UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
20549
FORM 10-Q
x
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
March 31,
2008
or
o
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period
from
to
Commission File Number: 001-33613
HIRERIGHT, INC.
(Exact name of registrant as specified in its
charter)
Delaware
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33-0465016
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(State or other
jurisdiction of
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(IRS employer
identification no.)
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incorporation or
organization)
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5151 California Avenue, Irvine,
CA 92617
www.hireright.com
(Address of principal executive offices)
(949) 428-5800
(Telephone number, including area code)
Not Applicable
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes
x
No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of large accelerated filer, accelerated filer, and smaller
reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a
smaller reporting company)
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Smaller reporting company
x
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Indicated by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes
o
No
x
The
number of shares of the registrants common stock, $0.01 par value, outstanding
on May 1, 2008 was 11,461,148.
HIRERIGHT, INC.
CONDENSED,
CONSOLIDATED BALANCE SHEETS
(Unaudited)
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March 31,
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December 31,
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(in thousands, except share amounts)
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2008
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2007
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ASSETS
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CURRENT ASSETS:
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Cash and cash equivalents
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$
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35,113
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$
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17,819
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Short-term investments
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2,630
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29,005
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Accounts receivable, net of allowance for
doubtful accounts of $149 and $153 at March 31, 2008 and
December 31, 2007, respectively, and reserve for sales allowances of
$126 and $139 at March 31, 2008 and December 31, 2007, respectively
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11,437
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10,002
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Prepaid expenses and other current assets
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1,036
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1,216
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Deferred tax assetcurrent
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1,330
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1,331
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Total current assets
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51,546
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59,373
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Property and equipment, net of accumulated
depreciation and amortization of $6,012 and $5,597 at March 31, 2008 and
December 31, 2007, respectively
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2,034
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2,003
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Long-term investments
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18,240
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8,595
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Other assets
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526
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486
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Deferred tax assetnon-current
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964
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964
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TOTAL
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$
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73,310
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$
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71,421
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LIABILITIES AND STOCKHOLDERS EQUITY
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CURRENT LIABILITIES:
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Accounts payable
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$
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4,523
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$
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3,428
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Accrued liabilities
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1,235
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1,228
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Accrued payroll and benefits
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2,558
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3,790
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Total current liabilities
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8,316
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8,446
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OTHER LIABILITIES
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151
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203
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COMMITMENTS AND CONTINGENCIES (Note 7)
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STOCKHOLDERS EQUITY:
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Common stock, $0.01 par value100,000,000
shares authorized; 11,452,924 and 11,233,597 shares issued and outstanding at
March 31, 2008 and December 31, 2007, respectively
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115
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112
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Additional paid-in capital
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68,631
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68,071
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Other comprehensive gaincurrency
translation
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16
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11
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Accumulated deficit
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(3,919
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)
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(5,422
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)
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Net stockholders equity
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64,843
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62,772
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TOTAL
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$
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73,310
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$
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71,421
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The accompanying notes are
an integral part of these condensed, consolidated financial statements.
1
HIRERIGHT, INC.
CONDENSED, CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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Three Months Ended
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March 31,
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(in thousands, except per share data)
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2008
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2007
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REVENUE:
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Service revenue
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$
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15,763
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$
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14,515
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Reimbursed fee revenue
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1,563
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1,505
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Total revenue
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17,326
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16,020
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COST OF REVENUE:
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Cost of service revenue
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7,369
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7,016
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Reimbursed fees paid
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1,563
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1,505
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Total cost of revenue
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8,932
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8,521
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GROSS PROFIT
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8,394
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7,499
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OPERATING EXPENSES:
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Research and development
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1,048
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909
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Sales and marketing
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2,938
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2,379
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General and administrative
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2,621
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2,287
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Total operating expenses
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6,607
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5,575
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INCOME FROM OPERATIONS
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1,787
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1,924
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OTHER INCOME (EXPENSE):
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Interest income
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583
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92
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Interest expense
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(1
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)
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Other income (expense)net
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(13
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)
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(1
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)
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Total other income net
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570
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90
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INCOME BEFORE INCOME TAXES
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2,357
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2,014
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INCOME TAX PROVISION
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854
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837
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NET INCOME
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1,503
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1,177
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Preferred stock dividends
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(543
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)
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Income allocable to preferred stockholders
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(481
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)
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NET INCOME ALLOCABLE TO COMMON STOCKHOLDERS
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$
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1,503
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$
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153
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EARNINGS PER SHARE:
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Basic
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$
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0.13
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$
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0.08
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Diluted
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$
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0.12
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$
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0.05
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WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
SHARES:
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Basic
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11,338
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1,957
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Diluted
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12,084
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3,036
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The
accompanying notes are an integral part of these condensed, consolidated
financial statements.
2
HIRERIGHT, INC.
CONDENSED, CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Three Months Ended March 31,
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(in thousands)
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2008
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2007
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CASH PROVIDED BY OPERATING ACTIVITIES:
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Net income
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$
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1,503
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$
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1,177
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Adjustments to reconcile net income to net
cash provided by operating activities:
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Depreciation and amortization
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377
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302
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Stock-based compensation expense
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133
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77
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|
Deferred income taxes
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1
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717
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Excess tax benefit from exercise of stock
options
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(59
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)
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Changes in operating assets and
liabilities:
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Accounts receivable, net
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(1,435
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)
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(870
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)
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Prepaid expenses and other current assets
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180
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314
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Other assets
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(38
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)
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75
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Accounts payable
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1,121
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(622
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)
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Accrued liabilities
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66
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|
601
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Accrued payroll and benefits
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(1,250
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)
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(1,152
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)
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Other liabilities
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(52
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)
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241
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|
|
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Net cash provided by operating activities
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547
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860
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CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES:
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Purchases of investments
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(15,000
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)
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(1,468
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)
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Sales of investments
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31,730
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750
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Purchases of fixed assets
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(425
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)
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(563
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)
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Net cash provided by (used in) investing
activities
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16,305
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(1,281
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)
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CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
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Proceeds from exercise of stock options
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371
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23
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Payment of deferred offering costs
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(687
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)
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Excess tax benefit from exercise of stock
options
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59
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|
|
|
|
|
|
|
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Net cash provided by (used in) financing
activities
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430
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(664
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)
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|
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EFFECT OF EXCHANGE RATE CHANGES ON CASH
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12
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|
1
|
|
|
|
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NET INCREASE IN CASH AND CASH EQUIVALENTS
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|
17,294
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|
(1,084
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)
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|
|
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CASH AND CASH EQUIVALENTS Beginning of
period
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17,819
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|
4,201
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|
|
|
|
|
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CASH AND CASH EQUIVALENTS End of period
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|
$
|
35,113
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|
$
|
3,117
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|
|
|
|
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
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Interest paid
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$
|
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|
$
|
1
|
|
|
|
|
|
|
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NON-CASH FINANCING TRANSACTIONS:
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|
|
|
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Vesting of stock options early exercised
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|
$
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|
$
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35
|
|
|
|
|
|
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|
Accrued purchases of fixed assets
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|
$
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81
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|
$
|
|
|
The accompanying notes are an integral part of these condensed,
consolidated financial statements.
