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Business Acquisitions and Divestitures | 9 Months Ended
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Sep. 30, 2013
Business Acquisitions and Divestitures | 3. Business acquisitions and divestitures A. Acquisitions (a) Third Pillar Systems, Inc. On August 30, 2013, the Company acquired certain assets, including contracts, and assumed certain liabilities of Third Pillar Systems, Inc., a Nevada corporation (“Third Pillar”) for cash consideration of $2,500. As a part of the transaction, the Company also hired employees of Third Pillar. With this transaction, the Company has acquired an integrated set of processes and assets capable of independently providing returns to the Company. Third Pillar is a provider of software solutions for the commercial lending and leasing industry. There are no contingent consideration arrangements in connection with the acquisition. Of the cash consideration of $2,500, the Company has held back $225 in accordance with the terms of the asset purchase agreement. This acquisition has been accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. The following table summarizes the allocation of purchase price based on the fair value of assets acquired and liabilities assumed as of the acquisition date:
Cash consideration |  | $ | 2,500 |
Recognized amounts of identifiable assets acquired and liabilities assumed |  |  |  |
Current assets |  | $ | 375 |
Intangible assets |  |  | 298 |
Other non-current assets |  |  | 24 |
Current liabilities |  |  | (200 | )
Total identifiable net assets acquired |  | $ | 497 |
Goodwill |  |  | 2,003 |
Total |  | $ | 2,500 |
Through this transaction, the Company has acquired an end to end platform and processes to supplement its commercial lending and leasing portfolio, thereby strengthening the Company’s service offerings in this industry. Goodwill representing the excess of the purchase consideration over the net assets acquired is deductible for tax purposes and has been allocated to the India reporting unit. The above technology related intangible asset has an estimated useful life of 8 years. (b) NGEN Media Services Private Limited On March 28, 2013, the Company acquired the remaining 50% of the outstanding equity interest in NGEN Media Services Private Limited, a private limited company organized under the laws of India (“NGEN”), and thereby increased its interest from 50% to 100%, providing the Company control over NGEN as a wholly owned subsidiary. NGEN is engaged in the business of media services outsourcing. The Company acquired the remaining 50% equity interest for cash consideration of $158. There are no contingent consideration arrangements in connection with the acquisition. The Company previously accounted for its 50% interest in NGEN as an equity method investment. The Company remeasured this equity interest to fair value at the acquisition date and recognized a loss of $5 in the Consolidated Statements of Income under “equity-method investment activity, net.” The following table summarizes the consideration paid to acquire NGEN and the fair value of assets acquired and liabilities assumed as of the acquisition date, as well as the fair value of the Company’s existing investment in NGEN as of the acquisition date:
Cash consideration |  | $ | 158 |
Acquisition date fair value of the Company’s investment in NGEN held before the business combination |  |  | 158 |
Total |  | $ | 316 |
Recognized amounts of identifiable assets acquired and liabilities assumed |  |  |  |
Cash and cash equivalents |  | $ | 432 |
Current assets |  |  | 402 |
Tangible fixed assets |  |  | 27 |
Other non-current assets |  |  | 89 |
Current liabilities |  |  | (337 | )
Other liabilities |  |  | (274 | )
Total identifiable net assets acquired |  | $ | 339 |
Gain recognized on acquisition |  |  | (23 | )
Total |  | $ | 316 |
(c) Jawood Business Process Solutions, LLC and Felix Software Solutions Private Limited On February 6, 2013, the Company acquired 100% of the outstanding membership interest in Jawood Business Process Solutions, LLC, a Michigan limited liability company (“Jawood”) for cash consideration of $51,000, subject to adjustment based on closing date net working capital, indebtedness and cash and cash equivalents. There are no contingent consideration arrangements in connection with the acquisition. The transaction also included the acquisition of 100% of the outstanding shares of Felix Software Solutions Private Limited, a company organized under the laws of India (“Felix”), for cash consideration of $2,295, subject to adjustment based on closing date net working capital. There are no contingent consideration arrangements in connection with the acquisition of Felix. Jawood and Felix (collectively referred to as the “Jawood business”) are, respectively, U.S. and India based providers of business consulting and information technology services to the healthcare payer industry. Felix is a key sub-contractor to Jawood. This transaction strengthens the Company’s solutions and services offerings in the healthcare payer market. Pursuant to the terms of the acquisition agreements with the respective sellers, the purchase consideration for the Jawood business is comprised of the following:
Base purchase price |  | $ | 53,295 |
Closing date net working capital adjustment |  |  | (3,821 | )
Closing date indebtedness adjustment |  |  | (2,202 | )
Closing date cash adjustment |  |  | 1,304 |
Seller expenses |  |  | (1,379 | )
Total purchase price |  | $ | 47,197 |
During the period ended September 30, 2013, the Company recorded a measurement period adjustment that resulted in a decrease in the purchase consideration by $1,089 with a corresponding change in goodwill. The measurement period adjustment did not have a significant impact on the Company’s consolidated statements of income, balance sheets or cash flows in any period and, thus, were recorded during the period ended September 30, 2013. The total amount paid by the Company to acquire the Jawood business, net of cash acquired of $1,364 and including seller expenses amounting to $1,379, was $47,212. The acquisition of the Jawood business has been accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. The assets and liabilities of the Jawood business are recorded at fair value as of the date of acquisition. The following table summarizes the allocation of the purchase price based on the fair value of assets acquired and liabilities assumed as of the date of acquisition including measurement period adjustments:
Purchase price |  | $ | 47,197 |
Acquisition related costs included in selling, general and administrative expenses |  |  | 310 |
Recognized amounts of identifiable assets acquired and liabilities assumed |  |  |  |
Cash and cash equivalents |  | $ | 1,364 |
Current assets |  |  | 6,477 |
Tangible fixed assets |  |  | 704 |
Intangible assets |  |  | 11,200 |
Other non-current assets |  |  | 548 |
Current liabilities |  |  | (7,866 | )
Long term liabilities |  |  | (56 | )
Total identifiable net assets acquired |  | $ | 12,371 |
Goodwill |  |  | 34,826 |
Total |  | $ | 47,197 |
Goodwill representing the excess of the purchase price over the net assets acquired has been allocated to the India reporting unit and is deductible for tax purposes to the extent of $32,656. The amortizable intangible assets are being amortized over their estimated useful lives using a method of amortization that reflects the expected pattern in which the economic benefits of the intangible assets will be consumed or otherwise realized. The value and estimated useful lives of the intangible assets are as follows:
|  | Value |  |  | Estimated useful life |
Customer related intangible assets |  | $ | 10,200 |  |  |  | 1 – 7 years |
Marketing related intangible assets |  |  | 1,000 |  |  |  | 1 – 5 years |
The weighted average amortization period in respect of the acquired intangible assets is 6 years. The results of operations of the Jawood business and the fair value of its assets and liabilities have been included in the Company’s Consolidated Financial Statements with effect from February 6, 2013, the date of acquisition. (d) Atyati Technologies Private Limited On September 4, 2012, the Company acquired 100% of the outstanding common and preferred stock of Atyati Technologies Private Limited, an Indian private limited company (“Atyati”), a cloud-hosted technology platform provider for the rural banking sector in India. This acquisition gives the Company a platform-based banking solution for the rural and semi-rural consumer market. The Company acquired Atyati for initial cash consideration of $19,368, subject to adjustment based on closing date final working capital. The acquisition agreement also provided for additional deferred consideration which had a discounted value of $2,539 and earn-out consideration (ranging from $0 to $14,372 based on gross profit for the year ending March 31, 2014) which had an estimated fair value of $1,487. Pursuant to the terms of the acquisition agreement with the sellers, the purchase consideration is comprised of the following:
Cash consideration |  | $ | 19,368 |
Acquisition date discounted value of deferred consideration |  |  | 2,539 |
Acquisition date fair value of earn-out consideration |  |  | 1,487 |
Working capital adjustment |  |  | — |
Total purchase price |  | $ | 23,394 |
