UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ~~September 30, 2014~~March 31, 2015
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________________ to ________________________

Commission file number: 1-7945

DELUXE CORPORATION

(Exact name of registrant as specified in its charter)



Minnesota (State or other jurisdiction of incorporation or organization)	41-0216800 (I.R.S. Employer Identification No.)
3680 Victoria St. N., Shoreview, Minnesota (Address of principal executive offices)	55126-2966 (Zip Code)

(651) 483-7111

(Registrant’s telephone number, including area code)

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. þYes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).

þYes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



	Large accelerated filer þ	Accelerated filer o
	Non-accelerated filer o	Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes þ No

The number of shares outstanding of registrant’s common stock, par value $1.00 per share, at ~~October~~April 20, ~~2014~~2015 was ~~49,671,746.~~49,930,204.

PART I − FINANCIAL INFORMATION

Item 1. Financial Statements.

DELUXE CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share par value)

(Unaudited)


	September 30, 2014			December 31, 2013			March 31, 2015			December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	188,001		$	121,089		$	58,319		$	61,541
Trade accounts receivable (net of allowances for uncollectible accounts of $3,464 and $3,861, respectively)	91,368			88,049
Trade accounts receivable (net of allowances for uncollectible accounts of $4,508 and $4,335, respectively)							94,361			113,656
Inventories and supplies	36,099			28,966			38,100			39,411
Deferred income taxes	5,695			6,946			10,295			10,159
Funds held for customers	39,546			42,425			50,038			43,604
Other current assets	34,287			31,838			43,831			50,519
Total current assets	394,996			319,313			294,944			318,890
Deferred income taxes	1,510			1,851			1,291			1,411
Long-term investments (including $2,332 and $2,407 of investments at fair value, respectively)	46,025			44,451
Property, plant and equipment (net of accumulated depreciation of $367,021 and $360,926, respectively)	94,448			101,343
Long-term investments (including $2,144 and $2,384 of investments at fair value, respectively)							46,137			46,451
Property, plant and equipment (net of accumulated depreciation of $346,279 and $348,530, respectively)							85,258			87,623
Assets held for sale	26,798			25,451			26,916			26,819
Intangibles (net of accumulated amortization of $380,883 and $346,086, respectively)	147,169			153,576
Intangibles (net of accumulated amortization of $397,142 and $388,308, respectively)							210,255			207,180
Goodwill	822,920			822,777			879,258			868,376
Other non-current assets	137,598			100,767			121,581			131,641
Total assets	$	1,671,464		$	1,569,529		$	1,665,640		$	1,688,391

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	74,280		$	71,492		$	75,227		$	87,216
Accrued liabilities	177,115			162,990			220,889			219,121
Short-term borrowings							318,000			160,000
Long-term debt due within one year	254,291			255,589			1,013			911
Total current liabilities	505,686			490,071			615,129			467,248
Long-term debt	390,321			385,115			196,434			393,401
Deferred income taxes	83,941			82,814			94,836			95,838
Other non-current liabilities	87,348			61,072			79,495			84,407
Commitments and contingencies (Notes 11 and 12)
Commitments and contingencies (Notes 12 and 13)
Shareholders’ equity:
Common shares $1 par value (authorized: 500,000 shares; outstanding: 2014 – 49,670; 2013 – 50,344)	49,670			50,344
Common shares $1 par value (authorized: 500,000 shares; outstanding: 2015 – 49,929; 2014 – 49,742)							49,929			49,742
Additional paid-in capital	2,849			22,596			11,648			4,758
Retained earnings	586,739			510,941			660,264			629,335
Accumulated other comprehensive loss	(35,090		)	(33,424		)	(42,095		)	(36,338		)
Total shareholders’ equity	604,168			550,457			679,746			647,497
Total liabilities and shareholders’ equity	$	1,671,464		$	1,569,529		$	1,665,640		$	1,688,391

See Condensed Notes to Unaudited Consolidated Financial Statements

DELUXE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share amounts)

(Unaudited)


	Quarter Ended September 30,						Nine Months Ended September 30,						Quarter Ended March 31,
	2014			2013			2014			2013			2015			2014
Product revenue	$	350,607		$	342,187		$	1,040,734		$	1,014,853		$	355,013		$	345,664
Service revenue	62,597			55,893			184,835			152,214			78,604			61,291
Total revenue	413,204			398,080			1,225,569			1,167,067			433,617			406,955
Cost of products	(125,917		)	(116,721		)	(363,852		)	(340,442		)	(123,739		)	(118,386		)
Cost of services	(24,233		)	(25,502		)	(77,117		)	(68,625		)	(28,942		)	(26,542		)
Total cost of revenue	(150,150		)	(142,223		)	(440,969		)	(409,067		)	(152,681		)	(144,928		)
Gross profit	263,054			255,857			784,600			758,000			280,936			262,027
Selling, general and administrative expense	(175,661		)	(173,359		)	(527,138		)	(513,013		)	(195,378		)	(177,931		)
Net restructuring charges	(4,193		)	(2,780		)	(8,507		)	(5,075		)	(267		)	(3,300		)
Asset impairment charge	(6,468		)	—			(6,468		)	—
Operating income	76,732			79,718			242,487			239,912			85,291			80,796
Loss on early debt extinguishment													(8,917		)	—
Interest expense	(9,580		)	(9,662		)	(28,677		)	(28,704		)	(6,515		)	(9,567		)
Other income	321			557			820			1,048			430			131
Income before income taxes	67,473			70,613			214,630			212,256			70,289			71,360
Income tax provision	(23,042		)	(23,710		)	(72,800		)	(71,326		)	(24,349		)	(24,036		)
Net income	$	44,431		$	46,903		$	141,830		$	140,930		$	45,940		$	47,324

Comprehensive income	$	41,585		$	48,907		$	140,164		$	140,945		$	40,183		$	45,455

Basic earnings per share	$	0.89		$	0.93		$	2.83		$	2.77		0.92			0.94
Diluted earnings per share	0.88			0.92			2.80			2.75			0.91			0.93
Cash dividends per share	0.30			0.25			0.85			0.75			0.30			0.25

See Condensed Notes to Unaudited Consolidated Financial Statements

DELUXE CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(in thousands)

(Unaudited)


	Common shares		Common shares par value			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total			Common shares		Common shares par value			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total
Balance, December 31, 2013	50,344		$	50,344		$	22,596		$	510,941		$	(33,424	)	$	550,457
Balance, December 31, 2014																		49,742		$	49,742		$	4,758		$	629,335		$	(36,338	)	$	647,497
Net income	—		—			—			141,830			—			141,830			—		—			—			45,940			—			45,940
Cash dividends	—		—			—			(42,631		)	—			(42,631		)	—		—			—			(15,011		)	—			(15,011		)
Common shares issued	525		525			10,580			—			—			11,105			204		204			4,032			—			—			4,236
Tax impact of share-based awards	—		—			2,225			—			—			2,225			—		—			1,096			—			—			1,096
Common shares repurchased	(1,133	)	(1,133		)	(35,585		)	(23,401		)	—			(60,119		)
Other common shares retired	(66	)	(66		)	(3,304		)	—			—			(3,370		)
Common shares retired																		(17	)	(17		)	(1,093		)	—			—			(1,110		)
Fair value of share-based compensation	—		—			6,337			—			—			6,337			—		—			2,855			—			—			2,855
Other comprehensive income	—		—			—			—			(1,666		)	(1,666		)
Balance, September 30, 2014	49,670		$	49,670		$	2,849		$	586,739		$	(35,090	)	$	604,168
Other comprehensive loss																		—		—			—			—			(5,757		)	(5,757		)
Balance, March 31, 2015																		49,929		$	49,929		$	11,648		$	660,264		$	(42,095	)	$	679,746

See Condensed Notes to Unaudited Consolidated Financial Statements

DELUXE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


		Nine Months Ended September 30,							Quarter Ended March 31,
		2014			2013				2015			2014
Cash flows from operating activities:	Cash flows from operating activities:							Cash flows from operating activities:
Net income	Net income	$	141,830		$	140,930		Net income	$	45,940		$	47,324
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	Depreciation	12,700			13,443			Depreciation	3,933			4,241
Amortization of intangibles	Amortization of intangibles	35,845			34,878			Amortization of intangibles	13,750			12,024
Asset impairment charge		6,468			—
Amortization of contract acquisition costs	Amortization of contract acquisition costs	13,180			12,633			Amortization of contract acquisition costs	4,831			4,261
Deferred income taxes	Deferred income taxes	116			1,563			Deferred income taxes	(1,215		)	(594		)
Employee share-based compensation expense	Employee share-based compensation expense	6,997			5,554			Employee share-based compensation expense	3,155			1,908
Loss on early debt extinguishment								Loss on early debt extinguishment	8,917			—
Other non-cash items, net	Other non-cash items, net	7,708			7,979			Other non-cash items, net	808			2,336
Changes in assets and liabilities, net of effect of acquisitions:	Changes in assets and liabilities, net of effect of acquisitions:							Changes in assets and liabilities, net of effect of acquisitions:
Trade accounts receivable	Trade accounts receivable	(5,547		)	(7,492		)	Trade accounts receivable	16,395			8,926
Inventories and supplies	Inventories and supplies	(2,016		)	(1,541		)	Inventories and supplies	1,409			(585		)
Other current assets	Other current assets	(4,730		)	(527		)	Other current assets	5,082			(1,703		)
Non-current assets	Non-current assets	(1,860		)	(5,731		)	Non-current assets	1,215			(860		)
Accounts payable	Accounts payable	1,598			(2,043		)	Accounts payable	(10,851		)	(2,169		)
Contract acquisition payments	Contract acquisition payments	(9,831		)	(10,551		)	Contract acquisition payments	(2,947		)	(1,355		)
Other accrued and non-current liabilities	Other accrued and non-current liabilities	901			(5,122		)	Other accrued and non-current liabilities	(12,719		)	(415		)
Net cash provided by operating activities	Net cash provided by operating activities	203,359			183,973			Net cash provided by operating activities	77,703			73,339
Cash flows from investing activities:	Cash flows from investing activities:							Cash flows from investing activities:
Purchases of capital assets	Purchases of capital assets	(29,649		)	(26,786		)	Purchases of capital assets	(9,512		)	(10,950		)
Payments for acquisitions, net of cash acquired	Payments for acquisitions, net of cash acquired	(12,144		)	(48,114		)	Payments for acquisitions, net of cash acquired	(7,584		)	(2,866		)
Proceeds from company-owned life insurance policies		897			4,599
Other	Other	462			1,472			Other	463			806
Net cash used by investing activities	Net cash used by investing activities	(40,434		)	(68,829		)	Net cash used by investing activities	(16,633		)	(13,010		)
Cash flows from financing activities:	Cash flows from financing activities:							Cash flows from financing activities:
Net payments on short-term debt		(125		)	—
Payments on long-term debt		(820		)	(1,456		)
Net proceeds (payments) from short-term borrowings								Net proceeds (payments) from short-term borrowings	158,000			(125		)
Payments on long-term debt, including costs of debt reacquisition								Payments on long-term debt, including costs of debt reacquisition	(207,242		)	(203		)
Payments for debt issue costs	Payments for debt issue costs	(1,085		)	(236		)	Payments for debt issue costs	(97		)	(939		)
Change in book overdrafts		—			(270		)
Proceeds from issuing shares under employee plans	Proceeds from issuing shares under employee plans	8,814			12,881			Proceeds from issuing shares under employee plans	3,389			5,376
Excess tax benefit from share-based employee awards	Excess tax benefit from share-based employee awards	2,581			1,582			Excess tax benefit from share-based employee awards	1,260			1,401
Payments for common shares repurchased	Payments for common shares repurchased	(60,119		)	(33,798		)	Payments for common shares repurchased	—			(31,930		)
Cash dividends paid to shareholders	Cash dividends paid to shareholders	(42,631		)	(38,027		)	Cash dividends paid to shareholders	(15,011		)	(12,644		)
Other								Other	(150		)	—
Net cash used by financing activities	Net cash used by financing activities	(93,385		)	(59,324		)	Net cash used by financing activities	(59,851		)	(39,064		)

Effect of exchange rate change on cash	Effect of exchange rate change on cash	(2,628		)	(1,215		)	Effect of exchange rate change on cash	(4,441		)	(1,739		)

Net change in cash and cash equivalents	Net change in cash and cash equivalents	66,912			54,605			Net change in cash and cash equivalents	(3,222		)	19,526
Cash and cash equivalents, beginning of year	Cash and cash equivalents, beginning of year	121,089			45,435			Cash and cash equivalents, beginning of year	61,541			121,089
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	188,001		$	100,040		Cash and cash equivalents, end of period	$	58,319		$	140,615

See Condensed Notes to Unaudited Consolidated Financial Statements

DELUXE CORPORATION

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in thousands, except per share amounts)

Note 1: Consolidated financial statements

The consolidated balance sheet as of ~~September 30, 2014~~March 31, 2015, the consolidated statements of comprehensive income for the quarters ~~and nine months~~ ended ~~September 30, 2014~~March 31, 2015 and ~~2013~~2014, the consolidated statement of shareholders’ equity for the ~~nine months~~quarter ended ~~September 30, 2014~~March 31, 2015, and the consolidated statements of cash flows for the ~~nine months~~quarters ended ~~September 30, 2014~~March 31, 2015 and ~~2013~~2014 are unaudited. The consolidated balance sheet as of December 31, ~~2013~~2014 was derived from audited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles (GAAP) in the United States of America. In the opinion of management, all adjustments necessary for a fair statement of the consolidated financial statements are included. Adjustments consist only of normal recurring items, except for any discussed in the notes below. Interim results are not necessarily indicative of results for a full year. The consolidated financial statements and notes are presented in accordance with instructions for Form 10-Q, and do not contain certain information included in our annual consolidated financial statements and notes. The consolidated financial statements and notes appearing in this report should be read in conjunction with the consolidated audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2013~~2014 (the ~~“2013~~“2014 Form 10-K”).

Note 2: New accounting pronouncements

~~On January 1, 2014, we~~Recently adopted ~~Accounting Standards Update (ASU) No. 2013-11,~~accounting pronouncements ~~Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists~~. This standard provides guidance regarding when an unrecognized tax benefit should be classified as a reduction to a deferred tax asset or when it should be classified as a liability in the consolidated balance sheet. Adoption of this standard resulted in an increase of $669 in non-current deferred income tax liabilities and a corresponding decrease in other non-current liabilities.

– In April 2014, the Financial Accounting Standards Board (FASB) issued ~~ASU~~Accounting Standards Update (ASU) No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This standard changes the criteria for determining which disposals should be presented as discontinued operations and modifies the related disclosure requirements. ~~Additionally,~~We adopted the new guidance ~~requires that a business which qualifies as held for sale upon acquisition should be reported as discontinued operations. The new guidance is effective for us~~ on January 1, 2015, and it is ~~to be~~ applied prospectively. As such, we will apply this standard to any new disposals or new classifications of disposal groups as held for sale which occur on or after January 1, 2015.

Accounting pronouncements not yet adopted – In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The new standard provides revenue recognition guidance for any entity that enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other accounting standards. The new standard also expands the required financial statement disclosures regarding revenue recognition. The new guidance is effective for us on January 1, ~~2017.~~2017, although the FASB has voted to propose a deferral of the effective date of the standard for one year. We are currently assessing the impact of this new standard on our consolidated financial statements, as well as the method of transition that we will use in adopting the new standard.

In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The new standard requires that a performance target that affects vesting and that could be achieved after the requisite service period should be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. The new guidance is effective for us on January 1, 2016. We currently have share-based payment awards that fall within the scope of this standard. Our current accounting treatment is in compliance with the new standard, so we expect no impact on our consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The new standard requires that debt issuance costs related to a recognized debt liability be presented in the consolidated balance sheet as a direct reduction from the carrying amount of the debt liability. The new guidance is effective for us on January 1, 2016. As of March 31, 2015, we had debt issuance costs of $2,593 related to long-term debt and $1,804 related to short-term borrowings.

Note 3: Supplemental balance sheet information

Inventories and supplies – Inventories and supplies were comprised of the following:


	September 30, 2014		December 31, 2013
(in thousands)					March 31, 2015		December 31, 2014
Raw materials	$	5,761	$	5,426	$	5,674	$	5,899
Semi-finished goods	8,948		8,361		8,535		8,990
Finished goods	18,264		11,948		20,627		21,298
Supplies	3,126		3,231		3,264		3,224
Inventories and supplies	$	36,099	$	28,966	$	38,100	$	39,411

Available-for-sale securities – Available-for-sale securities included within ~~cash and cash equivalents,~~ funds held for customers and other current assets were comprised of the following:


	September 30, 2014									March 31, 2015
	Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Canadian and provincial government securities (funds held for customers)⁽¹⁾	$	9,553	$	—	$	(211	)	$	9,342
Money market securities (cash equivalents)	2,996		—		—			2,996
(in thousands)										Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Canadian and provincial government securities										$	8,526	$	21	$	—	$	8,547
Canadian guaranteed investment certificate										7,883		—		—		7,883
Available-for-sale securities (funds held for customers)⁽¹⁾										16,409		21		—		16,430
Canadian money market fund (other current assets)	1,958		—		—			1,958		1,747		—		—		1,747
Total available-for-sale securities	$	14,507	$	—	$	(211	)	$	14,296	$	18,156	$	21	$	—	$	18,177

⁽¹⁾Funds held for customers, as reported on the consolidated balance sheet as of ~~September 30, 2014~~March 31, 2015, also included cash of $~~30,204~~33,608.


	December 31, 2013									December 31, 2014
	Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Money market securities (cash equivalents)	$	70,001	$	—	$	—		$	70,001
Funds held for customers:
(in thousands)										Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Canadian and provincial government securities	9,901		—		(343		)	9,558		$	9,245	$	—	$	(120	)	$	9,125
Canadian guaranteed investment certificate	5,178		—		—			5,178		8,605		—		—			8,605
Available-for-sale securities (funds held for customers)⁽¹⁾	15,079		—		(343		)	14,736		17,850		—		(120		)	17,730
Canadian money market fund (other current assets)	2,045		—		—			2,045		1,895		—		—			1,895
Total available-for-sale securities	$	87,125	$	—	$	(343	)	$	86,782	$	19,745	$	—	$	(120	)	$	19,625

⁽¹⁾Funds held for customers, as reported on the consolidated balance sheet as of December 31, ~~2013~~2014, also included cash of $~~27,689~~25,874.

Expected maturities of available-for-sale securities as of ~~September 30, 2014~~March 31, 2015 were as follows:


	Fair value
(in thousands)			Fair value
Due in one year or less	$	4,954	$	9,724
Due in two to five years	6,502		5,983
Due in six to ten years	2,840		2,470
Total available-for-sale securities	$	14,296	$	18,177

Further information regarding the fair value of available-for-sale securities can be found in Note 8: Fair value measurements.

Assets held for sale – Assets held for sale included the operations of small business distributors which we previously acquired and which consisted primarily of customer list intangible assets. ~~The net assets of one of the small business distributors were sold during 2014, realizing a net pre-tax gain of $430.~~ We are actively marketing the ~~remaining assets~~distributors and expect the selling prices will exceed the carrying values. Net assets held for sale consisted of the following:


	September 30, 2014			December 31, 2013			Balance sheet caption
(in thousands)								March 31, 2015			December 31, 2014			Balance sheet caption
Current assets	$	136		$	727		Other current assets	$	107		$	687		Other current assets
Intangibles	25,910			24,603			Assets held for sale	25,926			25,926			Assets held for sale
Other non-current assets	888			848			Assets held for sale	990			893			Assets held for sale
Accrued liabilities	(932		)	(733		)	Accrued liabilities	(389		)	(1,058		)	Accrued liabilities
Non-current deferred income tax liabilities	(8,748		)	(7,821		)	Other non-current liabilities	(8,848		)	(8,774		)	Other non-current liabilities
Other non-current liabilities	(13		)	(32		)	Other non-current liabilities
Net assets held for sale	$	17,241		$	17,592			$	17,786		$	17,674

Intangibles – Intangibles were comprised of the following:


	September 30, 2014							December 31, 2013							March 31, 2015							December 31, 2014
	Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount
(in thousands)															Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount
Indefinite-lived:
Trade name	$	19,100	$	—		$	19,100	$	19,100	$	—		$	19,100	$	19,100	$	—		$	19,100	$	19,100	$	—		$	19,100
Amortizable intangibles:
Internal-use software	363,093		(300,849		)	62,244		339,995		(275,159		)	64,836		372,854		(311,189		)	61,665		364,229		(303,340		)	60,889
Customer lists/relationships	70,418		(37,039		)	33,379		63,282		(31,606		)	31,676		110,503		(40,016		)	70,487		106,218		(40,097		)	66,121
Trade names	67,281		(36,594		)	30,687		67,961		(33,642		)	34,319		69,281		(38,673		)	30,608		69,281		(37,623		)	31,658
Software to be sold															28,500		(1,390		)	27,110		28,500		(601		)	27,899
Other	8,160		(6,401		)	1,759		9,324		(5,679		)	3,645		7,159		(5,874		)	1,285		8,160		(6,647		)	1,513
Amortizable intangibles	508,952		(380,883		)	128,069		480,562		(346,086		)	134,476		588,297		(397,142		)	191,155		576,388		(388,308		)	188,080
Intangibles	$	528,052	$	(380,883	)	$	147,169	$	499,662	$	(346,086	)	$	153,576	$	607,397	$	(397,142	)	$	210,255	$	595,488	$	(388,308	)	$	207,180

Amortization of intangibles was $~~11,730~~13,750 for the quarter ended ~~September 30, 2014~~March 31, 2015 and $~~11,880~~12,024 for the quarter ended ~~September 30, 2013. Amortization of intangibles was $35,845 for the nine months ended~~ ~~September 30,~~March 31, 2014 ~~and $34,878 for the nine months ended~~ ~~September 30, 2013~~. Based on the intangibles in service as of ~~September 30, 2014~~March 31, 2015, estimated future amortization expense is as follows:


	Estimated amortization expense
Remainder of 2014	$	10,376
2015	35,567
(in thousands)			Estimated amortization expense
Remainder of 2015			$	36,242
2016	23,597		37,349
2017	11,785		25,004
2018	8,041		17,643
2019			14,885

~~We acquire~~During the quarter ended March 31, 2015, we acquired internal-use software in the normal course of business. We also ~~acquire~~acquired internal-use software and other intangible assets in conjunction with acquisitions (Note 6). The following intangible assets were acquired during the ~~nine months~~quarter ended ~~September 30, 2014:~~March 31, 2015:


	Amount		Weighted-average amortization period (in years)
(in thousands)				Amount		Weighted-average amortization period (in years)
Internal-use software	$	26,769	4	$	8,868	5
Customer lists/relationships	9,996		10	8,199		8
Other	50		2
Acquired intangibles	$	36,815	5	$	17,067	6

Goodwill – Changes in goodwill during the ~~nine months~~quarter ended ~~September 30, 2014~~March 31, 2015 were as follows:


	Small Business Services			Financial Services			Direct Checks		Total
Balance, December 31, 2013:
(in thousands)												Small Business Services			Financial Services			Direct Checks		Total
Balance, December 31, 2014:
Goodwill, gross	$	652,554		$	41,717		$	148,506	$	842,777		$	654,007		$	85,863		$	148,506	$	888,376
Accumulated impairment charges	(20,000		)	—			—		(20,000		)	(20,000		)	—			—		(20,000		)
Goodwill, net of accumulated impairment charges	632,554			41,717			148,506		822,777			634,007			85,863			148,506		868,376
Adjustment for acquisition of Destination Rewards, Inc. (Note 6)	—			(1,375		)	—		(1,375		)
Acquisition of NetClime, Inc. (Note 6)	1,615			—			—		1,615
Adjustment for acquisition of Wausau Financial Systems, Inc. (Note 6)												—			(164		)	—		(164		)
Acquisition of Verify Valid, LLC (Note 6)												11,190			—			—		11,190
Currency translation adjustment	(97		)	—			—		(97		)	(144		)	—			—		(144		)
Balance, September 30, 2014:
Balance, March 31, 2015:
Goodwill, gross	654,072			40,342			148,506		842,920			665,053			85,699			148,506		899,258
Accumulated impairment charges	(20,000		)	—			—		(20,000		)	(20,000		)	—			—		(20,000		)
Goodwill, net of accumulated impairment charges	$	634,072		$	40,342		$	148,506	$	822,920		$	645,053		$	85,699		$	148,506	$	879,258

Other non-current assets – Other non-current assets were comprised of the following:


	September 30, 2014		December 31, 2013
(in thousands)					March 31, 2015		December 31, 2014
Contract acquisition costs	$	77,570	$	35,421	$	68,918	$	74,101
Postretirement benefit plan asset	26,177		24,981		24,188		24,243
Loans and notes receivable from distributors	15,237		16,162		11,957		14,583
Deferred advertising costs	8,190		10,447		7,893		8,922
Other	10,424		13,756		8,625		9,792
Other non-current assets	$	137,598	$	100,767	$	121,581	$	131,641

Changes in contract acquisition costs during the ~~nine months~~quarters ended ~~September 30, 2014~~March 31, 2015 and ~~2013~~2014 were as follows:


	Nine Months Ended September 30,						Quarter Ended March 31,
	2014			2013
(in thousands)							2015			2014
Balance, beginning of year	$	35,421		$	43,036		$	74,101		$	35,421
Additions⁽¹⁾	55,659			8,333			1,907			425
Amortization	(13,180		)	(12,633		)	(4,831		)	(4,261		)
Other	(330		)	(381		)	(2,259		)	(110		)
Balance, end of period	$	77,570		$	38,355		$	68,918		$	31,475

⁽¹⁾Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were ~~$9,831~~$2,947 for the ~~nine months~~quarter ended ~~September 30, 2014~~March 31, 2015 and ~~$10,551~~$1,355 for the ~~nine months~~quarter ended ~~September 30, 2013~~March 31, 2014.

