|
|
Tax receivables
|
|
177
|
|
|
158
|
|
||
Deposits
|
|
424
|
|
|
597
|
|
||
Prepaid insurance
|
|
236
|
|
|
524
|
|
||
Prepaid rent
|
|
134
|
|
|
259
|
|
||
Prepaid repairs and maintenance
|
|
832
|
|
|
687
|
|
||
Prepaid taxes
|
|
809
|
|
|
641
|
|
||
Prepaid commissions
|
|
2,564
|
|
|
2,696
|
|
||
Prepaid expenses
|
|
747
|
|
|
1,089
|
|
||
Total prepaid expenses and other
|
|
$
|
6,681
|
|
|
$
|
7,399
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Depreciation
|
|
$
|
2,665
|
|
|
$
|
2,405
|
|
|
$
|
5,291
|
|
|
$
|
4,827
|
|
Amortization
|
|
1,499
|
|
|
1,252
|
|
|
2,715
|
|
|
2,497
|
|
||||
Accretion
|
|
188
|
|
|
165
|
|
|
375
|
|
|
305
|
|
||||
Total depreciation, amortization and accretion
|
|
$
|
4,352
|
|
|
$
|
3,822
|
|
|
$
|
8,381
|
|
|
$
|
7,629
|
|
|
|
|
|
June 30, 2014
|
||||||||||
|
|
Useful Life
(In Years) |
|
Gross Carrying
Amount |
|
Accumulated
Amortization |
|
Net Balance
|
||||||
|
|
|
|
(Dollars in thousands)
|
||||||||||
Customer relationships
|
|
10
|
|
$
|
25,002
|
|
|
$
|
(8,334
|
)
|
|
$
|
16,668
|
|
Acquired technology
|
|
2 - 4
|
|
8,452
|
|
|
(6,803
|
)
|
|
1,649
|
|
|||
Non-compete agreements
|
|
5
|
|
2,370
|
|
|
(2,187
|
)
|
|
183
|
|
|||
Trademarks
|
|
3
|
|
5,702
|
|
|
(1,549
|
)
|
|
4,153
|
|
|||
Total amortizable intangible assets
|
|
|
|
$
|
41,526
|
|
|
$
|
(18,873
|
)
|
|
$
|
22,653
|
|
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
|
|
(Dollars in thousands)
|
||||||
Deferred financing costs
|
|
$
|
327
|
|
|
$
|
456
|
|
Deposits
|
|
197
|
|
|
195
|
|
||
Prepaid royalty
|
|
244
|
|
|
245
|
|
||
Other assets
|
|
818
|
|
|
819
|
|
||
Total other assets
|
|
$
|
1,586
|
|
|
$
|
1,715
|
|
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
|
|
(Dollars in thousands)
|
||||||
Accounts payable
|
|
$
|
1,905
|
|
|
$
|
1,726
|
|
Accrued network costs
|
|
1,122
|
|
|
1,169
|
|
||
Accrued taxes
|
|
3,076
|
|
|
3,959
|
|
||
Asset retirement obligations
|
|
428
|
|
|
358
|
|
||
Accrued outside services
|
|
899
|
|
|
1,049
|
|
||
Accrued accounting and legal
|
|
373
|
|
|
212
|
|
||
Accrued recognition awards
|
|
195
|
|
|
327
|
|
||
Accrued other
|
|
1,009
|
|
|
851
|
|
||
Deferred rent
|
|
77
|
|
|
77
|
|
||
Escheat liability
|
|
26
|
|
|
5
|
|
||
Lease incentive
|
|
189
|
|
|
152
|
|
||
Dividends payable - 2011 Long-Term Incentive Plan ("LTIP")
|
|
497
|
|
|
—
|
|
||
Total accounts payable and accrued liabilities
|
|
$
|
9,796
|
|
|
$
|
9,885
|
|
|
|
Short-Term
Portion |
|
Long-Term
Portion |
|
Total
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Balance at January 1, 2014
|
|
$
|
358
|
|
|
$
|
7,599
|
|
|
$
|
7,957
|
|
Accretion
|
|
14
|
|
|
361
|
|
|
375
|
|
|||
Additions
|
|
—
|
|
|
105
|
|
|
105
|
|
|||
Reclassifications
|
|
238
|
|
|
(238
|
)
|
|
—
|
|
|||
Amounts paid
|
|
(182
|
)
|
|
—
|
|
|
(182
|
)
|
|||
Balance at June 30, 2014
|
|
$
|
428
|
|
|
$
|
7,827
|
|
|
$
|
8,255
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
|
|
(Dollars in thousands)
|
||||||
Asset retirement obligations
|
|
$
|
7,827
|
|
|
$
|
7,599
|
|
Dividends payable — 2011 LTIP
|
|
—
|
|
|
409
|
|
||
Escheat liability
|
|
239
|
|
|
509
|
|
||
Capital lease payable
|
|
15
|
|
|
23
|
|
||
Lease incentive
|
|
489
|
|
|
180
|
|
||
Deferred rent
|
|
388
|
|
|
259
|
|
||
Royalty payable
|
|
273
|
|
|
280
|
|
||
Total other long-term liabilities
|
|
$
|
9,231
|
|
|
$
|
9,259
|
|
|
Activity
|
|
Total equity securities available at May 16, 2012
|
2,194,986
|
|
Add: 2011 LTIP RSUs forfeited by eligible employees
|
209,382
|
|
Add: Restricted stock forfeited by non-executive member of the Board of Directors
|
3,189
|
|
Less: 2011 LTIP RSUs awarded to eligible employees
|
(557,484
|
)
|
Less: Restricted stock awarded to non-executive members of the Board of Directors
|
(41,849
|
)
|
Less: Short-Term Incentive Plan (“STIP”) common stock awarded to an eligible employee
|
(41,702
|
)
|
Total equity securities available at June 30, 2014
|
1,766,522
|
|
|
|
Shares
|
|
Weighted-
Average Grant Date Fair Value |
|
Total Unrecognized Compensation Cost (net of estimated forfeitures)
(In thousands) |
|
Weighted-Average
Period Over Which Cost is Expected to be Recognized (In months) |
|||||
Non-vested RSUs at April 1, 2014
|
|
617,027
|
|
|
$
|
12.30
|
|
|
|
|
|
||
Granted
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Vested
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Forfeited
|
|
(57,338
|
)
|
|
11.20
|
|
|
|
|
|
|||
Non-vested RSUs at June 30, 2014
|
|
559,689
|
|
|
$
|
12.41
|
|
|
$
|
1,859
|
|
|
6
|
Declaration Date
|
|
Record Date
|
|
Payment Date
|
|
Per Share Amount
|
|
Total Payment
(1)
|
||||
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
||||
March 5
|
|
March 18
|
|
March 28
|
|
$
|
0.125
|
|
|
$
|
2,707
|
|
April 30
|
|
May 22
|
|
June 25
|
|
$
|
0.125
|
|
|
$
|
2,707
|
|
|
|
Total
|
|
|
|
$
|
0.250
|
|
|
$
|
5,414
|
|
|
(1)
|
The total payment reflects the cash dividends paid in relation to common stock and vested restricted stock.
