v2.4.0.6
Document and Entity Information Document
 3 Months Ended
Mar. 31, 2012
May 10, 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 Mar. 31, 2012  
Document Fiscal Year Focus 2012  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   36,471,081
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Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
 3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Operating revenue $ 43,827 $ 40,050
Operating expenses:    
Cost of services provided 9,029 7,307
Product development 4,272 4,619
Sales and marketing 3,812 2,852
General and administrative 6,444 7,761
Amortization and depreciation 1,941 1,877
Total operating expenses 25,498 24,416
Operating income 18,329 15,634
Interest income 167 200
Interest expense (253) (215)
Other non-operating income (loss) 0 (354)
Foreign currency exchange gain (296) 1,468
Income before income taxes 17,947 16,733
Income tax benefit (expense) (2,262) (1,569)
Net income $ 15,685 $ 15,164
Basic earnings per common share $ 0.43 $ 0.40
Diluted earnings per common share $ 0.40 $ 0.37
Basic weighted average shares outstanding 36,450 38,151
Diluted weighted average shares outstanding 39,523 38,154
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Condensed Consolidated Satements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
 3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Net income $ 15,685 $ 15,164
Other comprehensive income (loss):    
Foreign currency translation adjustments 4,327 2,053
Total other comprehensive income 4,327 2,053
Comprehensive income $ 20,012 $ 17,217
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Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2012
Dec. 31, 2011
Current assets:    
Cash and cash equivalents $ 37,140 $ 23,696
Short-term investments 730 1,505
Trade accounts receivable, less allowances of $1,221 and $1,719, respectively 29,351 31,133
Deferred tax asset, net 2,817 2,981
Other current assets 4,747 4,502
Total current assets 74,785 63,817
Property and equipment, net 9,399 8,834
Goodwill 264,504 259,218
Intangibles, net 37,763 38,386
Indefinite-lived intangibles 30,990 30,453
Deferred tax asset, net 10,970 9,412
Other assets 1,053 1,062
Total assets 429,464 411,182
Current liabilities:    
Accounts payable and accrued liabilities 19,075 18,719
Accrued payroll and related benefits 3,518 5,034
Short term debt 8,333 6,667
Current portion of long term debt and capital lease obligations, net of discount of $64 and $0, respectively 852 165
Deferred revenue 16,211 16,460
Current deferred rent 279 266
Other current liabilities 119 2,468
Total current liabilities 48,387 49,779
Revolving line of credit 31,750 31,750
Long term debt and capital lease obligations, less current portion, net of discount of $128 and $0, respectively 9,367 8,468
Other liabilities 3,775 3,803
Deferred revenue 69 328
Long term deferred rent 864 939
Total liabilities 94,212 95,067
Commitments and Contingencies, Note 6      
Stockholders’ equity:    
Preferred stock, $0.10 par value, 500,000 shares authorized, no shares issued and outstanding at March 31, 2012 and December 31, 2011 0 0
Common stock, $0.10 par value, 60,000,000 shares authorized, 36,495,652 issued and 36,455,143 outstanding at March 31, 2012 and 36,418,385 issued and 36,377,876 outstanding at December 31, 2011 3,646 3,638
Additional paid-in capital 180,099 179,518
Treasury stock (40,509 shares as of March 31, 2012 and December 31, 2011) (76) (76)
Retained earnings 151,780 137,559
Accumulated other comprehensive income (197) (4,524)
Total stockholders’ equity 335,252 316,115
Total liabilities and stockholders’ equity $ 429,464 $ 411,182
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Condensed Consolidated Balance Sheets (Unaudited) Condensed Consolidated Balance Sheets (Parentheticals) (USD $)
In Thousands, except Share data, unless otherwise specified
Mar. 31, 2012
Dec. 31, 2011
Current assets:    
Allowance for Doubtful Accounts Receivable, Current $ 1,221 $ 1,719
Current liabilities:    
Debt Instrument, Unamortized Discount, Current 64 0
Other Liabilities:    
Debt Instrument, Unamortized Discount, Long-Term $ 128 $ 0
