| Quarterly Financial Results (unaudited) |
Quarterly Financial Data (Unaudited) Revision of Previously Issued Financial Statements
During the preparation of the financial statements for the year ended December 31, 2022, an error was identified in the Company’s accounting for an intercompany sale of intellectual property that occurred during 2022. During each of the first three quarters of 2022, the Company failed to record a deferred tax asset in the jurisdiction where the intellectual property was sold for the step up in tax basis that was achieved with the sale. This caused net deferred taxes to be understated in the interim condensed consolidated balance sheets, the provision for income taxes to be overstated and net income and earnings per share to be understated in the interim condensed consolidated statements of income. Management evaluated the error and determined that the related impact was not material to any of the Company's previously issued financial statements.
The financial data below has been derived from the Company’s quarterly reports on Form 10-Q filed for the respective periods, with 2022 periods adjusted to reflect the impact of the error. The Company will also correct previously reported financial information for this error in its future filings, as applicable.
| | | | | | | | | | | | | | | | | | | | | | | | | (in thousands, except per share data) | First Quarter | | Second Quarter | | Third Quarter | | Fourth Quarter | | Year ended December 31, 2022 | | | | | | | | | Revenue | $ | 903,647 | | | $ | 903,332 | | | $ | 881,896 | | | $ | 927,779 | | | Cost of revenue (exclusive of amortization of acquired intangible assets) | 332,752 | | | 346,649 | | | 346,450 | | | 357,968 | | | Net income | 133,376 | | | 137,840 | | | 123,694 | | | 128,762 | | | Basic net income per share | 0.83 | | | 0.86 | | | 0.78 | | | 0.82 | | | Diluted net income per share | 0.82 | | | 0.85 | | | 0.78 | | | 0.82 | | | Year ended December 31, 2021 | | | | | | | | | Revenue | $ | 842,708 | | | $ | 852,824 | | | $ | 860,333 | | | $ | 905,358 | | | Cost of revenue (exclusive of amortization of acquired intangible assets) | 306,687 | | | 320,000 | | | 316,866 | | | 325,403 | | | Net income | 155,695 | | | 156,497 | | | 178,916 | | | 160,534 | | | Basic net income per share | 0.95 | | | 0.96 | | | 1.10 | | | 0.99 | | | Diluted net income per share | 0.94 | | | 0.94 | | | 1.08 | | | 0.97 | |
The changes to the condensed consolidated balance sheets as a result of the error were as follows (in thousands):
| | | | | | | | | | | | | | | | | | | As Previously Reported | | Adjustment | | As Revised | | March 31, 2022 | | | | | | | Deferred income tax assets | $ | 265,946 | | | $ | 8,610 | | | $ | 274,556 | | | Total assets | 8,303,779 | | | 8,610 | | | 8,312,389 | | | Deferred income tax liabilities | 41,131 | | | (5,603) | | | 35,528 | | | Total liabilities | 4,003,257 | | | (5,603) | | | 3,997,654 | | | Retained earnings | 1,515,842 | | | 14,213 | | | 1,530,055 | | | Total stockholders’ equity | 4,300,522 | | | 14,213 | | | 4,314,735 | | | Total liabilities and stockholders’ equity | 8,303,779 | | | 8,610 | | | 8,312,389 | | | | | | | | | June 30, 2022 | | | | | | | Deferred income tax assets | $ | 292,817 | | | $ | 19,698 | | | $ | 312,515 | | | Total assets | 8,211,054 | | | 19,698 | | | 8,230,752 | | | Deferred income tax liabilities | 39,367 | | | (12,818) | | | 26,549 | | | Total liabilities | 3,930,576 | | | (12,818) | | | 3,917,758 | | | Retained earnings | 1,635,379 | | | 32,516 | | | 1,667,895 | | | Total stockholders’ equity | 4,280,478 | | | 32,516 | | | 4,312,994 | | | Total liabilities and stockholders’ equity | 8,211,054 | | | 19,698 | | | 8,230,752 | | | | | | | | | September 30, 2022 | | | | | | | Deferred income tax assets | $ | 285,722 | | | $ | 29,112 | | | $ | 314,834 | | | Total assets | 8,107,369 | | | 29,112 | | | 8,136,481 | | | Deferred income tax liabilities | 38,146 | | | (18,944) | | | 19,202 | | | Total liabilities | 3,874,185 | | | (18,944) | | | 3,855,241 | | | Retained earnings | 1,743,533 | | | 48,056 | | | 1,791,589 | | | Total stockholders’ equity | 4,233,184 | | | 48,056 | | | 4,281,240 | | | Total liabilities and stockholders’ equity | 8,107,369 | | | 29,112 | | | 8,136,481 | |
Changes to the condensed consolidated statements of income as a result of the error were as follows (in thousands, except per share data):
| | | | | | | | | | | | | | | | | | | For the Three Months Ended
March 31, 2022 | | As Previously Reported | | Adjustment | | As Revised | | Provision for income taxes | $ | (34,050) | | | $ | 14,213 | | | $ | (19,837) | | | Net income | 119,163 | | | 14,213 | | | 133,376 | | | Net income per share: | | | | | | | Basic | $ | 0.74 | | | $ | 0.09 | | | $ | 0.83 | | | Diluted | $ | 0.73 | | | $ | 0.09 | | | $ | 0.82 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the Three Months Ended
June 30, 2022 | | For the Six Months Ended
June 30, 2022 | | As Previously Reported | | Adjustment | | As Revised | | As Previously Reported | | Adjustment | | As Revised | | Provision for income taxes | $ | (51,058) | | | $ | 18,303 | | | $ | (32,755) | | | $ | (85,108) | | | $ | 32,516 | | | $ | (52,592) | | | Net income | 119,537 | | | 18,303 | | | 137,840 | | | 238,700 | | | 32,516 | | | 271,216 | | | Net income per share: | | | | | | | | | | | | | Basic | $ | 0.75 | | | $ | 0.11 | | | $ | 0.86 | | | $ | 1.49 | | | $ | 0.20 | | | $ | 1.69 | | | Diluted | $ | 0.74 | | | $ | 0.11 | | | $ | 0.85 | | | $ | 1.47 | | | $ | 0.20 | | | $ | 1.67 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the Three Months Ended
September 30, 2022 | | For the Nine Months Ended
September 30, 2022 | | As Previously Reported | | Adjustment | | As Revised | | As Previously Reported | | Adjustment | | As Revised | | Provision for income taxes | $ | (50,006) | | | $ | 15,540 | | | $ | (34,466) | | | $ | (135,114) | | | $ | 48,056 | | | $ | (87,058) | | | Net income | 108,154 | | | 15,540 | | | 123,694 | | | 346,854 | | | 48,056 | | | 394,910 | | | Net income per share: | | | | | | | | | | | | | Basic | $ | 0.68 | | | $ | 0.10 | | | $ | 0.78 | | | $ | 2.17 | | | $ | 0.30 | | | $ | 2.47 | | | Diluted | $ | 0.68 | | | $ | 0.10 | | | $ | 0.78 | | | $ | 2.15 | | | $ | 0.30 | | | $ | 2.45 | |
The condensed consolidated statements of shareholders' equity, condensed consolidated statements of cash flows and condensed consolidated statements of comprehensive income for the quarterly and year-to-date periods ended March 31, 2022, June 30, 2022 and September 30, 2022 were also revised to reflect the impact to net income as stated in the tables above. The benefit for deferred income tax line was also adjusted in the condensed consolidated statement of cash flows, however, the error had no net impact on cash flows from operating, investing or financing activities in these periods.
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