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
(Dollars in thousands, except share and per share amounts)
|
||||||||||||||
Net income
|
|
$
|
4,291
|
|
|
$
|
6,828
|
|
|
$
|
9,181
|
|
|
$
|
13,753
|
|
Weighted average shares of common stock outstanding
|
|
21,642,163
|
|
|
21,644,281
|
|
|
21,640,191
|
|
|
21,666,096
|
|
||||
Dilutive effect of restricted stock and RSUs
|
|
457,628
|
|
|
182,868
|
|
|
433,063
|
|
|
255,646
|
|
||||
Weighted average shares of common stock and common stock equivalents
|
|
22,099,791
|
|
|
21,827,149
|
|
|
22,073,254
|
|
|
21,921,742
|
|
||||
Net income per common share
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.20
|
|
|
$
|
0.32
|
|
|
$
|
0.42
|
|
|
$
|
0.63
|
|
Diluted
|
|
$
|
0.19
|
|
|
$
|
0.31
|
|
|
$
|
0.42
|
|
|
$
|
0.63
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
Operating Expense Category
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Cost of revenue
|
|
$
|
81
|
|
|
$
|
49
|
|
|
$
|
162
|
|
|
$
|
98
|
|
Service, rental and maintenance
|
|
(17
|
)
|
|
20
|
|
|
$
|
22
|
|
|
$
|
40
|
|
||
Selling and marketing
|
|
131
|
|
|
119
|
|
|
262
|
|
|
238
|
|
||||
General and administrative
|
|
429
|
|
|
440
|
|
|
1,264
|
|
|
878
|
|
||||
Total stock based compensation
|
|
$
|
624
|
|
|
$
|
628
|
|
|
$
|
1,710
|
|
|
$
|
1,254
|
|
|
|
For the Three Months Ended
June 30, 2014 |
|
For the Three Months Ended
June 30, 2013 |
||||||||||||||||||||||||||
Market Segment
|
|
Wireless
|
|
Software
|
|
Total
|
|
% of Total
|
|
Wireless
|
|
Software
|
|
Total
|
|
% of Total
|
||||||||||||||
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
||||||||||||||||
Healthcare
|
|
$
|
22,616
|
|
|
$
|
10,589
|
|
|
$
|
33,205
|
|
|
67.7
|
%
|
|
$
|
24,462
|
|
|
$
|
10,041
|
|
|
$
|
34,503
|
|
|
66.0
|
%
|
Government
|
|
2,437
|
|
|
1,757
|
|
|
4,194
|
|
|
8.5
|
%
|
|
3,020
|
|
|
1,698
|
|
|
4,718
|
|
|
9.0
|
%
|
||||||
Large Enterprise
|
|
3,603
|
|
|
476
|
|
|
4,079
|
|
|
8.3
|
%
|
|
4,330
|
|
|
507
|
|
|
4,837
|
|
|
9.3
|
%
|
||||||
Other
(1)
|
|
3,762
|
|
|
751
|
|
|
4,513
|
|
|
9.2
|
%
|
|
4,542
|
|
|
715
|
|
|
5,257
|
|
|
10.1
|
%
|
||||||
Total Direct
|
|
32,418
|
|
|
13,573
|
|
|
45,991
|
|
|
93.7
|
%
|
|
36,354
|
|
|
12,961
|
|
|
49,315
|
|
|
94.4
|
%
|
||||||
Total Indirect
|
|
1,100
|
|
|
2,003
|
|
|
3,103
|
|
|
6.3
|
%
|
|
1,417
|
|
|
1,536
|
|
|
2,953
|
|
|
5.6
|
%
|
||||||
Total
|
|
$
|
33,518
|
|
|
$
|
15,576
|
|
|
$
|
49,094
|
|
|
100.0
|
%
|
|
$
|
37,771
|
|
|
$
|
14,497
|
|
|
$
|
52,268
|
|
|
100.0
|
%
|
(1)
|
Other includes hospitality, resort and billable travel revenue.
|
|
|
For the Six Months Ended
June 30, 2014 |
|
For the Six Months Ended
June 30, 2013 |
||||||||||||||||||||||||||
Market Segment
|
|
Wireless
|
|
Software
|
|
Total
|
|
% of Total
|
|
Wireless
|
|
Software
|
|
Total
|
|
% of Total
|
||||||||||||||
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
||||||||||||||||
Healthcare
|
|
$
|
46,022
|
|
|
$
|
20,556
|
|
|
$
|
66,578
|
|
|
67.1
|
%
|
|
$
|
48,995
|
|
|
$
|
19,370
|
|
|
$
|
68,365
|
|
|
64.9
|
%
|
Government
|
|
4,949
|
|
|
3,477
|
|
|
8,426
|
|
|
8.5
|
%
|
|
6,361
|
|
|
3,049
|
|
|
9,410
|
|
|
8.9
|
%
|
||||||
Large Enterprise
|
|
7,335
|
|
|
1,017
|
|
|
8,352
|
|
|
8.4
|
%
|
|
8,888
|
|
|
1,680
|
|
|
10,568
|
|
|
10.0
|
%
|
||||||
Other
(1)
|
|
7,320
|
|
|
1,165
|
|
|
8,485
|
|
|
8.6
|
%
|
|
9,324
|
|
|
1,349
|
|
|
10,673
|
|
|
10.1
|
%
|
||||||
Total Direct
|
|
65,626
|
|
|
26,215
|
|
|
91,841
|
|
|
92.6
|
%
|
|
73,568
|
|
|
25,448
|
|
|
99,016
|
|
|
93.9
|
%
|
||||||
Total Indirect
|
|
2,243
|
|
|
5,129
|
|
|
7,372
|
|
|
7.4
|
%
|
|
2,982
|
|
|
3,400
|
|
|
6,382
|
|
|
6.1
|
%
|
||||||
Total
|
|
$
|
67,869
|
|
|
$
|
31,344
|
|
|
$
|
99,213
|
|
|
100.0
|
%
|
|
$
|
76,550
|
|
|
$
|
28,848
|
|
|
$
|
105,398
|
|
|
100.0
|
%
|
(1)
|
Other includes hospitality, resort and billable travel revenue.
