Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 09, 2016 | Jun. 30, 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-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Period Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 3,063,146,952 | ||
Common Stock, Shares Outstanding | 48,963,695 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 62,427 | $ 61,541 |
Trade accounts receivable, net of allowances for uncollectible accounts | 123,654 | 113,656 |
Inventories and supplies | 41,956 | 39,411 |
Deferred income taxes | 0 | 10,159 |
Funds held for customers | 53,343 | 43,604 |
Other current assets | 44,608 | 50,519 |
Total current assets | 325,988 | 318,890 |
Deferred income taxes | 1,238 | 1,411 |
Long-term investments (including $2,091 and $2,384 of investments at fair value, respectively) | 41,691 | 46,451 |
Property, plant and equipment, net of accumulated depreciation | 85,732 | 87,623 |
Assets held for sale | 13,969 | 26,819 |
Intangibles, net of accumulated amortization | 285,311 | 207,180 |
Goodwill | 976,415 | 868,376 |
Other non-current assets | 114,058 | 131,641 |
Total assets | 1,844,402 | 1,688,391 |
Current liabilities: | ||
Accounts payable | 87,575 | 87,216 |
Accrued liabilities | 228,423 | 219,121 |
Short-term borrowings | 434,000 | 160,000 |
Long-term debt due within one year | 1,045 | 911 |
Total current liabilities | 751,043 | 467,248 |
Long-term debt | 196,222 | 393,401 |
Deferred income taxes | 81,076 | 95,838 |
Other non-current liabilities | $ 70,992 | $ 84,407 |
Commitments and contingencies (Notes 9, 13 and 14) | ||
Shareholders' equity: | ||
Common shares $1 par value (authorized: 500,000 shares; outstanding: 2015 - 49,019; 2014 - 49,742) | $ 49,019 | $ 49,742 |
Additional paid-in capital | 0 | 4,758 |
Retained earnings | 751,253 | 629,335 |
Accumulated other comprehensive loss | (55,203) | (36,338) |
Total shareholders' equity | 745,069 | 647,497 |
Total liabilities and shareholders' equity | $ 1,844,402 | $ 1,688,391 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
ASSETS | ||
Investments at fair value | $ 2,091 | $ 2,384 |
Shareholders' equity: | ||
Common stock, par value (per share) | $ 1 | $ 1 |
Common stock, shares authorized | 500,000 | 500,000 |
Common stock, shares outstanding | 49,019 | 49,742 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | |||
Product revenue | $ 1,451,994 | $ 1,410,858 | $ 1,369,711 |
Service revenue | 320,823 | 263,224 | 215,113 |
Total revenue | 1,772,817 | 1,674,082 | 1,584,824 |
Cost of products | (526,307) | (501,871) | (463,487) |
Cost of services | (112,902) | (104,407) | (97,629) |
Total cost of revenue | (639,209) | (606,278) | (561,116) |
Gross profit | 1,133,608 | 1,067,804 | 1,023,708 |
Selling, general and administrative expense | (774,859) | (719,192) | (691,359) |
Net restructuring charges | (4,418) | (8,776) | (9,435) |
Asset impairment charges | 0 | (6,468) | (5,000) |
Net loss on sale of facility | 0 | (735) | 0 |
Operating income | 354,331 | 332,633 | 317,914 |
Loss on early debt extinguishment | (8,917) | 0 | 0 |
Interest expense | (20,299) | (36,529) | (38,301) |
Other income | 2,832 | 1,077 | 1,446 |
Income before income taxes | 327,947 | 297,181 | 281,059 |
Income tax provision | (109,318) | (97,387) | (94,407) |
Net income | $ 218,629 | $ 199,794 | $ 186,652 |
Basic earnings per share | $ 4.39 | $ 3.99 | $ 3.68 |
Diluted earnings per share | 4.36 | 3.96 | 3.65 |
Cash dividends per share | $ 1.20 | $ 1.15 | $ 1 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 218,629 | $ 199,794 | $ 186,652 |
Other comprehensive income, net of tax: | |||
Reclassification of loss on derivative instruments from other comprehensive loss to net income | 0 | 781 | 1,040 |
Postretirement benefit plans: | |||
Net actuarial (loss) gain arising during the year | (7,666) | 1,133 | 8,365 |
Less reclassification of amounts from other comprehensive loss to net income: | |||
Amortization of prior service credit | (867) | (866) | (864) |
Amortization of net actuarial loss | 2,116 | 2,202 | 2,928 |
Postretirement benefit plans | (6,417) | 2,469 | 10,429 |
Unrealized holding gains (losses) on securities arising during the year | 11 | 151 | (184) |
Unrealized foreign currency translation adjustment | (12,459) | (6,315) | (4,062) |
Other comprehensive (loss) income | (18,865) | (2,914) | 7,223 |
Comprehensive income | 199,764 | 196,880 | 193,875 |
Income tax benefit (expense) of other comprehensive (loss) income included in above amounts: | |||
Reclassification of loss on derivative instruments from other comprehensive loss to net income | 0 | (501) | (671) |
Postretirement benefit plans: | |||
Net actuarial (loss) gain arising during the year | 4,906 | (726) | (5,393) |
Less reclassification of amounts from other comprehensive loss to net income: | |||
Amortization of prior service credit | 554 | 555 | 557 |
Amortization of net actuarial loss | (1,004) | (1,216) | (1,511) |
Postretirement benefit plans | 4,456 | (1,387) | (6,347) |
Unrealized holding gains (losses) on securities arising during the year | (4) | (53) | 64 |
Total net tax benefit (expense) included in other comprehensive (loss) income | $ 4,452 | $ (1,941) | $ (6,954) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - 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, 2012 | $ 432,935 | $ 50,614 | $ 47,968 | $ 375,000 | $ (40,647) |
