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Supplemental balance sheet and cash flow information (Tables) | 3 Months Ended
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Mar. 31, 2021
Inventories and supplies | Inventories and supplies – Inventories and supplies were comprised of the following:
(in thousands) |  | March 31, 2021 |  | December 31, 2020
Raw materials |  | $ | 5,415 |  |  | $ | 5,412 |
Semi-finished goods |  | 7,916 |  |  | 7,943 |
Finished goods |  | 31,464 |  |  | 33,513 |
Supplies |  | 5,263 |  |  | 5,010 |
Reserve for excess and obsolete items |  | (12,939) |  |  | (11,748) |
Inventories and supplies |  | $ | 37,119 |  |  | $ | 40,130 |
Changes in the reserve for excess and obsolete items were as follows for the quarters ended March 31, 2021 and 2020:
|  | Quarter Ended March 31,
(in thousands) |  | 2021 |  | 2020
Balance, beginning of year |  | $ | 11,748 |  |  | $ | 6,600 |
Amounts charged to expense |  | 2,013 |  |  | 88 |
Write-offs |  | (822) |  |  | (335) |
Balance, end of period |  | $ | 12,939 |  |  | $ | 6,353 |
Available-for-sale debt securities | Available-for-sale debt securities – Available-for-sale debt securities included within funds held for customers were comprised of the following:
|  | March 31, 2021
(in thousands) |  | Cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair value
Funds held for customers:(1) |  |  |  |  |  |  |  |
Domestic money market fund |  | $ | 12,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 12,000 |
Canadian and provincial government securities |  | 9,722 |  |  | — |  |  | (311) |  |  | 9,411 |
Canadian guaranteed investment certificate |  | 3,980 |  |  | — |  |  | — |  |  | 3,980 |
Available-for-sale debt securities |  | $ | 25,702 |  |  | $ | — |  |  | $ | (311) |  |  | $ | 25,391 |
(1) Funds held for customers, as reported on the consolidated balance sheet as of March 31, 2021, also included cash of $97,075.
|  | December 31, 2020
(in thousands) |  | Cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair value
Funds held for customers:(1) |  |  |  |  |  |  |  |
Domestic money market fund |  | $ | 15,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 15,000 |
Canadian and provincial government securities |  | 9,566 |  |  | — |  |  | (33) |  |  | 9,533 |
Canadian guaranteed investment certificate |  | 3,929 |  |  | — |  |  | — |  |  | 3,929 |
Available-for-sale debt securities |  | $ | 28,495 |  |  | $ | — |  |  | $ | (33) |  |  | $ | 28,462 |
(1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2020, also included cash of $91,287.
Expected maturities of available-for-sale debt securities | Expected maturities of available-for-sale debt securities as of March 31, 2021 were as follows:
(in thousands) |  | Fair value
Due in one year or less |  | $ | 14,550 |
Due in two to five years |  | 7,971 |
Due in six to ten years |  | 2,870 |
Available-for-sale debt securities |  | $ | 25,391 |
Revenue in excess of billings | Revenue in excess of billings – Revenue in excess of billings was comprised of the following:
(in thousands) |  | March 31, 2021 |  | December 31, 2020
Conditional right to receive consideration |  | $ | 20,072 |  |  | $ | 13,950 |
Unconditional right to receive consideration(1) |  | 7,583 |  |  | 3,667 |
Revenue in excess of billings |  | $ | 27,655 |  |  | $ | 17,617 |
(1) Represents revenues that are earned but not currently billable under the related contract terms. Trade accounts receivable on the consolidated balance sheets included unbilled receivables of $19,295 as of March 31, 2021 and $21,319 as of December 31, 2020.
