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Revenue
 9 Months Ended
Sep. 30, 2018
Revenue Recognition [Abstract]  
Revenue

Note 2. Revenue

Revenue Recognition

The Company manages highly-customized data and materials, such as Exchange Act, Securities Act and Investment Company Act filings with the SEC on behalf of its customers, manages virtual data rooms and performs XBRL and related services.  Clients are provided with EDGAR filing services, XBRL compliance services and translation, editing, interpreting, proof-reading and multilingual typesetting services, among others. The Company’s software-as-a-service solutions (“SaaS”) include the Venue Virtual Data Room, the FundSuiteArc software platform, ActiveDisclosure and data and analytics, among others.

Substantially all of the Company’s revenue is derived from contracts with an initial expected duration of one year or less. Generally, customer payment is due within ten days upon invoicing.

Revenue is recognized upon transfer of control of promised services or products to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services or products. The Company’s arrangements with customers often include promises to transfer multiple services or products to a customer. Determining whether services and products are considered distinct performance obligations that should be accounted for separately requires significant judgment. Certain customer arrangements have multiple performance obligations as certain promises are both capable of being distinct and are distinct within the context of the contract.  Other customer arrangements have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts, and therefore are not distinct.

Revenue for the Company’s services and products is recognized either over time or at a point in time, as outlined below.

Over time

The Company recognizes revenue for certain services over time.

 

•

The Company’s SaaS solutions, including the Venue Virtual Data Room, the FundSuiteArc software platform, ActiveDisclosure, data and analytics and others, are generally provided on a subscription basis and allow customers access to use the products over the contract period.  As a result, revenue for SaaS solutions are recognized ratably over time as the customer receives the benefit throughout the contract period. The timing of invoicing varies, however the customer may be invoiced before the end of the contract period, resulting in a deferred revenue balance.

 

•

Revenue for warehousing services are recognized ratably over time as the customer receives the benefit throughout the storage period.

Point in time

All remaining revenue arrangements are generally recognized at a point in time and are primarily invoiced upon completion of all services or upon shipment to the customer.

 

•

Certain of these arrangements include multiple performance obligations and revenue is recognized upon completion of each performance obligation, such as when a document is filed with a regulatory agency and upon completion of printing the related document. For arrangements with multiple performance obligations, the transaction price is allocated to the separate performance obligations. The Company provides customer specific solutions and as such, observable standalone selling price is rarely available. Standalone selling price is more frequently determined using an estimate of the standalone selling price of each distinct service or product, taking into consideration historical selling price by customer for each distinct service or product.  These estimates may vary from the final amounts invoiced to the customer and are adjusted upon completion of all performance obligations. Customers may be invoiced subsequent to the recognition of revenue for completed performance obligations, resulting in contract asset balances.

 

•

Revenue for arrangements which include assisting customers in completing regulatory filings for transactions, such as mergers and acquisitions or other public capital market transactions, is recognized upon completion of all promises, including the services performed and printing of the related document, if applicable.

 

•

Revenue for arrangements without a regulatory filing generally have a single performance obligation, as the services and products provided are not distinct within the context of the contract, and are recognized upon completion of the services performed or upon completion of printing of the related product.

 

•

Warehousing, fulfillment services and shipping and handling are each separate performance obligations.  As a result, when the Company provides warehousing and future fulfillment services, revenue for the composition services performed and printing of the product is recognized upon completion of the performance obligation(s), as control of the inventory has transferred to the customer and the inventory is being stored at the customer’s request.

Because substantially all of the Company’s products are customized, product returns are not significant; however, the Company accrues for the estimated amount of customer credits at the time of sale.

The Company records deferred revenue when amounts are invoiced but the revenue recognition criteria are not yet met. Such revenue is recognized when all criteria are subsequently met.

Certain revenues earned by the Company require significant judgment to determine if revenue should be recorded gross, as a principal, or net of related costs, as an agent. Billings for shipping and handling costs as well as certain postage costs, and out-of-pocket expenses are recorded gross.  Revenue is not recognized for customer-supplied postage. The Company’s printing operations process paper that may be supplied directly by customers or may be purchased by the Company from third parties and sold to customers.  Revenue is not recognized for customer-supplied paper, however revenues for Company-supplied paper are recognized on a gross basis. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to authorities.