Balance, shares at Dec. 31, 2012 | 50,614 | ||||
Net income | $ 186,652 | 186,652 | |||
Cash dividends | (50,711) | (50,711) | |||
Common shares issued | $ 26,655 | 1,182 | 25,473 | ||
Common shares issued, shares | 1,182 | ||||
Tax impact of share-based awards | $ 2,310 | 2,310 | |||
Common shares repurchased | $ (48,798) | (1,162) | (47,636) | ||
Common shares repurchased, shares | (1,162) | ||||
Other common shares retired | $ (12,760) | (290) | (12,470) | ||
Other common shares retired, shares | (290) | ||||
Fair value of share-based compensation | $ 6,951 | 6,951 | |||
Other comprehensive (loss) income | 7,223 | 7,223 | |||
Balance at Dec. 31, 2013 | $ 550,457 | 50,344 | 22,596 | 510,941 | (33,424) |
Balance, shares at Dec. 31, 2013 | 50,344 | ||||
Net income | $ 199,794 | 199,794 | |||
Cash dividends | (57,603) | (57,603) | |||
Common shares issued | $ 15,301 | 720 | 14,581 | ||
Common shares issued, shares | 720 | ||||
Tax impact of share-based awards | $ 4,398 | 4,398 | |||
Common shares repurchased | $ (60,119) | (1,133) | (35,585) | (23,401) | |
Common shares repurchased, shares | (1,133) | ||||
Other common shares retired | $ (10,649) | (189) | (10,064) | (396) | |
Other common shares retired, shares | (189) | ||||
Fair value of share-based compensation | $ 8,832 | 8,832 | |||
Other comprehensive (loss) income | (2,914) | (2,914) | |||
Balance at Dec. 31, 2014 | $ 647,497 | 49,742 | 4,758 | 629,335 | (36,338) |
Balance, shares at Dec. 31, 2014 | 49,742 | ||||
Net income | $ 218,629 | 218,629 | |||
Cash dividends | (59,755) | (59,755) | |||
Common shares issued | $ 7,987 | 324 | 7,663 | ||
Common shares issued, shares | 324 | ||||
Tax impact of share-based awards | $ 2,021 | 2,021 | |||
Common shares repurchased | $ (59,952) | (996) | (22,000) | (36,956) | |
Common shares repurchased, shares | (996) | ||||
Other common shares retired | $ (3,225) | (51) | (3,174) | ||
Other common shares retired, shares | (51) | ||||
Fair value of share-based compensation | $ 10,732 | 10,732 | |||
Other comprehensive (loss) income | (18,865) | (18,865) | |||
Balance at Dec. 31, 2015 | $ 745,069 | $ 49,019 | $ 0 | $ 751,253 | $ (55,203) |
Balance, shares at Dec. 31, 2015 | 49,019 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |||
Cash flows from operating activities: | |||||
Net income | $ 218,629 | $ 199,794 | $ 186,652 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation | 16,000 | 16,767 | 17,822 | ||
Amortization of intangibles | 60,700 | 49,075 | 46,651 | ||
Asset impairment charges | 0 | 6,468 | 5,000 | ||
Amortization of contract acquisition costs | 18,741 | 18,105 | 17,197 | ||
Deferred income taxes | (3,256) | (7,413) | (2,243) | ||
Employee share-based compensation expense | 11,894 | 9,776 | 7,562 | ||
Loss on early debt extinguishment | 8,917 | 0 | 0 | ||
Other non-cash items, net | 2,454 | 11,162 | 10,741 | ||
Changes in assets and liabilities, net of effect of acquisitions: | |||||
Trade accounts receivable | (4,525) | (21,095) | (14,754) | ||
Inventories and supplies | (339) | (4,353) | (1,594) | ||
Other current assets | 8,629 | (8,199) | 7,032 | ||
Non-current assets | (2,532) | (4,153) | (5,976) | ||
Accounts payable | (4,528) | 12,218 | 886 | ||
Contract acquisition payments | (12,806) | (16,567) | (12,133) | ||
Other accrued and non-current liabilities | (10,045) | 18,810 | (1,341) | ||
Net cash provided by operating activities | 307,933 | 280,395 | 261,502 | ||
Cash flows from investing activities: | |||||
Purchases of capital assets | (43,261) | (41,119) | (37,459) | ||
Payments for acquisitions, net of cash acquired | (212,990) | (105,029) | [1] | (69,709) | [2] |
Proceeds from company-owned life insurance policies | 3,973 | 897 | 4,599 | ||
Proceeds from sale of facility | 0 | 8,451 | 0 | ||
Other | 1,138 | 757 | 1,519 | ||
Net cash used by investing activities | (251,140) | (136,043) | (101,050) | ||
Cash flows from financing activities: | |||||
Net proceeds from short-term borrowings | 274,000 | 159,875 | 0 | ||
Payments on long-term debt, including costs of debt reacquisition | (208,062) | (254,403) | (1,555) | ||
Payments for debt issue costs | (749) | (1,085) | (236) | ||
Proceeds from issuing shares under employee plans | 5,895 | 9,148 | 15,948 | ||
Excess tax benefit from share-based employee awards | 2,244 | 4,992 | 3,055 | ||
Payments for common shares repurchased | (59,952) | (60,119) | (48,798) | ||
Cash dividends paid to shareholders | (59,755) | (57,603) | (50,711) | ||
Other | (310) | (150) | 0 | ||
Net cash used by financing activities | (46,689) | (199,345) | (82,297) | ||
Effect of exchange rate change on cash | (9,218) | (4,555) | (2,501) | ||
Net change in cash and cash equivalents | 886 | (59,548) | 75,654 | ||
Cash and cash equivalents, beginning of year | 61,541 | 121,089 | 45,435 | ||
Cash and cash equivalents, end of year | $ 62,427 | $ 61,541 | $ 121,089 | ||
[1] | Includes adjustments recorded in 2015 for the finalization of purchase accounting for the Wausau acquisition. These adjustments decreased goodwill $714 from the preliminary amount recorded as of December 31, 2014, with the offset to certain income and sales tax accounts. The amount of intangible assets acquired includes assets classified as held for sale upon acquisition of $1,353. | ||||