3
HIRERIGHT,
INC.
NOTES TO
CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.
General
Business.
HireRight, Inc. (the Company) was incorporated
in California in 1990 and reincorporated in Delaware in July 2007. Our
shares of common stock are listed on the NASDAQ Global Market and trade under
the symbol HIRE. We are a provider of
on-demand employment screening solutions. Our customers use our comprehensive
screening services in conjunction with our web-based software applications to
conduct and manage their employment screening programs efficiently and
effectively, make more informed employment decisions, improve workplace safety
and mitigate risk. We offer a comprehensive set of background screening
services including criminal, motor vehicle and other public records searches,
employment, education and professional license verifications and credit checks,
as well as drug and health screening services.
Basis of
Presentation.
The accompanying condensed, consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles (GAAP) in the United States for interim financial
information, and in accordance with the rules and regulations of the
United States Securities and Exchange Commission (the SEC). Accordingly, they
do not include all of the information and notes required by GAAP in the United
States for annual financial statements as permitted under applicable rules and
regulations, and should be read in conjunction with our audited consolidated
financial statements and notes thereto for the fiscal year ended December 31,
2007 included in the Companys Annual Report on Form 10-K.
The
condensed, consolidated financial statements included herein are unaudited;
however, they contain all adjustments, including normal recurring adjustments,
which in the opinion of management are necessary for a fair presentation. The
results of operations for the three months ended March 31, 2008 are not
necessarily indicative of results that can be expected for the full year.
The
preparation of our condensed, consolidated financial statements in accordance
with GAAP in the United States requires management to make estimates and
assumptions that affect the amounts reported in our condensed, consolidated
financial statements and notes thereto. Actual results could differ materially
from those estimates.
Initial Public Offering.
The Registration Statement for the Companys initial public offering (the Public Offering) was declared effective on August 7, 2007 (the Effective Date). The Company consummated the Public Offering on August 13, 2007 and sold 2,954,115 shares of its common stock, at a price of $15.00 per share. An additional 1,420,885 shares were sold by selling stockholders. The Company received approximately $39.4 million, net of underwriting discounts, commissions, and other offering costs. Upon the closing of the Public Offering, all of the Companys outstanding preferred stock automatically converted into an aggregate of 6,201,142 shares of the Companys common stock.
2.
Investments
The Company
accounts for its investments in marketable securities under Statements of
Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity
Securities
(SFAS 115). Investments consist of auction rate
municipal and equity securities with interest at rates that are reset
periodically. These securities are recorded at fair value in the accompanying
balance sheets. For the three months ended March 31, 2008 and 2007, the
Company has not recorded any realized gains or losses on marketable investment
securities. The Company evaluates its investments for other-than-temporarily
impairment on a security by security basis. As of March 31, 2008, the
Company determined that none of its securities were other-than-temporarily
impaired. As of March 31, 2008,
there was $7,000 in unrealized holding losses. The Company classifies all
available-for-sale securities as current or non-current assets in the
accompanying balance sheets based on managements intended holding period and
liquidity considerations based on market conditions.
At March 31,
2008, the Company held $20.9 million of securities with an auction reset
feature. The Dutch auction process that resets the applicable interest rate at
predetermined calendar intervals is intended to provide liquidity to the holder
of auction rate securities by matching buyers and sellers within a market
context enabling the holder to gain immediate liquidity by selling such
interests at par or rolling over their investment. If there is an
4
imbalance between buyers
and sellers the risk of a failed auction exists. The Company has had 10
securities fail at auction in 2008 with an aggregate par value of
$17.4 million. Given the deteriorating credit markets, and the increased
incidence of failure within the auction market in 2008, there can be no
assurance as to when we will be able to liquidate a particular security. In the
case of an auction failure we would not be able to access those funds until a
future auction of these investments is successful, the security is called by
the issuer or a buyer is found outside the auction process. As a result, we
have classified these auction rate securities as long-term investments, except
for $2.6 million of such securities which have been either sold or redeemed by
the issuer at par value subsequent to quarter end. Furthermore, if this situation were to
persist despite our intent and ability to hold such investments until the
security can be sold at its par value or until maturity, we may be required to
record an impairment charge at a future date.
We will continue
to monitor and evaluate these investments, noting that there is no assurance as
to when the market for this investment class will return to orderly operations.
3.
Fair Value of Financial
Instruments
On January 1, 2008,
the Company adopted the provisions of SFAS No. 157,
Fair Value
Measurements (SFAS 157),
related to its financial assets and
liabilities. The Company measures certain assets and liabilities at fair value
as discussed throughout the footnotes to its quarterly and annual financial
statements. Assets or liabilities that have recurring measurements are shown
below:
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Fair Value Measurements at Reporting Date Using
|
|
|
|
|
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Quoted Prices in
|
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Significant
|
|
|
|
|
|
|
|
Active Markets
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|
Other
|
|
Significant
|
|
|
|
|
|
for Identical
|
|
Observable
|
|
Unobservable
|
|
|
|
March 31,
|
|
Assets
|
|
Inputs
|
|
Inputs
|
|
Description
|
|
2008
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
(1)
|
|
$
|
35,113
|
|
$
|
35,113
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
2,630
|
|
2,630
|
|
|
|
|
|
Long-term investments
|
|
18,240
|
|
|
|
18,240
|
|
|
|
|
|
20,870
|
|
2,630
|
(2)
|
18,240
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
55,983
|
|
$
|
37,743
|
|
$
|
18,240
|
|
$
|
|
|
(1)
The carrying
amount approximates fair value because of the short maturity of these
instruments.
(2)
These
investments consist of auction rate securities which are actively traded.
Recent transaction activity has occurred within identical assets.
(3)
These
investments consist of
auction rate securities which have had few
transactions due to recent market conditions.
The fair value of such securities is determined by quoted prices for
identical or similar assets in markets that are not active.
As discussed in Note 2
above, the Companys short-term and long-term investments consist of auction
rate municipal and equity securities with interest at rates that are reset
periodically. These securities are publicly traded and the Company determines
its fair value based on the latest available quoted market prices
.
See Note 2 for
additional discussion of the Companys investment securities.
The Company also
adopted the provisions of SFAS No. 159,
The
Fair Value Option for Financial Assets and Financial Liabilities
(SFAS 159)
as of January 1, 2008. The adoption
of SFAS 159 did not have a material impact on the Companys financial position,
as the Company did not make any fair value elections under SFAS 159.
5
4.
Share-Based Compensation
During the three months ended March 31, 2008,
stock options for the purchase of 300,500 shares of common stock at a weighted
average exercise price of $8.16 per share were awarded, with vesting generally
over four years. For the comparable period in 2007, stock options for the
purchase of 24,889 shares of common stock at a weighted average exercise price
of $10.94 per share were awarded.
At March 31, 2008,
there were 835,759 outstanding stock options granted under our Stock
Option/Stock Issuance Plan (the 2000 Plan) and 353,546 outstanding stock
options under the 2007 Long Term Incentive Plan (the 2007 Plan). The 2007
Plan became effective on the Effective Date of the Companys Public Offering.
All stock option awards up until the Effective Date were made under the 2000
Plan. Commencing on the Effective Date,
new options and other stock awards may only be granted under the 2007 Plan. The
maximum aggregate number of shares of common stock or options to purchase
shares of the Companys common stock that may initially be issued under the
2007 Plan is 1,000,000. Outstanding options granted under both our 2000 Plan
and 2007 Plan expire ten years from the grant date and typically vest 25% upon
completion of one year of service with the remaining options vesting in 36
successive equal monthly installments upon completion of each additional month
of service thereafter.
During the three months
ended March 31, 2008, in accordance with the prospective method of
adoption of SFAS No. 123 (revised 2004),
Share-Based
Payment
(SFAS 123(R)), the Company recognized share-based
compensation expense of $133,000 compared to $77,000 for the comparable 2007
period. At March 31, 2008, there was approximately $2.0 million of
unrecognized compensation cost related to unvested shares that will be
recognized over a weighted average period of 2.0 years.
A summary of significant
assumptions used in determining the fair value of the options granted is as
follows:
|
|
Three Months Ended March 31,
|
|
|
|
2008
|
|
2007
|
|
Expected life (years)
|
|
6.25
|
|
6.25
|
|
Risk-free interest rate
|
|
3.14
|
%
|
4.82
|
%
|
Volatility
|
|
41.56
|
%
|
41.50
|
%
|
Dividend yield
|
|
0
|
%
|
0
|
%
|
As of March 31,
2008, the total number of outstanding options vested and expected to vest
(based on anticipated forfeitures) was 1,125,594, which had a weighted-average
exercise price of $5.53. The average remaining life of these options was 7.66
years and the aggregate intrinsic value was $5.1 million at March 31,
2008.
As of March 31,
2008, the total number of outstanding options currently exercisable was
614,035, which had a weighted-average exercise price of $3.38. The average
remaining life of these options was 6.4 years and the aggregate intrinsic value
was $4.1 million at March 31, 2008.
5.
Calculation of Earnings per Common Share
Basic earnings per common
share is calculated by dividing net income allocable to common stockholders by
the weighted average number of common shares outstanding during the period.
Diluted earnings per common share is calculated by dividing net income
allocable to common stockholders by the weighted average number of common
shares outstanding after giving effect to all potentially dilutive common
shares outstanding during the period. Basic and diluted earnings per common
share were calculated as follows:
6
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
in thousands, except per share amounts
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Net income
|
|
$
|
1,503
|
|
$
|
1,177
|
|
Less preferred stock dividends
|
|
|
|
(543
|
)
|
Less income allocable to preferred stockholders
|
|
|
|
(481
|
)
|
|
|
|
|
|
|
Net income allocable to common stockholders
|
|
$
|
1,503
|
|
$
|
153
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
Basic
|
|
11,338
|
|
1,957
|
|
Effect of dilutive potential common shares:
|
|
|
|
|
|
Weighted average unvested common shares
|
|
|
|
10
|
|
Common equivalent shares from warrants to purchase common stock
|
|
245
|
|
359
|
|
Common equivalent shares from options to purchase common stock
|
|
501
|
|
710
|
|
|
|
|
|
|
|
Diluted
|
|
12,084
|
|
3,036
|
|
|
|
|
|
|
|
Basic earnings per common share
|
|
$
|
0.13
|
|
$
|
0.08
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
$
|
0.12
|
|
$
|
0.05
|
|
The
anti-dilutive effect of 459,583 shares from outstanding stock options have been
excluded from the earnings per share calculations for the three months ended March 31,
2008.
6.
Recent Accounting Pronouncements
In February 2008,
the FASB issued FASB Staff Position No. 157-2 (Staff Position 157-2),
which deferred the effective date for certain portions of SFAS 157 related to
nonrecurring measurements of nonfinancial assets and liabilities. That provision of SFAS 157 will be
effective for the Companys fiscal year 2009.
We are currently evaluating the effect, if any, that the adoption of Staff Position 157-2
will have on our results of operations, financial position and cash flows.
In December 2007,
the FASB issued SFAS No. 141revised 2007,
Business Combinations
(SFAS 141R). SFAS 141R
establishes principles and requirements for how an acquirer in a business
combination recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest; recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and determines what information
to disclose to enable financial statement users to evaluate the nature and
financial effects of the business combination. SFAS 141R applies to
business combinations for which the acquisition date is on or after December 15,
2008. Early adoption is prohibited. We are currently evaluating the effect, if
any, that the adoption of SFAS 141R will have on our results of
operations, financial position and cash flows.
In December 2007,
the FASB issued SFAS No. 160,
Noncontrolling
Interests in Consolidated Financial Statementsan amendment to ARB No. 51
(SFAS 160). SFAS 160 requires all entities to report noncontrolling
(minority) interests in subsidiaries as equity in the consolidated financial
statements, but separate from the equity of the parent company. The statement
further requires that consolidated net income be reported at amounts
attributable to the parent and the noncontrolling interest, rather than
expensing the income attributable to the minority interest holder. This
statement also requires that companies provide sufficient disclosures to
clearly identify and distinguish between the interests of the parent company
and the interests of the noncontrolling owners, including a disclosure on the
face of the consolidated statements for income attributable to the
noncontrolling interest holder. This statement is effective for fiscal years
beginning on or after December 15, 2008. Early adoption is prohibited. We
are currently evaluating the effect, if any, that the adoption of SFAS 160
will have on our results of operations, financial position and cash flows.
7
7.
Commitments
and Contingencies
The Company is
currently involved in certain legal matters that have arisen in the normal
course of business. Management believes that the ultimate resolution of such
actions will not have a material adverse effect on the Companys consolidated
financial position and results of operations.
8.
Segment
Information
The Company
provides web-based screening services, primarily to customers located
throughout the United States, and provides similar services to similar
customers across industries. Separate profitability or financial information is
not analyzed for particular individual screening services. Management,
including the chief operating decision maker, evaluates the Companys
performance based on its overall operating results for the Company, and therefore,
the Company has determined that it operates under one reportable segment.
9.
Income
Taxes
At March 31, 2008, the Company had a federal net
operating loss carryforward of approximately $1.8 million. The federal net
operating losses will begin to expire in 2011. In general, Section 382 of
the Internal Revenue Code includes provisions which limit the amount of net
operating loss carryforwards and other tax attributes that may be used annually
in the event that a 50% ownership change (as defined) occurs in any three-year
period. During 2000, the Company experienced an ownership change for purposes
of Section 382, and the annual utilization of net operating loss
carryforwards and credits prior to the change will be limited accordingly. Such
limitation is reflected in the deferred income tax benefit balances as of March 31,
2008.
As of March 31, 2008, the Company had no material
unrecognized tax benefits and no adjustments to liabilities or operations were
required. The Company recognizes interest and penalties related to uncertain
tax positions in income tax expense. There was no expense related to interest
and penalties for the three months ended March 31, 2008.
Tax years 2004 through 2007 and 2003 through 2007 are
subject to examination by the federal and state taxing authorities,
respectively. There are no income tax examinations currently in process.
8
Item 2.
Managements Discussion and Analysis
of Financial Condition and Results of Operations
Overview
We are a leading provider
of on-demand employment screening solutions. Our customers use our
comprehensive screening services in conjunction with our web-based software
applications to conduct and manage their employment screening programs
efficiently and effectively, make more informed employment decisions, improve
workplace safety and mitigate risk. We offer a comprehensive set of background
screening services including criminal, motor vehicle and other public records
searches, employment, education and professional license verifications and
credit checks, as well as drug and health screening services.
Our screening solutions
are flexible and scalable, and therefore able to meet the demands of customers
across a range of sizes and industries, with hiring operations dispersed
throughout the United States and internationally. We serve a diverse customer
base in a variety of industries, such as business services, technology,
healthcare, manufacturing, telecommunications and financial services. As of March 31,
2008, we had 2,384 customers, which included 67 of the Fortune 500 companies.
Our sales are derived from a combination of direct sales efforts as well as
through our established network of strategic alliances with many of the leading
recruiting software application providers and human resource outsourcing, or
HRO, providers.
Cautionary
Statement Regarding Forward Looking Statements
Certain statements contained in this Quarterly Report
on Form 10-Q, which are not purely historical, are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, including but not limited to statements
regarding our expectations, hopes, beliefs, intentions, estimates or strategies
regarding the future, such as our future operating performance and financial
results, as well as those set forth in Part II, Item 1 Legal Proceedings
below. Actual results could differ
materially from those projected in any forward-looking statements as a result
of a number of factors, including those detailed below in this Managements
Discussion and Analysis section and elsewhere herein and in our Annual Report
on Form 10-K for the period ended December 31, 2007. Any forward-looking statements are made as of
the date hereof, and the Company assumes no obligation to update the
forward-looking statements, or to update the reasons why actual results could
differ materially from those projected in the forward-looking statements. For a discussion of risks and uncertainties
that should be considered and which could materially adversely affect the
Company and which could cause our actual results to differ materially from
those anticipated in our forward-looking statements, please see Risk Factors below
and in Part I, Item 1A of our Annual Report on Form 10-K for the
period ended December 31, 2007.
The following discussion of
our financial condition and results of operations should be read together with
the consolidated financial statements and related notes
for the year ended December 31, 2007
included in the Companys Annual Report on
Form10-K.
