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Supplemental balance sheet and cash flow information | 6 Months Ended
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Jun. 30, 2024
Balance Sheet Related Disclosures [Abstract] |
Supplemental balance sheet and cash flow information |
NOTE 3: SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION
Trade accounts receivable – Net trade accounts receivable was comprised of the following:
(in thousands) |  | June 30, 2024 |  | December 31, 2023
Trade accounts receivable – gross |  | $ | 184,754 |  |  | $ | 197,546 |
Allowance for credit losses |  | (9,584) |  |  | (6,541) |
Trade accounts receivable – net(1) |  | $ | 175,170 |  |  | $ | 191,005 |
(1) Includes unbilled receivables of $52,249 as of June 30, 2024 and $43,673 as of December 31, 2023. Changes in the allowance for credit losses for the six months ended June 30, 2024 and 2023 were as follows:
|  | Six Months Ended June 30,
(in thousands) |  | 2024 |  | 2023
Balance, beginning of year |  | $ | 6,541 |  |  | $ | 4,182 |
Bad debt expense |  | 8,980 |  |  | 3,027 |
Write-offs and other |  | (5,937) |  |  | (1,771) |
Balance, end of period |  | $ | 9,584 |  |  | $ | 5,438 |
Inventories and supplies – Inventories and supplies were comprised of the following:
(in thousands) |  | June 30, 2024 |  | December 31, 2023
Finished and semi-finished goods |  | $ | 32,138 |  |  | $ | 34,194 |
Raw materials and supplies |  | 17,125 |  |  | 17,339 |
Reserve for excess and obsolete items |  | (11,235) |  |  | (9,445) |
Inventories and supplies, net of reserve |  | $ | 38,028 |  |  | $ | 42,088 |
Available-for-sale debt securities – We did not hold any available-for-sale debt securities as of June 30, 2024. Available-for-sale debt securities held as of December 31, 2023 were comprised of the following:
|  | December 31, 2023
(in thousands) |  | Cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair value
Cash equivalents: |  |  |  |  |  |  |  |
Domestic money market fund |  | $ | 22,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 22,000 |
Available-for-sale debt securities |  | $ | 22,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 22,000 |
The domestic money market fund held highly liquid, short-term investments managed by the financial institution. 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) |  | June 30, 2024 |  | December 31, 2023
Conditional right to receive consideration |  | $ | 20,693 |  |  | $ | 20,680 |
Unconditional right to receive consideration(1) |  | 10,271 |  |  | 5,427 |
Revenue in excess of billings |  | $ | 30,964 |  |  | $ | 26,107 |
(1) Represents revenues that are earned but not currently billable under the related contract terms. Intangibles – Intangibles were comprised of the following:
|  | June 30, 2024 |  | December 31, 2023
(in thousands) |  | Gross carrying amount |  | Accumulated amortization |  | Net carrying amount |  | Gross carrying amount |  | Accumulated amortization |  | Net carrying amount
Internal-use software |  | $ | 577,245 |  |  | $ | (435,266) |  |  | $ | 141,979 |  |  | $ | 554,825 |  |  | $ | (412,364) |  |  | $ | 142,461 |
Customer lists/relationships |  | 346,890 |  |  | (239,298) |  |  | 107,592 |  |  | 363,298 |  |  | (235,557) |  |  | 127,741 |
Partner relationships |  | 75,100 |  |  | (16,050) |  |  | 59,050 |  |  | 74,911 |  |  | (14,031) |  |  | 60,880 |
Technology-based intangibles |  | 65,700 |  |  | (25,752) |  |  | 39,948 |  |  | 97,633 |  |  | (54,251) |  |  | 43,382 |
Trade names |  | 39,367 |  |  | (31,516) |  |  | 7,851 |  |  | 39,367 |  |  | (23,792) |  |  | 15,575 |
Software to be sold |  | 6,200 |  |  | (4,805) |  |  | 1,395 |  |  | 36,900 |  |  | (35,195) |  |  | 1,705 |
Intangibles |  | $ | 1,110,502 |  |  | $ | (752,687) |  |  | $ | 357,815 |  |  | $ | 1,166,934 |  |  | $ | (775,190) |  |  | $ | 391,744 |
Amortization of intangibles was $37,366 for the quarter ended June 30, 2024, $36,859 for the quarter ended June 30, 2023, $73,064 for the six months ended June 30, 2024 and $75,076 for the six months ended June 30, 2023. During the quarter ended June 30, 2024, we modified the useful life of a trade name asset that we no longer expect to utilize beyond 2024. This change resulted in incremental amortization expense of $6,674 during the quarter, and a similar incremental amount is expected to be recognized during the quarter ended September 30, 2024. Based on the intangibles in service as of June 30, 2024, estimated future amortization expense is as follows:
(in thousands) |  | Estimated amortization expense
Remainder of 2024 |  | $ | 61,171 |
2025 |  | 88,178 |
2026 |  | 58,906 |
2027 |  | 36,071 |
2028 |  | 26,993 |
