Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 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 nine months ended September 30, 2018 (in thousands, except per share amounts):

	As of September 30, 2018
Condensed Balance Sheet	As Reported			Adjustments			Balances without adoption of ASC 606
Unbilled trade accounts receivable	$	36,847		$	(533	)	$	36,314
Other current assets		38,706			4,014			42,720
Client contracts, net of amortization		-			66,364			66,364
Acquired client contracts, net of amortization		39,863			(39,863	)		-
Client contract costs, net of amortization		35,584			(35,584	)		-
Other non-current assets		10,898			5,069			15,967
Other assets		785,411			-			785,411
Total assets (1)	$	947,309		$	(533	)	$	946,776
Deferred revenue	$	54,966		$	2,655		$	57,621
Deferred income taxes		5,881			8			5,889
Other liabilities		528,043			-			528,043
Total liabilities		588,890			2,663			591,553
Accumulated earnings		781,188			(3,196	)		777,992
Other stockholders' equity		(422,769	)		-			(422,769	)
Total stockholders' equity		358,419			(3,196	)		355,223
Total stockholders' equity and liabilities	$	947,309		$	(533	)	$	946,776

(1)

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

	Quarter Ended September 30, 2018
Condensed Statement of Income	As Reported			Adjustments			Balances without adoption of ASC 606
Revenues:
Cloud and related services (2)	$	186,473		$	(6,162	)	$	180,311
Software and services (2)		14,283			1,589			15,872
Maintenance (2)		12,299			5,217			17,516
Total revenues		213,055			644			213,699
Cost of revenues:
Cloud and related services (2)		95,092			(4,544	)		90,548
Software and services (2)		8,669			208			8,877
Maintenance (2)		5,291			4,336			9,627
Total cost of revenues		109,052			-			109,052
Other expenses		83,511			-			83,511
Income before income taxes		20,492			644			21,136
Income tax provision		(4,391	)		(187	)		(4,578	)
Net income	$	16,101		$	457		$	16,558
Net income per diluted share	$	0.49		$	0.01		$	0.50

	Nine Months Ended September 30, 2018
Condensed Statement of Income	As Reported			Adjustments			Balances without adoption of ASC 606
Revenues:
Cloud and related services (2)	$	551,390		$	(19,294	)	$	532,096
Software and services (2)		39,573			4,742			44,315
Maintenance (2)		36,829			15,542			52,371
Total revenues		627,792			990			628,782
Cost of revenues:
Cloud and related services (2)		277,212			(15,542	)		261,670
Software and services (2)		25,816			660			26,476
Maintenance (2)		16,612			13,938			30,550
Total cost of revenues		319,640			(944	)		318,696
Other expenses		246,732			-			246,732
Income before income taxes		61,420			1,934			63,354
Income tax provision		(16,188	)		(561	)		(16,749	)
Net income	$	45,232		$	1,373		$	46,605
Net income per diluted share	$	1.37		$	0.04		$	1.41

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

	Nine Months Ended September 30, 2018
Condensed Statement of Cash Flows	As Reported			Adjustments			Balances without adoption of ASC 606
Net income	$	45,232		$	1,373		$	46,605
Adjustments to reconcile net income to net cash provided by operating activities -
Amortization		31,974			(3,146	)		28,828
Deferred income taxes		2,150			561			2,711
Other		32,255			-			32,255
Changes in operating assets and liabilities:
Other current and non-current assets		(21,763	)		10,231			(11,532	)
Deferred revenue		7,182			(1,689	)		5,493
Other		(23,761	)		-			(23,761	)
Net cash provided by operating activities		73,269			7,330			80,599
Cash flows from investing activities:
Acquisition of and investments in client contracts		-			(7,330	)		(7,330	)
Other		21,692			-			21,692
Net cash provided by (used in) investing activities		21,692			(7,330	)		14,362
Net cash used in financing activities		(18,770	)		-			(18,770	)
Effect of exchange rate fluctuations on cash		(1,262	)		-			(1,262	)
Net increase cash and cash equivalents		74,929			-			74,929
Cash and cash equivalents, beginning of period		122,243			-			122,243
Cash and cash equivalents, end of period	$	197,172		$	-		$	197,172

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				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Americas (principally the U.S.)	$	180,489	$	169,880	$	530,609	$	497,852
Europe, Middle East, and Africa		21,723		15,980		64,135		51,011
Asia Pacific		10,843		13,335		33,048		35,515
Total revenues	$	213,055	$	199,195	$	627,792	$	584,378

Rollforward of Unbilled Accounts Receivable

The following table rolls forward our unbilled accounts receivable from December 31, 2017 to September 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		168,198
Reclassified to receivables		(163,117	)
Other		(1,338	)
Ending Balance, September 30, 2018	$	36,847

Rollforward of Deferred Revenue

The following table rolls forward our deferred revenue from December 31, 2017 to September 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		35,575
Consideration received in advance of services performed net of revenue recognized in the current period		(44,218	)
Other		1,288
Ending Balance, September 30, 2018	$	(54,966	)

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):

	September 30, 2018						December 31, 2017
	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	14,828	$	—	$	14,828	$	3,544	$	—	$	3,544
Commercial paper	—			—		—	—			32,467		32,467
Short-term investments:
Corporate debt securities	—			—		—	—			124,182		124,182
U.S. government agency bonds	—			1,542		1,542	—			1,547		1,547
Asset-backed securities	—			588		588	—			13,388		13,388
Total	$	14,828	$	2,130	$	16,958	$	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):

	September 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)		146,250		146,250		—		—
2016 Convertible debt (par value)		230,000		242,650		230,000		251,850