9
Results of Operations
The following table sets forth selected statements of
income data for the periods indicated, expressed as a percent of total revenue:
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2008
|
|
2007
|
|
REVENUE:
|
|
|
|
|
|
Service revenue
|
|
91.0
|
%
|
90.6
|
%
|
Reimbursed fee revenue
|
|
9.0
|
%
|
9.4
|
%
|
|
|
|
|
|
|
Total revenue
|
|
100.0
|
%
|
100.0
|
%
|
|
|
|
|
|
|
COST OF REVENUE:
|
|
|
|
|
|
Cost of service revenue
|
|
42.5
|
%
|
43.8
|
%
|
Reimbursed fees paid
|
|
9.0
|
%
|
9.4
|
%
|
|
|
|
|
|
|
Total cost of revenue
|
|
51.5
|
%
|
53.2
|
%
|
|
|
|
|
|
|
GROSS PROFIT
|
|
48.5
|
%
|
46.8
|
%
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
Research and development
|
|
6.0
|
%
|
5.7
|
%
|
Sales and marketing
|
|
17.0
|
%
|
14.9
|
%
|
General and administrative
|
|
15.1
|
%
|
14.3
|
%
|
|
|
|
|
|
|
Total operating expenses
|
|
38.1
|
%
|
34.9
|
%
|
|
|
|
|
|
|
INCOME FROM OPERATIONS
|
|
10.4
|
%
|
11.9
|
%
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
Interest income
|
|
3.4
|
%
|
0.6
|
%
|
Interest expense
|
|
(0.0
|
)%
|
(0.0
|
)%
|
Other income (expense)net
|
|
(0.1
|
)%
|
(0.0
|
)%
|
|
|
|
|
|
|
Total other incomenet
|
|
3.3
|
%
|
0.6
|
%
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES
|
|
13.7
|
%
|
12.5
|
%
|
|
|
|
|
|
|
INCOME TAX PROVISION
|
|
4.9
|
%
|
5.2
|
%
|
|
|
|
|
|
|
NET INCOME
|
|
8.8
|
%
|
7.3
|
%
|
10
Three months ended March 31,
2008 and 2007
Service revenue
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March 31
|
|
2008 vs 2007
|
|
$ in thousands
|
|
2008
|
|
2007
|
|
Change
|
|
%Change
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue
|
|
$
|
15,763
|
|
$
|
14,515
|
|
$
|
1,248
|
|
8.6
|
%
|
As a percent of total revenue
|
|
91.0
|
%
|
90.6
|
%
|
0.4
|
ppts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue for the three months ended March 31,
2008 increased $1.2 million, or 8.6%, compared to the corresponding prior year
period. This increase was primarily due to a $1.8 million increase in service
revenue generated from net new customers in the three months ended March 31,
2008, compared to the 2007 period, offset by a decrease in service revenue
derived from existing customers of $0.6 million. We define revenue derived from
net new customers to mean revenue derived during the period from customers who
had not used our services during the 13 months immediately preceding the end of
that period, net of revenue derived during the period from customers who had
been billed for services in the prior period and were billed for less than 10%
of that prior period amount in the period being analyzed. The increase in
service revenue from new customers was due to customers that have started using
our services in the second quarter of 2007 or later from whom we had not
generated revenue during the period prior to March 31, 2007. As of March 31,
2008, we had 2,384 customers, compared to 1,566 customers as of March 31,
2007. The decrease in service revenue from existing customers compared to the
prior year was primarily the result of
a slowdown in the number of background screens ordered by these customers in
the current quarter, which we believe is due in most part to less hiring and
less movement by employees to new positions due to the current macro-economic
uncertainties. This slowdown of existing
customer revenue reduced our overall service revenue growth rate. We are unable
to currently predict if this existing customer growth slowdown will continue
into the future and, if so, for how long.
Reimbursed fee
revenue
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March 31
|
|
2008 vs 2007
|
|
$ in thousands
|
|
2008
|
|
2007
|
|
Change
|
|
%Change
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursed fee revenue
|
|
$
|
1,563
|
|
$
|
1,505
|
|
$
|
58
|
|
3.9
|
%
|
As a percent of total revenue
|
|
9.0
|
%
|
9.4
|
%
|
(0.4
|
)ppts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursed fee revenue for the three months ended March 31,
2008 increased $0.1 million, or 3.9%, compared to the corresponding prior year
period. This increase was a result of an
increase in the number of screening transactions, which grew approximately
13.2% in the three months ended March 31, 2008 compared to the three
months ended March 31, 2007.
Cost of revenue
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March 31
|
|
2008 vs 2007
|
|
$ in thousands
|
|
2008
|
|
2007
|
|
Change
|
|
%Change
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
$
|
7,369
|
|
$
|
7,016
|
|
$
|
353
|
|
5.0
|
%
|
As a percent of service revenue
|
|
46.7
|
%
|
48.3
|
%
|
(1.6
|
)ppts
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
8,394
|
|
$
|
7,499
|
|
$
|
895
|
|
11.9
|
%
|
As a percent of service revenue
|
|
53.3
|
%
|
51.7
|
%
|
1.6
|
ppts
|
|
|
11
Cost of revenue for the three months ended March 31,
2008 increased $0.4 million, or 5.0%, compared to the three months ended March 31,
2007. The increase was primarily due to
an increase in vendor costs and salaries and wages. Overall, cost of service
revenue as a percent of service revenue declined 1.6 percentage points for the
three months ended March 31, 2008 compared to the corresponding prior year
period. This decline was largely due to improved fixed cost leverage with
respect to our facilities and overhead costs, as well as the implementation of
certain automation projects.
Research and
development expense
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March 31
|
|
2008 vs 2007
|
|
$ in thousands
|
|
2008
|
|
2007
|
|
Change
|
|
%Change
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense
|
|
$
|
1,048
|
|
$
|
909
|
|
$
|
139
|
|
15.3
|
%
|
As a percent of service revenue
|
|
6.6
|
%
|
6.3
|
%
|
0.3
|
ppts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense for the three months
ended March 31, 2008 increased $0.1 million, or 15.3%, compared to the
three months ended March 31, 2007.
