RESTATEMENT OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Correction of Accounting Errors

Subsequent to the filing of the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2014 on November 5, 2014, management identified historical accounting errors relating to its accounting for certain software license, maintenance and service agreements. The prior period errors primarily relate to the Company's accounting for its bundled software multi-element arrangements.

More specifically, the Company concluded it had improperly accounted for contracts containing multiple software products delivered at different points in time as separate arrangements within a contract versus as a single arrangement with multiple elements, resulting in revenue being recognized on these contracts before all licenses, for which no vendor-specific objective evidence (“VSOE”) of fair value exists, had been delivered. Furthermore, the Company concluded that its mechanisms for tracking and estimating implementation hours was not capable of producing reliable estimates in support of its assertion of VSOE for its implementation services and that its pricing for stand-alone sales of post-contract support ("PCS") was not consistent enough to support its assertion of VSOE for PCS during prior periods.

Our previous accounting resulted in revenue being recognized earlier than would be appropriate for bundled software multi-element arrangements where VSOE does not exist for any of the software elements. Our current conclusions result in the deferral of revenue on such arrangements until the only undelivered element is PCS. The total arrangement revenue is then recognized ratably over the remaining initial bundled PCS period provided all other revenue recognition criteria have been met. Direct and incremental costs, including direct labor and sales commissions, related to obtaining and implementing these contracts have also been deferred until the only undelivered element is PCS and are recognized ratably over the remaining initial bundled PCS period.

Due to the above errors, including the related tax impact, net income for the fiscal quarters ended September 30, 2014 and 2013 was overstated by $6,674 and $6,567, respectively. On the balance sheet, total assets as of September 30, 2014 and June 30, 2014 increased $62,743 and $56,411, respectively; total liabilities increased $140,191 and $127,185 respectively; and stockholders' equity decreased $77,448 and $70,774 respectively.

The following tables present the effects of the restatement on each line of the Company's previously issued condensed consolidated financial statements as of September 30, 2014 and June 30, 2014 and for the fiscal quarters ended September 30, 2014 and 2013.



Condensed Consolidated Statements of Income:
(In Thousands, Except Per Share Data)

	Quarter Ended
	September 30, 2014
	As Previously Reported			Effect of Restatement			As Restated
REVENUE
License	$	13,610		$	(13,107	)	$	503
Support and service	292,454			(4,238		)	288,216
Hardware	12,755			—			12,755
Total revenue	318,819			(17,345		)	301,474

COST OF SALES
Cost of license	1,389			(980		)	409
Cost of support and service	169,697			(4,607		)	165,090
Cost of hardware	9,385			—			9,385
Total cost of sales	180,471			(5,587		)	174,884

GROSS PROFIT	138,348			(11,758		)	126,590

OPERATING EXPENSES
Selling and marketing	22,408			(745		)	21,663
Research and development	16,791			—			16,791
General and administrative	16,510			—			16,510
Total operating expenses	55,709			(745		)	54,964

OPERATING INCOME	82,639			(11,013		)	71,626

INTEREST INCOME (EXPENSE)
Interest income	57			—			57
Interest expense	(266		)	—			(266		)
Total interest income (expense)	(209		)	—			(209		)

INCOME BEFORE INCOME TAXES	82,430			(11,013		)	71,417

PROVISION FOR INCOME TAXES	29,668			(4,339		)	25,329

NET INCOME	$	52,762		$	(6,674	)	$	46,088

Diluted earnings per share	$	0.64		$	(0.08	)	$	0.56
Diluted weighted average shares outstanding	82,589			82,589			82,589

Basic earnings per share	$	0.64		$	(0.08	)	$	0.56
Basic weighted average shares outstanding	82,195			82,195			82,195



Condensed Consolidated Statements of Income:
(In Thousands, Except Per Share Data)

	Quarter Ended
	September 30, 2013
	As Previously Reported			Effect of Restatement			As Restated
REVENUE
License	$	11,779		$	(11,017	)	$	762
Support and service	269,544			(6,914		)	262,630
Hardware	14,338			—			14,338
Total revenue	295,661			(17,931		)	277,730

COST OF SALES
Cost of license	1,412			(1,068		)	344
Cost of support and service	154,583			(5,427		)	149,156
Cost of hardware	10,941			—			10,941
Total cost of sales	166,936			(6,495		)	160,441

GROSS PROFIT	128,725			(11,436		)	117,289

OPERATING EXPENSES
Selling and marketing	21,458			(720		)	20,738
Research and development	15,673			—			15,673
General and administrative	14,250			—			14,250
Total operating expenses	51,381			(720		)	50,661

OPERATING INCOME	77,344			(10,716		)	66,628

INTEREST INCOME (EXPENSE)
Interest income	131			—			131
Interest expense	(280		)	—			(280		)
Total interest income (expense)	(149		)	—			(149		)

