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Supplemental balance sheet and cash flow information

3 Months Ended

Mar. 31, 2022

Balance Sheet Related Disclosures [Abstract]

Supplemental Balance Sheet Disclosures [Text Block]

Trade accounts receivable – Net trade accounts receivable were comprised of the following:


(in thousands)	March 31, 2022		December 31, 2021
Trade accounts receivable – gross	$	188,534	$	202,077
Allowance for credit losses	(4,199)		(4,130)
Trade accounts receivable – net(1)	$	184,335	$	197,947

(1) Includes unbilled receivables of $50,106 as of March 31, 2022 and $47,420 as of December 31, 2021.

Changes in the allowance for credit losses for the quarters ended March 31, 2022 and 2021 were as follows:


	Quarter Ended March 31,
(in thousands)	2022		2021
Balance, beginning of year	$	4,130	$	6,428
Bad debt expense (benefit)	625		(649)
Write-offs and other	(556)		(900)
Balance, end of period	$	4,199	$	4,879

Inventories and supplies – Inventories and supplies were comprised of the following:


(in thousands)	March 31, 2022		December 31, 2021
Raw materials	$	5,587	$	5,316
Semi-finished goods	6,742		6,708
Finished goods	21,555		21,995
Supplies	6,022		6,041
Reserves for excess and obsolete items	(5,379)		(5,132)
Inventories and supplies, net of reserves	$	34,527	$	34,928

Changes in the reserves for excess and obsolete items were as follows for the quarters ended March 31, 2022 and 2021:


	Quarter Ended March 31,
(in thousands)	2022		2021
Balance, beginning of year	$	5,132	$	11,748
Amounts charged to expense	773		2,013
Write-offs and other	(526)		(822)
Balance, end of period	$	5,379	$	12,939

Available-for-sale debt securities – Available-for-sale debt securities included within funds held for customers were comprised of the following:


	March 31, 2022
(in thousands)	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Funds held for customers:(1)
Canadian and provincial government securities	$	9,865	$	—	$	(836)	$	9,029
Canadian guaranteed investment certificate	3,998		—		—		3,998
Available-for-sale debt securities	$	13,863	$	—	$	(836)	$	13,027

(1) Funds held for customers, as reported on the consolidated balance sheet as of March 31, 2022, also included cash of $143,725.


	December 31, 2021
(in thousands)	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Funds held for customers:(1)

Canadian and provincial government securities	$	9,724	$	—	$	(374)	$	9,350
Canadian guaranteed investment certificate	3,957		—		—		3,957
Available-for-sale debt securities	$	13,681	$	—	$	(374)	$	13,307

(1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2021, also included cash of $241,488.

Expected maturities of available-for-sale debt securities as of March 31, 2022 were as follows:


(in thousands)	Fair value
Due in one year or less	$	6,572
Due in two to five years	2,708
Due in six to ten years	3,747
Available-for-sale debt securities	$	13,027

Further information regarding the fair value of available-for-sale debt securities can be found in Note 8.

Revenue in excess of billings – Revenue in excess of billings was comprised of the following:


(in thousands)	March 31, 2022		December 31, 2021
Conditional right to receive consideration	$	22,657	$	22,780
Unconditional right to receive consideration(1)	11,032		7,613
Revenue in excess of billings	$	33,689	$	30,393

(1) Represents revenues that are earned but not currently billable under the related contract terms.

Intangibles – Intangibles were comprised of the following:


	March 31, 2022						December 31, 2021
(in thousands)	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Customer lists/relationships	$	493,510	$	(264,822)	$	228,688	$	493,495	$	(255,178)	$	238,317
Internal-use software	471,035		(354,338)		116,697		456,133		(342,656)		113,477
Technology-based intangibles	98,813		(40,584)		58,229		98,813		(38,553)		60,260
Partner relationships	73,257		(4,323)		68,934		73,095		(2,990)		70,105
Trade names	44,185		(24,935)		19,250		51,052		(31,277)		19,775
Software to be sold	36,900		(29,167)		7,733		36,900		(28,110)		8,790
Intangibles	$	1,217,700	$	(718,169)	$	499,531	$	1,209,488	$	(698,764)	$	510,724

Amortization of intangibles was $36,159 for the quarter ended March 31, 2022 and $23,264 for the quarter ended March 31, 2021. Based on the intangibles in service as of March 31, 2022, estimated future amortization expense is as follows:


(in thousands)	Estimated amortization expense
Remainder of 2022	$	88,406
2023	117,562
2024	75,257
2025	50,306
2026	40,004

The following intangibles were acquired during the quarter ended March 31, 2022:


(in thousands)	Amount		Weighted-average amortization period (in years)
Internal-use software	$	15,931	3
Customer lists/relationships	10,280		6
Partner relationships	163		1
Acquired intangibles	$	26,374	4