Stockholders' Equity:    
Preferred Stock, Par or Stated 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 or Stated Value Per Share $ 0.10 $ 0.10
Common Stock, Shares Authorized 60,000,000 60,000,000
Common Stock, Shares, Issued 36,495,652 36,418,385
Common Stock, Shares, Outstanding 36,455,143 36,377,876
Treasury Stock, Shares 40,509 40,509
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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Common Stock
Treasury Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income
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 15,685       15,685  
Cumulative translation adjustment 4,327         4,327
Comprehensive income 20,012          
Vesting of restricted stock, Shares   44,267        
Vesting of restricted stock, Value   4   (4)    
Exercise of stock options, Shares   33,000        
Exercise of stock options, Value 14 4   10    
Deferred compensation and amortization related to options and restricted stock 548     548    
APIC adjustment for stock options 27     27    
Dividends paid (1,464)       (1,464)  
Ending Balance, Value at Mar. 31, 2012 $ 335,252 $ 3,646 $ (76) $ 180,099 $ 151,780 $ (197)
Ending Balance, Issued Shares at Mar. 31, 2012 36,495,652 36,495,652        
Ending Balance, Treasury Shares at Mar. 31, 2012     (40,509)      
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Condensed Consolidated Statements of Cash Flow (Unaudited) (USD $)
In Thousands, unless otherwise specified
 3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Cash flows from operating activities:    
Net income $ 15,685 $ 15,164
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 1,941 1,877
Share based compensation 548 556
Provision for doubtful accounts 266 11
Provision (benefit) for deferred taxes (1,401) 2,198
Debt discount amortization on convertible debt 0 21
Unrealized foreign exchange gain (loss) on forward contracts 0 (152)
Unrealized foreign currency exchange gain (loss) 661 (1,890)
(Gain) loss on put option 0 354
Changes in assets and liabilities, net of effects from acquisitions:    
Accounts receivable 1,771 (5,987)
Other assets (302) 1,278
Accounts payable and accrued expenses (861) (2,357)
Accrued payroll and related benefits (1,575) (1,463)
Deferred revenue (560) 689
Deferred rent (75) (55)
Other current liabilities (2,336) 69
Net cash provided by operating activities 13,762 10,313
Cash flows from investing activities:    
Acquisition of ADAM, net of cash acquired 0 3,529
Maturities of marketable securities 979 7,960
Purchases of marketable securities 0 (5,384)
Capital expenditures (673) (524)
Net cash provided by/(used in) investing activities 306 5,581
Cash flows from financing activities:    
Principal payments of term loan obligation 0 (1,407)
Repurchases of common stock 0 (2,395)
Proceeds from the exercise of stock options 14 1
Dividend payments (1,464) 0
Payments of capital lease obligations (45) (102)
Net cash used in financing activities (1,495) (3,903)
Effect of foreign exchange rates on cash 871 201
Net change in cash and cash equivalents 13,444 12,192
Cash and cash equivalents at the beginning of the period 23,696 23,397
Cash and cash equivalents at the end of the period 37,140 35,589
Supplemental disclosures of cash flow information:    
Interest paid 312 204
Income taxes paid $ 3,030 $ 558
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Description of Business and Summary of Significant Accounting Policies
 3 Months Ended
Mar. 31, 2012
Description of Business and Summary of Significant Accounting Policies [Abstract]  
Business Description and Accounting Policies [Text Block]
Description of Business and Summary of Significant Accounting Policies
Description of Business—Ebix, Inc. and subsidiaries (“Ebix” or the “Company”) 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 Australia, Canada, China, India, Japan, New Zealand, Singapore, and Brazil. International revenue accounted for 30.4% and 30.3% of the Company’s total revenue for the three months ended March 31, 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 months ended March 31, 2012 and 2011.

