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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 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 year ended December 31, 2018 (in thousands, except per share amounts):

	As of December 31, 2018
Condensed Balance Sheet	As Reported			Adjustments			Balances without adoption of ASC 606
Unbilled trade accounts receivable	$	37,227		$	(451	)	$	36,776
Other current assets		32,286			5,834			38,120
Client contracts, net of amortization		—			88,733			88,733
Acquired client contracts, net of amortization		65,456			(65,456	)		—
Client contract costs, net of amortization		37,289			(37,289	)		—
Other non-current assets		26,934			8,178			35,112
Other assets		915,170			—			915,170
Total assets (1)	$	1,114,362		$	(451	)	$	1,113,911
Deferred revenue	$	57,763		$	2,463		$	60,226
Deferred income taxes		8,205			87			8,292
Other liabilities		687,370			—			687,370
Total liabilities		753,338			2,550			755,888
Accumulated earnings		795,127			(3,001	)		792,126
Other stockholders' equity		(434,103	)		—			(434,103	)
Total stockholders' equity		361,024			(3,001	)		358,023
Total stockholders' equity and liabilities	$	1,114,362		$	(451	)	$	1,113,911

(1)

See Note 4 for further discussion related to the reclassification of our client contracts and client contract costs.

	Year Ended December 31, 2018
Condensed Statement of Income	As Reported			Adjustments			Balances without adoption of ASC 606
Revenues:
Cloud and related services (2)	$	766,377		$	(25,960	)	$	740,417
Software and services (2)		58,101			6,072			64,173
Maintenance (2)		50,581			21,152			71,733
Total revenues		875,059			1,264			876,323
Cost of revenues:
Cloud and related services (2)		392,801			(20,419	)		372,382
Software and services (2)		34,870			875			35,745
Maintenance (2)		22,149			18,600			40,749
Total cost of revenues		449,820			(944	)		448,876
Other expenses		338,252			—			338,252
Income before income taxes		86,987			2,208			89,195
Income tax provision		(20,857	)		(640	)		(21,497	)
Net income	$	66,130		$	1,568		$	67,698
Net income per diluted share	$	2.01		$	0.05		$	2.06

(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 year ended December 31, 2018. Costs associated with these products were also reclassified to cost of cloud solution services in the year ended December 31, 2018.

	Year Ended December 31, 2018
Condensed Statement of Cash Flows	As Reported			Adjustments			Balances without adoption of ASC 606
Net income	$	66,130		$	1,568		$	67,698
Adjustments to reconcile net income to net cash provided by operating activities -
Amortization		44,328			(4,202	)		40,126
Deferred income taxes		4,913			640			5,553
Other		44,146			—			44,146
Changes in operating assets and liabilities:
Other current and non-current assets		(23,179	)		13,183			(9,996	)
Deferred revenue		10,492			(1,881	)		8,611
Other		(3,489	)		—			(3,489	)
Net cash provided by operating activities		143,341			9,308			152,649
Cash flows from investing activities:
Acquisition of and investments in client contracts		—			(9,308	)		(9,308	)
Other		(86,139	)		—			(86,139	)
Net cash provided by (used in) investing activities		(86,139	)		(9,308	)		(95,447	)
Net cash used in financing activities		(37,509	)		—			(37,509	)
Effect of exchange rate fluctuations on cash		(2,659	)		—			(2,659	)
Net increase cash and cash equivalents		17,034			—			17,034
Cash and cash equivalents, beginning of period		122,243			—			122,243
Cash and cash equivalents, end of period	$	139,277		$	—		$	139,277

Rollforward of Unbilled Accounts Receivable

The following table rolls forward our unbilled accounts receivable from December 31, 2017 to December 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		237,134
Reclassified to receivables		(231,689	)
Other		(1,322	)
Ending Balance, December 31, 2018	$	37,227

Rollforward of Deferred Revenue

The following table rolls forward our deferred revenue from December 31, 2017 to December 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		38,832
Consideration received in advance of services performed net of revenue recognized in the current period		(50,861	)
Other		1,877
Ending Balance, December 31, 2018	$	(57,763	)

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):

	December 31, 2018						December 31, 2017
	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Cash equivalents:
Money market funds	$	4,392	$	—	$	4,392	$	3,544	$	—	$	3,544
Commercial paper	—			9,078		9,078	—			32,467		32,467
Short-term investments:
Corporate debt securities	—			16,357		16,357	—			124,182		124,182
U.S. government agency bonds	—			3,724		3,724	—			1,547		1,547
Asset-backed securities	—			3,522		3,522	—			13,388		13,388
Total	$	4,392	$	32,681	$	37,073	$	3,544	$	171,584	$	175,128

Carrying Value 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 and estimated fair value of our debt as of the indicated periods (in thousands):

	December 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)		144,375		144,375		—		—
2016 Convertible debt (par value)		230,000		228,275		230,000		251,850

Allowance for Doubtful Accounts Receivable

The activity in our allowance for doubtful accounts receivable is as follows (in thousands):

	2018			2017			2016
Balance, beginning of year	$	4,149		$	3,080		$	3,600
Additions to expense		462			2,434			614
Write-offs		(1,659	)		(1,392	)		(1,102	)
Recoveries		—			5			—
Other		163			22			(32	)
Balance, end of year	$	3,115		$	4,149		$	3,080

Reconciliation of the Basic and Diluted EPS denominators

The reconciliation of the basic and diluted EPS denominators related to the common shares is included in the following table (in thousands):

	2018		2017		2016
Basic weighted-average common shares		32,488		32,415		30,968
Dilutive effect of restricted common stock		218		444	603
Dilutive effect of 2010 Convertible Notes		—		—		1,062
Dilutive effect of Stock Warrants		149		6	381
Diluted weighted-average common shares		32,855		32,865		33,014