[2] | Includes adjustments recorded in 2014 for the finalization of purchase accounting for the Destination Rewards acquisition. These adjustments decreased goodwill $1,375 from the preliminary amount recorded as of December 31, 2013, with the offset to intangible assets. The amount of intangible assets acquired includes assets classified as held for sale upon acquisition of $24,502. |
Significant accounting policies
Significant accounting policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Significant accounting policies | Significant accounting policies Nature of operations – We employ a multi-channel strategy to provide a suite of life cycle-driven solutions to our customers. We offer a wide range of services and products to small businesses, including website development and hosting, email marketing, social media, search engine optimization and logo design, in addition to our core checks and forms offerings. For financial institutions, we offer programs in customer acquisition and loyalty, fraud prevention and profitability, and financial technology solutions, including receivables management and data analytics, as well as our check program solutions. We are also a leading printer of checks and accessories sold directly to consumers. Consolidation – The consolidated financial statements include the accounts of Deluxe Corporation and its wholly-owned subsidiaries. All intercompany accounts, transactions and profits have been eliminated. Use of estimates – We have prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States. In this process, it is necessary for us to make certain assumptions and estimates affecting the amounts reported in the consolidated financial statements and related notes. These estimates and assumptions are developed based upon all available information. However, actual results can differ from assumed and estimated amounts. Foreign currency translation – The financial statements of our foreign subsidiaries are measured in the respective subsidiaries' functional currencies, primarily Canadian dollars, and are translated into U.S. dollars. Assets and liabilities are translated using the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average exchange rates during the year. The resulting translation gains and losses are reflected in accumulated other comprehensive loss in the shareholders' equity section of the consolidated balance sheets. Foreign currency transaction gains and losses are recorded in other income in the consolidated statements of income. Cash and cash equivalents – We consider all cash on hand and other highly liquid investments with original maturities of three months or less to be cash and cash equivalents. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents approximate fair value. Marketable securities – Marketable securities consist of a Canadian money market fund, which is classified as available for sale. The investment is carried at fair value and is included within other current assets in the consolidated balance sheets. 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. Trade accounts receivable – Trade accounts receivable are initially recorded at the invoiced amount upon the sale of goods or services to customers, and they do not bear interest. They are stated net of allowances for uncollectible accounts, which represent estimated losses resulting from the inability of customers to make the required payments. When determining the allowances for uncollectible accounts, we take several factors into consideration, including the overall composition of accounts receivable aging, our prior history of accounts receivable write-offs, the type of customer and our day-to-day knowledge of specific customers. Changes in the allowances for uncollectible accounts are included in selling, general and administrative (SG&A) expense in our consolidated statements of income. The point at which uncollected accounts are written off varies by type of customer, but generally does not exceed one year from the due date of the receivable. Inventories and supplies – Inventories and supplies are stated at the lower of average cost or market. Average cost approximates cost calculated on a first-in, first-out basis. Supplies consist of items not used directly in the production of goods, such as maintenance and other supplies utilized in the production area. Funds held for customers – Our Canadian payroll services business collects funds from clients to pay their payroll and related taxes. We hold these funds temporarily until payments are remitted to the clients' employees and the appropriate taxing authorities. These funds, consisting of cash and available-for-sale marketable securities, are reported as funds held for customers in the consolidated balance sheets. The corresponding liability for these obligations is included in accrued liabilities in the consolidated balance sheets. The available-for-sale marketable securities are carried at fair value, with unrealized gains and losses included in accumulated other comprehensive loss in the consolidated balance sheets. Realized gains and losses are included in revenue in our consolidated statements of income. Realized gains recognized during the past three years were not significant. Long-term investments – Long-term investments consist primarily of cash