Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 02, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | CSG SYSTEMS INTERNATIONAL INC | |
Entity Central Index Key | 1,005,757 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | CSGS | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 33,328,416 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 197,172 | $ 122,243 |
Short-term investments | 2,130 | 139,117 |
Total cash, cash equivalents and short-term investments | 199,302 | 261,360 |
Trade accounts receivable: | ||
Billed, net of allowance of $4,182 and $4,149 | 246,731 | 219,531 |
Unbilled | 36,847 | 31,187 |
Income taxes receivable | 7,452 | 13,839 |
Other current assets | 38,706 | 28,349 |
Total current assets | 529,038 | 554,266 |
Non-current assets: | ||
Property and equipment, net of depreciation of $108,266 and $123,126 | 78,265 | 44,651 |
Intangible assets | 71,816 | |
Goodwill | 210,697 | 210,080 |
Client contract costs, net of amortization of $37,038 and zero | 35,584 | |
Deferred income taxes | 11,011 | 14,057 |
Other assets | 10,898 | 10,948 |
Total non-current assets | 418,271 | 350,268 |
Total assets | 947,309 | 904,534 |
Current liabilities: | ||
Current portion of long-term debt | 7,500 | 22,500 |
Client deposits | 36,079 | 31,053 |
Trade accounts payable | 39,054 | 38,420 |
Accrued employee compensation | 56,578 | 62,984 |
Deferred revenue | 41,388 | 41,885 |
Income taxes payable | 448 | 1,216 |
Other current liabilities | 21,590 | 24,535 |
Total current liabilities | 202,637 | 222,593 |
Non-current liabilities: | ||
Long-term debt, net of unamortized discounts of $15,641 and $18,264 | 353,109 | 309,236 |
Deferred revenue | 13,578 | 12,346 |
Income taxes payable | 2,372 | 2,415 |
Deferred income taxes | 5,881 | 4,584 |
Other non-current liabilities | 11,313 | 10,614 |
Total non-current liabilities | 386,253 | 339,195 |
Total liabilities | 588,890 | 561,788 |
Stockholders' equity: | ||
Preferred stock, par value $.01 per share; 10,000 shares authorized; zero shares issued and outstanding | ||
Common stock, par value $.01 per share; 100,000 shares authorized; 33,451 and 33,516 shares outstanding | 693 | 689 |
Common stock warrants; 439 warrants vested; 1,425 issued | 9,082 | 9,082 |
Additional paid-in capital | 436,412 | 427,091 |
Treasury stock, at cost; 34,470 and 34,075 shares | (831,585) | (814,732) |
Accumulated other comprehensive income (loss): | ||
Unrealized loss on short-term investments, net of tax | (7) | (88) |
Cumulative foreign currency translation adjustments | (37,364) | (28,734) |
Accumulated earnings | 781,188 | 749,438 |
Total stockholders' equity | 358,419 | 342,746 |
Total liabilities and stockholders' equity | 947,309 | 904,534 |
Software | ||
Non-current assets: | ||
Intangible assets | 31,953 | 26,906 |
Client contracts | ||
Non-current assets: | ||
Intangible assets | $ 43,626 | |
Acquired client contracts | ||
Non-current assets: | ||
Intangible assets | $ 39,863 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Trade accounts receivable-billed, allowance | $ 4,182 | $ 4,149 |
Property and equipment, accumulated depreciation | 108,266 | 123,126 |
Intangibles, accumulated amortization | 198,047 | |
Client contract costs, accumulated amortization | 37,038 | 0 |
Long-term debt, unamortized discounts | $ 15,641 | $ 18,264 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares outstanding | 33,451,000 | 33,516,000 |
Common stock warrants, vested | 439,000 | 439,000 |
Common stock warrants, issued | 1,425,000 | 1,425,000 |
Treasury stock, shares | 34,470,000 | 34,075,000 |
Software | ||
Intangibles, accumulated amortization | $ 116,761 | $ 108,986 |
Client contracts | ||
Intangibles, accumulated amortization | 0 | 97,109 |
Acquired client contracts | ||
Intangibles, accumulated amortization | $ 81,286 | $ 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Total revenues | $ 213,055 | $ 199,195 | $ 627,792 | $ 584,378 |
Cost of revenues (exclusive of depreciation, shown separately below): | ||||
Total cost of revenues | 109,052 | 99,717 | 319,640 | 295,085 |
Other operating expenses: | ||||
Research and development | 31,477 | 30,324 | 91,809 | 85,103 |
Selling, general and administrative | 39,243 | 35,816 | 120,515 | 109,981 |
Depreciation | 4,831 | 3,344 | 13,293 | 9,975 |
Restructuring and reorganization charges | 2,799 | 1,618 | 7,028 | 4,597 |
Total operating expenses | 187,402 | 170,819 | 552,285 | 504,741 |
Operating income | 25,653 | 28,376 | 75,507 | 79,637 |
Other income (expense): | ||||
Interest expense | (4,456) | (4,186) | (13,202) | (12,638) |
Amortization of original issue discount | (671) | (634) | (1,984) | (2,147) |
Interest and investment income, net | 675 | 800 | 2,256 | 2,310 |
Loss on extinguishment of debt | (810) | |||
Other, net | (709) | (970) | (347) | (1,123) |
Total other | (5,161) | (4,990) | (14,087) | (13,598) |
Income before income taxes | 20,492 | 23,386 | 61,420 | 66,039 |
Income tax provision | (4,391) | (8,806) | (16,188) | (19,641) |
Net income | $ 16,101 | $ 14,580 | $ 45,232 | $ 46,398 |
Weighted-average shares outstanding: | ||||
Basic | 32,507 | 32,561 | 32,541 | 32,383 |
Diluted | 32,806 | 32,901 | 32,939 | 32,825 |
Earnings per common share: | ||||
Basic | $ 0.50 | $ 0.45 | $ 1.39 | $ 1.43 |
Diluted | $ 0.49 | $ 0.44 | $ 1.37 | $ 1.41 |
Cloud and Related Solutions | ||||
Revenues: | ||||
Total revenues | $ 186,473 | $ 164,789 | $ 551,390 | $ 481,445 |
Cost of revenues (exclusive of depreciation, shown separately below): | ||||
Total cost of revenues | 95,092 | 79,856 | 277,212 | 233,194 |
Software and Services | ||||
Revenues: | ||||
Total revenues | 14,283 | 15,726 | 39,573 | 46,680 |
Cost of revenues (exclusive of depreciation, shown separately below): | ||||
Total cost of revenues | 8,669 | 9,725 | 25,816 | 31,404 |
Maintenance | ||||
Revenues: | ||||
Total revenues | 12,299 | 18,680 | 36,829 | 56,253 |
Cost of revenues (exclusive of depreciation, shown separately below): | ||||
Total cost of revenues | $ 5,291 | $ 10,136 | $ 16,612 | $ 30,487 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 16,101 | $ 14,580 | $ 45,232 | $ 46,398 |
Other comprehensive income, net of tax: | ||||
Foreign currency translation adjustments | (109) | 5,609 | (8,630) | 15,173 |
Unrealized holding gains on short-term investments arising during period | 107 | 7 | 81 | 154 |
Other comprehensive income (loss), net of tax | (2) | 5,616 | (8,549) | 15,327 |
Total comprehensive income, net of tax | $ 16,099 | $ 20,196 | $ 36,683 | $ 61,725 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 45,232 | $ 46,398 |
Adjustments to reconcile net income to net cash provided by operating activities- | ||
Depreciation | 13,293 | 9,975 |
Amortization | 31,974 | 21,670 |
Amortization of original issue discount | 1,984 | 2,147 |
Asset impairment | 1,428 | 2,135 |
Gain on short-term investments and other | (65) | (76) |
Loss on extinguishment of debt | 810 | |
Deferred income taxes | 2,150 | 1,487 |
Stock-based compensation | 14,805 | 16,659 |
Changes in operating assets and liabilities, net of acquired amounts: | ||
Trade accounts receivable, net | (15,952) | 7,567 |
Other current and non-current assets | (21,763) | (1,788) |
Income taxes payable/receivable | 5,365 | 1,715 |
Trade accounts payable and accrued liabilities | (13,174) | (16,007) |
Deferred revenue | 7,182 | 10,940 |
Net cash provided by operating activities | 73,269 | 102,822 |
Cash flows from investing activities: | ||
Purchases of software, property and equipment | (44,047) | (23,370) |
Purchases of short-term investments | (53,285) | (116,203) |
Proceeds from sale/maturity of short-term investments | 190,467 | 150,768 |
Acquisition of and investments in business, net of cash acquired | (71,443) | |
Acquisition of and investments in client contracts | (10,082) | |
Net cash provided by investing activities | 21,692 | 1,113 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 1,701 | 1,259 |
Payment of cash dividends | (21,197) | (20,405) |
Repurchase of common stock | (24,034) | (24,764) |
Proceeds from long-term debt | 150,000 | |
Payments on long-term debt | (123,750) | (11,250) |
Settlement of convertible notes | (34,771) | |
Payments of deferred financing costs | (1,490) | |
Net cash used in financing activities | (18,770) | (89,931) |
Effect of exchange rate fluctuations on cash | (1,262) | 2,396 |
Net increase in cash and cash equivalents | 74,929 | 16,400 |
Cash and cash equivalents, beginning of period | 122,243 | 126,351 |
Cash and cash equivalents, end of period | 197,172 | 142,751 |
Cash paid during the period for- | ||
Interest | 14,181 | 13,638 |
Income taxes | $ 8,426 | $ 16,407 |
General
General | 9 Months Ended |
Sep. 30, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
General | 1. GENERAL We have prepared the accompanying unaudited condensed consolidated financial statements as of September 30, 2018 and December 31, 2017, and for the quarters and nine months ended September 30, 2018 and 2017, in accordance with accounting principles generally accepted (“GAAP”) in the United States of America (“U.S.”) for interim financial information, and pursuant to the instructions to Form 10-Q and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of our management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position and operating results have been included. The unaudited Condensed Consolidated Financial Statements (the “Financial Statements”) should be read in conjunction with the Consolidated Financial Statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contained in our Annual Report on Form 10-K for the year ended December 31, 2017 (our “2017 10-K”), filed with the SEC. The results of operations for the quarter and nine months ended September 30, 2018 are not necessarily indicative of the expected results for the entire year ending December 31, 2018. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates in Preparation of Financial Statements. The preparation of the accompanying Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our Financial Statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Revenue . We adopted Topic 606 (“ASC 606”) as of January 1, 2018 using the cumulative effect method and have applied ASC 606 to all contracts with clients that had not been completed as of the date of initial application. In conjunction with the adoption of ASC 606, we recorded a cumulative adjustment increasing beginning retained earnings (net of tax) by approximately $7 million, primarily related to contracts that we were previously required to defer revenue as we did not have vendor specific objective evidence (“VSOE”) of fair value for certain undelivered elements. Since we adopted ASC 606 using the cumulative effect method, comparative information in our Financial Statements has not been adjusted and continues to be as previously reported. 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 As a result of adopting ASC 606, we have changed our accounting policies for revenue recognition as discussed in more detail below. In summary, our revenue from client contracts is primarily related to our cloud and related solutions and, to a lesser degree, software and service and related maintenance arrangements, and is measured based on consideration specified within each of our contracts, excluding sales incentives and amounts collected on behalf of third parties, if any. We account for various products and services separately if they are distinct. A product or service, or group of products or services, is distinct if it is separately identifiable from other items in the context of the contract and if our client can benefit from the product or service on their own or with other resources that are readily available to that client. We recognize revenue when we satisfy our performance obligations by transferring control of a particular product or service, or group of products or services, to our clients, as described in more detail below. Taxes assessed on our products and services based on governmental authorities at the time of invoicing are excluded from our revenue. Cloud and Related Solutions. Our cloud and related solutions revenues relate to: (i) our software-as-a-service (“SaaS”), cloud-based, revenue management and digital monetization solutions, and various related ancillary services; and (ii) our managed services offering in which we operate software solutions (primarily our software solutions) on behalf of our clients. We contract for our cloud-based solutions using long-term arrangements whose terms have typically ranged from three to five years. The long-term cloud-based arrangements include a series of multiple services delivered daily or monthly, to include such things as: (i) revenue and customer communications management services; (ii) business support services (e.g., workforce management tools, consumer credit verifications, etc.); (iii) content monetization and delivery functions; and (iv) customer statement invoice printing and mailing services. The fees for these services typically are billed to our clients monthly based upon actual monthly volumes and/or usage of services (e.g., the number of client customers maintained on our systems, the number of transactions processed on our systems, and/or the quantity and content of the monthly statements and mailings processed through our systems). For cloud-based solution contracts, the total contract consideration (including impacts of discounts or incentives) is primarily variable dependent upon actual monthly volumes and/or usage of services; however, these contracts can also include ancillary fixed consideration in the form of one-time, monthly or annual fees. Although there may be multiple performance obligations, there is generally no allocation of value between the individual performance obligations as all are considered cloud and related solutions revenues that are recognized based on activities performed in each daily or monthly period. We contract for managed services solutions using long-term arrangements whose terms have typically ranged from three to five years. Under managed services agreements, we may operate software products (primarily our software solutions) on behalf of our clients: (i) out of a client’s data center; (ii) out of a data center we own and operate; or (iii) out of a third-party data center we contract with for such services. Managed services can also include us providing other services, such as transitional services, fulfillment, remittance processing, operational consulting, back office, and end user billing services. For managed services contracts, the total contract consideration is typically a fixed fee, but these contracts may also have variable fee components. The fees for these services typically are billed to our clients on a monthly basis. Unless managed services are included with a software license contract (as discussed further below), there is generally only one performance obligation and revenue is recognized for these arrangements on a ratable basis as the services are performed. Fees related to set-up or implementation activities for both cloud-based solution and managed services contracts are deferred and recognized ratably over the related service