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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _____________________________________________
Form 10-Q
 _____________________________________________
(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2021
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-27038
 _____________________________________________
NUANCE COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
 _____________________________________________
DE 94-3156479
(State or Other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1 Wayside Road
Burlington, MA 01803
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code:
(781) 565-5000
 _____________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, par value $0.001 NUAN Nasdaq Stock Market LLC
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer," “accelerated filer," “smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer Accelerated Filer
Non-accelerated Filer Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
The number of shares of the Registrant’s Common Stock, outstanding as of April 30, 2021 was 286,071,824.



NUANCE COMMUNICATIONS, INC.
TABLE OF CONTENTS
 
    Page
Item 1. Condensed Consolidated Financial Statements:
Consolidated Statements of Operations for the three and six months ended March 31, 2021 and 2020
1
Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended March 31, 2021 and 2020
2
Consolidated Balance Sheets at March 31, 2021 and September 30, 2020
3
Consolidated Statements of Stockholders’ Equity for the three and six months ended March 31, 2021 and 2020
4
Consolidated Statements of Cash Flows for the six months ended March 31, 2021 and 2020
6
Notes to Condensed Consolidated Financial Statements
7
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Certifications





NUANCE COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
  Three Months Ended March 31, Six Months Ended March 31,
  2021 2020 2021 2020
(Unaudited)
(In thousands, except per share amounts)
Revenues:
Hosting and professional services $ 197,981  $ 182,147  $ 393,813  $ 356,068 
Product and licensing 85,810  69,563  171,847  194,578 
Maintenance and support 63,186  64,214  127,070  126,787 
Total revenues 346,977  315,924  692,730  677,433 
Cost of revenues:  
Hosting and professional services 105,977  100,391  211,592  201,721 
Product and licensing 8,460  9,089  22,875  43,033 
Maintenance and support 7,273  8,020  14,759  15,883 
Amortization of intangible assets 4,929  6,557  9,191  13,126 
Total cost of revenues 126,639  124,057  258,417  273,763 
Gross profit 220,338  191,867  434,313  403,670 
Operating expenses:
Research and development 59,500  56,091  115,957  110,696 
Sales and marketing 70,333  70,174  135,738  135,950 
General and administrative 35,751  38,024  76,896  76,358 
Amortization of intangible assets 10,754  8,530  21,285  17,719 
Acquisition-related costs, net 1,669  1,678  1,994  2,898 
Restructuring and other charges, net 2,479  6,176  11,045  12,859 
Total operating expenses 180,486  180,673  362,915  356,480 
Income from operations 39,852  11,194  71,398  47,190 
Other income (expense):    
Interest income 176  1,512  404  3,698 
Interest expense (23,054) (23,629) (46,068) (47,444)
Other income (expense), net 583  (1,688) 1,080  (13,728)
Income (loss) before income taxes 17,557  (12,611) 26,814  (10,284)
Provision (benefit) for income taxes 4,823  13,872  7,126  (27,425)
Net income (loss) from continuing operations 12,734  (26,483) 19,688  17,141 
Net (loss) income from discontinued operations (16,368) 6,477  (8,427) 11,538 
Net (loss) income $ (3,634) $ (20,006) $ 11,261  $ 28,679 
Net income (loss) per common share - basic:
Continuing operations $ 0.04  $ (0.09) $ 0.07  $ 0.06 
Discontinued operations (0.05) 0.02  (0.03) 0.04 
Total net (loss) income per basic common share $ (0.01) $ (0.07) $ 0.04  $ 0.10 
Net income (loss) per common share - diluted:
Continuing operations $ 0.04  $ (0.09) $ 0.06  $ 0.06 
Discontinued operations (0.05) 0.02  (0.03) 0.04 
Total net (loss) income per diluted common share $ (0.01) $ (0.07) $ 0.03  $ 0.10 
Weighted average common shares outstanding:
Basic 285,284  282,576  284,545  283,366 
Diluted 320,112  282,576  317,160  288,214 

See accompanying notes.
1

NUANCE COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
  Three Months Ended March 31, Six Months Ended March 31,
  2021 2020 2021 2020
(Unaudited)
  (In thousands)
Net (loss) income $ (3,634) $ (20,006) $ 11,261  $ 28,679 
Other comprehensive (loss) income:
Foreign currency translation adjustment (5,679) (15,538) 10,135  (11,114)
Cerence Spin-off —  —  —  12,331 
Pension adjustments (414) —  (400) 2,007 
Unrealized loss on marketable securities (1) (496) (30) (528)
Total other comprehensive (loss) income, net (6,094) (16,034) 9,705  2,696 
Comprehensive (loss) income $ (9,728) $ (36,040) $ 20,966  $ 31,375 







































See accompanying notes.
2

NUANCE COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS 
March 31,
2021
September 30,
2020
(Unaudited)
  (In thousands, except per
share amounts)
ASSETS
Current assets:
Cash and cash equivalents $ 342,851  $ 301,233 
Marketable securities 69,549  71,114 
Accounts receivable, less allowances for doubtful accounts of $9,937 and $8,649
187,649  175,583 
Prepaid expenses and other current assets 182,582  152,563 
Current assets, discontinued operations —  35,492 
Total current assets 782,631  735,985 
Marketable securities 2,000  — 
Land, building and equipment, net 143,448  137,299 
Goodwill 2,154,443  2,120,495 
Intangible assets, net 157,149  167,270 
Right-of-use assets 95,925  104,839 
Other assets 258,480  248,414 
Long-term assets, discontinued operations —  79,030 
Total assets $ 3,594,076  $ 3,593,332 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt $ 1,065,183  $ 432,209 
Contingent and deferred acquisition payments 3,535  4,224 
Accounts payable 77,160  71,833 
Accrued expenses and other current liabilities 182,830  199,254 
Deferred revenue 257,677  249,484 
Current liabilities, discontinued operations —  29,138 
Total current liabilities 1,586,385  986,142 
Long-term debt 494,299  1,104,464 
Deferred revenue, net of current portion 100,071  98,696 
Deferred tax liabilities 13,211  70,116 
Operating lease liabilities 95,497  103,996 
Other liabilities 81,428  64,597 
Long-term liabilities, discontinued operations —  21,388 
Total liabilities 2,370,891  2,449,399 
Commitments and contingencies (Note 15)
Mezzanine Equity 101,333  — 
Stockholders’ equity:
Common stock, $0.001 par value per share; 560,000 shares authorized; 289,248 and 286,703 shares issued and 285,497 and 282,952 shares outstanding, respectively
289  287 
Additional paid-in capital 1,507,519  1,550,568 
Treasury stock, at cost (3,751 shares)
(16,788) (16,788)
Accumulated other comprehensive loss (108,213) (117,918)
Accumulated deficit (260,955) (272,216)
Total stockholders’ equity 1,121,852  1,143,933 
Total liabilities and stockholders’ equity $ 3,594,076  $ 3,593,332 

See accompanying notes.
3

NUANCE COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the three months ended March 31, 2021
  Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity
  Shares Amount Shares Amount
  (In thousands)
Balance at December 31, 2020 288,669  $ 289  $ 1,528,975  (3,751) $ (16,788) $ (102,119) $ (257,321) $ 1,153,036 
Issuance of common stock under employee stock plans 645  8,367  —  —  —  —  8,368 
Cancellation of restricted stock, and repurchase of common stock at cost for employee tax withholding (66) (1) (3,071) —  —  —  —  (3,072)
Stock-based compensation —  —  21,238  —  —  —  —  21,238 
Equity portion of convertible debt puttable —  —  (47,990) —  —  —  —  (47,990)
Net loss —  —  —  —  —  —  (3,634) (3,634)
Other comprehensive loss —  —  —  —  —  (6,094) —  (6,094)
Balance at March 31, 2021 289,248  $ 289  $ 1,507,519  (3,751) $ (16,788) $ (108,213) $ (260,955) $ 1,121,852 
For the six months ended March 31, 2021
  Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity
  Shares Amount Shares Amount
(In thousands)
Balance at September 30, 2020 286,703  $ 287  $ 1,550,568  (3,751) $ (16,788) $ (117,918) $ (272,216) $ 1,143,933 
Issuance of common stock under employee stock plans 3,762  8,364  —  —  —  —  8,368 
Cancellation of restricted stock, and repurchase of common stock at cost for employee tax withholding (1,217) (2) (46,773) —  —  —  —  (46,775)
Stock-based compensation —  —  96,693  —  —  —  —  96,693 
Equity portion of convertible debt puttable —  —  (101,333) —  —  —  —  (101,333)
Net income —  —  —  —  —  —  11,261  11,261 
Other comprehensive income —  —  —  —  —  9,705  —  9,705 
Balance at March 31, 2021 289,248  $ 289  $ 1,507,519  (3,751) $ (16,788) $ (108,213) $ (260,955) $ 1,121,852 




