2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates in Preparation of Financial Statements. The preparation of the accompanying Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Postage. We pass through to our clients the cost of postage that is incurred on behalf of those clients, and typically require an advance payment on expected postage costs. These advance payments are included in "client deposits" in the accompanying Condensed Consolidated Balance Sheets (the "Balance Sheet" or "Balance Sheets") and are classified as current liabilities regardless of the contract period. We net the cost of postage against the postage reimbursements, and include the net amount in processing and related services revenues. The cost of postage that has been shown net of the postage reimbursements from our clients for the third quarter of 2011 and 2010 was $65.9 million and $67.5 million, respectively, and for the nine months ended September 30, 2011 and 2010 was $199.0 million and $202.7 million, respectively.

Cash and Cash Equivalents. We consider all highly liquid investments with original maturities of three months or less at the date of the purchase to be cash equivalents. As of September 30, 2011, our cash equivalents consist primarily of institutional money market funds, commercial paper and time deposits held at major banks.

As of September 30, 2011, we had $4.8 million of restricted cash that serves to collateralize outstanding letters of credit. This restricted cash is included in Cash and cash equivalents in the accompanying Balance Sheet.

Short-term Investments and Other Financial Instruments. Our financial instruments as of September 30, 2011 include cash and cash equivalents, short-term investments, accounts receivable, accounts payable, interest rate swaps, and debt. Because of their short maturities, the carrying amounts of cash equivalents, accounts receivable, and accounts payable approximate their fair value.

Certain of our short-term investments and cash equivalents are considered "available-for-sale" and are reported at fair value in our accompanying Balance Sheets, with unrealized gains and losses, net of the related income tax effect, excluded from earnings and reported in a separate component of stockholders' equity. Realized and unrealized gains and losses were not material in any period presented.

All short-term investments held by us as of September 30, 2011, have contractual maturities of less than one year from the time of acquisition. Our short-term investments at September 30, 2011, and December 31, 2010, consisted entirely of commercial paper. Proceeds from the sale/maturity of short-term investments for the nine months ended September 30, 2011 and 2010 were $35.2 million and $81.9 million, respectively.

The following table represents the fair value hierarchy based upon three levels of inputs, of which Levels 1 and 2 are considered observable and Level 3 is unobservable, for financial assets and liabilities measured at fair value on a recurring basis (in thousands):


	September 30, 2011						December 31, 2010
	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Money market funds (1)	$	47,132	$	—	$	47,132	$	91,002	$	—	$	91,002
Commercial paper (2)		—		25,917		25,917		—		26,590		26,590

Total	$	47,132	$	25,917	$	73,049	$	91,002	$	26,590	$	117,592

Liabilities:
Interest rate swap contracts (3)		—		1,159		1,159		—		—		—

Total	$	—	$	1,159	$	1,159	$	—	$	—	$	—

(1)	As of September 30, 2011 and December 31, 2010, all of the money market funds were classified on our Balance Sheet in cash equivalents.

(2)	As of September 30, 2011 and December 31, 2010, of the total commercial paper, $11.5 million and $8.9 million, respectively, were classified on our Balance Sheet in cash equivalents, and $14.4 and $17.7 million, respectively, were classified on our Balance Sheet in short-term investments.

(3)	As of September 30, 2011, the fair value of the interest rate swap contracts were classified on our Balance Sheet in other non-current liabilities.

Valuation inputs used to measure the fair values of our money market funds were derived from quoted market prices. The fair values of all other financial instruments are based upon pricing provided by third-party pricing services. These prices were derived from observable market inputs.

We have chosen not to measure our debt at fair value, with changes recognized in earnings each reporting period. As of September 30, 2011, the estimated fair value of our Credit Agreement long-term debt of $192.5 million (carrying value including current maturities) was approximately $206 million, and was estimated using a discounted cash flow methodology. As of September 30, 2011, the estimated fair value of our $150 million (par value) convertible debt, based upon quoted market prices or recent sales activity, was approximately $132 million.

Adoption of New Guidance on Revenue Recognition Related to Multiple-Deliverable Revenue Arrangements. On January 1, 2011, new guidance on revenue recognition related to multiple-deliverable revenue arrangements became effective. The new guidance changed the criteria for separating deliverables in multiple element revenue arrangements that do not fall within the scope of other authoritative accounting literature.

Our processing and related services revenues relate primarily to the outsourced, customer care and billing processing and related services we provide to our North American cable and direct broadcast satellite clients under long-term master processing agreements. Under those agreements, on a monthly basis, we provide multiple services, to include billing and processing services; credit management and collection services; and customer statement invoice printing and mailing services. Since there are essentially no processing and related services elements that are undelivered at the end of each month, other than the future months' repetition of those same services which will be billed for and recognized as revenues in those future months when the services are provided, the new guidance did not impact the manner in which we are recognizing our processing and related services revenues.

The revenue recognition for our software licenses, software maintenance services (also known as post-contract customer support), and our professional services that involve the implementation of the software licenses, fall within the scope of specific authoritative accounting literature and are not impacted by the new guidance on revenue recognition related to multiple-deliverable revenue arrangements.

Accounting Pronouncements Issued But Not Yet Effective. In June 2011, new guidance was issued regarding the presentation of comprehensive income, requiring companies to present the components of net income and other comprehensive income either in one continuous statement or in two separate but consecutive statements and eliminating the option to report other comprehensive income and its components in the statement of stockholders' equity. The new guidance does not change the items that must be reported in other comprehensive income or when such items must be reclassified to net income. The new guidance is effective for interim and annual periods beginning after December 15, 2011. As this new guidance impacts presentation and disclosure only, it will have no effect on our consolidated financial position or results of operations.

In September 2011, new guidance was issued related to the testing of goodwill for impairment. The new guidance simplifies the assessment of goodwill impairment by giving companies the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing the two step impairment review process. The new guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. This new guidance is not expected to have a material impact on our consolidated financial position or results of operations.