period to which the activities relate. Depending on the significance of variable consideration, number of products/services, complex pricing structures and long-term nature of these types of contracts, the judgments and estimates made in this area could have a significant effect on the amount and timing of revenues recognized in any period. Prior to the adoption of ASC 606, we recognized revenue related to our cloud and related solutions contracts on a monthly basis as we provided the services. The adoption of ASC 606 did not result in any significant changes to the timing of revenue recognition related to these contracts. Software and Services. Our software and services revenues relate primarily to: (i) software license sales on either a perpetual or term license basis; and (ii) professional services to implement the software. Our software and services contracts are often contracted in bundled arrangements that include not only the software license and related implementation services, but can also include maintenance, managed services and/or additional professional services. For our software arrangements, the total contract consideration is allocated between the separate performance obligations based on stand-alone selling prices for software licenses, cost plus applicable margin for services and established pricing for maintenance. The initial sale of software products generally requires significant production, modification or customization, such that the delivery of the software license and the related professional services required to implement the software represent one combined performance obligation that is satisfied over time based of hours worked (hours-based method). We are using hours worked on the project as the measure to determine progress toward completion as we believe it is the most appropriate metric to measure such progress. The software and services fees are generally billed to our clients on a milestone or date basis. The determination of the performance obligations and allocation of value for software license arrangements require significant judgment. We generally determine stand-alone selling prices using pricing calculations (which include regional market factors) for our software license fees and maintenance, and cost-plus margins for services. Additionally, our use of an hours-based method of accounting for software license and other professional services performance obligations that are satisfied over time requires estimates of total project revenues and costs, along with the expected hours necessary to complete a project. Changes in estimates as a result of additional information or experience on a project as work progresses are inherent characteristics of this method of revenue recognition as we are exposed to various business risks in completing these types of performance obligations. The estimation process to support our hours-based recognition method is more difficult for projects of greater length and/or complexity. The judgments and estimates made in this area could: (i) have a significant effect on revenues recognized in any period by changing the amount and/or the timing of the revenue recognized; and/or (ii) impact the expected profitability of a project, including whether an overall loss on an arrangement has occurred. To mitigate the inherent risks in using this hours-based method, we track our performance on projects and reevaluate the appropriateness of our estimates as part of our monthly accounting cycle. In certain instances, we sell software license volume upgrades, which provide our clients the right to use our software to process higher transaction volume levels. In these instances, we analyze the contract to determine if the volume upgrade is a separate performance obligation and if so, we recognize the value associated with the software license as revenue on the effective date of the volume upgrade. A portion of our professional services revenues are contracted separately (e.g., business consulting services, etc.). Such contracts can either be on a fixed-price or time-and-materials basis. Revenues from fixed-price, professional service contracts are recognized using an hours-based method, as these professional services represent a performance obligation that is satisfied over time. Revenues from professional services contracts billed on a time-and-materials basis are recognized as the services are performed. Prior to the adoption of ASC 606, we recognized revenue for our software arrangements under the guidelines of contract accounting as our software products required significant production, modification or customization and if we had VSOE of fair value for undelivered elements (e.g., maintenance), which we generally had, we would allocate a portion of the total arrangement fee to the undelivered element based on its VSOE of fair value, and the balance of the arrangement fee was recognized using the percentage-of-completion (“POC”) method of accounting. Maintenance Our maintenance revenue relates primarily to support of our software once it has been implemented. Maintenance revenues are recognized ratably over the software maintenance period as services are provided. Our maintenance consists primarily of client and product support, technical updates (e.g., bug fixes, etc.), and unspecified upgrades or enhancements to our software products. If specified upgrades or enhancements are offered in a contract, which is rare, they are accounted for as a separate performance obligation. Maintenance can be invoiced to our clients on a monthly, quarterly or annual basis. Transaction Price Allocated to the Remaining Performance Obligations As of September 30, 2018, our aggregate amount of the transaction price allocated to the remaining performance obligations is approximately $527 million, which is made up of fixed fee consideration and guaranteed minimums expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied). We expect to recognize approximately 70% of this amount by the end of 2020, with the remaining amount recognized by the end of 2028. We have excluded from this amount variable consideration expected to be recognized in the future related to performance obligations that are unsatisfied (a practical expedient allowed under ASC 606). The majority of our future revenue is related to our cloud and related solution client contracts that include variable consideration dependent upon a series of monthly volumes and/or daily usage of services and have contractual terms ending from 2019 through 2028. We have not disclosed transaction price allocation to remaining performance obligations or an explanation thereof of comparable amounts as of December 31, 2017 (a transitional practical expedient allowed under ASC 606). Disaggregation of Revenue 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 Billed and Unbilled Accounts Receivable. Billed accounts receivable represents our unconditional rights to consideration. Once invoiced, our payment terms are generally between 30-60 days, and rarely do we have contracts with financing arrangements. Unbilled accounts receivable represents our rights to consideration for work completed but not billed. Unbilled accounts receivable is transferred to billed accounts receivable when the rights become unconditional which is generally at the time of invoicing. 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 Deferred Revenue. Deferred revenue represents consideration received from clients in advance of services being performed. 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 ) Cash and Cash Equivalents. We consider all highly liquid investments with original maturities of three months or less at the date of the purchase to be cash equivalents. As of September 30, 2018 and December 31, 2017, our cash equivalents consist primarily of institutional money market funds, commercial paper, and time deposits held at major banks. As of September 30, 2018 and December 31, 2017, we had $3.0 million and $4.2 million, respectively, of restricted cash that serves to collateralize outstanding letters of credit. This restricted cash is included in cash and cash equivalents in our Condensed Consolidated Balance Sheets (“Balance Sheets” or “Balance Sheet”). Short-term Investments and Other Financial Instruments . Our financial instruments as of September 30, 2018 and December 31, 2017 include cash and cash equivalents, short-term investments, accounts receivable, accounts payable, and debt. Because of their short maturities, the carrying amounts of cash equivalents, accounts receivable, and accounts payable approximate their fair value. Our short-term investments and certain of our cash equivalents are considered “available-for-sale” and are reported at fair value in our Balance Sheets, with unrealized gains and losses, net of the related income tax effect, excluded from earnings and reported in a separate component of stockholders’ equity. Realized and unrealized gains and losses were not material in any period presented. Primarily all short-term investments held by us as of September 30, 2018 and December 31, 2017 have contractual maturities of less than two years from the time of acquisition. Our short-term investments as of September 30, 2018 and December 31, 2017 consisted almost entirely of fixed income securities. Proceeds from the sale/maturity of short-term investments for the nine months ended September 30, 2018 and 2017 were $190.5 million and $150.8 million, respectively. Our short-term investments as of September 30, 2018 and December 31, 2017 were $2.1 million and $139.1 million, respectively. The significant decrease in our short-term investments between periods is due primarily to the acquisition of Business Ink in February 2018 for approximately $70 million and positioning of cash as of September 30, 2018 for the acquisition of Forte Payment Systems, Inc., which closed on October 1, 2018 for a purchase price of approximately $85 million, (approximately $80 million, net of cash acquired), less approximately $13 million in cash subject to certain tax filings (see Note 5). 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 Valuation inputs used to measure the fair values of our money market funds and corporate equity securities were derived from quoted market prices. The fair values of all other financial instruments are based upon pricing provided by third-party pricing services. These prices were derived from observable market inputs. 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 The fair value for our credit agreement was estimated using a discounted cash flow methodology, while the fair value for our convertible debt was estimated based upon quoted market prices or recent sales activity, both of which are considered Level 2 inputs. See Note 4 for additional discussion regarding an amendment to our Credit Agreement. Equity Method Investment. On July 30, 2018, we made a $2 million investment for a 4% noncontrolling financial interest in a payment technology and services company that enables omni-channel digital payments in Latin America. We are accounting for this investment using the equity method in accordance with Topic 323 . Accordingly, we recorded an initial investment of $2.8 million which includes direct costs of acquiring the investment. We will record our share of earnings and losses in the investment on a one-quarter lag basis which will result in an adjustment to our initial investment during the quarter-ending December 31, 2018. Other Accounting Pronouncements Adopted. In October 2016, the FASB issued ASU 2016-16, . This ASU requires entities to recognize at the transaction date the income tax consequences of intercompany asset transfers. This ASU is effective in annual and interim periods in fiscal years beginning after December 15, 2017, with early adoption permitted, and requires a modified retrospective transition method. We adopted this ASU in January 2018 and the adoption of this standard did not have a material impact on our Financial Statements. Accounting Pronouncement Issued But Not Yet Effective. In February 2016, the FASB issued ASU 2016-02, (Topic 842). This ASU requires lessees to recognize a lease liability and a right-to-use asset for all leases, including operating leases, with a term greater than twelve months on its balance sheet. This ASU is effective in annual and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. An entity may choose to adopt this ASU either retrospectively or prospectively as of the start of the first period for which it applies the standard (the effective date method). In 2018, we started the process of evaluating the impact this ASU on our accounting policies, business processes, and financial statements. We have formed a project team and started the process of lease identification, review, and data extraction for purposes of calculating the transition adjustment to be recorded on the effective date. In conjunction with these efforts, we are updating our policies to align with the new accounting guidance and our processes to ensure we properly account for new, existing, and modifications to leases subsequent to the adoption of the ASU. We continue to believe the adoption of this standard will have a material impact on our consolidated balance sheet. We currently intend to adopt the ASU in the first quarter of 2019, utilizing the effective date method of transition. |
Long-Lived Assets
