Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 June 30, 2013

 

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 001-34835

 

 

Envestnet, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Registrant’s telephone number, including area code:

(312) 827-2800

 

 

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  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	Accelerated filer                  x
Non-accelerated filer    o	Smaller reporting company o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o  No x

 

As of August 2, 2013, 33,407,311 shares of the common stock with a par value of $0.005 per share were outstanding.

 

 

Table of Contents

 

TABLE OF CONTENTS

 

	Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012	3
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013 and 2012	4
Condensed Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2013	5
Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2013 and 2012	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Forward-Looking Statements	17
Overview	18
Results of Operations	21
Liquidity and Capital Resources	28
Item 3. Quantitative and Qualitative Disclosures About Market Risk	30
Item 4. Controls and Procedures	30
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	33
Item 1A. Risk Factors	33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6. Exhibits	33

 

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Envestnet, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share information)

(Unaudited)

 

		June 30,			December 31,
		2013			2012
Assets
Current assets:
Cash and cash equivalents		$	39,679		$	29,983
Fees receivable		12,800			9,188
Deferred tax assets, net		2,833			2,089
Prepaid expenses and other current assets		4,220			2,501
Total current assets		59,532			43,761
Property and equipment, net		11,211			11,791
Internally developed software, net		4,998			4,324
Intangible assets, net		23,998			27,150
Goodwill		65,644			65,644
Deferred tax assets, net		6,544			6,194
Other non-current assets		4,103			3,535
Total assets		$	176,030		$	162,399
Liabilities and Stockholders’ Equity
Current liabilities:
Accrued expenses		$	23,691		$	20,201
Accounts payable		4,103			2,614
Deferred revenue		5,848			5,768
Total current liabilities		33,642			28,583
Deferred rent liability		2,414			2,195
Lease incentive liability		3,619			3,886
Other non-current liabilities		1,748			1,739
Total liabilities		41,423			36,403
Commitments and contingencies
Stockholders’ equity
Preferred stock		—			—
Common stock, par value $0.005, 500,000,000 shares authorized; 45,147,083 and 44,071,564 shares issued as of June 30, 2013 and December 31, 2012, respectively; 33,395,377 and 32,355,675 shares outstanding as of June 30, 2013 and December 31, 2012, respectively		226			220
Additional paid-in capital		181,143			173,611
Accumulated deficit		(35,618		)	(37,277		)
Treasury stock at cost, 11,751,706 and 11,715,889 shares as of June 30, 2013 and December 31, 2012, respectively		(11,144		)	(10,558		)
Total stockholders’ equity		134,607			125,996
Total liabilities and stockholders’ equity		$	176,030		$	162,399

 

See accompanying notes to unaudited Condensed Consolidated Financial Statements.

 

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Envestnet, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share information)

(Unaudited)

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2013			2012			2013			2012
Revenues:
Assets under management or administration		$	41,234		$	31,012		$	77,570		$	59,275
Licensing and professional services		10,398			6,950			20,687			11,329
Total revenues		51,632			37,962			98,257			70,604
Operating expenses:
Cost of revenues		19,638			13,549			36,446			25,075
Compensation and benefits		17,194			14,085			34,412			24,770
General and administration		9,962			8,148			18,855			14,921
Depreciation and amortization		3,081			3,224			6,199			5,623
Restructuring charges		—			88			—			115
Total operating expenses		49,875			39,094			95,912			70,504
Income (loss) from operations		1,757			(1,132		)	2,345			100
Other income (expense):
Interest income		4			14			9			23
Interest expense		—			—			—			(3		)
Other income		182			—			182			—
Total other income (expense)		186			14			191			20
Income (loss) before income tax provision (benefit)		1,943			(1,118		)	2,536			120
Income tax provision (benefit)		825			(450		)	877			48
Net income (loss)		$	1,118		$	(668	)	$	1,659		$	72
Net income (loss) per share:
Basic		$	0.03		$	(0.02	)	$	0.05		$	0.00
Diluted		$	0.03		$	(0.02	)	$	0.05		$	0.00
Weighted average common shares outstanding:
Basic		32,661,196			32,149,957			32,518,943			32,004,386
Diluted		35,164,106			32,149,957			34,760,568			33,054,632

 

See accompanying notes to unaudited Condensed Consolidated Financial Statements.

 

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Envestnet, Inc.