Goodwill – Changes in goodwill by reportable segment and in total were as follows for the quarter ended March 31, 2022:


(in thousands)	Payments		Cloud Solutions		Promotional Solutions		Checks		Total
Balance, December 31, 2021:
Goodwill, gross	$	895,338	$	432,984	$	252,874	$	434,812	$	2,016,008
Accumulated impairment charges	—		(392,168)		(193,699)		—		(585,867)
Goodwill, net of accumulated impairment charges	895,338		40,816		59,175		434,812		1,430,141

Currency translation adjustment	—		—		15		—		15
Balance, March 31, 2022	$	895,338	$	40,816	$	59,190	$	434,812	$	1,430,156

Balance, March 31, 2022:
Goodwill, gross	$	895,338	$	432,984	$	252,889	$	434,812	$	2,016,023
Accumulated impairment charges	—		(392,168)		(193,699)		—		(585,867)
Goodwill, net of accumulated impairment charges	$	895,338	$	40,816	$	59,190	$	434,812	$	1,430,156

Other non-current assets – Other non-current assets were comprised of the following:


(in thousands)	March 31, 2022		December 31, 2021
Postretirement benefit plan asset	$	88,943	$	87,019
Cloud computing arrangements implementation costs	66,408		63,806
Prepaid product discounts	51,885		56,527
Deferred contract acquisition costs(1)	20,200		17,975
Loans and notes receivable from distributors, net of allowance for credit losses(2)	15,970		20,201
Assets held for sale(3)	10,151		7,251
Other	25,899		26,684
Other non-current assets	$	279,456	$	279,463

(1) Amortization of deferred contract acquisition costs was $1,756 for the quarter ended March 31, 2022 and $972 for the quarter ended March 31, 2021.

(2) 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 $1,162 as of March 31, 2022 and $1,317 as of December 31, 2021.

(3) Relates primarily to the continuing evaluation of our real estate footprint in both periods, as well as the assets of our Australian web hosting business as of March 31, 2022 (Note 6).

Changes in the allowance for credit losses related to loans and notes receivable from distributors were as follows for the quarters ended March 31, 2022 and 2021:


	Quarter Ended March 31,
(in thousands)	2022		2021
Balance, beginning of year	$	2,830	$	3,995
Bad debt expense (benefit)	81		(634)
Exchange for customer lists	(402)		—
Balance, end of period	$	2,509	$	3,361

Past due receivables and those on non-accrual status were not significant as of March 31, 2022 or December 31, 2021.

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

The following table presents loans and notes receivable from distributors, including the current portion, by credit quality indicator and by year of origination, as of March 31, 2022. There were no write-offs or recoveries recorded during the quarter ended March 31, 2022.


	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	$	1,201	$	471	$	5,283	$	8,942	$	1,145	$	17,042
3-4 internal grade	—		2,599		—		—		—		2,599
Loans and notes receivable	$	1,201	$	3,070	$	5,283	$	8,942	$	1,145	$	19,641

Changes in prepaid product discounts during the quarters ended March 31, 2022 and 2021 were as follows:


	Quarter Ended March 31,
(in thousands)	2022		2021
Balance, beginning of year	$	56,527	$	50,602
Additions(1)	4,229		7,890
Amortization	(8,924)		(7,440)
Other	53		(8)
Balance, end of period	$	51,885	$	51,044

(1) Prepaid product discounts are generally accrued upon contract execution. Cash payments for prepaid product discounts were $7,859 for the quarter ended March 31, 2022 and $9,590 for the quarter ended March 31, 2021.

Accrued liabilities – Accrued liabilities were comprised of the following:


(in thousands)	March 31, 2022		December 31, 2021
Deferred revenue(1)	$	46,908	$	52,645
Employee cash bonuses, including sales incentives	16,216		45,006
Interest	15,451		4,597
Operating lease liabilities	14,243		14,852
Customer rebates	9,316		9,036
Prepaid product discounts due within one year	8,319		11,866
Other	91,460		78,830
Accrued liabilities	$	201,913	$	216,832

(1) $20,238 of the December 31, 2021 amount was recognized as revenue during the quarter ended March 31, 2022.

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, 2022		March 31, 2021
Cash and cash equivalents	$	44,059	$	125,440
Restricted cash and restricted cash equivalents included in funds held for customers	143,725		109,075
Cash and cash equivalents included in other current assets(1)	400		—
Non-current restricted cash included in other non-current assets	2,595		—
Total cash, cash equivalents, restricted cash and restricted cash equivalents	$	190,779	$	234,515

(1) Represents cash and cash equivalents of our Australian web hosting business that was classified as held for sale as of March 31, 2022 (Note 6).