Accrued liabilities – Accrued liabilities were comprised of the following:


	September 30, 2014		December 31, 2013
(in thousands)					March 31, 2015		December 31, 2014
Funds held for customers	$	38,687	$	41,810	$	49,274	$	42,944
Deferred revenue					43,183		48,514
Income taxes					24,320		5,393
Customer rebates					17,526		20,550
Performance-based compensation	24,602		29,544		14,918		38,259
Deferred revenue	20,771		16,897
Customer rebates	20,131		21,623
Contract acquisition costs due within one year	13,397		3,880		10,353		9,815
Interest	11,613		8,869
Restructuring due within one year (Note 9)	5,387		5,609		2,318		4,276
Other	42,527		34,758		58,997		49,370
Accrued liabilities	$	177,115	$	162,990	$	220,889	$	219,121

Note 4: Earnings per share

The following table reflects the calculation of basic and diluted earnings per share. During each period, certain stock options, as noted below, were excluded from the calculation of diluted earnings per share because their effect would have been antidilutive.


	Quarter Ended September 30,						Nine Months Ended September 30,						Quarter Ended March 31,
	2014			2013			2014			2013
(dollars and shares in thousands, except per share amounts)													2015			2014
Earnings per share – basic:
Net income	$	44,431		$	46,903		$	141,830		$	140,930		$	45,940		$	47,324
Income allocated to participating securities	(256		)	(160		)	(743		)	(689		)	(293		)	(200		)
Income available to common shareholders	$	44,175		$	46,743		$	141,087		$	140,241		$	45,647		$	47,124
Weighted-average shares outstanding	49,594			50,443			49,889			50,579			49,699			50,228
Earnings per share – basic	$	0.89		$	0.93		$	2.83		$	2.77		$	0.92		$	0.94

Earnings per share – diluted:
Net income	$	44,431		$	46,903		$	141,830		$	140,930		$	45,940		$	47,324
Income allocated to participating securities	(255		)	(159		)	(738		)	(684		)	(291		)	(198		)
Re-measurement of share-based awards classified as liabilities	(66		)	133			43			158			179			(8		)
Income available to common shareholders	$	44,110		$	46,877		$	141,135		$	140,404		$	45,828		$	47,118
Weighted-average shares outstanding	49,594			50,443			49,889			50,579			49,699			50,228
Dilutive impact of potential common shares	448			451			448			450			408			456
Weighted-average shares and potential common shares outstanding	50,042			50,894			50,337			51,029			50,107			50,684
Earnings per share – diluted	$	0.88		$	0.92		$	2.80		$	2.75		$	0.91		$	0.93

Antidilutive options excluded from calculation	276			440			276			440			265			281

Note 5: Other comprehensive income

Reclassification adjustments – Information regarding amounts reclassified from accumulated other comprehensive loss to net income was as follows:


Accumulated other comprehensive loss components	Amounts reclassified from accumulated other comprehensive loss												Affected line item in consolidated statements of comprehensive income	Amounts reclassified from accumulated other comprehensive loss						Affected line item in consolidated statements of comprehensive income
	Quarter Ended September 30,						Nine Months Ended September 30,							Quarter Ended March 31,
	2014			2013			2014			2013
(in thousands)														2015			2014
Amortization of loss on interest rate locks⁽¹⁾	$	(427	)	$	(418	)	$	(1,282	)	$	(1,255	)	Interest expense	$	—		$	(429	)	Interest expense
Tax benefit	167			158			501			475			Income tax provision	—			168			Income tax provision
Amortization of loss on interest rate locks, net of tax	(260		)	(260		)	(781		)	(780		)	Net income	—			(261		)	Net income
Amortization of postretirement benefit plan items:
Prior service credit	355			355			1,066			1,066			⁽²⁾	355			355			⁽²⁾
Net actuarial loss	(854		)	(1,110		)	(2,563		)	(3,330		)	⁽²⁾	(780		)	(854		)	⁽²⁾
Total amortization	(499		)	(755		)	(1,497		)	(2,264		)	⁽²⁾	(425		)	(499		)	⁽²⁾
Tax benefit	139			229			418			685			⁽²⁾	114			140			⁽²⁾
Amortization of postretirement benefit plan items, net of tax	(360		)	(526		)	(1,079		)	(1,579		)	⁽²⁾	(311		)	(359		)	⁽²⁾
Total reclassifications, net of tax	$	(620	)	$	(786	)	$	(1,860	)	$	(2,359	)		$	(311	)	$	(620	)

⁽¹⁾Relates to interest rate locks ~~executed~~which terminated in ~~2004.~~October 2014 in conjunction with the maturity of the related debt. See the caption "Note 6: Derivative financial instruments" in the Notes to Consolidated Financial Statements appearing in the ~~2013~~2014 Form 10-K.

⁽²⁾Amortization of postretirement benefit plan items is included in the computation of net periodic benefit income. Additional details can be found in Note 10: Postretirement benefits.

Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss were as follows:


	Postretirement benefit plans, net of tax			Loss on derivatives, net of tax⁽¹⁾			Net unrealized loss on marketable securities, net of tax⁽²⁾			Currency translation adjustment			Accumulated other comprehensive loss
Balance, December 31, 2013	$	(34,874	)	$	(781	)	$	(276	)	$	2,507		$	(33,424	)
(in thousands)																Postretirement benefit plans, net of tax			Net unrealized loss on marketable securities, net of tax⁽¹⁾			Currency translation adjustment			Accumulated other comprehensive loss
Balance, December 31, 2014																$	(32,405	)	$	(125	)	$	(3,808	)	$	(36,338	)
Other comprehensive income (loss) before reclassifications	—			—			88			(3,614		)	(3,526		)	—			104			(6,172		)	(6,068		)
Amounts reclassified from accumulated other comprehensive loss	1,079			781			—			—			1,860			311			—			—			311
Net current-period other comprehensive income (loss)	1,079			781			88			(3,614		)	(1,666		)	311			104			(6,172		)	(5,757		)
Balance, September 30, 2014	$	(33,795	)	$	—		$	(188	)	$	(1,107	)	$	(35,090	)
Balance, March 31, 2015																$	(32,094	)	$	(21	)	$	(9,980	)	$	(42,095	)

⁽¹⁾~~Relates to interest rate locks executed in 2004. See the caption "Note 6: Derivative financial instruments" in the Notes to Consolidated Financial Statements appearing in the 2013 Form 10-K.~~

⁽²⁾Other comprehensive income before reclassifications is net of income tax expense of $3136.

Note 6: Acquisitions

~~During the nine months ended September 30, 2014, we made the following payments, net of cash acquired, for business acquisitions:~~

Payments for acquisitions, net of cash acquired
Small business distributors $ 7,841
NetClime, Inc. 2,011
Gift Box Corporation of America⁽¹⁾
1,750
Other 542
Total $ 12,144

⁽¹⁾~~We are operating this business under the name WholeStyle Packaging~~^TM.

In ~~May 2014,~~January 2015, we acquired selected assets of ~~Gift Box Corporation of America (GBCA)~~Range, Inc., a supplier of retail packaging solutions, including gift boxes, bags, bows, ribbons and wraps. The allocation of the purchase price to the assets acquired and liabilities assumed was finalized during the third quarter of 2014, as we finalized the valuation of acquired inventory.marketing services provider, in a cash transaction for $3,600. Transaction costs related to the acquisition were expensed as incurred and were not significant to the consolidated statement of comprehensive income for the ~~nine months~~quarter ended ~~September 30, 2014.~~March 31, 2015. The results of operations of this business from its acquisition date are included in our Small Business Services segment. ~~Intangible~~We expect to finalize the allocation of the purchase price in the second quarter of 2015 when we complete our valuation of the acquired customer list. The net assets acquired consisted primarily of a customer list with a preliminary value of ~~$1,095~~$3,906 and a useful life of ~~five~~eight years, which is being amortized using the straight-line method. Further information regarding the calculation of the estimated fair value of the customer list can be found in Note 8.

In January ~~2014,~~2015, we acquired all of the outstanding capital stock of ~~NetClime, Inc.,~~ a ~~provider~~small business distributor in a cash transaction for $511, net of ~~website development software. The allocation~~cash acquired, plus non-cash consideration of $3,564 related to our receivables from the ~~purchase price, based upon the estimated fair value of the assets acquired and liabilities assumed, resulted in goodwill of~~ ~~$1,615. The acquisition resulted in goodwill as we expect~~distributor prior to ~~drive future revenue as we incorporate NetClime's software solution into our technology platform and the marketing solutions services we offer our customers.~~its acquisition. Transaction costs related to the acquisition were expensed as incurred and were not significant to the consolidated statement of comprehensive income for the ~~nine months~~quarter ended ~~September 30, 2014.~~March 31, 2015. The results of operations of ~~this business~~the distributor are included in our Financial Services segment from its acquisition date, ~~are included in~~as its customers consist primarily of financial institutions. We expect to finalize the allocation of the purchase price by the third quarter of 2015 when our ~~Small Business Services segment. Intangible~~valuation of certain assets and liabilities is finalized, including, but not limited to, intangibles and deferred income taxes. We also plan to finalize the estimated useful life of intangibles by the third quarter of 2015. The net assets acquired consisted primarily of ~~internal-use software~~a customer list with ~~an aggregate~~a preliminary fair value of ~~$1,050~~$4,293 and a preliminary useful life of ~~four~~eight years,, which is being amortized using the straight-line method. Further information regarding the calculation of the estimated fair value of the ~~internal-use software~~customer list can be found in Note 8.

In ~~December 2013,~~February 2015, we acquired ~~substantially all~~selected assets of Verify Valid, LLC, a provider of electronic check payment services, in a cash transaction for $3,447. The preliminary allocation of the purchase price based upon the estimated fair value of the assets ~~of Destination Rewards, Inc., a rewards and loyalty program provider. During the first quarter of 2014, we adjusted the valuation of the intangibles~~ acquired and ~~we finalized the determination of the intangible useful lives, resulting~~liabilities assumed resulted in tax-deductible goodwill of ~~$11,705. This is a decrease of $1,375 from the amount of goodwill as of December 31, 2013.~~$11,190. The acquisition resulted in goodwill as ~~we plan~~Verify Valid's technology enables us to ~~offer Destination Rewards~~diversify our payment product and service offerings and bring these offerings to our ~~clients~~customer base. Transaction costs related to the acquisition were expensed as ~~a key component~~incurred and were not significant to the consolidated statement of comprehensive income for the quarter ended March 31, 2015. The results of operations of this business from its acquisition date are included in our ~~marketing solutions product set. The~~Small Business Services segment. We expect to finalize the allocation of the purchase price by the third quarter of 2015 when our valuation of acquired ~~intangible~~software and its useful life, as well as the valuation of contingent consideration, is finalized. Net assets acquired consisted primarily of ~~customer relationships~~internal-use software with a preliminary value of ~~$4,400~~ ~~with~~$1,900 and a preliminary useful life of 105 years, internal-use software with an aggregate value of $4,100 and a weighted-average useful life of four years, and supplier relationships of $1,100 with a useful life of five years. All of the intangibles arewhich is being amortized using the straight-line method. In connection with this acquisition, we are required to make annual contingent payments over a period of up to eight years, subject to the business achieving specified revenue thresholds. The preliminary fair value of the liability for contingent payments recognized upon acquisition was $8,340, and is included in accrued liabilities and other non-current liabilities in the consolidated balance sheet. There is no maximum amount of contingent payments specified in the agreement. Further information regarding the calculation of the estimated fair ~~values~~value of ~~these assets~~the internal-use software and the contingent payments can be found in Note 8.

~~During the nine months ended September 30,~~In October 2014, we acquired the operations of several small business distributors for aggregate cash payments of $7,841. The assets acquired consisted primarily of customer lists, $6,501 of which are being amortized using the straight-line method over a weighted-average useful life of nine years. The remaining portionall of the ~~acquired customer lists are being held~~outstanding capital stock of Wausau Financial Systems, Inc. (Wausau), a provider of software-based solutions for ~~sale~~receivables management, lockbox processing, remote deposit capture and ~~are classified~~paperless branch solutions to financial institutions, utilities, government agencies and telecommunications companies. During the first quarter of 2015, we adjusted the valuation of certain income tax accounts and decreased goodwill $164 from the December 31, 2014 amount. The acquisition resulted in goodwill as ~~such in our consolidated balance sheet as~~Wausau provides new access into the commercial and treasury side of ~~September 30, 2014. The distributors’ results of operations are included in our Small Business Services segment from their acquisition dates. Further information regarding~~financial institutions through a strong software-as-a-service (SaaS) technology offering. We expect to finalize the ~~calculation~~allocation of the ~~estimated fair values~~purchase price by mid-2015, when our valuation of ~~the customer lists can be found in Note 8 and further information regarding net assets held for sale can be found in Note 3.~~deferred income taxes is finalized.

As our acquisitions were immaterial to our operating results both individually and in the aggregate, pro forma results of operations are not provided.

Note 7: Derivative financial instruments

We have entered into interest rate swaps to hedge against changes in the fair value of a portion of our long-term debt. We entered into these swaps, which we designated as fair value hedges, to achieve a targeted mix of fixed and variable rate debt, where we receive a fixed rate and pay a variable rate based on the London Interbank Offered Rate (LIBOR). ~~Changes in the fair value of the interest rate swaps and the related long-term debt are included in interest expense in the consolidated statements of comprehensive income.~~ The interest rate swaps related to our long-term debt due in 2020 have a notional amount of $200,000 and meet the criteria for using the short-cut method for a fair value hedge based on the structure of the hedging relationship. As such, ~~the~~ changes in the fair value of the ~~derivative~~derivatives and the related long-term debt are equal. The fair value of these interest rate swaps was included in other non-

current liabilities in the consolidated balance sheets and was $5,097 as of March 31, 2015 and $8,067 as of December 31, 2014. As the short-cut method is ~~not~~ being used to account for these hedges, the decrease in long-term debt due to fair value adjustments was also $5,097 as of March 31, 2015 and $8,067 as of December 31, 2014.

During the quarter ended March 31, 2014, we also held interest rate swaps related to our long-term debt ~~due~~which matured in October 2014. ~~When the change~~The short-cut method was not used for these interest rate swaps. As such, changes in the fair value of ~~these~~the interest rate swaps and the ~~hedged~~related long-term debt ~~are~~were not equal (i.e., hedge ineffectiveness)~~, the difference~~ and were included in ~~the changes in fair value affects the reported amount of~~ interest expense in ~~our~~the consolidated ~~statements~~statement of comprehensive income. Information regarding hedge ineffectiveness ~~in each period~~during the quarter ended March 31, 2014 is presented in Note 8.

~~Information regarding interest rate swaps as of~~ ~~September 30, 2014~~ ~~was as follows:~~

Notional amount Fair value of interest rate swaps Increase (decrease) in debt due to fair value adjustment Balance sheet caption including interest rate swaps
Fair value hedge related to long-term debt due in 2014 $ 198,000
$ 745
$ 6
Other current assets
Fair value hedge related to long-term debt due in 2020 200,000
(11,180 ) (11,180 ) Other non-current liabilities
Total fair value hedges $ 398,000
$ (10,435 )
$ (11,174 )

~~Information regarding interest rate swaps as of~~ ~~December 31, 2013~~ ~~was as follows:~~

Notional amount Fair value of interest rate swaps Increase (decrease) in debt due to fair value adjustment Balance sheet caption including interest rate swaps
Fair value hedge related to long-term debt due in 2014 $ 198,000
$ 2,158
$ 1,569
Other current assets
Fair value hedge related to long-term debt due in 2020 200,000
(16,239 ) (16,239 ) Other non-current liabilities
Total fair value hedges $ 398,000
$ (14,081 ) $ (14,670 )

Note 8: Fair value measurements

~~2014 annual impairment analyses~~ – We evaluate the carrying value of goodwill and our indefinite-lived trade name as of July 31 of each year and between annual evaluations, if events or circumstances occur that would indicate a possible impairment. As such, during the quarter ended September 30, 2014, we completed our annual impairment analyses. Our policy on impairment of indefinite-lived intangibles and goodwill, which is included under the caption "Note 1: Significant accounting policies" in the Notes to Consolidated Financial Statements appearing in the 2013 Form 10-K, provides further information regarding our methodology.

In completing the 2014 annual goodwill impairment analysis, we elected to perform a quantitative assessment for all of our reporting units to which goodwill is assigned, as our previous quantitative analysis was completed during 2010. First, we calculated the estimated fair value of each reporting unit to which goodwill is assigned and compared this estimated fair value to the carrying amount of the reporting unit's net assets. In calculating the estimated fair value, we used the income approach. The income approach is a valuation technique under which we estimated future cash flows using the reporting unit's financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we projected revenue for the next ~~five years. We applied our fixed and variable cost experience rates to the projected revenue to~~

arrive at the future cash flows. A terminal value was then applied to the projected cash flow stream. Future estimated cash flows were discounted to their present value to calculate the estimated fair value. The discount rate used was the value-weighted average of our estimated cost of capital derived using both known and customary market metrics. In determining the estimated fair values of our reporting units, we were required to estimate a number of factors, including projected operating results, terminal growth rates, economic conditions, anticipated future cash flows, the discount rate and the allocation of shared or corporate items. For reasonableness, the summation of our reporting units' fair values was compared to our consolidated fair value as indicated by our market capitalization. If the carrying amount of a reporting unit's net assets exceeds its estimated fair value, the second step of the goodwill impairment analysis requires us to measure the amount of the impairment loss. An impairment loss is calculated by comparing the implied fair value of the goodwill to its carrying amount. To calculate the implied fair value of goodwill, the fair value of the reporting unit's assets and liabilities, excluding goodwill, is estimated. The excess of the fair value of the reporting unit over the amount assigned to its assets and liabilities, excluding goodwill, is the implied fair value of the reporting unit's goodwill. We were not required to complete the second step of the goodwill impairment analysis for any of our reporting units. Our 2014 analysis indicated that the calculated fair values of our reporting units' net assets exceeded their carrying values by approximate amounts between $74,000 and $1,128,000, or by amounts between 47% and 482% above the carrying values of their net assets.

In completing the 2014 annual impairment analysis of our indefinite-lived trade name, we elected to perform a quantitative assessment which indicated that the calculated fair value of the asset exceeded its carrying value of $19,100 by approximately $31,000 as of July 31, 2014. As such, we recorded no impairment charges as a result of our 2014 impairment analyses.

~~Non-recurring asset impairment analysis –~~ During the quarter ended September 30, 2014, we performed an impairment analysis related to our Small Business Services search engine marketing and optimization business. Revenue and the related cash flows from this business have been lower than previously projected, and as a result of our annual planning process completed during the third quarter of 2014, we decided to reduce the revenue base of this business in order to improve its financial performance. As such, we revised our estimates of future revenues and cash flows to reflect these decisions during the quarter ended September 30, 2014. We calculated the estimated fair values of the assets as the net present value of estimated future cash flows (level 3 fair value measurement). Our analysis resulted in an impairment charge of $6,468 during the quarter ended September 30, 2014, which reflects writing down the net book value of the related intangible assets to zero.

~~The asset impairment charge included the following intangible assets:~~

Impairment charge
Internal-use software $ 4,036
Customer relationships 1,952
Trade name 480
Total impairment charge $ 6,468

~~2014~~2015 acquisitions – For all acquisitions, we are required to measure the fair value of the net identifiable tangible and intangible assets and liabilities acquired, excluding goodwill and deferred income taxes. The identifiable net assets acquired during the ~~nine months~~quarter ended ~~September 30, 2014~~March 31, 2015 were comprised primarily of customer lists associated with the acquisitions of a small business ~~distributors~~distributor and ~~GBCA,~~Range, Inc., as well as internal-use software associated with the acquisition of ~~NetClime, Inc.~~Verify Valid, LLC (Note 6). The aggregate fair value of the acquired customer lists was ~~$7,796~~$8,199 and was estimated ~~using an income approach.~~by discounting the estimated cash flows expected to be generated by the assets. Assumptions used in the calculations included same-customer revenue growth rates and estimated customer retention rates based on the acquirees' historical information. The fair value of the acquired internal-use software was $1,900 and was estimated using athe cost of reproduction method. The primary components of the software were identified and the estimated cost to reproduce the software was calculated based on data provided by ~~NetClime. The calculated fair value of the acquired internal-use software was~~ ~~$1,050~~.acquiree.

~~During the first quarter of 2014, we finalized the valuation of the intangible assets acquired in~~In connection with the acquisition of ~~Destination Rewards, Inc. in December 2013 (Note 6). The acquired intangibles consisted primarily~~VerifyValid, LLC, we are required to make annual contingent payments over a period of ~~customer relationships, internal-use software and supplier relationships.~~up to eight years, subject to the business achieving specified revenue thresholds. The fair value of the ~~customer relationships~~liability for contingent payments recognized upon acquisition was $8,340, and was estimated ~~using~~by discounting to present value the ~~multi-period excess earnings method.~~probability-weighted contingent payments expected to be made utilizing an appropriate discount rate. Assumptions used in this calculation included ~~same-customer revenue growth rates~~the discount rate and ~~estimated customer retention rates based on~~various probability factors. This liability is re-measured each reporting period and changes in the ~~acquirees' historical information. The~~fair value are included in selling, general and administrative (SG&A) expense in the consolidated statements of comprehensive income. Changes in the fair value of contingent consideration can result from changes in the ~~acquired customer relationships was $4,400, which represents an increase~~timing, amount of, ~~$2,200 from the December 31, 2013 amount. The fair value~~or likelihood of the acquired internal-use software was estimated using a cost of reproduction method. The primary components of the software were identified and the estimated cost to reproduce the software was calculated using estimated time and labor rates derived from our historical data from previous upgrades of a similar size and nature. The fair value of the acquired internal-use software was $4,100. The fair value of the supplier relationships was estimated by comparing the forecasted gross margin with

~~the supplier relationships in place compared to the forecasted gross margin without the supplier relationships. The fair value of the acquired supplier relationships was $1,100.~~applicable contingent payments.

