Restatement of Previously Issued Financial Statements

As disclosed in our Form 10-K for the year ended December 31, 2011, on April 10, 2012, we concluded that previously issued financial statements should not be relied upon due to certain revenue recognition adjustments. The decision to restate our financial statements was based on the results of an internal review of our historical revenue recognition policies and the application of these policies. All information presented in the accompanying Condensed Consolidated Financial Statements and the related notes include all such restatement adjustments.

Impact of Corrections on Previously Issued Consolidated Financial Statements

Revenue Related Adjustments:

Certain revenue recognition adjustments were noted during the internal reviews performed by management. Adjustments were primarily related to the following areas within revenue recognition:

•

In the course of our review, we identified software license and associated services agreements that were deemed to be linked but previously accounted for as separate transactions. To correct these items, we have recognized software license revenue for such transactions when the services agreement was executed, which was often the quarter immediately following the time when the license agreement is executed.

•

The restatement reflects our determination that vendor specific objective evidence (“VSOE”) of fair value did not exist for our cloud services (“Cloud Services”) and certain types of consulting arrangements. To correct these items, revenue associated with certain software license agreements and related services was deferred and recognized over the longest period for any undelivered services, often three years, or when VSOE of fair value was obtained, commencing once services began.

Other Adjustments:

In connection with the restatement, the Company also recorded certain aggregated adjustments during the restatement periods that were previously considered immaterial. As part of the restatement, these adjustments have now been reflected in the periods in which the item arose.

The following tables summarize the effects of the restatement on the condensed consolidated financial statements for the three and six months ended June 30, 2011:



	Three Months Ended June 30, 2011									Six Months Ended June 30, 2011
	As Reported			Adjustments			As Restated			As Reported			Adjustments			As Restated
Software licenses	$	26,915		$	3,306		$	30,221		$	58,395		$	7,470		$	65,865
Maintenance services	66,100			31			66,131			130,868			45			130,913
Product revenues	96,865			3,337			100,202			198,107			7,515			205,622
Consulting services	59,033			(225		)	58,808			116,677			(491		)	116,186
Service revenues	65,545			(225		)	65,320			127,909			(491		)	127,418
Total revenues	162,410			3,112			165,522			326,016			7,024			333,040
Cost of maintenance services	14,672			64			14,736			28,658			64			28,722
Cost of product revenues	17,686			64			17,750			34,455			64			34,519
Cost of consulting services	47,575			(366		)	47,209			94,178			(668		)	93,510
Reimbursed expenses	6,512			—			6,512			11,231			1			11,232
Cost of service revenues	54,087			(366		)	53,721			105,409			(667		)	104,742
Total cost of revenues	71,773			(302		)	71,471			139,864			(603		)	139,261
Gross Profit	90,637			3,414			94,051			186,152			7,627			193,779
Product development	19,807			(45		)	19,762			39,943			(89		)	39,854
General and administrative	16,314			—			16,314			38,402			271			38,673
Restructuring charges	439			(470		)	(31		)	981			(470		)	511
Total operating expenses	71,516			(515		)	71,001			112,740			(288		)	112,452
Operating income	19,121			3,929			23,050			73,412			7,915			81,327
Interest income and other, net	(881		)	114			(767		)	(2,151		)	151			(2,000		)
Income before income taxes	13,563			3,815			17,378			62,913			7,764			70,677
Income tax provision	3,444			1,221			4,665			7,266			2,585			9,851
Net income	10,119			2,594			12,713			55,647			5,179			60,826
Basic net income per common share	$	0.24		$	0.06		$	0.30		$	1.32		$	0.12		$	1.44
Diluted net income per common share	$	0.24		$	0.06		$	0.30		$	1.30		$	0.13		$	1.43

The adjustments reflected in the table above include the following:


•	Adjustments to revenue related to the lack of vendor specific objective evidence of fair value for Cloud Services and certain Consulting Services currencies and offerings, identification of linked contracts that should have been accounted for as a single arrangement, and the consideration of platform transfer rights on revenue recognition.


•	Adjustments to cost of revenue and operating expenses related to certain employee expenses and acquisition related costs associated with the acquisition of i2.


•	Provision for income taxes includes adjustments to deferred tax assets and income tax effects of other restatement adjustments.

The following tables present the effect of the restatement adjustments on the condensed consolidated statements of comprehensive income:



	Three Months Ended June 30, 2011									Six Months Ended June 30, 2011
	As Reported			Adjustments			As Restated			As Reported			Adjustments			As Restated
Net income	$	10,119		$	2,594		$	12,713		$	55,647		$	5,179		$	60,826
Foreign currency translation adjustment, net of tax	1,857			1			1,858			3,117			10			3,127
Unrealized gains (losses) on cash flow hedges, net of tax	(360		)	90			(270		)	(170		)	65			(105		)
Reclassification adjustment for (gains) losses in net income	—			(90		)	(90		)	—			(66		)	(66		)
Other comprehensive income	1,497			1			1,498			2,947			9			2,956
Comprehensive income	11,616			2,595			14,211			58,594			5,188			63,782

The following table presents the effect of the restatement adjustments on the consolidated statements of cash flows as well as the reclassification of payments of direct costs related to acquisitions in net cash provided by (used in) investing activities to net cash provided by operating activities as these amounts reflect certain acquired lease payments:



	Six Months Ended June 30, 2011
	As Reported			Adjustments			As Restated
Net income	$	55,647		$	5,179		$	60,826
Deferred income taxes	4,379			2,586			6,965
Accounts receivable	(24,890		)	2,978			(21,912		)
Prepaid expenses and other assets	(9,861		)	5,083			(4,778		)
Accounts payable	(11,861		)	(40		)	(11,901		)
Accrued expenses and other liabilities	(2,307		)	(4,653		)	(6,960		)
Deferred revenue	42,124			(12,179		)	29,945
Net cash provided by operating activities	94,160			(1,046		)	93,114
Payment of direct costs related to acquisitions	(1,703		)	1,703			—
Net cash (used in) provided by investing activities	(8,724		)	1,703			(7,021		)
Net increase in cash and cash equivalents	84,483			657			85,140
Cash and Cash Equivalents, End of Period	256,101			657			256,758

See also Note 13, “Condensed Consolidating Financial Information,” for a description of the Company's adjustments to its historical presentation of its condensed consolidating financial information.