Condensed Consolidated Statement of Stockholders’ Equity

(In thousands, except share information)

(Unaudited)

 

		Common Stock					Treasury Stock					Additional						Total
		Shares		Amount			Common Shares		Amount			Paid-in Capital			Accumulated deficit			Stockholders’ Equity
Balance, December 31, 2012		44,071,564		$	220		(11,715,889	)	$	(10,558	)	$	173,611		$	(37,277	)	$	125,996
Exercise of stock options		242,653		1			—		—			2,203			—			2,204
Issuance of common stock - Vesting of restricted stock		70,964		1			—		—			—			—			1
Exercise of warrants		761,902		4								—						4
Stock-based compensation		—		—			—		—			4,266			—			4,266
Tax benefit attributable to exercise of stock options		—		—			—		—			1,047			—			1,047
Reversal of state uncertain tax position		—		—			—		—			16			—			16
Purchase of treasury stock (at cost)		—		—			(35,817	)	(586		)	—			—			(586		)
Net income		—		—			—		—			—			1,659			1,659
Balance, June 30, 2013		45,147,083		$	226		(11,751,706	)	$	(11,144	)	$	181,143		$	(35,618	)	$	134,607

 

See accompanying notes to unaudited Condensed Consolidated Financial Statements.

 

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Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

		Six Months Ended
		June 30,
		2013			2012
OPERATING ACTIVITIES:
Net income		$	1,659		$	72
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,199			5,623
Deferred rent and lease incentive		(48		)	1,362
Provision for doubtful accounts		60			—
Deferred income taxes		(1,094		)	(432		)
Stock-based compensation		4,266			1,930
Excess tax benefits from stock-based compensation		(1,047		)	—
Interest expense		—			3
Changes in operating assets and liabilities, net of acquisitions:
Fees receivable		(3,672		)	1,574
Prepaid expenses and other current assets		(672		)	(1,016		)
Other non-current assets		(568		)	70
Accrued expenses		3,490			(616		)
Accounts payable		1,489			709
Deferred revenue		80			474
Other non-current liabilities		25			116
Net cash provided by operating activities		10,167			9,869
INVESTING ACTIVITIES:
Purchase of property and equipment		(1,638		)	(2,999		)
Capitalization of internally developed software		(1,503		)	(988		)
Repayment of notes payable assumed in acquisition		—			(174		)
Acquisition of businesses, net of cash acquired		—			(61,463		)
Net cash used in investing activities		(3,141		)	(65,624		)
FINANCING ACTIVITIES:
Proceeds from exercise of warrants		4			—
Proceeds from exercise of stock options		2,204			1,565
Issuance of restricted stock		1			2,759
Excess tax benefits from stock-based compensation		1,047			—
Purchase of treasury stock		(586		)	(78		)
Net cash provided by financing activities		2,670			4,246
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		9,696			(51,509		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		29,983			64,909
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	39,679		$	13,400
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes, net of refunds		$	2,955		$	325

 

See accompanying notes to unaudited Condensed Consolidated Financial Statements.

 

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Envestnet, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except share and per share amounts)

 

1.                       Organization and Description of Business

 

Envestnet, Inc. (“Envestnet”) and its subsidiaries (collectively, the “Company”) provides open-architecture wealth management services and technology to independent financial advisors and financial institutions. These services and related technology are provided via the Envestnet Advisor Suite®, Envestnet | PMC®, Envestnet | Vantage®, and Envestnet | TamaracTM.

 

Advisor Suite is a platform of integrated, internet-based technology applications and related services that provide portfolio diagnostics, proposal generation, investment model management, rebalancing and trading, portfolio performance reporting and monitoring solutions, billing, and back-office and middle-office operations and administration.

 

The Company’s investment consulting group, Envestnet | PMC, provides investment manager due diligence and research, a full spectrum of investment offerings supported by both proprietary and third-party research, and overlay portfolio management services.

 

Envestnet | Tamarac provides leading portfolio accounting, rebalancing, trading, performance reporting and client relationship management software, principally to high-end Registered Investment Advisors (“RIAs”).

 

Through these platform and service offerings, the Company provides open-architecture support for a wide range of investment products (separately managed accounts, multi-manager accounts, mutual funds, exchange-traded funds, stock baskets, alternative investments, and other fee-based investment solutions) from Envestnet | PMC and other leading investment providers via multiple custodians, and also account administration and reporting services.

