Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 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 and six months ended June 30, 2018 (in thousands, except per share amounts):

	As of June 30, 2018
Condensed Balance Sheet	As Reported			Adjustments			Balances without adoption of ASC 606
Unbilled trade accounts receivable	$	38,832		$	(614	)	$	38,218
Other current assets		38,185			3,670			41,855
Client contracts, net of amortization		-			69,125			69,125
Acquired client contracts, net of amortization		41,573			(41,573	)		-
Client contract costs, net of amortization		35,527			(35,527	)		-
Other non-current assets		7,012			4,305			11,317
Other assets		766,102			-			766,102
Total assets (1)	$	927,231		$	(614	)	$	926,617
Deferred revenue	$	48,632		$	3,218		$	51,850
Deferred income taxes		9,162			(179	)		8,983
Other liabilities		519,577			-			519,577
Total liabilities		577,371			3,039			580,410
Accumulated earnings		772,071			(3,653	)		768,418
Other stockholders' equity		(422,211	)		-			(422,211	)
Total stockholders' equity		349,860			(3,653	)		346,207
Total stockholders' equity and liabilities	$	927,231		$	(614	)	$	926,617

(1)

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

	Quarter Ended June 30, 2018
Condensed Statement of Income	As Reported			Adjustments			Balances without adoption of ASC 606
Revenues:
Cloud and related services (2)	$	187,401		$	(6,138	)	$	181,263
Software and services (2)		13,331			1,587			14,918
Maintenance (2)		12,301			5,197			17,498
Total revenues		213,033			646			213,679
Cost of revenues:
Cloud and related services (2)		95,212			(4,703	)		90,509
Software and services (2)		8,614			215			8,829
Maintenance (2)		5,666			4,488			10,154
Total cost of revenues		109,492			-			109,492
Other expenses		82,817			-			82,817
Income before income taxes		20,724			646			21,370
Income tax provision		(5,607	)		(187	)		(5,794	)
Net income	$	15,117		$	459		$	15,576
Net income per diluted share	$	0.46		$	0.01		$	0.47

	Six Months Ended June 30, 2018
Condensed Statement of Income	As Reported			Adjustments			Balances without adoption of ASC 606
Revenues:
Cloud and related services (2)	$	364,917		$	(13,132	)	$	351,785
Software and services (2)		25,290			3,153			28,443
Maintenance (2)		24,530			10,325			34,855
Total revenues		414,737			346			415,083
Cost of revenues:
Cloud and related services (2)		182,120			(10,998	)		171,122
Software and services (2)		17,147			452			17,599
Maintenance (2)		11,321			9,602			20,923
Total cost of revenues		210,588			(944	)		209,644
Other expenses		163,221			-			163,221
Income before income taxes		40,928			1,290			42,218
Income tax provision		(11,797	)		(374	)		(12,171	)
Net income	$	29,131		$	916		$	30,047
Net income per diluted share	$	0.88		$	0.03		$	0.91

(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 quarter and six months ended June 30, 2018. Costs associated with these products were also reclassified to cost of cloud solution services in the quarter and six months ended June 30, 2018.

	Six Months Ended June 30, 2018
Condensed Statement of Cash Flows	As Reported			Adjustments			Balances without adoption of ASC 606
Net income	$	29,131		$	916		$	30,047
Adjustments to reconcile net income to net cash provided by operating activities -
Amortization		20,957			(2,002	)		18,955
Deferred income taxes		4,944			374			5,318
Other		21,691			-			21,691
Changes in operating assets and liabilities:
Other current and non-current assets		(13,995	)		5,349			(8,646	)
Deferred revenue		799			(1,126	)		(327	)
Other		(37,313	)		-			(37,313	)
Net cash provided by operating activities		26,214			3,511			29,725
Cash flows from investing activities:
Acquisition of and investments in client contracts		-			(3,511	)		(3,511	)
Other		(22,830	)		-			(22,830	)
Net cash used in investing activities		(22,830	)		(3,511	)		(26,341	)
Net cash used in financing activities		(4,925	)		-			(4,925	)
Effect of exchange rate fluctuations on cash		(1,031	)		-			(1,031	)
Net decrease cash and cash equivalents		(2,572	)		-			(2,572	)
Cash and cash equivalents, beginning of period		122,243			-			122,243
Cash and cash equivalents, end of period	$	119,671		$	-		$	119,671

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				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Americas (principally the U.S.)	$	180,217	$	162,835	$	350,120	$	327,972
Europe, Middle East, and Africa		21,977		17,817		42,411		35,031
Asia Pacific		10,839		12,061		22,206		22,180
Total revenues	$	213,033	$	192,713	$	414,737	$	385,183

Rollforward of Unbilled Accounts Receivable

The following table rolls forward our unbilled accounts receivable from December 31, 2017 to June 30, 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		111,549
Reclassified to receivables		(104,913	)
Other		(908	)
Ending Balance, June 30, 2018	$	38,832

Rollforward of Deferred Revenue

The following table rolls forward our deferred revenue from December 31, 2017 to June 30, 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		29,546
Consideration received in advance of services performed net of revenue recognized in the current period		(31,747	)
Other		1,180
Ending Balance, June 30, 2018	$	(48,632	)

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):

	June 30, 2018						December 31, 2017
	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	7,450	$	—	$	7,450	$	3,544	$	—	$	3,544
Commercial paper	—			22,085		22,085	—			32,467		32,467
Short-term investments:
Corporate debt securities	—			53,345		53,345	—			124,182		124,182
U.S. government agency bonds	—			1,542		1,542	—			1,547		1,547
Asset-backed securities	—			11,806		11,806	—			13,388		13,388
Total	$	7,450	$	88,778	$	96,228	$	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):

	June 30, 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)		148,125		148,125		—		—
2016 Convertible debt (par value)		230,000		242,363		230,000		251,850