The increase was the result of higher salaries and related benefits for
existing employees, partially offset by development costs capitalized in the
2008 period. Research and development expense as a percent of service revenue
increased by 0.3 percentage points for the three months ended March 31,
2008 compared to the corresponding prior year period. This increase as a
percentage of service revenue primarily resulted from an increase in the
current period in amortization from capitalized software and a decrease in
capitalized labor.
Sales and
marketing expense
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March 31
|
|
2008 vs 2007
|
|
$ in thousands
|
|
2008
|
|
2007
|
|
Change
|
|
%Change
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing expense
|
|
$
|
2,938
|
|
$
|
2,379
|
|
$
|
559
|
|
23.5
|
%
|
As a percent of service revenue
|
|
18.6
|
%
|
16.4
|
%
|
2.2
|
ppts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing expense for the three months ended
March 31, 2008 increased $0.6 million, or 23.5%, compared to the
corresponding prior year period.
Approximately $0.4 million of the increase was due to higher salaries
and related benefits resulting from 15 additional full-time equivalent employees
during the three months ended March 31, 2008 compared to the 2007 period.
The remaining increase in sales and marketing expense was attributable to
higher travel and marketing expenses. We anticipate that sales and marketing
expense will continue to increase as a percentage of service revenue through
the end of 2008 as we plan to continue to invest in our sales and marketing
capabilities.
General and
administrative expense
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March 31
|
|
2008 vs 2007
|
|
$ in thousands
|
|
2008
|
|
2007
|
|
Change
|
|
%Change
|
|
|
|
|
|
|
|
|
|
|
|
General and adminstrative expense
|
|
$
|
2,621
|
|
$
|
2,287
|
|
$
|
334
|
|
14.6
|
%
|
As a percent of service revenue
|
|
16.6
|
%
|
15.8
|
%
|
0.8
|
ppts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expense for the three
months ended March 31, 2008 increased $0.3 million, or 14.6%, compared to
the three months ended March 31, 2007.
This was due to a $0.1 million increase in salaries and related benefits
for existing employees, plus expenses related to 6 additional full-time
equivalent employees during the three months ended March 31, 2008 compared
to the 2007 period. The remaining
increase in general and
12
administrative expenses was due to a $0.2 million
increase in consulting costs. As a percent of service revenue, general and
administrative expense increased 0.8 percentage points for the three months
ended March 31, 2008, compared to the corresponding prior year period.
Interest income
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March 31
|
|
2008 vs 2007
|
|
$ in thousands
|
|
2008
|
|
2007
|
|
Change
|
|
%Change
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
583
|
|
$
|
92
|
|
$
|
491
|
|
533.7
|
%
|
As a percent of service revenue
|
|
3.7
|
%
|
0.6
|
%
|
3.1
|
ppts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income increased $0.5 million to $0.6 million
for the three months ended March 31, 2008 as compared to $0.1 million in
the three months ended March 31, 2007.
The increase is a result of earnings on the proceeds from our initial
public offering held in investments.
Income taxes
The effective tax
rate for the three months ended March 31, 2008 was approximately 36.2%
compared to approximately 41.5% for the same period in 2007. The decrease in
the effective tax rate during the three months ended March 31, 2008
compared to the 2007 period was a result of tax-exempt interest income
generated from investment in tax-exempt securities during the current period.
Liquidity and Capital Resources
Operating
Activities
Our principal uses of cash in operating activities are
for operating expenses and working capital. Cash flows from operations are
significantly influenced by the amount of cash invested in personnel and
infrastructure to support the anticipated future growth in our business, the
increasing number of customers using our services and the amount and timing of
payments by these customers.
For the three months ended March 31, 2008, cash
generated by operating activities of $0.5 million resulted primarily from net
income, including adjustments for depreciation and amortization and non-cash
deferred taxes, partially offset by an increase in operating assets and
liabilities primarily as a result of the growth in revenues. Cash provided by operating activities of $0.9
million for the three months ended March 31, 2007 was primarily
attributable to net income, including adjustments for depreciation and amortization
and non-cash deferred taxes, partially offset by an increase in operating
assets and liabilities.
Investing
Activities
Net
cash provided by investing activities
for the three months ended March 31, 2008 was $16.3 million and was
comprised of net investment securities sales of $16.7 million, less purchases
of fixed assets of $0.4 million. The use of cash for investing activities in
the three months ended March 31, 2007 was $1.3 million and represented net
investment securities purchases and purchases of fixed assets of $0.7 million
and $0.6 million, respectively. See also Note 2 (Investments) above for
additional disclosures about investments.
Financing
Activities
Net
cash provided by financing activities
for the three months ended March 31, 2008 was $0.4 million, due to the
exercise of stock options. The use of cash for financing activities in the
three months ended March 31, 2007 of $0.7 million was primarily used in
preparation for our initial public offering in August 2007.
We currently believe that our existing cash position,
cash flows provided by operating activities and existing credit facilities will
be sufficient to fund our working capital requirements and planned investments
for at least the next twelve months. We
currently have no material debt. The
Company plans to use the net proceeds from our initial public offering
primarily for working capital and other general corporate purposes, including
the expansion of our sales and marketing activities, development of new service
offerings and expansion of our international operations. In addition, we may
use a portion of the net proceeds for acquisitions of, or investments in,
businesses,
13
products
or technologies that enhance or add new services or additional functionality,
further solidify our market position or allow us to offer complementary
products, services or technologies.
In the event an acquisition
plan is adopted which requires funds exceeding the availability described
above, an alternate source of funds to accomplish the acquisition would have to
be developed. Following the Companys
reincorporation into Delaware and our initial public offering, which was
completed on August 13, 2007, the Company had 100,000,000 shares of common
stock authorized, of which 11,452,924 shares were outstanding at March 31,
2008, and 10,000,000 shares of preferred stock authorized, of which none were
outstanding. The board of directors is authorized to issue up to an aggregate
of 10,000,000 shares of preferred stock in one or more series without further
vote or action by the stockholders. The
Company could issue additional shares of common or preferred stock or enter
into new or revised borrowing arrangements to raise funds.
