RESTATEMENT OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Correction of Accounting Errors

During the current fiscal year, 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 quarter ended December 31, 2013 was overstated by $5,621 and net income for the six months ended December 31, 2013 was overstated by $12,187. On the balance sheet, total assets as of June 30, 2014 increased $56,411, total liabilities increased $127,185, and stockholders' equity decreased $70,774.

The following tables present the effects of the restatement on each line of the Company's previously issued condensed consolidated financial statements as of June 30, 2014 and for the fiscal quarter and six-month period ended December 31, 2013.



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

	Quarter Ended
	December 31, 2013
	As Previously Reported			Effect of Restatement			As Restated
REVENUE
License	$	12,893		$	(12,647	)	$	246
Support and service	274,276			(1,034		)	273,242
Hardware	15,356			—			15,356
Total revenue	302,525			(13,681		)	288,844

COST OF SALES
Cost of license	947			(759		)	188
Cost of support and service	157,893			(3,124		)	154,769
Cost of hardware	10,867			—			10,867
Total cost of sales	169,707			(3,883		)	165,824

GROSS PROFIT	132,818			(9,798		)	123,020

OPERATING EXPENSES
Selling and marketing	21,071			(568		)	20,503
Research and development	16,142			—			16,142
General and administrative	12,132			—			12,132
Total operating expenses	49,345			(568		)	48,777

OPERATING INCOME	83,473			(9,230		)	74,243

INTEREST INCOME (EXPENSE)
Interest income	129			—			129
Interest expense	(267		)	—			(267		)
Total interest income (expense)	(138		)	—			(138		)

INCOME BEFORE INCOME TAXES	83,335			(9,230		)	74,105

PROVISION FOR INCOME TAXES	29,353			(3,609		)	25,744

NET INCOME	$	53,982		$	(5,621	)	$	48,361

Diluted earnings per share	$	0.63		$	(0.07	)	$	0.56
Diluted weighted average shares outstanding	85,986			85,986			85,986

Basic earnings per share	$	0.63		$	(0.06	)	$	0.57
Basic weighted average shares outstanding	85,450			85,450			85,450



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

	Six-Month Period Ended
	December 31, 2013
	As Previously Reported			Effect of Restatement			As Restated
REVENUE
License	$	24,671		$	(23,664	)	$	1,007
Support and service	543,820			(7,948		)	535,872
Hardware	29,694			—			29,694
Total revenue	598,185			(31,612		)	566,573

COST OF SALES
Cost of license	2,359			(1,826		)	533
Cost of support and service	312,477			(8,552		)	303,925
Cost of hardware	21,808			—			21,808
Total cost of sales	336,644			(10,378		)	326,266

GROSS PROFIT	261,541			(21,234		)	240,307

OPERATING EXPENSES
Selling and marketing	42,529			(1,289		)	41,240
Research and development	31,814			—			31,814
General and administrative	26,382			—			26,382
Total operating expenses	100,725			(1,289		)	99,436

OPERATING INCOME	160,816			(19,945		)	140,871

INTEREST INCOME (EXPENSE)
Interest income	260			—			260
Interest expense	(546		)	—			(546		)
Total interest income (expense)	(286		)	—			(286		)

INCOME BEFORE INCOME TAXES	160,530			(19,945		)	140,585

PROVISION FOR INCOME TAXES	56,760			(7,758		)	49,002

NET INCOME	$	103,770		$	(12,187	)	$	91,583

Diluted earnings per share	$	1.21		$	(0.14	)	$	1.07
Diluted weighted average shares outstanding	85,920			85,920			85,920

Basic earnings per share	$	1.22		$	(0.15	)	$	1.07
Basic weighted average shares outstanding	85,372			—			85,372



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)

	Six-Month Period Ended
	December 31, 2013
	As Previously Reported			Effect of Restatement			As Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	103,770		$	(12,187	)	$	91,583
Adjustments to reconcile net income from operations to net cash from operating activities:
Depreciation	26,153			—			26,153
Amortization	25,969			—			25,969
Change in deferred income taxes	3,868			(7,757		)	(3,889		)
Excess tax benefits from stock-based compensation	(3,152		)	—			(3,152		)
Expense for stock-based compensation	4,541			—			4,541
(Gain)/loss on disposal of assets	(52		)	—			(52		)
Changes in operating assets and liabilities:
Change in receivables	94,694			—			94,694
Change in prepaid expenses, deferred costs and other	(14,672		)	(11,668		)	(26,340		)
Change in accounts payable	(970		)	—			(970		)
Change in accrued expenses	(16,200		)	—			(16,200		)
Change in income taxes	11,660			—			11,660
Change in deferred revenues	(104,293		)	31,612			(72,681		)
Net cash from operating activities	131,316			—			131,316
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(21,866		)	—			(21,866		)
Proceeds from sale of assets	2,809			—			2,809
Internal use software	(6,980		)	—			(6,980		)
Computer software developed	(29,015		)	—			(29,015		)
Net cash from investing activities	(55,052		)	—			(55,052		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facilities	—			—			—
Repayments on credit facilities	(13,630		)	—			(13,630		)
Purchase of treasury stock	—			—			—
Dividends paid	(34,146		)	—			(34,146		)
Excess tax benefits from stock-based compensation	3,152			—			3,152
Proceeds from issuance of common stock upon exercise of stock options	221			—			221
Minimum tax withholding payments related to share based compensation	(6,239		)	—			(6,239		)
Proceeds from sale of common stock, net	1,974			—			1,974
Net cash from financing activities	(48,668		)	—			(48,668		)
NET CHANGE IN CASH AND CASH EQUIVALENTS	27,596			—			27,596
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	127,905			—			127,905
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	155,501		$	—		$	155,501

Prior Period Reclassification

Certain amounts included within the condensed consolidated statement of cash flows for the six months ended December 31, 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 six months ended December 31, 2013 by presenting excess tax benefits from stock based compensation as a separate line item and increasing the change in income taxes by $3,152. There was no change in total cash flows from operating, investing or financing activities.