|
Market Segment
|
|
As of June 30, 2014
|
|
As of March 31, 2014
|
|
As of June 30, 2013
|
|||
Healthcare
|
|
73.0
|
%
|
|
72.0
|
%
|
|
70.9
|
%
|
Government
|
|
8.3
|
%
|
|
8.6
|
%
|
|
9.1
|
%
|
Large Enterprise
|
|
7.8
|
%
|
|
8.2
|
%
|
|
8.1
|
%
|
Other
|
|
6.6
|
%
|
|
6.8
|
%
|
|
7.3
|
%
|
Total Direct
|
|
95.7
|
%
|
|
95.6
|
%
|
|
95.4
|
%
|
Total Indirect
|
|
4.3
|
%
|
|
4.4
|
%
|
|
4.6
|
%
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
•
|
Hospital Call Centers - These solutions encompass operator and answering services along with call recording, scheduling and selective additional support modules.
|
•
|
Clinical Workflow Communication - These solutions address hospital code processing as well as physician support tools.
|
•
|
Communication Applications - These solutions support hospital notification and appointment support.
|
•
|
Communications Infrastructure - These solutions support the wireless messaging infrastructure and offer a software product that can link disparate communications software (“middleware”).
|
•
|
Public Safety - These solutions implement and support emergency communication systems.
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
Revenue
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Paging revenue
|
|
$
|
31,458
|
|
|
$
|
36,064
|
|
|
$
|
64,354
|
|
|
$
|
73,115
|
|
Product and other revenue
|
|
2,060
|
|
|
1,707
|
|
|
3,515
|
|
|
3,435
|
|
||||
Total wireless revenue
|
|
$
|
33,518
|
|
|
$
|
37,771
|
|
|
$
|
67,869
|
|
|
$
|
76,550
|
|
|
|
As of June 30, 2014
|
|
As of March 31, 2014
|
|
As of June 30, 2013
|
||||||||||||
Distribution Channel
|
|
Units
|
|
% of Total
|
|
Units
|
|
% of Total
|
|
Units
|
|
% of Total
|
||||||
|
|
|
|
|
|
(Units in thousands)
|
|
|
|
|
||||||||
Direct
|
|
1,243
|
|
|
95.7
|
%
|
|
1,269
|
|
|
95.6
|
%
|
|
1,380
|
|
|
95.4
|
%
|
Indirect
|
|
56
|
|
|
4.3
|
%
|
|
58
|
|
|
4.4
|
%
|
|
65
|
|
|
4.6
|
%
|
Total
|
|
1,299
|
|
|
100.0
|
%
|
|
1,327
|
|
|
100.0
|
%
|
|
1,445
|
|
|
100.0
|
%
|
|
|
As of June 30, 2014
|
|
As of March 31, 2014
|
|
As of June 30, 2013
|
||||||||||||
Service Type
|
|
Units
|
|
% of Total
|
|
Units
|
|
% of Total
|
|
Units
|
|
% of Total
|
||||||
|
|
(Units in thousands)
|
||||||||||||||||
One-way messaging
|
|
1,208
|
|
|
93.0
|
%
|
|
1,230
|
|
|
92.7
|
%
|
|
1,343
|
|
|
92.9
|
%
|
Two-way messaging
|
|
91
|
|
|
7.0
|
%
|
|
97
|
|
|
7.3
|
%
|
|
102
|
|
|
7.1
|
%
|
Total
|
|
1,299
|
|
|
100.0
|
%
|
|
1,327
|
|
|
100.0
|
%
|
|
1,445
|
|
|
100.0
|
%
|
|
|
For the Three Months Ended
|
||||||||||||||||
|
|
June 30, 2014
|
|
March 31, 2014
|
|
June 30, 2013
|
||||||||||||
Distribution Channel
|
|
Gross
Placements |
|
Disconnects
|
|
Gross
Placements |
|
Disconnects
|
|
Gross
Placements |
|
Disconnects
|
||||||
|
|
|
|
|
|
(Units in thousands)
|
|
|
|
|
||||||||
Direct
|
|
50
|
|
|
76
|
|
|
38
|
|
|
84
|
|
|
54
|
|
|
71
|
|
Indirect
|
|
1
|
|
|
3
|
|
|
1
|
|
|
4
|
|
|
1
|
|
|
19
|
|
Total
|
|
51
|
|
|
79
|
|
|
39
|
|
|
88
|
|
|
55
|
|
|
90
|
|
|
|
As of June 30, 2014
|
|
As of March 31, 2014
|
|
As of June 30, 2013
|
||||||||||||
Account Size
|
|
Units
|
|
% of Total
|
|
Units
|
|
% of Total
|
|
Units
|
|
% of Total
|
||||||
|
|
(Units in thousands)
|
||||||||||||||||
1 to 3 Units
|
|
39
|
|
|
3.1
|
%
|
|
41
|
|
|
3.2
|
%
|
|
47
|
|
|
3.4
|
%
|
4 to 10 Units
|
|
23
|
|
|
1.8
|
%
|
|
24
|
|
|
1.9
|
%
|
|
28
|
|
|
2.0
|
%
|
11 to 50 Units
|
|
56
|
|
|
4.5
|
%
|
|
57
|
|
|
4.5
|
%
|
|
67
|
|
|
4.8
|
%
|
51 to 100 Units
|
|
38
|
|
|
3.1
|
%
|
|
41
|
|
|
3.2
|
%
|
|
45
|
|
|
3.2
|
%
|
101 to 1000 Units
|
|
275
|
|
|
22.1
|
%
|
|
282
|
|
|
22.3
|
%
|
|
305
|
|
|
22.1
|
%
|
> 1000 Units
|
|
812
|
|
|
65.4
|
%
|
|
824
|
|
|
64.9
|
%
|
|
888
|
|
|
64.5
|
%
|
Total direct units in service
|
|
1,243
|
|
|
100.0
|
%
|
|
1,269
|
|
|
100.0
|
%
|
|
1,380
|
|
|
100.0
|
%
|
|
|
For the Three Months Ended
|
|||||||
Account Size
|
|
June 30, 2014
|
|
March 31, 2014
|
|
June 30, 2013
|
|||
1 to 3 Units
|
|
(4.1
|
)%
|
|
(4.9
|
)%
|
|
(5.1
|
)%
|
4 to 10 Units
|
|
(5.4
|
)%
|
|
(4.1
|
)%
|
|
(5.3
|
)%
|
11 to 50 Units
|
|
(3.2
|
)%
|
|
(5.3
|
)%
|
|
(6.4
|
)%
|
51 to 100 Units
|
|
(8.7
|
)%
|
|
(1.2
|
)%
|
|
(5.3
|
)%
|
101 to 1000 Units
|
|
(2.5
|
)%
|
|
(1.7
|
)%
|
|
(5.0
|
)%
|
> 1000 Units
|
|
(1.2
|
)%
|
|
(4.0
|
)%
|
|
1.1
|
%
|
Total direct net unit loss %
|
|
(2.0
|
)%
|
|
(3.5
|
)%
|