Long-Lived Assets | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Long-Lived Assets | 3. LONG-LIVED ASSETS Goodwill. The changes in the carrying amount of goodwill for the nine months ended September 30, 2018, were as follows (in thousands): January 1, 2018 balance $ 210,080 Business Ink acquisition 3,314 Effects of changes in foreign currency exchange rates (2,697 ) September 30, 2018 balance $ 210,697 See Note 5 for discussion regarding the Business Ink acquisition. Other Intangible Assets. As part of the adoption of ASC 606, at January 1, 2018, we reclassified our investments in client contracts and capitalized costs related to conversion/set-up activities from “client contracts” to “client contract costs” on our Balance Sheet. As of September 30, 2018, our intangible assets subject to ongoing amortization consist of acquired client contracts and software. As of September 30, 2018 and December 31, 2017, the carrying values of our other intangible assets were as follows (in thousands): September 30, 2018 December 31, 2017 Gross Gross Carrying Accumulated Net Carrying Accumulated Net Amount Amortization Amount Amount Amortization Amount Investments in client contracts $ - $ - $ - $ 26,616 $ (9,782 ) $ 16,834 Capitalized costs - - - 26,811 (10,039 ) 16,772 Acquired client contracts 121,149 (81,286 ) 39,863 87,308 (77,288 ) 10,020 Total client contracts 121,149 (81,286 ) 39,863 140,735 (97,109 ) 43,626 Software 148,714 (116,761 ) 31,953 135,892 (108,986 ) 26,906 Total intangible assets $ 269,863 $ (198,047 ) $ 71,816 $ 276,627 $ (206,095 ) $ 70,532 Other intangible assets as of September 30, 2018 include assets acquired in the Business Ink business acquisition (see Note 5). The total amortization expense related to other intangible assets for the third quarters of 2018 and 2017 were $4.6 million and $6.7 million, respectively, and for the nine months ended September 30, 2018 and 2017 were $13.4 million and $20.0 million, respectively. Client Contract Costs . As of September 30, 2018, the carrying values of our contract cost assets, related to those contracts with a contractual term greater than one year, were as follows (in thousands): September 30, 2018 Gross Carrying Accumulated Net Amount Amortization Amount Client contract incentives (1) $ 28,366 $ (18,053 ) $ 10,313 Capitalized costs (2) 37,313 (17,485 ) 19,828 Capitalized commission fees (3) 6,943 (1,500 ) 5,443 Total client contract costs $ 72,622 $ (37,038 ) $ 35,584 The aggregate amortization related to our client contract costs include in our operations for the quarter and nine months ended September 30, 2018 was as follows (in thousands): Quarter Ended Nine Months Ended September 30, September 30, Client contract incentives (1) $ 2,781 $ 8,272 Capitalized costs (2) 2,658 7,495 Capitalized commission fees (3) 583 1,518 Total client contract costs $ 6,022 $ 17,285 (1) Client contract incentives consist principally of incentives provided to new or existing clients to convert their customer accounts to, or retain their customer’s account on, our outsourced solutions and are amortized ratably over the contract period to include renewal periods if applicable, which as of September 30, 2018, have termination dates that range from 2019 to 2025. The amortization of client contract incentives is reflected as a reduction in cloud and related solutions revenue in our Income Statement. (2) Capitalized costs are related to client conversion/set-up activities and direct material costs to fulfill long-term cloud-based or managed services arrangements. These costs are amortized over the contract period based on the transfer of goods or services to which the assets relate, which as of September 30, 2018 range from 2019 to 2023, and are included in cost of cloud and related solutions in our Income Statement. (3) Capitalized commission fees are incremental commissions paid as a result of obtaining a customer contract. These fees are amortized over the contract period based on the transfer of goods or services to which the assets relate, which as of September 30, 2018, range from 2019 to 2025, and are included in selling, general and administrative expenses in our Income Statement. Incremental commission fees incurred as a result of obtaining a customer contract are expensed when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less (a practical expedient allowed under ASC 606). |
Debt
Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | 4. DEBT Our long-term debt, as of September 30, 2018 and December 31, 2017, was as follows (in thousands): September 30, December 31, 2018 2017 2015 Credit Agreement: Term loan, due February 2020, interest at adjusted LIBOR plus 1.75% (combined rate of 3.44% at December 31, 2017) $ — $ 120,000 Less - deferred financing costs — (2,274 ) 2015 term loan, net of unamortized discounts — 117,726 $200 million revolving loan facility, due February 2020, interest at adjusted LIBOR plus applicable margin — — 2018 Credit Agreement: Term loan, due March 2023, interest at adjusted LIBOR plus 1.5% (combined rate of 3.89% at September 30, 2018) 146,250 — Less - deferred financing costs (2,424 ) — 2018 term loan, net of unamortized discounts 143,826 — $200 million revolving loan facility, due March 2023, interest at adjusted LIBOR plus applicable margin — — Convertible Notes: 2016 Convertible Notes – Senior convertible notes; due March 15, 2036; cash interest at 4.25% 230,000 230,000 Less – unamortized original issue discount (9,503 ) (11,487 ) Less – deferred financing costs (3,714 ) (4,503 ) 2016 Convertible Notes, net of unamortized discounts 216,783 214,010 Total debt, net of unamortized discounts 360,609 331,736 Current portion of long-term debt, net of unamortized discounts (7,500 ) (22,500 ) Long-term debt, net of unamortized discounts $ 353,109 $ 309,236 Credit Agreement 2018 Credit Agreement. On March 5, 2018, we entered into a new $350 million credit agreement (the “2018 Credit Agreement”) with a consortium of banks to replace the 2015 Credit Agreement. The 2018 Credit Agreement provides borrowings in the form of: (i) a $150 million aggregate principal five-year term loan (the “2018 Term Loan”); and (ii) a $200 million aggregate principal five-year revolving loan facility (the “2018 Revolver”). With the $150 million proceeds from the 2018 Term Loan, we repaid the outstanding $120 million balance of the term loan under the 2015 Credit Agreement, resulting in a net increase of available cash by $30 million, a portion of which was used to pay certain fees and expenses in connection with the refinancing, and the remainder of which will be used for general corporate purposes. The interest rates under the 2018 Credit Agreement are based upon our choice of an adjusted LIBOR rate plus an applicable margin of 1.50% - 2.50%, or an alternate base rate plus an applicable margin of 0.50% -1.50%, with the applicable margin, depending on our then-net secured total leverage ratio. We will pay a commitment fee of 0.200% - 0.375% of the average daily unused amount of the 2018 Revolver, with the commitment fee rate also dependent upon our then-net secured total leverage ratio. The 2018 Credit Agreement includes mandatory repayments of the aggregate principal amount of the 2018 Term Loan (payable quarterly) for the first, second, third, fourth, and fifth years, with the remaining principal balance due at maturity. The 2018 Credit Agreement has no prepayment penalties and requires mandatory repayments under certain circumstances, including: (i) asset sales or casualty proceeds; and (ii) proceeds of debt or preferred stock issuances. The 2018 Credit Agreement contains customary affirmative covenants. In addition, the 2018 Credit Agreement has customary negative covenants that places limits on our ability to: (i) incur additional indebtedness; (ii) create liens on its property; (iii) make investments; (iv) enter into mergers and consolidations; (v) sell assets; (vi) declare dividends or repurchase shares; (vii) engage in certain transactions with affiliates; and (viii) prepay certain indebtedness; and (ix) issue capital stock of subsidiaries. We must also meet certain financial covenants to include: (i) a maximum total leverage ratio; (ii) a maximum first-lien leverage ratio; and (iii) a minimum interest coverage ratio. In conjunction with the 2018 Credit Agreement, we entered into a security agreement in favor of Bank of America N.A, as collateral agent (the “Security Agreement”). Under the Security Agreement and 2018 Credit Agreement, certain of our domestic subsidiaries have guaranteed our obligations, and have pledged substantially all of our assets to secure the obligations under the 2018 Credit Agreement and such guarantees. During the nine months ended September 30, 2018, we made $3.8 million of principal repayments on our 2018 Credit Agreement. As of September 30, 2018, our interest rate on the 2018 Term Loan is 3.89% (adjusted LIBOR plus 1.50% per annum), effective through December 30, 2018, and our commitment fee on the 2018 Revolver is 0.20%. As of September 30, 2018, we had no borrowings outstanding on our 2018 Revolver and had the entire $200.0 million available to us. In conjunction with the closing of the 2018 Credit Agreement, we incurred financing costs of $1.5 million. When combined with the remaining deferred financing costs of the 2015 Credit Agreement, financing costs of $2.8 million have been deferred and are being amortized to interest expense using the effective interest method over the related term of the 2018 Credit Agreement. Additionally, as certain lenders from the 2015 Credit Agreement chose not to participate in the 2018 Credit Agreement syndication group, we wrote-off $0.8 million of unamortized debt issuance costs and recognized a loss on extinguishment of that debt. Convertible Notes 2016 Convertible Notes. Upon conversion of the 2016 Convertible Notes, we will settle our conversion obligation by paying or delivering, as the case may be, cash, shares of our common stock, or a combination thereof, at our election. It is our current intent and policy to settle our conversion obligations as follows: (i) pay cash for 100% of the par value of the 2016 Convertible Notes that are converted; and (ii) to the extent the value of our conversion obligation exceeds the par value, we can satisfy the remaining conversion obligation in our common stock, cash or a combination thereof. The 2016 Convertible Notes will be convertible at the option of the note holders upon the satisfaction of specified conditions and during certain periods. During the period from, and including, December 15, 2021 to the close of business on the business day immediately preceding March 15, 2022 and on or after December 15, 2035, holders may convert all or any portion of their 2016 Convertible Notes at the conversion rate then in effect at any time regardless of these conditions. As a result of us increasing our quarterly dividend in September 2018 (see Note 10), the previous conversion rate for the 2016 Convertible Notes of 17.5057 shares of our common stock per $1,000 principal amount of the 2016 Convertible Notes, which is equivalent to an initial conversion price of approximately $57.12 per share of our common stock, has been adjusted to 17.5173 shares of our common stock per $1,000 principal amount of the 2016 Convertible Notes, which is equivalent to an initial conversion price of approximately $57.09 per share of our common stock. Holders may require us to repurchase the 2016 Convertible Notes for cash on each of March 15, 2022, March 15, 2026, and March 15, 2031, or upon the occurrence of a fundamental change (as defined in the 2016 Convertible Notes Indenture) in each case at a purchase price equal to the principal amount thereof plus accrued and unpaid interest. We may not redeem the 2016 Convertible Notes prior to March 20, 2020. On or after March 20, 2020, we may redeem for cash all or part of the 2016 Convertible Notes if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. On or after March 15, 2022, we may redeem for cash all or part of the 2016 Convertible Notes regardless of the sales price condition described in the preceding sentence. In each case, the redemption price will equal the principal amount of the 2016 Convertible Notes to be redeemed, plus accrued and unpaid interest. As of September 30, 2018, none of the conversion features have been achieved, and thus, the 2016 Convertible Notes are not convertible by the holders. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | 5. ACQUISITIONS Business Ink On February 28, 2018, we acquired Business Ink for approximately $70 million in cash. Business Ink is a company based in Austin, Texas, with facilities in multiple locations. Business Ink provides outsourced, customized business communications services to the telecommunications, healthcare, financial services, utilities and government sectors across statements, email, mobile messaging and more. The acquisition extends the scale of our operations and platform capabilities, expands our customer base into new verticals, and further solidifies our customer communications footprint. The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands): Current assets $ 25,726 Fixed assets 13,337 Acquired client contracts 35,150 Acquired software 4,132 Goodwill 3,314 Non-current assets 148 Total assets acquired 81,807 Current liabilities (11,586 ) Non-current liabilities (256 ) Total liabilities assumed (11,842 ) Net assets acquired $ 69,965 The above estimated fair values of assets acquired and liabilities assumed are considered provisional and are based on the information that was available as of the date of the Business Ink acquisition to estimate the fair value of assets acquired and liabilities assumed. We believe that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but we are waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. During the nine-months ended September 30, 2018, we made certain adjustments, primarily to increase the value of the acquired client contracts by $4.3 million. As a result of these adjustments, the amount allocated to goodwill decreased by $0.2 million and $4.7 million during the three and nine-months ended September 30, 2018, respectively. We expect to finalize the valuation and complete the purchase price allocation as soon as practicable, but not later than one year from the acquisition date. The Business Ink goodwill has been assigned to our one reportable segment. The estimated lives assigned to the acquired client contracts and the acquired software assets range from approximately four months to fifteen years (weighted-average life of thirteen years), and four years, respectively. Amortization expense related to these acquired intangible assets is recognized based upon the pattern in which the economic benefits of the acquired intangible assets are expected to be received. The Business Ink goodwill and acquired intangible assets are deductible for income tax purposes. The results of operations of Business Ink are included in the accompanying Condensed Consolidated Statements of Income for the period subsequent to the acquisition date. Pro forma information on our historical results of operations to reflect the acquisition of Business Ink is not presented as Business Ink’s results of operations during prior periods are not significant to our results of operations. Forte Payment Systems, Inc. On October 1, 2018, we acquired Forte Payment Systems, Inc. (“Forte”), a leading provider of advanced payment solutions headquartered in Allen, Texas. The acquisition of Forte accelerates our ability to offer a comprehensive suite of next generation payment solutions that enables service providers to provide a differentiated customer experience, while also strengthening our position in the revenue management and payments sector and allowing us to grow our footprint into new verticals. We acquired 100% of the equity of Forte for a purchase price of approximately $85 million, (approximately $80 million, net of cash acquired), and held back approximately $13 million in cash subject to certain tax filings. The purchase agreement includes provisions for $18.8 million of potential future earn-out payments over a four-year measurement period. The earn-out payments are tied to performance-based goals and a defined service period by the eligible recipients. The results of Forte will be included in our results of operations for the period subsequent to the acquisition date. We have not completed the valuation analysis and calculations necessary to finalize the required purchase price allocations. In addition to goodwill, the final purchase price allocation may include allocations to intangible assets such as trademarks and trade names, developed technology, noncompetition agreements, and customer-related assets. |
Restructuring and Reorganizatio
Restructuring and Reorganization Charges | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring And Related Activities [Abstract] | |