Recurring fair value measurements – ~~Cash and cash equivalents as of~~ ~~September 30, 2014~~ ~~and~~ ~~December 31, 2013~~ included available-for-sale marketable securities (Note 3). These securities consisted of investments in money market funds which are traded in active markets. As such, the fair value of the securities is determined based on quoted market prices. Because of the short-term nature of the underlying investments, the cost of these securities approximates their fair value. The cost of securities sold is determined using the average cost method. No ~~gains or losses on sales of these marketable securities were realized during the quarters and nine months ended~~ ~~September 30, 2014~~ ~~and~~ ~~2013~~.

Funds held for customers included available-for-sale marketable securities (Note 3). These securities consisted of a mutual fund investment which invests in Canadian and provincial government securities and ~~as of December 31, 2013, an investment~~investments in a six-month Canadian guaranteed investment ~~certificate (GIC) which matured in February 2014.~~certificates (GIC's). The mutual fund is not traded in an active market and its fair value is determined by obtaining quoted prices in active markets for the underlying securities held by the fund. The fair value of the ~~GIC~~GIC's approximated cost due to ~~its~~thier relatively short duration. Unrealized gains and losses, net of tax, are included in accumulated other comprehensive loss in the consolidated balance sheets. The cost of securities sold is determined using the average cost method. Realized gains and losses are included in revenue in the consolidated statements of comprehensive income and were not significant for the quarters ~~and nine months~~ ended ~~September 30, 2014~~March 31, 2015 and ~~2013~~2014.

Other current assets included available-for-sale marketable securities (Note 3). These securities consisted of a Canadian money market fund which is not traded in an active market. As such, the fair value of this investment is determined by obtaining quoted prices in active markets for the underlying securities held by the fund. Because of the short-term nature of the underlying investments, the cost of these securities approximates their fair value. The cost of securities sold is determined using the average cost method. No gains or losses on sales of these marketable securities were realized during the quarters ~~and nine months~~ ended ~~September 30, 2014~~March 31, 2015 and ~~2013~~2014.

We have elected to account for a long-term investment in domestic mutual funds under the fair value option for financial assets and financial liabilities. The fair value option provides companies an irrevocable option to measure many financial assets and liabilities at fair value with changes in fair value recognized in earnings. The investment is included in long-term investments in the consolidated balance sheets. Long-term investments also include the cash surrender values of company-owned life insurance policies. Realized and unrealized gains and losses, as well as dividends earned by the mutual fund investment, are included in ~~selling, general and administrative (SG&A)~~SG&A expense in the consolidated statements of comprehensive income. This investment corresponds to a liability under an officers’ deferred compensation plan which is not available to new participants and is fully funded by the investment in mutual funds. The liability under the plan equals the fair value of the investment in mutual funds. Thus, as the value of the investment changes, the value of the liability changes accordingly. As changes in the liability are reflected within SG&A expense in the consolidated statements of comprehensive income, the fair value option of accounting for the investment in mutual funds allows us to net changes in the investment and the related liability in the statements of

comprehensive income. The cost of securities sold is determined using the average cost method. During the quarters ended March 31, 2015 and ~~nine months ended September 30,~~ 2014, ~~and 2013,~~ net realized gains were not significant. ~~Net~~We recognized net unrealized losses ~~were not significant~~of $187 during the ~~nine months~~quarter ended ~~September 30, 2014~~March 31, 2015 and ~~net unrealized gains of $140 were recognized~~$149 during the ~~nine months~~quarter ended ~~September 30, 2013.~~March 31, 2014.

The fair value of interest rate swaps (Note 7) is determined at each reporting date by means of a pricing model utilizing readily observable market interest rates. The change in fair value is determined as the change in the present value of estimated future cash flows discounted using the LIBOR rate. The interest rate swaps related to our long-term debt due in 2020 meet the criteria for using the short-cut method for a fair value hedge based on the structure of the hedging relationship. As such, the changes in the fair value of the derivative and related long-term debt are equal. The short-cut method iswas not ~~being~~ used for our other interest rate ~~swaps.~~swaps which terminated with the maturity of the related long-term debt in October 2014. Changes in the fair value of the interest rate swaps, as well as changes in the fair value of the hedged debt, are included in interest expense in the consolidated statements of comprehensive income and were as follows:

Quarter Ended
September 30, Nine Months Ended
September 30,
2014 2013 2014 2013
(Loss) gain from derivatives $ (1,292 ) $ 399
$ 3,646
$ (10,782 )
Gain (loss) from change in fair value of hedged debt 1,334
(411 ) (3,496 ) 10,852
Net decrease (increase) in interest expense $ 42
$ (12 ) $ 150

$ 70



	Quarter Ended March 31,
(in thousands)	2015			2014
Gain from derivatives	$	2,970		$	2,042
Loss from change in fair value of hedged debt	(2,970		)	(1,992		)
Net decrease in interest expense	$	—		$	50

Information regarding recurring fair value measurements completed during each period was as follows:


					Fair value measurements using															Fair value measurements using
	Fair value as of September 30, 2014				Quoted prices in active markets for identical assets				Significant other observable inputs				Significant unobservable inputs			Fair value as of March 31, 2015				Quoted prices in active markets for identical assets			Significant other observable inputs				Significant unobservable inputs
				(Level 1)				(Level 2)				(Level 3)
Available-for-sale marketable securities (cash equivalents)		$	2,996			$	2,996			$	—			$	—
(in thousands)																Fair value as of March 31, 2015				(Level 1)			(Level 2)				(Level 3)
Available-for-sale marketable securities (funds held for customers)	9,342				—				9,342				—						$	—		$	16,430			$	—
Available-for-sale marketable securities (other current assets)	1,958				—				1,958				—				1,747				—			1,747				—
Long-term investment in mutual funds	2,332				2,332				—				—			2,144				2,144			—				—
Derivative assets	745				—				745				—
Derivative liabilities	(11,180		)		—				(11,180		)		—			(5,097		)		—			(5,097		)		—
Accrued contingent consideration																(8,340		)		—			—				(8,340		)


					Fair value measurements using															Fair value measurements using
	Fair value as of December 31, 2013				Quoted prices in active markets for identical assets				Significant other observable inputs				Significant unobservable inputs			Fair value as of December 31, 2014				Quoted prices in active markets for identical assets			Significant other observable inputs				Significant unobservable inputs
				(Level 1)				(Level 2)				(Level 3)
Available-for-sale marketable securities (cash equivalents)		$	70,001			$	70,001			$	—			$	—
(in thousands)																Fair value as of December 31, 2014				(Level 1)			(Level 2)				(Level 3)
Available-for-sale marketable securities (funds held for customers)	14,736				—				14,736				—						$	—		$	17,730			$	—
Available-for-sale marketable securities (other current assets)	2,045				—				2,045				—				1,895				—			1,895				—
Long-term investment in mutual funds	2,407				2,407				—				—			2,384				2,384			—				—
Derivative assets	2,158				—				2,158				—
Derivative liabilities	(16,239		)		—				(16,239		)		—			(8,067		)		—			(8,067		)		—

Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred. There were no transfers between fair value levels during the ~~nine months~~quarter ended ~~September 30, 2014.~~March 31, 2015.

Fair value measurements of other financial instruments – The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate fair value.

Cash, ~~excluding cash equivalents, and~~ cash included within funds held for customers and short-term borrowings – The carrying amounts reported in the consolidated balance sheets approximate fair value because of the short-term nature of these items.

Loans and notes receivable from distributors – We have receivables for loans made to certain of our Safeguard® distributors. In addition, we have acquired the operations of several small business distributors which we then sold to our Safeguard distributors. In most cases, we entered into notes receivable upon the sale of the assets to the distributors. The fair value of these loans and notes receivable is calculated as the present value of expected future cash flows, discounted using an estimated interest rate based on published bond yields for companies of similar risk.

Long-term debt – The fair value of long-term debt is based on significant observable market inputs other than quoted prices ~~for identical liabilities when traded as assets~~ in an active ~~market.~~markets. The fair value of long-term debt included in the table below does not reflect the impact of hedging activity. The carrying amount of long-term debt includes the change in fair value of hedged long-term debt.

The estimated fair values of these financial instruments were as follows:


					Fair value measurements using										Fair value measurements using
	September 30, 2014				Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs		March 31, 2015				Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
	Carrying value		Fair value		(Level 1)		(Level 2)		(Level 3)
Cash (excluding cash equivalents)	$	185,005	$	185,005	$	185,005	$	—	$	—
(in thousands)											Carrying value		Fair value		(Level 1)		(Level 2)		(Level 3)
Cash											$	58,319	$	58,319	$	58,319	$	—	$	—
Cash (funds held for customers)	30,204		30,204		30,204		—		—		33,608		33,608		33,608		—		—
Loans and notes receivable from distributors	17,555		16,618		—		—		16,618		13,986		13,104		—		—		13,104
Long-term debt, including portion due within one year⁽¹⁾	642,326		675,050		675,050		—		—
Short-term borrowings											318,000		318,000		318,000		—		—
Long-term debt⁽¹⁾											194,903		217,540		—		217,540		—

⁽¹⁾Amounts exclude capital lease obligations.


					Fair value measurements using										Fair value measurements using
	December 31, 2013				Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs		December 31, 2014				Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
	Carrying value		Fair value		(Level 1)		(Level 2)		(Level 3)
Cash (excluding cash equivalents)	$	51,088	$	51,088	$	51,088	$	—	$	—
(in thousands)											Carrying value		Fair value		(Level 1)		(Level 2)		(Level 3)
Cash											$	61,541	$	61,541	$	61,541	$	—	$	—
Cash (funds held for customers)	27,689		27,689		27,689		—		—		25,874		25,874		25,874		—		—
Loans and notes receivable from distributors	18,047		17,051		—		—		17,051		16,915		15,765		—		—		15,765
Long-term debt, including portion due within one year⁽¹⁾	638,787		684,133		684,133		—		—
Short-term borrowings											160,000		160,000		160,000		—		—
Long-term debt⁽¹⁾											391,933		419,000		—		419,000		—

⁽¹⁾Amounts exclude capital lease obligations.

Note 9: Restructuring charges

Net restructuring charges for each period consisted of the following components:


	Quarter Ended September 30,						Nine Months Ended September 30,						Quarter Ended March 31,
	2014			2013			2014			2013
(in thousands)													2015			2014
Severance accruals	$	4,546		$	2,512		$	7,213		$	4,386		$	743		$	1,545
Severance reversals	(271		)	(210		)	(866		)	(688		)	(524		)	(310		)
Operating lease obligations	—			214			—			216
Operating lease obligations reversals	—			—			—			(157		)
Net restructuring accruals	4,275			2,516			6,347			3,757			219			1,235
Other costs	80			563			2,464			1,822			45			2,297
Net restructuring charges	$	4,355		$	3,079		$	8,811		$	5,579		$	264		$	3,532

The net restructuring charges are reflected in the consolidated statements of comprehensive income as follows:


	Quarter Ended September 30,				Nine Months Ended September 30,				Quarter Ended March 31,
	2014		2013		2014		2013
(in thousands)									2015			2014
Total cost of revenue	$	162	$	299	$	304	$	504	$	(3	)	$	232
Operating expenses	4,193		2,780		8,507		5,075		267			3,300
Net restructuring charges	$	4,355	$	3,079	$	8,811	$	5,579	$	264		$	3,532

~~2014 restructuring charges –~~During the ~~quarter and nine months~~quarters ended ~~September 30,~~March 31, 2015 and March 31, 2014, the net restructuring accruals included severance charges related to employee reductions across functional areas as we continue to reduce ~~costs, primarily within our sales and marketing, information technology and fulfillment functions.~~costs. The restructuring accruals included severance benefits for approximately ~~145~~40 employees ~~for the quarter ended September 30, 2014 and severance benefits for approximately 210 employees for the nine months ended September 30, 2014.~~during both periods. These charges were reduced by the reversal of restructuring accruals recorded primarily in previous years, as fewer employees received severance benefits than originally estimated. Other restructuring costs, which were expensed as incurred, included items such as information technology costs, employee and equipment moves, training and travel related to our restructuring activities.

~~2013 restructuring charges –~~ ~~During the quarter and nine months ended~~ ~~September 30, 2013~~, the net restructuring accruals included severance charges related to employee reductions across functional areas as we continued to reduce costs. The restructuring accruals included severance benefits for approximately 75 employees for the quarter ended September 30, 2013 and severance benefits for approximately 125 employees for the nine months ended September 30, 2013. These charges were reduced by the reversal of restructuring accruals recorded primarily in previous years, as fewer employees received severance benefits than originally estimated. Other restructuring costs, which were expensed as incurred, included items such as information technology costs, employee and equipment moves, training and travel related to our restructuring activities.

Restructuring accruals of $~~5,387~~2,318 as of ~~September 30,~~March 31, 2015 and $4,276 as of December 31, 2014 are reflected in the consolidated balance sheet in accrued liabilities. ~~Restructuring accruals of~~ ~~$5,638~~ ~~as of~~ ~~December 31, 2013~~ ~~are reflected in the consolidated balance sheet as accrued liabilities of~~ ~~$5,609~~ ~~and other non-current liabilities of~~ ~~$29~~. The majority of the employee reductions are expected to be completed in ~~2014,~~the third quarter of 2015, and we expect most of the related severance payments to be paid by ~~mid-2015,~~the first quarter of 2016, utilizing cash from operations. ~~The remaining payments due under operating lease obligations will be paid through February 2015.~~ As of ~~September 30, 2014~~March 31, 2015, approximately ~~130~~20 employees had not yet started to receive severance benefits. Further information regarding our restructuring accruals can be found under the caption “Note 8: Restructuring charges” in the Notes to Consolidated Financial Statements appearing in the ~~2013~~2014 Form 10-K.

Accruals for our restructuring initiatives, summarized by year, were as follows:


	2012 initiatives			2013 initiatives			2014 initiatives			Total
Balance, December 31, 2013	$	409		$	5,229		$	—		$	5,638
(in thousands)													2012 initiatives				2013 initiatives			2014 initiatives			2015 initiatives			Total
Balance, December 31, 2014													$	32			$	128		$	4,116		$	—		$	4,276
Restructuring charges	21			237			6,955			7,213			—				—			66			677			743
Restructuring reversals	(11		)	(775		)	(80		)	(866		)	—				(9		)	(515		)	—			(524		)
Payments	(344		)	(4,379		)	(1,875		)	(6,598		)	(32		)	��	(67		)	(1,975		)	(103		)	(2,177		)
Balance, September 30, 2014	$	75		$	312		$	5,000		$	5,387
Balance, March 31, 2015													$	—			$	52		$	1,692		$	574		$	2,318
Cumulative amounts:
Restructuring charges	$	8,012		$	7,616		$	6,955		$	22,583		$	8,012			$	7,629		$	8,206		$	677		$	24,524
Restructuring reversals	(1,362		)	(912		)	(80		)	(2,354		)	(1,363		)		(1,005		)	(1,157		)	—			(3,525		)
Payments	(6,575		)	(6,392		)	(1,875		)	(14,842		)	(6,649		)		(6,572		)	(5,357		)	(103		)	(18,681		)
Balance, September 30, 2014	$	75		$	312		$	5,000		$	5,387
Balance, March 31, 2015													$	—			$	52		$	1,692		$	574		$	2,318

1917

The components of our restructuring accruals, by segment, were as follows:


	Employee severance benefits												Operating lease obligations									Employee severance benefits												Operating lease obligations
	Small Business Services			Financial Services			Direct Checks			Corporate			Small Business Services			Direct Checks			Total
Balance, December 31, 2013	$	1,624		$	1,991		$	365		$	1,508		$	150		$	—		$	5,638
(in thousands)																						Small Business Services			Financial Services			Direct Checks			Corporate			Small Business Services			Direct Checks			Total
Balance, December 31, 2014																						$	1,412		$	1,848		$	—		$	984		$	32		$	—		$	4,276
Restructuring charges	3,159			2,727			36			1,291			—			—			7,213			250			385			—			108			—			—			743
Restructuring reversals	(328		)	(208		)	(32		)	(298		)	—			—			(866		)	(273		)	(55		)	—			(196		)	—			—			(524		)
Payments	(2,456		)	(2,068		)	(319		)	(1,664		)	(91		)	—			(6,598		)	(700		)	(1,048		)	—			(397		)	(32		)	—			(2,177		)
Balance, September 30, 2014	$	1,999		$	2,442		$	50		$	837		$	59		$	—		$	5,387
Balance, March 31, 2015																						$	689		$	1,130		$	—		$	499		$	—		$	—		$	2,318
Cumulative amounts⁽¹⁾:
Restructuring charges	$	8,036		$	6,615		$	585		$	6,735		$	442		$	170		$	22,583		$	8,693		$	7,170		$	585		$	7,464		$	442		$	170		$	24,524
Restructuring reversals	(769		)	(477		)	(54		)	(897		)	(157		)	—			(2,354		)	(1,572		)	(630		)	(59		)	(1,107		)	(157		)	—			(3,525		)
Inter-segment transfer	—			—			(25		)	25			—			—			—			—			—			(25		)	25			—			—			—
Payments	(5,268		)	(3,696		)	(456		)	(5,026		)	(226		)	(170		)	(14,842		)	(6,432		)	(5,410		)	(501		)	(5,883		)	(285		)	(170		)	(18,681		)
Balance, September 30, 2014	$	1,999		$	2,442		$	50		$	837		$	59		$	—		$	5,387
Balance, March 31, 2015																						$	689		$	1,130		$	—		$	499		$	—		$	—		$	2,318

⁽¹⁾Includes accruals related to our cost reduction initiatives for 2012 through ~~2014.~~2015.

Note 10: Postretirement benefits

We have historically provided certain health care benefits for a ~~portion~~large number of ~~our~~ retired U.S. employees. In addition to our retiree health care plan, we also have a supplemental executive retirement plan in the United States. Further information regarding our postretirement benefit plans can be found under the caption “Note 12: Postretirement benefits” in the Notes to Consolidated Financial Statements appearing in the ~~2013~~2014 Form 10-K.

Postretirement benefit income for each period consisted of the following components:


	Quarter Ended September 30,						Nine Months Ended September 30,						Quarter Ended March 31,
	2014			2013			2014			2013
(in thousands)													2015			2014
Interest cost	$	1,138		$	913		$	3,415		$	2,739		$	859		$	1,138
Expected return on plan assets	(2,183		)	(2,008		)	(6,550		)	(6,023		)	(1,958		)	(2,183		)
Amortization of prior service credit	(355		)	(355		)	(1,066		)	(1,066		)	(355		)	(355		)
Amortization of net actuarial losses	854			1,110			2,563			3,330			780			854
Net periodic benefit income	$	(546	)	$	(340	)	$	(1,638	)	$	(1,020	)	$	(674	)	$	(546	)

Note 11: Income tax provision

Our effective tax rate for the quarter ended March 31, 2015 was 34.6%, compared to our 2014 annual effective tax rate of 32.8%. Our 2014 tax rate included a number of discrete credits to income tax expense which collectively reduced our effective tax rate 0.9 points and which related primarily to state income tax credits. Our 2015 tax rate included a number of minor discrete charges to income tax expense which collectively increased our effective tax rate 0.4 points. Also contributing to the increase in our effective tax rate in 2015 was the expiration of the federal research and development credit on December 31, 2014. Accordingly, our 2015 effective tax rate does not include the impact of this tax credit.

2018

Note ~~11:~~12: Debt

Debt outstanding was comprised of the following:


	September 30, 2014		December 31, 2013
(in thousands)					March 31, 2015		December 31, 2014
7.0% senior notes due March 15, 2019	$	200,000	$	200,000	$	—	$	200,000
6.0% senior notes due November 15, 2020⁽¹⁾	188,820		183,761		194,903		191,933
Long-term portion of capital lease obligations	1,501		1,354		1,531		1,468
Long-term portion of debt	390,321		385,115		196,434		393,401
5.125% senior, unsecured notes due October 1, 2014, net of discount⁽²⁾	253,506		255,026
Amount drawn on credit facility					243,000		160,000
Short-term bank loan					75,000		—
Capital lease obligations due within one year	785		563		1,013		911
Total debt	$	644,612	$	640,704	$	515,447	$	554,312

⁽¹⁾Includes decrease due to cumulative change in fair value of hedged debt of ~~$11,180~~$5,097 as of ~~September 30, 2014~~March 31, 2015 and ~~$16,239~~$8,067 as of December 31, ~~2013.~~

⁽²⁾~~Includes increase due to cumulative change in fair value of hedged debt of $6 as of September 30, 2014 and $1,569 as of December 31, 2013.~~2014.

~~Discounts from par value are being amortized ratably as increases to interest expense over the term of the related debt.~~

~~All of our~~Our senior notes include covenants that place certain restrictions on the issuance of additional debt and limitations on certain liens. If our ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to interest expense, as defined in such instruments, falls below two to one, there would be additional limitations on our ability to issue additional debt. The notes due in 2020 ~~and 2019~~ also include limitations on our ability to issue redeemable stock and preferred stock, make loans and investments, and consolidate, merge or sell all or substantially all of our assets. Absent certain defined events of default under our debt instruments, and as long as our ratio of EBITDA to interest expense is in excess of two to one, our debt covenants do not restrict our ability to pay cash dividends at our current rate. There are currently no limitations on the amount of dividends and share repurchases under the terms of our ~~amended~~ credit facility agreement ~~executed in February 2014.~~or our short-term bank loan. However, if our leverage ratio, defined ~~in the agreement~~ as total debt less unrestricted cash to EBITDA, should exceed 2.75 to one, there would be an annual limitation on the amount of dividends and share repurchases under the terms of ~~the credit facility.~~these agreements.

Long-term debt – In November 2012, we issued $200,000 of 6.0% senior notes maturing on November 15, 2020. The notes were issued via a private placement under Rule 144A of the Securities Act of 1933. These notes were subsequently registered with the Securities and Exchange Commission (SEC) via a registration statement which became effective on April 3, 2013. Interest payments are due each May and November. The notes are guaranteed by certain of our subsidiaries and place a limitation on restricted payments, including share repurchases and increases in dividend levels. The limitation on restricted payments does not apply if the notes are upgraded to an investment-grade credit rating. Financial information for the guarantor subsidiaries can be found in Note ~~15.~~16. At any time prior to November 15, 2015, we may on one or more occasions redeem up to 35% of the original principal amount of the notes with the proceeds of one or more equity offerings at a redemption price of 106% of the principal amount of the notes, together with accrued and unpaid interest. At any time prior to November 15, 2016, we may also redeem some or all of the notes at a price equal to 100% of the principal amount plus accrued and unpaid interest and a make-whole premium. At any time on or after November 15, 2016, we may redeem some or all of the notes at prices ranging from 100% to 103% of the principal amount. If at any time we sell certain of our assets or experience specific types of changes in control, we must offer to purchase all of the outstanding notes at 101% of the principal amount. We classify payments for early redemption premiums as financing activities in our consolidated statements of cash flows. Proceeds from the offering, net of offering costs, were $196,340. These proceeds were used to retire our senior notes which were due in June 2015. The fair value of the notes issued in November 2012 was $~~212,000~~217,540 as of ~~September 30, 2014~~March 31, 2015, based on quoted prices ~~for identical liabilities when traded as assets.~~that are directly observable. As discussed in Note 7, we have entered into interest rate swaps to hedge these notes.