 

Envestnet operates four RIAs and a registered broker-dealer. The RIAs are registered with the Securities and Exchange Commission (“SEC”). The broker-dealer is registered with the SEC, all 50 states and the District of Columbia and is a member of the Financial Industry Regulatory Authority (“FINRA”).

 

2.                       Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements of the Company as of June 30, 2013 and for the three and six months ended June 30, 2013 and 2012 have not been audited by an independent registered public accounting firm. These unaudited condensed consolidated financial statements reflect all normal recurring adjustments which are, in the opinion of management, necessary to present fairly the Company’s financial position as of June 30, 2013 and the results of operations, stockholders’ equity and cash flows for the periods presented herein. The unaudited condensed consolidated balance sheet as of December 31, 2012 was derived from the Company’s audited financial statements for the year ended December 31, 2012 but does not include all disclosures, including notes required by accounting principles generally accepted in the United States of America (“GAAP”). The results of operations for the three and six months ended June 30, 2013 is not necessarily indicative of the operating results to be expected for other interim periods or for the full fiscal year. Dollar amounts contained in these unaudited condensed consolidated financial statements are in thousands, except share and per share amounts.

 

The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K filed for the year ended December 31, 2012.

 

The preparation of these unaudited condensed consolidated financial statements requires management to make estimates and assumptions related to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in conformity with GAAP. Significant areas requiring the use of management estimates relate to estimating uncollectible receivables, revenue recognition, costs capitalized for internally developed software, valuations and assumptions used for impairment testing of goodwill, intangible and other long-lived assets, fair value of stock options issued, realization of deferred tax assets and assumptions used to allocate purchase prices in business combinations. Actual results could differ materially from these estimates under different assumptions or conditions.

 

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Envestnet, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except share and per share amounts)

 

3.                       Business Acquisitions

 

Pro forma results for Envestnet, Inc. giving effect to the Prima Capital Holding, Inc. and Tamarac, Inc. acquisitions

 

The following pro forma financial information presents the combined results of operations of Envestnet, Prima Capital Holding, Inc. (“Prima”), which was acquired on April 1, 2012, and Tamarac, Inc. (“Tamarac”), which was acquired on May 1, 2012, for the three and six months ended June 30, 2012. The pro forma financial information presents the results as if the acquisitions had occurred as of the beginning of 2012.

 

The unaudited pro forma results presented include amortization charges for acquired intangible assets and stock-based compensation expense, the elimination of intercompany transactions, transaction-related expenses and the related tax effect of the aforementioned items.

 

Pro forma financial information is presented for informational purposes and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of the period presented.

 

		Three Months ended			Six Months ended
		June 30,			June 30,
		2012			2012
Revenue		$	39,082		$	76,197
Net income (loss)		(957		)	(1,980		)
Net income (loss) per share:
Basic		(0.03		)	(0.06		)
Diluted		(0.03		)	(0.06		)

 

4.                       Property and Equipment

 

Property and equipment consist of the following:

 

				June 30,			December 31,
		Estimated Useful Life		2013			2012
Cost:
Office furniture and fixtures		5-7 years		$	3,763		$	3,613
Computer equipment and software		3 years		23,530			22,098
Other office equipment		5 years		598			598
Leasehold improvements		Shorter of the term of the lease or useful life of the asset		7,694			7,638
				35,585			33,947
Less accumulated depreciation and amortization				(24,374		)	(22,156		)
Property and equipment, net				$	11,211		$	11,791

 

Depreciation and amortization expense was as follows:

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2013			2012			2013			2012
Depreciation and amortization expense		$	1,095		$	1,223		$	2,218		$	2,260

 

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Envestnet, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except share and per share amounts)

 

5.                       Internally Developed Software

 

Internally developed software consists of the following:

 

				June 30,			December 31,
		Estimated Useful Life		2013			2012
Internally developed software		5 years		$	14,734		$	13,232
Less accumulated amortization				(9,736		)	(8,908		)
Internally developed software, net				$	4,998		$	4,324

 

Amortization expense was as follows:

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2013			2012			2013			2012
Amortization expense		$	418		$	377		$	829		$	760

 

6.                       Intangible Assets

 

Intangible assets consist of the following:

 

				June 30, 2013									December 31, 2012
				Gross						Net			Gross						Net
				Carrying			Accumulated			Carrying			Carrying			Accumulated			Carrying
		Useful Life		Amount			Amortization			Amount			Amount			Amortization			Amount
Customer list		4 - 12 years		$	28,103		$	(11,125	)	16,978			$	28,103		$	(8,720	)	$	19,383
Proprietary technology		5 - 8 years		6,580			(1,182		)	5,398			6,580			(657		)	5,923
Trade names		5 years		2,090			(468		)	1,622			2,090			(246		)	1,844
Total intangible assets				$	36,773		$	(12,775	)	$	23,998		$	36,773		$	(9,623	)	$	27,150