4

NUANCE COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)
For the three months ended March 31, 2020
  Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Noncontrolling Interests Total Stockholders' Equity
  Shares Amount Shares Amount
  (In thousands)
Balance at December 31, 2019 287,626  $ 288  $ 1,615,989  3,751  $ (16,788) $ (114,043) $ (244,927) $ —  $ 1,240,519 
Issuance of common stock under employee stock plans 1,138  7,203  —  —  —  —  —  7,204 
Cancellation of restricted stock, and repurchase of common stock at cost for employee tax withholding (169) —  (3,478) —  —  —  —  —  (3,478)
Stock-based compensation —  —  23,911  —  —  —  —  —  23,911 
Repurchase and retirement of common stock (3,763) (4) (76,770) —  —  —  —  —  (76,774)
Repurchases of convertible notes (a)
—  —  (46,121) —  —  —  —  —  (46,121)
Net loss —  —  —  —  —  —  (20,006) —  (20,006)
Other comprehensive loss —  —  —  —  —  (16,034) —  —  (16,034)
Balance at March 31, 2020 284,832  $ 285  $ 1,520,734  3,751  $ (16,788) $ (130,077) $ (264,933) $ —  $ 1,109,221 
For the six months ended March 31, 2020
  Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Noncontrolling Interests Total Stockholders' Equity
  Shares Amount Shares Amount
(In thousands)
Balance at September 30, 2019 289,680  $ 290  $ 2,597,889  3,751  $ (16,788) $ (132,773) $ (293,612) $ 18,144  $ 2,173,150 
Cerence spin-off —  —  (922,567) —  —  12,331  —  (18,144) (928,380)
Issuance of common stock under employee stock plans 6,720  7,253  —  —  —  —  —  7,260 
Cancellation of restricted stock, and repurchase of common stock at cost for employee tax withholding (2,111) (2) (36,605) —  —  —  —  —  (36,607)
Stock-based compensation —  —  90,093  —  —  —  —  —  90,093 
Repurchase and retirement of common stock (9,457) (10) (169,208) —  —  —  —  —  (169,218)
Repurchases of convertible notes (a)
—  —  (46,121) —  —  —  —  —  (46,121)
Net income —  —  —  —  —  —  28,679  —  28,679 
Other comprehensive loss —  —  —  —  —  (9,635) —  —  (9,635)
Balance at March 31, 2020 284,832  $ 285  $ 1,520,734  3,751  $ (16,788) $ (130,077) $ (264,933) $ —  $ 1,109,221 
(a)According to ASC 470-20, cash consideration paid to repurchase and retire our convertible notes was first allocated to debt component based on the actual fair value on the trading date, and the remaining consideration was allocated to additional paid-in-capital.
See accompanying notes.
5

NUANCE COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
  Six Months Ended March 31,
  2021 2020
(Unaudited)
(In thousands)
Cash flows from operating activities:
Net income from continuing operations $ 19,688  $ 17,141 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 15,609  15,129 
Amortization 30,476  30,845 
Stock-based compensation 69,782  62,536 
Non-cash interest expense 24,799  25,318 
Deferred tax benefit (4,619) (40,901)
Loss on extinguishment of debt —  18,656 
Other 3,772  2,350 
Changes in operating assets and liabilities, excluding effects of acquisitions:
Accounts receivable (9,084) 19,660 
Prepaid expenses and other assets (12,866) 3,877 
Accounts payable 7,066  (5,117)
Accrued expenses and other liabilities (1,119) (58,593)
Deferred revenue (971) 24,638 
  Net cash provided by operating activities - continuing operations 142,533  115,539 
  Net cash provided by operating activities - discontinued operations 7,087  25,892 
Net cash provided by operating activities 149,620  141,431 
Cash flows from investing activities:
Capital expenditures (32,719) (31,187)
Proceeds from disposition of businesses, net of transaction fees 9,885  — 
Purchases of marketable securities and other investments (67,000) (148,880)
Proceeds from sales and maturities of marketable securities and other investments 66,518  224,987 
Payments for business and asset acquisitions, net of cash acquired (45,175) — 
Other 501  1,332 
Net cash (used in) provided by investing activities (67,990) 46,252 
Cash flows from financing activities:
Repurchase and redemption of debt —  (513,642)
Net distribution from Cerence upon the spin-off —  139,090 
Payments for repurchase of common stock —  (169,218)
Proceeds from issuance of common stock from employee stock plans 8,368  7,204 
Proceeds from the revolving credit facility —  230,000 
Payments for taxes related to net share settlement of equity awards (48,956) (36,488)
Other financing activities (2,235) (2,834)
Net cash used in financing activities (42,823) (345,888)
Effects of exchange rate changes on cash and cash equivalents 2,811  (4,849)
Net increase (decrease) in cash and cash equivalents 41,618  (163,054)
Cash and cash equivalents at beginning of period 301,233  560,961 
Cash and cash equivalents at end of period $ 342,851  $ 397,907 