Restructuring and Reorganization Charges | 6. RESTRUCTURING AND REORGANIZATION CHARGES During the third quarters of 2018 and 2017, we recorded restructuring and reorganization charges of $2.8 million and $1.6 million, respectively, and for the nine months ended September 30, 2018 and 2017, we recorded restructuring and reorganization charges of $7.0 million and $4.6 million, respectively. Our restructuring activities during the nine months ended September 30, 2018 were primarily made up of the following: • We reduced our workforce by approximately 70 employees as a result of organizational changes made to pursue global opportunities and efficiencies. As a result, we incurred restructuring charges related to involuntary terminations of $3.5 million. • We closed one of our print facilities. As a result, we incurred restructuring charges related to involuntary terminations and the impairment of assets of $2.1 million. The activity in the business restructuring and reorganization reserves during the nine months ended September 30, 2018 was as follows: Termination Facilities Benefits Abandonment Other Total January 1, 2018 balance $ 1,116 $ 3,032 — $ 4,148 Charged to expense during period 3,788 1,541 1,699 7,028 Cash payments (4,065 ) (1,984 ) — (6,049 ) Adjustment for asset impairment — — (1,428 ) (1,428 ) Other 16 130 (271 ) (125 ) September 30, 2018 balance $ 855 $ 2,719 $ — $ 3,574 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. INCOME TAXES The effective income tax rates for the third quarters and nine months ended September 30, 2018 and 2017 were as follows: Quarter Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 21 % 38 % 26 % 30 % Income Tax Accounting Implications of the Tax Cuts and Jobs Act During the third quarter of 2018, our estimated full-year 2018 effective income tax rate was reduced from 29% to 27% primarily due to a change in the estimate of research and development credits. The lower effective tax rate for the third quarter of 2018 reflects the full year-to-date impact of this reduction. The lower effective income tax rate for the nine months ended September 30, 2017 reflects: (i) an approximately $5 million net benefit resulting from Comcast Corporation’s (“Comcast”) exercise of 1.4 million vested stock warrants in January 2017, as the stock warrants appreciated in value since their vesting, resulting in an income tax benefit to us when exercised; and (ii) an approximately $2 million benefit related to the adoption of ASU 2016-09, Compensation – Stock Compensation |
Commitments, Guarantees and Con
Commitments, Guarantees and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments, Guarantees and Contingencies | 8. COMMITMENTS, GUARANTEES AND CONTINGENCIES Warranties. We generally warrant that our solutions and related offerings will conform to published specifications, or to specifications provided in an individual client arrangement, as applicable. The typical warranty period is 90 days from the date of acceptance of the solution or offering. For certain service offerings we provide a warranty for the duration of the services provided. We generally warrant that services will be performed in a professional and workmanlike manner. The typical remedy for breach of warranty is to correct or replace any defective deliverable, and if not possible or practical, we will accept the return of the defective deliverable and refund the amount paid under the client arrangement that is allocable to the defective deliverable. Our contracts also generally contain limitation of damages provisions in an effort to reduce our exposure to monetary damages arising from breach of warranty claims. Historically, we have incurred minimal warranty costs, and as a result, do not maintain a warranty reserve. Product and Services Indemnifications. Our arrangements with our clients generally include an indemnification provision that will indemnify and defend a client in actions brought against the client that claim our products and/or services infringe upon a copyright, trade secret, or valid patent. Historically, we have not incurred any significant costs related to such indemnification claims, and as a result, do not maintain a reserve for such exposure. Claims for Company Non-performance. Our arrangements with our clients typically cap our liability for breach to a specified amount of the direct damages incurred by the client resulting from the breach. From time-to-time, these arrangements may also include provisions for possible liquidated damages or other financial remedies for our non-performance, or in the case of certain of our outsourced customer care and billing solutions, provisions for damages related to service level performance requirements. The service level performance requirements typically relate to system availability and timeliness of service delivery. Historically, we have not incurred significant costs associated with service level performance within our client contracts, and as a result, do not include estimates for potential credits or refunds related to service level performance in our contract consideration at the onset of the contract, but instead, account for credits or refunds as an adjustment to the transaction price of the contract as those events occur. Indemnifications Related to Officers and the Board of Directors. We have agreed to indemnify members of our Board of Directors (the “Board”) and certain of our officers if they are named or threatened to be named as a party to any proceeding by reason of the fact that they acted in such capacity. We maintain directors’ and officers’ (D&O) insurance coverage to protect against such losses. We have not historically incurred any losses related to these types of indemnifications, and are not aware of any pending or threatened actions or claims against any officer or member of our Board. As a result, we have not recorded any liabilities related to such indemnifications as of September 30, 2018. In addition, as a result of the insurance policy coverage, we believe these indemnification agreements are not significant to our results of operations. Legal Proceedings. From time-to-time, we are involved in litigation relating to claims arising out of our operations in the normal course of business. We are not presently a party to any material pending or threatened legal proceedings. |
Earnings Per Common Share
Earnings Per Common Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | 9. EARNINGS PER COMMON SHARE Basic and diluted earnings per common share (“EPS”) amounts are presented on the face of the accompanying Income Statements. No reconciliation of the basic and diluted EPS numerators is necessary as net income is used as the numerators for all periods presented. The reconciliation of the basic and diluted EPS denominators related to the common shares is included in the following table (in thousands): Quarter Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Basic weighted-average common shares 32,507 32,561 32,541 32,383 Dilutive effect of restricted common stock 156 340 235 442 Dilutive effect of Stock Warrants 143 - 163 - Diluted weighted-average common shares 32,806 32,901 32,939 32,825 The Convertible Notes have a dilutive effect only in those quarterly periods in which our average stock price exceeds the current effective conversion price (see Note 4). The Stock Warrants have a dilutive effect only in those quarterly periods in which our average stock price exceeds the exercise price of $26.68 per warrant (under the treasury stock method), and are not subject to performance vesting conditions (see Note 10). Potentially dilutive common shares related to non-participating unvested restricted stock excluded from the computation of diluted EPS, as the effect was antidilutive, were not material in any period presented. |
Stockholders' Equity and Equity
Stockholders' Equity and Equity Compensation Plans | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders Equity Note [Abstract] | |
Stockholders' Equity and Equity Compensation Plans | 10. STOCKHOLDERS’ EQUITY AND EQUITY COMPENSATION PLANS Stock Repurchase Program. We currently have a stock repurchase program, approved by our Board, authorizing us to repurchase our common stock from time-to-time as market and business conditions warrant (the “Stock Repurchase Program”). During the nine months ended September 30, 2018 and 2017, we repurchased 0.4 million shares of our common stock for $16.9 million (weighted-average price of $42.71 per share) and 0.4 million shares of our common stock for $15.6 million (weighted-average price of $40.54 per share), respectively, under a SEC Rule 10b5-1 Plan. As of September 30, 2018, the total remaining number of shares available for repurchase under the Stock Repurchase Program totaled 5.8 million shares. Stock Repurchases for Tax Withholdings. In addition to the above-mentioned stock repurchases, during the nine months ended September 30, 2018 and 2017, we repurchased and then cancelled 0.2 million shares of common stock for $7.2 million and 0.2 million shares of common stock for $9.4 million, respectively, in connection with minimum tax withholding requirements resulting from the vesting of restricted common stock under our stock incentive plans. Stock Incentive Plan. In May 2018, our stockholders approved an increase of 2.7 million shares authorized for issuance under the 2005 Stock Incentive Plan, from 18.7 million shares to 21.4 million shares. Cash During the third quarter of 2018, the Board approved a quarterly cash dividend of $0.21 per share of common stock, totaling $7.0 million. During the third quarter of 2017, the Board approved a quarterly cash dividend of $0.1975 per share of common stock, totaling $6.7 million. Dividends declared for the nine months ended September 30, 2018 and 2017 totaled $21.2 million and $20.0 million, respectively. Warrants . In 2014, in conjunction with the execution of an amendment to our current agreement with Comcast, we issued stock warrants (the “Warrant Agreement”) for the right to purchase up to approximately 2.9 million shares of our common stock (the “Stock Warrants”) as an additional incentive for Comcast to convert customer accounts onto our Advanced Convergent Platform based on various milestones. The Stock Warrants have a 10-year term and an exercise price of $26.68 per warrant. Upon vesting, the Stock Warrants are recorded as a client contract incentive asset with the corresponding offset to stockholders’ equity. The client contract incentive asset related to the Stock Warrants is amortized as a reduction in cloud and related solutions revenues over the remaining term of the Comcast amended agreement. As of September 30, 2018 and December 31, 2017, we recorded a client contract incentive asset related to these Stock Warrants of $25.1 million as of both periods and have recorded accumulated amortization related to these Stock Warrants of $17.1 million and $9.2 million, respectively. The remaining unvested Stock Warrants will be accounted for as client contract incentive assets in the period the performance conditions necessary for vesting have been met. As of September 30, 2018, approximately 1.4 million Stock Warrants remain issued, of which 0.4 million were vested. Stock-Based Awards. A summary of our unvested restricted common stock activity during the quarter and nine months ended September 30, 2018 is as follows (shares in thousands): Quarter Ended Nine Months Ended September 30, 2018 September 30, 2018 Shares Weighted- Average Grant Date Fair Value Shares Weighted- Average Grant Date Fair Value Unvested awards, beginning 1,189 $ 41.67 1,222 $ 36.84 Awards granted 38 37.62 527 46.09 Awards forfeited/cancelled (28 ) 39.95 (107 ) 40.12 Awards vested (40 ) 37.96 (483 ) 34.55 Unvested awards, ending 1,159 $ 41.70 1,159 $ 41.70 Included in the awards granted during the nine months ended September 30, 2018 The other restricted common stock shares granted during the nine months ended September 30, 2018 We recorded stock-based compensation expense for the third quarters of 2018 and 2017 of $4.6 million and $5.0 million, respectively, and for the nine months ended September 30, 2018 and 2017 of $14.8 million and $16.7 million, respectively. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Use of Estimates in Preparation of Our Financial Statements | Use of Estimates in Preparation of Financial Statements. The preparation of the accompanying Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our Financial Statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Revenue | Revenue . We adopted Topic 606 (“ASC 606”) as of January 1, 2018 using the cumulative effect method and have applied ASC 606 to all contracts with clients that had not been completed as of the date of initial application. In conjunction with the adoption of ASC 606, we recorded a cumulative adjustment increasing beginning retained earnings (net of tax) by approximately $7 million, primarily related to contracts that we were previously required to defer revenue as we did not have vendor specific objective evidence (“VSOE”) of fair value for certain undelivered elements. Since we adopted ASC 606 using the cumulative effect method, comparative information in our Financial Statements has not been adjusted and continues to be as previously reported. 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 As a result of adopting ASC 606, we have changed our accounting policies for revenue recognition as discussed in more detail below. In summary, our revenue from client contracts is primarily related to our cloud and related solutions and, to a lesser degree, software and service and related maintenance arrangements, and is measured based on consideration specified within each of our contracts, excluding sales incentives and amounts collected on behalf of third parties, if any. We account for various products and services separately if they are distinct. A product or service, or group of products or services, is distinct if it is separately identifiable from other items in the context of the contract and if our client can benefit from the product or service on their own or with other resources that are readily available to that client. We recognize revenue when we satisfy our performance obligations by transferring control of a particular product or service, or group of products or services, to our clients, as described in more detail below. Taxes assessed on our products and services based on governmental authorities at the time of invoicing are excluded from our revenue. |
Transaction Price Allocated to the Remaining Performance Obligations | Transaction Price Allocated to the Remaining Performance Obligations As of September 30, 2018, our aggregate amount of the transaction price allocated to the remaining performance obligations is approximately $527 million, which is made up of fixed fee consideration and guaranteed minimums expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied). We expect to recognize approximately 70% of this amount by the end of 2020, with the remaining amount recognized by the end of 2028. We have excluded from this amount variable consideration expected to be recognized in the future related to performance obligations that are unsatisfied (a practical expedient allowed under ASC 606). The majority of our future revenue is related to our cloud and related solution client contracts that include variable consideration dependent upon a series of monthly volumes and/or daily usage of services and have contractual terms ending from 2019 through 2028. We have not disclosed transaction price allocation to remaining performance obligations or an explanation thereof of comparable amounts as of December 31, 2017 (a transitional practical expedient allowed under ASC 606). |