In March 2011, we issued $200,000 of 7.0% senior notes maturing on March 15, 2019. The notes were issued via a private placement under Rule 144A of the Securities Act of 1933. These notes were subsequently registered with the SEC via a registration statement which became effective on January 10, 2012. Interest payments are due each March and September. The notes are guaranteed by certain of our subsidiaries and place a limitation on restricted payments, including share repurchases and increases in dividend levels. The limitation on restricted payments does not apply if the notes are upgraded to an investment-grade credit rating. Financial information for the guarantor subsidiaries can be found in Note 15. At any time prior to ~~March 15, 2015, we may redeem some or all of the notes at a price equal to~~ ~~100%~~ ~~of the principal amount plus accrued and unpaid interest and a make-whole premium. At any time on or after~~ ~~March 15, 2015, we may redeem some or all of the notes at prices ranging from~~ ~~100%~~ to ~~103.5%~~ ~~of the principal amount. If at any time we sell certain of our assets or experience specific types of changes in control, we must offer to purchase all of the outstanding notes at~~ ~~101%~~ ~~of the principal amount.~~ Proceeds

from the offering, net of offering costs, were $196,195. These proceeds were used to retire a portion of our senior, unsecured notes due in 2012. ~~The fair value of the notes issued in~~ In March ~~2011~~ ~~was~~ ~~$209,550~~ ~~as of~~ ~~September 30, 2014, based on quoted prices for identical liabilities when traded as assets.~~

In ~~October 2004, we issued~~ ~~$275,000~~ of ~~5.125%~~ ~~senior, unsecured notes which matured on~~ ~~October 1, 2014~~. The notes were issued via a private placement under Rule 144A of the Securities Act of 1933. These notes were subsequently registered with the SEC via a registration statement which became effective on November 23, 2004. Interest payments were due each April and October. Proceeds from the offering, net of offering costs, were ~~$272,276. These proceeds were used to repay commercial paper borrowings used for the acquisition of New England Business Service, Inc. in 2004. During 2011,~~2015, we retired ~~$10,000~~all of these notes, ~~and~~realizing a loss on early debt extinguishment of $8,917 during ~~2009, we retired~~ ~~$11,500~~ ~~of these notes. As of~~ ~~September 30, 2014~~, the ~~fair value of the~~ ~~$253,500~~ ~~remaining notes outstanding~~quarter ended March 31, 2015. This retirement was ~~$253,500~~, based on quoted prices for identical liabilities when traded as assets. As discussed in Note 7, we entered into interest rate swaps to hedge a portion of these notes. We utilized cash on hand and borrowings underfunded utilizing our credit facility ~~to settle these notes on October 1, 2014. Further information regarding this settlement can be found in Note 16.~~and a short-term bank loan.

We had capital lease obligations of $~~2,286~~2,544 as of ~~September 30, 2014~~March 31, 2015 and ~~$1,917~~$2,379 as of December 31, ~~2013~~2014 related to information technology hardware. The lease obligations will be paid through ~~May~~December 2018. The related assets are included in property, plant and equipment in the consolidated balance sheets. Depreciation of the leased assets is included in depreciation expense in the consolidated statements of cash flows.

Short-term debt – In March 2015, we entered into a $75,000 short-term variable rate bank loan. The weighted-average interest rate on this loan during the first quarter of 2015 was 1.51%. Under the terms of the credit agreement, we must repay any principal amount outstanding greater than $50,000 on September 5, 2015, and any remaining principal amount must be repaid by March 3, 2016. We may prepay the loan in whole or in part at our discretion. Interest payments are due at the end of each quarter. Proceeds from this loan, net of offering costs were $74,903 and were used, along with a draw on our credit facility, to retire all $200,000 of our 7.0% senior notes which were scheduled to mature on March 15, 2019.

As of ~~December~~March 31, ~~2013,~~2015, we had a ~~$200,000~~$350,000 credit facility, which ~~was~~is scheduled to expire in ~~February 2017. In February 2014, we modified the terms of this credit facility, increasing the amount available for borrowing to~~ ~~$350,000~~ ~~and extending the term to~~ February 2019. Our commitment fee ~~under the amended agreement~~ ranges from 0.20% to 0.40% based on our leverage ratio. Borrowings under the credit facility are collateralized by substantially all of our personal and intangible property.

The credit ~~agreement~~agreements governing ~~the~~our credit facility ~~contains~~and our short-term bank loan contain customary covenants regarding limits on levels of subsidiary indebtedness and capital expenditures, liens, investments, acquisitions, certain mergers, certain asset sales outside the ordinary course of business, and change in control as defined in the agreement. The ~~agreement~~agreements also ~~contains~~contain financial covenants regarding our leverage ratio and interest coverage, and our credit facility agreement also contains a financial covenant regarding liquidity.No

Daily average amounts ~~were~~ outstanding under our credit facility ~~during the nine months ended~~ were as follows:



(in thousands)	Quarter Ended March 31, 2015			Year Ended December 31, 2014
Daily average amount outstanding	$	174,900		$	43,675
Weighted-average interest rate	1.64		%	1.63		%

~~September 30,~~As of March 31, 2015, $243,000 was drawn on our credit facility at a weighted-average interest rate of 1.64%. As of December 31, 2014, ~~or during 2013.~~ $160,000 was drawn on our credit facility at a weighted-average interest rate of 1.63%. As of ~~September 30, 2014~~March 31, 2015, amounts were available for borrowing under our credit facility as follows:


	Total available
(in thousands)				Total available
Credit facility commitment	$	350,000		$	350,000
Amount drawn on credit facility				(243,000		)
Outstanding letters of credit⁽¹⁾	(12,728		)	(12,953		)
Net available for borrowing as of September 30, 2014⁽²⁾	$	337,272
Net available for borrowing as of March 31, 2015				$	94,047

⁽¹⁾We use standby letters of credit primarily to collateralize certain obligations related to our self-insured workers’ compensation claims, as well as claims for environmental matters, as required by certain states. These letters of credit reduce the amount available for borrowing under our credit facility.

⁽²⁾~~Our credit facility was utilized in October 2014 to settle maturing debt and to fund an acquisition. Further information can be found in Note 16.~~

Note ~~12:~~13: Other commitments and contingencies

Indemnifications – In the normal course of business, we periodically enter into agreements that incorporate general indemnification language. These indemnifications encompass third-party claims arising from our products and services, including service failures, breach of security, intellectual property rights, governmental regulations and/or employment-related matters. Performance under these indemnities would generally be triggered by our breach of the terms of the contract. In disposing of assets or businesses, we often provide representations, warranties and/or indemnities to cover various risks including, for example, unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. We do not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. However, we have no reason to believe that any possible liability under these indemnities would have a material adverse effect on our financial position, annual results of operations or annual cash flows. We have recorded liabilities for known indemnifications related to environmental matters.

Environmental matters – We are currently involved in environmental compliance, investigation and remediation activities at some of our current and former sites, primarily printing facilities of our Financial Services and Small Business Services segments which have been sold. Remediation costs are accrued on an undiscounted basis when the obligations are

either known or considered probable and can be reasonably estimated. Remediation or testing costs that result directly from the

sale of an asset and which we would not have otherwise incurred are considered direct costs of the sale of the asset. As such, they are included in our measurement of the carrying value of the asset sold.

Accruals for environmental matters were $~~8,090~~7,597 as of ~~September 30, 2014~~March 31, 2015 and $~~8,294~~7,942 as of December 31, ~~2013~~2014, primarily related to facilities which have been sold. These accruals are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets. Accrued costs consist of direct costs of the remediation activities, primarily fees which will be paid to outside engineering and consulting firms. Although recorded accruals include our best estimates, our total costs cannot be predicted with certainty due to various factors such as the extent of corrective action that may be required, evolving environmental laws and regulations and advances in environmental technology. Where the available information is sufficient to estimate the amount of the liability, that estimate is used. Where the information is only sufficient to establish a range of probable liability and no point within the range is more likely than any other, the lower end of the range is recorded. We do not believe that the range of possible outcomes could have a material effect on our financial condition, results of operations or liquidity. Expense reflected in the consolidated statements of comprehensive income for environmental matters was $~~1,020~~293 for the ~~nine months~~quarter ended ~~September 30, 2014~~March 31, 2015 and $~~1,085~~269 for the ~~nine months~~quarter ended ~~September 30, 2013~~March 31, 2014.

As of ~~September 30, 2014~~March 31, 2015, $~~3,061~~2,332 of the costs included in our environmental accruals were covered by an environmental insurance policy which we purchased during 2002. The insurance policy covers up to $12,911 of remediation costs, of which $~~9,850~~10,579 had been paid through ~~September 30, 2014~~March 31, 2015. This insurance policy does not cover properties acquired subsequent to 2002. However, costs included in our environmental accruals for such properties were not material as of ~~September 30, 2014~~March 31, 2015. We do not anticipate significant net cash outlays for environmental matters in ~~2014.~~2015. The insurance policy also covers up to $10,000 of third-party claims through 2032 at certain owned, leased and divested sites. We consider the realization of recovery under the insurance policy to be probable based on the insurance contract in place with a reputable and financially-sound insurance company. As our environmental accruals include our best estimates of these costs, we have recorded receivables from the insurance company within other current assets and other non-current assets based on the amounts of our environmental accruals for insured sites.

We also have an additional environmental site liability insurance policy providing coverage on facilities which we acquired subsequent to 2002. This policy covers liability for claims of bodily injury or property damage arising from pollution events at the covered facilities. The policy also provides remediation coverage should we be required by a governing authority to perform remediation activities at the covered sites. The policy provides coverage of up to $15,000 through April 2019. No accruals have been recorded in our consolidated financial statements for any of the events contemplated in this insurance policy.

Self-insurance – We are self-insured for certain costs, primarily workers' compensation claims and medical and dental benefits. The liabilities associated with these items represent our best estimate of the ultimate obligations for reported claims plus those incurred, but not reported. The liability for workers' compensation, which totaled $~~4,155~~4,046 as of ~~September 30, 2014~~March 31, 2015 and $~~4,560~~4,040 as of December 31, ~~2013~~2014, is accounted for on a discounted basis. The difference between the discounted and undiscounted workers' compensation liability was not significant as of ~~September 30, 2014~~March 31, 2015 or December 31, ~~2013~~2014. We record liabilities for medical and dental benefits for active employees and those employees on long-term disability. Our liability for active employees is not recorded on a discounted basis as we expect the benefits to be paid in a relatively short period of time. Our liability for those employees on long-term disability is accounted for on a discounted basis. Our total liability for these medical and dental benefits totaled $~~3,340~~2,206 as of ~~September 30, 2014~~March 31, 2015 and $~~3,322~~2,361 as of December 31, ~~2013~~2014. The difference between the discounted and undiscounted medical and dental liability was ~~$149~~not significant as of ~~September 30, 2014~~March 31, 2015 ~~and~~or December 31, ~~2013~~2014.

Our self-insurance liabilities are estimated, in part, by considering historical claims experience, demographic factors and other actuarial assumptions. The estimated accruals for these liabilities could be significantly affected if future events and claims differ from these assumptions and historical trends.

Note ~~13:~~14: Shareholders’ equity

We have an outstanding authorization from our board of directors to purchase up to 10,000 shares of our common stock. This authorization has no expiration date, and 1,962 shares remained available for purchase under this authorization as of ~~September 30, 2014~~March 31, 2015. ~~During~~We did not repurchase any shares during the ~~nine months~~quarter ended ~~September 30, 2014~~March 31, 2015~~, we repurchased 1,133 shares for $60,119.~~.

2321

Note ~~14:~~15: Business segment information

We operate three reportable business segments: Small Business Services, Financial Services and Direct Checks. Our business segments are generally organized by type of customer served and reflect the way we manage the company. Small Business Services promotes and sells products and services to small businesses via direct response mail and internet advertising, referrals from financial institutions and telecommunications clients, Safeguard distributors, a network of local dealers, a direct sales force which focuses on major accounts, and an outbound telemarketing group. Financial Services' products and services are sold primarily through a direct sales force, which executes product and service supply contracts with our financial institution clients nationwide, including banks, credit unions and financial services companies. ~~Once~~In the case of check supply contracts, once the financial institution relationship is established, consumers may submit their check orders through their financial institution or over the phone or internet. Direct Checks sells products and services directly to consumers using direct ~~response~~ marketing, including print advertising and search engine marketing and optimization strategies. All three segments operate primarily in the United States. Small Business Services also has operations in Canada and portions of Europe.

In January 2015, we decided that two company-owned small business distributors will no longer be managed as part of our Small Business Services segment. Because their customers consist primarily of financial institutions, we determined that the businesses would be better positioned for long-term growth if they were managed as part of our Financial Services segment. As such, the results of operations of these businesses are included in the Financial Services segment beginning in 2015. Our business segment results for prior periods have been restated to reflect this change. Restated amounts for revenue and operating income for each quarter of 2014 and full year 2013 were as follows:



(in thousands)	Revenue		Operating income
Small Business Services:
First quarter 2014	$	266,510	$	43,397
Second quarter 2014	267,695		48,788
Third quarter 2014	278,268		42,948
Fourth quarter 2014	294,032		52,093
Total 2014	$	1,106,505	$	187,226
Total 2013	$	1,036,268	$	175,420

Financial Services:
First quarter 2014	$	92,446	$	21,823
Second quarter 2014	94,565		22,277
Third quarter 2014	92,072		19,133
Fourth quarter 2014	112,046		24,675
Total 2014	$	391,129	$	87,908
Total 2013	$	357,142	$	82,811

Our product and service offerings are comprised of the following:

Checks – We remain one of the largest providers of checks in the United States, both in terms of revenue and the number of checks produced. Checks account for the majority of the revenue in our Financial Services and Direct Checks segments and represented ~~43.2%~~40.7% of our Small Business Services segment's revenue in ~~2013.~~2014.

Marketing solutions and other services – All three of our segments offer products and services that help small businesses and/or financial institutions promote their businesses and acquire customers, as well as provide various other service offerings. Our Small Business Services segment offers services designed to fulfill the sales and marketing needs of small businesses, including web design, hosting and other web services; search engine optimization; marketing services, including email, mobile, social media and other self-service marketing solutions; digital printing services; and logo design. In addition, Small Business Services offers products such as promotional products, postcards, brochures, retail packaging supplies, apparel, greeting cards and business cards, as well as service offerings, including fraud protection and security, and payroll services. Financial Services offers various customer acquisition programs, marketing communications services, rewards and loyalty programs, fraud protection and security services, financial institution profitability and risk management services, supply chain management expertise, and a suite of financial technology solutions that integrates receivables, accelerates deposits and

payments, and eliminates paper. Our Direct Checks segment provides fraud protection and security services, as well as package insert programs under which companies' marketing materials are included in our check packages.

Forms – Our Small Business Services segment provides printed forms to small businesses, including deposit tickets, billing forms, work orders, job proposals, purchase orders, invoices and personnel forms. This segment also offers computer forms compatible with accounting software packages commonly used by small businesses. Forms sold by our Financial Services and Direct Checks segments include deposit tickets and check registers.

Accessories and other products – Small Business Services provides products designed to ~~provide~~supply small business owners with the customized documents necessary to efficiently manage their business including envelopes, office supplies, stamps and ~~labels, as well as retail packaging supplies.~~labels. Our Financial Services and Direct Checks segments offer checkbook covers and stamps.

~~Marketing solutions~~ – All three of our segments offer products and services that help small businesses and/or financial institutions promote their businesses and acquire customers. Our Small Business Services segment offers services designed to fulfill the sales and marketing needs of small businesses, including web design, hosting and other web services; search engine optimization; marketing services, including email, mobile, social media and other self-service marketing solutions; digital printing services; and logo design. In addition, Small Business Services offers products such as promotional products, postcards, brochures, apparel, greeting cards and business cards. Financial Services offers various customer acquisition programs, marketing communications services, and rewards and loyalty programs. Direct Checks provides package insert programs under which companies' marketing materials are included in our check packages.

~~Other services~~ – All three of our segments provide fraud protection and security services. In addition, our Small Business Services segment offers payroll services, and Financial Services provides financial institution profitability and risk management services.

The accounting policies of the segments are the same as those described in the Notes to Consolidated Financial Statements included in the ~~2013~~2014 Form 10-K. We allocate corporate costs for our shared services functions to our business segments, including costs of our executive management, human resources, supply chain, finance, information technology and legal functions. Generally, where costs incurred are directly attributable to a business segment, primarily within the areas of information technology, supply chain and finance, those costs are charged directly to that segment. Because we use a shared services approach for many of our functions, certain costs are not directly attributable to a business segment. These costs are allocated to our business segments based on segment revenue, as revenue is a measure of the relative size and magnitude of each segment and indicates the level of corporate shared services consumed by each segment. Corporate assets are not allocated to the segments and consist of property, plant and equipment, internal-use software, inventories and supplies related to our corporate shared services functions of manufacturing, information technology and real estate, as well as long-term investments.

We are an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations and the sharing of assets. Therefore, we do not represent that these segments, if operated independently, would report the operating income and other financial information shown.

The following is our segment information as of and for the quarters ended ~~September 30, 2014~~March 31, 2015 and ~~2013~~2014:

Reportable Business Segments
Small Business Services Financial Services Direct Checks Corporate Consolidated
Total revenue from external 2014 $ 284,643
$ 85,697
$ 42,864
$ —
$ 413,204
customers: 2013 265,463
86,482
46,135
—
398,080
Operating income: 2014 43,235
18,846
14,651
—
76,732
2013 46,277
18,859
14,582
—
79,718
Depreciation and amortization 2014 11,176
3,075
1,676
—
15,927
expense: 2013 11,449
2,842
1,984
—
16,275
Total assets: 2014 948,839
151,009
164,083
407,533
1,671,464
2013 929,820
87,934
167,626
324,306
1,509,686
Capital asset purchases: 2014 —
—
—
9,798
9,798
2013 —
—
—
10,196
10,196

~~The following is our segment information as of and for the nine months ended~~ ~~September 30, 2014~~ ~~and~~ ~~2013~~:


		Reportable Business Segments											Reportable Business Segments
		Small Business Services		Financial Services		Direct Checks		Corporate		Consolidated
(in thousands)													Small Business Services		Financial Services		Direct Checks		Corporate		Consolidated
Total revenue from external	2014	$	828,250	$	263,307	$	134,012	$	—	$	1,225,569	2015	$	276,966	$	111,540	$	45,111	$	—	$	433,617
customers:	2013	765,607		256,695		144,765		—		1,167,067		2014	266,510		92,446		47,999		—		406,955
Operating income:	2014	135,591		62,775		44,121		—		242,487		2015	49,448		20,410		15,433		—		85,291
	2013	131,068		63,350		45,494		—		239,912		2014	43,397		21,823		15,576		—		80,796
Depreciation and amortization	2014	34,027		9,416		5,102		—		48,545		2015	10,209		5,990		1,484		—		17,683
expense:	2013	34,139		8,233		5,949		—		48,321		2014	11,346		3,202		1,717		—		16,265
Total assets:	2014	948,839		151,009		164,083		407,533		1,671,464		2015	953,165		277,994		163,301		271,180		1,665,640
	2013	929,820		87,934		167,626		324,306		1,509,686		2014	928,118		103,767		166,501		365,946		1,564,332
Capital asset purchases:	2014	—		—		—		29,649		29,649		2015	—		—		—		9,512		9,512
	2013	—		—		—		26,786		26,786		2014	—		—		—		10,950		10,950

Note ~~15:~~16: Supplemental guarantor financial information

Our long-term notes due in ~~2019 and~~ 2020 (Note ~~11)~~12), as well as obligations under our credit facility, are jointly and severally guaranteed on a full and unconditional basis, subject to the release provisions described herein, by certain 100%-owned subsidiaries. The subsidiary guarantees with respect to our long-term notes are subject to release upon the occurrence of certain events: the sale of all or substantially all of a subsidiary's assets, when the requirements for defeasance of the guaranteed securities have been satisfied, when the subsidiary is declared an unrestricted subsidiary, or upon satisfaction and discharge of the indenture.

The following condensed supplemental consolidating financial information reflects the summarized financial information of Deluxe Corporation, the guarantors on a combined basis and the non-guarantor subsidiaries on a combined

basis. Separate financial statements of the guarantors are not presented because the guarantors are jointly, severally, fully and unconditionally liable under the guarantees, subject to the release provisions described herein, and we believe that the condensed consolidating financial statements presented are sufficient to provide an understanding of the financial position, results of operations and cash flows of the guarantors.

We are an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations and the sharing of assets. Therefore, we do not represent that the financial information presented is indicative of the financial position, results

of operations or cash flows which the entities would have reported if they had operated independently. The condensed consolidating financial statements should be read in conjunction with our consolidated financial statements.