INCOME BEFORE INCOME TAXES	77,195			(10,716		)	66,479

PROVISION FOR INCOME TAXES	27,407			(4,149		)	23,258

NET INCOME	$	49,788		$	(6,567	)	$	43,221

Diluted earnings per share	$	0.58		$	(0.08	)	$	0.50
Diluted weighted average shares outstanding	85,854			85,854			85,854

Basic earnings per share	$	0.58		$	(0.08	)	$	0.51
Basic weighted average shares outstanding	85,294			85,294			85,294



Condensed Consolidated Balance Sheets:
(In Thousands, Except Share and Per Share Data)
	September 30, 2014
	As Previously Reported			Effect of Restatement			As Restated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	39,402		$	—		$	39,402
Receivables, net	159,110			—			159,110
Income tax receivable	2,618			—			2,618
Prepaid expenses and other	72,340			1,588			73,928
Deferred costs	28,649			6,616			35,265
Total current assets	302,119			8,204			310,323
PROPERTY AND EQUIPMENT, net	301,132			—			301,132
OTHER ASSETS:
Non-current deferred costs	36,370			47,595			83,965
Computer software, net of amortization	167,585			—			167,585
Other non-current assets	37,389			6,944			44,333
Customer relationships, net of amortization	132,893			—			132,893
Other intangible assets, net of amortization	27,805			—			27,805
Goodwill	552,761			—			552,761
Total other assets	954,803			54,539			1,009,342
Total assets	$	1,558,054		$	62,743		$	1,620,797
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	8,316		$	—		$	8,316
Accrued expenses	58,038			—			58,038
Deferred income tax liability	37,592			(16,152		)	21,440
Accrued income taxes	14,690			—			14,690
Notes payable and current maturities of long term debt	9,964			—			9,964
Deferred revenues	260,552			31,724			292,276
Total current liabilities	389,152			15,572			404,724
LONG TERM LIABILITIES:
Non-current deferred revenues	9,017			157,502			166,519
Non-current deferred income tax liability	136,576			(32,883		)	103,693
Debt, net of current maturities	1,041			—			1,041
Other long-term liabilities	10,349			—			10,349
Total long term liabilities	156,983			124,619			281,602
Total liabilities	546,135			140,191			686,326
STOCKHOLDERS' EQUITY
Preferred stock - $1 par value; 500,000 shares authorized, none issued	—			—			—
Common stock - $0.01 par value; 250,000,000 shares authorized; 102,611,471 shares issued at September 30, 2014	1,026			—			1,026
Additional paid-in capital	412,092			—			412,092
Retained earnings	1,237,126			(77,448		)	1,159,678
Less treasury stock at cost 20,843,232 shares at September 30, 2014	(638,325		)	—			(638,325		)
Total stockholders' equity	1,011,919			(77,448		)	934,471
Total liabilities and equity	$	1,558,054		$	62,743		$	1,620,797



Condensed Consolidated Balance Sheets:
(In Thousands, Except Share and Per Share Data)
	June 30, 2014
	As Previously Reported			Effect of Restatement			As Restated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	70,377		$	—		$	70,377
Receivables, net	224,041			—			224,041
Income tax receivable	7,937			—			7,937
Prepaid expenses and other	59,824			1,250			61,074
Deferred costs	22,202			4,875			27,077
Total current assets	384,381			6,125			390,506
PROPERTY AND EQUIPMENT, net	291,675			—			291,675
OTHER ASSETS:
Non-current deferred costs	34,708			43,750			78,458
Computer software, net of amortization	160,391			—			160,391
Other non-current assets	38,121			6,536			44,657
Customer relationships, net of amortization	136,602			—			136,602
Other intangible assets, net of amortization	25,653			—			25,653
Goodwill	552,761			—			552,761
Total other assets	948,236			50,286			998,522
Total assets	$	1,624,292		$	56,411		$	1,680,703
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	10,516		$	—		$	10,516
Accrued expenses	63,299			—			63,299
Deferred income tax liability	37,592			(7,498		)	30,094
Notes payable and current maturities of long term debt	5,407			—			5,407
Deferred revenues	312,002			25,491			337,493
Total current liabilities	428,816			17,993			446,809
LONG TERM LIABILITIES:
Non-current deferred revenues	8,985			146,390			155,375
Non-current deferred income tax liability	134,918			(37,198		)	97,720
Debt, net of current maturities	3,729			—			3,729
Other long-term liabilities	9,683			—			9,683
Total long term liabilities	157,315			109,192			266,507
Total liabilities	586,131			127,185			713,316
STOCKHOLDERS' EQUITY
Preferred stock - $1 par value; 500,000 shares authorized, none issued	—			—			—
Common stock - $0.01 par value; 250,000,000 shares authorized; 102,429,926 shares issued at June 30, 2014	1,024			—			1,024
Additional paid-in capital	412,512			—			412,512
Retained earnings	1,202,406			(70,774		)	1,131,632
Less treasury stock at cost 19,794,559 shares at June 30, 2014	(577,781		)	—			(577,781		)
Total stockholders' equity	1,038,161			(70,774		)	967,387
Total liabilities and equity	$	1,624,292		$	56,411		$	1,680,703