During the period ended June 30, 2013, the Company recorded a measurement period adjustment which resulted in a decrease in the deferred tax asset of $827, an increase in other non-current assets of $194 and an increase in goodwill of $633. The measurement period adjustment did not have a significant impact on the Company’s consolidated statements of income, balance sheets or cash flows in any period and, thus, were recorded during the period ended June 30, 2013. The acquisition has been accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. The assets and liabilities of Atyati were recorded at fair value as of the date of acquisition. The following table summarizes the allocation of the purchase price based on the fair value of assets acquired and liabilities assumed as of the date of acquisition including measurement period adjustments:
Purchase price |  | $ | 23,394 |
Acquisition related costs included in selling, general and administrative expenses |  |  | 164 |
Recognized amounts of identifiable assets acquired and liabilities assumed |  |  |  |
Cash and cash equivalents |  | $ | 2,000 |
Current assets |  |  | 5,265 |
Tangible fixed assets |  |  | 426 |
Intangible assets |  |  | 8,767 |
Deferred tax asset/ (liability), net |  |  | (2,557 | )
Other non-current assets |  |  | 369 |
Current liabilities |  |  | (3,424 | )
Short term borrowings |  |  | (654 | )
Other liabilities |  |  | (737 | )
Total identifiable net assets acquired |  | $ | 9,455 |
Goodwill |  |  | 13,939 |
Total |  | $ | 23,394 |
Goodwill recorded in connection with the Atyati acquisition amounted to $13,939, representing the excess of the purchase price over the net assets (including deferred taxes) acquired, has been allocated to the India reporting unit and is not deductible for tax purposes. The amortizable intangible assets are being amortized over their estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise realized. The value and estimated useful lives of the intangibles are as follows:
|  | Value |  |  | Estimated useful life |
Customer related intangibles |  | $ | 5,408 |  |  |  | 4 – 9 years |
Other intangibles |  |  | 3,359 |  |  |  | 7 years |
The weighted average amortization period in respect of the acquired intangible assets is 7 years. The results of operations of Atyati and the fair value of its assets and liabilities have been included in the Company’s Consolidated Financial Statements with effect from September 4, 2012, the date of acquisition. (e) Triumph Engineering, Corp. and Triumph On-Demand, Inc. On August 17, 2012, the Company acquired 100% of the outstanding equity interest in Triumph Engineering, Corp. and Triumph On-Demand Inc., both Ohio corporations (collectively the “Triumph Companies”). The Triumph Companies are U.S. based providers of engineering services to the aviation, energy, and oil and gas industries. This acquisition provides the Company with capabilities in the engineering services space. The Company acquired the Triumph Companies for initial cash consideration of $3,600, subject to adjustment based on working capital and closing indebtedness. The acquisition agreement provided for additional deferred consideration which had a discounted value of $379, and earn-out consideration (ranging from $0 to $4,500 based on gross profit for the years ending December 31, 2013 and 2014) which had an estimated fair value of $3,256. Pursuant to the terms of the acquisition agreement with the seller, the purchase consideration is comprised of the following:
Cash consideration |  | $ | 3,600 |
Acquisition date fair value of deferred consideration |  |  | 379 |
Acquisition date fair value of earn-out consideration |  |  | 3,256 |
Working capital adjustment |  |  | (848 | )
Closing indebtedness adjustment |  |  | (941 | )
Total purchase price |  | $ | 5,446 |
During the period ended June 30, 2013, the Company recorded a measurement period adjustment which resulted in a decrease in the purchase consideration of $13 with a corresponding change in goodwill. The acquisition has been accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. The assets and liabilities of the Triumph Companies were recorded at fair value as of the date of acquisition. The following table summarizes the allocation of the purchase price based on the fair value of assets acquired and liabilities assumed as of the date of acquisition:
Purchase price |  | $ | 5,446 |
Acquisition related costs included in selling, general and administrative expenses |  |  | 134 |
Recognized amounts of identifiable assets acquired and liabilities assumed |  |  |  |
Cash and cash equivalents |  | $ | 312 |
Current assets |  |  | 1,708 |
Tangible fixed assets |  |  | 175 |
Intangible assets |  |  | 382 |
Deferred tax asset/ (liability), net |  |  | (565 | )
Current liabilities |  |  | (720 | )
Short term borrowing |  |  | (350 | )
Total identifiable net assets acquired |  | $ | 942 |
Goodwill |  |  | 4,504 |
Total |  | $ | 5,446 |
