Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. LIONBRIDGE TECHNOLOGIES INC /DE/ (1058299) 10-Q published on Nov 08, 2016 at 12:13 pm
Reporting Period: Sep 29, 2016
On January 2, 2015, the Company amended and restated the Company's Credit Agreement with HSBC Bank, as Administrative Agent and a lender, and a syndicate of other lenders (the “Amended and Restated Credit Agreement”). The Amended and Restated Credit Agreement includes a $100 million senior secured revolving credit facility, which includes (a) a $10 million sublimit for the issuance of standby letters of credit and (b) a $10 million sublimit for swing-line loans and a senior secured term loan facility in an aggregate amount of $35 million. The Company may request, at any time and from time to time, that the revolving credit facility be increased by an amount not to exceed $65 million, dependent upon certain conditions. The interest rates are in the range of Prime Rate plus 0.25%—1.00% or LIBOR plus 1.25%—2.00% (at the Company’s discretion), depending on certain conditions. Both facilities expire after five years from the date of entering into the Amended and Restated Credit Agreement, after which time the Company may need to secure new financing. The Company cannot assure that it will be able to secure new financing, or financing on terms that are acceptable. Debt, which is denominated in both the Euro and U.S. Dollar, consisted of the following at September 30:
Provision for Income Taxes. The provision for income taxes consists primarily of taxes resulting from profits in foreign jurisdictions, and interest and penalties associated with uncertain tax positions. The tax provision increased from a provision of $0.8 million in three months ended September 30, 2015 to a provision of $1.6 million for the three months ended September 30, 2016. The change in the tax provision for the three months ended September 30, 2016 compared to the three months ended September 30, 2015 is primarily due to change in jurisdictional mix of foreign profits, which are subject to tax by the foreign jurisdictions due to the treatment of the foreign subsidiaries as service providers that earn a profit based on a
cost-plus model and a discrete benefit recognized in the quarter of approximately $1.4 million related to the release of certain existing reserves for uncertain tax positions, primarily due to a favorable tax ruling in India. The tax provision increased from $1.2 million in the nine months ended September 30, 2015 to a provision of $4.0 million for the nine months ended September 30, 2016. The change in the tax provision for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015 is primarily due to a discrete benefit recognized in the second quarter of 2015 and changes in jurisdictional mix of foreign profits, which are subject to tax by the foreign jurisdictions due to the treatment of the foreign subsidiaries as service providers that earn a profit based on a cost-plus model and a discrete benefit recognized in the quarter of approximately $1.4 million related to the release of certain existing reserves for uncertain tax positions, primarily due to a favorable tax ruling in India.
Revenue from the Company’s GLC segment was relatively consistent for the three months ended September 30, 2016 as compared to the three months ended September 30, 2015. Revenue in the Company's GLC segment increased by $5.1 million from the acquisition of Geotext and increased $3.2 million from organic growth initiatives including the Company's onDemand offerings as well increased revenue with several enterprise clients. This was partially offset by a decrease of $6.1 million due to a decline in product translation project volumes from a few technology and manufacturing clients and a decrease of $1.5 million resulting from an unfavorable currency translation impact principally driven by the strengthening of the U.S. Dollar against foreign currencies, primarily the British Pound Sterling.
Revenue from the Company’s GES segment decreased $1.1 million, or 3.3%, to $32.8 million for the three months ended September 30, 2016 from $33.9 million for the three months ended September 30, 2015. The decrease is primarily due to decrease in volume from an existing technology client.
Revenue from the Company’s GLC segment increased $6.5 million, or 2.2%, to $306.1 million for the nine months ended September 30, 2016 from $299.6 million for the nine months ended September 30, 2015. The increase in revenue from the
Company's GLC segment was primarily due to incremental revenue of $16.7 million from the acquisition of Geotext and associated legal translation revenue and an increase of $5.1 million in organic revenue related to the Company's onDemand offerings and growth with several large enterprise accounts. This increase was partially offset by a decrease of $11.1 million in revenue primarily due to a decrease in project volumes from a few clients in the technology, manufacturing and financial sectors and a decrease of $4.6 million due to an unfavorable currency translation impact principally driven by the strengthening of the U.S. Dollar against foreign currencies, primarily the British Pound Sterling, Canadian Dollar and Swiss Franc.
The change of $1.5 million in net cash provided by operating activities in the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015 was primarily due to an improvement in accounts receivable management. The decrease in accounts receivable caused a decrease in days sales outstanding (“DSO”), which is calculated by dividing period end accounts receivable by average daily sales for the period. DSO was 55 days at September 30, 2016 compared with 55 days at December 31, 2015 and was 56 days at September 30, 2015 compared with 50 days at December 31, 2014. The changes in operating assets and liabilities are primarily due to the timing of cash inflows and outflows as the Company utilizes a variety of financing strategies to ensure that the Company's worldwide cash is available in the locations in which it is needed. The Company's business is subject to seasonal fluctuations and historically the Company's cash flows from operations in the first quarter result in a use of operating cash whereas the subsequent quarters historically result in cash provided by operations. For these reasons, cash flows from operating activities for the second quarter are more indicative of the results that the Company expects for the full year.