Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 20, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | DELUXE CORP | |
Entity Central Index Key | 27,996 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 49,960,160 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 64,926 | $ 61,541 |
Trade accounts receivable (net of allowances for uncollectible accounts of $4,720 and $4,335, respectively) | 95,116 | 113,656 |
Inventories and supplies | 40,521 | 39,411 |
Deferred income taxes | 10,518 | 10,159 |
Funds held for customers | 54,687 | 43,604 |
Other current assets | 46,511 | 50,519 |
Total current assets | 312,279 | 318,890 |
Deferred income taxes | 1,324 | 1,411 |
Long-term investments (including $2,142 and $2,384 of investments at fair value, respectively) | 45,500 | 46,451 |
Property, plant and equipment (net of accumulated depreciation of $343,141 and $348,530, respectively) | 84,092 | 87,623 |
Assets held for sale | 13,971 | 26,819 |
Intangibles (net of accumulated amortization of $405,433 and $388,308, respectively) | 218,552 | 207,180 |
Goodwill | 882,788 | 868,376 |
Other non-current assets | 130,279 | 131,641 |
Total assets | 1,688,785 | 1,688,391 |
Current liabilities: | ||
Accounts payable | 77,445 | 87,216 |
Accrued liabilities | 215,430 | 219,121 |
Short-term borrowings | 308,000 | 160,000 |
Long-term debt due within one year | 998 | 911 |
Total current liabilities | 601,873 | 467,248 |
Long-term debt | 194,771 | 393,401 |
Deferred income taxes | 95,053 | 95,838 |
Other non-current liabilities | $ 71,561 | $ 84,407 |
Commitments and contingencies (Notes 12 and 13) | ||
Shareholders' equity: | ||
Common shares $1 par value (authorized: 500,000 shares; outstanding: 2015 - 49,960; 2014 - 49,742) | $ 49,960 | $ 49,742 |
Additional paid-in capital | 15,103 | 4,758 |
Retained earnings | 701,295 | 629,335 |
Accumulated other comprehensive loss | (40,831) | (36,338) |
Total shareholders' equity | 725,527 | 647,497 |
Total liabilities and shareholders' equity | $ 1,688,785 | $ 1,688,391 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Allowances for uncollectible accounts | $ 4,720 | $ 4,335 |
Investments at fair value | 2,142 | 2,384 |
Accumulated depreciation | 343,141 | 348,530 |
Accumulated amortization | $ 405,433 | $ 388,308 |
Shareholders' equity: | ||
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized | 500,000 | 500,000 |
Common stock, shares outstanding | 49,960 | 49,742 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Product revenue | $ 358,897 | $ 344,463 | $ 713,911 | $ 690,127 |
Service revenue | 76,977 | 60,947 | 155,581 | 122,238 |
Total revenue | 435,874 | 405,410 | 869,492 | 812,365 |
Cost of products | (128,256) | (119,550) | (251,996) | (237,936) |
Cost of services | (27,682) | (26,341) | (56,624) | (52,884) |
Total cost of revenue | (155,938) | (145,891) | (308,620) | (290,820) |
Gross profit | 279,936 | 259,519 | 560,872 | 521,545 |
Selling, general and administrative expense | (190,091) | (173,546) | (385,469) | (351,476) |
Net restructuring charges | (966) | (1,014) | (1,233) | (4,314) |
Operating income | 88,879 | 84,959 | 174,170 | 165,755 |
Loss on early debt extinguishment | 0 | 0 | (8,917) | 0 |
Interest expense | (4,420) | (9,530) | (10,935) | (19,097) |
Other income | 824 | 368 | 1,254 | 499 |
Income before income taxes | 85,283 | 75,797 | 155,572 | 147,157 |
Income tax provision | (29,220) | (25,721) | (53,569) | (49,758) |
Net income | 56,063 | 50,076 | 102,003 | 97,399 |
Comprehensive income | $ 57,327 | $ 53,125 | $ 97,510 | $ 98,579 |
Basic earnings per share | $ 1.12 | $ 1 | $ 2.04 | $ 1.94 |
Diluted earnings per share | 1.11 | 0.99 | 2.02 | 1.92 |
Cash dividends per share | $ 0.30 | $ 0.30 | $ 0.60 | $ 0.55 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) - 6 months ended Jun. 30, 2015 - USD ($) shares in Thousands, $ in Thousands | Total | Common shares par value [Member] | Additional paid-in capital [Member] | Retained earnings [Member] | Accumulated other comprehensive loss [Member] |
Balance at Dec. 31, 2014 | $ 647,497 | $ 49,742 | $ 4,758 | $ 629,335 | $ (36,338) |
Balance (in shares) at Dec. 31, 2014 | 49,742 | ||||
Net income | $ 102,003 | 0 | 0 | 102,003 | 0 |
Cash dividends | (30,043) | 0 | 0 | (30,043) | 0 |
Common shares issued | $ 4,983 | 236 | 4,747 | 0 | 0 |
Common shares issued (in shares) | 236 | ||||
Tax impact of share-based awards | $ 1,365 | 0 | 1,365 | 0 | 0 |
Common shares retired | $ (1,155) | (18) | (1,137) | 0 | 0 |
Common shares retired (in shares) | (18) | ||||
Fair value of share-based compensation | $ 5,370 | 0 | 5,370 | 0 | 0 |
Other comprehensive loss | (4,493) | 0 | 0 | 0 | (4,493) |
Balance at Jun. 30, 2015 | $ 725,527 | $ 49,960 | $ 15,103 | $ 701,295 | $ (40,831) |
Balance (in shares) at Jun. 30, 2015 | 49,960 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net income | $ 102,003 | $ 97,399 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 7,939 | 8,503 |
Amortization of intangibles | 27,739 | 24,115 |
Amortization of contract acquisition costs | 9,697 | 8,533 |
Deferred income taxes | (1,368) | 123 |
Employee share-based compensation expense | 5,940 | 4,597 |
Loss on early debt extinguishment | 8,917 | 0 |
Other non-cash items, net | 139 | 4,617 |
Changes in assets and liabilities, net of effect of acquisitions: | ||
Trade accounts receivable | 19,434 | 1,646 |
Inventories and supplies | 27 | (1,434) |
Other current assets | 4,060 | (2,073) |
Non-current assets | 608 | (805) |
Accounts payable | (11,576) | (860) |
Contract acquisition payments | (5,848) | (4,326) |
Other accrued and non-current liabilities | (21,675) | (14,186) |
Net cash provided by operating activities | 146,036 | 125,849 |
Cash flows from investing activities: | ||
Purchases of capital assets | (19,307) | (19,851) |
Payments for acquisitions, net of cash acquired | (35,800) | (8,886) |
Other | 339 | 986 |
Net cash used by investing activities | (54,768) | (27,751) |
Cash flows from financing activities: | ||
Net proceeds (payments) from short-term borrowings | 148,000 | (125) |
Payments on long-term debt, including costs of debt reacquisition | (207,521) | (472) |
Payments for debt issue costs | (136) | (1,029) |
Proceeds from issuing shares under employee plans | 4,135 | 7,133 |
Excess tax benefit from share-based employee awards | 1,557 | 2,027 |
Payments for common shares repurchased | 0 | (51,940) |
Cash dividends paid to shareholders | (30,043) | (27,677) |
Other | (150) | 0 |
Net cash used by financing activities | (84,158) | (72,083) |
Effect of exchange rate change on cash | (3,725) | (162) |
Net change in cash and cash equivalents | 3,385 | 25,853 |
Cash and cash equivalents, beginning of year | 61,541 | 121,089 |
Cash and cash equivalents, end of period | $ 64,926 | $ 146,942 |
Consolidated financial statemen
Consolidated financial statements | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidated financial statements | Consolidated financial statements The consolidated balance sheet as of June 30, 2015 , the consolidated statements of comprehensive income for the quarters and six months ended June 30, 2015 and 2014 , the consolidated statement of shareholders’ equity for the six months ended June 30, 2015 , and the consolidated statements of cash flows for the six months ended June 30, 2015 and 2014 are unaudited. The consolidated balance sheet as of December 31, 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, 2014 (the “2014 Form 10-K”). |
New accounting pronouncements
New accounting pronouncements | 6 Months Ended |
Jun. 30, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New accounting pronouncements | New accounting pronouncements Recently adopted accounting pronouncement – 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. We adopted the new guidance on January 1, 2015, and it is 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, 2018. 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 June 30, 2015 , we had debt issuance costs of $2,478 related to long-term debt and $90 related to a short-term bank loan, which will be reclassified from other non-current assets and other current assets, respectively, upon adoption of this standard. In April 2015, the FASB issued ASU No. 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement . The new standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If the arrangement does include a software license, the software license element of the arrangement should be accounted for in the same manner as the acquisition of other software licenses. The new guidance is effective for us on January 1, 2016, and we will apply the standard on a prospective basis to all arrangements entered into or materially modified on or after January 1, 2016. We do not expect the application of this standard to have a significant impact on our results of operations or financial position. |
Supplemental balance sheet info
Supplemental balance sheet information | 6 Months Ended |
Jun. 30, 2015 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplemental balance sheet information | Supplemental balance sheet information Inventories and supplies – Inventories and supplies were comprised of the following: (in thousands) June 30, December 31, Raw materials $ 5,859 $ 5,899 Semi-finished goods 8,862 8,990 Finished goods 22,617 21,298 Supplies 3,183 3,224 Inventories and supplies $ 40,521 $ 39,411 Available-for-sale securities – Available-for-sale securities included within funds held for customers and other current assets were comprised of the following: June 30, 2015 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Canadian and provincial government securities $ 8,704 $ — $ (97 ) $ 8,607 Canadian guaranteed investment certificates 8,004 — — 8,004 Available-for-sale securities (funds held for customers) (1) 16,708 — (97 ) 16,611 Canadian money market fund (other current assets) 1,776 — — 1,776 Total available-for-sale securities $ 18,484 $ — $ (97 ) $ 18,387 (1) Funds held for customers, as reported on the consolidated balance sheet as of June 30, 2015 , also included cash of $38,076 . December 31, 2014 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Canadian and provincial government securities $ 9,245 $ — $ (120 ) $ 9,125 Canadian guaranteed investment certificates 8,605 — — 8,605 Available-for-sale securities (funds held for customers) (1) 17,850 — (120 ) 17,730 Canadian money market fund (other current assets) 1,895 — — 1,895 Total available-for-sale securities $ 19,745 $ — $ (120 ) $ 19,625 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2014 , also included cash of $25,874 . Expected maturities of available-for-sale securities as of June 30, 2015 were as follows: (in thousands) Fair value Due in one year or less $ 10,546 Due in two to five years 4,854 Due in six to ten years 2,987 Total available-for-sale securities $ 18,387 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 as of December 31, 2014 included the operations of five small business distributors which we previously acquired. The distributors were included in the Small Business Services segment and the assets acquired consisted primarily of customer list intangible assets. During the quarter ended June 30, 2015, we sold the operations of four of these distributors in exchange for notes receivable, realizing an immaterial net pre-tax gain. We are actively marketing the remaining distributor and expect the selling price will exceed its carrying value. Net assets held for sale consisted of the following: (in thousands) June 30, December 31, Balance sheet caption Current assets $ 91 $ 687 Other current assets Intangibles 13,533 25,926 Assets held for sale Other non-current assets 438 893 Assets held for sale Accrued liabilities (319 ) (1,058 ) Accrued liabilities Non-current deferred income tax liabilities (5,707 ) (8,774 ) Other non-current liabilities Net assets held for sale $ 8,036 $ 17,674 Intangibles – Intangibles were comprised of the following: June 30, 2015 December 31, 2014 (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 Amortizable intangibles: Internal-use software 381,566 (318,897 ) 62,669 364,229 (303,340 ) 60,889 Customer lists/relationships 123,680 (44,258 ) 79,422 106,218 (40,097 ) 66,121 Trade names 63,980 (34,066 ) 29,914 69,281 (37,623 ) 31,658 Software to be sold 28,500 (2,182 ) 26,318 28,500 (601 ) 27,899 Other 7,159 (6,030 ) 1,129 8,160 (6,647 ) 1,513 Amortizable intangibles 604,885 (405,433 ) 199,452 576,388 (388,308 ) 188,080 Intangibles $ 623,985 $ (405,433 ) $ 218,552 $ 595,488 $ (388,308 ) $ 207,180 Amortization of intangibles was $13,989 for the quarter ended June 30, 2015 and $12,091 for the quarter ended June 30, 2014 . Amortization of intangibles was $27,739 for the six months ended June 30, 2015 and $24,115 for the six months ended June 30, 2014 . Based on the intangibles in service as of June 30, 2015 , estimated future amortization expense is as follows: (in thousands) Estimated amortization expense Remainder of 2015 $ 27,850 2016 44,358 2017 30,619 2018 20,121 2019 16,351 During the six months ended June 30, 2015 , we acquired internal-use software in the normal course of business. We also acquired internal-use software and other intangible assets in conjunction with acquisitions (Note 6). The following intangible assets were acquired during the six months ended June 30, 2015 : (in thousands) Amount Weighted-average amortization period (in years) Internal-use software $ 17,540 4 Customer lists/relationships 21,349 7 Trade name 400 2 Acquired intangibles $ 39,289 6 Goodwill – Changes in goodwill during the six months ended June 30, 2015 were as follows: (in thousands) Small Business Services Financial Services Direct Checks Total Balance, December 31, 2014: Goodwill, gross $ 654,007 $ 85,863 $ 148,506 $ 888,376 Accumulated impairment charges (20,000 ) — — (20,000 ) Goodwill, net of accumulated impairment charges 634,007 85,863 148,506 868,376 Adjustment for acquisition of Wausau Financial Systems, Inc. (Note 6) — (164 ) — (164 ) Acquisition of Verify Valid (Note 6) 5,650 — — 5,650 Acquisition of small business distributor (Note 6) 9,046 — — 9,046 Currency translation adjustment (120 ) — — (120 ) Balance, June 30, 2015: Goodwill, gross 668,583 85,699 148,506 902,788 Accumulated impairment charges (20,000 ) — — (20,000 ) Goodwill, net of accumulated impairment charges $ 648,583 $ 85,699 $ 148,506 $ 882,788 Other non-current assets – Other non-current assets were comprised of the following: (in thousands) June 30, December 31, Contract acquisition costs $ 64,210 $ 74,101 Postretirement benefit plan asset 26,109 24,243 Loans and notes receivable from distributors 25,294 14,583 Deferred advertising costs 7,194 8,922 Other 7,472 9,792 Other non-current assets $ 130,279 $ 131,641 Changes in contract acquisition costs during the six months ended June 30, 2015 and 2014 were as follows: Six Months Ended (in thousands) 2015 2014 Balance, beginning of year $ 74,101 $ 35,421 Additions (1) 2,520 53,164 Amortization (9,697 ) (8,533 ) Other (2,714 ) (220 ) Balance, end of period $ 64,210 $ 79,832 (1) Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $5,848 for the six months ended June 30, 2015 and $4,326 for the six months ended June 30, 2014 . Accrued liabilities – Accrued liabilities were comprised of the following: (in thousands) June 30, December 31, Funds held for customers $ 54,593 $ 42,944 Deferred revenue 38,736 48,514 Performance-based compensation 23,135 38,259 Customer rebates 18,722 20,550 Contract acquisition costs due within one year 9,478 9,815 Restructuring due within one year (Note 9) 2,022 4,276 Other 68,744 54,763 Accrued liabilities $ 215,430 $ 219,121 |
Earnings per share
Earnings per share | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings per share | 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 Six Months Ended (dollars and shares in thousands, except per share amounts) 2015 2014 2015 2014 Earnings per share – basic: Net income $ 56,063 $ 50,076 $ 102,003 $ 97,399 Income allocated to participating securities (376 ) (287 ) (669 ) (486 ) Income available to common shareholders $ 55,687 $ 49,789 $ 101,334 $ 96,913 Weighted-average shares outstanding 49,770 49,789 49,732 50,021 Earnings per share – basic $ 1.12 $ 1.00 $ 2.04 $ 1.94 Earnings per share – diluted: Net income $ 56,063 $ 50,076 $ 102,003 $ 97,399 Income allocated to participating securities (374 ) (285 ) (665 ) (483 ) Re-measurement of share-based awards classified as liabilities (132 ) 117 47 109 Income available to common shareholders $ 55,557 $ 49,908 $ 101,385 $ 97,025 Weighted-average shares outstanding 49,770 49,789 49,732 50,021 Dilutive impact of potential common shares 400 441 404 448 Weighted-average shares and potential common shares outstanding 50,170 50,230 50,136 50,469 Earnings per share – diluted $ 1.11 $ 0.99 $ 2.02 $ 1.92 Antidilutive options excluded from calculation 260 279 260 279 |
Other comprehensive income
Other comprehensive income | 6 Months Ended |