Critical Accounting Policies and
Estimates
The
foregoing discussion and analysis of the Companys financial condition and
results of operations are based upon the consolidated financial statements of
the Company, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation of our financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues, costs and expenses, as well
as the disclosure of contingent assets and liabilities and other related
disclosures. We base our estimates on historical experience and on various
other assumptions that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about carrying values of
our assets and liabilities that are not readily apparent from other sources. In
many instances, we could have reasonably used different accounting estimates.
Actual results could differ from those estimates. We include any revisions to our
estimates in our results for the period in which the actual amounts become
known.
We believe the critical
accounting policies described below affect the more significant judgments and
estimates used in the preparation of our consolidated financial statements.
Accordingly, the following are the policies that we believe are the most
critical to aid in fully understanding and evaluating our historical
consolidated financial condition and results of operations:
Allowance for Doubtful Accounts.
We maintain an allowance for doubtful accounts for estimated losses
resulting from the inability of certain of our customers to pay us. This
provision is based on our historical experience and for specific customers
that, in our opinion, are likely to default on our receivables from them. In
order to identify these customers, we perform ongoing reviews of all customers
that have breached their payment terms, as well as those that have filed for
bankruptcy or for whom information has become available indicating a significant
risk of non-recoverability. We continue to monitor and evaluate our customers
over time. Historically, the allowance for doubtful accounts has been
sufficient to cover our uncollectible receivables. To the extent that our
future collections differ from our assumptions based on historical experience,
the amount of our bad debt and allowance recorded may be different. Although no
individual customer accounted for more than 6% of our total revenue thus far in
2008, if our historical collection experience changes unexpectedly or if one or
more of our largest customers fails to pay the amounts owed to us, our
allowance for doubtful accounts would likely be inadequate.
Accounting for Income Taxes.
We record income tax expense in accordance with SFAS No. 109,
Accounting for Income Taxes
(SFAS 109),
which requires that we recognize deferred tax assets and liabilities for
temporary differences in the bases of assets and liabilities for tax and
financial reporting purposes. We record a valuation allowance related to
deferred tax assets when it is more likely than not that some portion or all of
the deferred tax asset will not be realized. We eliminated our valuation
allowance in 2006 because we were profitable in 2006 and expected to be
profitable in future years. The preparation of financial projections involves
significant subjectivity due to the inherent uncertainty involved in estimating
future performance. If we fail to perform as projected, we may need to record a
valuation allowance in the future.
14
Accounting for Stock-Based Compensation.
Effective January 1, 2006, we adopted SFAS 123(R), which
requires that all stock-based compensation to employees, including grants of
employee stock options, be expensed in our financial statements based on their
respective grant date fair values. Under SFAS 123(R), we estimate the fair
value of each stock-based payment award using the Black-Scholes option pricing
model. The determination of the fair value of stock-based payment awards using
the Black-Scholes model is affected by our stock price and a number of
assumptions, including expected volatility, expected life, risk-free interest
rate and expected dividends. We do not have a history of market prices of our
common stock as we were not a public company until our recent initial public
offering, and as such, we estimate volatility in accordance with Staff
Accounting Bulletin No. 107 (SAB 107) using historical volatilities
of other publicly traded companies in our industry. The expected life of the
awards is based on the simplified method as defined in SAB 107. The
risk-free interest rate assumption is based on observed interest rates
appropriate for the terms of our awards. The dividend yield assumption is based
on our history and expectation of not paying any dividends. Forfeitures are
estimated at the time of grant and revised, if necessary, in subsequent periods
if actual forfeitures differ from those estimates. We recognized stock-based
compensation expense in our consolidated financial statements based on awards
that are ultimately expected to vest. A summary of significant assumptions used
in determining the fair value of the options is as follows:
|
|
Three Months Ended March 31,
|
|
|
|
2008
|
|
2007
|
|
Expected life (years)
|
|
6.25
|
|
6.25
|
|
Risk-free interest rate
|
|
3.14
|
%
|
4.82
|
%
|
Volatility
|
|
41.56
|
%
|
41.5
|
%
|
Dividend yield
|
|
0
|
%
|
0
|
%
|
If factors change and we
employ different assumptions, stock-based compensation expense may differ
significantly from what we have recorded in the past. If there are any
modifications or cancellations of the underlying unvested securities, we may be
required to accelerate, increase or cancel any remaining unearned stock-based
compensation expense. Future stock-based compensation expense and unearned
stock-based compensation will increase to the extent that we grant additional
equity awards to employees or we assume unvested equity awards in connection
with acquisitions.
Recent
Accounting Pronouncements
In February 2008,
the FASB issued FASB Staff Position No. 157-2 (Staff Position 157-2),
which deferred the effective date for certain portions of SFAS No. 157,
Fair Value Measurements (SFAS 157)
related to nonrecurring
measurements of nonfinancial assets and liabilities. That provision of SFAS 157 will be effective
for the Companys fiscal year 2009. We
are currently evaluating the effect, if any, that the adoption of Staff Position 157-2
will have on our results of operations, financial position and cash flows.
In December 2007,
the FASB issued SFAS No. 141revised 2007,
Business Combinations
(SFAS 141R). SFAS 141R
establishes principles and requirements for how an acquirer in a business
combination recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest; recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and determines what information
to disclose to enable financial statement users to evaluate the nature and
financial effects of the business combination. SFAS 141R applies to
business combinations for which the acquisition date is on or after December 15,
2008. Early adoption is prohibited. We are currently evaluating the effect, if
any, that the adoption of SFAS 141R will have on our results of
operations, financial position and cash flows.
