Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2018

Summary of Impacts of Adopting ASC 606 on Financial Statements

The following tables summarize the impacts of adopting ASC 606 on our Financial Statements as of and for the quarter ended March 31, 2018 (in thousands, except per share amounts):

	As of March 31, 2018
Condensed Balance Sheet	As Reported			Adjustments			Balances without adoption of ASC 606
Unbilled trade accounts receivable	$	35,426		$	(697	)	$	34,729
Other current assets		32,388			3,184			35,572
Client contracts, net of amortization		-			70,376			70,376
Acquired client contracts, net of amortization		39,688			(39,688	)		-
Client contract costs, net of amortization		38,357			(38,357	)		-
Other non-current assets		7,963			4,485			12,448
Other assets		774,616			-			774,616
Total assets (1)	$	928,438		$	(697	)	$	927,741
Deferred revenue	$	47,388		$	3,781		$	51,169
Deferred income taxes		8,412			(366	)		8,046
Other liabilities		514,563			-			514,563
Total liabilities		570,363			3,415			573,778
Accumulated earnings		764,015			(4,112	)		759,903
Other stockholders' equity		(405,940	)		-			(405,940	)
Total stockholders' equity		358,075			(4,112	)		353,963
Total stockholders' equity and liabilities	$	928,438		$	(697	)	$	927,741

(1)

See Note 3 for further discussion related to the reclassification of our client contracts and client contract costs.

	Quarter Ended March 31, 2018
Condensed Statement of Income	As Reported			Adjustments			Balances without adoption of ASC 606
Revenues:
Cloud and related services (2)	$	177,516		$	(6,994	)	$	170,522
Software and services (2)		11,959			1,566			13,525
Maintenance (2)		12,229			5,128			17,357
Total revenues		201,704			(300	)		201,404
Cost of revenues:
Cloud and related services (2)		86,908			(6,295	)		80,613
Software and services (2)		8,533			237			8,770
Maintenance (2)		5,655			5,114			10,769
Total cost of revenues		101,096			(944	)		100,152
Other expenses		80,404			-			80,404
Income before income taxes		20,204			644			20,848
Income tax provision		(6,190	)		(187	)		(6,377	)
Net income	$	14,014		$	457		$	14,471
Net income per diluted share	$	0.42		$	0.02		$	0.44

(2)

Adjustments are primarily related to software license products and related maintenance contracted as part of our cloud solutions contracts that were not capable of being distinct as a separate performance obligation under ASC 606 and are included in cloud solutions services in the first quarter of 2018. Costs associated with these products were also reclassified to cost of cloud solution services in the first quarter of 2018.

	Quarter Ended March 31, 2018
Condensed Statement of Cash Flows	As Reported			Adjustments			Balances without adoption of ASC 606
Net income	$	14,014		$	457		$	14,471
Adjustments to reconcile net income to net cash provided by operating activities -
Amortization		9,946			(878	)		9,068
Deferred income taxes		4,017			187			4,204
Other		10,270			-			10,270
Changes in operating assets and liabilities:
Other current and non-current assets		(4,629	)		2,298			(2,331	)
Deferred revenue		(3,331	)		(563	)		(3,894	)
Other		(432	)		-			(432	)
Net cash provided by operating activities		29,855			1,501			31,356
Cash flows from investing activities:
Acquisition of and investments in client contracts		-			(1,501	)		(1,501	)
Other		(16,433	)		-			(16,433	)
Net cash used in investing activities		(16,433	)		(1,501	)		(17,934	)
Net cash provided by financing activities		9,685			-			9,685
Effect of exchange rate fluctuations on cash		2,153			-			2,153
Net increase cash and cash equivalents		25,260			-			25,260
Cash and cash equivalents, beginning of period		122,243			-			122,243
Cash and cash equivalents, end of period	$	147,503		$	-		$	147,503

Schedule of Revenue Disaggregated by Geographic Region

In the following table, revenue is disaggregated by geographic region (using the location of the client as the basis of attributing revenues to the individual regions):

	Quarter Ended
	March 31,
	2018
Americas (principally the U.S.)	$	169,903
Europe, Middle East, and Africa		20,434
Asia Pacific		11,367
Total revenues	$	201,704

Rollforward of Unbilled Accounts Receivable

The following table rolls forward our unbilled accounts receivable from December 31, 2017 to March 31, 2018 (in thousands):

	Unbilled Receivables
Beginning Balance, December 31, 2017	$	31,187
Cumulative effect adjustments		4,193
Reclassification - Adoption of ASC 606		(2,276	)
Beginning Balance, January 1, 2018		33,104
Recognized during the period		51,590
Reclassified to receivables		(49,865	)
Other		597
Ending Balance, March 31, 2018	$	35,426

Rollforward of Deferred Revenue

The following table rolls forward our deferred revenue from December 31, 2017 to March 31, 2018 (in thousands):

	Deferred Revenue
Beginning Balance, December 31, 2017	$	(54,231	)
Cumulative effect adjustments		4,344
Reclassification - Adoption of ASC 606		2,276
Beginning Balance, January 1, 2018		(47,611	)
Revenue recognized that was included in deferred revenue at the beginning of the period		19,405
Consideration received in advance of services performed net of revenue recognized in the current period		(18,237	)
Other		(945	)
Ending Balance, March 31, 2018	$	(47,388	)

Fair Value Measurements

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 our financial assets and liabilities measured at fair value (in thousands):

	March 31, 2018						December 31, 2017
	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	33,992	$	—	$	33,992	$	3,544	$	—	$	3,544
Commercial paper	—			11,957		11,957	—			32,467		32,467
Short-term investments:
Corporate debt securities	—			59,869		59,869	—			124,182		124,182
U.S. government agency bonds	—			1,542		1,542	—			1,547		1,547
Asset-backed securities	—			13,184		13,184	—			13,388		13,388
Total	$	33,992	$	86,552	$	120,544	$	3,544	$	171,584	$	175,128

Carrying Value (Par Value for Convertible Debt) and Estimated Fair Value of Debt

We have chosen not to measure our debt at fair value, with changes recognized in earnings each reporting period. The following table indicates the carrying value (par value for convertible debt) and estimated fair value of our debt as of the indicated periods (in thousands):

	March 31, 2018				December 31, 2017
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
2015 Credit Agreement (carrying value including current maturities)	$	—	$	—	$	120,000	$	120,000
2018 Credit Agreement (carrying value including current maturities)		150,000		150,000		—		—
2016 Convertible debt (par value)		230,000		251,563		230,000		251,850