Disaggregation of Revenue | Disaggregation of Revenue 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 |
Billed and Unbilled Accounts Receivable | Billed and Unbilled Accounts Receivable. Billed accounts receivable represents our unconditional rights to consideration. Once invoiced, our payment terms are generally between 30-60 days, and rarely do we have contracts with financing arrangements. Unbilled accounts receivable represents our rights to consideration for work completed but not billed. Unbilled accounts receivable is transferred to billed accounts receivable when the rights become unconditional which is generally at the time of invoicing. 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 |
Deferred Revenue | Deferred Revenue. Deferred revenue represents consideration received from clients in advance of services being performed. 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 ) |
Cash and Cash Equivalents | Cash and Cash Equivalents. We consider all highly liquid investments with original maturities of three months or less at the date of the purchase to be cash equivalents. As of September 30, 2018 and December 31, 2017, our cash equivalents consist primarily of institutional money market funds, commercial paper, and time deposits held at major banks. As of September 30, 2018 and December 31, 2017, we had $3.0 million and $4.2 million, respectively, of restricted cash that serves to collateralize outstanding letters of credit. This restricted cash is included in cash and cash equivalents in our Condensed Consolidated Balance Sheets (“Balance Sheets” or “Balance Sheet”). |
Short-term Investments and Other Financial Instruments | Short-term Investments and Other Financial Instruments . Our financial instruments as of September 30, 2018 and December 31, 2017 include cash and cash equivalents, short-term investments, accounts receivable, accounts payable, and debt. Because of their short maturities, the carrying amounts of cash equivalents, accounts receivable, and accounts payable approximate their fair value. Our short-term investments and certain of our cash equivalents are considered “available-for-sale” and are reported at fair value in our Balance Sheets, with unrealized gains and losses, net of the related income tax effect, excluded from earnings and reported in a separate component of stockholders’ equity. Realized and unrealized gains and losses were not material in any period presented. Primarily all short-term investments held by us as of September 30, 2018 and December 31, 2017 have contractual maturities of less than two years from the time of acquisition. Our short-term investments as of September 30, 2018 and December 31, 2017 consisted almost entirely of fixed income securities. Proceeds from the sale/maturity of short-term investments for the nine months ended September 30, 2018 and 2017 were $190.5 million and $150.8 million, respectively. Our short-term investments as of September 30, 2018 and December 31, 2017 were $2.1 million and $139.1 million, respectively. The significant decrease in our short-term investments between periods is due primarily to the acquisition of Business Ink in February 2018 for approximately $70 million and positioning of cash as of September 30, 2018 for the acquisition of Forte Payment Systems, Inc., which closed on October 1, 2018 for a purchase price of approximately $85 million, (approximately $80 million, net of cash acquired), less approximately $13 million in cash subject to certain tax filings (see Note 5). 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 Valuation inputs used to measure the fair values of our money market funds and corporate equity securities were derived from quoted market prices. The fair values of all other financial instruments are based upon pricing provided by third-party pricing services. These prices were derived from observable market inputs. 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 The fair value for our credit agreement was estimated using a discounted cash flow methodology, while the fair value for our convertible debt was estimated based upon quoted market prices or recent sales activity, both of which are considered Level 2 inputs. See Note 4 for additional discussion regarding an amendment to our Credit Agreement. |
Other Accounting Pronouncements Adopted | |
Accounting Pronouncements | Equity Method Investment. On July 30, 2018, we made a $2 million investment for a 4% noncontrolling financial interest in a payment technology and services company that enables omni-channel digital payments in Latin America. We are accounting for this investment using the equity method in accordance with Topic 323 . Accordingly, we recorded an initial investment of $2.8 million which includes direct costs of acquiring the investment. We will record our share of earnings and losses in the investment on a one-quarter lag basis which will result in an adjustment to our initial investment during the quarter-ending December 31, 2018. Other Accounting Pronouncements Adopted. In October 2016, the FASB issued ASU 2016-16, . This ASU requires entities to recognize at the transaction date the income tax consequences of intercompany asset transfers. This ASU is effective in annual and interim periods in fiscal years beginning after December 15, 2017, with early adoption permitted, and requires a modified retrospective transition method. We adopted this ASU in January 2018 and the adoption of this standard did not have a material impact on our Financial Statements. |
Accounting Pronouncements Issued But Not Yet Effective | |
Accounting Pronouncements | Accounting Pronouncement Issued But Not Yet Effective. In February 2016, the FASB issued ASU 2016-02, (Topic 842). This ASU requires lessees to recognize a lease liability and a right-to-use asset for all leases, including operating leases, with a term greater than twelve months on its balance sheet. This ASU is effective in annual and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. An entity may choose to adopt this ASU either retrospectively or prospectively as of the start of the first period for which it applies the standard (the effective date method). In 2018, we started the process of evaluating the impact this ASU on our accounting policies, business processes, and financial statements. We have formed a project team and started the process of lease identification, review, and data extraction for purposes of calculating the transition adjustment to be recorded on the effective date. In conjunction with these efforts, we are updating our policies to align with the new accounting guidance and our processes to ensure we properly account for new, existing, and modifications to leases subsequent to the adoption of the ASU. We continue to believe the adoption of this standard will have a material impact on our consolidated balance sheet. We currently intend to adopt the ASU in the first quarter of 2019, utilizing the effective date method of transition. |
Cloud and Related Solutions Revenue | |
Revenue | Cloud and Related Solutions. Our cloud and related solutions revenues relate to: (i) our software-as-a-service (“SaaS”), cloud-based, revenue management and digital monetization solutions, and various related ancillary services; and (ii) our managed services offering in which we operate software solutions (primarily our software solutions) on behalf of our clients. We contract for our cloud-based solutions using long-term arrangements whose terms have typically ranged from three to five years. The long-term cloud-based arrangements include a series of multiple services delivered daily or monthly, to include such things as: (i) revenue and customer communications management services; (ii) business support services (e.g., workforce management tools, consumer credit verifications, etc.); (iii) content monetization and delivery functions; and (iv) customer statement invoice printing and mailing services. The fees for these services typically are billed to our clients monthly based upon actual monthly volumes and/or usage of services (e.g., the number of client customers maintained on our systems, the number of transactions processed on our systems, and/or the quantity and content of the monthly statements and mailings processed through our systems). For cloud-based solution contracts, the total contract consideration (including impacts of discounts or incentives) is primarily variable dependent upon actual monthly volumes and/or usage of services; however, these contracts can also include ancillary fixed consideration in the form of one-time, monthly or annual fees. Although there may be multiple performance obligations, there is generally no allocation of value between the individual performance obligations as all are considered cloud and related solutions revenues that are recognized based on activities performed in each daily or monthly period. We contract for managed services solutions using long-term arrangements whose terms have typically ranged from three to five years. Under managed services agreements, we may operate software products (primarily our software solutions) on behalf of our clients: (i) out of a client’s data center; (ii) out of a data center we own and operate; or (iii) out of a third-party data center we contract with for such services. Managed services can also include us providing other services, such as transitional services, fulfillment, remittance processing, operational consulting, back office, and end user billing services. For managed services contracts, the total contract consideration is typically a fixed fee, but these contracts may also have variable fee components. The fees for these services typically are billed to our clients on a monthly basis. Unless managed services are included with a software license contract (as discussed further below), there is generally only one performance obligation and revenue is recognized for these arrangements on a ratable basis as the services are performed. Fees related to set-up or implementation activities for both cloud-based solution and managed services contracts are deferred and recognized ratably over the related service period to which the activities relate. Depending on the significance of variable consideration, number of products/services, complex pricing structures and long-term nature of these types of contracts, the judgments and estimates made in this area could have a significant effect on the amount and timing of revenues recognized in any period. Prior to the adoption of ASC 606, we recognized revenue related to our cloud and related solutions contracts on a monthly basis as we provided the services. The adoption of ASC 606 did not result in any significant changes to the timing of revenue recognition related to these contracts. |
Software and Services Revenue | |
Revenue | Software and Services. Our software and services revenues relate primarily to: (i) software license sales on either a perpetual or term license basis; and (ii) professional services to implement the software. Our software and services contracts are often contracted in bundled arrangements that include not only the software license and related implementation services, but can also include maintenance, managed services and/or additional professional services. For our software arrangements, the total contract consideration is allocated between the separate performance obligations based on stand-alone selling prices for software licenses, cost plus applicable margin for services and established pricing for maintenance. The initial sale of software products generally requires significant production, modification or customization, such that the delivery of the software license and the related professional services required to implement the software represent one combined performance obligation that is satisfied over time based of hours worked (hours-based method). We are using hours worked on the project as the measure to determine progress toward completion as we believe it is the most appropriate metric to measure such progress. The software and services fees are generally billed to our clients on a milestone or date basis. The determination of the performance obligations and allocation of value for software license arrangements require significant judgment. We generally determine stand-alone selling prices using pricing calculations (which include regional market factors) for our software license fees and maintenance, and cost-plus margins for services. Additionally, our use of an hours-based method of accounting for software license and other professional services performance obligations that are satisfied over time requires estimates of total project revenues and costs, along with the expected hours necessary to complete a project. Changes in estimates as a result of additional information or experience on a project as work progresses are inherent characteristics of this method of revenue recognition as we are exposed to various business risks in completing these types of performance obligations. The estimation process to support our hours-based recognition method is more difficult for projects of greater length and/or complexity. The judgments and estimates made in this area could: (i) have a significant effect on revenues recognized in any period by changing the amount and/or the timing of the revenue recognized; and/or (ii) impact the expected profitability of a project, including whether an overall loss on an arrangement has occurred. To mitigate the inherent risks in using this hours-based method, we track our performance on projects and reevaluate the appropriateness of our estimates as part of our monthly accounting cycle. In certain instances, we sell software license volume upgrades, which provide our clients the right to use our software to process higher transaction volume levels. In these instances, we analyze the contract to determine if the volume upgrade is a separate performance obligation and if so, we recognize the value associated with the software license as revenue on the effective date of the volume upgrade. A portion of our professional services revenues are contracted separately (e.g., business consulting services, etc.). Such contracts can either be on a fixed-price or time-and-materials basis. Revenues from fixed-price, professional service contracts are recognized using an hours-based method, as these professional services represent a performance obligation that is satisfied over time. Revenues from professional services contracts billed on a time-and-materials basis are recognized as the services are performed. Prior to the adoption of ASC 606, we recognized revenue for our software arrangements under the guidelines of contract accounting as our software products required significant production, modification or customization and if we had VSOE of fair value for undelivered elements (e.g., maintenance), which we generally had, we would allocate a portion of the total arrangement fee to the undelivered element based on its VSOE of fair value, and the balance of the arrangement fee was recognized using the percentage-of-completion (“POC”) method of accounting. |