 
 
Three Months Ended
 
 
March 31,
(dollar amounts in thousands)
 
2012
 
2011
Exchanges
 
$
34,646

 
$
31,065

Broker Systems
 
4,754

 
3,842

Business Process Outsourcing (“BPO”)

 
3,571

 
3,619

Carrier Systems
 
856

 
1,524

Totals
 
$
43,827

 
$
40,050

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 (the "SEC") and in accordance with U.S. generally accepted accounting principles with the effect of inter-company balances and transactions eliminated. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the SEC's 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 three months ended March 31, 2012 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 Instruments—The Company believes the carrying amount of cash and cash equivalents, short-term investments, accounts receivable, accounts payable, accrued expenses, accrued payroll and related benefits, line of credit, long-term debt obligations, and capital lease obligations is a reasonable estimate of their fair value due to the short remaining maturity of these items and/or their fluctuating interest rates.
Revenue Recognition—The Company derives its revenues primarily from subscription and transaction fees pertaining to services delivered over our exchanges or from our ASP platforms, fees for business process outsourcing services, and fees for software development projects including associated fees for consulting, implementation, training, and project management provided to customers with installed systems. Sales and value-added taxes are not included in revenues, but rather are recorded as a liability until the taxes assessed are remitted to the respective taxing authorities.
In accordance with Financial Accounting Standard Board (“FASB”) and the SEC's 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 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 as of March 31, 2012 include $23.3 million of trade receivables stated at invoice billed amounts net of the estimated allowance for doubtful accounts receivable, and $6.1 million of unbilled receivables. Approximately $7.5 million of deferred revenue is included in accounts receivable at March 31, 2012. Bad debt expense incurred during the three month periods ended March 31, 2012 and March 31, 2011 was approximately $266 thousand, and $11 thousand, respectively. Accounts receivable are written off against the allowance account when the Company has exhausted all reasonable collection efforts.
Goodwill and Other Indefinite-Lived Intangible Assets—Goodwill represents the cost in excess of the fair value of the net assets of acquired businesses. Indefinite-lived intangible assets represent the fair value of acquired contractual customer relationships for which future cash flows are expected to continue indefinitely. In accordance with the relevant FASB accounting guidance, goodwill and indefinite-lived intangible assets are not amortized but are tested for impairment at the reporting unit level on an annual basis or on an interim basis if an event occurs or circumstances change that would likely have reduced the fair value of a reporting unit below its carrying value. Potential impairment indicators include a significant change in the business climate, legal factors, operating performance indicators, competition, and the sale or disposition of a significant portion of the business. The impairment evaluation process involves an assessment of certain qualitative factors to determine whether the existence of events or circumstances would indicate that it is more likely than not that the fair value of any of our reporting units was less than 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. 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 three months ended March 31, 2012 are as follows:

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

Additions, net (see Note 3)
3,486

Foreign currency translation adjustments
1,800

Ending Balance (March 31, 2012)
$
264,504

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 March 31, 2012 and December 31, 2011 are as follows:

 
March 31,
2012
 
December 31,
2011
 
(In thousands)
Finite-lived intangible assets:
 
 
 
Customer relationships
$
40,739

 
$
40,289

Developed technology
11,836

 
11,640

Trademarks
2,188

 
2,188

Non-compete agreements
418

 
418

Backlog
140

 
140

Database
213

 
207

Total intangibles
55,534

 
54,882

Accumulated amortization
(17,771
)
 
(16,496
)
Finite-lived intangibles, net
$
37,763

 
$
38,386

 
 
 
 
Indefinite-lived intangibles:
 
 
 
Customer/territorial relationships
$
30,990

 
$
30,453

Amortization expense recognized in connection with acquired intangible assets was $1.2 million and $1.2 million for the three months ended March 31, 2012 and March 31, 2011, respectively.
Income Taxes—Deferred income taxes are recorded to reflect the estimated future tax effects of differences between the financial statement and tax basis of assets, liabilities, operating loss and tax credit carry forwards using the tax rates expected to be in effect when the temporary differences reverse. Valuation allowances, if any, are recorded to reduce deferred tax assets to the amount management considers more likely than not to be realized. Such valuation allowances are recorded for the portion of the deferred tax assets that are not expected to be realized based on the levels of historical taxable income and projections for future taxable income over the periods in which the temporary differences will be deductible.
The Company also applies FASB accounting guidance on accounting for uncertainty in income taxes positions. This guidance clarifies the accounting for uncertainty in income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. In this regard we recognize the tax benefit from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
Recent Relevant Accounting Pronouncements—The following is a brief discussion of recently released accounting pronouncements that are pertinent to the Company's business:

In June 2011, the Financial Accounting Standards Board ("FASB") issued new financial reporting guidance regarding the reporting of "other comprehensive income, or (OCI)". This guidance revises the manner in which entities present comprehensive income in their financial statements. The new guidance requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income, or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, which is consistent with the income statement format used currently, and the second statement would include components of OCI. Under either method, entities must display adjustments for items that are reclassified from OCI to net income in both net income and OCI. The new reporting guidance does not change the items that must be reported in OCI. This new reporting standard is effective for interim and annual periods beginning after December 15, 2011. After adoption, the guidance must be applied retrospectively for all periods presented in the financial statements. The Company adopted this new guidance during the first quarter of 2012.
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Earnings per Share
 3 Months Ended
Mar. 31, 2012
Earnings Per Share [Abstract]  
Earnings Per Share [Text Block]
Earnings per Share
    
A reconciliation between basic and diluted earnings per share is as follows (in thousands, except per share data):

 
Three Months Ended
 
March 31,
 
2012
 
2011
 
(In thousands, except per share data)
Net income for basic and diluted earnings per share
$
15,685

 
$
15,164

Basic weighted average shares outstanding
36,450

 
38,151

Dilutive effect of stock options and restricted stock awards
3,073

 
3,366

Diluted weighted average shares outstanding
39,523

 
41,517

Basic earnings per common share
$
0.43

 
$
0.40

Diluted earnings per common share
$
0.40

 
$
0.37
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Business Combinations
 3 Months Ended
Mar. 31, 2012
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]
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 first quarter of 2012 the Company did not execute any material business acquisitions.
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 first quarter of 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 significant directly related internal operating costs incurred by the Company and a portion of the fee that had to be paid to our investment banker).

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Debt with Commercial Bank
 3 Months Ended
Mar. 31, 2012
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]
Debt with Commercial Bank

On April 20, 2011 the Company entered into a seventh amendment to a credit agreement (the “Seventh Amendment”) with Bank of America, N.A. ("BOA"), as administrative agent, which materially amended the initial credit agreement dated February 12, 2010.  The Seventh Amendment increased the existing revolving credit facility from $25 million to $35 million with its term ending on April 20, 2014, and the $10 million secured term loan was increased to $20 million and amortizes over a three year period with quarterly principal and interest payments that commenced on June 30, 2011. The entire credit facility has a variable interest rate currently set at LIBOR plus 1.50%. The Company deferred the origination costs in connection with this expanded and amended credit facility, and amortizes these costs into interest expense over the three-year life of the credit agreement. As of March 31, 2012 the Company's Condensed Consolidated Balance Sheet includes $143 thousand of remaining deferred financing costs. The revolving credit facility is used by the Company to fund working capital requirements primarily in support of current operations, organic growth, and accretive business acquisitions. The underlying financing agreement contains financial covenants regarding the Company's annualized EBITDA, fixed charge coverage ratio, and leverage ratio, as well as certain restrictive covenants pertaining to such matters as the incurrence of new debt, the aggregate amount of repurchases of the Company's equity shares, and the consummation of new business acquisitions. The Company currently is in compliance with all such financial and restrictive covenants, and there have been no violations thereof or in the event of noncompliance, appropriate waivers having been obtained.
At March 31, 2012, the outstanding balance on the revolving line of credit was $31.8 million and the facility carried an interest rate of 1.75%. This balance is included in the long-term liabilities section of the Condensed Consolidated Balance Sheets. During the three month period ending March 31, 2012, both the average and maximum outstanding balances on the revolving line of credit was $31.8 million.
At March 31, 2012, the outstanding balance on the term loan was $15 million of which $8.3 million is due within the next twelve months. This term loan also carried an interest rate of 1.75%. During the three months ended March 31, 2012, no payments were made against the term loan. The current and long-term portions of the term loan are included in the respective current and long-term sections of the Condensed Consolidated Balance Sheets.
Refer to Note 9 "Subsequent Events" in regards the termination of this credit facility with BOA, and the entering into of a new secured syndicated credit facility with Citibank N.A..