surrender values of company-owned life insurance policies. Certain of these policies fund amounts due under our deferred compensation plan and our inactive supplemental executive retirement plan. Further information regarding these plans can be found in Note 11 and Note 12. Additionally, long-term investments include an investment in domestic mutual funds with a fair value of $2,091 as of December 31, 2015 and $2,384 as of December 31, 2014 . We have elected to account for this investment 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. Realized and unrealized gains and losses, as well as dividends earned by the mutual fund investment, are included in SG&A expense in the consolidated statements of income. This investment corresponds to a liability under an officers' deferred compensation plan that 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 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 consolidated statements of income. The cost of securities sold is determined using the average cost method. Property, plant and equipment – Property, plant and equipment, including leasehold and other improvements that extend an asset's useful life or productive capabilities, are stated at historical cost less accumulated depreciation. Buildings have been assigned useful lives of 40 years and machinery and equipment are generally assigned useful lives ranging from one year to 11 years , with a weighted-average useful life of seven years as of December 31, 2015 . Buildings are depreciated using the 150% declining balance method, and machinery and equipment are depreciated using the sum-of-the-years' digits method. Leasehold and building improvements are depreciated on the straight-line basis over the estimated useful life of the property or the life of the lease, whichever is shorter. Maintenance and repairs are expensed as incurred. Fully depreciated assets are retained in property, plant and equipment until disposal. Any gains or losses resulting from the disposition of property, plant and equipment are included in SG&A expense in the consolidated statements of income, with the exception of building sales. Such gains and losses are reported separately in the consolidated statements of income. Intangibles – Intangible assets are stated at historical cost less accumulated amortization. Amortization expense is generally determined on the straight-line basis over periods ranging from one year to 20 years , with a weighted-average useful life of seven years as of December 31, 2015 . Customer lists are generally amortized using accelerated methods that reflect the pattern in which we receive the economic benefit of the asset. Each reporting period, we evaluate the remaining useful lives of our amortizable intangibles to determine whether events or circumstances warrant a revision to the remaining period of amortization. If our estimate of an asset's remaining useful life is revised, the remaining carrying amount of the asset is amortized prospectively over the revised remaining useful life. As of December 31, 2015 , we held a trade name asset that has been assigned an indefinite useful life. As such, this asset is not amortized, but is subject to impairment testing on at least an annual basis. Any gains or losses resulting from the disposition of intangibles are included in SG&A expense in the consolidated statements of income. We capitalize costs of software developed or obtained for internal use, including website development costs, once the preliminary project stage has been completed, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project, and (3) interest costs incurred, when significant, while developing internal-use software. Costs incurred in populating websites with information about the company or products are expensed as incurred. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. The carrying value of internal-use software is reviewed in accordance with our policy on impairment of long-lived assets and amortizable intangibles. We incur costs in connection with the development of certain software products that we sell to our customers. Costs for the development of software products to be sold are expensed as incurred until technological feasibility is established, at which time, such costs are capitalized until the product is available for general release to customers. We acquired software to be sold via the acquisition of Wausau Financial Systems, Inc. in October 2014 (Note 5). Impairment of long-lived assets and amortizable intangibles – We evaluate the recoverability of property, plant, equipment and amortizable intangibles not held for sale whenever events or changes in circumstances indicate that an asset's carrying amount may not be recoverable. Such circumstances could include, but are not limited to, (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used or in its physical condition, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of an asset. We compare the carrying amount of the asset to the estimated undiscounted future cash flows associated with it. If the sum of the expected future net cash flows is less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds the fair value of the asset. As quoted market prices are not available for the majority of our assets, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. During 2014 and 2013, we recorded asset impairment charges related to Small Business Services intangible assets. Further information regarding the impairment charges can be found in Note 7. We evaluate the recoverability of property, plant, equipment and intangibles held for sale by comparing the asset's carrying amount with its fair value less costs to sell. Should the fair value less costs to sell be less than the carrying value of the long-lived asset, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds the fair value of the asset less costs to sell. The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. Impairment of indefinite-lived intangibles and goodwill – We evaluate the carrying value of indefinite-lived intangibles and goodwill on July 31 st of each year and between annual evaluations if events occur or circumstances change that would indicate a possible impairment. Such circumstances could include, but are not limited to, (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, (3) an adverse action or assessment by a regulator, or (4) an adverse change in market conditions that are indicative of a decline in the fair value of the assets. In completing the annual impairment analysis of our indefinite-lived trade name in each of the past three years, we elected to perform a quantitative assessment. This assessment compares the carrying amount of the asset to its estimated fair value. The estimate of fair value is based on a relief from royalty method, which calculates the cost savings associated with owning rather than licensing the trade name. An assumed royalty rate is applied to forecasted revenue and the resulting cash flows are discounted. If the estimated fair value is less than the carrying value of the asset, an impairment loss would be recognized for the difference. The impairment analysis completed in each of the past three years indicated no impairment of our indefinite-lived trade name. In addition to the required impairment analysis, we regularly evaluate the remaining useful life of this asset to determine whether events and circumstances continue to support an indefinite useful life. If we were to determine that the asset has a finite useful life, we would test it for impairment and then amortize its remaining carrying value over its estimated remaining useful life. To analyze goodwill for impairment, we must assign our goodwill to individual reporting units. Identification of reporting units includes an analysis of the components that comprise each of our operating segments, which considers, among other things, the manner in which we operate our business and the availability of discrete financial information. Components of an operating segment are aggregated to form one reporting unit if the components have similar economic characteristics. We periodically review our reporting units to ensure that they continue to reflect the manner in which we operate our business. When completing our annual goodwill impairment analysis, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after this qualitative assessment, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step, quantitative impairment test is unnecessary. During 2015 and 2013, we elected to perform a qualitative assessment for all of our reporting units to which goodwill was assigned, with the exception of our Financial Services Commercial reporting unit, which was acquired subsequent to our 2014 annual impairment analysis. We noted no changes in events or circumstances which would have required us to complete the two-step quantitative goodwill impairment analysis for any of the reporting units analyzed. In addition, the quantitative analysis completed for the Financial Services Commercial reporting unit in 2015 indicated no impairment. As such, no goodwill impairment charges were recorded as a result of our 2015 or 2013 annual goodwill impairment analyses. In completing the 2015 goodwill impairment analysis for our Financial Services Commercial reporting unit and the 2014 annual goodwill impairment analysis for all of our reporting units, we elected to perform a quantitative assessment. Our previous quantitative analysis was completed during 2010. First, we calculated the estimated fair value of each reporting unit to which goodwill was assigned and compared this estimated fair value to the carrying amount of the reporting unit's net assets. In calculating the estimated fair value, we used the income approach. The income approach is a valuation technique under which we estimated future cash flows using the reporting unit's financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we projected revenue and applied our fixed and variable cost experience rates to the projected revenue to arrive at the future cash flows. A terminal value was then applied to the projected cash flow stream. Future estimated cash flows were discounted to their present value to calculate the estimated fair value. The discount rate used was the value-weighted average of our estimated cost of capital derived using both known and customary market metrics. In determining the estimated fair values of our reporting units, we were required to estimate a number of factors, including projected operating results, terminal growth rates, economic conditions, anticipated future cash flows, the