Condensed Consolidated Statements of Cash Flows:
(In Thousands)

	Quarter Ended
	September 30, 2014
	As Previously Reported			Effect of Restatement			As Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	52,762		$	(6,674	)	$	46,088
Adjustments to reconcile net income from operations to net cash from operating activities:
Depreciation	13,631			—			13,631
Amortization	15,817			—			15,817
Change in deferred income taxes	1,658			(4,340		)	(2,682		)
Excess tax benefits from stock-based compensation	(3,801		)	—			(3,801		)
Expense for stock-based compensation	2,068			—			2,068
(Gain)/loss on disposal of assets	(56		)	—			(56		)
Changes in operating assets and liabilities:
Change in receivables	64,931			—			64,931
Change in prepaid expenses, deferred costs and other	(19,893		)	(6,332		)	(26,225		)
Change in accounts payable	(2,200		)	—			(2,200		)
Change in accrued expenses	(4,680		)	—			(4,680		)
Change in income taxes	24,329			—			24,329
Change in deferred revenues	(51,418		)	17,346			(34,072		)
Net cash from operating activities	93,148			—			93,148
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(21,485		)	—			(21,485		)
Proceeds from sale of assets	58			—			58
Internal use software	(3,455		)	—			(3,455		)
Computer software developed	(17,999		)	—			(17,999		)
Net cash from investing activities	(42,881		)	—			(42,881		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on credit facilities	(170		)	—			(170		)
Purchase of treasury stock	(60,544		)	—			(60,544		)
Dividends paid	(18,042		)	—			(18,042		)
Excess tax benefits from stock-based compensation	3,801			—			3,801
Proceeds from issuance of common stock upon exercise of stock options	161			—			161
Minimum tax withholding payments related to share based compensation	(7,602		)	—			(7,602		)
Proceeds from sale of common stock, net	1,154			—			1,154
Net cash from financing activities	(81,242		)	—			(81,242		)
NET CHANGE IN CASH AND CASH EQUIVALENTS	$	(30,975	)	$	—		$	(30,975	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	70,377			—			70,377
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	39,402		$	—		$	39,402



Condensed Consolidated Statements of Cash Flows:
(In Thousands)

	Quarter Ended
	September 30, 2013
	As Previously Reported			Effect of Restatement			As Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	49,788		$	(6,567	)	$	43,221
Adjustments to reconcile net income from operations to net cash from operating activities:
Depreciation	12,963			—			12,963
Amortization	12,893			—			12,893
Change in deferred income taxes	1,862			(4,149		)	(2,287		)
Excess tax benefits from stock-based compensation	(2,947		)	—			(2,947		)
Expense for stock-based compensation	1,922			—			1,922
(Gain)/loss on disposal of assets	(30		)	—			(30		)
Changes in operating assets and liabilities:
Change in receivables	78,489			—			78,489
Change in prepaid expenses, deferred costs and other	(12,591		)	(7,215		)	(19,806		)
Change in accounts payable	2,213			—			2,213
Change in accrued expenses	(16,238		)	—			(16,238		)
Change in income taxes	21,531			—			21,531
Change in deferred revenues	(52,165		)	17,931			(34,234		)
Net cash from operating activities	97,690			—			97,690
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(7,351		)	—			(7,351		)
Proceeds from sale of assets	2,702			—			2,702
Internal use software	(3,183		)	—			(3,183		)
Computer software developed	(14,076		)	—			(14,076		)
Net cash from investing activities	(21,908		)	—			(21,908		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on credit facilities	(2,798		)	—			(2,798		)
Purchase of treasury stock	—			—			—
Dividends paid	(17,054		)	—			(17,054		)
Excess tax benefits from stock-based compensation	2,947			—			2,947
Proceeds from issuance of common stock upon exercise of stock options	111			—			111
Minimum tax withholding payments related to share based compensation	(6,176		)	—			(6,176		)
Proceeds from sale of common stock, net	1,070			—			1,070
Net cash from financing activities	(21,900		)	—			(21,900		)
NET CHANGE IN CASH AND CASH EQUIVALENTS	$	53,882		$	—		$	53,882
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	127,905		$	—		$	127,905
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	181,787		$	—		$	181,787

Prior Period Reclassification

Certain amounts included within the condensed consolidated statements of cash flows for the three months ended September 30, 2013 have been restated to correct an error related to the presentation of excess tax benefits from stock based compensation within cash flows from operating activities. Such correction adjusted the cash flow statement for the three months ended September 30, 2013 by presenting excess tax benefits from stock based compensation as a separate line item and increasing the change in income taxes by $2,947. There was no change in total cash flows from operating, investing or financing activities.