2624

Deluxe Corporation

Condensed Consolidating Balance Sheet

(Unaudited)


	September 30, 2014											March 31, 2015
	Deluxe Corporation		Guarantor subsidiaries		Non-guarantor subsidiaries		Eliminations			Total
(in thousands)												Deluxe Corporation		Guarantor subsidiaries		Non-guarantor subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	133,927	$	3,093	$	51,220	$	(239	)	$	188,001	$	6,817	$	2,009	$	49,508	$	(15	)	$	58,319
Trade accounts receivable, net	—		77,046		14,322		—			91,368		—		82,940		11,421		—			94,361
Inventories and supplies	—		30,789		5,310		—			36,099		—		33,346		4,754		—			38,100
Deferred income taxes	2,722		2,911		62		—			5,695		9,096		1,189		10		—			10,295
Funds held for customers	—		—		39,546		—			39,546		—		—		50,038		—			50,038
Other current assets	11,678		19,268		3,341		—			34,287		7,336		32,951		3,544		—			43,831
Total current assets	148,327		133,107		113,801		(239		)	394,996		23,249		152,435		119,275		(15		)	294,944
Deferred income taxes	—		—		1,510		—			1,510		2,067		—		1,291		(2,067		)	1,291
Long-term investments	38,186		7,839		—		—			46,025		38,776		7,361		—		—			46,137
Property, plant and equipment, net	4,891		83,127		6,430		—			94,448		4,696		74,947		5,615		—			85,258
Assets held for sale	—		3,104		23,694		—			26,798		—		3,102		23,814		—			26,916
Intangibles, net	633		144,280		2,256		—			147,169		1,367		206,761		2,127		—			210,255
Goodwill	—		821,138		1,782		—			822,920		—		877,685		1,573		—			879,258
Investments in consolidated subsidiaries	1,106,617		89,487		—		(1,196,104		)	—		1,319,928		88,254		—		(1,408,182		)	—
Intercompany receivable	8,168		—		—		(8,168		)	—		—		125,513		1,359		(126,872		)	—
Other non-current assets	10,224		126,911		463		—			137,598		7,539		113,653		389		—			121,581
Total assets	$	1,317,046	$	1,408,993	$	149,936	$	(1,204,511	)	$	1,671,464	$	1,397,622	$	1,649,711	$	155,443	$	(1,537,136	)	$	1,665,640

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	11,523	$	58,759	$	4,237	$	(239	)	$	74,280	$	13,313	$	58,951	$	2,978	$	(15	)	$	75,227
Accrued liabilities	27,749		102,703		46,663		—			177,115		41,875		123,683		55,331		—			220,889
Short-term borrowings												318,000		—		—		—			318,000
Long-term debt due within one year	254,282		—		9		—			254,291		1,009		—		4		—			1,013
Total current liabilities	293,554		161,462		50,909		(239		)	505,686		374,197		182,634		58,313		(15		)	615,129
Long-term debt	390,305		—		16		—			390,321		196,406		—		28		—			196,434
Deferred income taxes	1,620		82,321		—		—			83,941		—		96,903		—		(2,067		)	94,836
Intercompany payable	—		7,409		759		(8,168		)	—		126,872		—		—		(126,872		)	—
Other non-current liabilities	27,399		51,184		8,765		—			87,348		20,401		50,246		8,848		—			79,495
Total shareholders' equity	604,168		1,106,617		89,487		(1,196,104		)	604,168		679,746		1,319,928		88,254		(1,408,182		)	679,746
Total liabilities and shareholders' equity	$	1,317,046	$	1,408,993	$	149,936	$	(1,204,511	)	$	1,671,464	$	1,397,622	$	1,649,711	$	155,443	$	(1,537,136	)	$	1,665,640

2725

Deluxe Corporation

Condensed Consolidating Balance Sheet

(Unaudited)


	December 31, 2013											December 31, 2014
	Deluxe Corporation		Guarantor subsidiaries		Non-guarantor subsidiaries		Eliminations			Total
(in thousands)												Deluxe Corporation		Guarantor subsidiaries		Non-guarantor subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	71,972	$	6,991	$	45,229	$	(3,103	)	$	121,089	$	8,335	$	4,342	$	52,193	$	(3,329	)	$	61,541
Trade accounts receivable, net	—		70,317		17,732		—			88,049		—		100,197		13,459		—			113,656
Inventories and supplies	—		24,173		4,793		—			28,966		—		34,097		5,314		—			39,411
Deferred income taxes	2,698		4,198		50		—			6,946		8,929		1,182		48		—			10,159
Funds held for customers	—		—		42,425		—			42,425		—		—		43,604		—			43,604
Other current assets	8,266		20,118		3,454		—			31,838		8,538		38,912		3,069		—			50,519
Total current assets	82,936		125,797		113,683		(3,103		)	319,313		25,802		178,730		117,687		(3,329		)	318,890
Deferred income taxes	—		—		1,851		—			1,851		660		—		1,411		(660		)	1,411
Long-term investments	35,155		9,296		—		—			44,451		38,623		7,828		—		—			46,451
Property, plant and equipment, net	—		93,472		7,871		—			101,343		4,868		76,306		6,449		—			87,623
Assets held for sale	—		4,046		21,405		—			25,451		—		3,102		23,717		—			26,819
Intangibles, net	—		151,361		2,215		—			153,576		987		203,967		2,226		—			207,180
Goodwill	—		820,898		1,879		—			822,777		—		866,659		1,717		—			868,376
Investments in consolidated subsidiaries	1,155,705		82,918		—		(1,238,623		)	—		1,268,918		90,960		—		(1,359,878		)	—
Intercompany receivable	—		39,192		1,373		(40,565		)	—		—		82,758		536		(83,294		)	—
Other non-current assets	8,077		92,461		229		—			100,767		9,675		121,549		417		—			131,641
Total assets	$	1,281,873	$	1,419,441	$	150,506	$	(1,282,291	)	$	1,569,529	$	1,349,533	$	1,631,859	$	154,160	$	(1,447,161	)	$	1,688,391

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	11,831	$	54,655	$	8,109	$	(3,103	)	$	71,492	$	13,792	$	73,380	$	3,373	$	(3,329	)	$	87,216
Accrued liabilities	13,794		97,577		51,619		—			162,990		26,278		141,816		51,027		—			219,121
Short-term borrowings												160,000		—		—		—			160,000
Long-term debt due within one year	255,589		—		—		—			255,589		903		—		8		—			911
Total current liabilities	281,214		152,232		59,728		(3,103		)	490,071		200,973		215,196		54,408		(3,329		)	467,248
Long-term debt	385,115		—		—		—			385,115		393,387		—		14		—			393,401
Deferred income taxes	2,821		79,993		—		—			82,814		—		96,498		—		(660		)	95,838
Intercompany payable	40,565		—		—		(40,565		)	—		83,294		—		—		(83,294		)	—
Other non-current liabilities	21,701		31,511		7,860		—			61,072		24,382		51,247		8,778		—			84,407
Total shareholders' equity	550,457		1,155,705		82,918		(1,238,623		)	550,457		647,497		1,268,918		90,960		(1,359,878		)	647,497
Total liabilities and shareholders' equity	$	1,281,873	$	1,419,441	$	150,506	$	(1,282,291	)	$	1,569,529	$	1,349,533	$	1,631,859	$	154,160	$	(1,447,161	)	$	1,688,391

2826

Deluxe Corporation

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)


	Quarter Ended September 30, 2014															Quarter Ended March 31, 2015
	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
(in thousands)																Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	326,483		$	24,124		$	—		$	350,607		$	—		$	332,738		$	22,275		$	—		$	355,013
Service revenue	21,597			56,883			6,929			(22,812		)	62,597			26,685			73,240			6,598			(27,919		)	78,604
Total revenue	21,597			383,366			31,053			(22,812		)	413,204			26,685			405,978			28,873			(27,919		)	433,617
Cost of products	—			(113,576		)	(12,341		)	—			(125,917		)	—			(112,252		)	(11,487		)	—			(123,739		)
Cost of services	(22,115		)	(22,878		)	(1,762		)	22,522			(24,233		)	(30,283		)	(28,580		)	(2,090		)	32,011			(28,942		)
Total cost of revenue	(22,115		)	(136,454		)	(14,103		)	22,522			(150,150		)	(30,283		)	(140,832		)	(13,577		)	32,011			(152,681		)
Gross profit	(518		)	246,912			16,950			(290		)	263,054			(3,598		)	265,146			15,296			4,092			280,936
Operating expenses	—			(168,313		)	(11,831		)	290			(179,854		)	—			(180,758		)	(10,795		)	(4,092		)	(195,645		)
Asset impairment charge	—			(6,468		)	—			—			(6,468		)
Operating (loss) income	(518		)	72,131			5,119			—			76,732			(3,598		)	84,388			4,501			—			85,291
Loss on early debt extinguishment																(8,917		)	—			—			—			(8,917		)
Interest expense	(9,560		)	(4,161		)	—			4,141			(9,580		)	(6,497		)	(1,370		)	—			1,352			(6,515		)
Other income	3,826			399			237			(4,141		)	321			1,375			138			269			(1,352		)	430
(Loss) income before income taxes	(6,252		)	68,369			5,356			—			67,473			(17,637		)	83,156			4,770			—			70,289
Income tax benefit (provision)	3,930			(25,524		)	(1,448		)	—			(23,042		)	6,501			(29,441		)	(1,409		)	—			(24,349		)
(Loss) income before equity in earnings of consolidated subsidiaries	(2,322		)	42,845			3,908			—			44,431			(11,136		)	53,715			3,361			—			45,940
Equity in earnings of consolidated subsidiaries	46,753			3,908			—			(50,661		)	—			57,076			3,361			—			(60,437		)	—
Net income	$	44,431		$	46,753		$	3,908		$	(50,661	)	$	44,431		$	45,940		$	57,076		$	3,361		$	(60,437	)	$	45,940

Comprehensive income	$	41,585		$	43,609		$	442		$	(44,051	)	$	41,585		$	40,183		$	51,277		$	(2,707	)	$	(48,570	)	$	40,183

2927

Deluxe Corporation

Condensed Consolidating Statement of Comprehensive Income

(Unaudited)


	Quarter Ended September 30, 2013															Quarter Ended March 31, 2014
	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
(in thousands)																Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Product revenue	$	—		$	321,039		$	21,148		$	—		$	342,187		$	—		$	322,649		$	23,015		$	—		$	345,664
Service revenue	2,220			50,972			6,580			(3,879		)	55,893			21,570			55,532			8,061			(23,872		)	61,291
Total revenue	2,220			372,011			27,728			(3,879		)	398,080			21,570			378,181			31,076			(23,872		)	406,955
Cost of products	—			(106,523		)	(10,198		)	—			(116,721		)	—			(106,666		)	(11,720		)	—			(118,386		)
Cost of services	(2,573		)	(23,516		)	(2,005		)	2,592			(25,502		)	(24,051		)	(24,431		)	(3,076		)	25,016			(26,542		)
Total cost of revenue	(2,573		)	(130,039		)	(12,203		)	2,592			(142,223		)	(24,051		)	(131,097		)	(14,796		)	25,016			(144,928		)
Gross profit	(353		)	241,972			15,525			(1,287		)	255,857			(2,481		)	247,084			16,280			1,144			262,027
Operating expenses	—			(165,539		)	(11,887		)	1,287			(176,139		)	—			(167,766		)	(12,321		)	(1,144		)	(181,231		)
Operating (loss) income	(353		)	76,433			3,638			—			79,718			(2,481		)	79,318			3,959			—			80,796
Interest expense	(9,632		)	(2,194		)	(3		)	2,167			(9,662		)	(9,466		)	(3,422		)	—			3,321			(9,567		)
Other income (expense)	2,092			(162		)	794			(2,167		)	557
Other income																2,603			672			177			(3,321		)	131
(Loss) income before income taxes	(7,893		)	74,077			4,429			—			70,613			(9,344		)	76,568			4,136			—			71,360
Income tax benefit (provision)	5,439			(28,125		)	(1,024		)	—			(23,710		)	3,706			(26,554		)	(1,188		)	—			(24,036		)
(Loss) income before equity in earnings of consolidated subsidiaries	(2,454		)	45,952			3,405			—			46,903			(5,638		)	50,014			2,948			—			47,324
Equity in earnings of consolidated subsidiaries	49,357			3,405			—			(52,762		)	—			52,962			2,948			—			(55,910		)	—
Net income	$	46,903		$	49,357		$	3,405		$	(52,762	)	$	46,903		$	47,324		$	52,962		$	2,948		$	(55,910	)	$	47,324

Comprehensive income	$	48,907		$	51,093		$	4,622		$	(55,715	)	$	48,907		$	45,455		$	50,795		$	459		$	(51,254	)	$	45,455

~~Deluxe Corporation~~

~~Condensed Consolidating Statement of Comprehensive Income~~

~~(Unaudited)~~

Nine Months Ended September 30, 2014
Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total
Product revenue $ —
$ 970,175
$ 70,559
$ —
$ 1,040,734
Service revenue 64,727
168,630
22,008
(70,530 ) 184,835
Total revenue 64,727
1,138,805
92,567
(70,530 ) 1,225,569
Cost of products —
(328,277 ) (35,575 ) —
(363,852 )
Cost of services (65,910 ) (72,083 ) (6,908 ) 67,784
(77,117 )
Total cost of revenue (65,910 ) (400,360 ) (42,483 ) 67,784
(440,969 )
Gross profit (1,183 ) 738,445
50,084
(2,746 ) 784,600
Operating expenses —
(502,294 ) (36,097 ) 2,746
(535,645 )
Asset impairment charge —
(6,468 ) —
—
(6,468 )
Operating (loss) income (1,183 ) 229,683
13,987
—
242,487
Interest expense (28,536 ) (10,632 ) —
10,491
(28,677 )
Other income 9,525
1,331
455
(10,491 ) 820
(Loss) income before income taxes (20,194 ) 220,382
14,442
—
214,630
Income tax benefit (provision) 9,883
(78,691 ) (3,992 ) —
(72,800 )
(Loss) income before equity in earnings of consolidated subsidiaries (10,311 ) 141,691
10,450
—
141,830
Equity in earnings of consolidated subsidiaries 152,141
10,450
—
(162,591 ) —
Net income $ 141,830
$ 152,141
$ 10,450
$ (162,591 ) $ 141,830

Comprehensive income $ 140,164
$ 149,581
$ 6,924
$ (156,505 ) $ 140,164

~~Deluxe Corporation~~

~~Condensed Consolidating Statement of Comprehensive Income~~

~~(Unaudited)~~

Nine Months Ended September 30, 2013
Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total
Product revenue $ —
$ 962,380
$ 52,473
$ —
$ 1,014,853
Service revenue 6,570
137,517
19,632
(11,505 ) 152,214
Total revenue 6,570
1,099,897
72,105
(11,505 ) 1,167,067
Cost of products —
(317,908 ) (22,534 ) —
(340,442 )
Cost of services (5,227 ) (62,567 ) (6,452 ) 5,621
(68,625 )
Total cost of revenue (5,227 ) (380,475 ) (28,986 ) 5,621
(409,067 )
Gross profit 1,343
719,422
43,119
(5,884 ) 758,000
Operating expenses —
(491,374 ) (32,598 ) 5,884
(518,088 )
Operating income 1,343
228,048
10,521
—
239,912
Interest expense (28,655 ) (7,016 ) (3 ) 6,970
(28,704 )
Other income (expense) 6,184
(510 ) 2,344
(6,970 ) 1,048
(Loss) income before income taxes (21,128 ) 220,522
12,862
—
212,256
Income tax benefit (provision) 12,018
(80,048 ) (3,296 ) —
(71,326 )
(Loss) income before equity in earnings of consolidated subsidiaries (9,110 ) 140,474
9,566
—
140,930
Equity in earnings of consolidated subsidiaries 150,040
9,566
—
(159,606 ) —
Net income $ 140,930
$ 150,040
$ 9,566
$ (159,606 ) $ 140,930

Comprehensive income $ 140,945
$ 149,253
$ 7,221
$ (156,474 ) $ 140,945

3228

Deluxe Corporation

Condensed Consolidating Statement of Cash Flows

(Unaudited)


	Nine Months Ended September 30, 2014															Quarter Ended March 31, 2015
	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Net cash (used) provided by operating activities	$	(227	)	$	191,159		$	9,563		$	2,864		$	203,359
(in thousands)																Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Net cash provided by operating activities																$	12,584		$	57,848		$	3,957		$	3,314		$	77,703

Cash flows from investing activities:
Purchases of capital assets	(560		)	(27,910		)	(1,179		)	—			(29,649		)	(417		)	(8,266		)	(829		)	—			(9,512		)
Payments for acquisitions, net of cash acquired	—			(12,144		)	—			—			(12,144		)	(26		)	(7,558		)	—			—			(7,584		)
Proceeds from company-owned life insurance policies	897			—			—			—			897
Other	(319		)	770			11			—			462			(176		)	636			3			—			463
Net cash provided (used) by investing activities	18			(39,284		)	(1,168		)	—			(40,434		)
Net cash used by investing activities																(619		)	(15,188		)	(826		)	—			(16,633		)
Cash flows from financing activities:
Net payments on short-term debt	—			(125		)	—			—			(125		)
Payments on long-term debt	(645		)	(170		)	(5		)	—			(820		)
Net proceeds from short-term borrowings																158,000			—			—			—			158,000
Payments on long-term debt, including costs of debt reacquisition																(207,238		)	—			(4		)	—			(207,242		)
Payments for debt issue costs	(1,085		)	—			—			—			(1,085		)	(97		)	—			—			—			(97		)
Proceeds from issuing shares under employee plans	8,814			—			—			—			8,814			3,389			—			—			—			3,389
Excess tax benefit from share-based employee awards	2,581			—			—			—			2,581			1,260			—			—			—			1,260
Payments for common shares repurchased	(60,119		)	—			—			—			(60,119		)
Cash dividends paid to shareholders	(42,631		)	—			—			—			(42,631		)	(15,011		)	—			—			—			(15,011		)
Advances from (to) consolidated subsidiaries	155,249			(155,478		)	229			—			—			46,214			(44,993		)	(1,221		)	—			—
Net cash provided (used) by financing activities	62,164			(155,773		)	224			—			(93,385		)

Other																—			—			(150		)	—			(150		)
Net cash used by financing activities																(13,483		)	(44,993		)	(1,375		)	—			(59,851		)
Effect of exchange rate change on cash	—			—			(2,628		)	—			(2,628		)	—			—			(4,441		)	—			(4,441		)

Net change in cash and cash equivalents	61,955			(3,898		)	5,991			2,864			66,912			(1,518		)	(2,333		)	(2,685		)	3,314			(3,222		)
Cash and cash equivalents, beginning of year	71,972			6,991			45,229			(3,103		)	121,089			8,335			4,342			52,193			(3,329		)	61,541
Cash and cash equivalents, end of period	$	133,927		$	3,093		$	51,220		$	(239	)	$	188,001		$	6,817		$	2,009		$	49,508		$	(15	)	$	58,319

3329

Deluxe Corporation

Condensed Consolidating Statement of Cash Flows

(Unaudited)


	Nine Months Ended September 30, 2013															Quarter Ended March 31, 2014
	Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Net cash (used) provided by operating activities	$	(4,192	)	$	172,604		$	15,561		$	—		$	183,973
(in thousands)																Deluxe Corporation			Guarantor subsidiaries			Non-guarantor subsidiaries			Eliminations			Total
Net cash provided by operating activities																$	19,972		$	50,290		$	415		$	2,662		$	73,339

Cash flows from investing activities:
Purchases of capital assets	—			(23,645		)	(3,141		)	—			(26,786		)	(92		)	(10,058		)	(800		)	—			(10,950		)
Payments for acquisitions, net of cash acquired	—			(48,114		)	—			—			(48,114		)	—			(2,866		)	—			—			(2,866		)
Proceeds from company-owned life insurance policies	3,641			958			—			—			4,599
Other	1,260			204			8			—			1,472			226			577			3			—			806
Net cash provided (used) by investing activities	4,901			(70,597		)	(3,133		)	—			(68,829		)	134			(12,347		)	(797		)	—			(13,010		)
Cash flows from financing activities:
Payments on long-term debt	(125		)	—			(1,331		)	—			(1,456		)
Net payments on short-term borrowings																—			(125		)	—			—			(125		)
Payments on long-term debt, including costs of debt reacquisition																(183		)	(20		)	—			—			(203		)
Payments for debt issue costs	(236		)	—			—			—			(236		)	(939		)	—			—			—			(939		)
Change in book overdrafts	(270		)	(3,066		)	—			3,066			(270		)
Proceeds from issuing shares under employee plans	12,881			—			—			—			12,881			5,376			—			—			—			5,376
Excess tax benefit from share-based employee awards	1,582			—			—			—			1,582			1,401			—			—			—			1,401
Payments for common shares repurchased	(33,798		)	—			—			—			(33,798		)	(31,930		)	—			—			—			(31,930		)
Cash dividends paid to shareholders	(38,027		)	—			—			—			(38,027		)	(12,644		)	—			—			—			(12,644		)
Advances from (to) consolidated subsidiaries	97,427			(98,606		)	1,179			—			—			29,045			(30,950		)	1,905			—			—
Net cash provided (used) by financing activities	39,434			(101,672		)	(152		)	3,066			(59,324		)

Net cash (used) provided by financing activities																(9,874		)	(31,095		)	1,905			—			(39,064		)
Effect of exchange rate change on cash	—			—			(1,215		)	—			(1,215		)	—			—			(1,739		)	—			(1,739		)

Net change in cash and cash equivalents	40,143			335			11,061			3,066			54,605			10,232			6,848			(216		)	2,662			19,526
Cash and cash equivalents, beginning of year	14,862			3,228			31,346			(4,001		)	45,435			71,972			6,991			45,229			(3,103		)	121,089
Cash and cash equivalents, end of period	$	55,005		$	3,563		$	42,407		$	(935	)	$	100,040		$	82,204		$	13,839		$	45,013		$	(441	)	$	140,615

3430

~~Note 16: Subsequent events~~

On October 1, 2014, our senior, unsecured notes issued in October 2004 matured and were repaid utilizing $124,996 of cash and an initial draw of $135,000 on our $350,000 credit facility. Our total payment related to the maturing debt was $259,996, consisting of $253,500 of principal and $6,496 of accrued interest.

On October 22, 2014, we acquired Wausau Financial Systems, Inc. (WFS) in an all cash transaction for approximately $90,000, net of cash acquired, funded by a draw on our existing credit facility. The purchase included specific tax attributes which are expected to generate approximately $4,000 of incremental cash tax savings. WFS provides software-based solutions for receivables management, lockbox processing, remote deposit capture and paperless branch solutions to financial institutions, utilities, government agencies and telecommunications companies. The company will provide us new access into the commercial and treasury side of financial institutions through a strong software-as-a-service (SaaS) technology offering. The results of this business will be included in our Financial Services segment.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

EXECUTIVE OVERVIEW

We employ a multi-channel strategy to provide a suite of life-cycle driven solutions to our customers. We use printed and electronic marketing, a direct sales force, financial institution and telecommunication client referrals, purchased search results from online search engines, and independent distributors and dealers to promote and sell a wide range of customized products and services. Our Small Business Services segment provides products and services to ~~over 4.5~~nearly 4.6 million small business customers and our Direct Checks segment provides products and services to more than six million consumers. Through our Financial Services segment, we provide products and services to approximately ~~5,500~~5,600 financial institution clients. We operate primarily in the United States. Small Business Services also has operations in Canada and portions of Europe. Our product and service offerings are comprised of the following:

Forms – Our Small Business Services segment is a leading provider of printed forms to small businesses, including deposit tickets, billing forms, work orders, job proposals, purchase orders, invoices and personnel forms. This segment also offers computer forms compatible with accounting software packages commonly used by small businesses. Forms sold by our Financial Services and Direct Checks segments include deposit tickets and check registers.

Accessories and other products – Small Business Services offers products designed to provide small business owners with the customized documents necessary to efficiently manage their business including envelopes, office supplies, stamps and ~~labels, as well as retail packaging supplies.~~labels. Our Financial Services and Direct Checks segments offer checkbook covers and stamps.

Throughout the past several years, we have focused on opportunities to increase revenue and operating income, while maintaining strong operating margins. These opportunities have included new product and service offerings, brand awareness and positioning initiatives, investing in technology for our service offerings, enhancing our internet capabilities, improving customer segmentation, adding new small business customers, and reducing costs. In addition, we invested in various

acquisitions that extend the range of products and services we offer to our customers, including marketing solutions and other services offerings. During ~~the remainder of 2014,~~2015, we will continue our focus in these areas, with an emphasis on profitable revenue growth, increasing revenue from our marketing solutions and other services offerings for small businesses and financial institutions, and assessing small to medium-sized acquisitions that complement our large customer bases, with a focus on marketing solutions and other ~~services opportunities.~~services.

Earnings for the first ~~nine months~~quarter of ~~2014,~~2015, as compared to the first ~~nine months~~quarter of ~~2013,~~2014, benefited from price increases in all three segments and continuing initiatives to reduce our cost structure, primarily within our ~~fulfillment,~~ sales, ~~and~~ marketing and ~~information technology~~fulfillment organizations. These increases in earnings were partially offset by volume reductions for our personal check businesses due primarily to the continuing decline in check usage, as well as increased investments in revenue growth ~~opportunities, including product and service enhancements.~~opportunities.

Our Strategies

Details concerning our strategies were provided in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the year ended December 31, ~~2013~~2014 (the ~~“2013~~“2014 Form 10-K”). We made no significant changes to our strategies during the first ~~nine months~~quarter of ~~2014.~~2015.

Consistent with our ~~strategy,~~strategies, during the first ~~nine months~~quarter of ~~2014,~~2015, we ~~purchased the operations~~acquired selected assets of ~~several small business distributors for $7.8 million, net~~Range, Inc., a marketing services provider, and VerifyValid, LLC, a provider of ~~cash acquired. We also purchased~~electronic check payment services, as well as all of the outstanding capital stock of ~~NetClime, Inc.~~a small business distributor, in cash transactions for ~~cash~~an aggregate amount of ~~$2.0~~$7.6 million, net of cash acquired, as well as selected assets of Gift Box Corporation of America (GBCA) for cash of $1.8 million. NetClime is a provider of website development software and GBCA is a supplier of retail packaging solutions, including gift boxes, bags, bows, ribbons and wraps.plus non-cash consideration. The results of operations of ~~each of these businesses from their acquisition dates~~Range, Inc. and VerifyValid, LLC are included in our Small Business Services ~~segment.~~

On October 22, 2014, we acquired Wausau Financial Systems, Inc. (WFS) in an all cash transaction for approximately $90 million, net of cash acquired, funded by a draw on our credit facility. The purchase included specific tax attributes which are expected to generate approximately $4 million of incremental cash tax savings. WFS provides software-based solutions for receivables management, lockbox processing, remote deposit capture and paperless branch solutions to financial institutions, utilities, government agencies and telecommunications companies.segment from their acquisition dates. The results of ~~this business will be~~operations of the acquired distributor are included in our Financial Services ~~segment. In 2014, we anticipate that WFS will contribute revenue~~segment from its acquisition date, as its customers consist primarily of ~~approximately $12 million, will~~financial institutions. Further information regarding these acquisitions can be ~~$0.01 dilutive~~found under the caption “Note 6: Acquisitions” of the Condensed Notes to ~~earnings per share and will generate positive operating cash flow. In 2015, we estimate that WFS will contribute revenue~~Unaudited Consolidated Financial Statements appearing in Item 1 of ~~approximately $80 million and be $0.04 dilutive to earnings per share, turning slightly accretive to earnings per share in the fourth quarter of 2015.~~this report.