Jun. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Other comprehensive income | 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 Quarter Ended Six Months Ended (in thousands) 2015 2014 2015 2014 Amortization of loss on interest rate locks (1) $ — $ (427 ) $ — $ (855 ) Interest expense Tax benefit — 167 — 334 Income tax provision Amortization of loss on interest rate locks, net of tax — (260 ) — (521 ) Net income Amortization of postretirement benefit plan items: Prior service credit 355 355 711 711 (2) Net actuarial loss (780 ) (854 ) (1,560 ) (1,709 ) (2) Total amortization (425 ) (499 ) (849 ) (998 ) (2) Tax benefit 113 139 226 279 (2) Amortization of postretirement benefit plan items, net of tax (312 ) (360 ) (623 ) (719 ) (2) Total reclassifications, net of tax $ (312 ) $ (620 ) $ (623 ) $ (1,240 ) (1) Relates to interest rate locks which terminated in 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 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: (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 — 15 (5,131 ) (5,116 ) Amounts reclassified from accumulated other comprehensive loss 623 — — 623 Net current-period other comprehensive income (loss) 623 15 (5,131 ) (4,493 ) Balance, June 30, 2015 $ (31,782 ) $ (110 ) $ (8,939 ) $ (40,831 ) (1) Other comprehensive income before reclassifications is net of income tax expense of $5 . |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions During the six months ended June 30, 2015, we acquired the operations of two small business distributors for aggregate cash payments of $25,872 , net of cash acquired, plus non-cash consideration of $3,564 related to receivables from a distributor prior to its acquisition. The allocation of the purchase price based upon the estimated fair value of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $9,046 related to one of the distributors. The acquisition resulted in goodwill as we expect to accelerate revenue growth in business and marketing communications solutions by adding an established customer base which gives us a larger presence in the western United States. Transaction costs related to the acquisitions were expensed as incurred and were not significant to the consolidated statement of comprehensive income for the six months ended June 30, 2015 . The results of operations of one of the distributors are included in our Financial Services segment from its acquisition date, as its customers consist primarily of financial institutions. The other distributor is included within our Small Business Services segment from its acquisition date. We expect to finalize the allocation of the purchase price for both distributors by the end of 2015 when our valuations of certain assets and liabilities are finalized, including, but not limited to, intangibles and deferred income taxes. We also plan to finalize the estimated useful life of intangibles by the end of 2015. The net assets acquired consisted primarily of customer lists with an aggregate preliminary fair value of $17,443 and a weighted-average preliminary useful life of seven years , as well as internal-use software with a preliminary fair value of $1,000 and a preliminary useful life of three years . One of the customer lists is being amortized in proportion to the expected future cash flows, while the other intangibles are being amortized using the straight-line method. Further information regarding the calculation of the estimated fair value of the customer lists and internal-use software can be found in Note 8. In February 2015, we acquired selected assets of Verify Valid, LLC, a provider of electronic check payment services, in a cash transaction for $3,447 . The allocation of the purchase price based upon the estimated fair value of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $5,650 . During the second quarter of 2015, we adjusted the valuation of the liability for contingent consideration and decreased goodwill $5,540 from the preliminary amount recorded as of March 31, 2015. The acquisition resulted in goodwill as the acquired technology enables us to diversify our payment product and service offerings and bring these offerings to our customer base. Transaction costs related to the acquisition were expensed as incurred and were not significant to the consolidated statement of comprehensive income for the six months ended June 30, 2015 . The results of operations of this business from its acquisition date are included in our Small Business Services segment. Net assets acquired consisted primarily of internal-use software with a value of $1,900 and a useful life of 5 years , which 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 , based on the revenue generated by the business. There is no maximum amount of contingent payments specified in the agreement . The fair value of the liability for contingent payments recognized upon acquisition was $2,800 . During the second quarter of 2015, we decreased this liability $5,540 from the preliminary amount recorded as of March 31, 2015. This liability is included in accrued liabilities and other non-current liabilities in the consolidated balance sheet. Further information regarding the calculation of the estimated fair value of the internal-use software and the contingent payments can be found in Note 8. In January 2015, we acquired selected assets of Range, Inc., a 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 six months ended June 30, 2015 . The results of operations of this business from its acquisition date are included in our Small Business Services segment. Net assets acquired consisted primarily of a customer list with a value of $3,906 and a useful life of 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 October 2014, we acquired all of the outstanding capital stock of Wausau Financial Systems, Inc. (Wausau), a provider of 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 results of operations of this business from its acquisition date are included in our Financial Services segment. During the first quarter of 2015, we adjusted the valuation of certain income tax accounts and decreased goodwill $164 from the preliminary amount recorded as of December 31, 2014. The acquisition resulted in goodwill as Wausau provides new access into the commercial and treasury side of financial institutions through a strong software-as-a-service (SaaS) technology offering. We expect to finalize the allocation of the purchase price during the third quarter of 2015, when our valuation of 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. |
Derivative financial instrument
Derivative financial instruments | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative financial instruments | 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). 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, changes in the fair value of the 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 $6,577 as of June 30, 2015 and $8,067 as of December 31, 2014 . As the short-cut method is being used to account for these hedges, the decrease in long-term debt due to fair value adjustments was also $6,577 as of June 30, 2015 and $8,067 as of December 31, 2014 . During the six months ended June 30, 2014 , we also held interest rate swaps related to our long-term debt which matured in October 2014. The short-cut method was not used for these interest rate swaps. As such, changes in the fair value of the interest rate swaps and the related long-term debt were not equal (i.e., hedge ineffectiveness) and were included in interest expense in the consolidated statement of comprehensive income. Information regarding hedge ineffectiveness during the quarter and six months ended June 30, 2014 is presented in Note 8. |
Fair value measurements
Fair value measurements | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | Fair value measurements 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 six months ended June 30, 2015 were comprised primarily of customer lists associated with the acquisitions of small business distributors and Range, as well as internal-use software associated with the acquisitions of Verify Valid and a small business distributor (Note 6). The aggregate fair value of the acquired customer lists was $21,349 and was estimated 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 $2,900 and was estimated using the 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 acquirees. Recurring fair value measurements – 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 investments in Canadian guaranteed investment certificates (GIC's) with maturities of one year or less. 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's approximated cost due to their 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 or six months ended June 30, 2015 and 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 or six months ended June 30, 2015 and 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) 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 six months ended June 30, 2015 and 2014 , net realized gains were not significant. We recognized net unrealized losses of $191 during the six months ended June 30, 2015 and $103 during the six months ended June 30, 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 was not used for our other interest rate 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 Six Months Ended (in thousands) 2015 2014 2015 2014 (Loss) gain from derivatives $ (1,480 ) $ 2,897 $ 1,490 $ 4,938 Gain (loss) from change in fair value of hedged debt 1,480 (2,840 ) (1,490 ) (4,831 ) Net decrease in interest expense $ — $ 57 $ — $ 107 In connection with the Verify Valid acquisition in February 2015 (Note 6), we are required to make annual contingent payments over a period of up to eight years , based on the revenue generated by the business. A specified payment percentage for each year is applied to the revenue generated by the business in that year to determine the amount of the payment. There is no maximum amount of contingent payments specified in the agreement . The fair value of the liability for contingent payments recognized upon acquisition was $2,800 , and was estimated by discounting to present value the probability-weighted contingent payments expected to be made. Assumptions used in this calculation included the discount rate, projected revenue for 2015 through 2023 based on our most recent internal forecast, and factors indicating the probability of generating the forecasted revenue. This liability is re-measured each reporting period. Increases or decreases in projected revenue and the related probabilities may result in a higher or lower fair value measurement. Changes in the fair value resulting from changes in the timing, amount of, or likelihood of the applicable contingent payments are included in SG&A expense in the consolidated statements of comprehensive income. Changes in the fair value resulting from accretion for the passage of time are included in interest expense in the consolidated statements of comprehensive income. Information regarding recurring fair value measurements completed during each period was as follows: Fair value measurements using Fair value as of June 30, 2015 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) (Level 1) (Level 2) (Level 3) Available-for-sale marketable securities (funds held for customers) $ 16,611 $ — $ 16,611 $ — Available-for-sale marketable securities (other current assets) 1,776 — 1,776 — Long-term investment in mutual funds 2,142 2,142 — — Derivative liabilities (6,577 ) — (6,577 ) — Accrued contingent consideration (3,098 ) — — (3,098 ) Fair value measurements using Fair value as of December 31, 2014 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) (Level 1) (Level 2) (Level 3) Available-for-sale marketable securities (funds held for customers) $ 17,730 $ — $ 17,730 $ — Available-for-sale marketable securities (other current assets) 1,895 — 1,895 — Long-term investment in mutual funds 2,384 2,384 — — Derivative liabilities (8,067 ) — (8,067 ) — Changes in accrued contingent consideration during the six months ended June 30, 2015 were as follows: (in thousands) Six Months Ended June 30, 2015 Balance, December 31, 2014 $ — Acquisition date fair value (Note 6) 2,800 Accretion 298 Balance, June 30, 2015 $ 3,098 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 six months ended June 30, 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, short-term borrowings, and cash included within funds held for customers – 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 in active 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 June 30, 2015 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value (Level 1) (Level 2) (Level 3) Cash $ 64,926 $ 64,926 $ 64,926 $ — $ — Cash (funds held for customers) 38,076 38,076 38,076 — — Loans and notes receivable from distributors 27,659 25,530 — — 25,530 Short-term borrowings 308,000 308,000 308,000 — — Long-term debt (1) 193,423 217,160 — 217,160 — (1) Amounts exclude capital lease obligations. Fair value measurements using December 31, 2014 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value (Level 1) (Level 2) (Level 3) Cash $ 61,541 $ 61,541 $ 61,541 $ — $ — Cash (funds held for customers) 25,874 25,874 25,874 — — Loans and notes receivable from distributors 16,915 15,765 — — 15,765 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. |
Restructuring charges
Restructuring charges | 6 Months Ended |
Jun. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring charges | Restructuring charges Net restructuring charges for each period consisted of the following components: Quarter Ended Six Months Ended (in thousands) 2015 2014 2015 2014 Severance accruals $ 1,307 $ 1,122 $ 2,050 $ 2,667 Severance reversals (170 ) (285 ) (694 ) (595 ) Net restructuring accruals 1,137 837 1,356 2,072 Other costs 17 87 62 2,384 Net restructuring charges $ 1,154 $ 924 $ 1,418 $ 4,456 The net restructuring charges are reflected in the consolidated statements of comprehensive income as follows: Quarter Ended Six Months Ended (in thousands) 2015 2014 2015 2014 Total cost of revenue $ 188 $ (90 ) $ 185 $ 142 Operating expenses 966 1,014 1,233 4,314 Net restructuring charges $ 1,154 $ 924 $ 1,418 $ 4,456 During the quarters and six months ended June 30, 2015 and June 30, 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. The restructuring accruals included severance benefits for approximately 110 employees during the quarter ended June 30, 2015 , 25 employees during the quarter ended June 30, 2014 , 150 employees during the six months ended June 30, 2015 and 65 employees during the six months ended June 30, 2014 . 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 $2,022 as of June 30, 2015 and $4,276 as of December 31, 2014 are reflected in the consolidated balance sheet in accrued liabilities. The majority of the employee reductions are expected to be completed in the third quarter of 2015, and we expect most of the related severance payments to be paid by the first quarter of 2016, utilizing cash from operations. As of June 30, 2015 , approximately 105 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 2014 Form 10-K. Accruals for our restructuring initiatives, summarized by year, were as follows: (in thousands) 2012 initiatives 2013 initiatives 2014 initiatives 2015 initiatives Total Balance, December 31, 2014 $ 32 $ 128 $ 4,116 $ — $ 4,276 Restructuring charges — — 85 1,965 2,050 Restructuring reversals — (9 ) (659 ) (26 ) (694 ) Payments (32 ) (78 ) (3,012 ) (488 ) (3,610 ) Balance, June 30, 2015 $ — $ 41 $ 530 $ 1,451 $ 2,022 Cumulative amounts: Restructuring charges $ 8,012 $ 7,629 $ 8,225 $ 1,965 $ 25,831 Restructuring reversals (1,363 ) (1,005 ) (1,301 ) (26 ) (3,695 ) Payments (6,649 ) (6,583 ) (6,394 ) (488 ) (20,114 ) Balance, June 30, 2015 $ — $ 41 $ 530 $ 1,451 $ 2,022 The components of our restructuring accruals, by segment, were as follows: Employee severance benefits Operating lease obligations (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 1,004 572 — 474 — — 2,050 Restructuring reversals (378 ) (113 ) — (203 ) — — (694 ) Inter-segment transfer 28 (28 ) — — — — — Payments (1,260 ) (1,713 ) — (605 ) (32 ) — (3,610 ) Balance, June 30, 2015 $ 806 $ 566 $ — $ 650 $ — $ — $ 2,022 Cumulative amounts (1) : Restructuring charges $ 9,447 $ 7,357 $ 585 $ 7,830 $ 442 $ 170 $ 25,831 Restructuring reversals (1,677 ) (688 ) (59 ) (1,114 ) (157 ) — (3,695 ) Inter-segment transfer 28 (28 ) (25 ) 25 — — — Payments (6,992 ) (6,075 ) (501 ) (6,091 ) (285 ) (170 ) (20,114 ) Balance, June 30, 2015 $ 806 $ 566 $ — $ 650 $ — $ — $ 2,022 (1) Includes accruals related to our cost reduction initiatives for 2012 through 2015. |
Postretirement benefits
Postretirement benefits | 6 Months Ended |
Jun. 30, 2015 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Postretirement benefits | Postretirement benefits We have historically provided certain health care benefits for a large number of 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 2014 Form 10-K. Postretirement benefit income for each period consisted of the following components: Quarter Ended Six Months Ended (in thousands) 2015 2014 2015 2014 Interest cost $ 859 $ 1,138 $ 1,719 $ 2,277 Expected return on plan assets (1,958 ) (2,183 ) (3,917 ) (4,367 ) Amortization of prior service credit (355 ) (355 ) (711 ) (711 ) Amortization of net actuarial losses 780 854 1,560 1,709 Net periodic benefit income $ (674 ) $ (546 ) $ (1,349 ) $ (1,092 ) |
Income tax provision
Income tax provision | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income tax provision | Income tax provision Our effective tax rate for the six months ended June 30, 2015 was 34.4% , 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 0.3 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. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt outstanding was comprised of the following: (in thousands) June 30, December 31, 7.0% senior notes due March 15, 2019 $ — $ 200,000 6.0% senior notes due November 15, 2020 (1) 193,423 191,933 Long-term portion of capital lease obligations 1,348 1,468 Long-term portion of debt 194,771 393,401 Amount drawn on credit facility 233,000 160,000 Short-term bank loan 75,000 — Capital lease obligations due within one year 998 911 Total debt $ 503,769 $ 554,312 (1) Includes decrease due to cumulative change in fair value of hedged debt of $6,577 as of June 30, 2015 and $8,067 as of December 31, 2014 . Our senior notes due in 2020 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 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 credit facility agreement or our short-term bank loan. However, if our leverage ratio, defined 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 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 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 $217,160 as of June 30, 2015 , based on quoted prices 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. 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. In March 2015, we retired all of these notes, realizing a loss on early debt extinguishment of $8,917 during the six months ended June 30, 2015 . This retirement was funded utilizing our credit facility and a short-term bank loan. We had capital lease obligations of $2,346 as of June 30, 2015 and $2,379 as of December 31, 2014 related to information technology hardware. The lease obligations will be paid through February 2019 . 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 borrowings – In March 2015 , we entered into a $75,000 short-term variable rate bank loan. 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 $74,880 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 June 30, 2015 , $75,000 was outstanding under this bank loan at an interest rate of 1.52% . As of June 30, 2015 , we had a $350,000 credit facility, which is scheduled to expire in February 2019 . Our quarterly 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. As of June 30, 2015 , $233,000 was drawn on our credit facility at a weighted-average interest rate of 1.65% . As of December 31, 2014 , $160,000 was drawn on our credit facility at a weighted-average interest rate of 1.63% . The credit agreements governing our credit facility 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 agreements also contain financial covenants regarding our leverage ratio and interest coverage, and our credit facility agreement also contains a financial covenant regarding liquidity. Daily average amounts outstanding under our short-term borrowing arrangements were as follows: (in thousands) Six Months Ended Year Ended December 31, 2014 Short-term bank loan: Daily average amount outstanding $ 45,580 $ — Weighted-average interest rate 1.52 % — Credit facility: Daily average amount outstanding $ 250,967 $ 43,675 Weighted-average interest rate 1.64 % 1.63 % As of June 30, 2015 , amounts were available for borrowing under our credit facility as follows: (in thousands) Total available Credit facility commitment $ 350,000 Amount drawn on credit facility (233,000 ) Outstanding letters of credit (1) (12,726 ) Net available for borrowing as of June 30, 2015 $ 104,274 (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. |
Other commitments and contingen
Other commitments and contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other commitments and contingencies | 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 $7,697 as of June 30, 2015 and $7,942 as of December 31, 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 $725 for the six months ended June 30, 2015 and $469 for the six months ended June 30, 2014 . As of June 30, 2015 , $2,051 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 $10,860 had been paid through June 30, 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 June 30, 2015 . We do not anticipate significant net cash outlays for environmental matters in 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 $4,048 as of June 30, 2015 and $4,040 as of December 31, 2014 , is accounted for on a discounted basis. The difference between the discounted and undiscounted workers' compensation liability was not significant as of June 30, 2015 or December 31, 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 $2,128 as of June 30, 2015 and $2,361 as of December 31, 2014 . The difference between the discounted and undiscounted medical and dental liability was not significant as of June 30, 2015 or December 31, 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. |
Shareholders' equity
Shareholders' equity | 6 Months Ended |
Jun. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' equity | 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 June 30, 2015 . We did not repurchase any shares during the six months ended June 30, 2015 . |
Business segment information
Business segment information | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Business segment information | 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. 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 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 would 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 were included in the Financial Services segment beginning in 2015. Our business segment results for prior periods have been restated to reflect this change. 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 40.7% of our Small Business Services segment's revenue in 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 supply small business owners with the customized documents necessary to efficiently manage their business including envelopes, office supplies, stamps and labels. Our Financial Services and Direct Checks segments offer checkbook covers and stamps. The accounting policies of the segments are the same as those described in the Notes to Consolidated Financial Statements included in the 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 June 30, 2015 and 2014 : Reportable Business Segments (in thousands) Small Business Services Financial Services Direct Checks Corporate Consolidated Total revenue from external 2015 $ 282,285 $ 112,699 $ 40,890 $ — $ 435,874 customers: 2014 267,695 94,565 43,150 — 405,410 Operating income: 2015 48,225 25,506 15,148 — 88,879 2014 48,788 22,277 13,894 — 84,959 Depreciation and amortization 2015 11,231 5,791 973 — 17,995 expense: 2014 11,453 3,190 1,710 — 16,353 Total assets: 2015 980,405 272,495 162,058 273,827 1,688,785 2014 941,862 156,860 164,932 372,746 1,636,400 Capital asset purchases: 2015 — — — 9,795 9,795 2014 — — — 8,901 8,901 The following is our segment information as of and for the six months ended June 30, 2015 and 2014 : Reportable Business Segments (in thousands) Small Business Services Financial Services Direct Checks Corporate Consolidated Total revenue from external 2015 $ 559,251 $ 224,240 $ 86,001 $ — $ 869,492 customers: 2014 534,206 187,011 91,148 — 812,365 Operating income: 2015 97,672 45,916 30,582 — 174,170 2014 92,185 44,100 29,470 — 165,755 Depreciation and amortization 2015 21,440 11,781 2,457 — 35,678 expense: 2014 22,799 6,392 3,427 — 32,618 Total assets: 2015 980,405 272,495 162,058 273,827 1,688,785 2014 941,862 156,860 164,932 372,746 1,636,400 Capital asset purchases: 2015 — — — 19,307 19,307 2014 — — — 19,851 19,851 |
Supplemental guarantor financia
Supplemental guarantor financial information | 6 Months Ended |
Jun. 30, 2015 | |
Supplemental guarantor financial information [Abstract] | |
Supplemental guarantor financial information | Supplemental guarantor financial information Our long-term notes due in 2020 (Note 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. Deluxe Corporation Condensed Consolidating Balance Sheet (Unaudited) June 30, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total ASSETS Current assets: Cash and cash equivalents $ 7,196 $ 3,562 $ 54,288 $ (120 ) $ 64,926 Trade accounts receivable, net — 85,543 9,573 — 95,116 Inventories and supplies — 37,746 2,775 — 40,521 Deferred income taxes 9,296 1,133 89 — 10,518 Funds held for customers — — 54,687 — 54,687 Other current assets 8,658 34,891 2,962 — 46,511 Total current assets 25,150 162,875 124,374 (120 ) 312,279 Deferred income taxes 2,662 — 1,324 (2,662 ) 1,324 Long-term investments 38,138 7,362 — — 45,500 Property, plant and equipment, net 4,532 73,913 5,647 — 84,092 Assets held for sale — — 13,971 — 13,971 Intangibles, net 1,729 214,547 2,276 — 218,552 Goodwill — 881,191 1,597 — 882,788 Investments in consolidated subsidiaries 1,377,112 82,867 — (1,459,979 ) — Intercompany receivable — 167,095 225 (167,320 ) — Other non-current assets 7,724 122,371 184 — 130,279 Total assets $ 1,457,047 $ 1,712,221 $ 149,598 $ (1,630,081 ) $ 1,688,785 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 13,087 $ 62,228 $ 2,250 $ (120 ) $ 77,445 Accrued liabilities 25,893 130,822 58,715 — 215,430 Short-term borrowings 308,000 — — — 308,000 Long-term debt due within one year 987 — 11 — 998 Total current liabilities 347,967 193,050 60,976 (120 ) 601,873 Long-term debt 194,723 — 48 — 194,771 Deferred income taxes — 97,715 — (2,662 ) 95,053 Intercompany payable 167,320 — — (167,320 ) — Other non-current liabilities 21,510 44,344 5,707 — 71,561 Total shareholders' equity 725,527 1,377,112 82,867 (1,459,979 ) 725,527 Total liabilities and shareholders' equity $ 1,457,047 $ 1,712,221 $ 149,598 $ (1,630,081 ) $ 1,688,785 Deluxe Corporation Condensed Consolidating Balance Sheet (Unaudited) December 31, 2014 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total ASSETS Current assets: Cash and cash equivalents $ 8,335 $ 4,342 $ 52,193 $ (3,329 ) $ 61,541 Trade accounts receivable, net — 100,197 13,459 — 113,656 Inventories and supplies — 34,097 5,314 — 39,411 Deferred income taxes 8,929 1,182 48 — 10,159 Funds held for customers — — 43,604 — 43,604 Other current assets 8,538 38,912 3,069 — 50,519 Total current assets 25,802 178,730 117,687 (3,329 ) 318,890 Deferred income taxes 660 — 1,411 (660 ) 1,411 Long-term investments 38,623 7,828 — — 46,451 Property, plant and equipment, net 4,868 76,306 6,449 — 87,623 Assets held for sale — 3,102 23,717 — 26,819 Intangibles, net 987 203,967 2,226 — 207,180 Goodwill — 866,659 1,717 — 868,376 Investments in consolidated subsidiaries 1,268,918 90,960 — (1,359,878 ) — Intercompany receivable — 82,758 536 (83,294 ) — Other non-current assets 9,675 121,549 417 — 131,641 Total assets $ 1,349,533 $ 1,631,859 $ 154,160 $ (1,447,161 ) $ 1,688,391 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 13,792 $ 73,380 $ 3,373 $ (3,329 ) $ 87,216 Accrued liabilities 26,278 141,816 51,027 — 219,121 Short-term borrowings 160,000 — — — 160,000 Long-term debt due within one year 903 — 8 — 911 Total current liabilities 200,973 215,196 54,408 (3,329 ) 467,248 Long-term debt 393,387 — 14 — 393,401 Deferred income taxes — 96,498 — (660 ) 95,838 Intercompany payable 83,294 — — (83,294 ) — Other non-current liabilities 24,382 51,247 8,778 — 84,407 Total shareholders' equity 647,497 1,268,918 90,960 (1,359,878 ) 647,497 Total liabilities and shareholders' equity $ 1,349,533 $ 1,631,859 $ 154,160 $ (1,447,161 ) $ 1,688,391 Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income (Unaudited) Quarter Ended June 30, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 339,959 $ 18,938 $ — $ 358,897 Service revenue 28,426 71,753 6,331 (29,533 ) 76,977 Total revenue 28,426 411,712 25,269 (29,533 ) 435,874 Cost of products — (118,527 ) (9,729 ) — (128,256 ) Cost of services (29,847 ) (26,174 ) (1,830 ) 30,169 (27,682 ) Total cost of revenue (29,847 ) (144,701 ) (11,559 ) 30,169 (155,938 ) Gross profit (1,421 ) 267,011 13,710 636 279,936 Operating expenses — (180,869 ) (9,552 ) (636 ) (191,057 ) Operating (loss) income (1,421 ) 86,142 4,158 — 88,879 Interest expense (4,104 ) (4,625 ) (1 ) 4,310 (4,420 ) Other income 4,568 470 96 (4,310 ) 824 (Loss) income before income taxes (957 ) 81,987 4,253 — 85,283 Income tax benefit (provision) 788 (28,960 ) (1,048 ) — (29,220 ) (Loss) income before equity in earnings of consolidated subsidiaries (169 ) 53,027 3,205 — 56,063 Equity in earnings of consolidated subsidiaries 56,232 3,205 — (59,437 ) — Net income $ 56,063 $ 56,232 $ 3,205 $ (59,437 ) $ 56,063 Comprehensive income $ 57,327 $ 57,453 $ 4,157 $ (61,610 ) $ 57,327 Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income (Unaudited) Quarter Ended June 30, 2014 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 321,043 $ 23,420 $ — $ 344,463 Service revenue 21,560 56,215 7,018 (23,846 ) 60,947 Total revenue 21,560 377,258 30,438 (23,846 ) 405,410 Cost of products — (108,036 ) (11,514 ) — (119,550 ) Cost of services (19,744 ) (24,773 ) (2,070 ) 20,246 (26,341 ) Total cost of revenue (19,744 ) (132,809 ) (13,584 ) 20,246 (145,891 ) Gross profit 1,816 244,449 16,854 (3,600 ) 259,519 Operating expenses — (166,215 ) (11,945 ) 3,600 (174,560 ) Operating income 1,816 78,234 4,909 — 84,959 Interest expense (9,510 ) (3,049 ) — 3,029 (9,530 ) Other income 3,096 260 41 (3,029 ) 368 (Loss) income before income taxes (4,598 ) 75,445 4,950 — 75,797 Income tax benefit (provision) 2,248 (26,613 ) (1,356 ) — (25,721 ) (Loss) income before equity in earnings of consolidated subsidiaries (2,350 ) 48,832 3,594 — 50,076 Equity in earnings of consolidated subsidiaries 52,426 3,594 — (56,020 ) — Net income $ 50,076 $ 52,426 $ 3,594 $ (56,020 ) $ 50,076 Comprehensive income $ 53,125 $ 55,177 $ 6,023 $ (61,200 ) $ 53,125 Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income (Unaudited) Six Months Ended June 30, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 672,698 $ 41,213 $ — $ 713,911 Service revenue 55,111 144,993 12,929 (57,452 ) 155,581 Total revenue 55,111 817,691 54,142 (57,452 ) 869,492 Cost of products — (230,780 ) (21,216 ) — (251,996 ) Cost of services (60,130 ) (54,754 ) (3,920 ) 62,180 (56,624 ) Total cost of revenue (60,130 ) (285,534 ) (25,136 ) 62,180 (308,620 ) Gross profit (5,019 ) 532,157 29,006 4,728 560,872 Operating expenses — (361,627 ) (20,347 ) (4,728 ) (386,702 ) Operating (loss) income (5,019 ) 170,530 8,659 — 174,170 Loss on early debt extinguishment (8,917 ) — — — (8,917 ) Interest expense (10,601 ) (5,995 ) (1 ) 5,662 (10,935 ) Other income 5,943 608 365 (5,662 ) 1,254 (Loss) income before income taxes (18,594 ) 165,143 9,023 — 155,572 Income tax benefit (provision) 7,289 (58,401 ) (2,457 ) — (53,569 ) (Loss) income before equity in earnings of consolidated subsidiaries (11,305 ) 106,742 6,566 — 102,003 Equity in earnings of consolidated subsidiaries 113,308 6,566 — (119,874 ) — Net income $ 102,003 $ 113,308 $ 6,566 $ (119,874 ) $ 102,003 Comprehensive income $ 97,510 $ 108,730 $ 1,450 $ (110,180 ) $ 97,510 Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income (Unaudited) Six Months Ended June 30, 2014 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 643,692 $ 46,435 $ — $ 690,127 Service revenue 43,130 111,747 15,079 (47,718 ) 122,238 Total revenue 43,130 755,439 61,514 (47,718 ) 812,365 Cost of products — (214,702 ) (23,234 ) — (237,936 ) Cost of services (43,795 ) (49,205 ) (5,146 ) 45,262 (52,884 ) Total cost of revenue (43,795 ) (263,907 ) (28,380 ) 45,262 (290,820 ) Gross profit (665 ) 491,532 33,134 (2,456 ) 521,545 Operating expenses — (333,980 ) (24,266 ) 2,456 (355,790 ) Operating (loss) income (665 ) 157,552 8,868 — 165,755 Interest expense (18,976 ) (6,471 ) — 6,350 (19,097 ) Other income 5,699 932 218 (6,350 ) 499 (Loss) income before income taxes (13,942 ) 152,013 9,086 — 147,157 Income tax benefit (provision) 5,954 (53,168 ) (2,544 ) — (49,758 ) (Loss) income before equity in earnings of consolidated subsidiaries (7,988 ) 98,845 6,542 — 97,399 Equity in earnings of consolidated subsidiaries 105,387 6,542 — (111,929 ) — Net income $ 97,399 $ 105,387 $ 6,542 $ (111,929 ) $ 97,399 Comprehensive income $ 98,579 $ 105,972 $ 6,482 $ (112,454 ) $ 98,579 Deluxe Corporation Condensed Consolidating Statement of Cash Flows (Unaudited) Six Months Ended June 30, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Net cash (used) provided by operating activities $ (4,570 ) $ 139,604 $ 7,793 $ 3,209 $ 146,036 Cash flows from investing activities: Purchases of capital assets (905 ) (16,997 ) (1,405 ) — (19,307 ) Payments for acquisitions, net of cash acquired (26 ) (35,774 ) — — (35,800 ) Other (286 ) 619 6 — 339 Net cash used by investing activities (1,217 ) (52,152 ) (1,399 ) — (54,768 ) Cash flows from financing activities: Net proceeds from short-term borrowings 148,000 — — — 148,000 Payments on long-term debt, including costs of debt reacquisition (207,515 ) — (6 ) — (207,521 ) Payments for debt issue costs (136 ) — — — (136 ) Proceeds from issuing shares under employee plans 4,135 — — — 4,135 Excess tax benefit from share-based employee awards 1,557 — — — 1,557 Cash dividends paid to shareholders (30,043 ) — — — (30,043 ) Advances from (to) consolidated subsidiaries 88,650 (88,232 ) (418 ) — — Other — — (150 ) — (150 ) Net cash provided (used) by financing activities 4,648 (88,232 ) (574 ) — (84,158 ) Effect of exchange rate change on cash — — (3,725 ) — (3,725 ) Net change in cash and cash equivalents (1,139 ) (780 ) 2,095 3,209 3,385 Cash and cash equivalents, beginning of year 8,335 4,342 52,193 (3,329 ) 61,541 Cash and cash equivalents, end of period $ 7,196 $ 3,562 $ 54,288 $ (120 ) $ 64,926 Deluxe Corporation Condensed Consolidating Statement of Cash Flows (Unaudited) Six Months Ended June 30, 2014 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Net cash (used) provided by operating activities $ (1,237 ) $ 120,051 $ 4,995 $ 2,040 $ 125,849 Cash flows from investing activities: Purchases of capital assets (334 ) (18,400 ) (1,117 ) — (19,851 ) Payments for acquisitions, net of cash acquired — (8,886 ) — — (8,886 ) Other 558 421 7 — 986 Net cash provided (used) by investing activities 224 (26,865 ) (1,110 ) — (27,751 ) Cash flows from financing activities: Net payments on short-term borrowings — (125 ) — — (125 ) Payments on long-term debt, including costs of debt reacquisition (449 ) (20 ) (3 ) — (472 ) Payments for debt issue costs (1,029 ) — — — (1,029 ) Proceeds from issuing shares under employee plans 7,133 — — — 7,133 Excess tax benefit from share-based employee awards 2,027 — — — 2,027 Payments for common shares repurchased (51,940 ) — — — (51,940 ) Cash dividends paid to shareholders (27,677 ) — — — (27,677 ) Advances from (to) consolidated subsidiaries 93,117 (93,381 ) 264 — — Net cash provided (used) by financing activities 21,182 (93,526 ) 261 — (72,083 ) Effect of exchange rate change on cash — — (162 ) — (162 ) Net change in cash and cash equivalents 20,169 (340 ) 3,984 2,040 25,853 Cash and cash equivalents, beginning of year 71,972 6,991 45,229 (3,103 ) 121,089 Cash and cash equivalents, end of period $ 92,141 $ 6,651 $ 49,213 $ (1,063 ) $ 146,942 |
New accounting pronouncements (
New accounting pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New accounting pronouncements | New accounting pronouncements Recently adopted accounting pronouncement – 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. We adopted the new guidance on January 1, 2015, and it is 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, 2018. 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 June 30, 2015 , we had debt issuance costs of $2,478 related to long-term debt and $90 related to a short-term bank loan, which will be reclassified from other non-current assets and other current assets, respectively, upon adoption of this standard. In April 2015, the FASB issued ASU No. 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement . The new standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If the arrangement does include a software license, the software license element of the arrangement should be accounted for in the same manner as the acquisition of other software licenses. The new guidance is effective for us on January 1, 2016, and we will apply the standard on a prospective basis to all arrangements entered into or materially modified on or after January 1, 2016. We do not expect the application of this standard to have a significant impact on our results of operations or financial position. |
Long-term investments (Policies
Long-term investments (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Long-term investments | 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) 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. |
Recurring fair value measuremen
Recurring fair value measurements (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair value level transfers | Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred. |
Supplemental balance sheet in26
Supplemental balance sheet information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Balance Sheet Related Disclosures [Abstract] | |
Inventories and supplies | Inventories and supplies – Inventories and supplies were comprised of the following: (in thousands) June 30, December 31, Raw materials $ 5,859 $ 5,899 Semi-finished goods 8,862 8,990 Finished goods 22,617 21,298 Supplies 3,183 3,224 Inventories and supplies $ 40,521 $ 39,411 |
Available-for-sale securities | Available-for-sale securities – Available-for-sale securities included within funds held for customers and other current assets were comprised of the following: June 30, 2015 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Canadian and provincial government securities $ 8,704 $ — $ (97 ) $ 8,607 Canadian guaranteed investment certificates 8,004 — — 8,004 Available-for-sale securities (funds held for customers) (1) 16,708 — (97 ) 16,611 Canadian money market fund (other current assets) 1,776 — — 1,776 Total available-for-sale securities $ 18,484 $ — $ (97 ) $ 18,387 (1) Funds held for customers, as reported on the consolidated balance sheet as of June 30, 2015 , also included cash of $38,076 . December 31, 2014 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Canadian and provincial government securities $ 9,245 $ — $ (120 ) $ 9,125 Canadian guaranteed investment certificates 8,605 — — 8,605 Available-for-sale securities (funds held for customers) (1) 17,850 — (120 ) 17,730 Canadian money market fund (other current assets) 1,895 — — 1,895 Total available-for-sale securities $ 19,745 $ — $ (120 ) $ 19,625 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2014 , also included cash of $25,874 . |
Expected maturities of available-for-sale securities | Expected maturities of available-for-sale securities as of June 30, 2015 were as follows: (in thousands) Fair value Due in one year or less $ 10,546 Due in two to five years 4,854 Due in six to ten years 2,987 Total available-for-sale securities $ 18,387 |
Assets held for sale | Net assets held for sale consisted of the following: (in thousands) June 30, December 31, Balance sheet caption Current assets $ 91 $ 687 Other current assets Intangibles 13,533 25,926 Assets held for sale Other non-current assets 438 893 Assets held for sale Accrued liabilities (319 ) (1,058 ) Accrued liabilities Non-current deferred income tax liabilities (5,707 ) (8,774 ) Other non-current liabilities Net assets held for sale $ 8,036 $ 17,674 |
Intangibles | Intangibles – Intangibles were comprised of the following: June 30, 2015 December 31, 2014 (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 Amortizable intangibles: Internal-use software 381,566 (318,897 ) 62,669 364,229 (303,340 ) 60,889 Customer lists/relationships 123,680 (44,258 ) 79,422 106,218 (40,097 ) 66,121 Trade names 63,980 (34,066 ) 29,914 69,281 (37,623 ) 31,658 Software to be sold 28,500 (2,182 ) 26,318 28,500 (601 ) 27,899 Other 7,159 (6,030 ) 1,129 8,160 (6,647 ) 1,513 Amortizable intangibles 604,885 (405,433 ) 199,452 576,388 (388,308 ) 188,080 Intangibles $ 623,985 $ (405,433 ) $ 218,552 $ 595,488 $ (388,308 ) $ 207,180 |
Estimated future amortization expense | Based on the intangibles in service as of June 30, 2015 , estimated future amortization expense is as follows: (in thousands) Estimated amortization expense Remainder of 2015 $ 27,850 2016 44,358 2017 30,619 2018 20,121 2019 16,351 |
Acquired intangibles | The following intangible assets were acquired during the six months ended June 30, 2015 : (in thousands) Amount Weighted-average amortization period (in years) Internal-use software $ 17,540 4 Customer lists/relationships 21,349 7 Trade name 400 2 Acquired intangibles $ 39,289 6 |
Goodwill | Goodwill – Changes in goodwill during the six months ended June 30, 2015 were as follows: (in thousands) Small Business Services Financial Services Direct Checks Total Balance, December 31, 2014: Goodwill, gross $ 654,007 $ 85,863 $ 148,506 $ 888,376 Accumulated impairment charges (20,000 ) — — (20,000 ) Goodwill, net of accumulated impairment charges 634,007 85,863 148,506 868,376 Adjustment for acquisition of Wausau Financial Systems, Inc. (Note 6) — (164 ) — (164 ) Acquisition of Verify Valid (Note 6) 5,650 — — 5,650 Acquisition of small business distributor (Note 6) 9,046 — — 9,046 Currency translation adjustment (120 ) — — (120 ) Balance, June 30, 2015: Goodwill, gross 668,583 85,699 148,506 902,788 Accumulated impairment charges (20,000 ) — — (20,000 ) Goodwill, net of accumulated impairment charges $ 648,583 $ 85,699 $ 148,506 $ 882,788 |
Other non-current assets | Other non-current assets – Other non-current assets were comprised of the following: (in thousands) June 30, December 31, Contract acquisition costs $ 64,210 $ 74,101 Postretirement benefit plan asset 26,109 24,243 Loans and notes receivable from distributors 25,294 14,583 Deferred advertising costs 7,194 8,922 Other 7,472 9,792 Other non-current assets $ 130,279 $ 131,641 |
Changes in contract acquisition costs | Changes in contract acquisition costs during the six months ended June 30, 2015 and 2014 were as follows: Six Months Ended (in thousands) 2015 2014 Balance, beginning of year $ 74,101 $ 35,421 Additions (1) 2,520 53,164 Amortization (9,697 ) (8,533 ) Other (2,714 ) (220 ) Balance, end of period $ 64,210 $ 79,832 (1) Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $5,848 for the six months ended June 30, 2015 and $4,326 for the six months ended June 30, 2014 . |
Accrued liabilities | Accrued liabilities – Accrued liabilities were comprised of the following: (in thousands) June 30, December 31, Funds held for customers $ 54,593 $ 42,944 Deferred revenue 38,736 48,514 Performance-based compensation 23,135 38,259 Customer rebates 18,722 20,550 Contract acquisition costs due within one year 9,478 9,815 Restructuring due within one year (Note 9) 2,022 4,276 Other 68,744 54,763 Accrued liabilities $ 215,430 $ 219,121 |
Earnings per share (Tables)
Earnings per share (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
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 Six Months Ended (dollars and shares in thousands, except per share amounts) 2015 2014 2015 2014 Earnings per share – basic: Net income $ 56,063 $ 50,076 $ 102,003 $ 97,399 Income allocated to participating securities (376 ) (287 ) (669 ) (486 ) Income available to common shareholders $ 55,687 $ 49,789 $ 101,334 $ 96,913 Weighted-average shares outstanding 49,770 49,789 49,732 50,021 Earnings per share – basic $ 1.12 $ 1.00 $ 2.04 $ 1.94 Earnings per share – diluted: Net income $ 56,063 $ 50,076 $ 102,003 $ 97,399 Income allocated to participating securities (374 ) (285 ) (665 ) (483 ) Re-measurement of share-based awards classified as liabilities (132 ) 117 47 109 Income available to common shareholders $ 55,557 $ 49,908 $ 101,385 $ 97,025 Weighted-average shares outstanding 49,770 49,789 49,732 50,021 Dilutive impact of potential common shares 400 441 404 448 Weighted-average shares and potential common shares outstanding 50,170 50,230 50,136 50,469 Earnings per share – diluted $ 1.11 $ 0.99 $ 2.02 $ 1.92 Antidilutive options excluded from calculation 260 279 260 279 |
Other comprehensive income (Tab
Other comprehensive income (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Reclassification adjustments | 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 Quarter Ended Six Months Ended (in thousands) 2015 2014 2015 2014 Amortization of loss on interest rate locks (1) $ — $ (427 ) $ — $ (855 ) Interest expense Tax benefit — 167 — 334 Income tax provision Amortization of loss on interest rate locks, net of tax — (260 ) — (521 ) Net income Amortization of postretirement benefit plan items: Prior service credit 355 355 711 711 (2) Net actuarial loss (780 ) (854 ) (1,560 ) (1,709 ) (2) Total amortization (425 ) (499 ) (849 ) (998 ) (2) Tax benefit 113 139 226 279 (2) Amortization of postretirement benefit plan items, net of tax (312 ) (360 ) (623 ) (719 ) (2) Total reclassifications, net of tax $ (312 ) $ (620 ) $ (623 ) $ (1,240 ) (1) Relates to interest rate locks which terminated in 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 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 | Accumulated other comprehensive loss – Changes in the components of accumulated other comprehensive loss were as follows: (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 — 15 (5,131 ) (5,116 ) Amounts reclassified from accumulated other comprehensive loss 623 — — 623 Net current-period other comprehensive income (loss) 623 15 (5,131 ) (4,493 ) Balance, June 30, 2015 $ (31,782 ) $ (110 ) $ (8,939 ) $ (40,831 ) (1) Other comprehensive income before reclassifications is net of income tax expense of $5 . |
Fair value measurements (Tables
Fair value measurements (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
(Loss) gain from derivative instruments | 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 was not used for our other interest rate 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 Six Months Ended (in thousands) 2015 2014 2015 2014 (Loss) gain from derivatives $ (1,480 ) $ 2,897 $ 1,490 $ 4,938 Gain (loss) from change in fair value of hedged debt 1,480 (2,840 ) (1,490 ) (4,831 ) Net decrease in interest expense $ — $ 57 $ — $ 107 |
Recurring fair value measurements | Information regarding recurring fair value measurements completed during each period was as follows: Fair value measurements using Fair value as of June 30, 2015 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) (Level 1) (Level 2) (Level 3) Available-for-sale marketable securities (funds held for customers) $ 16,611 $ — $ 16,611 $ — Available-for-sale marketable securities (other current assets) 1,776 — 1,776 — Long-term investment in mutual funds 2,142 2,142 — — Derivative liabilities (6,577 ) — (6,577 ) — Accrued contingent consideration (3,098 ) — — (3,098 ) Fair value measurements using Fair value as of December 31, 2014 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) (Level 1) (Level 2) (Level 3) Available-for-sale marketable securities (funds held for customers) $ 17,730 $ — $ 17,730 $ — Available-for-sale marketable securities (other current assets) 1,895 — 1,895 — Long-term investment in mutual funds 2,384 2,384 — — Derivative liabilities (8,067 ) — (8,067 ) — |
Changes in accrued contingent consideration | Changes in accrued contingent consideration during the six months ended June 30, 2015 were as follows: (in thousands) Six Months Ended June 30, 2015 Balance, December 31, 2014 $ — Acquisition date fair value (Note 6) 2,800 Accretion 298 Balance, June 30, 2015 $ 3,098 |
Estimated fair values of other financial instruments | The estimated fair values of these financial instruments were as follows: Fair value measurements using June 30, 2015 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value (Level 1) (Level 2) (Level 3) Cash $ 64,926 $ 64,926 $ 64,926 $ — $ — Cash (funds held for customers) 38,076 38,076 38,076 — — Loans and notes receivable from distributors 27,659 25,530 — — 25,530 Short-term borrowings 308,000 308,000 308,000 — — Long-term debt (1) 193,423 217,160 — 217,160 — (1) Amounts exclude capital lease obligations. Fair value measurements using December 31, 2014 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) Carrying value Fair value (Level 1) (Level 2) (Level 3) Cash $ 61,541 $ 61,541 $ 61,541 $ — $ — Cash (funds held for customers) 25,874 25,874 25,874 — — Loans and notes receivable from distributors 16,915 15,765 — — 15,765 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. |
Restructuring charges (Tables)
Restructuring charges (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Components of net restructuring charges | Net restructuring charges for each period consisted of the following components: Quarter Ended Six Months Ended (in thousands) 2015 2014 2015 2014 Severance accruals $ 1,307 $ 1,122 $ 2,050 $ 2,667 Severance reversals (170 ) (285 ) (694 ) (595 ) Net restructuring accruals 1,137 837 1,356 2,072 Other costs 17 87 62 2,384 Net restructuring charges $ 1,154 $ 924 $ 1,418 $ 4,456 The net restructuring charges are reflected in the consolidated statements of comprehensive income as follows: Quarter Ended Six Months Ended (in thousands) 2015 2014 2015 2014 Total cost of revenue $ 188 $ (90 ) $ 185 $ 142 Operating expenses 966 1,014 1,233 4,314 Net restructuring charges $ 1,154 $ 924 $ 1,418 $ 4,456 |
Restructuring accruals, initiatives summarized by year | Accruals for our restructuring initiatives, summarized by year, were as follows: (in thousands) 2012 initiatives 2013 initiatives 2014 initiatives 2015 initiatives Total Balance, December 31, 2014 $ 32 $ 128 $ 4,116 $ — $ 4,276 Restructuring charges — — 85 1,965 2,050 Restructuring reversals — (9 ) (659 ) (26 ) (694 ) Payments (32 ) (78 ) (3,012 ) (488 ) (3,610 ) Balance, June 30, 2015 $ — $ 41 $ 530 $ 1,451 $ 2,022 Cumulative amounts: Restructuring charges $ 8,012 $ 7,629 $ 8,225 $ 1,965 $ 25,831 Restructuring reversals (1,363 ) (1,005 ) (1,301 ) (26 ) (3,695 ) Payments (6,649 ) (6,583 ) (6,394 ) (488 ) (20,114 ) Balance, June 30, 2015 $ — $ 41 $ 530 $ 1,451 $ 2,022 |
Restructuring accruals, by segment | The components of our restructuring accruals, by segment, were as follows: Employee severance benefits Operating lease obligations (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 1,004 572 — 474 — — 2,050 Restructuring reversals (378 ) (113 ) — (203 ) — — (694 ) Inter-segment transfer 28 (28 ) — — — — — Payments (1,260 ) (1,713 ) — (605 ) (32 ) — (3,610 ) Balance, June 30, 2015 $ 806 $ 566 $ — $ 650 $ — $ — $ 2,022 Cumulative amounts (1) : Restructuring charges $ 9,447 $ 7,357 $ 585 $ 7,830 $ 442 $ 170 $ 25,831 Restructuring reversals (1,677 ) (688 ) (59 ) (1,114 ) (157 ) — (3,695 ) Inter-segment transfer 28 (28 ) (25 ) 25 — — — Payments (6,992 ) (6,075 ) (501 ) (6,091 ) (285 ) (170 ) (20,114 ) Balance, June 30, 2015 $ 806 $ 566 $ — $ 650 $ — $ — $ 2,022 (1) Includes accruals related to our cost reduction initiatives for 2012 through 2015. |
Postretirement benefits (Tables
Postretirement benefits (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Components of net periodic benefit income | Postretirement benefit income for each period consisted of the following components: Quarter Ended Six Months Ended (in thousands) 2015 2014 2015 2014 Interest cost $ 859 $ 1,138 $ 1,719 $ 2,277 Expected return on plan assets (1,958 ) (2,183 ) (3,917 ) (4,367 ) Amortization of prior service credit (355 ) (355 ) (711 ) (711 ) Amortization of net actuarial losses 780 854 1,560 1,709 Net periodic benefit income $ (674 ) $ (546 ) $ (1,349 ) $ (1,092 ) |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt outstanding | Debt outstanding was comprised of the following: (in thousands) June 30, December 31, 7.0% senior notes due March 15, 2019 $ — $ 200,000 6.0% senior notes due November 15, 2020 (1) 193,423 191,933 Long-term portion of capital lease obligations 1,348 1,468 Long-term portion of debt 194,771 393,401 Amount drawn on credit facility 233,000 160,000 Short-term bank loan 75,000 — Capital lease obligations due within one year 998 911 Total debt $ 503,769 $ 554,312 (1) Includes decrease due to cumulative change in fair value of hedged debt of $6,577 as of June 30, 2015 and $8,067 as of December 31, 2014 . |
Short-term borrowings, daily average amounts outstanding | Daily average amounts outstanding under our short-term borrowing arrangements were as follows: (in thousands) Six Months Ended Year Ended December 31, 2014 Short-term bank loan: Daily average amount outstanding $ 45,580 $ — Weighted-average interest rate 1.52 % — Credit facility: Daily average amount outstanding $ 250,967 $ 43,675 Weighted-average interest rate 1.64 % 1.63 % |
Credit facility, amounts available for borrowing | As of June 30, 2015 , amounts were available for borrowing under our credit facility as follows: (in thousands) Total available Credit facility commitment $ 350,000 Amount drawn on credit facility (233,000 ) Outstanding letters of credit (1) (12,726 ) Net available for borrowing as of June 30, 2015 $ 104,274 (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. |
Business segment information (T
Business segment information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Business segment information | The following is our segment information as of and for the quarters ended June 30, 2015 and 2014 : Reportable Business Segments (in thousands) Small Business Services Financial Services Direct Checks Corporate Consolidated Total revenue from external 2015 $ 282,285 $ 112,699 $ 40,890 $ — $ 435,874 customers: 2014 267,695 94,565 43,150 — 405,410 Operating income: 2015 48,225 25,506 15,148 — 88,879 2014 48,788 22,277 13,894 — 84,959 Depreciation and amortization 2015 11,231 5,791 973 — 17,995 expense: 2014 11,453 3,190 1,710 — 16,353 Total assets: 2015 980,405 272,495 162,058 273,827 1,688,785 2014 941,862 156,860 164,932 372,746 1,636,400 Capital asset purchases: 2015 — — — 9,795 9,795 2014 — — — 8,901 8,901 The following is our segment information as of and for the six months ended June 30, 2015 and 2014 : Reportable Business Segments (in thousands) Small Business Services Financial Services Direct Checks Corporate Consolidated Total revenue from external 2015 $ 559,251 $ 224,240 $ 86,001 $ — $ 869,492 customers: 2014 534,206 187,011 91,148 — 812,365 Operating income: 2015 97,672 45,916 30,582 — 174,170 2014 92,185 44,100 29,470 — 165,755 Depreciation and amortization 2015 21,440 11,781 2,457 — 35,678 expense: 2014 22,799 6,392 3,427 — 32,618 Total assets: 2015 980,405 272,495 162,058 273,827 1,688,785 2014 941,862 156,860 164,932 372,746 1,636,400 Capital asset purchases: 2015 — — — 19,307 19,307 2014 — — — 19,851 19,851 |
Supplemental guarantor financ34
Supplemental guarantor financial information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Supplemental guarantor financial information [Abstract] | |
Condensed Consolidating Balance Sheets | Deluxe Corporation Condensed Consolidating Balance Sheet (Unaudited) June 30, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total ASSETS Current assets: Cash and cash equivalents $ 7,196 $ 3,562 $ 54,288 $ (120 ) $ 64,926 Trade accounts receivable, net — 85,543 9,573 — 95,116 Inventories and supplies — 37,746 2,775 — 40,521 Deferred income taxes 9,296 1,133 89 — 10,518 Funds held for customers — — 54,687 — 54,687 Other current assets 8,658 34,891 2,962 — 46,511 Total current assets 25,150 162,875 124,374 (120 ) 312,279 Deferred income taxes 2,662 — 1,324 (2,662 ) 1,324 Long-term investments 38,138 7,362 — — 45,500 Property, plant and equipment, net 4,532 73,913 5,647 — 84,092 Assets held for sale — — 13,971 — 13,971 Intangibles, net 1,729 214,547 2,276 — 218,552 Goodwill — 881,191 1,597 — 882,788 Investments in consolidated subsidiaries 1,377,112 82,867 — (1,459,979 ) — Intercompany receivable — 167,095 225 (167,320 ) — Other non-current assets 7,724 122,371 184 — 130,279 Total assets $ 1,457,047 $ 1,712,221 $ 149,598 $ (1,630,081 ) $ 1,688,785 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 13,087 $ 62,228 $ 2,250 $ (120 ) $ 77,445 Accrued liabilities 25,893 130,822 58,715 — 215,430 Short-term borrowings 308,000 — — — 308,000 Long-term debt due within one year 987 — 11 — 998 Total current liabilities 347,967 193,050 60,976 (120 ) 601,873 Long-term debt 194,723 — 48 — 194,771 Deferred income taxes — 97,715 — (2,662 ) 95,053 Intercompany payable 167,320 — — (167,320 ) — Other non-current liabilities 21,510 44,344 5,707 — 71,561 Total shareholders' equity 725,527 1,377,112 82,867 (1,459,979 ) 725,527 Total liabilities and shareholders' equity $ 1,457,047 $ 1,712,221 $ 149,598 $ (1,630,081 ) $ 1,688,785 Deluxe Corporation Condensed Consolidating Balance Sheet (Unaudited) December 31, 2014 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total ASSETS Current assets: Cash and cash equivalents $ 8,335 $ 4,342 $ 52,193 $ (3,329 ) $ 61,541 Trade accounts receivable, net — 100,197 13,459 — 113,656 Inventories and supplies — 34,097 5,314 — 39,411 Deferred income taxes 8,929 1,182 48 — 10,159 Funds held for customers — — 43,604 — 43,604 Other current assets 8,538 38,912 3,069 — 50,519 Total current assets 25,802 178,730 117,687 (3,329 ) 318,890 Deferred income taxes 660 — 1,411 (660 ) 1,411 Long-term investments 38,623 7,828 — — 46,451 Property, plant and equipment, net 4,868 76,306 6,449 — 87,623 Assets held for sale — 3,102 23,717 — 26,819 Intangibles, net 987 203,967 2,226 — 207,180 Goodwill — 866,659 1,717 — 868,376 Investments in consolidated subsidiaries 1,268,918 90,960 — (1,359,878 ) — Intercompany receivable — 82,758 536 (83,294 ) — Other non-current assets 9,675 121,549 417 — 131,641 Total assets $ 1,349,533 $ 1,631,859 $ 154,160 $ (1,447,161 ) $ 1,688,391 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 13,792 $ 73,380 $ 3,373 $ (3,329 ) $ 87,216 Accrued liabilities 26,278 141,816 51,027 — 219,121 Short-term borrowings 160,000 — — — 160,000 Long-term debt due within one year 903 — 8 — 911 Total current liabilities 200,973 215,196 54,408 (3,329 ) 467,248 Long-term debt 393,387 — 14 — 393,401 Deferred income taxes — 96,498 — (660 ) 95,838 Intercompany payable 83,294 — — (83,294 ) — Other non-current liabilities 24,382 51,247 8,778 — 84,407 Total shareholders' equity 647,497 1,268,918 90,960 (1,359,878 ) 647,497 Total liabilities and shareholders' equity $ 1,349,533 $ 1,631,859 $ 154,160 $ (1,447,161 ) $ 1,688,391 |
Condensed Consolidating Statements of Comprehensive Income | Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income (Unaudited) Quarter Ended June 30, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 339,959 $ 18,938 $ — $ 358,897 Service revenue 28,426 71,753 6,331 (29,533 ) 76,977 Total revenue 28,426 411,712 25,269 (29,533 ) 435,874 Cost of products — (118,527 ) (9,729 ) — (128,256 ) Cost of services (29,847 ) (26,174 ) (1,830 ) 30,169 (27,682 ) Total cost of revenue (29,847 ) (144,701 ) (11,559 ) 30,169 (155,938 ) Gross profit (1,421 ) 267,011 13,710 636 279,936 Operating expenses — (180,869 ) (9,552 ) (636 ) (191,057 ) Operating (loss) income (1,421 ) 86,142 4,158 — 88,879 Interest expense (4,104 ) (4,625 ) (1 ) 4,310 (4,420 ) Other income 4,568 470 96 (4,310 ) 824 (Loss) income before income taxes (957 ) 81,987 4,253 — 85,283 Income tax benefit (provision) 788 (28,960 ) (1,048 ) — (29,220 ) (Loss) income before equity in earnings of consolidated subsidiaries (169 ) 53,027 3,205 — 56,063 Equity in earnings of consolidated subsidiaries 56,232 3,205 — (59,437 ) — Net income $ 56,063 $ 56,232 $ 3,205 $ (59,437 ) $ 56,063 Comprehensive income $ 57,327 $ 57,453 $ 4,157 $ (61,610 ) $ 57,327 Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income (Unaudited) Quarter Ended June 30, 2014 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 321,043 $ 23,420 $ — $ 344,463 Service revenue 21,560 56,215 7,018 (23,846 ) 60,947 Total revenue 21,560 377,258 30,438 (23,846 ) 405,410 Cost of products — (108,036 ) (11,514 ) — (119,550 ) Cost of services (19,744 ) (24,773 ) (2,070 ) 20,246 (26,341 ) Total cost of revenue (19,744 ) (132,809 ) (13,584 ) 20,246 (145,891 ) Gross profit 1,816 244,449 16,854 (3,600 ) 259,519 Operating expenses — (166,215 ) (11,945 ) 3,600 (174,560 ) Operating income 1,816 78,234 4,909 — 84,959 Interest expense (9,510 ) (3,049 ) — 3,029 (9,530 ) Other income 3,096 260 41 (3,029 ) 368 (Loss) income before income taxes (4,598 ) 75,445 4,950 — 75,797 Income tax benefit (provision) 2,248 (26,613 ) (1,356 ) — (25,721 ) (Loss) income before equity in earnings of consolidated subsidiaries (2,350 ) 48,832 3,594 — 50,076 Equity in earnings of consolidated subsidiaries 52,426 3,594 — (56,020 ) — Net income $ 50,076 $ 52,426 $ 3,594 $ (56,020 ) $ 50,076 Comprehensive income $ 53,125 $ 55,177 $ 6,023 $ (61,200 ) $ 53,125 Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income (Unaudited) Six Months Ended June 30, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 672,698 $ 41,213 $ — $ 713,911 Service revenue 55,111 144,993 12,929 (57,452 ) 155,581 Total revenue 55,111 817,691 54,142 (57,452 ) 869,492 Cost of products — (230,780 ) (21,216 ) — (251,996 ) Cost of services (60,130 ) (54,754 ) (3,920 ) 62,180 (56,624 ) Total cost of revenue (60,130 ) (285,534 ) (25,136 ) 62,180 (308,620 ) Gross profit (5,019 ) 532,157 29,006 4,728 560,872 Operating expenses — (361,627 ) (20,347 ) (4,728 ) (386,702 ) Operating (loss) income (5,019 ) 170,530 8,659 — 174,170 Loss on early debt extinguishment (8,917 ) — — — (8,917 ) Interest expense (10,601 ) (5,995 ) (1 ) 5,662 (10,935 ) Other income 5,943 608 365 (5,662 ) 1,254 (Loss) income before income taxes (18,594 ) 165,143 9,023 — 155,572 Income tax benefit (provision) 7,289 (58,401 ) (2,457 ) — (53,569 ) (Loss) income before equity in earnings of consolidated subsidiaries (11,305 ) 106,742 6,566 — 102,003 Equity in earnings of consolidated subsidiaries 113,308 6,566 — (119,874 ) — Net income $ 102,003 $ 113,308 $ 6,566 $ (119,874 ) $ 102,003 Comprehensive income $ 97,510 $ 108,730 $ 1,450 $ (110,180 ) $ 97,510 Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income (Unaudited) Six Months Ended June 30, 2014 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 643,692 $ 46,435 $ — $ 690,127 Service revenue 43,130 111,747 15,079 (47,718 ) 122,238 Total revenue 43,130 755,439 61,514 (47,718 ) 812,365 Cost of products — (214,702 ) (23,234 ) — (237,936 ) Cost of services (43,795 ) (49,205 ) (5,146 ) 45,262 (52,884 ) Total cost of revenue (43,795 ) (263,907 ) (28,380 ) 45,262 (290,820 ) Gross profit (665 ) 491,532 33,134 (2,456 ) 521,545 Operating expenses — (333,980 ) (24,266 ) 2,456 (355,790 ) Operating (loss) income (665 ) 157,552 8,868 — 165,755 Interest expense (18,976 ) (6,471 ) — 6,350 (19,097 ) Other income 5,699 932 218 (6,350 ) 499 (Loss) income before income taxes (13,942 ) 152,013 9,086 — 147,157 Income tax benefit (provision) 5,954 (53,168 ) (2,544 ) — (49,758 ) (Loss) income before equity in earnings of consolidated subsidiaries (7,988 ) 98,845 6,542 — 97,399 Equity in earnings of consolidated subsidiaries 105,387 6,542 — (111,929 ) — Net income $ 97,399 $ 105,387 $ 6,542 $ (111,929 ) $ 97,399 Comprehensive income $ 98,579 $ 105,972 $ 6,482 $ (112,454 ) $ 98,579 |
Condensed Consolidating Statements of Cash Flows | Deluxe Corporation Condensed Consolidating Statement of Cash Flows (Unaudited) Six Months Ended June 30, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Net cash (used) provided by operating activities $ (4,570 ) $ 139,604 $ 7,793 $ 3,209 $ 146,036 Cash flows from investing activities: Purchases of capital assets (905 ) (16,997 ) (1,405 ) — (19,307 ) Payments for acquisitions, net of cash acquired (26 ) (35,774 ) — — (35,800 ) Other (286 ) 619 6 — 339 Net cash used by investing activities (1,217 ) (52,152 ) (1,399 ) — (54,768 ) Cash flows from financing activities: Net proceeds from short-term borrowings 148,000 — — — 148,000 Payments on long-term debt, including costs of debt reacquisition (207,515 ) — (6 ) — (207,521 ) Payments for debt issue costs (136 ) — — — (136 ) Proceeds from issuing shares under employee plans 4,135 — — — 4,135 Excess tax benefit from share-based employee awards 1,557 — — — 1,557 Cash dividends paid to shareholders (30,043 ) — — — (30,043 ) Advances from (to) consolidated subsidiaries 88,650 (88,232 ) (418 ) — — Other — — (150 ) — (150 ) Net cash provided (used) by financing activities 4,648 (88,232 ) (574 ) — (84,158 ) Effect of exchange rate change on cash — — (3,725 ) — (3,725 ) Net change in cash and cash equivalents (1,139 ) (780 ) 2,095 3,209 3,385 Cash and cash equivalents, beginning of year 8,335 4,342 52,193 (3,329 ) 61,541 Cash and cash equivalents, end of period $ 7,196 $ 3,562 $ 54,288 $ (120 ) $ 64,926 Deluxe Corporation Condensed Consolidating Statement of Cash Flows (Unaudited) Six Months Ended June 30, 2014 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Net cash (used) provided by operating activities $ (1,237 ) $ 120,051 $ 4,995 $ 2,040 $ 125,849 Cash flows from investing activities: Purchases of capital assets (334 ) (18,400 ) (1,117 ) — (19,851 ) Payments for acquisitions, net of cash acquired — (8,886 ) — — (8,886 ) Other 558 421 7 — 986 Net cash provided (used) by investing activities 224 (26,865 ) (1,110 ) — (27,751 ) Cash flows from financing activities: Net payments on short-term borrowings — (125 ) — — (125 ) Payments on long-term debt, including costs of debt reacquisition (449 ) (20 ) (3 ) — (472 ) Payments for debt issue costs (1,029 ) — — — (1,029 ) Proceeds from issuing shares under employee plans 7,133 — — — 7,133 Excess tax benefit from share-based employee awards 2,027 — — — 2,027 Payments for common shares repurchased (51,940 ) — — — (51,940 ) Cash dividends paid to shareholders (27,677 ) — — — (27,677 ) Advances from (to) consolidated subsidiaries 93,117 (93,381 ) 264 — — Net cash provided (used) by financing activities 21,182 (93,526 ) 261 — (72,083 ) Effect of exchange rate change on cash — — (162 ) — (162 ) Net change in cash and cash equivalents 20,169 (340 ) 3,984 2,040 25,853 Cash and cash equivalents, beginning of year 71,972 6,991 45,229 (3,103 ) 121,089 Cash and cash equivalents, end of period $ 92,141 $ 6,651 $ 49,213 $ (1,063 ) $ 146,942 |
New accounting pronouncements35
New accounting pronouncements (Details) $ in Thousands | Jun. 30, 2015USD ($) |
Schedule of debt instruments [Line Items] | |
Debt issuance costs, long-term | $ 2,478 |
Short-term bank loan [Member] | |
Schedule of debt instruments [Line Items] | |
Debt issuance costs, short-term | $ 90 |
Supplemental balance sheet in36
Supplemental balance sheet information (inventories and supplies) (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Inventories and supplies | ||
Raw materials | $ 5,859 | $ 5,899 |
Semi-finished goods | 8,862 | 8,990 |
Finished goods | 22,617 | 21,298 |
Supplies | 3,183 | 3,224 |
Inventories and supplies | $ 40,521 | $ 39,411 |
Supplemental balance sheet in37
Supplemental balance sheet information (available-for-sale securities) (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | ||
Available-for-sale securities [Line Items] | ||||
Cost | $ 18,484 | $ 19,745 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | (97) | (120) | ||
Fair value | 18,387 | 19,625 | ||
Expected maturities of available-for-sale securities | ||||
Due in one year or less | 10,546 | |||
Due in two to five years | 4,854 | |||
Due in six to ten years | 2,987 | |||
Fair value | 18,387 | 19,625 | ||
Funds held for customers [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Cost | 16,708 | [1] | 17,850 | [2] |
Gross unrealized gains | 0 | [1] | 0 | [2] |
Gross unrealized losses | (97) | [1] | (120) | [2] |
Fair value | 16,611 | [1] | 17,730 | [2] |
Cash | 38,076 | 25,874 | ||
Expected maturities of available-for-sale securities | ||||
Fair value | 16,611 | [1] | 17,730 | [2] |
Funds held for customers [Member] | Canadian and provincial government securities [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Cost | 8,704 | 9,245 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | (97) | (120) | ||
Fair value | 8,607 | 9,125 | ||
Expected maturities of available-for-sale securities | ||||
Fair value | 8,607 | 9,125 | ||
Funds held for customers [Member] | Canadian guaranteed investment certificates [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Cost | 8,004 | 8,605 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | 0 | 0 | ||
Fair value | 8,004 | 8,605 | ||
Expected maturities of available-for-sale securities | ||||
Fair value | 8,004 | 8,605 | ||
Other current assets [Member] | Money market securities [Member] | Canadian [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Cost | 1,776 | 1,895 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | 0 | 0 | ||
Fair value | 1,776 | 1,895 | ||
Expected maturities of available-for-sale securities | ||||
Fair value | $ 1,776 | $ 1,895 | ||
[1] | Funds held for customers, as reported on the consolidated balance sheet as of June 30, 2015, also included cash of $38,076. | |||
[2] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2014, also included cash of $25,874. |
Supplemental balance sheet in38
Supplemental balance sheet information (assets held for sale) (Details) - Assets held for sale [Member] - Small business distributors [Member] $ in Thousands | 3 Months Ended | |
Jun. 30, 2015USD ($)business | Dec. 31, 2014USD ($)business | |
Assets held for sale [Line Items] | ||
Number of businesses held for sale | business | 5 | |
Number of businesses sold | business | 4 | |
Current assets | $ 91 | $ 687 |
Intangibles | 13,533 | 25,926 |
Other non-current assets | 438 | 893 |
Accrued liabilities | (319) | (1,058) |
Non-current deferred income tax liabilities | (5,707) | (8,774) |
Net assets held for sale | $ 8,036 | $ 17,674 |
Supplemental balance sheet in39
Supplemental balance sheet information (intangibles) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Intangibles [Line Items] | |||||
Gross carrying amount | $ 623,985 | $ 623,985 | $ 595,488 | ||
Accumulated amortization | (405,433) | (405,433) | (388,308) | ||
Net carrying amount | 218,552 | 218,552 | 207,180 | ||
Estimated future amortization expense [Abstract] | |||||
Remainder of 2015 | 27,850 | 27,850 | |||
2,016 | 44,358 | 44,358 | |||
2,017 | 30,619 | 30,619 | |||
2,018 | 20,121 | 20,121 | |||
2,019 | 16,351 | 16,351 | |||
Amortization of intangibles | 13,989 | $ 12,091 | 27,739 | $ 24,115 | |
Indefinite-lived intangibles [Member] | Trade names [Member] | |||||
Intangibles [Line Items] | |||||
Gross carrying amount | 19,100 | 19,100 | 19,100 | ||
Net carrying amount | 19,100 | 19,100 | 19,100 | ||
Amortizable intangibles [Member] | |||||
Intangibles [Line Items] | |||||
Gross carrying amount | 604,885 | 604,885 | 576,388 | ||
Accumulated amortization | (405,433) | (405,433) | (388,308) | ||
Net carrying amount | 199,452 | 199,452 | 188,080 | ||
Amount acquired | $ 39,289 | ||||
Amount acquired, weighted-average amortization period (in years) | 6 years | ||||
Amortizable intangibles [Member] | Internal-use software [Member] | |||||
Intangibles [Line Items] | |||||
Gross carrying amount | 381,566 | $ 381,566 | 364,229 | ||
Accumulated amortization | (318,897) | (318,897) | (303,340) | ||
Net carrying amount | 62,669 | 62,669 | 60,889 | ||
Amount acquired | $ 17,540 | ||||
Amount acquired, weighted-average amortization period (in years) | 4 years | ||||
Amortizable intangibles [Member] | Customer lists/relationships [Member] | |||||
Intangibles [Line Items] | |||||
Gross carrying amount | 123,680 | $ 123,680 | 106,218 | ||
Accumulated amortization | (44,258) | (44,258) | (40,097) | ||
Net carrying amount | 79,422 | 79,422 | 66,121 | ||
Amount acquired | $ 21,349 | ||||
Amount acquired, weighted-average amortization period (in years) | 7 years | ||||
Amortizable intangibles [Member] | Trade names [Member] | |||||
Intangibles [Line Items] | |||||
Gross carrying amount | 63,980 | $ 63,980 | 69,281 | ||
Accumulated amortization | (34,066) | (34,066) | (37,623) | ||
Net carrying amount | 29,914 | 29,914 | 31,658 | ||
Amount acquired | $ 400 | ||||
Amount acquired, weighted-average amortization period (in years) | 2 years | ||||
Amortizable intangibles [Member] | Software to be sold [Member] | |||||
Intangibles [Line Items] | |||||
Gross carrying amount | 28,500 | $ 28,500 | 28,500 | ||
Accumulated amortization | (2,182) | (2,182) | (601) | ||
Net carrying amount | 26,318 | 26,318 | 27,899 | ||
Amortizable intangibles [Member] | Other [Member] | |||||
Intangibles [Line Items] | |||||
Gross carrying amount | 7,159 | 7,159 | 8,160 | ||
Accumulated amortization | (6,030) | (6,030) | (6,647) | ||
Net carrying amount | $ 1,129 | $ 1,129 | $ 1,513 |
Supplemental balance sheet in40
Supplemental balance sheet information (goodwill) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Feb. 28, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2015 | |
Goodwill [Roll Forward] | ||||
Goodwill, gross, beginning of year | $ 888,376 | $ 888,376 | ||
Accumulated impairment charges, beginning of year | (20,000) | (20,000) | ||
Goodwill, net of accumulated impairment charges, beginning of year | 868,376 | 868,376 | ||
Currency translation adjustment | (120) | |||
Goodwill, gross, end of period | $ 902,788 | 902,788 | ||
Accumulated impairment charges, end of period | (20,000) | (20,000) | ||
Goodwill, net of accumulated impairment charges, end of period | 882,788 | 882,788 | ||
Wausau Financial Systems, Inc. [Member] | ||||
Goodwill [Roll Forward] | ||||
Adjustment to goodwill (Note 6) | (164) | |||
Verify Valid [Member] | ||||