See accompanying notes.
6

NUANCE COMMUNICATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Presentation
Nuance Communications, Inc. ("we", "Nuance", "our", "us", or the "Company") is a pioneer and leader in conversational and cognitive artificial intelligence ("AI") innovations that bring intelligence to everyday work and life. Our solutions and technologies can understand, analyze and respond to human language to increase productivity and amplify human intelligence. Our solutions are used by businesses in the healthcare, financial services, telecommunications and travel industries, among others. We had three reportable segments as of March 31, 2021: Healthcare, Enterprise, and Other. See Note 18 for a description of each of these segments.
Although we believe the disclosures included herein are adequate to ensure that the condensed consolidated financial statements are fairly presented, certain information and footnote disclosures to the financial statements have been condensed or omitted in accordance with the rules and regulations of the SEC. Accordingly, the condensed consolidated financial statements and the footnotes included herein should be read in conjunction with the audited financial statements and the footnotes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire fiscal year or any future period.
On April 11, 2021, we entered into an Agreement and Plan of Merger ( the "Merger Agreement") with Microsoft Corporation ("Microsoft") and Big Sky Merger Sub Inc. ("Merger Sub"). Subject to the terms and conditions of the Merger Agreement, Microsoft has agreed to acquire Nuance for $56.00 per share in an all-cash transaction. Pursuant to the Merger Agreement, a wholly-owned subsidiary of Microsoft will merge with and into Nuance ("the Merger") with Nuance surviving as a wholly-owned subsidiary of Microsoft. As a result of the Merger, we will cease to be a publicly traded company. We have agreed to various customary covenants and agreements, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Merger. We do not believe these restrictions will prevent us from meeting our debt service obligations, ongoing costs of operations, working capital needs, or capital expenditure requirements. The transaction is currently intended to close by December 31, 2021. Consummation of the Merger is subject to certain conditions, including the receipt of the necessary approval from our stockholders, the satisfaction of certain regulatory approvals and other customary closing conditions.
For additional information related to the Merger Agreement, please refer to the definitive proxy statement and other relevant materials in connection with the transaction that we will file with the SEC and which will contain important information about Nuance and the Merger.
As more fully described in Note 11, during the second quarter of fiscal year 2021, our common stock price exceeded 130% of the applicable conversion price for each of our convertible debentures for at least 20 trading days during the 30 consecutive trading days ending March 31, 2021. As a result, the holders of our 1.25% 2025 Debentures, 1.5% 2035 Debentures, and 1.0% 2035 Debentures have the right to convert all or any portion of their debentures between April 1, 2021 and June 30, 2021. Additionally, the holders of the 1.5% 2035 Debentures will have the right to redeem the notes in November 2021. All three convertible notes with a total net book value of $1.07 billion were included within current liabilities as of March 31, 2021.
Should any holders elect to convert, the principal amount of the convertible debentures would be payable in cash, and any amount payable in excess of the principal amount would be paid in cash or shares of our common stock at our election. Although the holders of our 1.25% 2025 Debentures, 1.5% 2035 Debentures, and 1.0% 2035 Debentures previously had the right to convert their debentures between January 1, 2021 and March 31, 2021 as our common stock price exceeded 130% of the applicable conversion price for these debentures for at least 20 trading days during the 30 consecutive trading days ending December 31, 2020, there were no material exercises of the conversion rights during the second quarter ended March 31, 2021. Subsequent to the balance sheet date, holders of our 1.5% 2035 Debentures submitted conversion notices with a total value of approximately $118.3 million.
Our convertible debentures are actively traded in the open market. The 1.25% 2025 Debentures trade at a price consistently in excess of their conversion values. Therefore, we believe that it is uneconomic, and thus unlikely, for the holders of the 1.25% 2025 Debentures to early exercise their conversion rights. In the event that holders of any of our debentures presented an amount for settlement that exceeded our then available sources of liquidity, we may need to obtain additional financing, which we believe would be available to us based upon our assessment of the prevailing market and business conditions and our experience of successful capital raising activities.
2. Summary of Significant Accounting Policies
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Recently Adopted Accounting Standards
Internal-Use Software
In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract", which became effective for us during the first quarter of fiscal year 2021. The guidance requires that implementation costs related to a hosting arrangement that is a service contract be capitalized and amortized over the term of the hosting arrangement, starting when the module or component of the hosting arrangement is ready for its intended use. The guidance is applied retrospectively to each period presented. The implementation did not have a material impact on our condensed consolidated financial statements.
Current Expected Credit Losses
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" which became effective for us during the first quarter of fiscal year 2021. The guidance requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financial assets using a forward-looking approach, taking into consideration historical experience, current conditions, and supportable forecasts that impact collectibility. The implementation did not have a material impact on our condensed consolidated financial statements.
Issued Accounting Standards Not Yet Adopted
From time to time, new accounting pronouncements are issued by the FASB and are adopted by us as of the specified effective dates. Unless otherwise discussed, such pronouncements did not have or will not have a significant impact on our consolidated financial position, results of operations or cash flows, or do not apply to our operations.
Convertible Notes
In August 2020, the FASB issued ASU 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity," which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The new guidance eliminates two of the three models in Accounting Standards Codification ("ASC") 470-202 that require separating embedded conversion features from convertible instruments. As a result, only conversion features accounted for under the substantial premium model in ASC 470-20 and those that require bifurcation in accordance with ASC 815-153 will be accounted for separately. For contracts in an entity’s own equity, the new guidance eliminates some of the requirements in ASC 815-404 for equity classification. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. The guidance will be effective for annual periods beginning after December 15, 2021, and interim periods therein. Early adoption is permitted for all entities for fiscal periods beginning after December 15, 2020, including interim periods within the same fiscal year. Entities are allowed to adopt the guidance using either the modified or full retrospective approach. We are currently assessing the provisions of the guidance and the impact on our condensed consolidated financial statements.
3. Revenue Recognition
We derive revenue from the following sources: (1) hosting services, (2) software licenses, including royalties, (3) maintenance and support ("M&S"), (4) professional services, and (5) sale of hardware. Revenue is reported net of applicable sales and use tax, value-added tax and other transaction taxes imposed on the related transaction including mandatory government charges that are passed through to our customers. We account for a contract when both parties have approved and committed to the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and the collectibility of the consideration is probable.
The majority of our arrangements with customers typically contain multiple products and services. We account for individual products and services separately if they are distinct, that is, if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer.
We recognize revenue after applying the following five steps:
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NUANCE COMMUNICATIONS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
identification of the contract, or contracts, with a customer;
identification of the performance obligations in the contract, including whether they are distinct within the context of the contract;
determination of the transaction price, including the constraint on variable consideration;
allocation of the transaction price to the performance obligations in the contract; and
recognition of revenue when, or as, performance obligations are satisfied.
We allocate the transaction price of the arrangement based on the relative estimated standalone selling price ("SSP") of each distinct performance obligation. In determining SSP, we maximize observable inputs and consider a number of data points, including:
the pricing of standalone sales (in the instances where available);
the pricing established by management when setting prices for deliverables that are intended to be sold on a standalone basis;
contractually stated prices for deliverables that are intended to be sold on a standalone basis; and
other pricing factors, such as the geographical region in which the products are sold and expected discounts based on the customer size and type.
We only include estimated amounts of variable consideration in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. We reduce transaction prices for estimated returns and other allowances that represent variable consideration under ASU No. 2014-09, "Revenue from Contracts with Customers: Topic 606" ("ASC 606"), which we estimate based on historical return experience and other relevant factors and record a reduction to revenue and accounts receivable. Other forms of contingent revenue or variable consideration are infrequent.
Revenue is recognized when control of these products and services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.
We assess the timing of the transfer of products or services to the customer as compared to the timing of payments to determine whether a significant financing component exists. In accordance with the practical expedient in ASC 606-10-32-18, we do not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. If the difference in timing arises for reasons other than the provision of financing to either the customer or us, no financing component is deemed to exist. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our services, not to receive or provide financing from or to customers. We do not consider set-up fees nor other upfront fees paid by our customers to represent a financing component.
Certain products are sold through distributors or resellers. Certain distributors and resellers have been granted right of return and selling incentives which are accounted for as variable consideration when estimating the amount of revenue to be recognized. Returns and credits are estimated at the contract inception and updated at the end of each reporting period as additional information becomes available. In accordance with the practical expedient in ASC 606-10-10-4, we apply a portfolio approach to estimate the variable consideration associated with this group of customers.
Reimbursements for out-of-pocket costs generally include, but are not limited to, costs related to transportation, lodging and meals. Revenue from reimbursed out-of-pocket costs is accounted for as variable consideration.
Shipping and handling activities are not considered a contract performance obligation. We record shipping and handling costs billed to customers as revenue with offsetting costs recorded as cost of revenue.
Performance Obligations
Hosting
Hosting services, which allow our customers to use the hosted software over the contract period without taking possession of the software, are provided on a usage basis as consumed or on a fixed fee subscription basis. Our hosting contract terms generally range from one to five years.
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NUANCE COMMUNICATIONS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
As each day of providing services is substantially the same and the customer simultaneously receives and consumes the benefits as access is provided, we have determined that our hosting services arrangements are a single performance obligation comprised of a series of distinct services. These services include variable consideration, which is typically a function of usage. We recognize revenue as each distinct service period is performed (i.e., recognized as incurred).
Subscription-based revenue represents a single promise to stand-ready to provide access to our hosting services. Revenue is recognized over time on a ratable basis over the hosting contract term, which generally ranges from one to five years.
Software Licenses
On-premise software licenses sold with non-distinct professional services to customize and/or integrate the underlying software are accounted for as a combined performance obligation. Revenue from the combined performance obligation is recognized over time based upon the progress towards completion of the project, which is measured based on the labor hours already incurred to date as compared to the total estimated labor hours.
Revenue from distinct on-premise software licenses, which do not require professional services to customize and/or integrate the software license, is recognized at the point in time when the software is made available to the customer and control is transferred.
Revenue from software licenses sold on a royalty basis, where the license of intellectual property is the predominant item to which the royalty relates, is recognized in the period the usage occurs in accordance with the practical expedient in ASC 606-10-55-65(A).
Maintenance and Support
Our M&S contracts generally include telephone support and the right to receive unspecified upgrades and updates on a when-and-if available basis. M&S revenue is recognized over time on a ratable basis over the contract period because we transfer control evenly by providing a stand-ready service.
Professional Services
Revenue from distinct professional services, including training, is recognized over time based upon the progress towards completion of the project, which is measured based on the labor hours already incurred to date as compared to the total estimated labor hours.
Hardware
Hardware revenue is recognized at the point in time when control is transferred to the customer, which is typically upon delivery.
Significant Judgments
Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Our license contracts often include professional services to customize and/or integrate the licenses into the customer’s environment. Judgment is required to determine whether the license is considered distinct and accounted for separately, or not distinct and accounted for together with professional services.
Judgments are required to determine the SSP for each distinct performance obligation. When SSP is directly observable, we estimate SSP based upon the historical transaction prices, adjusted for geographic considerations, customer classes, and customer relationship profiles. In instances where SSP is not directly observable, we determine SSP using information that may include market conditions and other observable inputs. We may have more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, we may use information such as the size of the customer and geographic region in determining SSP. Determining SSP for performance obligations which we never sell separately also requires significant judgment. In estimating the SSP for such performance obligations, we consider the likely price that would have resulted from established pricing practices had the deliverable been offered separately and the prices a customer would likely be willing to pay.
From time to time, we may enter into arrangements with third party suppliers to resell products or services. In such cases, we evaluate whether we are the principal (i.e. report revenues on a gross basis) or agent (i.e. report revenues on a net basis). In doing so, we first evaluate whether we control the good or service before it is transferred to the customer. If we control the good
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NUANCE COMMUNICATIONS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
or service before it is transferred to the customer, we are the principal; if not, we are the agent. Generally, we control a promised good or service before transferring that good or service to the customer and act as the principal to the transaction. Determining whether we control the good or service before it is transferred to the customer may require judgment.
Disaggregated Revenue
We disaggregate revenue from contracts with customers by reportable segment and products and services as this presentation depicts the timing, risks and uncertainty of our revenue streams, which is also in line with how we manage our businesses, assess performance, and determine management compensation. Our disaggregated revenue from continuing operations is as follows (dollars in thousands):
Three Months Ended March 31,
2021 2020
Hosting and professional services Product and licensing Maintenance and support Total Hosting and professional services Product and licensing Maintenance and support Total
Healthcare $ 117,593  $ 61,326  $ 32,973  $ 211,892  $ 93,646  $ 43,266  $ 34,070  $ 170,982 
Enterprise 75,740  24,057  30,200  129,997  80,840  26,258  30,135  137,233 
Other 4,648  427  13  5,088  7,661  39  7,709 
Total revenues $ 197,981  $ 85,810  $ 63,186  $ 346,977  $ 182,147  $ 69,563  $ 64,214  $ 315,924 
Six Months Ended March 31,
2021 2020
Hosting and professional services Product and licensing Maintenance and support Total Hosting and professional services Product and licensing Maintenance and support Total
Healthcare $ 228,397  $ 116,108  $ 66,719  $ 411,224  $ 182,073  $ 135,058  $ 67,661  $ 384,792 
Enterprise 154,481  54,343  60,325  269,149  158,476  57,995  59,146  275,617 
Other 10,935  1,396  26  12,357  15,519  1,525  (20) 17,024 
Total revenues $ 393,813  $ 171,847  $ 127,070  $ 692,730  $ 356,068  $ 194,578  $ 126,787  $ 677,433 
Hardware revenue comprised approximately $7.1 million and $13.7 million of total product and licensing revenue for the three and six months ended March 31, 2021, respectively, and $8.5 million and $14.8 million of total product and licensing revenue for the three and six months ended March 31, 2020, respectively.
Contract Acquisition Costs
We are required to capitalize certain contract acquisition costs under ASC 606. The capitalized costs primarily relate to paid commissions and other direct, incremental costs to acquire customer contracts. In accordance with the practical expedient in ASC 606-10-10-4, we apply a portfolio approach to estimate contract acquisition costs for groups of customer contracts. We elect to apply the practical expedient in ASC 340-40-25-4 and will expense contract acquisition costs as incurred where the expected period of benefit is one year or less. Sales commissions paid on renewal maintenance and support are not commensurate with sales commissions paid on the initial maintenance and support contract. Contract acquisition costs are deferred and amortized on a straight-line basis over the period of benefit, which we have estimated to be between one and five years. The period of benefit was determined based on an average customer contract term, expected contract renewals, changes in technology and our ability to retain customers including canceled contracts. Contract acquisition costs are classified as current or noncurrent assets based on when the expense will be recognized. The current and noncurrent portions of contract acquisition costs are included in Prepaid expenses and other current assets, and Other assets, respectively. As of March 31, 2021, we had $31.2 million of current contract acquisition costs from continuing operations and $67.1 million of noncurrent contract acquisition costs from continuing operations. As of September 30, 2020, we had $20.9 million of current contract acquisition costs from continuing operations and $51.6 million of noncurrent contract acquisition costs from continuing operations. Commission expense is primarily included in sales and marketing expense on the consolidated statements of operations. We had amortization expense related to contract acquisition costs from continuing operations of $4.7 million and $9.4 million for the three and six months ended March 31, 2021, respectively, and $4.0 million and $7.6 million for the three and six months ended March 31, 2020, respectively. There was no impairment related to commission costs capitalized.
Capitalized Contract Costs
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NUANCE COMMUNICATIONS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
We capitalize incremental costs incurred to fulfill our contracts that (1) relate directly to the contract, (2) are expected to generate resources that will be used to satisfy our performance obligation under the contract, and (3) are expected to be recovered through revenue generated under the contract. Our capitalized costs consist primarily of setup costs, such as costs to stand-up, customize, and develop applications for each customer. These costs are incurred to satisfy our stand-ready obligation to provide access to our connected offerings. The contract costs are expensed to cost of revenue as we satisfy our stand-ready obligation over the contract term, which we estimate to be between one and five years. The contract term estimation was determined based on an average customer contract term, expected contract renewals, changes in technology, and our ability to retain customers including canceled contracts. We classify capitalized contract costs as current or noncurrent based on the timing of when we expect to recognize the expense. The current and noncurrent portions of capitalized contract fulfillment costs are included in Prepaid expenses and other current assets, and Other assets, respectively. As of March 31, 2021, we had $19.8 million of short-term contract costs from continuing operations included with Prepaid expenses and other current assets and $33.1 million of long-term costs from continuing operations included within Other assets. As of September 30, 2020, we had $18.0 million of short-term contract costs from continuing operations included with Prepaid expenses and other current assets and $30.7 million of long-term costs from continuing operations included within Other assets.
Trade Accounts Receivable and Contract Balances
We classify our right to consideration in exchange for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). We present such receivables in Accounts receivable, net in our consolidated balance sheets at their net estimated realizable value. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and other applicable factors.
Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period.
Contract assets include unbilled amounts from long-term contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is not solely subject to the passage of time. The current and noncurrent portions of contract assets are included in Prepaid expenses and other current assets, and Other assets. As of March 31, 2021, we had $60.5 million of current contract assets from continuing operations and $94.2 million of noncurrent contract assets from continuing operations. As of September 30, 2020, we had $48.7 million of current contract assets from continuing operations and $107.4 million of noncurrent contract assets from continuing operations. The table below shows significant changes in contract assets of continuing operations (dollars in thousands):
Contract assets
Balance as of September 30, 2020 $ 156,142 
Revenues recognized but not billed 225,454 
Amounts reclassified to accounts receivable (226,902)
Balance at March 31, 2021 $ 154,694 
Our contract liabilities, or Deferred revenue, consist of advance payments and billings in excess of revenues recognized. We classify Deferred revenue as current or noncurrent based on when we expect to recognize the revenues. As of March 31, 2021, we had $357.7 million of Deferred revenue. The table below shows significant changes in Deferred revenue of continuing operations (dollars in thousands):
Deferred revenue
Balance as of September 30, 2020 $ 348,180 
Amounts bill but not recognized 403,593 
Revenue recognized (394,025)
Balance at March 31, 2021 $ 357,748 
Remaining Performance Obligations
The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of March 31, 2021 (dollars in thousands):
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Within One Year Two to Four Years Greater than Four Years Total
Total revenue $ 718,566  $ 925,100  $ 28,857  $ 1,672,523 
The table above includes fixed backlogs and does not include variable backlog derived from contingent usage-based activities, such as royalties and usage-based hosting revenue.
4. Disposition of Businesses
Disposition of Our Medical Transcription and EHR Implementation businesses