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Commitments and Contingencies
 3 Months Ended
Mar. 31, 2012
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]
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.).  In September 2011, a related derivative complaint was filed against the Company and each of its Directors in the Superior Court of Fulton County, Georgia, styled Nauman v. Raina, et al., Civil Action File No. 2011-cv-205276. The derivative action has been stayed pending resolution of the Defendants' Motion to Dismiss in the federal action. A Consolidated Amended Complaint (“CAC”) was filed by Plaintiffs on November 28, 2011, in the federal action. On January 12, 2012, the Company filed a Motion to Dismiss the CAC, which raises various defenses that the CAC fails to state a claim. Plaintiffs filed their Response on February 23, 2012. On March 26, 2012 the Company filed a Reply Memorandum in Further Support of the Motion to Dismiss. The Company believes that the complaints are legally insufficient, and we intend to seek dismissal.
In the normal course of business, the Company is involved in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate likely disposition of these matters will not have a material adverse effect on the Company's business, consolidated financial position, results of operations or liquidity.
Lease Commitments—The Company leases office space under non-cancelable operating leases with expiration dates ranging through 2019, with various renewal options. Capital leases range from three to five years and are primarily for computer equipment. There were multiple assets under various individual capital leases at March 31, 2012 and 2011. Rental expense for office facilities and certain equipment subject to operating leases for the three months ended March 31, 2012 and 2011 was $1.3 million and $963 thousand, 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 March 31, 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 $384 thousand. The maximum potential estimated cumulative liability for the annual contract period, which ends in September 2012, is $2.5 million.
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Income Taxes
 3 Months Ended
Mar. 31, 2012
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
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 has been centralized into our India and Singapore subsidiaries, respectively. Our operations in India benefit from a tax holiday which will continue through 2015; as such local India taxable income, other than passive interest and rental income, is not taxed. After the tax holiday expires taxable 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 is 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 $2.3 million for the three months ended March 31, 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 first quarter of 2012 was 12.52% as compared to 9.38% for the same period in 2011. The effective rate increased primarily due to increased taxable income from jurisdictions with higher tax rates.
At March 31, 2012, the Company had remaining available domestic net operating loss (“NOL”) carry-forwards of approximately $56.0 million which are available to offset future federal and certain state income taxes. The Company expects to fully utilize these NOLs 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 March 31, 2012 the Company’s Condensed Consolidated Balance Sheet includes a liability of $3.18 million for unrecognized tax benefits which is included in other long-term liabilities. During the three months ended March 31, 2012 there were no changes to this liability. A reconciliation of the beginning and ending amount of the Company’s liability reserves for unrecognized tax benefits is as follows:
 
(in thousands)
Balance at January 1, 2012
$
3,180

Additions for tax positions related to current year
$
—

Additions for tax positions of prior years
$
—

Reductions for tax position of prior years
$
—

Balance at March 31, 2012
$
3,180

The Company recognizes interest accrued and penalties related to unrecognized tax benefits as part of income tax expense. As of March 31, 2012 approximately $754 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
 3 Months Ended
Mar. 31, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Disclosure [Text Block]
Derivative Instruments
The Company uses derivative instruments that are not designated as hedges under FASB accounting guidance related to the accounting for derivative instruments and hedging activity, to hedge the fluctuations in foreign exchange rates for recognized balance sheet items. primarily intercompany receivables. As of March 31, 2012, all of the Company's pre-existing foreign currency hedge contracts have matured. The inputs 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 is the Indian rupee. The change in the fair value of these derivatives was recorded in foreign currency exchange gains (losses) in the Condensed Consolidated Statements of Income and was $1.2 million and $25 thousand for the three months ended March 31, 2012 and 2011, respectively. These reported gains are in addition to the consolidated foreign exchange gains (losses) equivalent to $(1.5) million and $1.5 million recorded during the three months ended March 31, 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.

