XML 26 R12.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Financial Instruments | 12 Months Ended
--- | ---
Dec. 31, 2017
Investments All Other Investments [Abstract] |
Financial Instruments | Note 5. Financial Instruments The carrying amounts of our cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short maturity of these instruments. The carrying value of bank debt approximates fair value, as the interest rate on the bank debt is variable and approximates current market rates. Concentrations of Credit Risk Financial instruments that may subject us to concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. We place our cash and cash equivalents with highly-rated financial institutions, limiting the amount of credit exposure with any one financial institution. Our client base consists of large numbers of geographically diverse customers dispersed throughout the United States; thus, concentration of credit risk with respect to accounts receivable is not significant. Bonds We held corporate and municipal bonds with net book value totaling $49.5 million and $42.4 million at December 31, 2017 and 2016, respectively. All bonds are investment grade and are classified as available-for-sale. Our bonds have maturity dates or callable dates ranging from January 2018 through December 2023, and are included in “Funds held for clients — current” in the accompanying Consolidated Balance Sheets based on the intent and ability of us to sell these investments at any time under favorable conditions. The following table summarizes our bond activity for the years ended December 31, 2017 and 2016 (in thousands):
|  | 2017 |  |  | 2016 |
Fair value at January 1 |  | $ | 44,573 |  |  | $ | 43,142 |
Purchases |  |  | 15,546 |  |  |  | 11,355 |
Sales |  |  | (940 | ) |  |  | (2,900 | )
Maturities and calls |  |  | (7,845 | ) |  |  | (6,878 | )
Decrease in bond premium |  |  | (160 | ) |  |  | (106 | )
Fair market value adjustment |  |  | (73 | ) |  |  | (40 | )
Fair value at December 31 |  | $ | 51,101 |  |  | $ | 44,573 |
Interest Rate Swaps We do not purchase or hold any derivative instruments for trading or speculative purposes. We utilize interest rate swaps to manage interest rate risk exposure associated with our floating-rate debt under the credit facility. Under these interest rate swap contracts, we receive cash flows from counterparties at variable rates based on the London Interbank Offered Rate (“LIBOR”) and pay the counterparties a fixed rate. To mitigate counterparty credit risk, we only enter into contracts with selected major financial institutions with investment grade ratings and continually assess their creditworthiness. There are no credit risk-related contingent features in our interest rate swaps nor do the swaps contain provisions under which we would be required to post collateral. The designation of a derivative instrument as a hedge and its ability to meet the hedge accounting criteria determine how we reflect the change in fair value of the derivative instrument. A derivative qualifies for hedge accounting treatment if, at inception, it meets defined correlation and effectiveness criteria. These criteria require that the anticipated cash flows and/or changes in fair value of the hedging instrument substantially offset those of the position being hedged. We had no fair value hedging instruments at December 31, 2017 or 2016. Our interest rate swaps are designated as cash flow hedges. Accordingly, the interest rate swaps are recorded as either an asset or liability in the accompanying Consolidated Balance Sheets at fair value. The mark-to-market gains or losses on the swaps are deferred and included as a component of AOCL, net of tax, to the extent the hedge is determined to be effective, and reclassified to interest expense in the same period during which the hedged transaction affects earnings. The interest rate swaps are assessed for effectiveness and continued qualification for hedge accounting on a quarterly basis. For the years ended December 31, 2017 and 2016, the interest rate swaps were deemed to be highly effective. The following table summarizes our outstanding interest rate swaps and their classification in the accompanying Consolidated Balance Sheets at December 31, 2017 and 2016 (in thousands). Refer to Note 6, Fair Value Measurements, to the accompanying consolidated financial statements for additional disclosures regarding fair value measurements.
|  | December 31, 2017
|  | Notional Amount |  |  | Fair Value |  |  | Balance Sheet Location
Interest rate swaps |  | $ | 55,000 |  |  | $ | 1,055 |  |  | Other non-current assets
Interest rate swap |  | $ | 15,000 |  |  | $ | 76 |  |  | Other current assets
|  | December 31, 2016
|  | Notional Amount |  |  | Fair Value |  |  | Balance Sheet Location
Interest rate swaps |  | $ | 50,000 |  |  | $ | 525 |  |  | Other non-current assets
Interest rate swap |  | $ | 10,000 |  |  | $ | 4 |  |  | Other current assets
Under the terms of the interest rate swaps, we pay interest at a fixed rate of interest plus applicable margin as stated in the agreement, and receive interest that varies with the one-month LIBOR. The notional value, fixed rate of interest and expiration date of each interest rate swap is (i) $15 million – 1.155% - November 2018, (ii) $25 million – 1.300% - October 2020, (iii) $10 million – 1.120% - February 2021 and (iv) $20 million – 1.770% - May 2022. During the second quarter of 2017, we entered into a 5-year interest rate swap with a notional value of $20 million, while during the fourth quarter of 2017, one interest rate swap expired with a notional value of $10 million. During the next twelve months, the amount of the December 31, 2017 AOCL balance that will be reclassified to earnings is expected to be immaterial. The following table summarizes the effects of the interest rate swap on our accompanying Consolidated Statements of Comprehensive Income for the years ended December 31, 2017 and 2016 (in thousands):
|  | Gain recognized in AOCL, net of tax |  |  | Loss reclassified from AOCL into expense |  |  |
|  | Twelve Months Ended December 31, |  |  | Twelve Months Ended December 31, |  |  | Location
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |  |
Interest rate swap |  | $ | 379 |  |  | $ | 182 |  |  | $ | (132 | ) |  | $ | (410 | ) |  | Interest expense

X
- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
Name: | us-gaap_FinancialInstrumentsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_InvestmentsAllOtherInvestmentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration