Annual report pursuant to Section 13 and 15(d)

Other Balance Sheet Components

v3.22.2.2
Other Balance Sheet Components
 12 Months Ended
Sep. 30, 2022
Receivables [Abstract]  
Other Balance Sheet Components OTHER BALANCE SHEET COMPONENTS
Accounts Receivable, Net
Table 14.1: Details of Accounts Receivable, Net
As of September 30,
2022 2021
(in thousands)
Billed and billable receivables $ 723,979  $ 718,728 
Unbilled receivables 91,404  124,135 
Allowance for credit losses (8,273) (8,044)
Accounts receivable, net $ 807,110  $ 834,819 
Table 14.2: Changes in Allowance for Credit Losses
For the Year Ended September 30,
2022 2021 2020
(in thousands)
Balance at beginning of period $ 8,044  $ 6,051  $ 5,382 
Provision for estimated credit losses 6,799  11,038  12,976 
Write-offs, net of recoveries (6,570) (9,045) (12,307)
Balance at end of period $ 8,273  $ 8,044  $ 6,051 
On September 21, 2022, we entered into a Receivables Purchase Agreement with Wells Fargo Bank N.A., under which we may sell certain US-originated accounts receivable balances up to a maximum amount of $110.0 million. In return for these sales, we receive a cash payment equal to the face value of the receivables less a financing charge. The effective interest rate under this program was 4.08%.
We account for these transfers as sales. We have no retained interest in the transferred receivables other than administrative responsibilities, and Wells Fargo has no recourse for any credit risk. We estimate that the implicit servicing fees for an arrangement of this size and type would be immaterial.
For the year ended September 30, 2022, the fair value of accounts receivables transferred to Wells Fargo and derecognized from our balance sheet was $74.2 million. In exchange for these sales, we received $73.9 million of cash. The balance, representing a loss on sale from these transfers, is included within our selling, general and administrative expenses. We have recorded these transactions within our operating cash flows.
Property and Equipment, Net
Table 14.3: Details of Property and Equipment, Net
As of September 30,
2022 2021
(in thousands)
Land $ —  $ 1,738 
Building and improvements —  11,981 
Office furniture and equipment 209,258  254,102 
Leasehold improvements 78,727  79,938 
Property and equipment, at cost 287,985  347,759 
Accumulated depreciation (235,727) (285,132)
Property and equipment, net $ 52,258  $ 62,627 
Depreciation expense for the years ended September 30, 2022, 2021, and 2020, was $28.3 million, $34.1 million, and $54.9 million, respectively. This expense was recorded within "cost of revenue" and "selling, general, and administrative expenses" on our consolidated statements of operations.
In August 2022, we sold the land and buildings which held our corporate headquarters resulting in a gain on sale of $11.0 million.
Capitalized Software Costs, Net
Capitalized software is recorded at cost and includes purchased, internally-developed and externally-developed software used in our operations. Amortization expense is provided using the straight-line method over the estimated useful lives of the software.
A summary of activities related to capitalized software costs is shown below:
Table 14.4: Details of Capitalized Software, Net
As of September 30,
2022 2021
(in thousands)
Capitalized software $ 161,353  $ 139,145 
Accumulated amortization (102,613) (96,277)
Capitalized software, net $ 58,740  $ 42,868 
Amortization expense related to capitalized software for the years ended September 30, 2022, 2021, and 2020 was $14.1 million, $12.3 million, and $9.6 million, respectively. The majority of this amortization was recorded within our "cost of revenue" and "selling, general, and administrative expenses" on our consolidated statements of operations.
The amortization totals above include $2.4 million, and $0.6 million of costs which were capitalized and subsequently written off during the years ended September 30, 2021 and 2020, respectively, with no comparable amounts for the year ended September 30, 2022. These costs were related to contracts that were deemed unrecoverable. This expense was recorded within "cost of revenue" on our consolidated statements of operations.
Deferred Contract Costs, Net
Deferred contract costs consist of contractually recoverable costs to fulfill related to long-term service contracts. These costs include direct and incremental costs incurred prior to the commencement of providing service to our customer. These costs are expensed over the period the services are provided using the straight-line method.
A summary of activities related to deferred contract costs is shown below:
Table 14.5: Details of Deferred Contracts Costs, Net
As of September 30,
2022 2021
(in thousands)
Deferred contract costs $ 76,498  $ 67,209 
Accumulated amortization (28,766) (30,723)
Total deferred contract costs, net $ 47,732  $ 36,486 
Amortization expense related to deferred contract costs for the years ended September 30, 2022, 2021, and 2020 was $8.9 million, $13.6 million, and $6.8 million, respectively. These amounts were recorded within our "cost of revenue" on our consolidated statements of operations.
The amortization totals above includes $4.4 million, and $0.6 million of costs which were written off during the years ended September 30, 2021 and 2020, respectively, with no comparable amounts for the year ended September 30, 2022. These costs were related to contracts in our U.S. Services and Outside the U.S. segments and are deemed unrecoverable. This expense was recorded within "cost of revenue" on our consolidated statements of operations.