 

Amortization expense was as follows:

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2013			2012			2013			2012
Amortization expense		$	1,568		$	1,624		$	3,152		$	2,603

 

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Envestnet, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except share and per share amounts)

 

7.                       Other Non-Current Assets

 

Other non-current assets consist of the following:

 

		June 30,			December 31,
		2013			2012
Investment in private company		$	1,250		$	1,250
Deposits
Lease		1,647			1,655
Other		268			264
Other		938			366
Total other non-current assets		$	4,103		$	3,535

 

8.                       Fair Value Measurements

 

Financial assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:

 

Level 1:	Inputs based on quoted market prices in active markets for identical assets or liabilities at the measurement date.
Level 2:	Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or inputs that are observable and can be corroborated by observable market data.
Level 3:	Inputs reflect management’s best estimates and assumptions of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.

 

Fair Value on a Recurring Basis:

 

The Company periodically invests excess cash in money-market funds not insured by the Federal Deposit Insurance Corporation. The Company believes that the investments in money market funds are on deposit with creditworthy financial institutions and that the funds are highly liquid. The fair values of the Company’s investments in money market funds are based on the daily quoted market prices of the net asset value of the various money market funds. These money market funds are considered Level 1 assets, totaled approximately $28,751 and $20,682 as of June 30, 2013 and December 31, 2012, respectively, and are included in cash and cash equivalents in the condensed consolidated balance sheets.

 

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Envestnet, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except share and per share amounts)

 

9.                       Accrued Expenses

 

Accrued expenses consist of the following:

 

		June 30,			December 31,
		2013			2012
Accrued investment manager fees		$	16,358		$	12,937
Accrued compensation and related taxes		5,333			5,726
Accrued professional services		329			408
Other accrued expenses		1,671			1,130
Total accrued expenses		$	23,691		$	20,201

 

10.                Income Taxes

 

The following table includes income tax provision (benefit) and the effective tax rate for the Company’s income from operations:

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2013			2012			2013			2012
Income (loss) before income taxes		$	1,943		$	(1,118	)	$	2,536		$	120
Income tax provision (benefit)		825			(450		)	877			48
Effective tax rate		42.5		%	40.3		%	34.6		%	40.0		%

 

The Company’s effective tax rate in the three months ended June 30, 2013, was higher than the effective tax rate in the three months ended June 30, 2012, primarily due to non-deductible transaction costs. The Company’s effective tax rate in the six months ended June 30, 2013, was lower than the effective tax rate in the six months ended June 30, 2012, primarily due to a change in the tax rate expected to apply to taxable income when deferred income taxes are realized.

 

The liability for unrecognized tax benefits reported in other non-current liabilities was $1,688 and $1,739 at June 30, 2013 and December 31, 2012, respectively. At June 30, 2013, the amount of unrecognized tax benefits that would benefit the Company’s effective tax rate, if recognized, was $522. At this time, the Company estimates it is reasonably possible that the liability for unrecognized tax benefits will decrease by as much as $400 in the next twelve months due to the completion of reviews by tax authorities, the voluntary filing of certain state income tax returns and the expiration of certain statutes of limitations.

 

The Company recognizes potential interest and penalties related to unrecognized tax benefits in income tax expense. The Company had accrued interest and penalties of $645 and $642 as of June 30, 2013 and December 31, 2012, respectively.

 

The Company files a consolidated federal income tax return and separate tax returns with various states. Additionally, a subsidiary of the Company files a tax return in a foreign jurisdiction. The Company’s tax returns for the calendar years ended December 31, 2011, 2010 and 2009 remain open to examination by the Internal Revenue Service in their entirety. With respect to state taxing jurisdictions, the Company’s tax returns for the fiscal year ended March 31, 2009, as well as calendar years ended December 31, 2011, 2010 and 2009 remain open to examination by various state revenue services.