Adoption of ASU 2014-09

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which outlines a single comprehensive model for entities to use in accounting for revenue using a five-step process that supersedes virtually all existing revenue guidance. ASU 2014-09 also requires additional quantitative and qualitative disclosures. On January 1, 2018, the Company adopted the standard and all related amendments, using the modified retrospective approach applied to contracts that were not completed as of January 1, 2018. The Company recognized the cumulative effect of applying the standard as an opening transition adjustment to retained earnings. The comparative periods have not been restated and continue to be reported under the accounting standards in effect for those periods (“Previous Revenue Standard”).

As a result of the adoption of ASU 2014-09, revenue recognition has been accelerated for certain arrangements with multiple performance obligations as revenue is now recognized upon the completion of each performance obligation rather than upon completion of all services and shipment of the related document, if applicable. Revenue has also been accelerated for certain inventory which has been invoiced but not yet shipped at the customer’s request. Additionally, certain revenues related to virtual data room services have been deferred to be recognized over the term of the contract.

As substantially all of the Company’s revenue is derived from contracts with an initial expected duration of one year or less, the Company has applied the practical expedient for performance obligations related to contracts with an initial duration of less than one year and is therefore not required to disclose information regarding remaining performance obligations at the end of the reporting period. The Company has also elected the practical expedient to recognize costs to obtain the contract, primarily commissions, as incurred.

The cumulative effect of the changes made to the Company’s consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09 were as follows:

 

Balance at December 31, 2017

 

 

Adoption of ASU 2014-09

 

 

Balance at January 1, 2018

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Receivables, less allowances for doubtful accounts

$

165.2

 

 

$

8.9

 

 

$

174.1

 

Inventories

 

23.3

 

 

 

(10.6

)

 

 

12.7

 

Deferred income taxes

 

22.2

 

 

 

(0.5

)

 

 

21.7

 

Total assets

 

893.5

 

 

 

(2.2

)

 

 

891.3

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Accrued liabilities

 

119.2

 

 

 

(3.1

)

 

 

116.1

 

Equity

 

 

 

 

 

 

 

 

 

 

 

Retained earnings

 

8.9

 

 

 

0.9

 

 

 

9.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

$

893.5

 

 

$

(2.2

)

 

$

891.3

 

 

The impact of the adoption of ASU 2014-09 on the Company’s condensed consolidated statement of operations for the three months and nine months ended September 30, 2018 and condensed consolidated balance sheet as of September 30, 2018 was as follows:

 

 

Three Months Ended September 30, 2018

 

 

Previous Revenue Standard

 

 

Adoption of ASU 2014-09

 

 

As Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

Services net sales

$

139.1

 

 

$

(0.6

)

 

$

138.5

 

Products net sales

 

80.3

 

 

$

(1.9

)

 

 

78.4

 

Total net sales

 

219.4

 

 

 

(2.5

)

 

 

216.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Services cost of sales (exclusive of depreciation and amortization)

 

75.5

 

 

 

—

 

 

 

75.5

 

Products costs of sales (exclusive of depreciation and amortization)

 

60.0

 

 

 

(2.2

)

 

 

57.8

 

Total cost of sales

 

135.5

 

 

 

(2.2

)

 

 

133.3

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses (exclusive of depreciation and amortization)

 

62.6

 

 

 

—

 

 

 

62.6

 

Income tax expense (benefit)

 

19.8

 

 

 

(0.1

)

 

 

19.7

 

Net earnings

$

48.2

 

 

$

(0.2

)

 

$

48.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

Basic

 

1.43

 

 

 

(0.01

)

 

 

1.42

 

Diluted

 

1.41

 

 

 

(0.01

)

 

 

1.40

 

 

 

Nine Months Ended September 30, 2018

 

 

Previous Revenue Standard

 

 

Adoption of ASU 2014-09

 

 

As Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

Services net sales

$

484.9

 

 

$

1.0

 

 

$

485.9

 

Products net sales

 

278.6

 

 

 

(1.8

)

 

 

276.8

 

Total net sales

 

763.5

 

 

 

(0.8

)

 

 

762.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Services cost of sales (exclusive of depreciation and amortization)