|
(1.3
|
)%
|
|
|
ARPU For the Three Months Ended
|
||||||||||
Distribution Channel
|
|
June 30, 2014
|
|
March 31, 2014
|
|
June 30, 2013
|
||||||
Direct
|
|
$
|
8.06
|
|
|
$
|
8.19
|
|
|
$
|
8.33
|
|
Indirect
|
|
6.39
|
|
|
6.37
|
|
|
6.31
|
|
|||
Total
|
|
7.98
|
|
|
8.11
|
|
|
8.22
|
|
|
|
For the Three Months Ended June 30,
|
||||||||||
Account Size
|
|
June 30, 2014
|
|
March 31, 2014
|
|
June 30, 2013
|
||||||
1 to 3 Units
|
|
$
|
14.86
|
|
|
$
|
14.96
|
|
|
$
|
15.12
|
|
4 to 10 Units
|
|
14.12
|
|
|
14.22
|
|
|
14.29
|
|
|||
11 to 50 Units
|
|
12.00
|
|
|
12.07
|
|
|
11.96
|
|
|||
51 to 100 Units
|
|
10.18
|
|
|
10.27
|
|
|
10.42
|
|
|||
101 to 1000 Units
|
|
8.58
|
|
|
8.76
|
|
|
8.84
|
|
|||
> 1000 Units
|
|
7.00
|
|
|
7.11
|
|
|
7.19
|
|
|||
Total direct ARPU
|
|
$
|
8.06
|
|
|
$
|
8.19
|
|
|
$
|
8.33
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
Revenue
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Operations revenue
|
|
$
|
8,046
|
|
|
$
|
7,552
|
|
|
$
|
16,438
|
|
|
$
|
15,141
|
|
Maintenance revenue
|
|
7,530
|
|
|
6,945
|
|
|
14,906
|
|
|
13,707
|
|
||||
Total software revenue
|
|
$
|
15,576
|
|
|
$
|
14,497
|
|
|
$
|
31,344
|
|
|
$
|
28,848
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
Bookings
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Operations and new maintenance orders
|
|
$
|
11,018
|
|
|
$
|
8,566
|
|
|
$
|
19,706
|
|
|
$
|
17,380
|
|
Maintenance and subscription renewals
|
|
7,941
|
|
|
7,060
|
|
|
16,174
|
|
|
12,499
|
|
||||
Total bookings
|
|
$
|
18,959
|
|
|
$
|
15,626
|
|
|
$
|
35,880
|
|
|
$
|
29,879
|
|
Backlog
|
(Dollars in thousands)
|
||
|
|
||
Beginning balance at January 1, 2014
|
$
|
40,211
|
|
Operations bookings
|
19,706
|
|
|
Maintenance and subscription renewals
|
16,174
|
|
|
Available backlog
|
$
|
76,091
|
|
Operations revenue
|
(16,438
|
)
|
|
Maintenance revenue
|
(14,906
|
)
|
|
Other
(1)
|
(4,565
|
)
|
|
Total backlog at June 30, 2014
|
$
|
40,182
|
|
(1)
|
Other reflects cancellations and adjustments to backlog.
|
|
|
For the Three Months Ended June 30,
|
|
Change Between 2014 and 2013
|
|||||||||||
|
|
2014
|
|
2013
|
|
Total
|
|
%
|
|||||||
|
|
(Dollars in thousands)
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Wireless revenue
|
|
$
|
33,518
|
|
|
$
|
37,771
|
|
|
$
|
(4,253
|
)
|
|
(11.3
|
)%
|
Software revenue
|
|
15,576
|
|
|
14,497
|
|
|
1,079
|
|
|
7.4
|
%
|
|||
Total
|
|
$
|
49,094
|
|
|
$
|
52,268
|
|
|
$
|
(3,174
|
)
|
|
(6.1
|
)%
|
Selected operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Cost of revenue
|
|
$
|
7,180
|
|
|
$
|
6,961
|
|
|
$
|
219
|
|
|
3.1
|
%
|
Service, rental and maintenance
|
|
11,420
|
|
|
12,018
|
|
|
(598
|
)
|
|
(5.0
|
)%
|
|||
Selling and marketing
|
|
7,780
|
|
|
6,538
|
|
|
1,242
|
|
|
19.0
|
%
|
|||
General and administrative
|
|
10,990
|
|
|
11,022
|
|
|
(32
|
)
|
|
(0.3
|
)%
|
|||
Severance and restructuring
|
|
4
|
|
|
2
|
|
|
2
|
|
|
100.0
|
%
|
|||
Total
|
|
$
|
37,374
|
|
|
$
|
36,541
|
|
|
$
|
833
|
|
|
2.3
|
%
|
FTEs
|
|
615
|
|
|
659
|
|
|
(44
|
)
|
|
(6.7
|
)%
|
|||
Active transmitters
|
|
4,431
|
|
|
4,601
|
|
|
(170
|
)
|
|
(3.7
|
)%
|
|
|
For the Three Months Ended June 30,
|
||||||
|
|
2014
|
|
2013
|
||||
|
|
(Dollars in thousands)
|
||||||
Paging revenue:
|
|
|
|
|
||||
One-way messaging
|
|
$
|
27,415
|
|
|
$
|
31,202
|
|
Two-way messaging
|
|
4,043
|
|
|
4,862
|
|
||
Total paging revenue
|
|
31,458
|
|
|
36,064
|
|
||
Product and other revenue
|
|
2,060
|
|
|
1,707
|
|
||
Total wireless revenue
|
|
$
|
33,518
|
|
|
$
|
37,771
|
|
|
|
Units in Service
|
|
Revenue
|
|
|
|||||||||||||||||||||||
|
|
As of June 30,
|
|
For the Three Months Ended June 30,
|
|
Change Due To:
|
|||||||||||||||||||||||
|
|
2014
|
|
2013
|
|
Change
|
|
2014
(1)
|
|
2013
(1)
|
|
Change
|
|
ARPU
|
|
Units
|
|||||||||||||
|
|
(Units in thousands)
|
|
(Dollars in thousands)
|
|||||||||||||||||||||||||
One-way messaging
|
|
1,208
|
|
|
1,343
|
|
|
(135
|
)
|
|
$
|
27,415
|
|
|
$
|
31,202
|
|
|
$
|
(3,787
|
)
|
|
$
|
(762
|
)
|
|
$
|
(3,025
|
)
|
Two-way messaging
|
|
91
|
|
|
102
|
|
|
(11
|
)
|
|
4,043
|
|
|
4,862
|
|
|
(819
|
)
|
|
(51
|
)
|
|
(768
|
)
|
|||||
Total
|
|
1,299
|
|
|
1,445
|
|
|
(146
|
)
|
|
$
|
31,458
|
|
|
$
|
36,064
|
|
|
$
|
(4,606
|
)
|
|
$
|
(813
|
)
|
|
$
|
(3,793
|
)
|
(1)
|
Amounts shown exclude non-paging revenue.