 

The Company’s India subsidiary is currently under examination by the India Taxing Authority for the fiscal years ended March 31, 2009 and March 31, 2010. Based on the outcome of examinations of the Company’s subsidiary or the result of the expiration of statutes of limitations, it is reasonably possible that the related unrecognized tax benefits could change from those recorded in the condensed consolidated balance sheets. It is possible that one or more of these audits may be finalized within the next twelve months. The Company’s subsidiary’s tax returns for the fiscal years ended March 31, 2007 through March 31, 2012 remain open to examination by the India Taxing Authority in their entirety.

 

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Envestnet, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except share and per share amounts)

 

11.                Stockholders’ Equity

 

In February 2010, in connection with a Platform Services Agreement between the Company and FundQuest Incorporated (“FundQuest”), a subsidiary of BNP Paribas Investment Partners USA Holdings, Inc., the Company issued to FundQuest a warrant to purchase 1,388,888 shares of the Company’s common stock, with an exercise price of $10.80 per share.  During 2011, the warrant was sold by FundQuest to a third party.  On June 24, 2013, the third party exercised the warrant via a cashless exercise, and as a result, the Company issued 761,902 shares of the Company’s common stock to the third party.

 

12.                Stock-Based Compensation

 

The Company has stock options and restricted stock outstanding under the 2004 Stock Incentive Plan (the “2004 Plan”), the 2010 Long-Term Incentive Plan (the “2010 Plan”) and the Envestnet, Inc. Management Incentive Plan for Envestnet | Tamarac Management Employees (the “2012 Plan”). As of June 30, 2013, the maximum number of stock options and restricted stock available for future issuance under the Company’s plans is 1,309,379.

 

Employee stock-based compensation expense under the Company’s plans was as follows:

 

		Three Months Ended June 30,						Six Months Ended June 30,
		2013			2012			2013			2012
Employee stock-based compensation expense		$	1,960		$	1,135		$	4,266		$	1,930
Tax effect on employee stock-based compensation expense		(832		)	(456		)	(1,475		)	(777		)
Net effect on income		$	1,128		$	679		$	2,791		$	1,153

 

Stock Options

 

The following weighted average assumptions were used to value options granted during the periods indicated:

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2013			2012			2013			2012
Grant date fair value of options		$	—		$	4.97		$	6.11		$	4.91
Volatility		—			39.7		%	40.4		%	39.7		%
Risk-free interest rate		—			1.2		%	1.0		%	1.2		%
Dividend yield		—			0.0		%	0.0		%	0.0		%
Expected term (in years)		—			6.0			6.0			6.0

 

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Table of Contents

 

Envestnet, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except share and per share amounts)

 

The following table summarizes option activity under the Company’s plans:

 

		Shares		Weighted- Average Exercise Price			Weighted-Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2012		5,277,412		$	8.86
Granted		190,413		15.34
Exercised		(9,050	)	6.24
Forfeited		(8,050	)	11.91
Outstanding as of March 31, 2013		5,450,725		9.08			6.2		$	45,939
Granted		—		—
Exercised		(233,603	)	9.13
Forfeited		(31,815	)	12.41
Outstanding as of June 30, 2013		5,185,307		9.06			6.0		$	80,583
Options exercisable		3,440,826		8.04			4.9		$	56,991

 

Exercise prices of stock options outstanding as of June 30, 2013 range from $0.11 to $15.34.

 

Restricted Stock

 

Periodically, the Company grants restricted stock awards to employees that vest one-third on each of the first three anniversaries of the grant date. The following is a summary of the activity for unvested restricted stock awards granted under the Company’s plans:

 

		Number of Shares		Weighted-Average Grant Date Fair Value per Share
Balance at December 31, 2012		758,990		$	12.49
Granted		172,212		15.34
Vested		(70,964	)	—
Forfeited		(3,197	)	13.78
Balance at March 31, 2013		857,041		13.07
Granted		105,858		18.29
Forfeited		(152,653	)	12.54
Balance at June 30, 2013		810,246		14.51

 

At June 30, 2013, there was $4,823 of unrecognized compensation expense related to unvested stock options, which the Company expects to recognize over a weighted-average period of 1.4 years. At June 30, 2013, there was $3,356 of unrecognized compensation expense related to unvested restricted stock awards, which the Company expects to recognize over a weighted-average period of 2.4 years. At June 30, 2013, there was an additional $4,832 of potential unrecognized stock compensation expense related to unvested restricted stock granted under the 2012 Plan that vest based upon Tamarac meeting certain performance conditions and then a subsequent two-year service condition, which the Company expects to recognize over the remaining estimated vesting period of 1.75 to 3.75 years.

 

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