 

253.0

 

 

 

0.4

 

 

 

253.4

 

Products costs of sales (exclusive of depreciation and amortization)

 

205.0

 

 

 

(0.9

)

 

 

204.1

 

Total cost of sales

 

458.0

 

 

 

(0.5

)

 

 

457.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses (exclusive of depreciation and amortization)

 

203.8

 

 

 

—

 

 

 

203.8

 

Income tax expense (benefit)

 

31.6

 

 

 

(0.1

)

 

 

31.5

 

Net earnings

$

74.8

 

 

$

(0.2

)

 

$

74.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

Basic

 

2.22

 

 

 

(0.01

)

 

 

2.21

 

Diluted

 

2.20

 

 

 

(0.01

)

 

 

2.19

 

 

 

 

September 30, 2018

 

 

Previous Revenue Standard

 

 

Adoption of ASU 2014-09

 

 

As Reported

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Receivables, less allowances for doubtful accounts

$

215.7

 

 

$

5.8

 

 

$

221.5

 

Inventories

 

23.8

 

 

 

(10.0

)

 

 

13.8

 

Deferred income taxes

 

14.5

 

 

 

(0.5

)

 

 

14.0

 

Total assets

 

918.1

 

 

 

(4.7

)

 

 

913.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Accrued liabilities

 

142.7

 

 

 

(5.4

)

 

 

137.3

 

Equity

 

 

 

 

 

 

 

 

 

 

 

Retained earnings

 

83.7

 

 

 

0.7

 

 

 

84.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

$

918.1

 

 

$

(4.7

)

 

$

913.4

 

 

Disaggregation of revenue

 

The following tables disaggregates revenue by reporting unit and timing of revenue recognition for the three and nine months ended September 30, 2018:

 

 

Three Months Ended September 30, 2018

 

 

Point in time

 

 

Over time

 

 

Total

 

U.S.

 

 

 

 

 

 

 

 

 

 

 

Capital Markets

$

78.1

 

 

$

24.4

 

 

$

102.5

 

Investment Markets*

 

70.1

 

 

 

11.7

 

 

 

81.8

 

Language Solutions*

 

1.2

 

 

 

—

 

 

 

1.2

 

Total U.S.

 

149.4

 

 

 

36.1

 

 

 

185.5

 

International

 

26.7

 

 

 

4.7

 

 

 

31.4

 

Total net sales

$

176.1

 

 

$

40.8

 

 

$

216.9

 

 

 

Nine Months Ended September 30, 2018

 

 

Point in time

 

 

Over time

 

 

Total

 

U.S.

 

 

 

 

 

 

 

 

 

 

 

Capital Markets

$

292.1

 

 

$

72.5

 

 

$

364.6

 

Investment Markets*

 

224.2

 

 

 

38.6

 

 

 

262.8

 

Language Solutions*

 

13.7

 

 

 

—

 

 

 

13.7

 

Total U.S.

 

530.0

 

 

 

111.1

 

 

 

641.1

 

International

 

107.9

 

 

 

13.7

 

 

 

121.6

 

Total net sales

$

637.9

 

 

$

124.8

 

 

$

762.7

 

 

* Certain prior quarter amounts were restated to conform to the Company’s current reporting unit structure.

 

Contract Balances

 

Contract assets represent revenue recognized for performance obligations completed before an unconditional right to payment exists, and therefore invoicing has not yet occurred. Contract assets were $6.1  million at September 30, 2018 and $9.0 million at January 1, 2018, respectively. Generally, the contract assets balance is impacted by the recognition of additional contract assets, offset by amounts invoiced to customers. For the nine months ended September 30, 2018, final amounts invoiced to customers exceeded estimates of standalone selling price as of January 1, 2018 for the related arrangements by approximately $0.7 million. Contract assets are included in accounts receivable on the condensed consolidated balance sheet.

 

Contract liabilities consist of deferred revenue and progress billings which are included in accrued liabilities on the condensed consolidated balance sheet. Changes in contract liabilities were as follows:

 

Balance at January 1, 2018

$

14.2

 

Deferral of revenue

 

35.4

 

Revenue recognized

 

(35.9

)

Disposition

 

(1.6

)

Balance at September 30, 2018

$

12.1