Maintenance Revenue | |
Revenue | Maintenance Our maintenance revenue relates primarily to support of our software once it has been implemented. Maintenance revenues are recognized ratably over the software maintenance period as services are provided. Our maintenance consists primarily of client and product support, technical updates (e.g., bug fixes, etc.), and unspecified upgrades or enhancements to our software products. If specified upgrades or enhancements are offered in a contract, which is rare, they are accounted for as a separate performance obligation. Maintenance can be invoiced to our clients on a monthly, quarterly or annual basis. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
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 |
Long-Lived Assets (Tables)
Long-Lived Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Summary of Changes in Carrying Amount of Goodwill | Goodwill. The changes in the carrying amount of goodwill for the nine months ended September 30, 2018, were as follows (in thousands): January 1, 2018 balance $ 210,080 Business Ink acquisition 3,314 Effects of changes in foreign currency exchange rates (2,697 ) September 30, 2018 balance $ 210,697 See Note 5 for discussion regarding the Business Ink acquisition. |
Summary of Carrying Value of Assets | As of September 30, 2018 and December 31, 2017, the carrying values of our other intangible assets were as follows (in thousands): September 30, 2018 December 31, 2017 Gross Gross Carrying Accumulated Net Carrying Accumulated Net Amount Amortization Amount Amount Amortization Amount Investments in client contracts $ - $ - $ - $ 26,616 $ (9,782 ) $ 16,834 Capitalized costs - - - 26,811 (10,039 ) 16,772 Acquired client contracts 121,149 (81,286 ) 39,863 87,308 (77,288 ) 10,020 Total client contracts 121,149 (81,286 ) 39,863 140,735 (97,109 ) 43,626 Software 148,714 (116,761 ) 31,953 135,892 (108,986 ) 26,906 Total intangible assets $ 269,863 $ (198,047 ) $ 71,816 $ 276,627 $ (206,095 ) $ 70,532 |
Summary of Carrying Values of Contract Cost Assets | As of September 30, 2018, the carrying values of our contract cost assets, related to those contracts with a contractual term greater than one year, were as follows (in thousands): September 30, 2018 Gross Carrying Accumulated Net Amount Amortization Amount Client contract incentives (1) $ 28,366 $ (18,053 ) $ 10,313 Capitalized costs (2) 37,313 (17,485 ) 19,828 Capitalized commission fees (3) 6,943 (1,500 ) 5,443 Total client contract costs $ 72,622 $ (37,038 ) $ 35,584 |
Summary of Aggregate Amortization Related to Client Contract Costs | The aggregate amortization related to our client contract costs include in our operations for the quarter and nine months ended September 30, 2018 was as follows (in thousands): Quarter Ended Nine Months Ended September 30, September 30, Client contract incentives (1) $ 2,781 $ 8,272 Capitalized costs (2) 2,658 7,495 Capitalized commission fees (3) 583 1,518 Total client contract costs $ 6,022 $ 17,285 (1) Client contract incentives consist principally of incentives provided to new or existing clients to convert their customer accounts to, or retain their customer’s account on, our outsourced solutions and are amortized ratably over the contract period to include renewal periods if applicable, which as of September 30, 2018, have termination dates that range from 2019 to 2025. The amortization of client contract incentives is reflected as a reduction in cloud and related solutions revenue in our Income Statement. (2) Capitalized costs are related to client conversion/set-up activities and direct material costs to fulfill long-term cloud-based or managed services arrangements. These costs are amortized over the contract period based on the transfer of goods or services to which the assets relate, which as of September 30, 2018 range from 2019 to 2023, and are included in cost of cloud and related solutions in our Income Statement. (3) Capitalized commission fees are incremental commissions paid as a result of obtaining a customer contract. These fees are amortized over the contract period based on the transfer of goods or services to which the assets relate, which as of September 30, 2018, range from 2019 to 2025, and are included in selling, general and administrative expenses in our Income Statement. Incremental commission fees incurred as a result of obtaining a customer contract are expensed when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less (a practical expedient allowed under ASC 606). |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Our long-term debt, as of September 30, 2018 and December 31, 2017, was as follows (in thousands): September 30, December 31, 2018 2017 2015 Credit Agreement: Term loan, due February 2020, interest at adjusted LIBOR plus 1.75% (combined rate of 3.44% at December 31, 2017) $ — $ 120,000 Less - deferred financing costs — (2,274 ) 2015 term loan, net of unamortized discounts — 117,726 $200 million revolving loan facility, due February 2020, interest at adjusted LIBOR plus applicable margin — — 2018 Credit Agreement: Term loan, due March 2023, interest at adjusted LIBOR plus 1.5% (combined rate of 3.89% at September 30, 2018) 146,250 — Less - deferred financing costs (2,424 ) — 2018 term loan, net of unamortized discounts 143,826 — $200 million revolving loan facility, due March 2023, interest at adjusted LIBOR plus applicable margin — — Convertible Notes: 2016 Convertible Notes – Senior convertible notes; due March 15, 2036; cash interest at 4.25% 230,000 230,000 Less – unamortized original issue discount (9,503 ) (11,487 ) Less – deferred financing costs (3,714 ) (4,503 ) 2016 Convertible Notes, net of unamortized discounts 216,783 214,010 Total debt, net of unamortized discounts 360,609 331,736 Current portion of long-term debt, net of unamortized discounts (7,500 ) (22,500 ) Long-term debt, net of unamortized discounts $ 353,109 $ 309,236 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Summary of Preliminary Estimated Fair Values of Assets Acquired and Liabilities Assumed at Date of Acquisition | The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands): Current assets $ 25,726 Fixed assets 13,337 Acquired client contracts 35,150 Acquired software 4,132 Goodwill 3,314 Non-current assets 148 Total assets acquired 81,807 Current liabilities (11,586 ) Non-current liabilities (256 ) Total liabilities assumed (11,842 ) Net assets acquired $ 69,965 |
Restructuring and Reorganizat_2
Restructuring and Reorganization Charges (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring And Related Activities [Abstract] | |
Schedule of Activity in Business Restructuring and Reorganization Reserves | The activity in the business restructuring and reorganization reserves during the nine months ended September 30, 2018 was as follows: Termination Facilities Benefits Abandonment Other Total January 1, 2018 balance $ 1,116 $ 3,032 — $ 4,148 Charged to expense during period 3,788 1,541 1,699 7,028 Cash payments (4,065 ) (1,984 ) — (6,049 ) Adjustment for asset impairment — — (1,428 ) (1,428 ) Other 16 130 (271 ) (125 ) September 30, 2018 balance $ 855 $ 2,719 $ — $ 3,574 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Effective Income Tax Rates | The effective income tax rates for the third quarters and nine months ended September 30, 2018 and 2017 were as follows: Quarter Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 21 % 38 % 26 % 30 % |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
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): Quarter Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Basic weighted-average common shares 32,507 32,561 32,541 32,383 Dilutive effect of restricted common stock 156 340 235 442 Dilutive effect of Stock Warrants 143 - 163 - Diluted weighted-average common shares 32,806 32,901 32,939 32,825 |
Stockholders' Equity and Equi_2
Stockholders' Equity and Equity Compensation Plans (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders Equity Note [Abstract] | |
Summary of Unvested Restricted Common Stock Activity | Stock-Based Awards. A summary of our unvested restricted common stock activity during the quarter and nine months ended September 30, 2018 is as follows (shares in thousands): Quarter Ended Nine Months Ended September 30, 2018 September 30, 2018 Shares Weighted- Average Grant Date Fair Value Shares Weighted- Average Grant Date Fair Value Unvested awards, beginning 1,189 $ 41.67 1,222 $ 36.84 Awards granted 38 37.62 527 46.09 Awards forfeited/cancelled (28 ) 39.95 (107 ) 40.12 Awards vested (40 ) 37.96 (483 ) 34.55 Unvested awards, ending 1,159 $ 41.70 1,159 $ 41.70 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands | Oct. 01, 2018 | Feb. 28, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Jul. 30, 2018 | Jan. 01, 2018 |
Summary Of Significant Accounting Policies [Line Items] | |||||||
Aggregate amount of transaction price allocated to remaining performance obligations | $ 527,000 | ||||||
Remaining performance obligations expected to be recognized, year | 2,028 | ||||||
Restricted cash | $ 3,000 | $ 4,200 | |||||
Proceeds from sale/maturity of short-term investments | 190,467 | $ 150,768 | |||||
Short-term investments | 2,130 | $ 139,117 | |||||
Business acquisition, net of cash acquired | $ 71,443 | ||||||
Equity method investments | $ 2,000 | ||||||
Equity method investment, include direct cost | $ 2,800 | ||||||
Payment Technology and Services Company | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Equity method investment, noncontrolling financial interest | 4.00% | ||||||
Business Ink | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Business acquisition date | Feb. 28, 2018 | ||||||
Business acquisition, net of cash acquired | $ 70,000 | ||||||
Forte Payment Systems, Inc | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Business acquisition date | Oct. 1, 2018 | ||||||
Forte Payment Systems, Inc | Subsequent Event | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Business acquisition, net of cash acquired | $ 80,000 | ||||||
Business acquisition, cash consideration | 85,000 | ||||||
Cash held subject to certain tax filings | $ 13,000 | ||||||
Maximum | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Billed accounts receivable, payment term | 60 days | ||||||
Short-term investment contractual maturities | 2 years | 2 years | |||||
Minimum | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Billed accounts receivable, payment term | 30 days | ||||||
Cloud and Related Solutions Revenue | Maximum | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Long-term arrangements service period | 5 years | ||||||
Future revenue including variable consideration, contractual terms ending, year | 2,028 | ||||||
Cloud and Related Solutions Revenue | Minimum | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Long-term arrangements service period | 3 years | ||||||
Future revenue including variable consideration, contractual terms ending, year | 2,019 | ||||||
ASC 606 | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Cumulative effect upon adoption of new accounting principle, increase in retained earnings net of tax | $ 7,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Impacts of Adopting ASC 606 on Condensed Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Unbilled trade accounts receivable | $ 36,847 | $ 33,104 | $ 31,187 |
Other current assets | 38,706 | 28,349 | |
Intangible assets | 71,816 | ||
Client contract costs, net of amortization | 35,584 | ||
Other non-current assets | 10,898 | 10,948 | |
Other assets | 785,411 | ||
Total assets | 947,309 | 904,534 | |
Deferred revenue | 54,966 | $ 47,611 | 54,231 |
Deferred income taxes | 5,881 | 4,584 | |
Other liabilities | 528,043 | ||
Total liabilities | 588,890 | 561,788 | |
Accumulated earnings | 781,188 | 749,438 | |
Other stockholders' equity | (422,769) | ||
Total stockholders' equity | 358,419 | 342,746 | |
Total liabilities and stockholders' equity | 947,309 | 904,534 | |
Client contracts | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Intangible assets | 43,626 | ||
Acquired client contracts | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Intangible assets | 39,863 | ||
Adjustments | ASC 606 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Unbilled trade accounts receivable | (533) | ||
Other current assets | 4,014 | ||
Client contract costs, net of amortization | (35,584) | ||
Other non-current assets | 5,069 | ||
Total assets | (533) | ||
Deferred revenue | 2,655 | ||
Deferred income taxes | 8 | ||
Total liabilities | 2,663 | ||
Accumulated earnings | (3,196) | ||
Total stockholders' equity | (3,196) | ||
Total liabilities and stockholders' equity | (533) | ||
Adjustments | Client contracts | ASC 606 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Intangible assets | 66,364 | ||
Adjustments | Acquired client contracts | ASC 606 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Intangible assets | (39,863) | ||
Balances without Adoption of ASC 606 | ASC 606 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Unbilled trade accounts receivable | 36,314 | ||
Other current assets | 42,720 | ||
Intangible assets | 70,532 | ||
Other non-current assets | 15,967 | ||
Other assets | 785,411 | ||
Total assets | 946,776 | ||
Deferred revenue | 57,621 | ||
Deferred income taxes | 5,889 | ||
Other liabilities | 528,043 | ||
Total liabilities | 591,553 | ||
Accumulated earnings | 777,992 | ||
Other stockholders' equity | (422,769) | ||
Total stockholders' equity | 355,223 | ||
Total liabilities and stockholders' equity | 946,776 | ||
Balances without Adoption of ASC 606 | Client contracts | ASC 606 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Intangible assets | $ 66,364 | 43,626 | |
Balances without Adoption of ASC 606 | Acquired client contracts | ASC 606 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Intangible assets | $ 10,020 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Summary of Impacts of Adopting ASC 606 on Condensed Statement of Income (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Total revenues | $ 213,055 | $ 199,195 | $ 627,792 | $ 584,378 |
Cost of revenues: | ||||
Total cost of revenues | 109,052 | 99,717 | 319,640 | 295,085 |
Other expenses | 83,511 | 246,732 | ||
Income before income taxes | 20,492 | 23,386 | 61,420 | 66,039 |
Income tax provision | (4,391) | (8,806) | (16,188) | (19,641) |
Net income | $ 16,101 | $ 14,580 | $ 45,232 | $ 46,398 |
Net income per diluted share | $ 0.49 | $ 0.44 | $ 1.37 | $ 1.41 |
Cloud and Related Services | ||||
Revenues: | ||||
Total revenues | $ 186,473 | $ 164,789 | $ 551,390 | $ 481,445 |
Cost of revenues: | ||||
Total cost of revenues | 95,092 | 79,856 | 277,212 | 233,194 |