Cost Reduction Initiatives

As discussed in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of the ~~2013~~2014 Form 10-K, we anticipated that we would realize net cost reductions of approximately $5550 million in ~~2014,~~2015, as compared to our ~~2013~~2014 results of operations. ~~To date, we have~~We are currently on track to realize these cost reductions, with approximately $11 million realized ~~approximately $48 million of net cost reductions~~through March 31, 2015, primarily from our sales, marketing and fulfillment ~~and information technology organizations, and we have increased our estimate of 2014 net cost reductions to~~ ~~$60 million~~.organizations. Approximately ~~70%~~60% of these savings ~~will impact~~impacted selling, general and administrative (SG&A) expense, with the remaining ~~30%~~40% affecting total cost of revenue.

Outlook for ~~2014~~2015

We anticipate that consolidated revenue will be between $~~1.657~~1.75 billion and $~~1.665~~1.78 billion for ~~2014,~~2015, compared to $~~1.585~~1.67 billion for ~~2013.~~2014. In Small Business Services, we expect revenue to increase between 7%5% and 8%6% compared to ~~2013~~2014 revenue of $~~1.050~~1.11 billion~~, as volume~~. Volume declines in core business products, ~~and~~lower search engine marketing/optimization revenue resulting from our decision in 2014 to reduce the ~~impact~~revenue base of this business and unfavorable foreign currency exchange ~~rate changes~~rates are expected to be more than offset by benefits from our e-commerce investments, price increases and growth in our distributor, dealer and major accounts channels and in our marketing solutions and other services offerings. ~~The anticipated revenue increase includes incremental revenue from the VerticalResponse acquisition in June 2013 and the GBCA acquisition in May 2014.~~ In Financial Services, we expect revenue to increase ~~approximately 5%~~between 11% and 14% compared to ~~2013~~2014 revenue of $~~343.2~~391.1 million. We expect that year-over-year secular check order declines of approximately 6%, as well as ~~pricing pressure on~~expected contract ~~renewals,~~renewal allowances, will be more than offset by continued growth in ~~non-check revenue,~~marketing solutions and other services, including incremental revenue from the ~~Acton Marketing acquisition in August 2013, the Destination Rewards acquisition in December 2013 and the WFS~~Wausau Financial Systems, Inc. acquisition in October ~~2014.~~2014 and growth in our Deluxe Rewards service offerings. Additionally, we expect Financial Services revenue to benefit from higher revenue per order and a full year of revenue from a new large financial institution client acquired in the ~~third~~fourth quarter of ~~2013, and a quarter of revenue from a new client recently~~

~~acquired.~~2014. In Direct Checks, we expect revenue to decline approximately 8% compared to ~~2013~~2014 revenue of $~~191.4~~176.4 million, driven primarily by secular check order volume ~~declines.~~declines resulting from reduced check usage, as well as the elimination of marketing expenditures that no longer meet our return criteria.

We expect that ~~2014~~2015 diluted earnings per share will be between $~~3.86~~4.27 and $~~3.92~~4.42, including $~~0.22~~0.13 per share for the loss on early debt extinguishment in the first quarter of 2015 and restructuring ~~an asset impairment charge and transaction~~ costs, ~~related to acquisitions,~~ compared to $~~3.65~~3.96 for ~~2013,~~2014, which ~~also~~ included total charges of ~~$0.22~~$0.24 per share related to restructuring ancosts, asset impairment ~~charge~~charges and transaction costs related to acquisitions. We expect that the benefits of additional cost reduction activities and lower ~~fourth quarter~~ interest expense will be partially offset by a continued sluggish economy, increases in medical expenses, material costs and delivery rates, as well as continued investments in revenue growth opportunities, including brand awareness, marketing solutions and other services offers, and enhanced e-commerce capabilities. We estimate that our annual effective tax rate for ~~2014~~2015 will be approximately 34.0%, compared to ~~33.6%~~32.8% for ~~2013.~~2014. A number of discrete credits to income tax expense in ~~2013~~2014 collectively reduced our ~~2013~~2014 tax rate by ~~0.7~~0.9 points.

We believe that cash generated by operating activities, along with availability under our credit facility, will be sufficient to support our operations for the next 12 months, including ~~required interest and principal payments,~~ dividend payments, capital expenditures, required interest payments and anticipated share repurchases in the last half of 2015 to offset the dilutive impact of shares issued under our employee stock incentive plan, as well as possible small-to-medium-sized acquisitions. We are focused on a disciplined approach to capital deployment that focuses on our need to continue investing in initiatives to drive revenue growth, including small-to-medium-sized acquisitions and continued expansion of our distributor channel. In April 2014, our board of directors increased our quarterly dividend amount from $0.25 per share to $0.30 per share. Dividends are approved by the board of

directors on a quarterly basis, and thus are subject to change. ~~In February 2014, we increased the amount~~As of March 31, 2015, $94.0 million was available for borrowing under our credit ~~facility from~~facility. On March 16, 2015, we redeemed all $200.0 ~~million to $350.0 million, along with extending the term of the agreement from February 2017 to February 2019. In October 2014, $253.5~~ million of our 7.0% senior notes ~~matured. We used cash on hand and an initial borrowing of $135.0 million under~~due in March 2019, utilizing our credit facility ~~to meet this debt obligation.~~and a $75.0 million short-term bank loan. We may also, from time to time, consider retiring additional outstanding debt through open market ~~repurchases,~~purchases, privately negotiated transactions or other means. ~~We also utilized~~Any such purchases or exchanges would depend upon prevailing market conditions, our ~~credit facility to fund the entire amount paid for the acquisition~~liquidity requirements and other potential uses of ~~WFS in October 2014. We expect to reduce the amount drawn on our credit facility during the fourth quarter of 2014 using~~ cash, ~~generated by operations.~~including acquisitions and share repurchases.

BUSINESS CHALLENGES/MARKET RISKS

Details concerning business challenges/market risks were provided in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the ~~2013~~2014 Form 10-K. There were no significant changes in these items during the first ~~nine months~~quarter of ~~2014.~~2015.

CONSOLIDATED RESULTS OF OPERATIONS

Consolidated Revenue


	Quarter Ended September 30,						Nine Months Ended September 30,						Quarter Ended March 31,
(in thousands, except per order amounts)	2014		2013		Change		2014		2013		Change		2015		2014		Change
Total revenue	$	413,204	$	398,080	3.8	%	$	1,225,569	$	1,167,067	5.0	%	$	433,617	$	406,955	6.6	%
Orders⁽¹⁾	13,445		13,232		1.6	%	39,021		39,565		(1.4	%)	13,471		12,515		7.6	%
Revenue per order	$	30.73	$	30.08	2.2	%	$31.41		$29.50		6.5	%	$	32.19	$	32.52	(1.0	%)

⁽¹⁾Orders is our company-wide measure of volume and includes both products and services.

The increase in total revenue for the ~~third~~first quarter ~~and first nine months~~ of ~~2014,~~2015, as compared to the ~~same periods in 2013,~~first quarter of 2014, was primarily due to growth in marketing solutions and other services revenue of $29 million, including incremental revenue of $21 million from ~~acquisitions,~~businesses acquired during 2015 and ~~price increases in all three segments,~~2014, as well as growth in our Small Business Services distributor ~~channel.~~

channel of approximately $5 million. Revenue for the first quarter of 2015 also benefited from price increases in all three segments. These revenue increases were partially offset by lower order volume for our personal check businesses and ~~continued pricing pressure on~~ contract ~~renewals~~renewal allowances within Financial Services.

Service revenue represented ~~15.1%~~18.1% of total revenue for the first ~~nine months~~quarter of ~~2014~~2015 and ~~13.0%~~15.1% for the first ~~nine months~~quarter of ~~2013.~~2014. As such, the majority of our revenue is generated by product sales. We do not manage our business based on product versus service revenue. Instead, we analyze our revenue based on the following categories:


	Quarter Ended September 30,				Nine Months Ended September 30,				Quarter Ended March 31,
	2014		2013		2014		2013		2015		2014
Checks, including contract settlements	52.7	%	55.6	%	53.7	%	57.0	%	51.7	%	54.7	%
Marketing solutions and other services									27.8	%	22.5	%
Forms	13.0	%	12.7	%	12.9	%	12.9	%	12.3	%	12.9	%
Accessories and other products	9.5	%	10.1	%	9.7	%	9.7	%	8.2	%	9.9	%
Marketing solutions, including services	19.1	%	16.7	%	17.9	%	14.9	%
Other services	5.7	%	4.9	%	5.8	%	5.5	%
Total revenue	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

The number of orders increased for the ~~third~~first quarter of ~~2014,~~2015, as compared to the ~~third~~first quarter of ~~2013,~~2014, due primarily to growth in marketing solutions and other services, including the impact of acquisitions ~~as well as~~in 2015 and 2014, and growth in the Small Business Services distributor ~~channel. These increases were~~channel, partially offset by the continuing decline in check and forms usage.

~~The number of orders~~ Revenue per order decreased for the first ~~nine months~~quarter of ~~2014,~~2015, as compared to the first ~~nine months~~quarter of ~~2013,~~2014, primarily due ~~primarily~~ to the ~~continuing decline in check~~product and ~~forms usage, partially offset by growth in marketing solutions~~service mix within Small Business Services and ~~other services, including~~ the impact of ~~acquisitions, as well as growth in the Small Business~~Financial Services ~~distributor channel.~~

~~Revenue per order increased for the third quarter and first nine months of 2014, as compared to the same periods in 2013, primarily due to~~contract renewal allowances, partially offset by the benefit of price increases in all three segments, as well as a continued shift from personal check orders to higher dollar Small Business Services orders. At the same time, Financial Services continues to experience pricing pressure on contract renewals.segments.

Consolidated ~~Gross Margin~~Cost of Revenue

Quarter Ended September 30, Nine Months Ended September 30,
(in thousands) 2014 2013 Change 2014 2013 Change
Gross profit $ 263,054
$ 255,857
2.8 % $ 784,600
$ 758,000
3.5 %
Gross margin 63.7 % 64.3 % (0.6) pts.
64.0 % 64.9 % (0.9) pts.



	Quarter Ended March 31,
(in thousands)	2015			2014			Change
Total cost of revenue	$	152,681		$	144,928		5.3	%
Total cost of revenue as a percentage of total revenue	35.2		%	35.6		%	(0.4) pts.

~~As with~~Cost of revenue ~~we do not separately analyze gross margin generated by product revenue~~consists primarily of raw materials used to manufacture our products, shipping and service revenue. Instead, we evaluate gross margin on a consolidated basis when analyzing our consolidated results of operations to gain important insight into significant profit drivers. As a significant portion of our revenue is generated from the sale of manufactured andhandling costs, third-party production costs for outsourced products, ~~we believe~~payroll and related expenses for fulfillment personnel, information technology costs, depreciation and amortization of assets used in the ~~measure~~production process and in support of ~~gross margin best demonstrates our manufacturing~~digital service offerings, and distribution performance, as well as the impact of pricing on our profitability. Gross margin is not a complete measure of profitability, as it omits SG&A expense. However, it is a financial measure which we believe is useful in evaluating our results of operations.related overhead.

~~Gross margin decreased~~The increase in total cost of revenue for the ~~third~~first quarter ~~and first nine months~~ of ~~2014,~~2015, as compared to the ~~same periods in 2013, due~~first quarter of 2014, was primarily attributable to the ~~shift~~growth in volume. This included businesses we acquired in 2015 and 2014, which incurred incremental costs of approximately $7 million, and growth in our ~~revenue mix to lower margin services and~~Small Business Services distributor channel, which generated an increase of approximately $2 million in outsourced ~~products, as well as higher~~product costs in 2015. Additionally, delivery rates and material costs increased in ~~2014. These decreases~~2015. Partially offsetting these increases in ~~gross margin~~total cost of revenue were ~~partially offset by the benefit of price increases, as well as~~ manufacturing ~~and delivery~~ efficiencies and other benefits resulting from our continued cost reduction ~~initiatives.~~initiatives of approximately $4 million.

Consolidated Selling, General & Administrative Expense


	Quarter Ended September 30,								Nine Months Ended September 30,								Quarter Ended March 31,
(in thousands)	2014			2013			Change		2014			2013			Change		2015			2014			Change
SG&A expense	$	175,661		$	173,359		1.3	%	$	527,138		$	513,013		2.8	%	$	195,378		$	177,931		9.8	%
SG&A expense as a percentage of total revenue	42.5		%	43.5		%	(1.0) pts.		43.0		%	44.0		%	(1.0) pts.		45.1		%	43.7		%	1.4 pts.

The increase in SG&A expense for the ~~third~~first quarter ~~and first nine months~~ of ~~2014,~~2015, as compared to the ~~same periods in 2013,~~first quarter of 2014, was driven primarily by incremental operating expenses of the businesses we acquired in 2015 and 2014 ~~and 2013~~of approximately $16 million and investments in revenue growth opportunities, including efforts to grow our Small Business Services distributor channel. In addition, ~~performance-based compensation~~Small Business Services commission expense increased ~~as compared~~$2 million due primarily to ~~2013.~~increased financial institution commission rates. These increases were partially offset by various expense reduction initiatives of approximately $7 million within sales, marketing and our shared services organizations, including improved labor efficiency and reduced expenses for information technology ~~infrastructure, as well as planned lower spending on brand awareness initiatives relative to 2013. Additionally, amortization expense related to previous acquisitions decreased in 2014.~~infrastructure.

Net Restructuring Charges


	Quarter Ended September 30,						Nine Months Ended September 30,						Quarter Ended March 31,
(in thousands)	2014		2013		Change		2014		2013		Change		2015		2014		Change
Net restructuring charges	$	4,193	$	2,780	$	1,413	$	8,507	$	5,075	$	3,432	$	267	$	3,300	$	(3,033	)

We recorded restructuring charges and reversals related to the cost reduction initiatives discussed under Executive Overview. ~~The~~Restructuring charges and reversals ~~for each period primarily~~ relate to costs of our restructuring activities such as employee severance benefits and other direct costs of our initiatives, including information technology costs, employee and equipment moves, training and travel. In addition to the restructuring charges shown here, total cost of revenue in our consolidated statements of comprehensive income included net restructuring charges of $0.2 million for the ~~third~~first quarter of ~~2014,~~ ~~$0.3 million~~ ~~for the third quarter of 2013, $0.3 million for the first nine months of 2014, and $0.5 million for the first nine months of 2013.~~2014. Further information can be found under Restructuring Costs.

~~Asset Impairment Charge~~

Loss on Early Debt Extinguishment


	Quarter Ended September 30,						Nine Months Ended September 30,						Quarter Ended March 31,
(in thousands)	2014		2013		Change		2014		2013		Change		2015		2014		Change
Asset impairment charge	$	6,468	$	—	$	6,468	$	6,468	$	—	$	6,468
Loss on early debt extinguishment													$	8,917	$	—	$	8,917

During the ~~third~~first quarter of ~~2014,~~2015, we ~~performed an impairment analysis~~retired all $200.0 million of ~~assets related to~~ our ~~Small Business Services search engine marketing and optimization business. Revenue~~7.0% senior notes due in March 2019, realizing a pre-tax loss of $8.9 million consisting of a contractual call premium and the write-off of related debt issuance costs. We funded the retirement utilizing our credit facility and a short-term bank loan. We may also, from time to time, consider retiring additional outstanding debt through open market purchases, privately negotiated transactions or other means. Any such purchases or exchanges would depend upon prevailing market conditions, our liquidity requirements and other potential uses of cash, ~~flows from this business have been lower than previously projected,~~including acquisitions and as a result of our annual planning process completed during the third quarter of 2014, we decided to reduce the revenue base of this business in order to improve its financial performance. As such, we revised our estimates of future revenues and cash flows to reflect these decisions during the third quarter of 2014. We calculated the estimated fair values of the assets as the net present value of estimated future cash flows. Our analysis resulted in an impairment charge of $6,468 during the third quarter of 2014, which reflects writing down the net book value of the related intangible assets to zero.share repurchases.

Interest Expense


	Quarter Ended September 30,								Nine Months Ended September 30,								Quarter Ended March 31,
(in thousands)	2014			2013			Change		2014			2013			Change		2015			2014			Change
Interest expense	$	9,580		$	9,662		(0.8	%)	$	28,677		$	28,704		(0.1	%)	$	6,515		$	9,567		(31.9	%)
Weighted-average debt outstanding	655,777			655,024			0.1	%	655,773			654,510			0.2	%	557,637			655,737			(15.0	%)
Weighted-average interest rate	5.30		%	5.32		%	(0.02) pts.		5.30		%	5.33		%	(0.03) pts.		4.4		%	5.3		%	(0.9) pts.

~~Interest~~The decrease in interest expense for the ~~third~~first quarter ~~and first nine months~~ of ~~2014, was virtually flat~~2015, as compared to the ~~same periods~~first quarter of 2014, was driven by changes in ~~2013, as~~ our ~~average~~ debt ~~outstanding and~~structure. In October 2014, long-term notes of $253.5 million matured. These notes had a weighted-average interest rate inof 4.3% during the first quarter of 2014, ~~approximated~~including the ~~2013 amounts.~~impact of hedging activities. We utilized cash on hand and an initial borrowing of $135.0 million under our credit facility to meet this debt obligation. In addition, on March 16, 2015, we retired $200.0 million of long-term debt with an interest rate of 7.0%. We utilized our credit facility and a short-term bank loan to fund this redemption. Amounts outstanding under our short-term borrowings carried a weighted-average interest rate of 1.6% during the first quarter of 2015.

Income Tax Provision

Quarter Ended September 30, Nine Months Ended September 30,
(in thousands) 2014 2013 Change 2014 2013 Change
Income tax provision $ 23,042
$ 23,710
(2.8 %) $ 72,800
$ 71,326
2.1 %
Effective tax rate 34.1 % 33.6 % 0.5 pts.
33.9 % 33.6 % 0.3 pts.

The increase in our effective tax rate for the third quarter of 2014, as compared to the third quarter of 2013, was primarily due to discrete credits to income tax expense in the third quarter of 2013, which collectively reduced our 2013 effective tax rate 0.8 points, and which related primarily to state tax matters. Additionally, our current year research and development credit is lower than in 2013, as the law allowing for the federal credit expired at the end of 2013 and extension legislation for 2014 has not yet been enacted. Partially offsetting these increases was a lower state income tax rate in 2014.



	Quarter Ended March 31,
(in thousands)	2015			2014			Change
Income tax provision	$	24,349		$	24,036		1.3	%
Effective tax rate	34.6		%	33.7		%	0.9 pts.

The increase in our effective tax rate for the first ~~nine months~~quarter of ~~2014,~~2015, as compared to the first ~~nine months~~quarter of ~~2013,~~2014, was ~~primarily~~ due to a number of minor discrete credits to income tax expense in the first nine months of 2013, which collectively reduced our effective tax rate 0.7 points, and which related primarily to the impact of federal legislation enacted in January 2013 which allowed us to claim the research and development credit on our 2012 federal income tax return. Additionally, our current year research and development credit is lower than in 2013, as the law allowing for the federal credit expired at the end of 2013 and extension legislation for 2014 has not yet been enacted. Partially offsetting these increases in our effective tax rate relative to 2013 was a lower state income tax rate in 2014, as well as discrete credits to income tax expense in the first nine monthsquarter of 2014, which collectively reduced our 2014 effective tax rate ~~0.2~~by 0.4 points. In addition, our 2015 tax rate included a number of minor discrete charges to income tax expense which collectively increased our 2015 effective tax rate 0.4 points. We expect that our annual effective tax rate for 2015 will be approximately 34%.

RESTRUCTURING COSTS

We have recorded expenses related to our restructuring activities, including accruals consisting primarily of employee severance benefits, as well as costs which are expensed as incurred, including information technology costs, employee and equipment moves, training and travel. Our restructuring activities are driven by our cost reduction initiatives and include employee reductions in various functional areas, as well as the closing of ~~facilities.~~facilities, including one printing facility in 2014. Restructuring costs have been reduced by the reversal of severance accruals when fewer employees receive severance benefits than originally estimated.

Net restructuring charges for each period were as follows:


	Quarter Ended September 30,						Nine Months Ended September 30,						Quarter Ended March 31,
(in thousands)	2014			2013			2014			2013			2015			2014
Severance accruals	$	4,546		$	2,512		$	7,213		$	4,386		$	743		$	1,545
Severance reversals	(271		)	(210		)	(866		)	(688		)	(524		)	(310		)
Operating lease obligations	—			214			—			216
Operating lease obligations reversals	—			—			—			(157		)
Net restructuring accruals	4,275			2,516			6,347			3,757			219			1,235
Other costs	80			563			2,464			1,822			45			2,297
Net restructuring charges	$	4,355		$	3,079		$	8,811		$	5,579		$	264		$	3,532

Number of employees included in severance accruals	145			75			210			125			40			40

The ~~majority of the~~ employee reductions included in our restructuring accruals are expected to be completed by the ~~end~~third quarter of ~~2014,~~2015, and we expect most of the related severance payments to be paid by ~~mid-2015,~~the first quarter of 2016, utilizing cash from operations.

As a result of our employee reductions and facility closings, we expect to realize ~~in 2014~~ cost savings of approximately $3$2 million in total cost of revenue and ~~$15~~$15 million in SG&A expense in 2015, in comparison to our ~~2013~~2014 results of operations. These savings represent a portion of the estimated $6050 million of total net cost reductions we expect to realize in ~~2014.~~2015. Expense reductions consist primarily of labor and facility costs.

Further information regarding our restructuring charges can be found under the caption “Note 9: Restructuring charges” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report.

SEGMENT RESULTS

Additional financial information regarding our business segments appears under the caption “Note ~~14:~~15: Business segment information” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report. In January 2015, we decided that two company-owned small business distributors will no longer be managed as part of our Small Business Services segment. Because their customers consist primarily of financial institutions, we determined that the businesses would be better positioned for long-term growth if they were managed as part of our Financial Services segment. As such, the results of operations of these businesses are included in the Financial Services segment beginning in 2015. Our business segment results for prior periods have been restated to reflect this change.

Small Business Services

This segment's products and services are promoted through direct response mail and internet advertising, referrals from financial institutions and telecommunications clients, Safeguard® distributors, a network of local dealers, a direct sales force which focuses on major accounts, and an outbound telemarketing group. Results for this segment were as follows:


	Quarter Ended September 30,								Nine Months Ended September 30,								Quarter Ended March 31,
(in thousands)	2014			2013			Change		2014			2013			Change		2015			2014			Change
Total revenue	$	284,643		$	265,463		7.2	%	$	828,250		$	765,607		8.2	%	$	276,966		$	266,510		3.9	%
Operating income	43,235			46,277			(6.6	%)	135,591			131,068			3.5	%	49,448			43,397			13.9	%
Operating margin	15.2		%	17.4		%	(2.2) pts.		16.4		%	17.1		%	(0.7) pts.		17.9		%	16.3		%	1.6 pts.