Goodwill [Roll Forward] | ||||
Adjustment to goodwill (Note 6) | (5,540) | |||
Goodwill acquired during period (Note 6) | $ 5,650 | |||
Small business distributors [Member] | ||||
Goodwill [Roll Forward] | ||||
Goodwill acquired during period (Note 6) | 9,046 | |||
Small Business Services [Member] | ||||
Goodwill [Roll Forward] | ||||
Goodwill, gross, beginning of year | 654,007 | 654,007 | ||
Accumulated impairment charges, beginning of year | (20,000) | (20,000) | ||
Goodwill, net of accumulated impairment charges, beginning of year | 634,007 | 634,007 | ||
Currency translation adjustment | (120) | |||
Goodwill, gross, end of period | 668,583 | 668,583 | ||
Accumulated impairment charges, end of period | (20,000) | (20,000) | ||
Goodwill, net of accumulated impairment charges, end of period | 648,583 | 648,583 | ||
Small Business Services [Member] | Verify Valid [Member] | ||||
Goodwill [Roll Forward] | ||||
Goodwill acquired during period (Note 6) | $ 5,650 | |||
Small Business Services [Member] | Small business distributors [Member] | ||||
Goodwill [Roll Forward] | ||||
Goodwill acquired during period (Note 6) | 9,046 | |||
Financial Services [Member] | ||||
Goodwill [Roll Forward] | ||||
Goodwill, gross, beginning of year | 85,863 | 85,863 | ||
Accumulated impairment charges, beginning of year | 0 | 0 | ||
Goodwill, net of accumulated impairment charges, beginning of year | 85,863 | 85,863 | ||
Currency translation adjustment | 0 | |||
Goodwill, gross, end of period | 85,699 | 85,699 | ||
Accumulated impairment charges, end of period | 0 | 0 | ||
Goodwill, net of accumulated impairment charges, end of period | 85,699 | 85,699 | ||
Financial Services [Member] | Wausau Financial Systems, Inc. [Member] | ||||
Goodwill [Roll Forward] | ||||
Adjustment to goodwill (Note 6) | (164) | |||
Direct Checks [Member] | ||||
Goodwill [Roll Forward] | ||||
Goodwill, gross, beginning of year | 148,506 | 148,506 | ||
Accumulated impairment charges, beginning of year | 0 | 0 | ||
Goodwill, net of accumulated impairment charges, beginning of year | $ 148,506 | 148,506 | ||
Currency translation adjustment | 0 | |||
Goodwill, gross, end of period | 148,506 | 148,506 | ||
Accumulated impairment charges, end of period | 0 | 0 | ||
Goodwill, net of accumulated impairment charges, end of period | $ 148,506 | $ 148,506 |
Supplemental balance sheet in41
Supplemental balance sheet information (other) (Details) - USD ($) $ in Thousands | 6 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Dec. 31, 2014 | ||
Other non-current assets | |||||
Contract acquisition costs | $ 74,101 | $ 35,421 | $ 64,210 | $ 74,101 | |
Postretirement benefit plan asset | 26,109 | 24,243 | |||
Loans and notes receivable from distributors | 25,294 | 14,583 | |||
Deferred advertising costs | 7,194 | 8,922 | |||
Other | 7,472 | 9,792 | |||
Other non-current assets | 130,279 | 131,641 | |||
Contract acquisition costs [Roll Forward] | |||||
Balance, beginning of year | 74,101 | 35,421 | |||
Additions | [1] | 2,520 | 53,164 | ||
Amortization | (9,697) | (8,533) | |||
Other | (2,714) | (220) | |||
Balance, end of period | 64,210 | 79,832 | |||
Contract acquisition payments | $ 5,848 | $ 4,326 | |||
Accrued liabilities | |||||
Funds held for customers | 54,593 | 42,944 | |||
Deferred revenue | 38,736 | 48,514 | |||
Performance-based compensation | 23,135 | 38,259 | |||
Customer rebates | 18,722 | 20,550 | |||
Contract acquisition costs due within one year | 9,478 | 9,815 | |||
Restructuring due within one year (Note 9) | 2,022 | 4,276 | |||
Other | 68,744 | 54,763 | |||
Accrued liabilities | $ 215,430 | $ 219,121 | |||
[1] | Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $5,848 for the six months ended June 30, 2015 and $4,326 for the six months ended June 30, 2014. |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings per share - basic: | ||||
Net income | $ 56,063 | $ 50,076 | $ 102,003 | $ 97,399 |
Income allocated to participating securities | (376) | (287) | (669) | (486) |
Income available to common shareholders | $ 55,687 | $ 49,789 | $ 101,334 | $ 96,913 |
Weighted-average shares outstanding | 49,770 | 49,789 | 49,732 | 50,021 |
Earnings per share - basic | $ 1.12 | $ 1 | $ 2.04 | $ 1.94 |
Earnings per share - diluted: | ||||
Net income | $ 56,063 | $ 50,076 | $ 102,003 | $ 97,399 |
Income allocated to participating securities | (374) | (285) | (665) | (483) |
Re-measurement of share-based awards classified as liabilities | (132) | 117 | 47 | 109 |
Income available to common shareholders | $ 55,557 | $ 49,908 | $ 101,385 | $ 97,025 |
Weighted-average shares outstanding | 49,770 | 49,789 | 49,732 | 50,021 |
Dilutive impact of potential common shares | 400 | 441 | 404 | 448 |
Weighted-average shares and potential common shares outstanding | 50,170 | 50,230 | 50,136 | 50,469 |
Earnings per share - diluted | $ 1.11 | $ 0.99 | $ 2.02 | $ 1.92 |
Antidilutive options excluded from calculation | 260 | 279 | 260 | 279 |
Other comprehensive income (rec
Other comprehensive income (reclassification adjustments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Reclassification adjustments [Line Items] | |||||
Interest expense | $ (4,420) | $ (9,530) | $ (10,935) | $ (19,097) | |
Income tax provision | (29,220) | (25,721) | (53,569) | (49,758) | |
Net income | 56,063 | 50,076 | 102,003 | 97,399 | |
Total reclassifications, net of tax | 623 | ||||
Amortization of postretirement benefit plan items [Member] | |||||
Reclassification adjustments [Line Items] | |||||
Total reclassifications, net of tax | 623 | ||||
Amounts reclassified from accumulated other comprehensive loss [Member] | |||||
Reclassification adjustments [Line Items] | |||||
Total reclassifications, net of tax | (312) | (620) | (623) | (1,240) | |
Amounts reclassified from accumulated other comprehensive loss [Member] | Amortization of loss on interest rate locks [Member] | |||||
Reclassification adjustments [Line Items] | |||||
Interest expense | [1] | 0 | (427) | 0 | (855) |
Income tax provision | 0 | 167 | 0 | 334 | |
Net income | 0 | (260) | 0 | (521) | |
Amounts reclassified from accumulated other comprehensive loss [Member] | Amortization of postretirement benefit plan items [Member] | |||||
Reclassification adjustments [Line Items] | |||||
Prior service credit | [2] | 355 | 355 | 711 | 711 |
Net actuarial loss | [2] | (780) | (854) | (1,560) | (1,709) |
Total amortization | [2] | (425) | (499) | (849) | (998) |
Tax benefit | [2] | 113 | 139 | 226 | 279 |
Amortization of postretirement benefit plan items, net of tax | [2] | $ (312) | $ (360) | $ (623) | $ (719) |
[1] | Relates to interest rate locks which terminated in 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 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. |
Other comprehensive income (acc
Other comprehensive income (accumulated other comprehensive loss) (Details) - Jun. 30, 2015 - USD ($) $ in Thousands | Total | |
Accumulated other comprehensive loss [Line Items] | ||
Accumulated other comprehensive loss, beginning of year | $ (36,338) | |
Other comprehensive income (loss) before reclassifications | (5,116) | |
Amounts reclassified from accumulated other comprehensive loss | 623 | |
Net current-period other comprehensive income (loss) | (4,493) | |
Accumulated other comprehensive loss, end of period | (40,831) | |
Postretirement benefit plans, net of tax [Member] | ||
Accumulated other comprehensive loss [Line Items] | ||
Accumulated other comprehensive loss, beginning of year | (32,405) | |
Other comprehensive income (loss) before reclassifications | 0 | |
Amounts reclassified from accumulated other comprehensive loss | 623 | |
Net current-period other comprehensive income (loss) | 623 | |
Accumulated other comprehensive loss, end of period | (31,782) | |
Net unrealized loss on marketable securities, net of tax [Member] | ||
Accumulated other comprehensive loss [Line Items] | ||
Accumulated other comprehensive loss, beginning of year | (125) | |
Other comprehensive income (loss) before reclassifications | [1] | 15 |
Amounts reclassified from accumulated other comprehensive loss | 0 | |
Net current-period other comprehensive income (loss) | 15 | |
Accumulated other comprehensive loss, end of period | (110) | |
Income tax expense related to other comprehensive income before reclassifications | 5 | |
Currency translation adjustment [Member] | ||
Accumulated other comprehensive loss [Line Items] | ||
Accumulated other comprehensive loss, beginning of year | (3,808) | |
Other comprehensive income (loss) before reclassifications | (5,131) | |
Amounts reclassified from accumulated other comprehensive loss | 0 | |
Net current-period other comprehensive income (loss) | (5,131) | |
Accumulated other comprehensive loss, end of period | $ (8,939) | |
[1] | Other comprehensive income before reclassifications is net of income tax expense of $5. |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Feb. 28, 2015 | Jan. 31, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | |
Acquisitions [Line Items] | ||||||
Payments for acquisitions, net of cash acquired | $ 35,800 | $ 8,886 | ||||
Customer lists/relationships [Member] | ||||||
Acquisitions [Line Items] | ||||||
Acquired intangible assets | $ 21,349 | 21,349 | ||||
Internal-use software [Member] | ||||||
Acquisitions [Line Items] | ||||||
Acquired intangible assets | 2,900 | 2,900 | ||||
Small business distributors [Member] | ||||||
Acquisitions [Line Items] | ||||||
Payments for acquisitions, net of cash acquired | 25,872 | |||||
Non-cash consideration | 3,564 | |||||
Goodwill | 9,046 | |||||
Small business distributors [Member] | Customer lists/relationships [Member] | ||||||
Acquisitions [Line Items] | ||||||
Acquired intangible assets | 17,443 | $ 17,443 | ||||
Acquired intangible assets, weighted-average useful life | 7 years | |||||
Small business distributors [Member] | Internal-use software [Member] | ||||||
Acquisitions [Line Items] | ||||||
Acquired intangible assets | 1,000 | $ 1,000 | ||||
Acquired intangible assets, weighted-average useful life | 3 years | |||||
Verify Valid [Member] | ||||||
Acquisitions [Line Items] | ||||||
Payments for acquisitions, net of cash acquired | $ 3,447 | |||||
Goodwill | $ 5,650 | |||||
Adjustment to goodwill | (5,540) | |||||
Contingent consideration, period | 8 years | |||||
Liability for contingent consideration | $ 2,800 | |||||
Change in liability for contingent consideration | $ (5,540) | |||||
Liability for contingent consideration, maximum unlimited | There is no maximum amount of contingent payments specified in the agreement | |||||
Verify Valid [Member] | Internal-use software [Member] | ||||||
Acquisitions [Line Items] | ||||||
Acquired intangible assets | $ 1,900 | |||||
Acquired intangible assets, weighted-average useful life | 5 years | |||||
Range, Inc. [Member] | ||||||
Acquisitions [Line Items] | ||||||
Payments for acquisitions, net of cash acquired | $ 3,600 | |||||
Range, Inc. [Member] | Customer lists/relationships [Member] | ||||||
Acquisitions [Line Items] | ||||||
Acquired intangible assets | $ 3,906 | |||||
Acquired intangible assets, weighted-average useful life | 8 years | |||||
Wausau Financial Systems, Inc. [Member] | ||||||
Acquisitions [Line Items] | ||||||
Adjustment to goodwill | $ (164) |
Derivative financial instrume46
Derivative financial instruments (Details) - Fair value hedge related to long-term debt due in 2020 [Member] - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Derivative financial instruments [Line Items] | ||
Notional amount | $ 200,000 | |
Fair value of interest rate swaps | 6,577 | $ 8,067 |
Decrease in debt due to fair value adjustments | $ 6,577 | $ 8,067 |
Fair value measurements (acquis
Fair value measurements (acquisitions) (Details) $ in Thousands | Jun. 30, 2015USD ($) |
Customer lists/relationships [Member] | |
Acquisitions [Line Items] | |
Acquired intangible assets | $ 21,349 |
Internal-use software [Member] | |
Acquisitions [Line Items] | |
Acquired intangible assets | $ 2,900 |
Fair value measurements (invest
Fair value measurements (investments and hedge ineffectiveness ) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Long-term Investments [Abstract] | ||||
Net unrealized losses on investment in mutual funds | $ (191) | $ (103) | ||
Fair value measurements, hedge ineffectiveness | ||||
(Loss) gain from derivatives | $ (1,480) | $ 2,897 | 1,490 | 4,938 |
Gain (loss) from change in fair value of hedged debt | 1,480 | (2,840) | (1,490) | (4,831) |
Net decrease in interest expense | 0 | 57 | $ 0 | 107 |
Funds held for customers [Member] | Guaranteed investment certificates [Member] | Canadian [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Maximum maturity period, debt securities | 1 year | |||
Other current assets [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Realized gain (loss) on available-for-sale securities | $ 0 | $ 0 | $ 0 | $ 0 |
Fair value measurements (recurr
Fair value measurements (recurring fair value measurements) (Details) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | |||
Feb. 28, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | |||
Recurring fair value measurements [Line Items] | |||||
Available-for-sale marketable securities | $ 18,387 | $ 19,625 | |||
Long-term investment in mutual funds | 2,142 | 2,384 | |||
Verify Valid [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Contingent consideration, period | 8 years | ||||
Liability for contingent consideration, maximum unlimited | There is no maximum amount of contingent payments specified in the agreement | ||||
Accrued contingent consideration | $ (2,800) | ||||
Funds held for customers [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Available-for-sale marketable securities | 16,611 | [1] | 17,730 | [2] | |
Recurring fair value measurements [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Long-term investment in mutual funds | 2,142 | 2,384 | |||
Derivative liabilities | (6,577) | (8,067) | |||
Accrued contingent consideration | (3,098) | ||||
Transfers between fair value levels | 0 | ||||
Recurring fair value measurements [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Long-term investment in mutual funds | 2,142 | 2,384 | |||
Derivative liabilities | 0 | 0 | |||
Accrued contingent consideration | 0 | ||||
Recurring fair value measurements [Member] | Significant other observable inputs (Level 2) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Long-term investment in mutual funds | 0 | 0 | |||
Derivative liabilities | (6,577) | (8,067) | |||
Accrued contingent consideration | 0 | ||||
Recurring fair value measurements [Member] | Significant unobservable inputs (Level 3) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Long-term investment in mutual funds | 0 | 0 | |||
Derivative liabilities | 0 | 0 | |||
Accrued contingent consideration | (3,098) | ||||
Recurring fair value measurements [Member] | Funds held for customers [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Available-for-sale marketable securities | 16,611 | 17,730 | |||
Recurring fair value measurements [Member] | Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Available-for-sale marketable securities | 0 | 0 | |||
Recurring fair value measurements [Member] | Funds held for customers [Member] | Significant other observable inputs (Level 2) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Available-for-sale marketable securities | 16,611 | 17,730 | |||
Recurring fair value measurements [Member] | Funds held for customers [Member] | Significant unobservable inputs (Level 3) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Available-for-sale marketable securities | 0 | 0 | |||
Recurring fair value measurements [Member] | Other current assets [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Available-for-sale marketable securities | 1,776 | 1,895 | |||
Recurring fair value measurements [Member] | Other current assets [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Available-for-sale marketable securities | 0 | 0 | |||
Recurring fair value measurements [Member] | Other current assets [Member] | Significant other observable inputs (Level 2) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Available-for-sale marketable securities | 1,776 | 1,895 | |||
Recurring fair value measurements [Member] | Other current assets [Member] | Significant unobservable inputs (Level 3) [Member] | |||||
Recurring fair value measurements [Line Items] | |||||
Available-for-sale marketable securities | $ 0 | $ 0 | |||
[1] | Funds held for customers, as reported on the consolidated balance sheet as of June 30, 2015, also included cash of $38,076. | ||||
[2] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2014, also included cash of $25,874. |
Fair value measurements (change
Fair value measurements (changes in Level 3 recurring fair value measurement) (Details) - Accrued contingent consideration [Member] $ in Thousands | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Change in accrued contingent consideration | |
Balance, beginning of period | $ 0 |
Acquisition date fair value (Note 6) | 2,800 |
Accretion | 298 |
Balance, end of period | $ 3,098 |
Fair value measurements (other
Fair value measurements (other financial instruments) (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | |
Fair value measurements, other financial instruments [Line Items] | |||
Short-term borrowings | $ 308,000 | $ 160,000 | |
Carrying value [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Loans and notes receivable from distributors | 27,659 | 16,915 | |
Short-term borrowings | 308,000 | 160,000 | |
Long-term debt | [1] | 193,423 | 391,933 |
Fair value [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Loans and notes receivable from distributors | 25,530 | 15,765 | |
Short-term borrowings | 308,000 | 160,000 | |
Long-term debt | [1] | 217,160 | 419,000 |
Fair value [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Loans and notes receivable from distributors | 0 | 0 | |
Short-term borrowings | 308,000 | 160,000 | |
Long-term debt | [1] | 0 | 0 |
Fair value [Member] | Significant other observable inputs (Level 2) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Loans and notes receivable from distributors | 0 | 0 | |
Short-term borrowings | 0 | 0 | |
Long-term debt | [1] | 217,160 | 419,000 |
Fair value [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Loans and notes receivable from distributors | 25,530 | 15,765 | |
Short-term borrowings | 0 | 0 | |