|
|
|
For the Three Months Ended June 30,
|
||||||
|
|
2014
|
|
2013
|
||||
|
|
(Dollars in thousands)
|
||||||
Operations revenue
|
|
$
|
8,046
|
|
|
$
|
7,552
|
|
Maintenance revenue
|
|
7,530
|
|
|
6,945
|
|
||
Total software revenue
|
|
$
|
15,576
|
|
|
$
|
14,497
|
|
•
|
Payroll and related —
The increase of $0.1 million in payroll and related expenses was due primarily to higher average payroll and related expenses for professional services and maintenance support personnel.
|
•
|
Cost of sales —
The increase of $0.1 million in cost of sales expenses was primarily due to higher third-party professional services expenses associated with the increase in sales orders.
|
|
|
For the Three Months Ended June 30,
|
|
Change Between 2014 and 2013
|
|||||||||||
|
|
2014
|
|
2013
|
|
Total
|
|
%
|
|||||||
|
|
(Dollars in thousands)
|
|||||||||||||
Site rent
|
|
$
|
3,981
|
|
|
$
|
4,237
|
|
|
$
|
(256
|
)
|
|
(6.0
|
)%
|
Telecommunications
|
|
1,669
|
|
|
1,885
|
|
|
(216
|
)
|
|
(11.5
|
)%
|
|||
Payroll and related
|
|
4,434
|
|
|
4,589
|
|
|
(155
|
)
|
|
(3.4
|
)%
|
|||
Stock based compensation
|
|
(17
|
)
|
|
20
|
|
|
(37
|
)
|
|
(185.0
|
)%
|
|||
Other
|
|
1,353
|
|
|
1,287
|
|
|
66
|
|
|
5.1
|
%
|
|||
Total service, rental and maintenance
|
|
$
|
11,420
|
|
|
$
|
12,018
|
|
|
$
|
(598
|
)
|
|
(5.0
|
)%
|
FTEs
|
|
159
|
|
|
167
|
|
|
(8
|
)
|
|
(4.8
|
)%
|
•
|
Site rent —
The decrease of $0.3 million in site rent expenses was primarily due to the rationalization of our networks, which has decreased the number of transmitters required to provide service to our customers. The reduction in transmitters has, in turn, reduced the number of lease locations. The number of active transmitters declined 3.7% from June 30, 2013 to June 30, 2014.
|
•
|
Telecommunications —
The decrease of $0.2 million in telecommunication expenses was due to the consolidation of our networks. We believe continued reductions in these expenses will occur as our networks continue to be consolidated as anticipated through the remainder of 2014, and as we reduced telephone circuit inventory.
|
•
|
Payroll and related —
Payroll and related expenses were incurred largely for field technicians, their managers, and in-house repair personnel, product development, product strategy and quality assurance personnel. The decrease in payroll and related expenses of $0.2 million was due to a reduction in eight FTEs as compared to the comparable period.
|
|
|
For the Three Months Ended June 30,
|
|
Change Between 2014 and 2013
|
|||||||||||
|
|
2014
|
|
2013
|
|
Total
|
|
%
|
|||||||
|
|
(Dollars in thousands)
|
|||||||||||||
Payroll and related
|
|
$
|
4,440
|
|
|
$
|
5,074
|
|
|
$
|
(634
|
)
|
|
(12.5
|
)%
|
Stock based compensation
|
|
429
|
|
|
441
|
|
|
(12
|
)
|
|
(2.7
|
)%
|
|||
Bad debt
|
|
134
|
|
|
265
|
|
|
(131
|
)
|
|
(49.4
|
)%
|
|||
Facility rent
|
|
899
|
|
|
839
|
|
|
60
|
|
|
7.2
|
%
|
|||
Telecommunications
|
|
399
|
|
|
343
|
|
|
56
|
|
|
16.3
|
%
|
|||
Outside services
|
|
1,719
|
|
|
1,606
|
|
|
113
|
|
|
7.0
|
%
|
|||
Taxes, licenses and permits
|
|
1,383
|
|
|
1,166
|
|
|
217
|
|
|
18.6
|
%
|
|||
Other
|
|
1,587
|
|
|
1,288
|
|
|
299
|
|
|
23.2
|
%
|
|||
Total general and administrative
|
|
$
|
10,990
|
|
|
$
|
11,022
|
|
|
$
|
(32
|
)
|
|
(0.3
|
)%
|
FTEs
|
|
135
|
|
|
146
|
|
|
(11
|
)
|
|
(7.5
|
)%
|
•
|
Payroll and related —
Payroll and related expenses were incurred mainly for employees in information technology, administrative operations, finance, human resources and executive management. Payroll and related expenses decreased by $0.6 million reflecting headcount reductions of 11 FTEs to 135 FTEs at
June 30, 2014
from 146 FTEs at
June 30, 2013
.