In the normal course of business, we acquire and develop internal-use software. We also, at times, purchase customer list and partner relationship assets. During the six months ended June 30, 2024, we acquired or developed $37,710 of internal-use software with a weighted-average useful life of 3 years. Other intangibles acquired during the period were not material. Goodwill – In conjunction with the realignment of our reportable business segments effective January 1, 2024 (Note 15), the goodwill amounts by reportable segment as of December 31, 2023 have been recast to reflect our new segment structure. No goodwill impairment charges were recorded in conjunction with the segment realignment. Changes in goodwill by reportable segment and in total were as follows for the six months ended June 30, 2024:
(in thousands) |  | Merchant Services |  | B2B Payments |  | Data Solutions(1) |  | Print(1) |  | All Other |  | Total
Balance, December 31, 2023 |  | $ | 727,688 |  |  | $ | 160,431 |  |  | $ | 40,804 |  |  | $ | 493,924 |  |  | $ | 7,743 |  |  | $ | 1,430,590 |
Currency translation adjustment |  | — |  |  | — |  |  | — |  |  | (48) |  |  | — |  |  | (48) |
Balance, June 30, 2024 |  | $ | 727,688 |  |  | $ | 160,431 |  |  | $ | 40,804 |  |  | $ | 493,876 |  |  | $ | 7,743 |  |  | $ | 1,430,542 |
(1) The Data Solutions and Print balances are net of accumulated impairment charges of $145,584 and $193,699, respectively, for each period. Other non-current assets – Other non-current assets were comprised of the following:
(in thousands) |  | June 30, 2024 |  | December 31, 2023
Postretirement benefit plan asset |  | $ | 99,163 |  |  | $ | 94,939 |
Cloud computing arrangement implementation costs |  | 48,124 |  |  | 59,234 |
Prepaid product discounts(1) |  | 41,390 |  |  | 40,376 |
Deferred contract acquisition costs(2) |  | 20,513 |  |  | 21,103 |
Loans and notes receivable from distributors, net of allowance for credit losses(3) |  | 12,081 |  |  | 12,443 |
Other |  | 30,074 |  |  | 23,087 |
Other non-current assets |  | $ | 251,345 |  |  | $ | 251,182 |
(1) Amortization of prepaid product discounts was $16,354 for the six months ended June 30, 2024 and $17,173 for the six months ended June 30, 2023. (2) Amortization of deferred contract acquisition costs was $6,298 for the six months ended June 30, 2024 and $5,315 for the six months ended June 30, 2023. (3) 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 $1,501 as of June 30, 2024 and $987 as of December 31, 2023. Changes in the allowance for credit losses related to loans and notes receivable from distributors were as follows for the six months ended June 30, 2024 and 2023:
|  | Six Months Ended June 30,
(in thousands) |  | 2024 |  | 2023
Balance, beginning of year |  | $ | 928 |  |  | $ | 1,024 |
Bad debt expense (benefit) |  | 217 |  |  | (73) |
Balance, end of period |  | $ | 1,145 |  |  | $ | 951 |
Past due receivables and those on non-accrual status were not material as of June 30, 2024 or December 31, 2023. 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 June 30, 2024. There were no write-offs or recoveries recorded during the six months ended June 30, 2024.
|  |  |  | Loans and notes receivable from distributors amortized cost basis by origination year |  |
(in thousands) |  | 2024 |  | 2023 |  | 2020 |  | 2019 |  | Prior |  | Total
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |
1-2 internal grade |  | $ | 967 |  |  | $ | 341 |  |  | $ | 928 |  |  | $ | 340 |  |  | $ | 11,448 |  |  | $ | 14,024 |
3-4 internal grade |  | — |  |  | — |  |  | — |  |  | — |  |  | 703 |  |  | 703 |
Loans and notes receivable |  | $ | 967 |  |  | $ | 341 |  |  | $ | 928 |  |  | $ | 340 |  |  | $ | 12,151 |  |  | $ | 14,727 |
Accrued liabilities – Accrued liabilities were comprised of the following:
(in thousands) |  | June 30, 2024 |  | December 31, 2023
Deferred revenue(1) |  | $ | 26,620 |  |  | $ | 35,343 |
Employee bonuses, including sales incentives |  | 23,902 |  |  | 49,446 |
Income taxes |  | 17,965 |  |  | 7,558 |
Operating lease liabilities |  | 13,369 |  |  | 13,562 |
Customer rebates |  | 10,637 |  |  | 12,718 |
Wages and payroll liabilities, including vacation |  | 8,344 |  |  | 8,605 |
Prepaid product discounts |  | 7,457 |  |  | 4,477 |
Restructuring |  | 3,800 |  |  | 9,689 |
Other |  | 37,051 |  |  | 50,029 |
Accrued liabilities |  | $ | 149,145 |  |  | $ | 191,427 |
(1) Revenue recognized for amounts included in deferred revenue at the beginning of the period was $24,333 for the six months ended June 30, 2024 and $29,637 for the six months ended June 30, 2023. Supplemental cash flow information – The reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the consolidated balance sheets was as follows:
(in thousands) |  | June 30, 2024 |  | June 30, 2023
Cash and cash equivalents |  | $ | 23,077 |  |  | $ | 39,052 |
Restricted cash and restricted cash equivalents included in funds held for customers |  | 50,937 |  |  | 147,392 |
Non-current restricted cash included in other non-current assets |  | 3,990 |  |  | 2,749 |
Total cash, cash equivalents, restricted cash and restricted cash equivalents |  | $ | 78,004 |  |  | $ | 189,193 |

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