Recently Adopted Accounting Guidance

The Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers, in May 2014. This standard (and related amendments collectively referred to as “ASC 606”) is part of an effort to create a common revenue standard for U.S. generally accepted accounting principles (“U.S. GAAP”) and International Financial Reporting Standards (“IFRS”). The new standard has superseded much of the authoritative literature for revenue recognition. The new model enacts a five-step process for achieving the core principle, which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard was effective for the Company on July 1, 2018. Entities are allowed to transition to the new standard by either recasting prior periods (full retrospective) or recognizing the cumulative effect as of the beginning of the period of adoption (modified retrospective).

The Company adopted the new standard using the full retrospective transition approach, using certain practical expedients. The Company has not disclosed the amount of transaction price allocated to remaining performance obligations for reporting periods presented before the date of initial application. Also, the Company did not separately consider the effects of contract modifications that occurred before the beginning of the earliest reporting period presented, but reflects the aggregate effect of all modifications that occurred before the beginning of the earliest period presented. As a result, all fiscal 2018 financial information has been adjusted for the effects of applying ASC 606. The details of the significant changes are disclosed below:

Software Revenue Recognition

The Company previously recognized software license and related services within the scope of ASC Topic 985-605, which required the establishment of vendor-specific objective evidence (“VSOE”) of fair value in order to separately recognize revenue for each software-related good or service. Due to the inability to establish VSOE, the Company had previously deferred all revenue on software-related goods and services on a master contract until all the goods and services had been delivered. Under ASC 606, VSOE is no longer required for separation of otherwise distinct performance obligations within a revenue arrangement. This change has resulted in earlier recognition of revenue for the Company’s software-related goods and services, leading to a decrease in deferred revenue balances within our adjusted condensed consolidated balance sheets.

Impacts on Financial Statements

The following tables summarize the impacts of ASC 606 adoption on the Company’s Condensed Consolidated Financial Statements:

Condensed Consolidated Balance Sheet as of June 30, 2018:



	As Previously Reported			Adjustments			As Adjusted
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	31,440		$	—		$	31,440
Receivables, net	291,630			5,641			297,271
Income tax receivable	21,671			—			21,671
Prepaid expenses and other	84,810			11,331			96,141
Deferred costs	38,985			(11,916		)	27,069
Total current assets	468,536			5,056			473,592
PROPERTY AND EQUIPMENT, net	286,850			—			286,850
OTHER ASSETS:
Non-current deferred costs	95,540			(20,675		)	74,865
Computer software, net of amortization	288,172			—			288,172
Other non-current assets	107,775			2,524			110,299
Customer relationships, net of amortization	115,034			—			115,034
Other intangible assets, net of amortization	38,467			—			38,467
Goodwill	649,929			—			649,929
Total other assets	1,294,917			(18,151		)	1,276,766
Total assets	$	2,050,303		$	(13,095	)	$	2,037,208
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	34,510		$	—		$	34,510
Accrued expenses	97,848			(9,084		)	88,764
Deferred revenues	355,538			(3,107		)	352,431
Total current liabilities	487,896			(12,191		)	475,705
LONG-TERM LIABILITIES:
Non-current deferred revenues	93,094			(75,610		)	17,484
Non-current deferred income tax liability	189,613			18,690			208,303
Other long-term liabilities	12,872			—			12,872
Total long-term liabilities	295,579			(56,920		)	238,659
Total liabilities	783,475			(69,111		)	714,364
STOCKHOLDERS' EQUITY
Preferred stock - $1 par value; 500,000 shares authorized, none issued	—			—			—
Common stock - $0.01 par value; 250,000,000 shares authorized; 103,278,562 shares issued at June 30, 2018	1,033			—			1,033
Additional paid-in capital	464,138			—			464,138
Retained earnings	1,856,917			56,016			1,912,933
Less treasury stock at cost 26,107,903 shares at June 30, 2018	(1,055,260		)	—			(1,055,260		)
Total stockholders' equity	1,266,828			56,016			1,322,844
Total liabilities and equity	$	2,050,303		$	(13,095	)	$	2,037,208

Condensed Consolidated Statement of Income for the three months ended September 30, 2017:



	Three Months Ended September 30, 2017
	As Previously Reported			Adjustments			As Adjusted
REVENUE	$	359,934		$	1,350		$	361,284

EXPENSES
Cost of Revenue	204,715			(800		)	203,915
Research and Development	20,929			—			20,929
Selling, General, and Administrative	43,733			(2,645		)	41,088
Gain on Disposal of a Business	(1,705		)	—			(1,705		)
Total Expenses	267,672			(3,445		)	264,227

OPERATING INCOME	92,262			4,795			97,057

INTEREST INCOME (EXPENSE)
Interest Income	147			—			147
Interest Expense	(189		)	—			(189		)
Total Interest Income (Expense)	(42		)	—			(42		)

INCOME BEFORE INCOME TAXES	92,220			4,795			97,015

PROVISION/ (BENEFIT) FOR INCOME TAXES	28,809			1,336			30,145

NET INCOME	$	63,411		$	3,459		$	66,870

Basic earnings per share	$	0.82					$	0.87
Basic weighted average shares outstanding	77,283						77,283

Diluted earnings per share	$	0.82					$	0.86
Diluted weighted average shares outstanding	77,646						77,646

Condensed Consolidated Statement of Cash Flows for the three months ended September 30, 2017:



	Three Months Ended September 30, 2017
	As Previously Reported			Adjustments			As Adjusted
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	63,411		$	3,459		$	66,870
Adjustments to reconcile net income from operations to net cash from operating activities:
Depreciation	12,419			—			12,419
Amortization	23,856			—			23,856
Change in deferred income taxes	1,359			2,031			3,390
Expense for stock-based compensation	1,513			—			1,513
(Gain)/loss on disposal of assets and businesses	(1,620		)	—			(1,620		)
Changes in operating assets and liabilities:
Change in receivables	105,243			(3,310		)	101,933
Change in prepaid expenses, deferred costs and other	(13,645		)	(4,424		)	(18,069		)
Change in accounts payable	2,000			—			2,000
Change in accrued expenses	(9,881		)	3,774			(6,107		)
Change in income taxes	26,141			(695		)	25,446
Change in deferred revenues	(72,074		)	(835		)	(72,909		)
Net cash from operating activities	138,722			—			138,722

CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisitions, net of cash acquired	(10,455		)	—			(10,455		)
Capital expenditures	(3,708		)	—			(3,708		)
Proceeds from the sale of businesses	200			—			200
Proceeds from the sale of assets	106			—			106
Internal use software	(3,452		)	—			(3,452		)
Computer software developed	(22,976		)	—			(22,976		)
Net cash from investing activities	(40,285		)	—			(40,285		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on credit facilities	(50,000		)	—			(50,000		)
Purchase of treasury stock	(30,018		)	—			(30,018		)
Dividends paid	(23,904		)	—			(23,904		)
Proceeds from issuance of common stock upon exercise of stock options	1			—			1
Tax withholding payments related to share based compensation	(7,033		)	—			(7,033		)
Proceeds from sale of common stock	1,792			—			1,792
Net cash from financing activities	(109,162		)	—			(109,162		)
NET CHANGE IN CASH AND CASH EQUIVALENTS	$	(10,725	)	$	—		$	(10,725	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	114,765		$	—		$	114,765
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	104,040		$	—		$	104,040

ASU 2016-15 issued by the FASB in August 2016 clarifies cash flow classification of eight specific cash flow issues and is effective for our annual reporting period beginning July 1, 2018. The adoption of this standard did not have any impact on our financial statements.