|
•
|
Bad debt
— The decrease of $0.1 million in bad debt expenses reflected the improvement in collection efforts associated with our software sales.
|
•
|
Outside services
— Outside service expenses consisted primarily of costs associated with printing and mailing invoices, and various professional fees. The increase of $0.1 million in outside service expenses was due primarily to higher professional services fees for transactional tax processing services.
|
•
|
Taxes, licenses and permits —
Taxes, license and permit expenses consisted of property, franchise, gross receipts and transactional taxes. The increase in tax, license and permit expenses of $0.2 million was primarily due to higher universal service fund expenses and transactional taxes based on revenues.
|
•
|
Other —
The increase of $0.3 million in other expenses was due primarily to higher repair and maintenance expenses of $0.1 million, recruiting and relocation expenses of $0.1 million and various other expenses net of $0.1 million.
|
|
|
For the Three Months Ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
||||||||||
|
|
(Dollars in thousands)
|
||||||||||||
Income before income tax expense
|
|
$
|
7,110
|
|
|
|
|
$
|
11,766
|
|
|
|
||
Federal income tax expense at the statutory rate
|
|
$
|
2,489
|
|
|
35.0
|
%
|
|
$
|
4,118
|
|
|
35.0
|
%
|
State income taxes, net of Federal benefit
|
|
306
|
|
|
4.3
|
%
|
|
498
|
|
|
4.2
|
%
|
||
Other
|
|
24
|
|
|
0.3
|
%
|
|
322
|
|
|
2.8
|
%
|
||
Income tax expense
|
|
$
|
2,819
|
|
|
39.6
|
%
|
|
$
|
4,938
|
|
|
42.0
|
%
|
|
|
For the Six Months Ended June 30,
|
|
Change Between 2014 and 2013
|
|||||||||||
|
|
2014
|
|
2013
|
|
Total
|
|
%
|
|||||||
|
|
(Dollars in thousands)
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Wireless revenue
|
|
$
|
67,869
|
|
|
$
|
76,550
|
|
|
$
|
(8,681
|
)
|
|
(11.3
|
)%
|
Software revenue
|
|
31,344
|
|
|
28,848
|
|
|
2,496
|
|
|
8.7
|
%
|
|||
Total
|
|
$
|
99,213
|
|
|
$
|
105,398
|
|
|
$
|
(6,185
|
)
|
|
(5.9
|
)%
|
Selected operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Cost of revenue
|
|
$
|
13,985
|
|
|
$
|
13,628
|
|
|
$
|
357
|
|
|
2.6
|
%
|
Service, rental and maintenance
|
|
23,212
|
|
|
24,209
|
|
|
(997
|
)
|
|
(4.1
|
)%
|
|||
Selling and marketing
|
|
15,026
|
|
|
12,932
|
|
|
2,094
|
|
|
16.2
|
%
|
|||
General and administrative
|
|
23,125
|
|
|
23,353
|
|
|
(228
|
)
|
|
(1.0
|
)%
|
|||
Severance and restructuring
|
|
24
|
|
|
2
|
|
|
22
|
|
|
1,100.0
|
%
|
|||
Total
|
|
$
|
75,372
|
|
|
$
|
74,124
|
|
|
$
|
1,248
|
|
|
1.7
|
%
|
FTEs
|
|
615
|
|
|
659
|
|
|
(44
|
)
|
|
(6.7
|
)%
|
|||
Active transmitters
|
|
4,431
|
|
|
4,601
|
|
|
(170
|
)
|
|
(3.7
|
)%
|
|
|
For the Six Months Ended June 30,
|
||||||
|
|
2014
|
|
2013
|
||||
|
|
(Dollars in thousands)
|
||||||
Paging revenue:
|
|
|
|
|
||||
One-way messaging
|
|
$
|
56,030
|
|
|
$
|
63,162
|
|
Two-way messaging
|
|
8,324
|
|
|
9,953
|
|
||
Total paging revenue
|
|
64,354
|
|
|
73,115
|
|
||
Product and other revenue
|
|
3,515
|
|
|
3,435
|
|
||
Total wireless revenue
|
|
$
|
67,869
|
|
|
$
|
76,550
|
|
|
|
Units in Service
|
|
Revenue
|
|
|
|||||||||||||||||||||||
|
|
As of June 30,
|
|
For the Six Months Ended June 30,
|
|
Change Due To:
|
|||||||||||||||||||||||
|
|
2014
|
|
2013
|
|
Change
|
|
2014
(1)
|
|
2013
(1)
|
|
Change
|
|
ARPU
|
|
Units
|
|||||||||||||
|
|
(Units in thousands)
|
|
(Dollars in thousands)
|
|||||||||||||||||||||||||
One-way messaging
|
|
1,208
|
|
|
1,343
|
|
|
(135
|
)
|
|
$
|
56,030
|
|
|
$
|
63,162
|
|
|
$
|
(7,132
|
)
|
|
$
|
(1,418
|
)
|
|
$
|
(5,714
|
)
|
Two-way messaging
|
|
91
|
|
|
102
|
|
|
(11
|
)
|
|
8,324
|
|
|
9,953
|
|
|
(1,629
|
)
|
|
(25
|
)
|
|
(1,604
|
)
|
|||||
Total
|
|
1,299
|
|
|
1,445
|
|
|
(146
|
)
|
|
$
|
64,354
|
|
|
$
|
73,115
|
|
|
$
|
(8,761
|
)
|
|
$
|
(1,443
|
)
|
|
$
|
(7,318
|
)
|
(1)
|
Amounts shown exclude non-paging revenue.