Software and Services | ||||
Revenues: | ||||
Total revenues | 14,283 | 15,726 | 39,573 | 46,680 |
Cost of revenues: | ||||
Total cost of revenues | 8,669 | 9,725 | 25,816 | 31,404 |
Maintenance | ||||
Revenues: | ||||
Total revenues | 12,299 | 18,680 | 36,829 | 56,253 |
Cost of revenues: | ||||
Total cost of revenues | 5,291 | $ 10,136 | 16,612 | $ 30,487 |
Adjustments | ASC 606 | ||||
Revenues: | ||||
Total revenues | 644 | 990 | ||
Cost of revenues: | ||||
Total cost of revenues | (944) | |||
Income before income taxes | 644 | 1,934 | ||
Income tax provision | (187) | (561) | ||
Net income | $ 457 | $ 1,373 | ||
Net income per diluted share | $ 0.01 | $ 0.04 | ||
Adjustments | Cloud and Related Services | ASC 606 | ||||
Revenues: | ||||
Total revenues | $ (6,162) | $ (19,294) | ||
Cost of revenues: | ||||
Total cost of revenues | (4,544) | (15,542) | ||
Adjustments | Software and Services | ASC 606 | ||||
Revenues: | ||||
Total revenues | 1,589 | 4,742 | ||
Cost of revenues: | ||||
Total cost of revenues | 208 | 660 | ||
Adjustments | Maintenance | ASC 606 | ||||
Revenues: | ||||
Total revenues | 5,217 | 15,542 | ||
Cost of revenues: | ||||
Total cost of revenues | 4,336 | 13,938 | ||
Balances without Adoption of ASC 606 | ASC 606 | ||||
Revenues: | ||||
Total revenues | 213,699 | 628,782 | ||
Cost of revenues: | ||||
Total cost of revenues | 109,052 | 318,696 | ||
Other expenses | 83,511 | 246,732 | ||
Income before income taxes | 21,136 | 63,354 | ||
Income tax provision | (4,578) | (16,749) | ||
Net income | $ 16,558 | $ 46,605 | ||
Net income per diluted share | $ 0.50 | $ 1.41 | ||
Balances without Adoption of ASC 606 | Cloud and Related Services | ASC 606 | ||||
Revenues: | ||||
Total revenues | $ 180,311 | $ 532,096 | ||
Cost of revenues: | ||||
Total cost of revenues | 90,548 | 261,670 | ||
Balances without Adoption of ASC 606 | Software and Services | ASC 606 | ||||
Revenues: | ||||
Total revenues | 15,872 | 44,315 | ||
Cost of revenues: | ||||
Total cost of revenues | 8,877 | 26,476 | ||
Balances without Adoption of ASC 606 | Maintenance | ASC 606 | ||||
Revenues: | ||||
Total revenues | 17,516 | 52,371 | ||
Cost of revenues: | ||||
Total cost of revenues | $ 9,627 | $ 30,550 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Summary of Impacts of Adopting ASC 606 on Condensed Statement of Cash Flows (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Net income | $ 45,232 | $ 46,398 |
Adjustments to reconcile net income to net cash provided by operating activities- | ||
Amortization | 31,974 | 21,670 |
Deferred income taxes | 2,150 | 1,487 |
Other | 32,255 | |
Changes in operating assets and liabilities: | ||
Other current and non-current assets | (21,763) | (1,788) |
Deferred revenue | 7,182 | 10,940 |
Other | (23,761) | |
Net cash provided by operating activities | 73,269 | 102,822 |
Cash flows from investing activities: | ||
Acquisition of and investments in client contracts | (10,082) | |
Other | 21,692 | |
Net cash provided by investing activities | 21,692 | 1,113 |
Net cash used in financing activities | (18,770) | $ (89,931) |
Effect of exchange rate fluctuations on cash | (1,262) | |
Net increase cash and cash equivalents | 74,929 | |
Cash and cash equivalents, beginning of period | 122,243 | |
Cash and cash equivalents, end of period | 197,172 | |
Adjustments | ASC 606 | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Net income | 1,373 | |
Adjustments to reconcile net income to net cash provided by operating activities- | ||
Amortization | (3,146) | |
Deferred income taxes | 561 | |
Changes in operating assets and liabilities: | ||
Other current and non-current assets | 10,231 | |
Deferred revenue | (1,689) | |
Net cash provided by operating activities | 7,330 | |
Cash flows from investing activities: | ||
Acquisition of and investments in client contracts | (7,330) | |
Net cash provided by investing activities | (7,330) | |
Balances without Adoption of ASC 606 | ASC 606 | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Net income | 46,605 | |
Adjustments to reconcile net income to net cash provided by operating activities- | ||
Amortization | 28,828 | |
Deferred income taxes | 2,711 | |
Other | 32,255 | |
Changes in operating assets and liabilities: | ||
Other current and non-current assets | (11,532) | |
Deferred revenue | 5,493 | |
Other | (23,761) | |
Net cash provided by operating activities | 80,599 | |
Cash flows from investing activities: | ||
Acquisition of and investments in client contracts | (7,330) | |
Other | 21,692 | |
Net cash provided by investing activities | 14,362 | |
Net cash used in financing activities | (18,770) | |
Effect of exchange rate fluctuations on cash | (1,262) | |
Net increase cash and cash equivalents | 74,929 | |
Cash and cash equivalents, beginning of period | 122,243 | |
Cash and cash equivalents, end of period | $ 197,172 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details Textual 1) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2018-10-01 | 9 Months Ended |
Sep. 30, 2018 | |
Summary Of Significant Accounting Policies [Line Items] | |
Remaining performance obligations expected to be recognized, percentage | 70.00% |
Remaining performance obligations expected to be recognized, period | 2 years 3 months |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Schedule of Revenue Disaggregated by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation Of Revenue [Line Items] | ||||
Disaggregated revenue | $ 213,055 | $ 199,195 | $ 627,792 | $ 584,378 |
Americas | ||||
Disaggregation Of Revenue [Line Items] | ||||
Disaggregated revenue | 180,489 | 169,880 | 530,609 | 497,852 |
Europe, Middle East, and Africa | ||||
Disaggregation Of Revenue [Line Items] | ||||
Disaggregated revenue | 21,723 | 15,980 | 64,135 | 51,011 |
Asia Pacific | ||||
Disaggregation Of Revenue [Line Items] | ||||
Disaggregated revenue | $ 10,843 | $ 13,335 | $ 33,048 | $ 35,515 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Rollforward of Unbilled Accounts Receivable (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Sep. 30, 2018 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Beginning Balance | $ 31,187 | $ 31,187 |
Recognized during the period | 168,198 | |
Reclassified to receivables | (163,117) | |
Other | (1,338) | |
Ending Balance | 33,104 | $ 36,847 |
ASC 606 | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Reclassification - Adoption of ASC 606 | (2,276) | |
ASC 606 | Unbilled Receivables | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Cumulative effect adjustments | $ 4,193 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Rollforward of Deferred Revenue (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Sep. 30, 2018 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Beginning Balance | $ (54,231) | $ (54,231) |
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 | (47,611) | $ (54,966) |
ASC 606 | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Reclassification - Adoption of ASC 606 | 2,276 | |
ASC 606 | Deferred Revenue | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Cumulative effect adjustments | $ 4,344 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets: | ||
Assets fair value | $ 16,958 | $ 175,128 |
Cash equivalents | Money Market Funds | ||
Assets: | ||
Assets fair value | 14,828 | 3,544 |
Cash equivalents | Commercial Paper | ||
Assets: | ||
Assets fair value | 32,467 | |
Short-term Investments | Corporate Debt Securities | ||
Assets: | ||
Assets fair value | 124,182 | |
Short-term Investments | U.S. Government Agency Bonds | ||
Assets: | ||
Assets fair value | 1,542 | 1,547 |
Short-term Investments | Asset-backed securities | ||
Assets: | ||
Assets fair value | 588 | 13,388 |
Level 1 | ||
Assets: | ||
Assets fair value | 14,828 | 3,544 |
Level 1 | Cash equivalents | Money Market Funds | ||
Assets: | ||
Assets fair value | 14,828 | 3,544 |
Level 2 | ||
Assets: | ||
Assets fair value | 2,130 | 171,584 |
Level 2 | Cash equivalents | Commercial Paper | ||
Assets: | ||
Assets fair value | 32,467 | |
Level 2 | Short-term Investments | Corporate Debt Securities | ||
Assets: | ||
Assets fair value | 124,182 | |
Level 2 | Short-term Investments | U.S. Government Agency Bonds | ||
Assets: | ||
Assets fair value | 1,542 | 1,547 |
Level 2 | Short-term Investments | Asset-backed securities | ||
Assets: | ||
Assets fair value | $ 588 | $ 13,388 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Carrying Value (Par Value for Convertible Debt) and Estimated Fair Value of Debt (Details 1) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
2015 Credit Agreement | 2015 Term Loan | ||
Carrying value and estimated fair value of debt | ||
Fair Value | $ 120,000 | |
Carrying Value | 120,000 | |
2018 Credit Agreement | 2018 Term Loan | ||
Carrying value and estimated fair value of debt | ||
Fair Value | $ 146,250 | |
Carrying Value | 146,250 | |
Senior Convertible Notes 2016 | ||
Carrying value and estimated fair value of debt | ||
Fair Value | 242,650 | 251,850 |
Carrying Value | $ 230,000 | $ 230,000 |
Long-Lived Assets - Summary of
Long-Lived Assets - Summary of Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Goodwill Roll Forward | |
Beginning balance | $ 210,080 |
Business Ink acquisition | 3,314 |
Effects of changes in foreign currency exchange rates | (2,697) |
Ending balance | $ 210,697 |
Long-Lived Assets - Summary o_2
Long-Lived Assets - Summary of Carrying Value of Other Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 269,863 | |
Accumulated Amortization | (198,047) | |
Net Amount | 71,816 | |
Balances without Adoption of ASC 606 | ASC 606 | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 276,627 | |
Accumulated Amortization | (206,095) | |
Net Amount | 70,532 | |
Investments in client contracts | Balances without Adoption of ASC 606 | ASC 606 | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 26,616 | |
Accumulated Amortization | (9,782) | |
Net Amount | 16,834 | |
Capitalized costs | Balances without Adoption of ASC 606 | ASC 606 | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 26,811 | |
Accumulated Amortization | (10,039) | |
Net Amount | 16,772 | |
Acquired client contracts | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 121,149 | |
Accumulated Amortization | (81,286) | 0 |
Net Amount | 39,863 | |
Acquired client contracts | Balances without Adoption of ASC 606 | ASC 606 | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 87,308 | |
Accumulated Amortization | (77,288) | |
Net Amount | 10,020 | |
Client contracts | ||
Finite Lived Intangible Assets [Line Items] | ||
Accumulated Amortization | 0 | (97,109) |
Net Amount | 43,626 | |
Client contracts | Balances without Adoption of ASC 606 | ASC 606 | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 140,735 | |
Accumulated Amortization | (97,109) | |
Net Amount | 66,364 | 43,626 |
Software | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 148,714 | |
Accumulated Amortization | (116,761) | (108,986) |
Net Amount | $ 31,953 | 26,906 |
Software | Balances without Adoption of ASC 606 | ASC 606 | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 135,892 | |
Accumulated Amortization | (108,986) | |
Net Amount | $ 26,906 |
Long-Lived Assets (Details Text
Long-Lived Assets (Details Textual) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||||
Total amortization expense | $ 4.6 | $ 6.7 | $ 13.4 | $ 20 |
Estimated total amortization expense 2018 | 18 | 18 | ||
Estimated total amortization expense 2019 | 16.1 | 16.1 | ||
Estimated total amortization expense 2020 | 13.2 | 13.2 | ||
Estimated total amortization expense 2021 | 9.2 | 9.2 | ||
Estimated total amortization expense 2022 | $ 6.8 | $ 6.8 |
Long-Lived Assets - Summary o_3
Long-Lived Assets - Summary of Carrying Values of Contract Cost Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Capitalized Contract Cost [Line Items] | ||
Gross Carrying Amount | $ 72,622 | |
Accumulated Amortization | (37,038) | $ 0 |
Net Amount | 35,584 | |
Client contract incentives | ||
Capitalized Contract Cost [Line Items] | ||
Gross Carrying Amount | 28,366 | |
Accumulated Amortization | (18,053) | |
Net Amount | 10,313 | |
Capitalized costs | ||
Capitalized Contract Cost [Line Items] | ||
Gross Carrying Amount | 37,313 | |
Accumulated Amortization | (17,485) | |
Net Amount | 19,828 | |
Capitalized commission fees | ||
Capitalized Contract Cost [Line Items] | ||
Gross Carrying Amount | 6,943 | |
Accumulated Amortization | (1,500) | |
Net Amount | $ 5,443 |
Long-Lived Assets - Summary o_4
Long-Lived Assets - Summary of Aggregate Amortization Related to Client Contract Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Capitalized Contract Cost [Line Items] | ||
Total client contract costs, aggregate amortization | $ 6,022 | $ 17,285 |
Client contract incentives | ||
Capitalized Contract Cost [Line Items] | ||
Total client contract costs, aggregate amortization | 2,781 | 8,272 |
Capitalized costs | ||
Capitalized Contract Cost [Line Items] | ||
Total client contract costs, aggregate amortization | 2,658 | 7,495 |
Capitalized commission fees | ||
Capitalized Contract Cost [Line Items] | ||
Total client contract costs, aggregate amortization | $ 583 | $ 1,518 |
Long-Lived Assets - Summary o_5
Long-Lived Assets - Summary of Aggregate Amortization Related to Client Contract Costs (Parenthetical) (Details) | 9 Months Ended |
Sep. 30, 2018 | |
Minimum | Client contract incentives | |
Finite Lived Intangible Assets [Line Items] | |
Intangible assets, amortization year | 2,019 |
Minimum | Capitalized costs | |
Finite Lived Intangible Assets [Line Items] | |
Intangible assets, amortization year | 2,019 |
Minimum | Capitalized commission fees | |
Finite Lived Intangible Assets [Line Items] | |
Intangible assets, amortization year | 2,019 |
Maximum | Client contract incentives | |
Finite Lived Intangible Assets [Line Items] | |
Intangible assets, amortization year | 2,025 |
Maximum | Capitalized costs | |
Finite Lived Intangible Assets [Line Items] | |
Intangible assets, amortization year | 2,023 |
Maximum | Capitalized commission fees | |
Finite Lived Intangible Assets [Line Items] | |
Intangible assets, amortization year | 2,025 |
Maximum life of incremental commission fees expensed when incurred | 1 year |
Debt - Long-Term Debt (Details)
Debt - Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Mar. 05, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | |||
Less – unamortized original issue discount | $ (15,641) | $ (18,264) | |
Less - deferred financing costs | $ (2,800) | ||
Total debt, net of unamortized discounts | 360,609 | 331,736 | |
Current portion of long-term debt, net of unamortized discounts | (7,500) | (22,500) | |
Long-term debt, net of unamortized discounts | 353,109 | 309,236 | |
2015 Credit Agreement | 2015 Term Loan | |||
Debt Instrument [Line Items] | |||
Total long-term debt, gross | 120,000 | ||
Less - deferred financing costs | (2,274) | ||
Total debt, net of unamortized discounts | 117,726 | ||
2018 Credit Agreement | 2018 Term Loan | |||
Debt Instrument [Line Items] | |||
Total long-term debt, gross | 146,250 | ||
Less - deferred financing costs | (2,424) | ||
Total debt, net of unamortized discounts | 143,826 | $ 150,000 | |