On November 17, 2020, we entered into a definitive agreement (the “Agreement”) to sell our medical transcription and electronic healthcare record ("EHR") implementation businesses (the "Business") to Assured Healthcare Partners and Aeries Technology Group (together, the “Buyer”). Pursuant to the Agreement, we sold and transferred, and the Buyer purchased and acquired, (a) the shares of certain subsidiaries through which we operate a portion of the Business and (b) certain assets used in or related to the Business; and the Buyer assumed certain liabilities related to such assets of the Business, subject to certain exclusions and indemnities as set forth in the Agreement.
On March 1, 2021, we completed the sale of the Business and received approximately $29.8 million in cash, subject to post-closing finalization of the adjustments set forth in the Agreement. As a result, we recorded a loss of $12.5 million, which is included within Net (loss) income from discontinued operations. There are a number of working capital and other adjustments under the Agreement and related ancillary agreements. We do not believe that post-closing working capital adjustments under the Agreement, if any, will have a material impact on our results of operations.
Additionally, as in accordance with the Agreement, we retained certain identifiable accounts receivable balances with the sale of the Business. As of March 31, 2021, the balance of retained accounts receivable, net is $3.5 million. This is immaterial to our consolidated balance sheet and has been included within our continuing operations balance sheet.
For all periods presented, the Businesses' results of operations have been included within discontinued operations in our condensed consolidated financial statements.
Spin-off of Automotive
On October 1, 2019, we completed the spin-off of our Automotive business as an independent public company, Cerence, and a pro rata and tax-free distribution to our stockholders of all of the outstanding shares of Cerence owned by Nuance on October 1, 2019. The distribution was made in the amount of one share of Cerence common stock for every eight shares of Nuance common stock owned by Nuance’s stockholders of record as of 5:00 p.m. Eastern Time on September 17, 2019.
In connection with the spin-off, on September 30, 2019, we sold 1.8% of our equity interest in Cerence to a non-affiliated third party for a total cash consideration of $9.8 million. The difference between the consideration received and the carrying amount of the non-controlling interest was recognized in additional paid-in capital, which was subsequently derecognized as part of the spin-off transaction. Effective as of October 1, 2019, for all periods presented, the results of operations of our former Automotive business have been included within discontinued operations.
For the six months ended March 31, 2020, we incurred cash payments of $13.3 million related to the separation and spin-off of our Automotive business, which have been presented as operating cash flows from discontinued operations.
The historical results of operations of Automotive have been included within discontinued operations in our condensed consolidated financial statements.
The following table summarizes the results of the discontinued operations (dollars in thousands):
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Three Months Ended March 31,
  2021 2020
  Medical Transcription and EHR Implementation Medical Transcription and EHR Implementation
Major line items constituting net (loss) income of discontinued operations:
Revenue $ 33,421  $ 53,413 
Cost of revenue 25,682  33,036 
Research and development 1,237  1,818 
Sales and marketing 1,056  850 
General and administrative 54  352 
Amortization of intangible assets 1,629  3,291 
Acquisition-related costs, net — 
Restructuring and other charges, net 4,409  153 
(Loss) income from discontinued operations before income taxes (646) 13,911 
Provision for income taxes 3,178  7,434 
Loss on disposition (12,544) — 
Net (loss) income from discontinued operations $ (16,368) $ 6,477 
Supplemental information:
Depreciation $ 739  $ 2,420 
Amortization $ 1,629  $ 3,350 
Stock compensation $ 1,149  $ 1,528 
Capital expenditures $ —  $ 287 
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Six Months Ended March 31,
  2021 2020
  Medical Transcription and EHR Implementation Medical Transcription and EHR Implementation Automotive Total
Major line items constituting net (loss) income of discontinued operations:
Revenue $ 81,071  $ 110,137  $ —  $ 110,137 
Cost of revenue 54,834  67,719  —  67,719 
Research and development 2,535  3,766  —  3,766 
Sales and marketing 1,964  1,546  —  1,546 
General and administrative 66  332  —  332 
Amortization of intangible assets 4,073  6,651  —  6,651 
Acquisition-related costs, net —  (51) —  (51)
Restructuring and other charges, net 8,847  153  7,386  7,539 
Income (loss) from discontinued operations before income taxes 8,752  30,021  (7,386) 22,635 
Provision (benefit) for income taxes 4,635  12,291  (1,194) 11,097 
Loss on disposition (12,544) —  —  — 
Net (loss) income from discontinued operations $ (8,427) $ 17,730  $ (6,192) $ 11,538 
Supplemental information:
Depreciation $ 1,802  $ 4,021  $ —  $ 4,021 
Amortization $ 4,073  $ 6,768  $ —  $ 6,768 
Stock compensation $ 1,436  $ 2,359  $ —  $ 2,359 
Capital expenditures $ 57  $ 308  $ —  $ 308 
The following table summarizes the assets and liabilities of our Medical Transcription and EHR Implementation Businesses included within discontinued operations. (dollars in thousands):
September 30, 2020
Major classes of assets of discontinued operations:
Accounts receivable, net $ 24,993 
Prepaid expenses and other current assets 10,499 
Land, building and equipment, net 6,129 
Goodwill 13,217 
Intangible assets, net 46,214 
Right-of-use assets 5,437 
Other noncurrent assets 8,033 
Total assets $ 114,522 
Major classes of liabilities of discontinued operations:
Accounts payable $ 3,289 
Accrued expenses and other current liabilities 14,010 
Deferred revenue 17,452 
Operating lease liabilities 3,625 
Other noncurrent liabilities 12,150 
Total liabilities $ 50,526 
5. Business Acquisitions
As part of our business strategy, we have acquired, and may acquire in the future, certain businesses and technologies primarily to expand our products and service offerings.
Fiscal Year 2021 Acquisitions
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
For the six months ended March 31, 2021, we completed an acquisition in our Healthcare segment for a total cash consideration of $45.2 million. As a result, we recognized goodwill of $28.2 million and intangible assets of $19.8 million related to technology with a useful life of 5.0 years. The results of operations of the acquired entity have been included within our consolidated statement of operations from the acquisition date. The acquisition was not material to our condensed consolidated financial statements.
Acquisition-Related Costs, net
Acquisition-related costs include costs related to business and asset acquisitions. These costs consist of (i) transition and integration costs, including retention payments, transitional employee costs and earn-out payments, and other costs related to integration activities; (ii) professional service fees, including financial advisory, legal, accounting, and other outside services incurred in connection with acquisition activities, and disputes and regulatory matters related to acquired entities; and (iii) fair value adjustments to acquisition-related contingencies.
A summary of acquisition-related costs, net is as follows (dollars in thousands):
Three Months Ended March 31, Six Months Ended March 31,
2021 2020 2021 2020
Transition and integration costs $ 1,142  $ 1,366  $ 1,214  $ 2,821 
Professional service fees 527  312  780  79 
Acquisition-related adjustments —  —  —  (2)
Total $ 1,669  $ 1,678  $ 1,994  $ 2,898 
6. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill by reportable segment for the six months ended March 31, 2021 are as follows (dollars in thousands): 
Goodwill
Healthcare Enterprise Other Total
Balance as of September 30, 2020 $ 1,424,959  $ 682,600  $ 12,936  $ 2,120,495 
Acquisitions 28,210  —  —  28,210 
Effect of foreign currency translation 1,825  3,695  218  5,738 
Balance at March 31, 2021 $ 1,454,994  $ 686,295  $ 13,154  $ 2,154,443 
Other Intangible Assets
The changes in the carrying amount of intangible assets for the six months ended March 31, 2021 are as follows (dollars in thousands):
Intangible Assets
Balance at September 30, 2020 $ 167,270 
Acquisitions 19,840 
Amortization (30,476)
Effect of foreign currency translation 515 
Balance at March 31, 2021 $ 157,149 
7. Financial Instruments and Hedging Activities
Derivatives Not Designated as Hedges
Forward Currency Contracts
We have operations in a number of international locations where currency exchange rates can be volatile. We utilize foreign currency forward contracts to mitigate the risks associated with changes in foreign currency exchange rates so that our exposure to foreign currencies will be mitigated or offset by the gains or losses on the foreign currency forward contracts. Generally, we
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
enter into such contracts for less than 90 days and have no cash requirements until maturity. As of March 31, 2021 and September 30, 2020, we had outstanding contracts with a total notional value of $25.0 million and $40.7 million, respectively.
We did not designate any forward contracts as hedging instruments for the six months ended March 31, 2021 or 2020. Therefore, changes in fair value of foreign currency forward contracts were recognized within Other income (expense), net in our consolidated statements of operations. The cash flows related to the settlement of forward contracts not designated as hedging instruments are included in cash flows from investing activities within our consolidated statement of cash flows.
A summary of the derivative instruments is as follows (dollars in thousands):
Derivatives Not Designated as Hedges Balance Sheet Classification Fair Value
March 31,
2021
September 30,
2020
Foreign currency forward contracts Prepaid expenses and other current assets $ 73  $ 109 
Foreign currency forward contracts Accrued expenses and other current liabilities $ (7) $ (92)
A summary of other income (expense), net related to foreign currency forward contracts for the three and six months ended March 31, 2021 and 2020 is as follows (dollars in thousands):
Income Statement Classification Three Months Ended March 31, Six Months Ended March 31,
Derivatives Not Designated as Hedges Income (Loss) Recognized 2021 2020 2021 2020
Foreign currency forward contracts Other income (expense), net $ 1,096  $ (143) $ 548  $ 442 
8. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Valuation techniques must maximize the use of observable inputs and minimize the use of unobservable inputs. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
The determination of the applicable level within the hierarchy of a particular financial asset or liability depends on the lowest level of inputs that are significant to the fair value measurement as of the measurement date as follows:
Level 1: Quoted prices for identical assets or liabilities in active markets.
Level 2: Observable inputs other than those described as Level 1.
Level 3: Unobservable inputs that are supportable by little or no market activities and are based on significant assumptions and estimates.
Assets and liabilities measured at fair value on a recurring basis as of March 31, 2021 and September 30, 2020 consisted of the following (dollars in thousands):
  March 31, 2021
Level 1 Level 2 Level 3 Total
Assets:
Money market funds (a)
$ 223,067  $ —  $ —  $ 223,067 
Time deposits (b)
—  56,179  —  56,179 
Commercial paper, $56,966 at cost (b)
—  57,030  —  57,030 
Corporate notes and bonds, $9,224 at cost (b)
—  9,216  —  9,216 
Foreign currency exchange contracts (b)
—  73  —  73 
Total assets at fair value $ 223,067  $ 122,498  $ —  $ 345,565 
Liabilities:
Foreign currency exchange contracts (b)
$ —  (7) $ —  $ (7)
Contingent acquisition payments (c)
—  —  (1,743) (1,743)
Total liabilities at fair value $ —  $ (7) $ (1,743) $ (1,750)
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
September 30, 2020
Level 1 Level 2 Level 3 Total
Assets:
Money market funds (a)
$ 182,645  $ —  $ —  $ 182,645 
Time deposits (b)
—  95,180  —  95,180 
Commercial paper, $33,265 at cost (b)
—  33,290  —  33,290 
Corporate notes and bonds, $15,460 at cost (b)
—  15,480  —  15,480 
Foreign currency exchange contracts (b)
—  109  —  109 
Total assets at fair value $ 182,645  $ 144,059  $ —  $ 326,704 
Liabilities:
Foreign currency exchange contracts (b)
$ —  $ (92) $ —  $ (92)
Contingent acquisition payments (c)
—  —  (1,796) (1,796)
Total liabilities at fair value $ —  $ (92) $ (1,796) $ (1,888)
 
(a)Money market funds and time deposits with original maturity of 90 days or less are included within cash and cash equivalents in the consolidated balance sheets and are valued at quoted market prices in active markets.
(b)Time deposits, commercial paper, corporate notes and bonds, and foreign currency exchange contracts are recorded at fair market values, which are determined based on the most recent observable inputs for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable. Time deposits are generally for terms of one year or less. Commercial paper and corporate notes and bonds generally mature within three years and had a weighted average maturity of 0.44 years as of March 31, 2021 and 0.31 years as of September 30, 2020.
(c)    The fair values of our contingent consideration arrangements were determined using either the option pricing model with Monte Carlo simulation or the probability-weighted discounted cash flow method.
The estimated fair value of our total debt was approximately $2,857.6 million (face value $1,666.5 million) as of March 31, 2021 and $2,355.5 million (face value $1,666.5 million) as of September 30, 2020 based on Level 2 measurements. The fair value of each borrowing was estimated using the average of the bid and ask trading quotes at each respective reporting date. There was no balance outstanding under our revolving credit agreement as of March 31, 2021 or September 30, 2020.
Additionally, contingent acquisition payments are recorded at fair values upon the acquisition and are remeasured in subsequent reporting periods with the changes in fair values recorded within acquisition-related costs, net. Such payments are contingent upon the achievement of specified performance targets and are valued using the option pricing model with Monte Carlo simulation or the probability-weighted discounted cash flow model (Level 3 measurement).
The following table provides a summary of changes in the aggregate fair value of the contingent acquisition payments for all periods presented (dollars in thousands):
Three Months Ended March 31, Six Months Ended March 31,
2021 2020 2021 2020
Balance at beginning of period $ 1,847  $ 2,493  $ 1,796  $ 2,550 
Payments and foreign currency translation (104) —  (53) (57)
Balance at end of period $ 1,743  $ 2,493  $ 1,743  $ 2,493 
Contingent acquisition payments are to be made in periods through fiscal year 2021. As of March 31, 2021, the maximum amount payable based on the agreements was $3.0 million if the specified performance targets are achieved.
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
9. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (dollars in thousands): 
March 31,
2021
September 30,
2020
Compensation $ 88,503  $ 110,827 
Cost of revenue related liabilities 26,634  25,434 
Accrued interest payable 13,419  13,484 
Consulting and professional fees 8,712  10,589 
Sales and marketing incentives 1,585  2,021 
Sales and other taxes payable 6,929  6,339 
Operating lease obligations 26,857  26,284 
Other 10,191  4,276 
Total $ 182,830  $ 199,254 
10. Restructuring and Other Charges, net
Restructuring and other charges, net include restructuring expenses together with other charges that are unusual in nature, are the result of unplanned events, and arise outside of the ordinary course of our business.
The following table represents the roll forward of restructuring liabilities for the six months ended March 31, 2021 (dollars in thousands): 
Personnel Facilities Total
Balance at September 30, 2020 $ 1,243  $ 15,516  $ 16,759 
Restructuring charges, net 5,896  6,074  11,970 
Non-cash adjustment (839) (2,498) (3,337)
Cash payments (4,714) (2,289) (7,003)
Balance at March 31, 2021 $ 1,586  $ 16,803  $ 18,389 
The table below presents the Restructuring and other charges, net associated with each segment, but excluded from calculation of each segment's profit (dollars in thousands):
  Three Months Ended March 31,
2021 2020
Personnel Facilities Total Restructuring Other Charges Total Personnel Facilities Total Restructuring Other Charges Total
Healthcare $ 702  $ 114  $ 816  $ —  $ 816  $ 353  $ 248  $ 601  $ —  $ 601 
Enterprise 82  2,732  2,814  —  2,814  233  213  446  —  446 
Other —  139  139  —  139  —  54  54  —  54 
Corporate 323  18  341  (1,631) (1,290) 683  883  1,566  3,509  5,075 
Total $ 1,107  $ 3,003  $ 4,110  $ (1,631) $ 2,479  $ 1,269  $ 1,398  $ 2,667  $ 3,509  $ 6,176 
  Six Months Ended March 31,
2021 2020
Personnel Facilities Total Restructuring Other Charges Total Personnel Facilities Total Restructuring Other Charges Total
Healthcare $ 3,334  $ 681  $ 4,015  $ —  $ 4,015  $ 1,629  $ 1,775  $ 3,404  $ —  $ 3,404 
Enterprise 1,264  5,204  6,468  —  6,468  1,537  718  2,255  —  2,255 
Other —  168  168  —  168  —  (311) (311) —  (311)
Corporate 1,298  21  1,319  (925) 394  1,016  351  1,367  6,144  7,511 
Total $ 5,896  $ 6,074  $ 11,970  $ (925) $ 11,045  $ 4,182  $ 2,533  $ 6,715  $ 6,144  $ 12,859 
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Fiscal Year 2021
For the six months ended March 31, 2021, we recorded restructuring charges of $12.0 million, which included $5.9 million related to the termination of approximately 79 employees and $6.1 million of charges related to closing certain idle facilities. Of these amounts, $4.1 million was recorded for the three months ended March 31, 2021, which included $1.1 million related to the termination of approximately 22 employees and $3.0 million charge related to closing certain idle facilities. These actions were part of our strategic initiatives focused on investment rationalization, process optimization and cost reduction as we continue to evaluate the geographic footprint of our offices and facilities. We expect the remaining outstanding severance of $1.6 million to be substantially paid during fiscal year 2021, and the remaining $16.8 million lease payments to be made through fiscal year 2027, in accordance with the terms of the applicable leases.
Additionally, for the six months ended March 31, 2021, we recorded $0.9 million for professional service receipts related to other corporate initiatives, of which we recorded $1.6 million during the three months ended March 31, 2021.
Fiscal Year 2020
For the six months ended March 31, 2020, we recorded restructuring charges of $6.7 million, which included $4.2 million related to the termination of approximately 51 employees and $2.5 million related to certain restructuring facilities. Of these amounts, $2.7 million was recorded for the three months ended March 31, 2020, which included $1.3 million related to the termination of approximately 14 employees and $1.4 million related to certain restructuring facilities. These actions were part of our strategic initiatives focused on investment rationalization, process optimization and cost reduction.
Additionally, for the six months ended March 31, 2020, we recorded $4.2 million of costs related to the separation of our Automotive business and $2.0 million related to the impairment of a right-of-use asset of a restructuring facility, offset in part by a $0.1 million cash receipt from insurance claims related to a malware incident that occurred in the third quarter of fiscal year 2017 (the "2017 Malware Incident"). Of these amounts, we recorded $1.4 million costs related to the separation of our Automotive business, $2.0 million related to the impairment of a right-of-use asset of a restructuring facility, and a $0.1 million cash expense from insurance claims related to the 2017 Malware Incident for the three months ended March 31, 2020. The $2.0 million impairment charge for the three and six months ended March 31, 2020 was related to a restructuring facility as we re-assessed the timing and fees of the assumed sublease as a result of the COVID-19 pandemic.
11. Debt
As of March 31, 2021 and September 30, 2020, we had the following borrowing obligations (dollars in thousands): 
March 31,
2021
September 30,
2020
5.625% Senior Notes due 2026, net of deferred issuance costs of $3.5 million and $3.9 million, respectively. Effective interest rate 5.625%.
$ 496,456  $ 496,148 
1.000% Convertible Debentures due 2035, net of unamortized discount of $50.8 million and $64.8 million, respectively, and deferred issuance costs of $2.3 million and $2.9 million, respectively. Effective interest rate 5.622%.
623,405  608,767 
1.250% Convertible Debentures due 2025, net of unamortized discount of $40.7 million and $45.2 million, respectively, and deferred issuance costs of $1.7 million and $1.9 million, respectively. Effective interest rate 5.578%.
220,271  215,582 
1.500% Convertible Debentures due 2035, net of unamortized discount of $5.7 million and $10.4 million, respectively, and deferred issuance costs of $0.2 million and $0.3 million, respectively. Effective interest rate 5.394%.
221,507  216,627 
Deferred issuance costs related to our Revolving Credit Facility (2,157) (451)
Total debt 1,559,482  1,536,673 
    Less: current portion (a)
(1,065,183) (432,209)
Total long-term debt $ 494,299  $ 1,104,464 
(a) As of March 31, 2021, the holders have the right to convert all or any portion of the 1.25% 2025 Debentures, 1.5% 2035 Debentures, and 1.0% 2035 Debentures between April 1, 2021 and June 30, 2021. Additionally, the holders of the 1.5% 2035 Debentures will have the right to redeem the notes in November 2021. As a result, the net carrying amounts of the convertible debentures were included in current liabilities as of March 31, 2021.
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table summarizes the maturities of our borrowing obligations as of March 31, 2021 (dollars in thousands):
Fiscal Year
Convertible Debentures (a)
Senior Notes Total
2021 $ 1,166,516  $ —  $ 1,166,516 
2022 —  —  — 
2023 —  —  — 
2024 —  —  — 
2025 —  —  — 
Thereafter
—  500,000  500,000 
Total before unamortized discount 1,166,516  500,000  1,666,516 
Less: unamortized discount and issuance costs (101,333) (5,701) (107,034)
Total debt $ 1,065,183  $ 494,299  $ 1,559,482 
(a) As more fully described below, as of March 31, 2021, the holders have the right to convert all or any portion of the 1.25% 2025 Debentures, 1.5% 2035 Debentures, and 1.0% 2035 Debentures between April 1, 2021 and June 30, 2021. Additionally, the holders of the 1.5% 2035 Debentures will have the right to redeem the notes in November 2021. As a result, these convertible debentures were treated as if they were due in fiscal year 2021.
5.625% Senior Notes due 2026
In December 2016, we issued $500.0 million aggregate principal amount of 5.625% Senior Notes due on December 15, 2026 (the "2026 Senior Notes") in a private placement. The proceeds from the 2026 Senior Notes were approximately $495.0 million, net of issuance costs, and we used the proceeds to repurchase a portion of our then outstanding 5.375% Senior Notes due 2020. The 2026 Senior Notes bear interest at 5.625% per year, payable in cash semi-annually in arrears.
The 2026 Senior Notes are unsecured senior obligations and are guaranteed on an unsecured senior basis by certain of our domestic subsidiaries ("Subsidiary Guarantors"). The 2026 Senior Notes and the guarantees rank equally in right of payment with all of our and the Subsidiary Guarantors’ existing and future unsecured senior debt and rank senior in right of payment to all of our and the Subsidiary Guarantors’ future unsecured subordinated debt. The 2026 Senior Notes and guarantees effectively rank junior to all our secured debt and that of the Subsidiary Guarantors to the extent of the value of the collateral securing such debt and to all liabilities, including trade payables, of our subsidiaries that have not guaranteed the 2026 Senior Notes.
At any time before December 15, 2021, we may redeem all or a portion of the 2026 Senior Notes at a redemption price equal to 100% of the aggregate principal amount of the 2026 Senior Notes to be redeemed, plus a "make-whole" premium and accrued and unpaid interest to, but excluding, the redemption date. At any time on or after December 15, 2021, we may redeem all or a portion of the 2026 Senior Notes at certain redemption prices expressed as percentages of the principal amount, plus accrued and unpaid interest to, but excluding, the redemption date. At any time and from time to time before December 15, 2021, we may redeem up to 35% of the aggregate outstanding principal amount of the 2026 Senior Notes with the net cash proceeds received by us from certain equity offerings at a price equal to 105.625% of the aggregate principal amount, plus accrued and unpaid interest to, but excluding, the redemption date, provided that the redemption occurs no later than 120 days after the closing of the related equity offering, and at least 50% of the original aggregate principal amount of the 2026 Senior Notes remains outstanding immediately thereafter.