|
|
|
For the Six Months Ended June 30,
|
||||||
|
|
2014
|
|
2013
|
||||
|
|
(Dollars in thousands)
|
||||||
Operations revenue
|
|
$
|
16,438
|
|
|
$
|
15,141
|
|
Maintenance revenue
|
|
14,906
|
|
|
13,707
|
|
||
Total software revenue
|
|
$
|
31,344
|
|
|
$
|
28,848
|
|
|
|
For the Six Months Ended June 30,
|
|
Change Between 2014 and 2013
|
|||||||||||
|
|
2014
|
|
2013
|
|
Total
|
|
%
|
|||||||
|
|
(Dollars in thousands)
|
|||||||||||||
Payroll and related
|
|
$
|
7,786
|
|
|
$
|
7,452
|
|
|
$
|
334
|
|
|
4.5
|
%
|
Cost of sales
|
|
4,149
|
|
|
4,023
|
|
|
126
|
|
|
3.1
|
%
|
|||
Stock based compensation
|
|
162
|
|
|
98
|
|
|
64
|
|
|
65.3
|
%
|
|||
Other
|
|
1,888
|
|
|
2,055
|
|
|
(167
|
)
|
|
(8.1
|
)%
|
|||
Total cost of revenue
|
|
$
|
13,985
|
|
|
$
|
13,628
|
|
|
$
|
357
|
|
|
2.6
|
%
|
FTEs
|
|
176
|
|
|
186
|
|
|
(10
|
)
|
|
(5.4
|
)%
|
•
|
Payroll and related —
The increase of $0.3 million in payroll and related expenses was due primarily to higher average payroll and related expenses for professional services and maintenance support personnel.
|
•
|
Cost of sales —
The increase of $0.1 million in cost of sales expenses was primarily due to higher third-party professional services expenses associated with the increase in sales orders.
|
•
|
Other —
The decrease of $0.2 million in other expenses was primarily due to lower repair and maintenance expenses, outside service expenses and office expenses.
|
|
|
For the Six Months Ended June 30,
|
|
Change Between 2014 and 2013
|
|||||||||||
|
|
2014
|
|
2013
|
|
Total
|
|
%
|
|||||||
|
|
(Dollars in thousands)
|
|||||||||||||
Site rent
|
|
$
|
7,996
|
|
|
$
|
8,472
|
|
|
$
|
(476
|
)
|
|
(5.6
|
)%
|
Telecommunications
|
|
3,405
|
|
|
3,774
|
|
|
(369
|
)
|
|
(9.8
|
)%
|
|||
Payroll and related
|
|
9,028
|
|
|
9,287
|
|
|
(259
|
)
|
|
(2.8
|
)%
|
|||
Stock based compensation
|
|
22
|
|
|
40
|
|
|
(18
|
)
|
|
(45.0
|
)%
|
|||
Other
|
|
2,761
|
|
|
2,636
|
|
|
125
|
|
|
4.7
|
%
|
|||
Total service, rental and maintenance
|
|
$
|
23,212
|
|
|
$
|
24,209
|
|
|
$
|
(997
|
)
|
|
(4.1
|
)%
|
FTEs
|
|
159
|
|
|
167
|
|
|
(8
|
)
|
|
(4.8
|
)%
|
•
|
Site rent —
The decrease of $0.5 million in site rent expenses was primarily due to the rationalization of our networks, which has decreased the number of transmitters required to provide service to our customers. The reduction in transmitters has, in turn, reduced the number of lease locations. The number of active transmitters declined 3.7% from June 30, 2013 to June 30, 2014.
|
•
|
Telecommunications —
The decrease of $0.4 million in telecommunication expenses was due to the consolidation of our networks. We believe continued reductions in these expenses will occur as our networks continue to be consolidated as anticipated through the remainder of 2014 and as we reduced telephone circuit inventory.
|
•
|
Payroll and related —
Payroll and related expenses were incurred largely for field technicians, their managers, and in-house repair personnel, product development, product strategy and quality assurance personnel. The decrease in payroll and related expenses of $0.3 million was due to a reduction in eight FTEs as compared to the comparable period.
|
|
|
For the Six Months Ended June 30,
|
|
Change Between 2014 and 2013
|
|||||||||||
|
|
2014
|
|
2013
|
|
Total
|
|
%
|
|||||||
|
|
(Dollars in thousands)
|
|||||||||||||
Payroll and related
|
|
$
|
9,236
|
|
|
$
|
10,488
|
|
|
$
|
(1,252
|
)
|
|
(11.9
|
)%
|
Stock based compensation
|
|
1,264
|
|
|
878
|
|
|
386
|
|
|
44.0
|
%
|
|||
Bad debt
|
|
220
|
|
|
540
|
|
|
(320
|
)
|
|
(59.3
|
)%
|
|||
Facility rent
|
|
1,821
|
|
|
1,683
|
|
|
138
|
|
|
8.2
|
%
|
|||
Telecommunications
|
|
794
|
|
|
718
|
|
|
76
|
|
|
10.6
|
%
|
|||
Outside services
|
|
3,481
|
|
|
4,166
|
|
|
(685
|
)
|
|
(16.4
|
)%
|
|||
Taxes, licenses and permits
|
|
2,447
|
|
|
2,399
|
|
|
48
|
|
|
2.0
|
%
|
|||
Other
|
|
3,862
|
|
|
2,481
|
|
|
1,381
|
|
|
55.7
|
%
|
|||
Total general and administrative
|
|
$
|
23,125
|
|
|
$
|
23,353
|
|
|
$
|
(228
|
)
|
|
(1.0
|
)%
|
FTEs
|
|
135
|
|
|
146
|
|
|
(11
|
)
|
|
(7.5
|
)%
|
•
|
Payroll and related —
Payroll and related expenses were incurred mainly for employees in information technology, administrative operations, finance, human resources and executive management. Payroll and related expenses decreased by $1.3 million reflecting headcount reductions of 11 FTEs to 135 FTEs at
June 30, 2014
from 146 FTEs at
June 30, 2013
.
|
•
|
Stock based compensation —
Stock based compensation expenses consisted primarily of amortization of compensation expense associated with restricted stock units (“RSUs”) awarded to certain eligible employees and amortization of compensation expense for restricted stock awarded to non-executive members of our Board of Directors under the Equity Plans (see Note 15). Stock based compensation expenses increased by $0.4 million due primarily to higher amortization of compensation expense for awards under the 2011 Long-Term Incentive Plan (“LTIP”).
|
•
|
Bad debt
— The decrease of $0.3 million in bad debt expenses reflected the improvement in collection efforts associated with our software sales.
|
•
|
Outside services
— Outside service expenses consisted primarily of costs associated with printing and mailing invoices, and various professional fees. The decrease of $0.7 million in outside service expenses was due primarily to lower professional services fees for external accounting and tax support services.
|
•
|
Other —
The increase of $1.4 million in other expenses was due primarily to a non-recurring charge of $0.7 million related to future billing credits, higher repair and maintenance expenses of $0.3 million and recruiting and relocation expenses of $0.4 million.