Intangibles | Intangibles – Intangibles were comprised of the following:
|  | March 31, 2021 |  | December 31, 2020
(in thousands) |  | Gross carrying amount |  | Accumulated amortization |  | Net carrying amount |  | Gross carrying amount |  | Accumulated amortization |  | Net carrying amount
Amortizable intangibles: |  |  |  |  |  |  |  |  |  |  |  |
Internal-use software |  | $ | 397,675 |  |  | $ | (314,125) |  |  | $ | 83,550 |  |  | $ | 380,144 |  |  | $ | (303,422) |  |  | $ | 76,722 |
Customer lists/relationships |  | 366,241 |  |  | (212,425) |  |  | 153,816 |  |  | 352,895 |  |  | (202,428) |  |  | 150,467 |
Software to be sold |  | 36,900 |  |  | (24,941) |  |  | 11,959 |  |  | 36,900 |  |  | (23,884) |  |  | 13,016 |
Technology-based intangibles |  | 33,813 |  |  | (29,163) |  |  | 4,650 |  |  | 33,813 |  |  | (27,613) |  |  | 6,200 |
Trade names |  | 30,230 |  |  | (30,053) |  |  | 177 |  |  | 30,281 |  |  | (29,926) |  |  | 355 |
Intangibles |  | $ | 864,859 |  |  | $ | (610,707) |  |  | $ | 254,152 |  |  | $ | 834,033 |  |  | $ | (587,273) |  |  | $ | 246,760 |
Estimated future amortization expense | Based on the intangibles in service as of March 31, 2021, estimated future amortization expense is as follows:
(in thousands) |  | Estimated amortization expense
Remainder of 2021 |  | $ | 65,583 |
2022 |  | 68,285 |
2023 |  | 48,720 |
2024 |  | 23,206 |
2025 |  | 17,327 |
Acquired intangibles | The following intangibles were acquired during the quarter ended March 31, 2021:
(in thousands) |  | Amount |  | Weighted-average amortization period (in years)
Internal-use software |  | $ | 17,321 |  |  | 3
Customer lists/relationships |  | 13,302 |  |  | 8
Acquired intangibles |  | $ | 30,623 |  |  | 5
Goodwill | Goodwill – Changes in goodwill by reportable segment and in total for the quarter ended March 31, 2021 were as follows:
(in thousands) |  | Payments |  | Cloud Solutions |  | Promotional Solutions |  | Checks |  | Total
Balance, December 31, 2020: |  |  |  |  |  |  |  |  |  |
Goodwill, gross |  | $ | 168,165 |  |  | $ | 432,984 |  |  | $ | 252,864 |  |  | $ | 434,812 |  |  | $ | 1,288,825 |
Accumulated impairment charges |  | — |  |  | (362,058) |  |  | (189,923) |  |  | — |  |  | (551,981) |
Goodwill, net of accumulated impairment charges |  | 168,165 |  |  | 70,926 |  |  | 62,941 |  |  | 434,812 |  |  | 736,844 |
Currency translation adjustment |  | — |  |  | — |  |  | 18 |  |  | — |  |  | 18 |
Balance, March 31, 2021 |  | $ | 168,165 |  |  | $ | 70,926 |  |  | $ | 62,959 |  |  | $ | 434,812 |  |  | $ | 736,862 |
Balance, March 31, 2021: |  |  |  |  |  |  |  |  |  |
Goodwill, gross |  | $ | 168,165 |  |  | $ | 432,984 |  |  | $ | 252,882 |  |  | $ | 434,812 |  |  | $ | 1,288,843 |
Accumulated impairment charges |  | — |  |  | (362,058) |  |  | (189,923) |  |  | — |  |  | (551,981) |
Goodwill, net of accumulated impairment charges |  | $ | 168,165 |  |  | $ | 70,926 |  |  | $ | 62,959 |  |  | $ | 434,812 |  |  | $ | 736,862 |
Other non-current assets | Other non-current assets – Other non-current assets were comprised of the following:
(in thousands) |  | March 31, 2021 |  | December 31, 2020
Postretirement benefit plan asset |  | $ | 72,775 |  |  | $ | 71,208 |
Prepaid product discounts |  | 51,044 |  |  | 50,602 |
Cloud computing arrangements |  | 38,249 |  |  | 29,242 |
Loans and notes receivable from distributors, net of allowances for doubtful accounts(1) |  | 27,182 |  |  | 35,068 |
Deferred sales commissions(2) |  | 15,461 |  |  | 9,199 |
Other |  | 13,124 |  |  | 13,360 |
Other non-current assets |  | $ | 217,835 |  |  | $ | 208,679 |
(1) Amount Includes the non-current portion of loans and notes receivable. The current portion of these receivables is included in other current assets on the consolidated balance sheets and was $1,704 as of March 31, 2021 and $2,008 as of December 31, 2020. (2) Amortization of deferred sales commissions was $972 for the quarter ended March 31, 2021 and $882 for the quarter ended March 31, 2020.
