Description of Business and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Business Combination, Segment Allocation

The following table summarizes the goodwill recorded in connection with the acquisitions that occurred during 2013 and 2012:



Company acquired	Date acquired	(in thousands)
Qatarlyst ("Qatarlyst")	April 2013	$	11,136
Total during 2013		$	11,136

Benefit Software, Inc. ("BSI")	March 2012	$	3,243
Taimma Communications, Inc. ("Taimma")	April 2012	7,557
PlanetSoft Holdings, Inc. ("PlanetSoft")	June 2012	44,116
Fintechnix Pty Limited ("Fintechnix")	June 2012	3,706
TriSystems, Ltd. ("Trisystems")	August 2012	8,754
Total during 2012		$	67,376

In addition, during 2012 the Company recorded a $25 thousand increase to goodwill, in connection to a 2009 acquisition, for an earn-out payment not previously recognized.

Schedule of Revenue by Product/Service Groups

Presented in the table below is the breakout of our revenue streams for each of those product/service groups for the years ended December 31, 2013 , 2012 and 2011.



	For the Year Ended
	December 31,
(dollar amounts in thousands)		2013		2012		2011
Exchanges		$	163,925	$	159,678	$	130,638
Broker Systems		18,378		18,612		18,006
Business Process Outsourcing (“BPO”)		15,678		16,140		14,944
Carrier Systems		6,729		4,940		5,381
Totals		$	204,710	$	199,370	$	168,969

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Additional information regarding the Company's assets and liabilities that are measured at fair value on a recurring basis is presented in the following tables:



	Fair Values at Reporting Date Using*
Descriptions	Balance at December 31, 2013		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets
Available-for-sale securities:
Commercial bank certificates of deposits	$	801	$	801	$	—	$	—
Total assets measured at fair value	$	801	$	801	$	—	$	—

Liabilities
Derivatives:
Common share-based put option (a)	$	845	$	—	$	845	$	—
Contingent accrued earn-out acquisition consideration (b)	14,420		—		—		14,420
Total liabilities measured at fair value	$	15,265	$	—	$	845	$	14,420

(a) In connection with the acquisition of PlanetSoft effective June 1, 2012, Ebix issued a put option to the PlanetSoft's three shareholders. The put option, which expires in June 2014, is exercisable during the thirty-day period immediately following the two-year anniversary date of the business acquisition, which if exercised would enable them to sell the underlying 296,560 shares of Ebix common stock they received as part of the purchase consideration, back to the Company at a price of $16.86 per share, which represents the per-share value established on the effective date of the closing of Ebix's acquisition of PlanetSoft. In accordance with the relevant authoritative accounting literature a portion of the total purchase consideration was allocated to this put liability based on its initial fair value, which was determined to be $1.4 million using a Black-Scholes model. The inputs used in the valuation of the put option include term, stock price volatility, current stock price, exercise price, and the risk free rate of return.
(b) The income valuation approach is applied and the valuation inputs include the contingent payment arrangement terms, projected cash flows, rate of return, and probability assessments.
* During the year ended December 31, 2013 there were no transfers between fair value Levels 1, 2 or 3.



	Fair Values at Reporting Date Using*
Descriptions	Balance at December 31, 2012		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets
Available-for-sale securities:
Commercial bank certificates of deposits ($213 thousand is recorded in the long term asset section of the consolidated balance sheets)	$	1,184	1,184		—		—
Total assets measured at fair value	$	1,184	$	1,184	$	—	$	—

Liabilities
Derivatives:
Common share-based put option (a)	$	1,186	—		1,186		—
Contingent accrued earn-out acquisition consideration (b)	17,495		—		—		17,495
Total liabilities measured at fair value	$	18,681	$	—	$	1,186	$	17,495

(a) In connection with the acquisition of PlanetSoft effective June 1, 2012, Ebix issued a put option to the PlanetSoft's three shareholders. The put option, which expires in June 2014, is exercisable during the thirty-day period immediately following the two-year anniversary date of the business acquisition, which if exercised would enable them to sell the underlying 296,560 shares of Ebix common stock they received as part of the purchase consideration, back to the Company at a price of $16.86 per share, which represents the per-share value established on the effective date of the closing of Ebix's acquisition of PlanetSoft. In accordance with the relevant authoritative accounting literature a portion of the total purchase consideration was allocated to this put liability based on its initial fair value, which was determined to be $1.4 million using a Black-Scholes model. The inputs used in the valuation of the put option include term, stock price volatility, current stock price, exercise price, and the risk free rate of return.
(b) The income valuation approach is applied and the valuation inputs include the contingent payment arrangement terms, projected cash flows, rate of return, and probability assessments.
* During the year ended December 31, 2012 there were no transfers between fair value Levels 1, 2 or 3.

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

For the Company's assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balances for each category therein, and gains or losses recognized during the year.



Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Contingent Liability for Accrued Earn-out Acquisition Consideration	Balance at December 31, 2013			Balance at December 31, 2012
	(in thousands)

Beginning balance	$	17,495		7,590

Total remeasurement adjustments:
(Gains) or losses included in earnings **	(10,253		)	(699		)
(Gains) or losses recorded against goodwill	—			—
Foreign currency translation adjustments ***	730			(143		)

Acquisitions and settlements
Business acquisitions	9,425			16,258
Settlements	(2,977		)	(5,511		)

Ending balance	$	14,420		$	17,495

The amount of total (gains) or losses for the year included in earnings or changes to net assets, attributable to changes in unrealized (gains) or losses relating to assets or liabilities still held at year-end.	$	(9,954	)	$	(802	)

** recorded as a component of reported general and administrative expenses
*** recorded as a component of other comprehensive income within stockholders' equity

Fair Value, Significant Unobservable Inputs Used in Measurement of Contingent Consideration Liabilities

The significant unobservable inputs used in the fair value measurement of the Company's contingent consideration liabilities designated as Level 3 are as follows:

Schedule of Goodwill

Changes in the carrying amount of goodwill for the years ended December 31, 2013 and 2012 are as follows:



	December 31, 2013			December 31, 2012
	(in thousands)
Beginning Balance	$	326,748		$	259,218
Additions, net (see Note 3)	11,136			67,401
Foreign currency translation adjustments	(816		)	129
Ending Balance	$	337,068		$	326,748

Schedule of Finite-Lived Intangible Assets by Major Class, Estimated Useful Lives

We amortize these intangible assets on a straight-line basis over their estimated useful lives, as follows:



	Life
Category	(yrs)
Customer relationships	7-20
Developed technology	3-12
Trademarks	3-15
Non-compete agreements	5
Database	10

Schedule of Intangible Assets, Excluding Goodwill

Intangible assets as of December 31, 2013 and December 31, 2012, are as follows:



	December 31,
	2013			2012
	(In thousands)
Finite-lived intangible assets:
Customer relationships	$	62,408		$	57,638
Developed technology	14,630			14,025
Trademarks	2,646			2,638
Non-compete agreements	538			538
Backlog	140			140
Database	212			212
Total intangibles	80,574			75,191
Accumulated amortization	(29,840		)	(22,600		)
Finite-lived intangibles, net	$	50,734		$	52,591

Indefinite-lived intangibles:
Customer/territorial relationships	$	30,887		$	30,887

Useful Lives of Property and Equipment Used in Computation of Depreciation

The estimated useful lives applied by the Company for property and equipment are as follows:



	Life
Asset Category	(yrs)
Computer equipment	5
Furniture, fixtures and other	7
Buildings	30
Leasehold improvements	Life of the lease

(in thousands)

Fair Value at December 31, 2013

Valuation Technique

Significant Unobservable
Input

Contingent acquisition consideration:
(Taimma, PlanetSoft, TriSystems, and Qatarlyst acquisitions)

Discounted cash flow

Expected future annual revenue streams and probability of achievement