|
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
||||||||||
|
|
(Dollars in thousands)
|
||||||||||||
Income before income tax expense
|
|
$
|
15,151
|
|
|
|
|
$
|
23,523
|
|
|
|
||
Federal income tax expense at the statutory rate
|
|
$
|
5,303
|
|
|
35.0
|
%
|
|
$
|
8,233
|
|
|
35.0
|
%
|
State income taxes, net of Federal benefit
|
|
651
|
|
|
4.3
|
%
|
|
981
|
|
|
4.2
|
%
|
||
Other
|
|
16
|
|
|
0.1
|
%
|
|
556
|
|
|
2.3
|
%
|
||
Income tax expense
|
|
$
|
5,970
|
|
|
39.4
|
%
|
|
$
|
9,770
|
|
|
41.5
|
%
|
|
|
For the Six Months Ended June 30,
|
|
Change Between
2014 and 2013 |
||||||||
|
|
2014
|
|
2013
|
|
|||||||
|
|
(Dollars in thousands)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
18,351
|
|
|
$
|
23,142
|
|
|
$
|
(4,791
|
)
|
Net cash used in investing activities
|
|
(4,977
|
)
|
|
(5,259
|
)
|
|
(282
|
)
|
|||
Net cash used in financing activities
|
|
(5,414
|
)
|
|
(6,900
|
)
|
|
(1,486
|
)
|
|
|
For the Six Months Ended June 30,
|
|
Change Between
2014 and 2013 |
||||||||
|
|
2014
|
|
2013
|
|
|||||||
|
|
(Dollars in thousands)
|
||||||||||
Cash received from customers
|
|
$
|
96,181
|
|
|
$
|
104,889
|
|
|
$
|
(8,708
|
)
|
Cash paid for —
|
|
|
|
|
|
|
||||||
Payroll and related costs
|
|
40,932
|
|
|
43,195
|
|
|
(2,263
|
)
|
|||
Site rent costs
|
|
7,906
|
|
|
8,460
|
|
|
(554
|
)
|
|||
Telecommunication costs
|
|
4,239
|
|
|
4,268
|
|
|
(29
|
)
|
|||
Interest costs
|
|
3
|
|
|
6
|
|
|
(3
|
)
|
|||
Other operating costs
|
|
24,750
|
|
|
25,818
|
|
|
(1,068
|
)
|
|||
|
|
77,830
|
|
|
81,747
|
|
|
(3,917
|
)
|
|||
Net cash provided by operating activities
|
|
$
|
18,351
|
|
|
$
|
23,142
|
|
|
$
|
(4,791
|
)
|
•
|
Cash payments for payroll and related costs decreased $2.3 million as a result of our lower headcount.
|
•
|
Cash payments for site rent costs decreased $0.6 million. This decrease was due primarily to the rationalization of our network.
|
•
|
Cash payments for telecommunication costs decreased slightly. This decrease was due primarily to the consolidation of our networks.
|
•
|
Cash payments for other operating costs decreased $1.1 million. The decrease was due primarily to lower outside service costs of $0.5 million, bad debt costs of $0.3 million, office costs of $0.2 million and other miscellaneous costs, net of $0.1 million.
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Operating income
|
|
$
|
7,368
|
|
|
$
|
11,905
|
|
|
$
|
15,460
|
|
|
$
|
23,645
|
|
Plus: Depreciation, amortization and accretion
|
|
4,352
|
|
|
3,822
|
|
|
8,381
|
|
|
7,629
|
|
||||
EBITDA (as defined by the Company)
|
|
11,720
|
|
|
15,727
|
|
|
23,841
|
|
|
31,274
|
|
||||
Less: Purchases of property and equipment
|
|
(2,393
|
)
|
|
(2,927
|
)
|
|
(5,036
|
)
|
|
(5,268
|
)
|
||||
OCF (as defined by the Company)
|
|
$
|
9,327
|
|
|
$
|
12,800
|
|
|
$
|
18,805
|
|
|
$
|
26,006
|
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation
(1)
|
|
|
|
3.2
|
|
Amended and Restated Bylaw
(1)
|
|
|
|
10.1
|
|
Employment Agreement by and between the Company and Colin Balmforth dated as of June 17, 2014
(2)
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, dated July 31, 2014
(3)
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, dated July 31, 2014
(3)
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 dated July 31, 2014
(3)
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 dated July 31, 2014
(3)
|
(1)
|
Incorporated by reference to the Company's Current Report on Form 8-K filed on July 8, 2014.
|
(2)
|
Incorporated by reference to the Company's Current Report on Form 8-K filed on June 18, 2014.
|
(3)
|
Filed herewith.
|
101.INS
|
|
XBRL Instance Document*
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema*
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation*
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition*
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels*
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation*
|
*
|
The financial information contained in these XBRL documents is unaudited. The information in these exhibits shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of Section 18, nor shall they be deemed incorporated by reference into any disclosure document relating to Spōk Holdings, Inc., except to the extent, if any, expressly set forth by specific reference in such filing.
|
|
|
SPŌK HOLDINGS, INC.
|
||
|
|
|||
Dated: July 31, 2014
|
|
/s/ Shawn E. Endsley
|
||
|
|
Name:
|
|
Shawn E. Endsley
|
|
|
Title:
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer and duly authorized officer)
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation
(1)
|
|
|
|
3.2
|
|
Amended and Restated Bylaw
(1)
|
|
|
|
10.1
|
|
Employment Agreement by and between the Company and Colin Balmforth dated as of June 17, 2014
(2)
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, dated July 31, 2014
(3)
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, dated July 31, 2014
(3)
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 dated July 31, 2014
(1)
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 dated July 31, 2014
(1)
|
(1)
|
Incorporated by reference to the Company's Current Report on Form 8-K filed on July 8, 2014.
|
(2)
|
Incorporated by reference to the Company's Current Report on Form 8-K filed on June 18, 2014.
|
(3)
|
Filed herewith.
|
101.INS
|
|
XBRL Instance Document*
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema*
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation*
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition*
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels*
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation*
|
*
|
The financial information contained in these XBRL documents is unaudited. The information in these exhibits shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of Section 18, nor shall they be deemed incorporated by reference into any disclosure document relating to Spōk Holdings, Inc., except to the extent, if any, expressly set forth by specific reference in such filing.
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