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Supplemental balance sheet and cash flow information
 6 Months Ended
Jun. 30, 2020
Balance Sheet Related Disclosures [Abstract]  
Supplemental balance sheet and cash flow information
Trade accounts receivable – Changes in the allowance for uncollectible accounts included within trade accounts receivable for the six months ended June 30, 2020 and 2019 were as follows:
 
 
Six Months Ended June 30,
(in thousands)
 
2020
 
2019
Balance, beginning of year
 
$
4,985

 
$
3,639

Bad debt expense
 
3,374

 
2,549

Write-offs and other
 
(1,633
)
 
(1,669
)
Balance, end of period
 
$
6,726

 
$
4,519



Inventories and supplies – Inventories and supplies were comprised of the following:
(in thousands)
 
June 30,
2020
 
December 31,
2019
Raw materials
 
$
7,001

 
$
6,977

Semi-finished goods
 
7,070

 
7,368

Finished goods
 
30,082

 
21,982

Supplies
 
3,372

 
3,594

Inventories and supplies
 
$
47,525

 
$
39,921



Available-for-sale debt securities – Available-for-sale debt securities included within funds held for customers were comprised of the following:
 
 
June 30, 2020
(in thousands)
 
Cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Fair value
Funds held for customers:(1)
 
 
 
 
 
 
 
 
Domestic money market fund
 
$
7,000

 
$
—

 
$
—

 
$
7,000

Canadian and provincial government securities
 
8,732

 
126

 
—

 
8,858

Canadian guaranteed investment certificates
 
7,343

 
—

 
—

 
7,343

Available-for-sale debt securities
 
$
23,075

 
$
126

 
$
—

 
$
23,201


(1) Funds held for customers, as reported on the consolidated balance sheet as of June 30, 2020, also included cash of $59,381.

 
 
December 31, 2019
(in thousands)
 
Cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Fair value
Funds held for customers:(1)
 
 
 
 
 
 
 
 
Domestic money market fund
 
$
18,000

 
$
—

 
$
—

 
$
18,000

Canadian and provincial government securities
 
9,056

 
—

 
(304
)
 
8,752

Canadian guaranteed investment certificates
 
7,698

 
—

 
—

 
7,698

Available-for-sale debt securities
 
$
34,754

 
$
—

 
$
(304
)
 
$
34,450

 
(1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2019, also included cash of $83,191.
 
Expected maturities of available-for-sale debt securities as of June 30, 2020 were as follows:
(in thousands)
 
Fair value
Due in one year or less
 
$
16,318

Due in two to five years
 
2,861

Due in six to ten years
 
4,022

Available-for-sale debt securities
 
$
23,201



Further information regarding the fair value of available-for-sale debt securities can be found in Note 7.

Revenue in excess of billings – Upon adoption of ASU No. 2016-13 and related amendments on January 1, 2020 (Note 2), we recorded an allowance for uncollectible accounts related to revenue in excess of billings. This allowance was not significant upon adoption or as of June 30, 2020. Revenue in excess of billings, net of the allowance for uncollectible acounts, was comprised of the following:
(in thousands)
 
June 30,
2020
 
December 31,
2019
Conditional right to receive consideration
 
$
16,839

 
$
24,499

Unconditional right to receive consideration
 
8,175

 
8,291

Revenue in excess of billings
 
$
25,014

 
$
32,790



Intangibles – Intangibles were comprised of the following:
 
 
June 30, 2020
 
December 31, 2019
(in thousands)
 
Gross carrying amount
 
Accumulated amortization
 
Net carrying amount
 
Gross carrying amount
 
Accumulated amortization
 
Net carrying amount
Amortizable intangibles:
 
 

 
 

 
 

 
 

 
 

 
 

Internal-use software
 
$
397,913

 
$
(321,204
)
 
$
76,709

 
$
380,905

 
$
(299,698
)
 
$
81,207

Customer lists/relationships
 
310,282

 
(181,761
)
 
128,521

 
348,055

 
(187,462
)
 
160,593

Software to be sold
 
36,900

 
(21,770
)
 
15,130

 
36,900

 
(19,657
)
 
17,243

Technology-based intangibles
 
34,613

 
(25,313
)
 
9,300

 
34,780

 
(22,122
)
 
12,658

Trade names
 
29,952

 
(28,867
)
 
1,085

 
32,505

 
(28,084
)
 
4,421

Intangibles
 
$
809,660

 
$
(578,915
)

$
230,745


$
833,145


$
(557,023
)

$
276,122



During the first quarter of 2020, we recorded asset impairment charges related to certain intangible assets. Further information can be found in Note 7.

Amortization of intangibles was $21,529 for the quarter ended June 30, 2020, $28,314 for the quarter ended June 30, 2019, $45,040 for the six months ended June 30, 2020 and $56,488 for the six months ended June 30, 2019. Based on the intangibles in service as of June 30, 2020, estimated future amortization expense is as follows:
(in thousands)
 
Estimated
amortization
expense
Remainder of 2020
 
$
45,590

2021
 
70,492

2022
 
50,044

2023
 
30,139

2024
 
15,616



The following intangibles were acquired during the six months ended June 30, 2020:
(in thousands)
 
Amount
 
Weighted-average amortization period
(in years)
Internal-use software
 
$
20,286

 
3
Customer lists/relationships
 
735

 
5
Acquired intangibles
 
$
21,021

 
4


Goodwill – Changes in goodwill by reportable segment and in total for the six months ended June 30, 2020 were as follows :
(in thousands)
 
Payments
 
Cloud Solutions
 
Promotional Solutions
 
Checks
 
Total
Balance, December 31, 2019:
 
 
 
 
 
 
 
 
 
