F-13
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These
include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or
liabilities in markets that are not active.
Level 3: Observable inputs that reflect the reporting entity’s own assumptions.
Our major categories of financial assets and liabilities subject to fair value measurements, including cash and cash equivalents
and marketable securities that are held as available-for-sale, are measured on a recurring basis. Certain assets and liabilities, including
long-lived assets, intangible assets and goodwill, are measured at fair value on a non-recurring basis. Additional disclosures regarding
our fair value measurements are included in Note 15.
Recent Accounting Pronouncements.
In February 2013, the FASB amended the disclosure requirements regarding the
reporting of amounts reclassified out of accumulated other comprehensive income. The amendment does not change the current
requirement for reporting net income or other comprehensive income, but requires additional disclosures about significant amounts
reclassified out of accumulated other comprehensive income including the effect of the reclassification on the related net income line
items. This amendment was adopted prospectively effective January 1, 2013.
In March 2013, the FASB amended guidance related to a parent company’s accounting for the release of the cumulative
translation adjustment into net income upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an
investment in a foreign entity. This guidance is effective for fiscal periods beginning after December 15, 2013, and is to be applied
prospectively to derecognition events occurring after the effective date. We do not anticipate the adoption of this amendment will have
a material impact on our financial statements.
In July 2013, the FASB amended guidance related to income taxes and the presentation of an unrecognized tax benefit when a
net operating loss carryforward, a similar loss, or a tax credit carryforward exists. Under certain circumstances, unrecognized tax
benefits should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a
similar tax loss or a tax credit carryforward. This pronouncement is effective for fiscal years, and interim periods within those years,
beginning after December 15, 2013, with early adoption permitted. We do not expect this pronouncement to have a material effect on
our consolidated financial statements.
2. Acquisitions
On July 6, 2012, we acquired all of the outstanding shares of privately-held microDATA, GIS, Inc. (“microDATA”), in
accordance with a Purchase and Sale Agreement. The microDATA acquisition was accounted for using the acquisition method;
accordingly, the total purchase price was $35,544 comprised of $20,786 in cash, net of cash acquired, and $14,250 in promissory
notes, and performance-based earn-out opportunities. microDATA’s operating results are reflected in the consolidated financial
statements and are integrated into the Commercial Segment. The acquisition cash was funded by incremental bank debt; see Note 12.
The valuation has resulted in $22,032 of goodwill, which will be deductible for tax purposes over 15 years.
Effective January 31, 2011, we completed our acquisition of the outstanding ownership units of Trident Space & Defense, LLC
(“Trident”.) The Trident acquisition was accounted for using the acquisition method; accordingly, the total purchase price was
allocated to the acquired assets and assumed liabilities based on management’s preliminary determination of the fair values as of
January 31, 2011. The purchase price was $29,460, comprised of $17,190 paid in cash and 3,000 Class A common shares valued at
$12,270. The total purchase price was allocated based on the estimated fair value of the acquired tangible and intangible assets and
assumed liabilities, with the excess of the purchase price over the assets acquired and liabilities assumed being allocated to goodwill.
The valuation has resulted in the recognition of $17,607 of goodwill, which will be deductible for tax purposes.
There were no material business acquisitions completed in 2013.
3. Income Per Share
Basic income per share is based upon the average number of shares of common stock outstanding during the period. Stock
options and restricted stock to purchase approximately 14,300, 23,500, and 9,500 shares were excluded from the computation of
diluted net income per share because their inclusion would have been anti-dilutive for 2013, 2012, and 2011, respectively.
For 2013, 2012, and 2011, shares issuable upon conversion of convertible debt were excluded from the computation of diluted
net income per share because their inclusion would have been anti-dilutive. Concurrent with the issuance of the convertible notes we
entered into convertible note hedge and warrant transactions. If the Company’s share price is greater than the warrant exercise price of
$12.74 per share for any period presented, the warrants would be dilutive to the Company’s earnings per share. The convertible note
hedge is excluded from the calculation of diluted earnings per share as the impact is always considered anti-dilutive since the call
option would be exercised by us when the exercise price is lower than the market price. For the years ended December 31, 2013, 2012,