Long-term debt | [1] | 0 | 0 |
Cash [Member] | Carrying value [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 64,926 | 61,541 | |
Cash [Member] | Fair value [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 64,926 | 61,541 | |
Cash [Member] | Fair value [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 64,926 | 61,541 | |
Cash [Member] | Fair value [Member] | Significant other observable inputs (Level 2) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 0 | 0 | |
Cash [Member] | Fair value [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 0 | 0 | |
Funds held for customers [Member] | Carrying value [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 38,076 | 25,874 | |
Funds held for customers [Member] | Fair value [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 38,076 | 25,874 | |
Funds held for customers [Member] | Fair value [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 38,076 | 25,874 | |
Funds held for customers [Member] | Fair value [Member] | Significant other observable inputs (Level 2) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 0 | 0 | |
Funds held for customers [Member] | Fair value [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | $ 0 | $ 0 | |
[1] | Amounts exclude capital lease obligations. |
Restructuring charges (Details)
Restructuring charges (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015USD ($)Employees | Jun. 30, 2014USD ($)Employees | Jun. 30, 2015USD ($)Employees | Jun. 30, 2014USD ($)Employees | Dec. 31, 2014USD ($) | |
Net restructuring charges by component | |||||
Severance accruals | $ 1,307 | $ 1,122 | $ 2,050 | $ 2,667 | |
Severance reversals | (170) | (285) | (694) | (595) | |
Net restructuring accruals | 1,137 | 837 | 1,356 | 2,072 | |
Other costs | 17 | 87 | 62 | 2,384 | |
Net restructuring charges | 1,154 | 924 | 1,418 | 4,456 | |
Total cost of revenue | 188 | (90) | 185 | 142 | |
Operating expenses | $ 966 | $ 1,014 | $ 1,233 | $ 4,314 | |
Number of employees in severance accruals | Employees | 110 | 25 | 150 | 65 | |
Other restructuring charges disclosures | |||||
Restructuring accruals, total | $ 2,022 | $ 2,022 | $ 4,276 | ||
Number of employees that have not started to receive severance benefits | Employees | 105 | 105 |
Restructuring charges (restruct
Restructuring charges (restructuring accruals by year and by segment) (Details) - Jun. 30, 2015 - USD ($) $ in Thousands | Total | Total | Total | Total | |
Restructuring accruals [Line Items] | |||||
Balance, beginning of year | $ 4,276 | ||||
Restructuring charges | 2,050 | $ 25,831 | [1] | ||
Restructuring reversals | (694) | (3,695) | [1] | ||
Inter-segment transfer | 0 | 0 | [1] | ||
Payments | (3,610) | (20,114) | [1] | ||
Balance, end of period | 2,022 | $ 2,022 | $ 2,022 | 2,022 | |
2012 initiatives [Member] | |||||
Restructuring accruals [Line Items] | |||||
Balance, beginning of year | 32 | ||||
Restructuring charges | 0 | 8,012 | |||
Restructuring reversals | 0 | (1,363) | |||
Payments | (32) | (6,649) | |||
Balance, end of period | 0 | 0 | 0 | 0 | |
2013 initiatives [Member] | |||||
Restructuring accruals [Line Items] | |||||
Balance, beginning of year | 128 | ||||
Restructuring charges | 0 | 7,629 | |||
Restructuring reversals | (9) | (1,005) | |||
Payments | (78) | (6,583) | |||
Balance, end of period | 41 | 41 | 41 | 41 | |
2014 initiatives [Member] | |||||
Restructuring accruals [Line Items] | |||||
Balance, beginning of year | 4,116 | ||||
Restructuring charges | 85 | 8,225 | |||
Restructuring reversals | (659) | (1,301) | |||
Payments | (3,012) | (6,394) | |||
Balance, end of period | 530 | 530 | 530 | 530 | |
2015 initiatives [Member] | |||||
Restructuring accruals [Line Items] | |||||
Balance, beginning of year | 0 | ||||
Restructuring charges | 1,965 | ||||
Restructuring reversals | (26) | ||||
Payments | (488) | ||||
Balance, end of period | 1,451 | 1,451 | 1,451 | 1,451 | |
Employee severance benefits [Member] | Small Business Services [Member] | |||||
Restructuring accruals [Line Items] | |||||
Balance, beginning of year | 1,412 | ||||
Restructuring charges | 1,004 | 9,447 | [1] | ||
Restructuring reversals | (378) | (1,677) | [1] | ||
Inter-segment transfer | 28 | 28 | [1] | ||
Payments | (1,260) | (6,992) | [1] | ||
Balance, end of period | 806 | 806 | 806 | 806 | |
Employee severance benefits [Member] | Financial Services [Member] | |||||
Restructuring accruals [Line Items] | |||||
Balance, beginning of year | 1,848 | ||||
Restructuring charges | 572 | 7,357 | [1] | ||
Restructuring reversals | (113) | (688) | [1] | ||
Inter-segment transfer | (28) | (28) | [1] | ||
Payments | (1,713) | (6,075) | [1] | ||
Balance, end of period | 566 | 566 | 566 | 566 | |
Employee severance benefits [Member] | Direct Checks [Member] | |||||
Restructuring accruals [Line Items] | |||||
Balance, beginning of year | 0 | ||||
Restructuring charges | 0 | 585 | [1] | ||
Restructuring reversals | 0 | (59) | [1] | ||
Inter-segment transfer | 0 | (25) | [1] | ||
Payments | 0 | (501) | [1] | ||
Balance, end of period | 0 | 0 | 0 | 0 | |
Employee severance benefits [Member] | Corporate [Member] | |||||
Restructuring accruals [Line Items] | |||||
Balance, beginning of year | 984 | ||||
Restructuring charges | 474 | 7,830 | [1] | ||
Restructuring reversals | (203) | (1,114) | [1] | ||
Inter-segment transfer | 0 | 25 | [1] | ||
Payments | (605) | (6,091) | [1] | ||
Balance, end of period | 650 | 650 | 650 | 650 | |
Operating lease obligations [Member] | Small Business Services [Member] | |||||
Restructuring accruals [Line Items] | |||||
Balance, beginning of year | 32 | ||||
Restructuring charges | 0 | 442 | [1] | ||
Restructuring reversals | 0 | (157) | [1] | ||
Inter-segment transfer | 0 | 0 | [1] | ||
Payments | (32) | (285) | [1] | ||
Balance, end of period | 0 | 0 | 0 | 0 | |
Operating lease obligations [Member] | Direct Checks [Member] | |||||
Restructuring accruals [Line Items] | |||||
Balance, beginning of year | 0 | ||||
Restructuring charges | 0 | 170 | [1] | ||
Restructuring reversals | 0 | 0 | [1] | ||
Inter-segment transfer | 0 | 0 | [1] | ||
Payments | 0 | (170) | [1] | ||
Balance, end of period | $ 0 | $ 0 | $ 0 | $ 0 | |
[1] | Includes accruals related to our cost reduction initiatives for 2012 through 2015. |
Postretirement benefits (Detail
Postretirement benefits (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Net periodic benefit income | ||||
Interest cost | $ 859 | $ 1,138 | $ 1,719 | $ 2,277 |
Expected return on plan assets | (1,958) | (2,183) | (3,917) | (4,367) |
Amortization of prior service credit | (355) | (355) | (711) | (711) |
Amortization of net actuarial losses | 780 | 854 | 1,560 | 1,709 |
Net periodic benefit income | $ (674) | $ (546) | $ (1,349) | $ (1,092) |
Income tax provision (Details)
Income tax provision (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 34.40% | 32.80% |
Discrete charge (credit) to income tax expense, percent | 0.30% | (0.90%) |
Debt (Details)
Debt (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||
Mar. 31, 2015USD ($) | Nov. 30, 2012USD ($) | Mar. 31, 2011USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | ||
Schedule of debt instruments [Line Items] | ||||||||||
Long-term portion of debt | $ 194,771 | $ 194,771 | $ 393,401 | |||||||
Short-term borrowings | 308,000 | 308,000 | 160,000 | |||||||
Capital lease obligations due within one year | 998 | 998 | 911 | |||||||
Total debt | $ 503,769 | $ 503,769 | 554,312 | |||||||
Ratio of EBITDA to interest expense | 2 | 2 | ||||||||
Ratio of total debt less unrestricted cash to EBITDA | 2.75 | 2.75 | ||||||||
Loss on early debt extinguishment | $ 0 | $ 0 | $ (8,917) | $ 0 | ||||||
Capital lease obligations | 2,346 | $ 2,346 | 2,379 | |||||||
Capital lease obligations, expiration date | Feb. 28, 2019 | |||||||||
Fair value hedge related to long-term debt due in 2020 [Member] | ||||||||||
Schedule of debt instruments [Line Items] | ||||||||||
Decrease in debt due to fair value adjustments | 6,577 | $ 6,577 | 8,067 | |||||||
Senior notes due 2020 [Member] | ||||||||||
Schedule of debt instruments [Line Items] | ||||||||||
Long-term portion of debt | [1] | 193,423 | 193,423 | 191,933 | ||||||
Debt issuance date | Nov. 27, 2012 | |||||||||
Principal amount issued | $ 200,000 | |||||||||
Stated interest rate | 6.00% | |||||||||
Debt maturity date | Nov. 15, 2020 | |||||||||
Proceeds from offering, net of offering costs | $ 196,340 | |||||||||
Fair value of notes outstanding | 217,160 | 217,160 | ||||||||
Senior notes due 2020 [Member] | First optional redemption period [Member] | ||||||||||
Schedule of debt instruments [Line Items] | ||||||||||
Redemption period, end date | Nov. 15, 2015 | |||||||||
Notes redeemable during redemption period | 35.00% | |||||||||
Redemption price, percentage | 106.00% | |||||||||
Senior notes due 2020 [Member] | Second optional redemption period [Member] | ||||||||||
Schedule of debt instruments [Line Items] | ||||||||||
Redemption period, end date | Nov. 15, 2016 | |||||||||
Redemption price, percentage | 100.00% | |||||||||
Senior notes due 2020 [Member] | Third optional redemption period [Member] | ||||||||||
Schedule of debt instruments [Line Items] | ||||||||||
Redemption period, start date | Nov. 15, 2016 | |||||||||
Senior notes due 2020 [Member] | Third optional redemption period [Member] | Minimum [Member] | ||||||||||
Schedule of debt instruments [Line Items] | ||||||||||
Redemption price, percentage | 100.00% | |||||||||
Senior notes due 2020 [Member] | Third optional redemption period [Member] | Maximum [Member] | ||||||||||
Schedule of debt instruments [Line Items] | ||||||||||
Redemption price, percentage | 103.00% | |||||||||
Senior notes due 2020 [Member] | Mandatory redemption [Member] | ||||||||||
Schedule of debt instruments [Line Items] | ||||||||||
Redemption price, percentage | 101.00% | |||||||||
Senior notes due 2019 [Member] | ||||||||||
Schedule of debt instruments [Line Items] | ||||||||||
Long-term portion of debt | 0 | 0 | 200,000 | |||||||
Debt issuance date | Mar. 15, 2011 | |||||||||
Principal amount issued | $ 200,000 | |||||||||
Stated interest rate | 7.00% | |||||||||
Debt maturity date | Mar. 15, 2019 | |||||||||
Proceeds from offering, net of offering costs | $ 196,195 | |||||||||
Loss on early debt extinguishment | $ 8,917 | |||||||||
Principal amount retired | 200,000 | |||||||||
Capital lease obligations [Member] | ||||||||||
Schedule of debt instruments [Line Items] | ||||||||||
Long-term portion of debt | 1,348 | 1,348 | 1,468 | |||||||
Credit facility [Member] | ||||||||||
Schedule of debt instruments [Line Items] | ||||||||||
Short-term borrowings | 233,000 | 233,000 | 160,000 | |||||||
Short-term bank loan [Member] | ||||||||||
Schedule of debt instruments [Line Items] | ||||||||||
Short-term borrowings | $ 75,000 | $ 75,000 | $ 0 | |||||||
Debt issuance date | Mar. 5, 2015 | |||||||||
Principal amount issued | $ 75,000 | $ 75,000 | ||||||||
Proceeds from offering, net of offering costs | $ 74,880 | |||||||||
[1] | Includes decrease due to cumulative change in fair value of hedged debt of $6,577 as of June 30, 2015 and $8,067 as of December 31, 2014. |
Debt (short-term borrowings) (D
Debt (short-term borrowings) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2011 | Mar. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | ||
Schedule of debt instruments [Line Items] | ||||||
Short-term borrowings | $ 308,000 | $ 160,000 | ||||
Credit facility commitment | $ 350,000 | |||||
Credit facility, date of expiration | Feb. 21, 2019 | |||||
Credit facility, daily average amount outstanding | $ 250,967 | $ 43,675 | ||||
Credit facility, weighted-average interest rate | 1.64% | 1.63% | ||||
Credit facility, interest rate, amount outstanding | 1.65% | 1.63% | ||||
Outstanding letters of credit | [1] | $ (12,726) | ||||
Credit facility, net available for borrowing at end of period | $ 104,274 | |||||
Minimum [Member] | ||||||
Schedule of debt instruments [Line Items] | ||||||
Credit facility, commitment fee | 0.20% | |||||
Maximum [Member] | ||||||
Schedule of debt instruments [Line Items] | ||||||
Credit facility, commitment fee | 0.40% | |||||
Short-term bank loan [Member] | ||||||
Schedule of debt instruments [Line Items] | ||||||
Debt issuance date | Mar. 5, 2015 | |||||
Principal amount issued | $ 75,000 | $ 75,000 | ||||
Principal amount over which payment is required, first payment date | $ 50,000 | 50,000 | ||||
Debt maturity date, start | Sep. 5, 2015 | |||||
Debt maturity date, end | Mar. 3, 2016 | |||||
Proceeds from loan, net of offering costs | $ 74,880 | |||||
Short-term borrowings | $ 75,000 | $ 0 | ||||
Short-term borrowings, interest rate, amount outstanding | 1.52% | |||||
Short-term borrowings, daily average amount outstanding | $ 45,580 | $ 0 | ||||
Short-term borrowings, weighted-average interest rate | 1.52% | 0.00% | ||||
Senior notes due 2019 [Member] | ||||||
Schedule of debt instruments [Line Items] | ||||||
Debt issuance date | Mar. 15, 2011 | |||||
Principal amount issued | $ 200,000 | |||||
Proceeds from loan, net of offering costs | $ 196,195 | |||||
Principal amount retired | $ 200,000 | |||||
Stated interest rate | 7.00% | |||||
Debt maturity date | Mar. 15, 2019 | |||||
Credit facility [Member] | ||||||
Schedule of debt instruments [Line Items] | ||||||
Short-term borrowings | $ 233,000 | $ 160,000 | ||||
[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. |
Other commitments and conting58
Other commitments and contingencies (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Environmental matters [Line Items] | |||
Accruals for environmental matters | $ 7,697 | $ 7,942 | |
Expense for environmental matters | 725 | $ 469 | |
Self-insurance | |||
Workers' compensation liability | 4,048 | 4,040 | |
Liability for medical and dental benefits for active and disabled employees | 2,128 | $ 2,361 | |
Environmental insurance policy purchased during 2002 [Member] | Environmental remediation costs [Member] | |||
Environmental matters [Line Items] | |||
Accruals for environmental matters | 2,051 | ||
Environmental insurance coverage | 12,911 | ||
Cumulative benefits received under insurance policy | 10,860 | ||
Environmental insurance policy purchased during 2002 [Member] | Third-party claims [Member] | |||
Environmental matters [Line Items] | |||
Environmental insurance coverage | 10,000 | ||
Environmental insurance policy for facilities purchased subsequent to 2002 [Member] | |||
Environmental matters [Line Items] | |||
Accruals for environmental matters | 0 | ||
Environmental insurance coverage | $ 15,000 |
Shareholders' equity (Details)
Shareholders' equity (Details) - Jun. 30, 2015 - shares shares in Thousands | Total |
Stockholders' Equity Note [Abstract] | |
Common shares authorized for repurchase | 10,000 |
Common shares that remain available for repurchase | 1,962 |
Common shares repurchased (in shares) | 0 |
Business segment information (D
Business segment information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Business segment information [Line Items] | |||||
Number of reportable business segments | 3 | ||||
Total revenue from external customers: | $ 435,874 | $ 405,410 | $ 869,492 | $ 812,365 | |
Operating income | 88,879 | 84,959 | 174,170 | 165,755 | |
Depreciation and amortization expense: | 17,995 | 16,353 | 35,678 | 32,618 | |
Total assets | 1,688,785 | 1,636,400 | 1,688,785 | 1,636,400 | $ 1,688,391 |
Capital asset purchases: | 9,795 | 8,901 | 19,307 | 19,851 | |
Reportable Business Segments [Member] | Small Business Services [Member] | |||||
Business segment information [Line Items] | |||||
Total revenue from external customers: | 282,285 | 267,695 | 559,251 | 534,206 | |
Operating income | 48,225 | 48,788 | 97,672 | 92,185 | |
Depreciation and amortization expense: | 11,231 | 11,453 | 21,440 | 22,799 | |
Total assets | 980,405 | 941,862 | 980,405 | 941,862 | |
Capital asset purchases: | 0 | 0 | 0 | 0 | |
Reportable Business Segments [Member] | Small Business Services [Member] | Checks [Member] | |||||
Business segment information [Line Items] | |||||
Percentage of revenue | 40.70% | ||||
Reportable Business Segments [Member] | Financial Services [Member] | |||||
Business segment information [Line Items] | |||||
Total revenue from external customers: | 112,699 | 94,565 | 224,240 | 187,011 | |
Operating income | 25,506 | 22,277 | 45,916 | 44,100 | |
Depreciation and amortization expense: | 5,791 | 3,190 | 11,781 | 6,392 | |
Total assets | 272,495 | 156,860 | 272,495 | 156,860 | |
Capital asset purchases: | 0 | 0 | 0 | 0 | |
Reportable Business Segments [Member] | Direct Checks [Member] | |||||
Business segment information [Line Items] | |||||
Total revenue from external customers: | 40,890 | 43,150 | 86,001 | 91,148 | |
Operating income | 15,148 | 13,894 | 30,582 | 29,470 | |
Depreciation and amortization expense: | 973 | 1,710 | 2,457 | 3,427 | |
Total assets | 162,058 | 164,932 | 162,058 | 164,932 | |
Capital asset purchases: | 0 | 0 | 0 | 0 | |
Corporate [Member] | |||||
Business segment information [Line Items] | |||||
Total revenue from external customers: | 0 | 0 | 0 | 0 | |
Operating income | 0 | 0 | 0 | 0 | |
Depreciation and amortization expense: | 0 | 0 | 0 | 0 | |
Total assets | 273,827 | 372,746 | 273,827 | 372,746 | |
Capital asset purchases: | $ 9,795 | $ 8,901 | $ 19,307 | $ 19,851 |
Supplemental guarantor financ61
Supplemental guarantor financial information (Condensed Consolidating Balance Sheets) (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 |
Current assets: | ||||
Cash and cash equivalents | $ 64,926 | $ 61,541 | $ 146,942 | $ 121,089 |
Trade accounts receivable, net | 95,116 | 113,656 | ||
Inventories and supplies | 40,521 | 39,411 | ||
Deferred income taxes | 10,518 | 10,159 | ||
Funds held for customers | 54,687 | 43,604 | ||
Other current assets | 46,511 | 50,519 | ||
Total current assets | 312,279 | 318,890 | ||
Deferred income taxes | 1,324 | 1,411 | ||
Long-term investments | 45,500 | 46,451 | ||
Property, plant and equipment, net | 84,092 | 87,623 | ||
Assets held for sale | 13,971 | 26,819 | ||
Intangibles, net | 218,552 | 207,180 | ||
Goodwill | 882,788 | 868,376 | ||
Investments In consolidated subsidiaries | 0 | 0 | ||
Intercompany receivable | 0 | 0 | ||
Other non-current assets | 130,279 | 131,641 | ||
Total assets | 1,688,785 | 1,688,391 | 1,636,400 | |
Current liabilities: | ||||
Accounts payable | 77,445 | 87,216 | ||
Accrued liabilities | 215,430 | 219,121 | ||