 
Goodwill, gross
 
$
168,165

 
$
432,984

 
$
252,834

 
$
434,812

 
$
1,288,795

Accumulated impairment charges
 
—

 
(357,741
)
 
(126,567
)
 
—

 
(484,308
)
Goodwill, net of accumulated impairment charges
 
168,165

 
75,243


126,267

 
434,812


804,487

Impairment charges (Note 7)
 
—

 
(4,317
)
 
(63,356
)
 
—

 
(67,673
)
Currency translation adjustment
 
—

 
—

 
(66
)
 
—

 
(66
)
Balance, June 30, 2020
 
$
168,165

 
$
70,926

 
$
62,845

 
$
434,812

 
$
736,748

 
 
 
 
 
 
 
 
 
 
 
Balance, June 30, 2020:
 
 

 
 

 
 

 
 
 
 

Goodwill, gross
 
$
168,165

 
$
432,984

 
$
252,768

 
$
434,812

 
$
1,288,729

Accumulated impairment charges
 
—

 
(362,058
)
 
(189,923
)
 
—

 
(551,981
)
Goodwill, net of accumulated impairment charges
 
$
168,165

 
$
70,926


$
62,845

 
$
434,812


$
736,748


Other non-current assets – Other non-current assets were comprised of the following:
(in thousands)
 
June 30,
2020
 
December 31,
2019
Postretirement benefit plan asset
 
$
59,457

 
$
56,743

Loans and notes receivable from Safeguard distributors, net of allowance for doubtful accounts(1)
 
55,255

 
66,872

Prepaid product discounts
 
43,541

 
51,145

Cloud computing arrangements
 
12,166

 
—

Deferred sales commissions(2)
 
10,789

 
9,682

Other
 
21,892

 
16,308

Other non-current assets
 
$
203,100

 
$
200,750



(1) Amount Includes the non-current portion of loans and note receivables. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $3,879 as of June 30, 2020 and $3,511 as of December 31, 2019.

(2) Amortization of deferred sales commissions was $1,817 for the six months ended June 30, 2020 and $1,464 for the six months ended June 30, 2019.

Upon adoption of ASU No. 2016-13 and related amendments on January 1, 2020 (Note 2), we recorded an additional allowance for uncollectible accounts related to loans and notes receivable from Safeguard distributors. Changes in this allowance for the six months ended June 30, 2020 and 2019 were as follows:
 
 
Six Months Ended June 30,
(in thousands)
 
2020
 
2019
Balance, beginning of year
 
$
284

 
$
284

Adoption of ASU No. 2016-13 (Note 2)
 
4,749

 
—

Bad debt expense
 
6,623

 
—

Balance, end of period
 
$
11,656

 
$
284



Bad debt expense for the six months ended June 30, 2020, included loan-specific allowances primarily related to a distributor that was underperforming. In calculating this reserve, we utilized various valuation techniques to determine the value of the underlying collateral. Other past due receivables and those on non-accrual status were not significant as of June 30, 2020.

We categorize loans and notes receivable into risk categories based on information about the ability of borrowers to service their debt, including current financial information, historical payment experience, current economic trends and other factors. The highest quality receivables are assigned a 1-2 internal grade. Those that have a potential weakness requiring management's attention are assigned a 3-4 internal grade.

The following table presents loans and notes receivable from Safeguard distributors, including the current portion, by credit quality indicator and by year of origination, as of June 30, 2020. There were no write-offs or recoveries recorded during the six months ended June 30, 2020.
 
 
Loans and notes receivable from distributors amortized cost basis by origination year
 
 
(in thousands)
 
2020
 
2019
 
2018
 
2017
 
2016
 
Prior
 
Total
Risk rating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1-2 internal grade
 
$
1,386

 
$
3,876

 
$
24,310

 
$
22,779

 
$
220

 
$
4,386

 
$
56,957

3-4 internal grade
 
—

 
2,553

 
7,508

 
—

 
—

 
3,772

 
13,833

Loans and notes receivable
 
$
1,386

 
$
6,429

 
$
31,818

 
$
22,779

 
$
220

 
$
8,158

 
$
70,790



Changes in prepaid product discounts during the six months ended June 30, 2020 and 2019 were as follows:
 
 
Six Months Ended June 30,
(in thousands)
 
2020
 
2019
Balance, beginning of year
 
$
51,145

 
$
54,642

Additions(1)
 
7,195

 
12,405

Amortization
 
(14,174
)
 
(11,681
)
Other
 
(625
)
 
(447
)
Balance, end of period
 
$
43,541

 
$
54,919

 
(1) Prepaid product discounts are generally accrued upon contract execution. Cash payments for prepaid product discounts were $15,806 for the six months ended June 30, 2020 and $16,182 for the six months ended June 30, 2019.

Accrued liabilities – Accrued liabilities were comprised of the following:
(in thousands)
 
June 30,
2020
 
December 31,
2019
Deferred revenue(1)
 
$
43,271

 
$
46,098

Employee cash bonuses
 
21,648

 
36,918

Wages
 
17,389

 
6,937

Operating lease liabilities
 
14,320

 
12,898

Prepaid product discounts due within one year
 
8,810

 
14,709

Other
 
68,772

 
61,778

Accrued liabilities
 
$
174,210

 
$
179,338


 
(1) $30,594 of the December 31, 2019 amount was recognized as revenue during the six months ended June 30, 2020.

Supplemental cash flow information – The reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the consolidated balance sheets was as follows:
(in thousands)
 
June 30,
2020
 
June 30,
2019
Cash and cash equivalents
 
$
371,951

 
$
66,732

Restricted cash and restricted cash equivalents included in funds held for customers
 
66,381

 
77,326

Total cash, cash equivalents, restricted cash and restricted cash equivalents
 
$
438,332

 
$
144,058