Upon the occurrence of a change in control or sale of substantially all assets, we must offer to repurchase the 2026 Senior Notes at a price equal to 100% in the case of an asset sale, or 101% in the case of a change of control, of the principal amount plus accrued and unpaid interest to, but excluding, the repurchase date.
1.0% Convertible Debentures due 2035
In December 2015, we issued $676.5 million in aggregate principal amount of 1.0% Senior Convertible Debentures due in 2035 (the "1.0% 2035 Debentures") in a private placement. Total proceeds were $663.8 million, net of issuance costs, and we used a portion to repurchase $38.3 million in aggregate principal on our 2.75% Senior Convertible Debentures due in 2031 (the “2.75% 2031 Debentures”) and to repay the aggregate principal balance of $472.5 million on our term loan under the amended and restated credit agreement. The 1.0% 2035 Debentures bear interest at 1.0% per year, payable in cash semi-annually in arrears. In addition to ordinary interest and default additional interest, beginning with the semi-annual interest period commencing on December 15, 2022, contingent interest will accrue during any regular semi-annual interest period where the average trading price of our 1.0% 2035 Debentures for the ten trading day period immediately preceding the first day of such
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semi-annual period is greater than or equal to $1,200 per $1,000 principal amount of our 1.0% 2035 Debentures, in which case, contingent interest will accrue at a rate of 0.50% per annum of such average trading price. The 1.0% 2035 Debentures mature on December 15, 2035, subject to the right of the holders to require us to redeem the 1.0% 2035 Debentures on December 15, 2022, 2027, or 2032. The 1.0% 2035 Debentures are general senior unsecured obligations and rank equally in right of payment with all of our existing and future unsecured, unsubordinated indebtedness and senior in right of payment to any indebtedness that is contractually subordinated to the 1.0% 2035 Debentures. The 1.0% 2035 Debentures will be effectively subordinated to indebtedness and other liabilities of our subsidiaries.
We account separately for the liability and equity components of the 1.0% 2035 Debentures in accordance with authoritative guidance for convertible debt instruments that may be settled in cash upon conversion. The guidance requires the carrying amount of the liability component to be estimated by measuring the fair value of a similar liability that does not have an associated conversion feature and record the remainder in stockholders’ equity. At issuance, we allocated $495.4 million to long-term debt, and $181.1 million has been recorded as additional paid-in capital, which is being amortized to interest expense using the effective interest rate method through December 2022.
If converted, the principal amount of the 1.0% 2035 Debentures is payable in cash and any amounts payable in excess of the principal amount will be paid in cash or shares of our common stock, at our election. The conversion of the 1.0% 2035 Debentures will be based upon a conversion ratio of 41.4576 common shares per $1,000 principal amount, subject to adjustments. Conversion is only allowed in the following circumstances and to the following extent: (i) prior to June 15, 2035, on any date during any fiscal quarter (and only during such fiscal quarter) if the closing sale price of our common stock was more than 130% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last trading day of the previous fiscal quarter; (ii) during the five consecutive business-day period following any five consecutive trading-day period in which the trading price for $1,000 principal amount of the 1.0% 2035 Debentures for each day during such five trading-day period was less than 98% of the closing sale price of our common stock multiplied by the then current conversion rate; (iii) upon the occurrence of specified corporate transactions, as described in the indenture for the 1.0% 2035 Debentures; or (iv) at the option of the holder at any time on or after June 15, 2035. Additionally, we may redeem the 1.0% 2035 Debentures, in whole or in part, on or after December 20, 2022 for cash at a price equal to 100% of the principal amount of the 1.0% 2035 Debentures to be purchased plus any accrued and unpaid interest, including any additional interest to, but excluding, the repurchase date. Each holder shall have the right, at such holder’s option, to require us to repurchase all or any portion of the 1.0% 2035 Debentures held by such holder on December 15, 2022, December 15, 2027, or December 15, 2032 at par plus accrued and unpaid interest. If we undergo a fundamental change or non-stock change of control (as described in the indenture for the 1.0% 2035 Debentures) prior to maturity, holders will have the option to require us to repurchase all or any portion of their debentures for cash at a price equal to 100% of the principal amount of the 1.0% 2035 Debentures to be purchased plus any accrued and unpaid interest.
The 1.0% 2035 Debentures were convertible as of March 31, 2021, as our common stock price exceeded the conversion threshold price of 130% of the applicable conversion price per share for at least 20 trading days during the 30 consecutive trading days ending March 31, 2021. As a result, the holders of our 1.0% 2035 Debentures have the right to convert all or any portion of their debentures between April 1, 2021 and June 30, 2021. The holders previously had the right to convert all or any portion of their debentures at the aforementioned conversion ratio beginning January 1, 2021 through March 31, 2021. As of March 31, 2021, the net carrying amount of the 1.0% 2035 Debentures was included within the current portion of long-term debt, and $53.1 million has been reclassified from permanent equity to mezzanine equity. As of March 31, 2021, the if-converted value of the 1.0% 2035 Debentures exceeded its principal amount by $547.4 million.
1.25% Convertible Debentures due 2025
In March 2017, we issued $350.0 million in aggregate principal amount of 1.25% Senior Convertible Debentures due in 2025 (the "1.25% 2025 Debentures") in a private placement. The proceeds were approximately $343.6 million, net of issuance costs. We used a portion of the proceeds to repurchase 5.8 million shares of our common stock for $99.1 million and $17.8 million in aggregate principal on our 2.75% 2031 Debentures. The 1.25% 2025 Debentures bear interest at 1.25% per year, payable in cash semi-annually in arrears, beginning on October 1, 2017. The 1.25% 2025 Debentures mature on April 1, 2025. The 1.25% 2025 Debentures are general senior unsecured obligations and rank equally in right of payment with all of our existing and future unsecured, unsubordinated indebtedness and senior in right of payment to any indebtedness that is contractually subordinated to the 1.25% 2025 Debentures. The 1.25% 2025 Debentures will be effectively subordinated to indebtedness and other liabilities of our subsidiaries.
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
We account separately for the liability and equity components of the 1.25% 2025 Debentures in accordance with authoritative guidance for convertible debt instruments that may be settled in cash upon conversion. The guidance requires the carrying amount of the liability component to be estimated by measuring the fair value of a similar liability that does not have an associated conversion feature and record the remainder in stockholders’ equity. At issuance, we allocated $252.1 million to long-term debt, and $97.9 million has been recorded as additional paid-in capital, which is being amortized to interest expense using the effective interest rate method through April 1, 2025.
If converted, the principal amount of the 1.25% 2025 Debentures is payable in cash and any amounts payable in excess of the principal amount will be paid in cash or shares of our common stock, at our election. The conversion of the 1.25% 2025 Debentures will be based upon a conversion ratio of 50.7957 common shares per $1,000 principal amount, subject to adjustments. Conversion is only allowed in the following circumstances and to the following extent: (i) prior to October 1, 2024, on any date during any fiscal quarter (and only during such fiscal quarter) if the closing sale price of our common stock was more than 130% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last trading day of the previous fiscal quarter; (ii) at any time on or after October 1, 2024; (iii) during the five consecutive business-day period immediately following any five consecutive trading-day period in which the trading price for $1,000 principal amount of the 1.25% 2025 Debentures for each day during such five trading-day period was less than 98% of the closing sale price of our common stock multiplied by the then current conversion rate; or (iv) upon the occurrence of specified corporate transactions, as described in the indenture for the 1.25% 2025 Debentures. We may not redeem the 1.25% 2025 Debentures prior to the maturity date. If we undergo a fundamental change or non-stock change of control (as described in the indenture for the 1.25% 2025 Debentures) prior to maturity, holders will have the option to require us to repurchase all or any portion of their debentures for cash at a price equal to 100% of the principal amount of the 1.25% 2025 Debentures to be purchased plus any accrued and unpaid interest.
During the second quarter of fiscal year 2020, we repurchased $87.3 million notional amount of our 1.25% 2025 Debentures for $112.3 million, of which we allocated $72.8 million to debt and $39.5 million to equity based upon ASC 470-20. Also, in connection with the repurchases, we wrote off $16.7 million of unamortized discount and $0.7 million of unamortized costs. As a result, we recorded a $2.8 million loss associated with the repurchases. Following the repurchases, $262.7 million in aggregate principal amount of the 1.25% 2025 Debentures remains outstanding.
The 1.25% 2025 Debentures were convertible as of March 31, 2021, as our common stock price exceeded the conversion threshold price of 130% of the applicable conversion price per share for at least 20 trading days during the 30 consecutive trading days ending March 31, 2021. As a result, the holders of our 1.25% 2025 Debentures have the right to convert all or any portion of their debentures between April 1, 2021 and June 30, 2021. The holders previously had the right to convert all or any portion of their debentures at the aforementioned conversion ratio beginning October 1, 2020 through March 31, 2021. As of March 31, 2021, the net carrying amount of the 1.25% 2025 Debentures was included within the current portion of long-term debt, and $42.4 million has been reclassified from permanent equity to mezzanine equity. As of March 31, 2021, the if-converted value of the 1.25% 2025 Debentures exceeded its principal amount by $319.6 million.
1.50% Convertible Debentures due 2035