The increase in total revenue for the ~~third~~first quarter ~~and first nine months~~ of ~~2014,~~2015, as compared to the ~~same periods in 2013,~~first quarter of 2014, was due primarily to growth in marketing solutions and other services revenue of $7 million, including ~~incremental revenue from acquisitions, as well as~~ growth in our distributor channel of approximately $5 million and incremental revenue from the acquisitions of Range, Inc. in January 2015 and Gift Box Corporation of America in May 2014 of $4 million, partially offset by lower search engine marketing/optimization revenue resulting from our decision in 2014 to reduce the revenue base of this business. Revenue for the first quarter of 2015 also benefited from price increases. These increases in revenue were partially offset by a decrease in volume for certain core business products sold through our direct sales channel, including accessories and forms, as well as an unfavorable currency exchange rate impact of $2 million.

The ~~decrease~~increase in operating income and operating margin for the ~~third~~first quarter of ~~2014,~~2015, as compared to the ~~third~~first quarter of ~~2013,~~2014, was primarily due to ~~an asset impairment charge~~price increases and benefits of ~~$6.5~~our cost reduction initiatives. Additionally, restructuring costs were approximately $3 million lower in ~~2014, which reduced operating margin for the third quarter of 2014 by 2.3 points. Additionally,~~2015. Further information can be found under Restructuring Costs. Partially offsetting these increases in operating income and operating margin ~~decreased due to the shift in our revenue mix to lower margin services and outsourced products, an increase in~~were increased investments in revenue growth opportunities, including those to grow our distributor channel, and increases in delivery rates, material costs and performance-based compensation in 2014. Partially offsetting these decreases in operating income and operating margin was the benefit of cost reduction initiatives and price increases. Further information regarding the asset impairment charge can be found under ~~Consolidated Results of Operations~~.

The increase in operating income for the first nine months of 2014, as compared to the first nine months of 2013, was primarily due to price increases, benefits of our cost reduction initiatives and planned lower spending on brand awareness initiatives relative to 2013, as well as lower amortization expense related to previous acquisitions. Brand awareness spending decreased as we incurred considerable production start-up expenses in 2013. Partially offsetting these increases in operating income was the asset impairment charge of $6.5 million in 2014, the shift in our revenue mix to lower margin services and outsourced products, an increase in investments in revenue growth opportunities, including those to grow our distributor channel, and increases in delivery rates, material costs and performance-based compensation in 2014.channel. In addition, ~~restructuring charges for the first nine months of 2014 were $2.8~~commission expense increased $2 million ~~higher than in the first nine months of 2013. Further information can be found under~~ ~~Restructuring Costs~~.

~~Operating margin decreased for the first nine months of 2014, as compared to the first nine months of 2013,~~ due primarily to ~~the $6.5 million asset impairment charge, as well as~~ increased ~~SG&A expense associated with acquisitions, investments in revenue growth opportunities~~financial institution commission rates, and ~~increases in~~ delivery rates and material costs increased in 2014. The asset impairment charge reduced operating margin for the first nine months of 2014 by 0.8 points. Partially offsetting these decreases in operating margin was the impact of price increases, benefits of our cost reduction initiatives, lower brand awareness spending in 2014, as well as lower amortization expense related to previous acquisitions.2015.

Financial Services

Financial Services' products and services are sold primarily through a direct sales force, which executes product and service supply contracts with our financial institution clients nationwide, including banks, credit unions and financial services companies. ~~Once~~In the case of check supply contracts, once the financial institution relationship is established, consumers may submit their check orders through their financial institution or over the phone or internet. Results for this segment were as follows:

Quarter Ended September 30, Nine Months Ended September 30,
(in thousands) 2014 2013 Change 2014 2013 Change
Total revenue $ 85,697
$ 86,482
(0.9 %) $ 263,307
$ 256,695
2.6 %
Operating income 18,846
18,859
(0.1 %) 62,775
63,350
(0.9 %)
Operating margin 22.0 % 21.8 % 0.2 pts.
23.8 % 24.7 % (0.9) pts.

The decrease in revenue for the third quarter of 2014, as compared to the third quarter of 2013, was due to lower order volume, resulting primarily from the continued decline in check usage, and continuing competitive pricing pressure on contract renewals. Partially offsetting these revenue decreases was growth in marketing solutions and other services, including incremental revenue from the Destination Rewards acquisition in December 2013, and the benefit of price increases.



	Quarter Ended March 31,
(in thousands)	2015			2014			Change
Total revenue	$	111,540		$	92,446		20.7	%
Operating income	20,410			21,823			(6.5	%)
Operating margin	18.3		%	23.6		%	(5.3) pts.

The increase in revenue for the first ~~nine months~~quarter of ~~2014,~~2015, as compared to the first ~~nine months~~quarter of ~~2013,~~2014, was due to ~~price increases and~~ growth in marketing solutions and other services of $22 million, including incremental revenue of $17 million from the ~~acquisitions of Acton Marketing~~Wausau Financial Systems, Inc. (Wausau) acquisition in ~~August 2013~~October 2014 and ~~Destination~~increased revenue for our Deluxe Rewards ~~in December 2013.~~service offerings. Additionally, revenue benefited from price increases. Partially offsetting these revenue increases was lower check order volume ~~resulting primarily from~~due to the continued decline in check usage, ~~and continuing competitive pricing pressure on contract renewals.~~

~~Operating income was virtually flat for the third quarter of 2014,~~ as compared to the third quarter of 2013, primarily due to the benefit of our continuing cost reduction initiatives and price increases, partially offset by higher performance-based compensation and increased delivery and material costs. In addition, restructuring charges for the third quarter of 2014 were $0.7 million higher than in the third quarter of 2013. Further information can be found under ~~Restructuring Costs. Operating margin increased for the third quarter of 2014, as compared to the third quarter of 2013,~~well as the impact of ~~cost reduction initiatives and price increases more than offset the expense increases.~~contract renewal allowances.

~~Operating~~The decrease in operating income and operating margin ~~decreased~~ for the first ~~nine months~~quarter of ~~2014,~~2015, as compared to the first ~~nine months~~quarter of ~~2013,~~2014, was primarily due to the impact of the Wausau acquisition, contract renewal allowances and increased delivery and material costs in ~~2014, as well as the impact~~2015. The operating results of ~~acquisitions and higher performance-based compensation. In addition, restructuring charges~~Wausau, including acquisition-related amortization, reduced Financial Services' operating margin for the first ~~nine months~~quarter of ~~2014 were $0.8 million higher than in the first nine months of 2013.~~2015 by 5.4 points. Partially offsetting these decreases in operating income and operating margin were price increases and the benefit of our continuing cost reduction initiatives.

Direct Checks

Direct Checks sells products and services directly to consumers using direct ~~response~~ marketing, including print advertising and search engine marketing and optimization strategies. Direct Checks sells under various brand names, including Checks Unlimited®, Designer® Checks, Checks.com, Check Gallery®, The Styles Check Company®, and Artistic Checks®, among others. Results for this segment were as follows:


	Quarter Ended September 30,								Nine Months Ended September 30,								Quarter Ended March 31,
(in thousands)	2014			2013			Change		2014			2013			Change		2015			2014			Change
Total revenue	$	42,864		$	46,135		(7.1	%)	$	134,012		$	144,765		(7.4	%)	$	45,111		$	47,999		(6.0	%)
Operating income	14,651			14,582			0.5	%	44,121			45,494			(3.0	%)	15,433			15,576			(0.9	%)
Operating margin	34.2		%	31.6		%	2.6 pts.		32.9		%	31.4		%	1.5 pts.		34.2		%	32.5		%	1.7 pts.

The decrease in revenue for the ~~third~~first quarter ~~and first nine months~~ of ~~2014,~~2015, as compared to the ~~same periods in 2013,~~first quarter of 2014, was due to a reduction in orders stemming from the continued decline in check ~~usage.~~usage, as well as eliminating marketing expenditures that no longer meet our return criteria. Partially offsetting the ~~revenue~~volume decline was higher revenue per order, partly due to price increases.

The ~~increase~~decrease in operating income for the ~~third~~first quarter of ~~2014,~~2015, as compared to the ~~third~~first quarter of ~~2013,~~2014, was due primarily to ~~benefits from our cost reduction initiatives and higher revenue per order. These increases in operating income were partially offset by the~~ lower order volume and increased delivery rates and material costs ~~and performance-based compensation.~~

~~The decrease~~ in operating income for the first nine months of 2014, as compared to the first nine months of 2013, was due primarily to the lower order volume and increased delivery rates, material costs and performance-based compensation in 2014.2015. These decreases in operating income were partially offset by benefits from our cost reduction initiatives and higher revenue per order.

Operating margin increased for the ~~third~~first quarter ~~and first nine months~~ of ~~2014,~~2015, as compared to the ~~same periods in 2013,~~first quarter of 2014, as the benefits from our cost reduction initiatives and price increases exceeded the impact of increased delivery rates and material ~~costs and performance-based compensation.~~costs.

CASH FLOWS AND LIQUIDITY

As of ~~September 30, 2014~~March 31, 2015, we held cash and cash equivalents of $~~188.0~~58.3 million. The following table shows our cash flow activity for the ~~nine months~~quarters ended ~~September 30, 2014~~March 31, 2015 and ~~2013~~2014, and should be read in conjunction with the consolidated statements of cash flows appearing in Item 1 of this report.


	Nine Months Ended September 30,									Quarter Ended March 31,
(in thousands)	2014			2013			Change			2015			2014			Change
Net cash provided by operating activities	$	203,359		$	183,973		$	19,386		$	77,703		$	73,339		$	4,364
Net cash used by investing activities	(40,434		)	(68,829		)	28,395			(16,633		)	(13,010		)	(3,623		)
Net cash used by financing activities	(93,385		)	(59,324		)	(34,061		)	(59,851		)	(39,064		)	(20,787		)
Effect of exchange rate change on cash	(2,628		)	(1,215		)	(1,413		)	(4,441		)	(1,739		)	(2,702		)
Net change in cash and cash equivalents	$	66,912		$	54,605		$	12,307		$	(3,222	)	$	19,526		$	(22,748	)

The $~~19.4~~4.4 million increase in net cash provided by operating activities for the first ~~nine months~~quarter of ~~2014,~~2015, as compared to the first ~~nine months~~quarter of ~~2013,~~2014, was primarily due to higher cash provided by earnings and a ~~$10.3~~$3.6 million decrease in the funding of medical benefits ~~the positive impact of working capital changes, and a~~ ~~$5.3 million~~ ~~decrease in performance-based compensation payments related to our 2013 performance. Our funding of medical benefits decreased during 2014~~ as ~~we utilized more of the plan assets of our postretirement benefit plan and~~ we reduced pre-funding of the trust used to pay ~~medical benefits.~~these benefits beginning in the second quarter of 2014. These increases in net cash provided by operating activities were partially offset by a $~~6.3~~5.9 million increase in ~~income tax~~performance-based compensation payments related to our 2014 performance and a $1.6 million increase in contract acquisition payments.

Included in net cash provided by operating activities were the following operating cash outflows:


	Nine Months Ended September 30,							Quarter Ended March 31,
(in thousands)	2014		2013		Change			2015		2014		Change
Performance-based compensation payments								$	30,983	$	25,050	$	5,933
Interest payments								7,792		7,128		664
Income tax payments	$	75,874	$	69,549	$	6,325		6,275		5,981		294
Interest payments	26,711		26,148		563
Performance-based compensation payments	25,050		30,322		(5,272		)
Funding of medical benefits	14,000		24,256		(10,256		)	5,450		9,000		(3,550		)
Contract acquisition payments	9,831		10,551		(720		)	2,947		1,355		1,592
Severance payments	6,507		4,327		2,180			2,145		2,743		(598		)

Net cash used by investing activities for the first ~~nine months~~quarter of ~~2014~~2015 was $~~28.4~~3.6 million ~~lower~~higher than the first ~~nine months~~quarter of ~~2013,~~2014, driven primarily by ~~a decrease~~an increase in payments for acquisitions of ~~$36.0~~$4.7 million. In ~~2014,~~2015, we acquired Range, Inc., as well as a small business ~~distributors, NetClime, Inc.~~distributor and ~~Gift Box Corporation of America~~VerifyValid, LLC, for an aggregate of ~~$12.1~~$7.6 million, net of cash acquired. In ~~2013,~~2014, we acquired ~~VerticalResponse,~~NetClime, Inc. and small business distributors ~~and Acton Marketing~~ for an aggregate of ~~$48.1~~$2.9 million, net of cash acquired. Partially offsetting this ~~decrease~~increase in cash used by investing activities was a decrease of ~~$3.7 million in benefits received from company-owned life insurance policies, as well as an increase of $2.9~~$1.4 million in purchases of capital assets asin 2015. For all of 2015, we ~~continue~~estimate that capital spending will be approximately $40 million, comparable to ~~invest in key revenue growth initiatives and in order fulfillment and information technology infrastructure.~~the 2014 amount.

Net cash used by financing activities for the first ~~nine months~~quarter of ~~2014~~2015 was $~~34.1~~20.8 million higher than the first ~~nine months~~quarter of ~~2013~~2014 due primarily to an increase of ~~$26.3~~$207.0 million in payments on long-term debt due to ~~repurchase common shares.~~the redemption of $200.0 million of our long-term notes due in 2019. In addition, dividend payments increased ~~$4.6~~$2.4 million, as we increased our per share dividend amount in the second quarter of 2014, and proceeds from issuing shares under employee plans decreased ~~$4.1~~$2.0 million, as fewer stock options were exercised in ~~2014.~~2015. Partially offsetting these increases in cash used by financing activities were net proceeds from short-term borrowings of $158.0 million during 2015, which were used primarily for the redemption of a portion of our long-term debt, as well as a decrease of $31.9 million in payments to repurchase common shares, as we did not repurchase any shares during the first quarter of 2015.

Significant cash inflows, excluding those related to operating activities, for each period were as follows:


	Nine Months Ended September 30,							Quarter Ended March 31,
(in thousands)	2014		2013		Change			2015		2014		Change
Net proceeds from short-term borrowings								$	158,000	$	—	$	158,000
Proceeds from issuing shares under employee plans	$	8,814	$	12,881	$	(4,067	)	3,389		5,376		(1,987		)
Proceeds from company-owned life insurance policies	897		4,599		(3,702		)

Significant cash outflows, excluding those related to operating activities, for each period were as follows:


	Nine Months Ended September 30,							Quarter Ended March 31,
(in thousands)	2014		2013		Change			2015		2014		Change
Payments on long-term debt, including costs of debt reacquisition								$	207,242	$	203	$	207,039
Payments for common shares repurchased	$	60,119	$	33,798	$	26,321		—		31,930		(31,930		)
Cash dividends paid to shareholders	42,631		38,027		4,604			15,011		12,644		2,367
Purchases of capital assets	29,649		26,786		2,863			9,512		10,950		(1,438		)
Payments for acquisitions, net of cash acquired	12,144		48,114		(35,970		)	7,584		2,866		4,718

We anticipate that net cash provided by operating activities will be between ~~$278~~$295 million and ~~$285~~$305 million in ~~2014,~~2015, compared to $~~262~~280 million in ~~2013,~~2014, driven by higher earnings ~~lower contributions to our trust used to fund medical benefits,~~ and lower ~~performance-based compensation~~interest payments, partially offset by higher income tax, medical and performance-based compensation payments. We anticipate that net cash ~~generated~~provided by operating activities in ~~2014~~2015 will be utilized for ~~small-to-medium-sized acquisitions,~~ share repurchases, dividend payments, ~~and~~ capital expenditures of approximately $40 ~~million.~~million and small-to-medium-sized acquisitions. We intend to focus our capital spending on key revenue growth initiatives and investments in order fulfillment and information technology infrastructure. ~~In February 2014, we increased the amount~~As of March 31, 2015, $94.0 million was available for borrowing under our credit ~~facility from~~facility. On March 16, 2015, we redeemed all $200.0 ~~million to $350.0 million, along with extending the term of the agreement from February 2017 to February 2019. In October 2014, $253.5~~ million of our 7.0% senior notes ~~matured. We used cash on hand and an initial borrowing of $135.0 million under~~due in March 2019, utilizing our credit facility ~~to meet this debt obligation.~~and a short-term bank loan. We may also, from time to time, consider retiring outstanding debt through open market repurchases, privately negotiated transactions or other means. ~~We also utilized~~Any such purchases or exchanges would depend upon prevailing market conditions, our ~~credit facility to fund the entire amount paid for the acquisition~~liquidity requirements and other potential uses of ~~WFS in October 2014. Further information can be found under~~ ~~Executive Overview. We expect to reduce the amount drawn on our credit facility during the fourth quarter of 2014 using~~ cash, ~~generated by operations.~~including acquisitions and share repurchases.

As of ~~September 30, 2014,~~March 31, 2015, our subsidiaries located in Canada held cash and marketable securities of ~~$51.2~~$50.0 million. Deferred income taxes have not been recognized on unremitted earnings of our foreign subsidiaries, as these amounts are intended to be reinvested indefinitely in the operations of those subsidiaries. If we were to repatriate all of the Canadian cash and marketable securities into the U.S. at one time, we would incur a U.S. tax liability of approximately $7 million, based on current federal tax law.

~~We had~~ ~~$337.3 million~~ ~~available for borrowing under our credit facility as of~~ ~~September 30, 2014~~. We believe that ~~net~~ cash generated by operating activities, along with availability under our credit facility, will be sufficient to support our operations for the next 12 months, including ~~required interest and principal payments,~~ dividend payments, capital expenditures and ~~possible~~required interest payments, as well as anticipated share repurchases in the last half of 2015 and small-to-medium-sized acquisitions.

CAPITAL RESOURCES

Our total debt was $~~644.6~~515.4 million as of ~~September 30, 2014~~March 31, 2015, ~~an increase~~a decrease of $~~3.9~~38.9 million from December 31, ~~2013~~2014. We have entered into interest rate swaps to hedge against changes in the fair value of a portion of our long-term debt. As of ~~September 30, 2014~~March 31, 2015, interest rate swaps with a notional amount of ~~$398.0~~$200.0 million were designated as fair value hedges. The carrying amount of long-term debt as of ~~September 30, 2014~~March 31, 2015 included an ~~$11.2~~a $5.1 million decrease related to adjusting the hedged debt for changes in its fair value. As of December 31, ~~2013~~2014, this fair value adjustment was a decrease of ~~$14.7 million~~.$8.1 million. Further information concerning the interest rate swaps and our outstanding debt can be found under the captions “Note 7: Derivative financial instruments” and “Note ~~11:~~12: Debt” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing

in Item 1 of this report. Information regarding our debt service obligations can be found under Off-Balance Sheet Arrangements, Guarantees and Contractual Obligations in the ~~2013~~2014 Form 10-K.

Our capital structure for each period was as follows:


	September 30, 2014				December 31, 2013						March 31, 2015				December 31, 2014
(in thousands)	Amount		Weighted- average interest rate		Amount		Weighted- average interest rate		Change		Amount		Weighted- average interest rate		Amount		Weighted- average interest rate		Change
Fixed interest rate	$	257,786	6.6	%	$	257,408	6.6	%	$	378	$	2,544	2.0	%	$	202,379	6.9	%	$	(199,835	)
Floating interest rate	386,826		4.5	%	383,296		4.5	%	3,530		512,903		2.9	%	351,933		3.5	%	160,970
Total debt	644,612		5.3	%	640,704		5.3	%	3,908		515,447		2.9	%	554,312		4.7	%	(38,865		)
Shareholders’ equity	604,168				550,457				53,711		679,746				647,497				32,249
Total capital	$	1,248,780			$	1,191,161			$	57,619	$	1,195,193			$	1,201,809			$	(6,616	)

We have an outstanding authorization from our board of directors to purchase up to 10 million shares of our common stock. This authorization has no expiration date, and 2.0 million shares remained available for purchase under this authorization as of ~~September 30, 2014~~March 31, 2015. ~~During~~We did not repurchase any shares during the first ~~nine months~~quarter of ~~2014, we purchased~~ ~~1.1 million~~ ~~shares for $60.1 million~~.2015. Information regarding changes in shareholders' equity can be found in the consolidated statement of shareholders' equity appearing in Item 1 of this report.

On March 16, 2015, we redeemed all $200.0 million of our 7.0% senior notes due in March 2019, utilizing our credit facility and a $75.0 million short-term bank loan. The weighted average interest rate on the short-term bank loan was 1.51% during the first quarter of 2015. We may, from time to time, consider retiring outstanding debt through open market purchases, privately negotiated transactions or other means. Any such repurchases or exchanges would depend on prevailing market conditions, our liquidity requirements and other potential uses of cash, including acquisitions or share repurchases.

As of ~~September 30, 2014~~March 31, 2015, we had a $350.0 million credit facility, which expires in February 2019. Our commitment fee ranges from 0.20% to 0.40% based on our leverage ratio. Borrowings under the credit facility are collateralized by substantially all of our personal and intangible property. The credit ~~agreement~~agreements governing the credit facility ~~contains~~and our short-term bank loan contain customary covenants regarding limits on levels of subsidiary indebtedness and capital expenditures, liens, investments, acquisitions, certain mergers, certain asset sales outside the ordinary course of business, and change in control as defined in the agreement. The ~~agreement~~agreements also ~~contains~~contain financial covenants regarding our leverage ratio and interest coverage, and our credit facility agreement also contains a financial covenant regarding liquidity. We were in compliance with all debt covenants as of ~~September 30, 2014~~March 31, 2015, and we expect to remain in compliance with all debt covenants throughout the next 12 months.

~~No amounts were outstanding under~~As of March 31, 2015, $243,000 was drawn on our credit facility ~~during the first nine months~~at a weighted-average interest rate of 1.64%. As of December 31, 2014, ~~or during 2013.~~$160,000 was drawn on our credit facility at a weighted-average interest rate of 1.63%. As of ~~September 30, 2014~~March 31, 2015, amounts were available for borrowing under our credit facility as follows:


(in thousands)	Total available			Total available
Credit facility commitment	$	350,000		$	350,000
Amount drawn on credit facility				(243,000		)
Outstanding letters of credit⁽¹⁾	(12,728		)	(12,953		)
Net available for borrowing as of September 30, 2014⁽²⁾	$	337,272
Net available for borrowing as of March 31, 2015				$	94,047

⁽²⁾~~Our credit facility was utilized in October 2014 to settle maturing debt and to fund an acquisition. Further information can be found under~~ ~~Executive Overview~~ ~~and under the caption “Note 16: Subsequent events” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report.~~

OTHER FINANCIAL POSITION INFORMATION

Contract acquisition costs – Other non-current assets include contract acquisition costs of our Financial Services segment. These costs, which are essentially pre-paid product discounts, are recorded as non-current assets upon contract execution and are amortized, generally on the straight-line basis, as reductions of revenue over the related contract term. Changes in contract acquisition costs during the ~~nine months~~quarters ended ~~September 30, 2014~~March 31, 2015 and ~~2013~~2014 can be found under the caption "Note 3: Supplemental balance sheet information" of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report. Cash payments for contract acquisition costs were $~~9.8~~2.9 million for the first ~~nine~~

~~months~~quarter of ~~2014~~2015 and $~~10.6~~1.4 million for the first ~~nine months~~quarter of ~~2013.~~2014. We anticipate cash payments of approximately $1915 million for the year ending December 31, ~~2014.~~2015.

The number of checks being written has been declining, which has contributed to increased competitive pressure when attempting to retain or acquire clients. Both the number of financial institution clients requesting contract acquisition payments and the amount of the payments has fluctuated significantly from year to year. Although we anticipate that we will selectively continue to make contract acquisition payments, we cannot quantify future amounts with certainty. The amount paid depends on numerous factors, such as the number and timing of contract executions and renewals, competitors’ actions, overall product discount levels and the structure of up-front product discount payments versus providing higher discount levels throughout the term of the contract.