Senior Convertible Notes 2016 | |||
Debt Instrument [Line Items] | |||
Total long-term debt, gross | 230,000 | 230,000 | |
Less – unamortized original issue discount | (9,503) | (11,487) | |
Less - deferred financing costs | (3,714) | (4,503) | |
Total debt, net of unamortized discounts | $ 216,783 | $ 214,010 |
Debt - Long-Term Debt (Parenthe
Debt - Long-Term Debt (Parenthetical) (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Mar. 05, 2018 | |
2015 Credit Agreement | 2015 Term Loan | |||
Debt Instrument [Line Items] | |||
Basis spread on term loan | 1.75% | ||
Term loan combined interest rate | 3.44% | ||
Maturity period | Feb. 29, 2020 | ||
2015 Credit Agreement | Revolving Loan | |||
Debt Instrument [Line Items] | |||
Amount available under credit facility | $ 200,000,000 | ||
Maturity period | Feb. 29, 2020 | ||
2018 Credit Agreement | |||
Debt Instrument [Line Items] | |||
Amount available under credit facility | $ 350,000,000 | ||
2018 Credit Agreement | 2018 Term Loan | |||
Debt Instrument [Line Items] | |||
Basis spread on term loan | 1.50% | ||
Term loan combined interest rate | 3.89% | ||
Maturity period | Mar. 31, 2023 | ||
2018 Credit Agreement | Revolving Loan | |||
Debt Instrument [Line Items] | |||
Amount available under credit facility | $ 200,000,000 | $ 200,000,000 | |
Maturity period | Mar. 31, 2023 | ||
Senior Convertible Notes 2016 | |||
Debt Instrument [Line Items] | |||
Maturity period | Mar. 15, 2036 | ||
Interest rate on senior subordinated convertible notes | 4.25% |
Debt - Credit Agreement (Detail
Debt - Credit Agreement (Details Textual) - USD ($) | Mar. 05, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||||
Carrying value of debt | $ 360,609,000 | $ 331,736,000 | ||
Proceeds from term loan | 150,000,000 | |||
Principal repayments | 123,750,000 | $ 11,250,000 | ||
Net increase of available cash | $ 30,000,000 | |||
Payments of deferred financing costs | 1,490,000 | |||
Financing costs | 2,800,000 | |||
Loss on extinguishment of debt | (810,000) | |||
2015 Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Principal repayments | 120,000,000 | |||
2018 Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Credit Agreement | $ 350,000,000 | |||
Principal repayments | $ 3,800,000 | |||
Debt instrument, frequency of periodic payment | payable quarterly | |||
Debt instrument, payment terms of principal of debt | The 2018 Credit Agreement includes mandatory repayments of the aggregate principal amount of the 2018 Term Loan (payable quarterly) for the first, second, third, fourth, and fifth years, with the remaining principal balance due at maturity. The 2018 Credit Agreement has no prepayment penalties and requires mandatory repayments under certain circumstances, including: (i) asset sales or casualty proceeds; and (ii) proceeds of debt or preferred stock issuances. | |||
Payments of deferred financing costs | $ 1,500,000 | |||
2018 Credit Agreement | Minimum | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, unused capacity, commitment fee percentage | 0.20% | |||
2018 Credit Agreement | Maximum | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, unused capacity, commitment fee percentage | 0.375% | |||
2018 Credit Agreement | London Interbank Offered Rate (LIBOR) | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on term loan | 1.50% | |||
2018 Credit Agreement | London Interbank Offered Rate (LIBOR) | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on term loan | 2.50% | |||
2018 Credit Agreement | Base Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on term loan | 0.50% | |||
2018 Credit Agreement | Base Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on term loan | 1.50% | |||
2018 Credit Agreement | Revolving Loan | ||||
Debt Instrument [Line Items] | ||||
Credit Agreement | $ 200,000,000 | $ 200,000,000 | ||
Credit facility term | 5 years | |||
Line of credit facility, unused capacity, commitment fee percentage | 0.20% | |||
Credit facility, outstanding barrowings | $ 0 | |||
Credit facility, current borrowing capacity | 200,000,000 | |||
2018 Credit Agreement | 2018 Term Loan | ||||
Debt Instrument [Line Items] | ||||
Carrying value of debt | 150,000,000 | $ 143,826,000 | ||
Term loan period | 5 years | |||
Proceeds from term loan | $ 150,000,000 | |||
Basis spread on term loan | 1.50% | |||
Term loan combined interest rate | 3.89% | |||
Financing costs | $ 2,424,000 | |||
2015 Credit Agreement | Revolving Loan | ||||
Debt Instrument [Line Items] | ||||
Credit Agreement | 200,000,000 | |||
Unamortized debt issuance costs | 800,000 | |||
Loss on extinguishment of debt | $ 800,000 |
Debt - 2016 Convertible Notes (
Debt - 2016 Convertible Notes (Details Textual) - Senior Convertible Notes 2016 $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018USD ($)Tradingday$ / shares | Dec. 31, 2017USD ($)$ / shares | |
Debt Instrument [Line Items] | ||
Percentage of par value of convertible notes to be settled in cash | 100.00% | |
Conversion rate of common stock | 17.5173 | 17.5057 |
Convertible Notes, initial conversion of Par Value Convertible Notes to common stock | $ | $ 1 | $ 1 |
Conversion price | $ / shares | $ 57.09 | $ 57.12 |
Rate of conversion price | 130.00% | |
Debt instrument, convertible, threshold consecutive trading days | 30 | |
Debt instrument, convertible, threshold trading days | 20 |
Acquisitions (Details Textual)
Acquisitions (Details Textual) $ in Thousands | Oct. 01, 2018USD ($) | Feb. 28, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($)Segment |
Business Acquisition [Line Items] | ||||
Business acquisition, net of cash acquired | $ 71,443 | |||
Business Ink | ||||
Business Acquisition [Line Items] | ||||
Business acquisition date | Feb. 28, 2018 | |||
Business acquisition, net of cash acquired | $ 70,000 | |||
Decrease in goodwill | $ (200) | $ (4,700) | ||
Number of reportable segments | Segment | 1 | |||
Business Ink | Client contracts | ||||
Business Acquisition [Line Items] | ||||
Adjustments to increase acquired intangible asset | $ 4,300 | |||
Weighted-average life | 13 years | |||
Business Ink | Client contracts | Minimum | ||||
Business Acquisition [Line Items] | ||||
Estimated lives assigned to acquired assets | 4 months | |||
Business Ink | Client contracts | Maximum | ||||
Business Acquisition [Line Items] | ||||
Estimated lives assigned to acquired assets | 15 years | |||
Business Ink | Software | ||||
Business Acquisition [Line Items] | ||||
Estimated lives assigned to acquired assets | 4 years | |||
Forte Payment Systems, Inc | ||||
Business Acquisition [Line Items] | ||||
Business acquisition date | Oct. 1, 2018 | |||
Forte Payment Systems, Inc | Subsequent Event | ||||
Business Acquisition [Line Items] | ||||
Business acquisition, net of cash acquired | $ 80,000 | |||
Business acquisition, acquired equity percentage | 100.00% | |||
Business acquisition, cash consideration | $ 85,000 | |||
Cash held subject to certain tax filings | 13,000 | |||
Potential future earn out payments | $ 18,800 | |||
Potential future earn out payments meassurement period | 4 years |
Acquisitions - Summary of Preli
Acquisitions - Summary of Preliminary Estimated Fair Values of Assets Acquired and Liabilities Assumed at Date of Acquisition (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Feb. 28, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | |||
Goodwill | $ 210,697 | $ 210,080 | |
Business Ink | |||
Business Acquisition [Line Items] | |||
Current assets | $ 25,726 | ||
Fixed assets | 13,337 | ||
Goodwill | 3,314 | ||
Non-current assets | 148 | ||
Total assets acquired | 81,807 | ||
Current liabilities | (11,586) | ||
Non-current liabilities | (256) | ||
Total liabilities assumed | (11,842) | ||
Net assets acquired | 69,965 | ||
Client contracts | Business Ink | |||
Business Acquisition [Line Items] | |||
Intangible assets, Acquired | 35,150 | ||
Software | Business Ink | |||
Business Acquisition [Line Items] | |||
Intangible assets, Acquired | $ 4,132 |
Restructuring and Reorganizat_3
Restructuring and Reorganization Charges (Details Textual) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)Employees | Sep. 30, 2017USD ($) | |
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring and reorganization charges | $ 2,799 | $ 1,618 | $ 7,028 | $ 4,597 |
Reduced workforce | Employees | 70 | |||
Termination Benefits Related to Organizational Changes | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring and reorganization charges | $ 3,500 | |||
Closure of Print Facility | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring charges and impairment of assets | $ 2,100 |
Restructuring and Reorganizat_4
Restructuring and Reorganization Charges - Schedule of Activity in Business Restructuring and Reorganization Reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Rollforward of Restructuring and Reorganization Reserves | ||||
Beginning Balance | $ 4,148 | |||
Charged to expense during period | $ 2,799 | $ 1,618 | 7,028 | $ 4,597 |
Cash payments | (6,049) | |||
Adjustment for asset impairment | (1,428) | $ (2,135) | ||
Other | (125) | |||
Ending Balance | 3,574 | 3,574 | ||
Termination Benefits | ||||
Rollforward of Restructuring and Reorganization Reserves | ||||
Beginning Balance | 1,116 | |||
Charged to expense during period | 3,788 | |||
Cash payments | (4,065) | |||
Other | 16 | |||
Ending Balance | 855 | 855 | ||
Facilities Abandonment | ||||
Rollforward of Restructuring and Reorganization Reserves | ||||
Beginning Balance | 3,032 | |||
Charged to expense during period | 1,541 | |||
Cash payments | (1,984) | |||
Other | 130 | |||
Ending Balance | $ 2,719 | 2,719 | ||
Other | ||||
Rollforward of Restructuring and Reorganization Reserves | ||||
Charged to expense during period | 1,699 | |||
Adjustment for asset impairment | (1,428) | |||
Other | $ (271) |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rates (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Effective Income Tax Rate Continuing Operations Tax Rate Reconciliation [Abstract] | ||||
Effective income tax rates | 21.00% | 38.00% | 26.00% | 30.00% |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes [Line Items] | ||||||
Corporate income tax rate | 21.00% | 35.00% | ||||
Recognized provisional tax expense | $ 2,300 | |||||
Effective income tax rate | 21.00% | 38.00% | 26.00% | 30.00% | ||
Income tax benefit | $ (4,391) | $ (8,806) | $ (16,188) | $ (19,641) | ||
ASU 2016-09 | ||||||
Income Taxes [Line Items] | ||||||
Income tax benefit | 2,000 | |||||
Warrant Exercise | ||||||
Income Taxes [Line Items] | ||||||
Income tax benefit | $ 5,000 | |||||
Comcast | ||||||
Income Taxes [Line Items] | ||||||
Stock warrants exercised | 1.4 | |||||
Scenario, Forecast | ||||||
Income Taxes [Line Items] | ||||||
Effective income tax rate before change in estimate of research and development credits | 29.00% | |||||
Effective income tax rate | 27.00% |
Commitments, Guarantees and C_2
Commitments, Guarantees and Contingencies (Details Textual) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Warranty Period | 90 days |
Earnings Per Common Share - Rec
Earnings Per Common Share - Reconciliation of the Basic and Diluted EPS Denominators (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Reconciliation of the basic and diluted EPS denominators | ||||
Basic weighted-average common shares | 32,507 | 32,561 | 32,541 | 32,383 |
Dilutive effect of restricted common stock | 156 | 340 | 235 | 442 |
Dilutive effect of Stock Warrants | 143 | 163 | ||
Diluted weighted-average common shares | 32,806 | 32,901 | 32,939 | 32,825 |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details Textual) | Sep. 30, 2018$ / shares |
Common Stock Warrants | |
Earnings Per Common Share [Line Items] | |
Common stock warrants issued, per warrant | $ 26.68 |
Stockholders' Equity and Equi_3
Stockholders' Equity and Equity Compensation Plans (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
May 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2014 | Apr. 30, 2018 | |
Stockholders Equity And Equity Compensation Plans [Line Items] | ||||||||
Remaining number of shares available for repurchase | 5,800,000 | 5,800,000 | ||||||
Repurchase of common stock for employee tax withholdings, shares | 200,000 | 200,000 | ||||||
Repurchase of common stock for tax withholdings, value | $ 7,200 | $ 9,400 | ||||||
Cash dividends declared per common share | $ 0.21 | $ 0.1975 | ||||||
Cash dividend | $ 7,000 | $ 6,700 | 21,200 | 20,000 | ||||
Stock warrants term | 10 years | |||||||
Stock warrants, exercise price | $ 26.68 | |||||||
Stock-based compensation expense | $ 4,600 | $ 5,000 | $ 14,805 | $ 16,659 | ||||
Performance Shares | ||||||||
Stockholders Equity And Equity Compensation Plans [Line Items] | ||||||||
Performance based awards granted to executive management and certain key employees shares | 100,000 | |||||||
Performance Shares | 2018 Performance Awards | ||||||||
Stockholders Equity And Equity Compensation Plans [Line Items] | ||||||||
Vesting maturity date | Mar. 31, 2020 | |||||||
Restricted common stock | ||||||||
Stockholders Equity And Equity Compensation Plans [Line Items] | ||||||||
Vesting period | 4 years | |||||||
Comcast | ||||||||
Stockholders Equity And Equity Compensation Plans [Line Items] | ||||||||
Issuance of stock warrants | 2,900,000 | |||||||
Stock warrants issued | 1,400,000 | 1,400,000 | ||||||
Stock warrants vested | 400,000 | |||||||
Comcast | Common Stock Warrants | ||||||||
Stockholders Equity And Equity Compensation Plans [Line Items] | ||||||||
Client contract incentive related to stock warrants | $ 25,100 | $ 25,100 | ||||||
Accumulated amortization expense of client contract incentive related to stock warrants | $ 17,100 | $ 9,200 | ||||||
Stock Incentive Plan 2005 | ||||||||
Stockholders Equity And Equity Compensation Plans [Line Items] | ||||||||
Increase in number of shares approved for issuance under incentive plan | 2,700,000 | |||||||
Number of shares approved for issuance under incentive plan | 21,400,000 | 18,700,000 | ||||||
SEC Rule 10b5-1 Plan | ||||||||
Stockholders Equity And Equity Compensation Plans [Line Items] | ||||||||
Repurchase of common stock, shares | 400,000 | 400,000 | ||||||
Total amount paid | $ 16,900 | $ 15,600 | ||||||
Weighted-average price per share | $ 42.71 | $ 40.54 |
Stockholders' Equity and Equi_4
Stockholders' Equity and Equity Compensation Plans - Summary of Unvested Restricted Common Stock Activity (Details) - Restricted common stock - $ / shares shares in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Shares | ||
Shares, Unvested awards, beginning balance | 1,189 | 1,222 |
Shares, Awards granted | 38 | 527 |
Shares, Awards forfeited/cancelled | (28) | (107) |
Shares, Awards vested | (40) | (483) |
Shares, Unvested awards, ending balance | 1,159 | 1,159 |
Weighted-Average Grant Date Fair Value | ||
Weighted-Average Grant Date Fair Value, Unvested awards, beginning balance | $ 41.67 | $ 36.84 |
Weighted-Average Grant Date Fair Value, Awards granted | 37.62 | 46.09 |
Weighted-Average Grant Date Fair Value, Awards forfeited/cancelled | 39.95 | 40.12 |
Weighted-Average Grant Date Fair Value, Awards vested | 37.96 | 34.55 |
Weighted-Average Grant Date Fair Value, Unvested awards, ending balance | $ 41.70 | $ 41.70 |