Loans and notes receivable by credit quality Indicator | The following table presents loans and notes receivable from distributors, including the current portion, by credit quality indicator and by year of origination, as of March 31, 2021. There were no write-offs or recoveries recorded during the quarter ended March 31, 2021.
|  | Loans and notes receivable from distributors amortized cost basis by origination year |  |
(in thousands) |  | 2020 |  | 2019 |  | 2018 |  | 2017 |  | Prior |  | Total
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |
1-2 internal grade |  | $ | 1,310 |  |  | $ | 587 |  |  | $ | 14,546 |  |  | $ | 11,744 |  |  | $ | 1,481 |  |  | $ | 29,668 |
3-4 internal grade |  | — |  |  | 2,579 |  |  | — |  |  | — |  |  | — |  |  | 2,579 |
Loans and notes receivable |  | $ | 1,310 |  |  | $ | 3,166 |  |  | $ | 14,546 |  |  | $ | 11,744 |  |  | $ | 1,481 |  |  | $ | 32,247 |
Changes in prepaid product discounts | Changes in prepaid product discounts during the quarters ended March 31, 2021 and 2020 were as follows:
|  | Quarter Ended March 31,
(in thousands) |  | 2021 |  | 2020
Balance, beginning of year |  | $ | 50,602 |  |  | $ | 51,145 |
Additions(1) |  | 7,890 |  |  | 2,470 |
Amortization |  | (7,440) |  |  | (7,077) |
Other |  | (8) |  |  | (544) |
Balance, end of period |  | $ | 51,044 |  |  | $ | 45,994 |
(1) Prepaid product discounts are generally accrued upon contract execution. Cash payments for prepaid product discounts were $9,590 for the quarter ended March 31, 2021 and $7,321 for the quarter ended March 31, 2020.
Accrued liabilities | Accrued liabilities – Accrued liabilities were comprised of the following:
(in thousands) |  | March 31, 2021 |  | December 31, 2020
Deferred revenue(1) |  | $ | 49,469 |  |  | $ | 42,104 |
Employee cash bonuses, including sales incentives |  | 17,005 |  |  | 21,090 |
Prepaid product discounts due within one year |  | 12,640 |  |  | 14,365 |
Operating lease liabilities |  | 10,914 |  |  | 11,589 |
Customer rebates |  | 7,046 |  |  | 8,179 |
Other |  | 77,849 |  |  | 79,856 |
Accrued liabilities |  | $ | 174,923 |  |  | $ | 177,183 |
(1) $16,121 of the December 31, 2020 amount was recognized as revenue during the quarter ended March 31, 2021.
Supplemental cash flow information | Supplemental cash flow information – The reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the consolidated balance sheets was as follows:
(in thousands) |  | March 31, 2021 |  | March 31, 2020
Cash and cash equivalents |  | $ | 125,440 |  |  | $ | 310,146 |
Restricted cash and restricted cash equivalents included in funds held for customers |  | 109,075 |  |  | 75,657 |
Total cash, cash equivalents, restricted cash and restricted cash equivalents |  | $ | 234,515 |  |  | $ | 385,803 |
Trade accounts receivable [Member] |
Allowances for uncollectible accounts | Trade accounts receivable – Changes in the allowances for uncollectible accounts included within trade accounts receivable were as follows for the quarters ended March 31, 2021 and 2020:
|  | Quarter Ended March 31,
(in thousands) |  | 2021 |  | 2020
Balance, beginning of year |  | $ | 6,428 |  |  | $ | 4,985 |
Bad debt (benefit) expense |  | (649) |  |  | 1,059 |
Write-offs and other |  | (900) |  |  | (2,098) |
Balance, end of period |  | $ | 4,879 |  |  | $ | 3,946 |
Loans and notes receivable [Member] |
Allowances for uncollectible accounts | Changes in the allowances for uncollectible accounts related to loans and notes receivable from distributors were as follows for the quarters ended March 31, 2021 and 2020:
|  | Quarter Ended March 31,
(in thousands) |  | 2021 |  | 2020
Balance, beginning of year |  | $ | 3,995 |  |  | $ | 284 |
Adoption of ASU No. 2016-13 |  | — |  |  | 4,749 |
Bad debt (benefit) expense |  | (634) |  |  | 5,382 |
Balance, end of period |  | $ | 3,361 |  |  | $ | 10,415 |

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