In June 2015, we issued $263.9 million in aggregate principal amount of 1.5% Senior Convertible Debentures due in 2035 in exchange for $256.2 million in aggregate principal amount of our 2.75% 2031 Debentures. Total proceeds, net of issuance costs, were $253.2 million. The 1.5% 2035 Debentures were issued at 97.09% of the principal amount, which resulted in a discount of $7.7 million. The 1.5% 2035 Debentures bear interest at 1.5% per year, payable in cash semi-annually in arrears. In addition to ordinary interest and default additional interest, beginning with the semi-annual interest period commencing on November 1, 2021, contingent interest will accrue during any regular semi-annual interest period where the average trading price of our 1.5% 2035 Debentures for the ten trading day period immediately preceding the first day of such semi-annual period is greater than or equal to $1,200 per $1,000 principal amount of our 1.5% 2035 Debentures, in which case, contingent interest will accrue at a rate of 0.50% per annum of such average trading price. The 1.5% 2035 Debentures mature on November 1, 2035, subject to the right of the holders to require us to redeem the 1.5% 2035 Debentures on November 1, 2021, 2026, or 2031. The 1.5% 2035 Debentures are general senior unsecured obligations and rank equally in right of payment with all of our existing and future unsecured, unsubordinated indebtedness and senior in right of payment to any indebtedness that is contractually subordinated to the 1.5% 2035 Debentures. The 1.5% 2035 Debentures will be effectively subordinated to indebtedness and other liabilities of our subsidiaries.
We account separately for the liability and equity components of the 1.5% 2035 Debentures in accordance with authoritative guidance for convertible debt instruments that may be settled in cash upon conversion. At issuance, we allocated $208.6 million
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
to long-term debt, and $55.3 million has been recorded as additional paid-in capital, which is being amortized to interest expense using the effective interest rate method through November 2021.
If converted, the principal amount of the 1.5% 2035 Debentures is payable in cash and any amounts payable in excess of the principal amount, will be paid in cash or shares of our common stock, at our election. The conversion of the 1.5% 2035 Debentures will be based upon a conversion ratio of 48.5216 common shares per $1,000 principal amount, subject to adjustments. Conversion is only allowed in the following circumstances and to the following extent: (i) prior to May 1, 2035, on any date during any fiscal quarter beginning after September 30, 2015 (and only during such fiscal quarter) if the closing sale price of our common stock was more than 130% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last trading day of the previous fiscal quarter; (ii) during the five consecutive business-day period following any five consecutive trading-day period in which the trading price for $1,000 principal amount of the 1.5% 2035 Debentures for each day during such five trading-day period was less than 98% of the closing sale price of our common stock multiplied by the then current conversion rate; (iii) upon the occurrence of specified corporate transactions, as described in the indenture for the 1.5% 2035 Debentures; or (iv) at the option of the holder at any time on or after May 1, 2035. Additionally, we may redeem the 1.5% 2035 Debentures, in whole or in part, on or after November 5, 2021 for cash at a price equal to 100% of the principal amount of the 1.5% 2035 Debentures to be purchased plus any accrued and unpaid interest, including any additional interest to, but excluding, the repurchase date. Each holder shall have the right, at such holder’s option, to require us to repurchase all or any portion of the 1.5% 2035 Debentures held by such holder on November 1, 2021, November 1, 2026, or November 1, 2031 at par plus accrued and unpaid interest. If we undergo a fundamental change (as described in the indenture for the 1.5% 2035 Debentures) prior to maturity, holders will have the option to require us to repurchase all or any portion of their debentures for cash at a price equal to 100% of the principal amount of the 1.5% 2035 Debentures to be purchased plus any accrued and unpaid interest.
During the second quarter of fiscal year 2020, we repurchased $36.5 million notional amount of 1.5% 2035 Debentures for $41.3 million, of which we allocated $34.7 million to debt and $6.6 million to equity based upon ASC 470-20. Also, in connection with the repurchases, we wrote off $2.5 million of unamortized discount and $0.1 million of unamortized costs. As a result, we recorded a $0.8 million loss associated with the repurchases. Following the repurchases, $227.4 million in aggregate principal amount of the 1.5% 2035 Debentures remains outstanding.
The 1.5% 2035 Debentures were convertible as of March 31, 2021, as our common stock price exceeded the conversion threshold price of 130% of the applicable conversion price per share for at least 20 trading days during the 30 consecutive trading days ending March 31, 2021. As a result, the holders of our 1.5% 2035 Debentures have the right to convert all or any portion of their debentures between April 1, 2021 and June 30, 2021. The holders previously had the right to convert all or any portion of their debentures at the aforementioned conversion ratio beginning October 1, 2020 through March 31, 2021. As of March 31, 2021, the net carrying amount of the 1.5% 2035 Debentures was included within the current portion of long-term debt, and $5.9 million has been reclassified from permanent equity to mezzanine equity. As of March 31, 2021, the if-converted value of the 1.5% 2035 Debentures exceeded its principal amount by $254.1 million. Subsequent to the balance sheet date, holders of our 1.5% 2035 Debentures submitted conversion notices with a total value of approximately $118.3 million.
Revolving Credit Facility
On July 31, 2020, we amended our revolving credit agreement (the "Amended Revolving Credit Agreement") to, among other things, extend the expiration from April 15, 2021 to April 15, 2022. The Amended Revolving Credit Agreement provided for aggregate borrowing commitments of $242.5 million (the "Revolving Credit Facility"), including the revolving facility loans, the swingline loans and issuance of letters of credit. The borrowing outstanding under the Revolving Credit Facility bore interest at either (i) LIBOR plus an applicable margin of 1.50% or 1.75%, or (ii) the alternative base rate plus an applicable margin of 0.50% or 0.75%. The Revolving Credit Facility was secured by substantially all our assets. The Revolving Credit Agreement contained customary affirmative and negative covenants and conditions to borrowing, as well as customary events of default. At any time that there were any outstanding borrowings (excluding up to $25,000,000 of issued and undrawn Letters of Credit) under the Revolving Credit Facility, we were required to maintain a Consolidated Senior Secured Leverage Ratio (as defined in the Revolving Credit Agreement) not exceeding 4.00 to 1.00.
On February 4, 2021, we entered into a new revolving credit agreement (the "New Revolving Credit Agreement"), which replaced the existing Amended Revolving Credit Agreement. The New Revolving Credit Agreement expires February 4, 2026, and has an aggregate borrowing commitment of $300.0 million, including revolving loans and letters of credit (the "New Revolving Credit Facility"). The New Revolving Credit Facility bears interest at either (i) LIBOR plus an applicable margin of 1.50% or 1.75%, or (ii) the alternative base rate plus an applicable margin of 0.50% or 0.75%. The New Revolving Credit
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Facility is secured by substantially all our assets and substantially all assets of certain of our domestic subsidiaries that guarantee our obligations under the New Revolving Credit Agreement. The New Revolving Credit Agreement contains customary affirmative and negative covenants and conditions to borrowing, as well as customary events of default. Among other things, we are required to maintain a Consolidated Senior Secured Leverage Ratio (as defined in the New Revolving Credit Agreement) not exceeding 4.00 to 1.00. We were in compliance with all the debt covenants as of March 31, 2021.
As of March 31, 2021, after taking into account the outstanding letters of credit of $2.2 million, we had $297.8 million available for borrowing under the New Revolving Credit Facility.
12. Stockholders' Equity
Share Repurchases
On April 29, 2013, our Board of Directors approved a share repurchase program for up to $500.0 million, which was increased by $500.0 million on April 29, 2015. On August 1, 2018, our Board of Directors approved an additional $500.0 million under our share repurchase program. Under the terms of the share repurchase program, we have the ability to repurchase shares from time to time through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated stock repurchase transactions, or any combination of such methods. The share repurchase program does not require us to acquire any specific number of shares and may be modified, suspended, extended or terminated by us at any time without prior notice. The timing and the amount of any purchases are subject to our assessment of the prevailing market conditions, general economic conditions, capital allocation alternatives, and other factors.
We did not repurchase any shares of our common stock for the three and six months ended March 31, 2021. We repurchased 3.8 million shares of our common stock for $76.8 million for the three months ended March 31, 2020 and 9.5 million shares of our common stock for $169.2 million for the six months ended March 31, 2020. The amount paid in excess of par value is recognized in additional paid in capital and these shares were retired upon repurchase. Since the commencement of the program, we have repurchased 73.8 million shares for $1,238.8 million. As of March 31, 2021, approximately $261.2 million remained available for future repurchases under the program.
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
13. Net Income (Loss) Per Share
The following table sets forth the computation for basic and diluted net income (loss) per share (in thousands, except per share amounts): 
  Three Months Ended March 31, Six Months Ended March 31,
2021 2020 2021 2020
Numerator:
Net income (loss) from continuing operations $ 12,734  $ (26,483) $ 19,688  $ 17,141 
Net (loss) income from discontinued operations (16,368) 6,477  (8,427) 11,538 
Net (loss) income $ (3,634) $ (20,006) $ 11,261  $ 28,679 
Denominator:
Weighted average common shares outstanding — basic 285,284  282,576  284,545  283,366 
Dilutive effect of convertible instruments 27,041  —  24,339  — 
Dilutive effect of employee stock compensation plans(a)
7,787  —  8,276  4,848 
Weighted average common shares outstanding — diluted 320,112  282,576  317,160  288,214 
Net income (loss) per common share - basic:    
Continuing operations $ 0.04  $ (0.09) $ 0.07  $ 0.06 
Discontinued operations (0.05) 0.02  (0.03) 0.04 
Total net (loss) income per basic common share $ (0.01) $ (0.07) $ 0.04  $ 0.10 
Net income (loss) per common share - diluted:
Continuing operations $ 0.04  $ (0.09) $ 0.06  $ 0.06 
Discontinued operations (0.05) 0.02  (0.03) 0.04 
Total net (loss) income per diluted common share $ (0.01) $ (0.07) $ 0.03  $ 0.10 
Anti-dilutive equity instruments excluded from the calculation
38  73  19  39 
Contingently issuable awards excluded from the calculation
—  2,113  —  1,706 
(a)Certain performance-based awards were excluded from the determination of dilutive net income (loss) per share as the conditions were not met at the end of the reporting period.
14. Stock-Based Compensation
On January 22, 2020, our shareholders adopted our 2020 Stock Plan (the "2020 Stock Plan"). The 2020 Stock Plan (i) grants the Company's compensation committee the discretionary authority over the plan; (ii) makes employees, directors, consultants, and advisors of the Company and its subsidiaries eligible to receive awards; (iii) sets the number of shares of common stock that may be issued in satisfaction of awards to be 9,000,000 shares, plus the number of shares available for issuance under the amended and restated 2000 Stock Plan (the "Amended and Restated 2000 Stock Plan"); and (iv) identifies the annual limits on shares granted to each individual and the types of awards permissible.
As of March 31, 2021, we had 11.4 million shares available for future grants under the 2020 Stock Plan and the Amended and Restated 2000 Stock Plan. We recognize stock-based compensation expenses over the requisite service periods. Our share-based awards are classified within equity upon issuance.
The amounts included in the consolidated statements of operations related to stock-based compensation are as follows (dollars in thousands): 
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
  Three Months Ended March 31, Six Months Ended March 31,
2021 2020 2021 2020