Goodwill recorded in connection with the acquisition of the Triumph Companies amounted to $4,504, representing the excess of the purchase price over the net assets (including deferred taxes) acquired, has been allocated to the India reporting unit and is not deductible for tax purposes. The amortizable intangible assets are being amortized over their estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise realized. The value and estimated useful lives of the intangibles are as follows:
|  | Value |  |  | Estimated useful life |
Customer related intangibles |  | $ | 382 |  |  |  | 1 to 10 years |
The weighted average amortization period in respect of the acquired intangible assets is 8 years. The results of operations of the Triumph Companies and the fair value of the assets and liabilities are included in the Company’s Consolidated Financial Statements with effect from August 17, 2012, the date of acquisition. (f) Accounting Plaza B.V. On April 25, 2012, the Company acquired 100% of the outstanding equity interest in Accounting Plaza B.V., a private limited liability company organized under the laws of the Netherlands (“Accounting Plaza”). Accounting Plaza is a provider of finance and accounting, human resources and PeopleSoft ERP services. This acquisition strengthens the Company’s domain expertise in the retail industry and significantly expands its presence in Europe. The Company acquired Accounting Plaza for cash consideration of $38,698 subject to adjustments based on the transfer of pension funds, underfunding in pension funds, and sellers’ warranty breaches including certain other transactions and transaction costs. There are no contingent consideration arrangements in connection with the acquisition. Pursuant to the terms of the acquisition agreement with the sellers, the purchase consideration is comprised of the following:
Base consideration |  | $ | 38,698 |
Adjustment for transfer of pension funds |  |  | — |
Adjustment for underfunding in pension funds |  |  | — |
Adjustment for sellers warranty breaches and certain other transactions |  |  | — |
Adjustment for transaction costs |  |  | — |
Purchase consideration |  | $ | 38,698 |
During the period ended March 31, 2013, the Company recorded a measurement period adjustment which resulted in a $107 increase in the purchase consideration with a corresponding increase in goodwill. The measurement period adjustment did not have a significant impact on the Company’s consolidated statements of income, balance sheets or cash flows in any period and, thus, were recorded during the period ended March 31, 2013. The acquisition has been accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. The assets and liabilities of Accounting Plaza were recorded at fair value as of the date of acquisition. The following table summarizes the allocation of the purchase consideration based on the fair value of assets acquired and liabilities assumed as of the date of acquisition including measurement period adjustments:
Purchase consideration |  | $ | 38,698 |
Acquisition related costs included in selling, general and administrative expenses |  |  | 434 |
Recognized amounts of identifiable assets acquired and liabilities assumed |  |  |  |
Cash and cash equivalents |  | $ | 1,664 |
Current assets |  |  | 11,327 |
Tangible fixed assets |  |  | 2,010 |
Intangible assets |  |  | 13,138 |
Deferred tax asset/ (liability), net |  |  | (2,711 | )
Other non-current assets |  |  | 971 |
Current liabilities |  |  | (9,062 | )
Other liabilities |  |  | (4,188 | )
Total identifiable net assets acquired |  | $ | 13,149 |
Goodwill |  |  | 25,549 |
Total |  | $ | 38,698 |
The fair value of the current assets acquired included trade receivables with a fair value of $9,744. The gross amount due was $9,917, of which $173 was expected to be uncollectable. Goodwill representing the excess of the purchase price over the fair value of the net assets (including deferred taxes) acquired is not deductible for tax purposes and has been allocated to the Europe reporting unit. The amortizable intangible assets acquired are being amortized over their estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise realized. The value and estimated useful life of the intangible asset are as follows:
|  | Value |  |  | Estimated useful life |
Customer related intangible |  | $ | 13,138 |  |  |  | 3 – 10 years |