Short-term borrowings | 308,000 | 160,000 | ||
Long-term debt due within one year | 998 | 911 | ||
Total current liabilities | 601,873 | 467,248 | ||
Long-term debt | 194,771 | 393,401 | ||
Deferred income taxes | 95,053 | 95,838 | ||
Intercompany payable | 0 | 0 | ||
Other non-current liabilities | 71,561 | 84,407 | ||
Total shareholders' equity | 725,527 | 647,497 | ||
Total liabilities and shareholders' equity | 1,688,785 | 1,688,391 | ||
Deluxe Corporation [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | 7,196 | 8,335 | 92,141 | 71,972 |
Trade accounts receivable, net | 0 | 0 | ||
Inventories and supplies | 0 | 0 | ||
Deferred income taxes | 9,296 | 8,929 | ||
Funds held for customers | 0 | 0 | ||
Other current assets | 8,658 | 8,538 | ||
Total current assets | 25,150 | 25,802 | ||
Deferred income taxes | 2,662 | 660 | ||
Long-term investments | 38,138 | 38,623 | ||
Property, plant and equipment, net | 4,532 | 4,868 | ||
Assets held for sale | 0 | 0 | ||
Intangibles, net | 1,729 | 987 | ||
Goodwill | 0 | 0 | ||
Investments In consolidated subsidiaries | 1,377,112 | 1,268,918 | ||
Intercompany receivable | 0 | 0 | ||
Other non-current assets | 7,724 | 9,675 | ||
Total assets | 1,457,047 | 1,349,533 | ||
Current liabilities: | ||||
Accounts payable | 13,087 | 13,792 | ||
Accrued liabilities | 25,893 | 26,278 | ||
Short-term borrowings | 308,000 | 160,000 | ||
Long-term debt due within one year | 987 | 903 | ||
Total current liabilities | 347,967 | 200,973 | ||
Long-term debt | 194,723 | 393,387 | ||
Deferred income taxes | 0 | 0 | ||
Intercompany payable | 167,320 | 83,294 | ||
Other non-current liabilities | 21,510 | 24,382 | ||
Total shareholders' equity | 725,527 | 647,497 | ||
Total liabilities and shareholders' equity | 1,457,047 | 1,349,533 | ||
Guarantor subsidiaries [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | 3,562 | 4,342 | 6,651 | 6,991 |
Trade accounts receivable, net | 85,543 | 100,197 | ||
Inventories and supplies | 37,746 | 34,097 | ||
Deferred income taxes | 1,133 | 1,182 | ||
Funds held for customers | 0 | 0 | ||
Other current assets | 34,891 | 38,912 | ||
Total current assets | 162,875 | 178,730 | ||
Deferred income taxes | 0 | 0 | ||
Long-term investments | 7,362 | 7,828 | ||
Property, plant and equipment, net | 73,913 | 76,306 | ||
Assets held for sale | 0 | 3,102 | ||
Intangibles, net | 214,547 | 203,967 | ||
Goodwill | 881,191 | 866,659 | ||
Investments In consolidated subsidiaries | 82,867 | 90,960 | ||
Intercompany receivable | 167,095 | 82,758 | ||
Other non-current assets | 122,371 | 121,549 | ||
Total assets | 1,712,221 | 1,631,859 | ||
Current liabilities: | ||||
Accounts payable | 62,228 | 73,380 | ||
Accrued liabilities | 130,822 | 141,816 | ||
Short-term borrowings | 0 | 0 | ||
Long-term debt due within one year | 0 | 0 | ||
Total current liabilities | 193,050 | 215,196 | ||
Long-term debt | 0 | 0 | ||
Deferred income taxes | 97,715 | 96,498 | ||
Intercompany payable | 0 | 0 | ||
Other non-current liabilities | 44,344 | 51,247 | ||
Total shareholders' equity | 1,377,112 | 1,268,918 | ||
Total liabilities and shareholders' equity | 1,712,221 | 1,631,859 | ||
Non-guarantor subsidiaries [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | 54,288 | 52,193 | 49,213 | 45,229 |
Trade accounts receivable, net | 9,573 | 13,459 | ||
Inventories and supplies | 2,775 | 5,314 | ||
Deferred income taxes | 89 | 48 | ||
Funds held for customers | 54,687 | 43,604 | ||
Other current assets | 2,962 | 3,069 | ||
Total current assets | 124,374 | 117,687 | ||
Deferred income taxes | 1,324 | 1,411 | ||
Long-term investments | 0 | 0 | ||
Property, plant and equipment, net | 5,647 | 6,449 | ||
Assets held for sale | 13,971 | 23,717 | ||
Intangibles, net | 2,276 | 2,226 | ||
Goodwill | 1,597 | 1,717 | ||
Investments In consolidated subsidiaries | 0 | 0 | ||
Intercompany receivable | 225 | 536 | ||
Other non-current assets | 184 | 417 | ||
Total assets | 149,598 | 154,160 | ||
Current liabilities: | ||||
Accounts payable | 2,250 | 3,373 | ||
Accrued liabilities | 58,715 | 51,027 | ||
Short-term borrowings | 0 | 0 | ||
Long-term debt due within one year | 11 | 8 | ||
Total current liabilities | 60,976 | 54,408 | ||
Long-term debt | 48 | 14 | ||
Deferred income taxes | 0 | 0 | ||
Intercompany payable | 0 | 0 | ||
Other non-current liabilities | 5,707 | 8,778 | ||
Total shareholders' equity | 82,867 | 90,960 | ||
Total liabilities and shareholders' equity | 149,598 | 154,160 | ||
Eliminations [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | (120) | (3,329) | $ (1,063) | $ (3,103) |
Trade accounts receivable, net | 0 | 0 | ||
Inventories and supplies | 0 | 0 | ||
Deferred income taxes | 0 | 0 | ||
Funds held for customers | 0 | 0 | ||
Other current assets | 0 | 0 | ||
Total current assets | (120) | (3,329) | ||
Deferred income taxes | (2,662) | (660) | ||
Long-term investments | 0 | 0 | ||
Property, plant and equipment, net | 0 | 0 | ||
Assets held for sale | 0 | 0 | ||
Intangibles, net | 0 | 0 | ||
Goodwill | 0 | 0 | ||
Investments In consolidated subsidiaries | (1,459,979) | (1,359,878) | ||
Intercompany receivable | (167,320) | (83,294) | ||
Other non-current assets | 0 | 0 | ||
Total assets | (1,630,081) | (1,447,161) | ||
Current liabilities: | ||||
Accounts payable | (120) | (3,329) | ||
Accrued liabilities | 0 | 0 | ||
Short-term borrowings | 0 | 0 | ||
Long-term debt due within one year | 0 | 0 | ||
Total current liabilities | (120) | (3,329) | ||
Long-term debt | 0 | 0 | ||
Deferred income taxes | (2,662) | (660) | ||
Intercompany payable | (167,320) | (83,294) | ||
Other non-current liabilities | 0 | 0 | ||
Total shareholders' equity | (1,459,979) | (1,359,878) | ||
Total liabilities and shareholders' equity | $ (1,630,081) | $ (1,447,161) |
Supplemental guarantor financ62
Supplemental guarantor financial information (Condensed Consolidating Statements of Comprehensive Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Consolidating Statements of Comprehensive Income [Abstract] | ||||
Product revenue | $ 358,897 | $ 344,463 | $ 713,911 | $ 690,127 |
Service revenue | 76,977 | 60,947 | 155,581 | 122,238 |
Total revenue | 435,874 | 405,410 | 869,492 | 812,365 |
Cost of products | (128,256) | (119,550) | (251,996) | (237,936) |
Cost of services | (27,682) | (26,341) | (56,624) | (52,884) |
Total cost of revenue | (155,938) | (145,891) | (308,620) | (290,820) |
Gross profit | 279,936 | 259,519 | 560,872 | 521,545 |
Operating expenses | (191,057) | (174,560) | (386,702) | (355,790) |
Operating income | 88,879 | 84,959 | 174,170 | 165,755 |
Loss on early debt extinguishment | 0 | 0 | (8,917) | 0 |
Interest expense | (4,420) | (9,530) | (10,935) | (19,097) |
Other income | 824 | 368 | 1,254 | 499 |
Income before income taxes | 85,283 | 75,797 | 155,572 | 147,157 |
Income tax benefit (provision) | (29,220) | (25,721) | (53,569) | (49,758) |
(Loss) income before equity in earnings of consolidated subsidiaries | 56,063 | 50,076 | 102,003 | 97,399 |
Equity in earnings of consolidated subsidiaries | 0 | 0 | 0 | 0 |
Net income | 56,063 | 50,076 | 102,003 | 97,399 |
Comprehensive income | 57,327 | 53,125 | 97,510 | 98,579 |
Deluxe Corporation [Member] | ||||
Condensed Consolidating Statements of Comprehensive Income [Abstract] | ||||
Product revenue | 0 | 0 | 0 | 0 |
Service revenue | 28,426 | 21,560 | 55,111 | 43,130 |
Total revenue | 28,426 | 21,560 | 55,111 | 43,130 |
Cost of products | 0 | 0 | 0 | 0 |
Cost of services | (29,847) | (19,744) | (60,130) | (43,795) |
Total cost of revenue | (29,847) | (19,744) | (60,130) | (43,795) |
Gross profit | (1,421) | 1,816 | (5,019) | (665) |
Operating expenses | 0 | 0 | 0 | 0 |
Operating income | (1,421) | 1,816 | (5,019) | (665) |
Loss on early debt extinguishment | (8,917) | |||
Interest expense | (4,104) | (9,510) | (10,601) | (18,976) |
Other income | 4,568 | 3,096 | 5,943 | 5,699 |
Income before income taxes | (957) | (4,598) | (18,594) | (13,942) |
Income tax benefit (provision) | 788 | 2,248 | 7,289 | 5,954 |
(Loss) income before equity in earnings of consolidated subsidiaries | (169) | (2,350) | (11,305) | (7,988) |
Equity in earnings of consolidated subsidiaries | 56,232 | 52,426 | 113,308 | 105,387 |
Net income | 56,063 | 50,076 | 102,003 | 97,399 |
Comprehensive income | 57,327 | 53,125 | 97,510 | 98,579 |
Guarantor subsidiaries [Member] | ||||
Condensed Consolidating Statements of Comprehensive Income [Abstract] | ||||
Product revenue | 339,959 | 321,043 | 672,698 | 643,692 |
Service revenue | 71,753 | 56,215 | 144,993 | 111,747 |
Total revenue | 411,712 | 377,258 | 817,691 | 755,439 |
Cost of products | (118,527) | (108,036) | (230,780) | (214,702) |
Cost of services | (26,174) | (24,773) | (54,754) | (49,205) |
Total cost of revenue | (144,701) | (132,809) | (285,534) | (263,907) |
Gross profit | 267,011 | 244,449 | 532,157 | 491,532 |
Operating expenses | (180,869) | (166,215) | (361,627) | (333,980) |
Operating income | 86,142 | 78,234 | 170,530 | 157,552 |
Loss on early debt extinguishment | 0 | |||
Interest expense | (4,625) | (3,049) | (5,995) | (6,471) |
Other income | 470 | 260 | 608 | 932 |
Income before income taxes | 81,987 | 75,445 | 165,143 | 152,013 |
Income tax benefit (provision) | (28,960) | (26,613) | (58,401) | (53,168) |
(Loss) income before equity in earnings of consolidated subsidiaries | 53,027 | 48,832 | 106,742 | 98,845 |
Equity in earnings of consolidated subsidiaries | 3,205 | 3,594 | 6,566 | 6,542 |
Net income | 56,232 | 52,426 | 113,308 | 105,387 |
Comprehensive income | 57,453 | 55,177 | 108,730 | 105,972 |
Non-guarantor subsidiaries [Member] | ||||
Condensed Consolidating Statements of Comprehensive Income [Abstract] | ||||
Product revenue | 18,938 | 23,420 | 41,213 | 46,435 |
Service revenue | 6,331 | 7,018 | 12,929 | 15,079 |
Total revenue | 25,269 | 30,438 | 54,142 | 61,514 |
Cost of products | (9,729) | (11,514) | (21,216) | (23,234) |
Cost of services | (1,830) | (2,070) | (3,920) | (5,146) |
Total cost of revenue | (11,559) | (13,584) | (25,136) | (28,380) |
Gross profit | 13,710 | 16,854 | 29,006 | 33,134 |
Operating expenses | (9,552) | (11,945) | (20,347) | (24,266) |
Operating income | 4,158 | 4,909 | 8,659 | 8,868 |
Loss on early debt extinguishment | 0 | |||
Interest expense | (1) | 0 | (1) | 0 |
Other income | 96 | 41 | 365 | 218 |
Income before income taxes | 4,253 | 4,950 | 9,023 | 9,086 |
Income tax benefit (provision) | (1,048) | (1,356) | (2,457) | (2,544) |
(Loss) income before equity in earnings of consolidated subsidiaries | 3,205 | 3,594 | 6,566 | 6,542 |
Equity in earnings of consolidated subsidiaries | 0 | 0 | 0 | 0 |
Net income | 3,205 | 3,594 | 6,566 | 6,542 |
Comprehensive income | 4,157 | 6,023 | 1,450 | 6,482 |
Eliminations [Member] | ||||
Condensed Consolidating Statements of Comprehensive Income [Abstract] | ||||
Product revenue | 0 | 0 | 0 | 0 |
Service revenue | (29,533) | (23,846) | (57,452) | (47,718) |
Total revenue | (29,533) | (23,846) | (57,452) | (47,718) |
Cost of products | 0 | 0 | 0 | 0 |
Cost of services | 30,169 | 20,246 | 62,180 | 45,262 |
Total cost of revenue | 30,169 | 20,246 | 62,180 | 45,262 |
Gross profit | 636 | (3,600) | 4,728 | (2,456) |
Operating expenses | (636) | 3,600 | (4,728) | 2,456 |
Operating income | 0 | 0 | 0 | 0 |
Loss on early debt extinguishment | 0 | |||
Interest expense | 4,310 | 3,029 | 5,662 | 6,350 |
Other income | (4,310) | (3,029) | (5,662) | (6,350) |
Income before income taxes | 0 | 0 | 0 | 0 |
Income tax benefit (provision) | 0 | 0 | 0 | 0 |
(Loss) income before equity in earnings of consolidated subsidiaries | 0 | 0 | 0 | 0 |
Equity in earnings of consolidated subsidiaries | (59,437) | (56,020) | (119,874) | (111,929) |
Net income | (59,437) | (56,020) | (119,874) | (111,929) |
Comprehensive income | $ (61,610) | $ (61,200) | $ (110,180) | $ (112,454) |
Supplemental guarantor financ63
Supplemental guarantor financial information (Condensed Consolidating Statements of Cash Flows) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Consolidating Statements of Cash Flows [Abstract} | ||||
Net cash provided by operating activities | $ 146,036 | $ 125,849 | ||
Cash flows from investing activities: | ||||
Purchases of capital assets | $ (9,795) | $ (8,901) | (19,307) | (19,851) |
Payments for acquisitions, net of cash acquired | (35,800) | (8,886) | ||
Other | 339 | 986 | ||
Net cash used by investing activities | (54,768) | (27,751) | ||
Cash flows from financing activities: | ||||
Net proceeds (payments) from short-term borrowings | 148,000 | (125) | ||
Payments on long-term debt, including costs of debt reacquisition | (207,521) | (472) | ||
Payments for debt issue costs | (136) | (1,029) | ||
Proceeds from issuing shares under employee plans | 4,135 | 7,133 | ||
Excess tax benefit from share-based employee awards | 1,557 | 2,027 | ||
Payments for common shares repurchased | 0 | (51,940) | ||
Cash dividends paid to shareholders | (30,043) | (27,677) | ||
Advances from (to) consolidated subsidiaries | 0 | 0 | ||
Other | (150) | 0 | ||
Net cash used by financing activities | (84,158) | (72,083) | ||
Effect of exchange rate change on cash | (3,725) | (162) | ||
Net change in cash and cash equivalents | 3,385 | 25,853 | ||
Cash and cash equivalents, beginning of year | 61,541 | 121,089 | ||
Cash and cash equivalents, end of period | 64,926 | 146,942 | 64,926 | 146,942 |
Deluxe Corporation [Member] | ||||
Condensed Consolidating Statements of Cash Flows [Abstract} | ||||
Net cash provided by operating activities | (4,570) | (1,237) | ||
Cash flows from investing activities: | ||||
Purchases of capital assets | (905) | (334) | ||
Payments for acquisitions, net of cash acquired | (26) | 0 | ||
Other | (286) | 558 | ||
Net cash used by investing activities | (1,217) | 224 | ||
Cash flows from financing activities: | ||||
Net proceeds (payments) from short-term borrowings | 148,000 | 0 | ||
Payments on long-term debt, including costs of debt reacquisition | (207,515) | (449) | ||
Payments for debt issue costs | (136) | (1,029) | ||
Proceeds from issuing shares under employee plans | 4,135 | 7,133 | ||
Excess tax benefit from share-based employee awards | 1,557 | 2,027 | ||
Payments for common shares repurchased | (51,940) | |||
Cash dividends paid to shareholders | (30,043) | (27,677) | ||
Advances from (to) consolidated subsidiaries | 88,650 | 93,117 | ||
Other | 0 | |||
Net cash used by financing activities | 4,648 | 21,182 | ||
Effect of exchange rate change on cash | 0 | 0 | ||
Net change in cash and cash equivalents | (1,139) | 20,169 | ||
Cash and cash equivalents, beginning of year | 8,335 | 71,972 | ||
Cash and cash equivalents, end of period | 7,196 | 92,141 | 7,196 | 92,141 |
Guarantor subsidiaries [Member] | ||||
Condensed Consolidating Statements of Cash Flows [Abstract} | ||||
Net cash provided by operating activities | 139,604 | 120,051 | ||
Cash flows from investing activities: | ||||
Purchases of capital assets | (16,997) | (18,400) | ||
Payments for acquisitions, net of cash acquired | (35,774) | (8,886) | ||
Other | 619 | 421 | ||
Net cash used by investing activities | (52,152) | (26,865) | ||
Cash flows from financing activities: | ||||
Net proceeds (payments) from short-term borrowings | 0 | (125) | ||
Payments on long-term debt, including costs of debt reacquisition | 0 | (20) | ||
Payments for debt issue costs | 0 | 0 | ||
Proceeds from issuing shares under employee plans | 0 | 0 | ||
Excess tax benefit from share-based employee awards | 0 | 0 | ||
Payments for common shares repurchased | 0 | |||
Cash dividends paid to shareholders | 0 | 0 | ||
Advances from (to) consolidated subsidiaries | (88,232) | (93,381) | ||
Other | 0 | |||
Net cash used by financing activities | (88,232) | (93,526) | ||
Effect of exchange rate change on cash | 0 | 0 | ||
Net change in cash and cash equivalents | (780) | (340) | ||
Cash and cash equivalents, beginning of year | 4,342 | 6,991 | ||
Cash and cash equivalents, end of period | 3,562 | 6,651 | 3,562 | 6,651 |
Non-guarantor subsidiaries [Member] | ||||
Condensed Consolidating Statements of Cash Flows [Abstract} | ||||
Net cash provided by operating activities | 7,793 | 4,995 | ||
Cash flows from investing activities: | ||||
Purchases of capital assets | (1,405) | (1,117) | ||
Payments for acquisitions, net of cash acquired | 0 | 0 | ||
Other | 6 | 7 | ||
Net cash used by investing activities | (1,399) | (1,110) | ||
Cash flows from financing activities: | ||||
Net proceeds (payments) from short-term borrowings | 0 | 0 | ||
Payments on long-term debt, including costs of debt reacquisition | (6) | (3) | ||
Payments for debt issue costs | 0 | 0 | ||
Proceeds from issuing shares under employee plans | 0 | 0 | ||
Excess tax benefit from share-based employee awards | 0 | 0 | ||
Payments for common shares repurchased | 0 | |||
Cash dividends paid to shareholders | 0 | 0 | ||
Advances from (to) consolidated subsidiaries | (418) | 264 | ||
Other | (150) | |||
Net cash used by financing activities | (574) | 261 | ||
Effect of exchange rate change on cash | (3,725) | (162) | ||
Net change in cash and cash equivalents | 2,095 | 3,984 | ||
Cash and cash equivalents, beginning of year | 52,193 | 45,229 | ||
Cash and cash equivalents, end of period | 54,288 | 49,213 | 54,288 | 49,213 |
Eliminations [Member] | ||||
Condensed Consolidating Statements of Cash Flows [Abstract} | ||||
Net cash provided by operating activities | 3,209 | 2,040 | ||
Cash flows from investing activities: | ||||
Purchases of capital assets | 0 | 0 | ||
Payments for acquisitions, net of cash acquired | 0 | 0 | ||
Other | 0 | 0 | ||
Net cash used by investing activities | 0 | 0 | ||
Cash flows from financing activities: | ||||
Net proceeds (payments) from short-term borrowings | 0 | 0 | ||
Payments on long-term debt, including costs of debt reacquisition | 0 | 0 | ||
Payments for debt issue costs | 0 | 0 | ||
Proceeds from issuing shares under employee plans | 0 | 0 | ||
Excess tax benefit from share-based employee awards | 0 | 0 | ||
Payments for common shares repurchased | 0 | |||
Cash dividends paid to shareholders | 0 | 0 | ||
Advances from (to) consolidated subsidiaries | 0 | 0 | ||
Other | 0 | |||
Net cash used by financing activities | 0 | 0 | ||
Effect of exchange rate change on cash | 0 | 0 | ||
Net change in cash and cash equivalents | 3,209 | 2,040 | ||
Cash and cash equivalents, beginning of year | (3,329) | (3,103) | ||
Cash and cash equivalents, end of period | $ (120) | $ (1,063) | $ (120) | $ (1,063) |