v2.4.0.6
Geographic Information
 3 Months Ended
Mar. 31, 2012
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]
Geographic Information
The Company operates with one reportable segment whose results are regularly reviewed by the Company’s chief operating decision maker as to performance and allocation of resources. The following enterprise wide information is provided. The following information relates to primary geographic locations in which the Company conducts its operations (all amounts in thousands):
Three Months Ended March 31, 2012

 
 
United States
 
Canada
 
Latin America
 
Australia
 
Singapore
 
New Zealand
 
India
 
Total
External Revenues
 
$
30,490

 
$
382

 
$
2,422

 
$
9,167

 
$
795

 
$
571

 
$
—

 
$
43,827

Long-lived assets
 
$
261,713

 
$
—

 
$
14,452

 
$
1,441

 
$
65,749

 
$
260

 
$
11,064

 
$
354,679


Three Months Ended March 31, 2011
 
 
United States
 
Canada
 
Latin America
 
Australia
 
Singapore
 
New Zealand
 
India
 
Total
External Revenues
 
$
27,898

 
$
182

 
$
2,563

 
$
8,322

 
$
724

 
$
361

 
$
—

 
$
40,050

Long-lived assets
 
$
237,464

 
$
—

 
$
18,180

 
$
1,506

 
$
70,922

 
$
36

 
$
3,674

 
$
331,782
v2.4.0.6
Subsequent Events
 3 Months Ended
Mar. 31, 2012
Subsequent Events [Abstract]  
Subsequent Events [Text Block]
Subsequent Events

Entry into a Material Definitive Agreement the Creation of a Direct Financial Obligation
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 Citi Bank, N.A. 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, replaces 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%.

Termination of a Material Definitive Agreement
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 Citi Bank led Secured Syndicated Credit Facility discussed immediately above. Upon the effective date this payoff, BOA's commitment to extend further credit to the Company terminated.

Completion of Business Acquisition
Effective April 1, 2012 Ebix acquired Canadian based Taimma Communications, Inc., ("Taimma"). Taimma provides innovative e-learning medical education solutions to the pharmaceutical, biotechnology, and healthcare industries. Ebix acquired all of the outstanding stock and the business operations of Taimma for a cash purchase price of $5.2 million and funded the transaction using existing available internal cash resources. The former shareholders of Taimma retain the right to earn up to an additional $4.5 million if certain incremental revenue targets are achieved over the two-year anniversary date subsequent to the effective date of the acquisition.

Appointment of New Named Executive Officers
Effective May 1, 2012 the Company appointed the following three additional individuals as new executives.

Mr. Graham Prior, as Corporate Senior Vice President International Business & Intellectual Property. Mr. Prior, age 55, has been employed by Ebix since 1996 when the Company acquired Complete Broking Systems Ltd for which Mr. Prior was a part owner.  Mr. Prior has been working within the insurance technology industry since 1990 and is currently responsible for the Company's international operations in Singapore, New Zealand, Australia, Europe, Africa and Asia.  Mr. Prior is also responsible for the company's worldwide product development initiatives. 

    Mr. Leon d'Apice, as Managing Director - Ebix Australia Group Head. Mr. d'Apice, age 56, has been employed with Ebix since 1996 when the Company acquired Complete Broking Systems Ltd for which Mr. d'Apice was also a part owner in.  Mr. d'Apice has been in the information technology field since 1977 and is currently responsible for all of the operations of the Ebix's Australia's business units. 

Mr. James Senge Sr., as Senior Vice President EbixHealth. Mr. Senge, age 51, has been employed with Ebix, (as a result of the business acquisition of Acclamation Systems, Inc. in 2008), since 1979. During his over 32 plus years with the Acclamation/Ebix Mr. Senge has been involved with all facets of the EbixHealth division, including being responsible for the strategic direction and day to day operations of the division. Mr. Senge's  focus is on expanding the Company's reach into the on-demand, end to end technology solutions for the health insurance and healthcare markets.  Mr.  Senge works from Ebix's Pittsburgh, Pennsylvania office.  Ebix also employs a related party of Mr. Senge, namely James Senge Jr.  who is the son of Mr. James Senge Sr. James Senge Jr. also works in the product development function within our EbixHealth division and is located in the Company's Atlanta, GA office.