Stockholders' Equity

12 Months Ended

Dec. 31, 2016

Stockholders Equity Note [Abstract]

Stockholders' Equity

10.Stockholders’ Equity

Stock Repurchase Program. We currently have a stock repurchase program, approved by our Board, authorizing us to repurchase shares of our common stock from time-to-time as market and business conditions warrant (the “Stock Repurchase Program”). During 2016, 2015, and 2014, we repurchased 0.3 million shares of our common stock for $11.6 million (weighted–average price of $36.42 per share), 0.3 million shares of our common stock for $6.9 million (weighted-average price of $27.06 per share), and 0.7 million shares of our common stock for $19.1 million (weighted-average price of $26.05 per share), respectively, under a Securities and Exchange Commission (“SEC”) Rule 10b5-1 Plan.

In 2015, we entered into an accelerated share repurchase transaction agreement (the “ASR Agreement”) with a counterparty to repurchase $50 million of our common stock.Total shares purchased under the ASR Agreement in 2015 were 1.6 million shares at an average purchase price of $31.64 per share. The shares were reflected as treasury stock in the periods the shares were delivered.

As of December 31, 2016, the total remaining number of shares available for repurchase under the Stock Repurchase Program totaled approximately 6.7 million shares.  

In addition to the above mentioned stock repurchases, during 2016, 2015, and 2014, we repurchased and then cancelled approximately 344,000 shares, 265,000 shares, and 252,000 shares for $13.7 million, $8.1 million, and $6.9 million, respectively, of common stock from our employees in connection with minimum tax withholding requirements resulting from the vesting of restricted stock under our stock incentive plans.

Cash Dividend.  During 2016 and 2015, our Board approved total cash dividends of $0.74 per share and $0.70 per share of common stock, totaling $23.8 million and $22.9 million, respectively.

Warrants.  In 2014, in conjunction with the execution of an amendment to our current agreement with Comcast, we issued stock warrants (the “Warrant Agreement”) for the right to purchase up to approximately 2.9 million shares of our common stock (the “Stock Warrants”) as an additional incentive for Comcast to convert new customer accounts onto our ACP cloud solution.   The Stock Warrants have a 10-year term and an exercise price of $26.68 per warrant.  

Of the total Stock Warrants, 1.9 million Stock Warrants relate to Comcast’s existing residential business and vest(ed) as follows:

• The first 25% of these Stock Warrants (approximately 0.5 million) vested upon the successful conversion of the first 0.5 million customer accounts, which occurred during the fourth quarter of 2014.

• The next 25% of these Stock Warrants had a time-based vesting provision, and vested in January 2015.

• The next 25% of these Stock Warrants vested after a cumulative total of 5.5 million customer accounts were converted onto ACP, which occurred in the fourth quarter of 2016.

• The last 25% of these Stock Warrants vest proportionately based on the number of customer accounts converted above 5.5 million accounts, with full vesting based on a target of 5.7 million customer accounts above the 5.5 million account level (i.e., a total target of 11.2 million customer account conversions).

The remaining 1.0 million Stock Warrants relate to additional residential accounts that Comcast may acquire and convert onto ACP in the future and vest proportionately with acquired customer accounts converted onto ACP from other providers’ billing platforms, with full vesting based on a target of 5 million newly converted customer accounts.

Fifty percent of the unvested Stock Warrants become fully vested upon a fundamental change (including a change in control) of the Company, as defined, proportionally reducing the number of Stock Warrants eligible for vesting based on future performance conditions.

Once vested, Comcast may exercise the Stock Warrants and elect either physical delivery of common shares or net share settlement (cashless exercise).  Alternatively, the exercise of the Stock Warrants may be settled with cash based solely on our approval, or if Comcast were to beneficially own or control in excess of 19.99% of the common stock or voting of the Company.   

Upon vesting, the Stock Warrants are recorded as a client incentive asset, as determined using the Black-Scholes option-pricing model, with the corresponding offset to stockholders’ equity.  The client incentive asset related to the Stock Warrants is being amortized as a reduction in cloud and related solutions revenues over the remaining term of the Comcast amended agreement.  As of December 31, 2016 and 2015, we have recorded a client incentive asset related to these Stock Warrants of $16.0 million and $7.3 million, respectively, and have recorded accumulated amortization related to these Stock Warrants of $4.3 million and $2.0 million, respectively.  

The remaining unvested Stock Warrants will be accounted for as client incentive assets in the period the performance conditions necessary for vesting have been met.  As of December 31, 2016, none of the Stock Warrants had been exercised.

In January 2017, Comcast exercised 1.4 million vested Stock Warrants.  We net share settled the exercise of the Stock Warrants by delivering approximately 649,000 shares of our common stock that we were holding as treasury shares.  After this exercise, approximately 1.5 million Stock Warrants are outstanding, none of which are vested as of the date of this filing.

Convertible Debt Securities. Under GAAP, convertible debt securities that may be settled in cash upon conversion (including partial cash settlement), which would include our 2016 Convertible Notes and our 2010 Convertible Notes, must be separated into their liability and equity components at initial recognition by: (i) recording the liability component at the fair value of a similar liability that does not have an associated equity component; and (ii) attributing the remaining proceeds from the issuance to the equity component. As of December 31, 2016, the carrying amount of the equity component related to our 2016 Convertible Notes was $9.8 million. As of December 31, 2015, the carrying amount of the equity component related to our 2010 Convertible Notes was $22.9 million. Beginning September 1, 2016, the holders of the 2010 Convertible Notes can elect to convert their securities at any time, with settlement occurring on March 1, 2017.  Accordingly, at December 31, 2016, we classified the difference between the principal amount payable in cash upon conversion and the total settlement value of the 2010 Convertible Notes of $39.8 million as current portion of long-term debt conversion obligation on our Balance Sheet, outside of stockholders’ equity (see Note 5).