In December 2007,
the FASB issued SFAS No. 160,
Noncontrolling
Interests in Consolidated Financial Statementsan amendment to ARB No. 51
(SFAS 160). SFAS 160 requires all entities to report noncontrolling
(minority) interests in subsidiaries as equity in the consolidated financial
statements, but separate from the equity of the parent company. The statement
further requires that consolidated net income be reported at amounts
attributable to the parent and the noncontrolling interest, rather than
expensing the income attributable to the minority interest holder. This
statement also requires that companies provide sufficient disclosures to
clearly identify and distinguish between the interests of the parent company
and the interests of the noncontrolling owners, including a disclosure on
15
the face of the
consolidated statements for income attributable to the noncontrolling interest
holder. This statement is effective for fiscal years beginning on or after December 15,
2008. Early adoption is prohibited. We are currently evaluating the effect, if
any, that the adoption of SFAS 160 will have on our results of operations,
financial position and cash flows.
Item 3.
Quantitative and Qualitative
Disclosures about Market Risk
There
are no material changes to the disclosure set forth in the
Quantitative
and Qualitative Disclosures about Market Risk
section of
Managements
Discussion and Analysis of Financial Condition and Results of Operations
contained in
the Companys Annual Report Form 10-K for the period ended December 31,
2007.
Item 4T.
Controls and Procedures
The Companys
Chief Executive Officer and Chief Financial Officer, with the participation of
the Companys management, carried out an evaluation of the effectiveness of the
Companys disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)).
Based upon that evaluation, the Chief Executive Officer and the Chief Financial
Officer concluded that, as of the end of the period covered by this report, the
Companys disclosure controls and procedures are effective at the reasonable
assurance level in identifying material information relating to the Company
(including its consolidated subsidiaries) required to be included in this
report.
Disclosure
controls and procedures, no matter how well designed and implemented, can
provide only reasonable assurance of achieving an entitys disclosure objectives.
The likelihood of achieving such objectives is affected by limitations inherent
in disclosure controls and procedures. These include the fact that human
judgment in decision-making can be faulty and that breakdowns in internal
control can occur because of human failures such as simple errors or mistakes
or intentional circumvention of the established process.
There were no
changes in the Companys internal controls over financial reporting, identified
by the Chief Executive Officer or the Chief Financial Officer that occurred
during the period covered by this report that have materially affected, or are
reasonably likely to materially affect, the Companys internal control over
financial reporting.
We are not
required to comply with all of the rules and regulations of the Securities
and Exchange Commission, particularly the requirement that we include in our
annual report on Form 10-K a report of management and accompanying auditors
report on the Companys internal control over financial reporting (404
reporting). Compliance by the Company with the 404 reporting rules and
regulations will be required in our annual report on Form 10-K for the
fiscal year ending December 31, 2008, unless the rules and
regulations governing 404 reporting are revised.
16
PART II. OTHER INFORMATION
Item 1.
Legal
Proceedings
We encounter
lawsuits from time to time in the ordinary course of business and, at March 31,
2008, we were parties to several civil lawsuits. The Company does not expect
that the resolution of these lawsuits will have a material adverse impact on
future results of operations or financial position. Certain lawsuits filed
against the Company from time to time contain claims not covered by insurance,
or seek damages in excess of policy limits, and such claims could be filed in
the future. The Company may file intellectual property infringement and/or
other types of lawsuits in the future which may result in materially increased
costs and other adverse consequences. Any costs and/or losses that we may
suffer from such lawsuits, and the effect such litigation may have upon the
reputation and marketability of our products and services, could have a
material adverse impact on the future results of operations, financial
condition and/or prospects of the Company.
Item 1A.
Risk Factors
Except
for modifications to the risk factor set forth below, there have been no
material changes to the risk factors disclosed in Part I, Item 1A in our
Annual Report on Form 10-K for the period ended December 31, 2007.
Our investments in marketable securities are subject to
risks which may cause losses.
We invest our cash
balances in high-quality issuers and limit the amount of credit exposure to any
one issuer other than the United States government and its agencies. As of March 31,
2008 our investments in marketable securities consist primarily of auction rate
securities. Our auction rate securities are investment grade quality as of March 31,
2008. We believe that these investments still approximate their par value,
however, such risks, including the systemic failure of future auctions for
auction rate securities, may result in a loss of liquidity, substantial
impairment to our investments, realization of substantial future losses, or a
complete loss of the investment in the long-term which may have a material
adverse effect on our business, results of operations, liquidity, and financial
condition. See Note 2 of our Notes to Consolidated Financial Statements
for additional information about our investments in marketable securities.
Item 2.
Unregistered
Sales of Equity Securities and Use of Proceeds
Not applicable
Item 3.
Defaults Upon Senior Securities
Not applicable
Item 4.
Submission of Matters to a Vote of
Security Holders
No matters were
submitted to a vote of our security holders, through solicitation of proxies or
otherwise, during the first quarter of 2008.
Item 5.
Other
Information
Not applicable
17
Item 6.
Exhibits
Exhibit
|
|
Description
|
|
|
|
3.1
|
|
|
Certificate
of Incorporation of HireRight, Inc. (1)
|
|
|
|
|
3.2
|
|
|
Bylaws
of HireRight, Inc. (1)
|
|
|
|
|
4.1
|
|
|
Specimen
common stock certificate(1)
|
|
|
|
|
31.1
|
*
|
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
|
|
31.2
|
*
|
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
|
|
32.1
|
*
|
|
Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
|
|
|
|
32.2
|
*
|
|
Certification
of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
|
*
|
|
New
exhibit filed with this report.
|
|
(1)
|
|
Filed
as an exhibit to the Registrants Registration Statement on Form S-1
Registration No. 333-140613 and incorporated herein by reference.
|
18
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, as amended, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
|
|
HIRERIGHT, INC.
|
|
|
|
|
|
|
Date:
|
May 7, 2008
|
/s/ ERIC J.
BODEN
|
|
|
Eric J. Boden
|
|
|
President and Chief
Executive Officer
|
|
|
(duly authorized officer)
|
|
|
|
|
|
|
Date:
|
May 7, 2008
|
/s/ JEFFREY
A. WAHBA
|
|
|
Jeffrey A. Wahba
|
|
|
Chief Financial Officer
|
|
|
(principal financial officer)
|
19
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