Liabilities for contract acquisition payments are recorded upon contract execution. These obligations are monitored for each contract and are adjusted as payments are made. Contract acquisition payments due within the next year are included in accrued liabilities in our consolidated balance sheets. These accruals were $~~13.4~~10.4 million as of ~~September 30, 2014~~March 31, 2015 and ~~$3.9~~$9.8 million

as of December 31, ~~2013~~2014. Accruals for contract acquisition payments included in other non-current liabilities in our consolidated balance sheets were $~~38.5~~33.0 million as of ~~September 30, 2014~~March 31, 2015 and ~~$2.4~~$36.8 million as of December 31, ~~2013~~2014.

OFF-BALANCE SHEET ARRANGEMENTS, GUARANTEES AND CONTRACTUAL OBLIGATIONS

It is not our general business practice to enter into off-balance sheet arrangements or to guarantee the performance of third parties. In the normal course of business we periodically enter into agreements that incorporate general indemnification language. These indemnifications encompass third-party claims arising from our products and services, including service failures, breach of security, intellectual property rights, governmental regulations and/or employment-related matters. Performance under these indemnities would generally be triggered by our breach of terms of the contract. In disposing of assets or businesses, we often provide representations, warranties and/or indemnities to cover various risks, including, for example, unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. We do not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. However, we have no reason to believe that any possible liability under these indemnities would have a material adverse effect on our financial position, annual results of operations or annual cash flows. We have recorded liabilities for known indemnifications related to environmental matters. Further information can be found under the caption “Note ~~12:~~13: Other commitments and contingencies” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in the Item 1 of this report.

We are not engaged in any transactions, arrangements or other relationships with unconsolidated entities or other third parties that are reasonably likely to have a material effect on our liquidity or on our access to, or requirements for, capital resources. In addition, we have not established any special purpose entities.

A table of our contractual obligations was provided in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of the ~~2013~~2014 Form 10-K. ~~There~~With the exception of the redemption in March 2015 of our $200.0 million notes due in 2019, as discussed in the 2014 Form 10-K, there were no significant changes in these obligations during the first ~~nine months~~quarter of ~~2014. In October 2014, $253.5 million of our senior notes matured. We used cash on hand and borrowings under our credit facility to meet this debt obligation.~~2015.

RELATED PARTY TRANSACTIONS

We did not enter into any material related party transactions during the first ~~nine months~~quarter of ~~2014~~2015 or during ~~2013.~~2014.

CRITICAL ACCOUNTING POLICIES

A description of our critical accounting policies was provided in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the ~~2013~~2014 Form 10-K. There were no changes in these policies during the first ~~nine months of 2014.~~

~~During the third~~ quarter of 2014, we completed the annual impairment analyses of goodwill and our indefinite-lived trade name. In completing the 2014 annual goodwill impairment analysis, we elected to perform a quantitative assessment for all of our reporting units to which goodwill is assigned, as our previous quantitative analysis was completed during 2010. First,

we calculated the estimated fair value of each reporting unit to which goodwill is assigned and compared this estimated fair value to the carrying amount of the reporting unit's net assets. In calculating the estimated fair value, we used the income approach. The income approach is a valuation technique under which we estimated future cash flows using the reporting unit's financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we projected revenue for the next 2015.~~five years~~. We applied our fixed and variable cost experience rates to the projected revenue to arrive at the future cash flows. A terminal value was then applied to the projected cash flow stream. Future estimated cash flows were discounted to their present value to calculate the estimated fair value. The discount rate used was the value-weighted average of our estimated cost of capital derived using both known and customary market metrics. In determining the estimated fair values of our reporting units, we were required to estimate a number of factors, including projected operating results, terminal growth rates, economic conditions, anticipated future cash flows, the discount rate and the allocation of shared or corporate items. For reasonableness, the summation of our reporting units' fair values was compared to our consolidated fair value as indicated by our market capitalization. If the carrying amount of a reporting unit's net assets exceeds its estimated fair value, the second step of the goodwill impairment analysis requires us to measure the amount of the impairment loss. An impairment loss is calculated by comparing the implied fair value of the goodwill to its carrying amount. To calculate the implied fair value of goodwill, the fair value of the reporting unit's assets and liabilities, excluding goodwill, is estimated. The excess of the fair value of the reporting unit over the amount assigned to its assets and liabilities, excluding goodwill, is the implied fair value of the reporting unit's goodwill. We were not required to complete the second step of the goodwill impairment analysis for any of our reporting units. Our 2014 analysis indicated that the calculated fair values of our reporting units' net assets exceeded their carrying values by approximate amounts between $74 million and $1.13 billion, or by amounts between 47% and 482% above the carrying values of their net assets.

In completing the annual impairment analysis of our indefinite-lived trade name, we elected to perform a quantitative assessment which indicated that the calculated fair value of the asset exceeded its carrying value of $19.1 million by approximately $31.0 million. In this analysis, we assumed a discount rate of 11.0% and a royalty rate of 1.5%. A one-half percentage point increase in the discount rate would reduce the indicated fair value of the asset by approximately $3 million and a one-half percentage point decrease in the royalty rate would reduce the indicated fair value of the asset by approximately $17 million.

NEW ACCOUNTING PRONOUNCEMENTS

Information regarding ~~the~~ accounting ~~pronouncement~~pronouncements not yet adopted ~~during 2014~~ can be found under the caption “Note 2: New accounting pronouncements” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report.

~~In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-08,~~ ~~Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity~~. This standard changes the criteria for determining which disposals should be presented as discontinued operations and modifies the related disclosure requirements. Additionally, the new guidance requires that a business which qualifies as held for sale upon acquisition should be reported as discontinued operations. The new guidance is effective for us on January 1, 2015 and is to be applied prospectively. As such, we will apply this standard to any new disposals or new classifications of disposal groups as held for sale which occur on or after January 1, 2015.

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers~~. The new standard provides revenue recognition guidance for any entity that enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other accounting standards. The new standard also expands the required financial statement disclosures regarding revenue recognition. The new guidance is effective for us on January 1, 2017. We are currently assessing the impact of this new standard on our consolidated financial statements, as well as the method of transition that we will use in adopting the new standard.

~~In June 2014, the FASB issued ASU No. 2014-12,~~ ~~Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period~~. The new standard requires that a performance target that affects vesting and that could be achieved after the requisite service period should be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. The new guidance is effective for us on January 1, 2016. We currently have share-based payment awards that fall within the scope of this standard. Our current accounting treatment is in compliance with the new standard, so we expect no impact on our consolidated financial statements.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 (the Reform Act) provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information. We are filing this cautionary statement in connection with the Reform Act. When we use the words or phrases “should result,” “believe,” “intend,” “plan,” “are expected to,” “targeted,” “will continue,” “will approximate,” “is anticipated,” “estimate,” “project,” “outlook” or similar expressions in this Quarterly Report on Form 10-Q, in future filings with the Securities and Exchange Commission, in our press releases and in oral statements made by our representatives, they indicate forward-looking statements within the meaning of the Reform Act.

We want to caution you that any forward-looking statements made by us or on our behalf are subject to uncertainties and other factors that could cause them to be incorrect. Known material risks are discussed in Item 1A of the ~~2013~~2014 Form 10-K and are incorporated into this Item 2 of this report on Form 10-Q as if fully stated herein. Although we have attempted to compile a comprehensive list of these important factors, we want to caution you that other factors may prove to be important in affecting future operating results. New factors emerge from time to time, and it is not possible for us to predict all of these factors, nor can we assess the impact each factor or combination of factors may have on our business.

You are further cautioned not to place undue reliance on those forward-looking statements because they speak only of our views as of the date the statements were made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to changes in interest rates primarily as a result of the borrowing activities used to support our capital structure, maintain liquidity and fund business operations. We do not enter into financial instruments for speculative or trading purposes. The nature and amount of debt outstanding can be expected to vary as a result of future business requirements, market conditions and other factors. As of ~~September 30, 2014~~March 31, 2015, our total debt was comprised of the following:


(in thousands)	Carrying amount		Fair value⁽¹⁾		Weighted-average interest rate		Carrying amount		Fair value⁽¹⁾		Weighted-average interest rate
Long-term notes maturing October 2014, including increase of $6 related to cumulative change in fair value of hedged debt	$	253,506	$	253,500	4.3	%
Long-term notes maturing March 2019	200,000		209,550		7.0	%
Long-term notes maturing November 2020, including decrease of $11,180 related to cumulative change in fair value of hedged debt	188,820		212,000		4.9	%
Amount drawn on credit facility							$	243,000	$	243,000	1.6	%
Long-term notes maturing November 2020, including decrease of $5,097 related to cumulative change in fair value of hedged debt							194,903		217,540		4.9	%
Short-term bank loan							75,000		75,000		1.5	%
Capital lease obligations	2,286		2,286		2.0	%	2,544		2,544		2.0	%
Total debt	$	644,612	$	677,336	5.3	%	$	515,447	$	538,084	2.9	%

⁽¹⁾For our long-term notes, fair value is based on observable market inputs other than quoted ~~market~~ prices ~~as of~~ ~~September 30, 2014~~ ~~for identical liabilities when traded as assets.~~in active markets. Capital lease obligations are presented at their carrying amount. For short-term borrowings, fair value equals carrying value due to their short-term duration.

On March 16, 2015, we redeemed all $200.0 million of our 7.0% senior notes due in March 2019, utilizing our credit facility and a short-term bank loan. We may, from time to time, retire outstanding debt through open market purchases, privately negotiated transactions or other means. Any such repurchases or exchanges would depend on prevailing market conditions, our liquidity requirements and other potential uses of cash, including acquisitions or share repurchases.

We have entered into interest rate swaps to hedge against changes in the fair value of a portion of our long-term debt. As of ~~September 30, 2014~~March 31, 2015, interest rate swaps with a notional amount of ~~$398.0~~$200.0 million were designated as fair value hedges. The carrying amount of long-term debt as of ~~September 30, 2014~~March 31, 2015 included an ~~$11.2~~a $5.1 million decrease related to adjusting the hedged debt for changes in its fair value. ~~Changes~~The interest rate swaps outstanding as of March 31, 2015 related to our long-term debt due in 2020 and meet the criteria for using the short-cut method of accounting for a fair value hedge based on the structure of the hedging relationship. As such, changes in the fair value of the ~~interest rate swaps~~derivative and the related long-term debt are included in interest expense in the consolidated statements of comprehensive income. When the change in the fair value of the interest rate swaps and the hedged debt are not equal (i.e., hedge ineffectiveness), the difference in the changes in fair value affects the reported amount of interest expense in our consolidated statements of comprehensive income. Information regarding hedge ineffectiveness can be found under the caption “Note 8: Fair value measurements” of the Condensed Notes to Unaudited Consolidated Financial Statements appearing in Item 1 of this report.equal.

Based on the daily average amount of outstanding variable rate debt in our portfolio, a one percentage point change in our weighted-average interest rates would have resulted in a $~~3.0~~1.0 million change in interest expense for the first ~~nine months~~quarter of ~~2014, excluding any hedge ineffectiveness related to our interest rate swaps.~~2015.

We are exposed to changes in foreign currency exchange rates. Investments in, loans and advances to foreign subsidiaries and branches, as well as the operations of these businesses, are denominated in foreign currencies, primarily the Canadian dollar. The effect of exchange rate changes is expected to have a minimal impact on our earnings and cash flows, as our foreign operations represent a relatively small portion of our business. We have not entered into hedges against changes in foreign currency exchange rates.

See Business Challenges/Market Risks in Item 2 of this report for further discussion of market risks.

Item 4. Controls and Procedures.

(a) Disclosure Controls and Procedures — As of the end of the period covered by this report (the “Evaluation Date”), we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in applicable rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

~~In May 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued an updated version of its~~ (b) Internal Control – Integrated Framework (the “2013 COSO Framework”). Originally issued in 1992, the framework helps organizations design, implement and evaluate the effectiveness of internal control concepts and simplify their use and application. We expect that our assessment of the overall effectiveness of internal control over financial reporting for the year ending December 31, 2014 will be based on the 2013 COSO Framework. We do not expect that our transition to the updated framework will have a significant impact on our internal control over financial reporting or on our disclosure controls and procedures.

~~(b) Internal Control~~ Over Financial Reporting —There were no changes in our internal control over financial reporting identified in connection with our evaluation during the quarter ended ~~September 30, 2014~~March 31, 2015, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II−OTHER INFORMATION

Item 1. Legal Proceedings.

We record provisions with respect to identified claims or lawsuits when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Claims and lawsuits are reviewed quarterly and provisions are taken or adjusted to reflect the status of a particular matter. We believe the recorded reserves in our consolidated financial statements are adequate in light of the probable and estimable outcomes. Recorded liabilities were not material to our financial position, results of operations or liquidity, and we do not believe that any of the currently identified claims or litigation, either individually or in the aggregate, will materially affect our financial position, results of operations or liquidity upon resolution.

Item 1A. Risk Factors.

Our risk factors are outlined in Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2013~~2014 (the ~~“2013~~“2014 Form 10-K”). There have been no significant changes to these risk factors since we filed the ~~2013~~2014 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~The following table shows purchases of our own equity securities, based on trade date, which were completed during the third quarter of 2014:~~

Period Total number of shares (or units) purchased Average price paid per share (or unit) Total number of shares (or units) purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
July 1, 2014 -
July 31, 2014
15,300
$ 55.24
15,300
2,092,407
August 1, 2014 -
August 31, 2014
130,300
56.28
130,300
1,962,107
September 1, 2014 -
September 30, 2014
—
—
—
1,962,107
Total 145,600
$ 56.17
145,600
1,962,107

In August 2003, our board of directors approved an authorization to purchase up to 10 million shares of our common stock. This authorization has no expiration date and 2.0 million shares remained available for purchase under this authorization as of ~~September 30, 2014~~March 31, 2015. We did not repurchase any shares during the quarter ended March 31, 2015.

While not considered repurchases of shares, we do at times withhold shares that would otherwise be issued under equity-based awards to cover the withholding taxes due as a result of the exercising or vesting of such awards. During the ~~third~~first quarter of ~~2014,~~2015, we withheld ~~8,145~~17,054 shares in conjunction with the vesting and exercise of equity-based awards.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

~~None.~~We held our annual shareholders' meeting on April 29, 2015.

43,739,554 shares were represented (87.6% of the 49,917,161 shares outstanding and entitled to vote at the meeting). Three items were considered at the meeting, and the results of the voting were as follows:

(1) Election of Directors:

Shareholders were asked to elect 10 directors to hold office until the 2016 annual meeting of shareholders. The nominees for director were: Ronald C. Baldwin, Charles A. Haggerty, Cheryl E. Mayberry McKissack, Don J. McGrath, Neil J. Metviner, Stephen P. Nachtsheim, Mary Ann O'Dwyer, Thomas J. Reddin, Martyn R. Redgrave and Lee J. Schram. The results were as follows:



	For	Withheld	Broker non-vote
Ronald C. Baldwin	39,243,822	360,499	4,135,233
Charles A. Haggerty	39,026,626	577,695	4,135,233
Cheryl E. Mayberry McKissack	39,098,974	505,347	4,135,233
Don J. McGrath	39,216,046	388,275	4,135,233
Neil J. Metviner	39,249,362	354,959	4,135,233
Stephen P. Nachtsheim	39,031,920	572,401	4,135,233
Mary Ann O'Dwyer	38,982,582	621,739	4,135,233
Thomas J. Reddin	39,130,296	474,025	4,135,233
Martyn R. Redgrave	39,111,623	492,698	4,135,233
Lee J. Schram	39,193,357	410,964	4,135,233

(2) A non-binding resolution to approve the compensation of our named executive officers, as described in the proxy statement filed in connection with the annual meeting (or "say-on-pay" vote):



For:	37,479,442
Against:	1,817,259
Abstain:	307,620
Broker non-vote:	4,135,233

(3) Ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2015:



For:	43,191,778
Against:	229,178
Abstain:	318,598

Item 6. Exhibits.



Exhibit Number	Description	Method of Filing
3.1	Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2010)	*
3.2	Bylaws (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the Commission on October 23, 2008)	*



Exhibit Number	Description	Method of Filing
4.1	Amended and Restated Rights Agreement, dated as of December 20, 2006, by and between us and Wells Fargo Bank, National Association, as Rights Agent, which includes as Exhibit A thereto, the Form of Rights Certificate (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Commission on December 21, 2006)	*



~~Exhibit Number~~	~~Description~~	~~Method of Filing~~
4.2	Indenture, dated as of April 30, 2003, by and between us and Wells Fargo Bank Minnesota, N.A., as trustee (incorporated by reference to Exhibit 4.8 to the Registration Statement on Form S-3 (Registration No. 333-104858) filed with the Commission on April 30, 2003)	*
4.3	Form of Officer’s Certificate and Company Order authorizing the 2014 Notes, series B (incorporated by reference to Exhibit 4.9 to the Registration Statement on Form S-4 (Registration No. 333-120381) filed with the Commission on November 12, 2004)	*
~~4.4~~	Specimen of 5 1/8% notes due 2014, series B (incorporated by reference to Exhibit 4.10 to the Registration Statement on Form S-4 (Registration No. 333-120381) filed with the Commission on November 12, 2004)	*
~~4.5~~	Indenture, dated as of March 15, 2011, by and among us, the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee (including form of 7.00% Senior Notes due 2019) (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Commission on March 15, 2011)	*
~~4.6~~4.4	Supplemental Indenture, dated as of July 30, 2012, among us, OrangeSoda, Inc., the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.11 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2012)	*
4.5	Second Supplemental Indenture, dated as of June 28, 2013, among us, VerticalResponse, Inc., the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.13 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2013)	*
4.6	Third Supplemental Indenture, dated as of September 25, 2013, among us, ChecksByDeluxe.com, LLC, Direct Checks Unlimited, LLC, Direct Checks Unlimited Sales, Inc., Safeguard Acquisitions, Inc., Safeguard Franchise Systems, Inc., the guarantors listed on the signature pages thereto, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.16 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2013)	*
4.7	Fourth Supplemental Indenture, dated as of December 17, 2014, among us, Safeguard Franchise Sales, Inc., Wausau Financial Systems, Inc., the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.9 to the Annual Report on Form 10-K for the year ended December 31, 2014)	*
4.8	Fifth Supplemental Indenture, dated as of March 4, 2015, among us, AccuSource Solutions Corporation, SyncSuite, LLC, the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee	Filed herewith
4.9	Indenture, dated as of November 27, 2012, by and among us, the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee (including form of 6.000% Senior Notes due 2020) (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Commission on November 27, 2012)	*
~~4.8~~	Second Supplemental Indenture, dated as of June 28, 2013 among us, VerticalResponse, Inc., the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.13 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2013)	*
~~4.9~~4.10	Supplemental Indenture, dated as of June 28, 2013, among us, VerticalResponse, Inc., the guarantors listed on the signature pages thereto, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.14 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2013)	*
~~4.10~~4.11	Second Supplemental Indenture, dated as of September 25, 2013, among us, ChecksByDeluxe.com, LLC, Direct Checks Unlimited, LLC, Direct Checks Unlimited Sales, Inc., Safeguard Acquisitions, Inc., Safeguard Franchise Systems, Inc., the guarantors listed on the signature pages thereto, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.15 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2013)	*
~~4.11~~4.12	Third Supplemental Indenture, dated as of ~~September 25, 2013~~December 17, 2014, among us, ~~ChecksByDeluxe.com, LLC, Direct Checks Unlimited, LLC, Direct Checks Unlimited~~Safeguard Franchise Sales, Inc., ~~Safeguard Acquisitions, Inc., Safeguard Franchise~~Wausau Financial Systems, Inc., the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit ~~4.16~~4.13 to the ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~September 30, 2013)~~December 31, 2014)	*



Exhibit Number	Description	Method of Filing
4.13	Fourth Supplemental Indenture, dated as of March 4, 2015, among us, AccuSource Solutions Corporation, SyncSuite, LLC, the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee	Filed herewith
12.1	Statement re: Computation of Ratios	Filed herewith
31.1	CEO Certification of Periodic Report pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	CFO Certification of Periodic Report pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith



~~Exhibit Number~~	~~Description~~	~~Method of Filing~~
32.1	CEO and CFO Certification of Periodic Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of ~~September 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, (ii) Consolidated Statements of Comprehensive Income for the quarters ended March 31, 2015 and ~~nine months ended September 30,~~ 2014, ~~and 2013,~~ (iii) Consolidated Statement of Shareholders' Equity for the ~~nine months~~quarter ended ~~September 30, 2014,~~March 31, 2015, (iv) Consolidated Statements of Cash Flows for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2015 and 2014, ~~and 2013,~~ and (v) Condensed Notes to Unaudited Consolidated Financial Statements**Statements	Filed herewith

___________________

* Incorporated by reference

** Submitted electronically with this report

5246

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	DELUXE CORPORATION (Registrant)

Date: ~~October 30, 2014~~May 1, 2015	/s/ Lee Schram
	Lee Schram Chief Executive Officer (Principal Executive Officer)

Date: ~~October 30, 2014~~May 1, 2015	/s/ Terry D. Peterson
	Terry D. Peterson Senior Vice President, Chief Financial Officer (Principal Financial Officer)

Date: ~~October 30, 2014~~May 1, 2015	/s/ Jeffrey J. Bata
	Jeffrey J. Bata Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer)

5347

INDEX TO EXHIBITS



Exhibit No.		Description
4.8		Fifth Supplemental Indenture, dated as of March 4, 2015, among us, AccuSource Solutions Corporation, SyncSuite, LLC, the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee
4.13		Fourth Supplemental Indenture, dated as of March 4, 2015, among us, AccuSource Solutions Corporation, SyncSuite, LLC, the guarantors listed on the signature pages thereto and U.S. Bank National Association, as trustee
12.1		Statement re: Computation of Ratios
31.1		CEO Certification of Periodic Report pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		CFO Certification of Periodic Report pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		CEO and CFO Certification of Periodic Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of ~~September 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, (ii) Consolidated Statements of Comprehensive Income for the quarters ended March 31, 2015 and ~~nine months ended September 30,~~ 2014, ~~and 2013,~~ (iii) Consolidated Statement of Shareholders' Equity for the ~~nine months~~quarter ended ~~September 30, 2014,~~March 31, 2015, (iv) Consolidated Statements of Cash Flows for the ~~nine months~~quarters ended ~~September 30,~~March 31, 2015 and 2014, ~~and 2013,~~ and (v) Condensed Notes to Unaudited Consolidated Financial Statements

5448



	Payments for acquisitions, net of cash acquired
Small business distributors	$	7,841
NetClime, Inc.	2,011
Gift Box Corporation of America⁽¹⁾	1,750
Other	542
Total	$	12,144



	Notional amount		Fair value of interest rate swaps			Increase (decrease) in debt due to fair value adjustment			Balance sheet caption including interest rate swaps
Fair value hedge related to long-term debt due in 2014	$	198,000	$	745		$	6		Other current assets
Fair value hedge related to long-term debt due in 2020	200,000		(11,180		)	(11,180		)	Other non-current liabilities
Total fair value hedges	$	398,000	$	(10,435	)	$	(11,174	)



	Impairment charge
Internal-use software	$	4,036
Customer relationships	1,952
Trade name	480
Total impairment charge	$	6,468



Period	Total number of shares (or units) purchased	Average price paid per share (or unit)		Total number of shares (or units) purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
July 1, 2014 - July 31, 2014	15,300	$	55.24	15,300	2,092,407
August 1, 2014 - August 31, 2014	130,300	56.28		130,300	1,962,107
September 1, 2014 - September 30, 2014	—	—		—	1,962,107
Total	145,600	$	56.17	145,600	1,962,107