The weighted average amortization period in respect of the acquired intangible assets is 7 years. The results of operations of Accounting Plaza and the fair value of the assets and liabilities have been included in the Company’s Consolidated Financial Statements with effect from April 25, 2012, the date of acquisition. B. Earn-out consideration and deferred consideration The Company acquired Akritiv Technologies, Inc. (“Akritiv”), High Performance Partners, LLC (“HPP”), Empower Research, LLC (“Empower”), Atyati and the Triumph Companies on March 14, 2011, August 24, 2011, October 3, 2011, September 4, 2012 and August 17, 2012, respectively. The terms of the acquisition agreements for these business acquisitions provided for payment of additional earn-out consideration if certain future events or conditions are met. These earn-outs were recorded as liabilities based on their fair values as of the acquisition dates. The Company evaluates the fair value of earn-out consideration for the respective acquisitions for changes at each reporting period. As of September 30, 2013, the Company re-measured the fair value of such earn-out consideration with corresponding changes in the Consolidated Statements of Income as follows:
Decrease in fair value of earn-out consideration for Empower |  | $ | (145 | )
Decrease in fair value of earn-out consideration for Triumph Companies |  |  | (2,150 | )
Decrease in fair value of earn-out consideration for Atyati |  |  | (1,794 | )
Decrease in fair value of earn-out consideration for HPP |  |  | (363 | )
|  | $ | (4,452 | )
Further, during the period ended September 30, 2013, the Company paid earn-out consideration of $85, $3,274 and $1,499 for HPP, Akritiv and Empower, respectively, due to the fulfillment of certain earn-out conditions set forth in the acquisition agreements. Additionally, during the period ended September 30, 2013, the Company paid deferred consideration of $811 to the Empower sellers pursuant to the terms of the acquisition agreement. C. Divestitures (a) Hello Communications (Shanghai) Co., Ltd. On February 22, 2013, the Company completed the divestiture of Hello Communications (Shanghai) Co., Ltd., a subsidiary engaged in the business of providing offshore tele-sales and other voice-based support services to telecom carriers and IT/telecom equipment manufacturers in Asia, for cash consideration of $998 resulting in loss of $447. The expected loss on the sale was recorded within other income (expense), net in the Consolidated Statements of Income for the year ended December 31, 2012 and was not materially different from the actual realized loss. The balance of cash and cash equivalents of Hello Communications (Shanghai) Co., Ltd. on the date of sale was $2,047, resulting in a net cash outflow of $1,049. The results of operations of Hello Communications (Shanghai) Co., Ltd. are not material to the Company’s results of operations or financial condition and, therefore, are not reflected as discontinued operations for the periods presented. (b) Clearbizz B.V. On September 13, 2013, the Company completed the divestiture of Clearbizz, B.V., a subsidiary engaged in the business of providing electronic invoicing services in the Netherlands for cash consideration of $1 resulting in a loss of $1,184, which was recorded within other income (expense), net in the Consolidated Statements of Income. The results of operations of Clearbizz B.V. are not material to the Company’s results of operations or financial condition and, therefore, are not reflected as discontinued operations for the periods presented. (c) Gantthead.com, Inc. During the period ended June 30, 2013, the Company decided to divest or discontinue Gantthead.com, Inc., a subsidiary engaged in the business of operating an online technology portal for project management. An amount of $2,336 has been reserved within other income (expense), net in the Consolidated Statements of Income representing an estimated loss on the expected divestiture of Gantthead.com, Inc. The results of operations of Gantthead.com, Inc. are not material to the Company’s results of operations or financial condition and, therefore, are not reflected as discontinued operations for the periods presented.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6996-128479 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7000-128479 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4922-128472 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4926-128472 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1383-128463 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1392-128463 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1486-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6927-128479 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1497-128463 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1490-128463 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7008-128479 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4845-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1500-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1524-128463 + Details
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