discount rate and the allocation of shared or corporate items. Because our 2014 quantitative analysis included all of our reporting units, the summation of our reporting units' fair values was compared to our consolidated fair value, as indicated by our market capitalization, to evaluate the reasonableness of our calculations. If the carrying amount of a reporting unit's net assets exceeds its estimated fair value, the second step of the goodwill impairment analysis requires us to measure the amount of the impairment loss. An impairment loss is calculated by comparing the implied fair value of the goodwill to its carrying amount. To calculate the implied fair value of goodwill, the fair value of the reporting unit's assets and liabilities, excluding goodwill, is estimated. The excess of the fair value of the reporting unit over the amount assigned to its assets and liabilities, excluding goodwill, is the implied fair value of the reporting unit's goodwill. We were not required to complete the second step of the goodwill impairment analysis for any of our reporting units, and no goodwill impairment charges were recorded during 2014. Further information regarding our annual impairment analyses can be found in Note 7. Contract acquisition costs – We record contract acquisition costs when we sign or renew certain contracts with our financial institution clients. These costs, which are essentially pre-paid product discounts, consist of cash payments or accruals related to amounts owed to financial institution clients by our Financial Services segment. Contract acquisition costs are amortized as reductions of revenue over the related contract term, generally on the straight-line basis. Currently, these amounts are being amortized over periods ranging from one year to 10 years , with a weighted-average life of six years as of December 31, 2015 . Whenever events or changes occur that impact the related contract, including significant declines in the anticipated profitability, we evaluate the carrying value of the contract acquisition costs to determine if impairment has occurred. Should a financial institution cancel a contract prior to the agreement's termination date, or should the volume of orders realized through a financial institution fall below contractually-specified minimums, we generally have a contractual right to a refund of the remaining unamortized contract acquisition costs. These costs are included in other non-current assets in the consolidated balance sheets. Advertising costs – Deferred advertising costs include materials, printing, labor and postage costs related to direct response advertising programs of our Direct Checks and Small Business Services segments. These costs are amortized as SG&A expense over periods (not exceeding 18 months ) that correspond to the estimated revenue streams of the individual advertisements. The actual revenue streams are analyzed at least annually to monitor the propriety of the amortization periods. Judgment is required in estimating the future revenue streams, especially with regard to check re-orders, which can span an extended period of time. Significant changes in the actual revenue streams would require the amortization periods to be modified, thus impacting our results of operations during the period in which the change occurred and in subsequent periods. Within our Direct Checks segment, approximately 87% of the costs of individual advertisements is expensed within six months of the advertisement. The deferred advertising costs of our Small Business Services segment are fully amortized within six months of the advertisement. Deferred advertising costs are included in other current assets and other non-current assets in the consolidated balance sheets. Non-direct response advertising projects are expensed as incurred. Catalogs provided to financial institution clients of our Financial Services segment are accounted for as prepaid assets until they are shipped to financial institutions. The total amount of advertising expense was $87,396 in 2015 , $91,937 in 2014 and $93,872 in 2013 . Loans and notes receivable from distributors – We have, at times, provided loans to certain of our Safeguard® distributors to allow them to purchase the operations of other small business distributors. We have also sold the operations of distributors that we own in exchange for notes receivable. These loans and notes receivable are included in other current assets and other non-current assets in the consolidated balance sheets. Interest is accrued at market interest rates as earned. We generally withhold commissions payable to the distributors to settle the monthly payments due on the receivables. As of December 31, 2015 and December 31, 2014 , past due amounts, allowances for credit losses and receivables placed on non-accrual status were not significant. The determination to place receivables on non-accrual status is completed on a case-by-case basis, evaluating the specifics of each situation. Restructuring charges – Over the past several years, we have recorded restructuring charges as a result of various cost management efforts, including facility closings, the relocation of business activities, and fundamental changes in the manner in which certain business functions are conducted. These charges have consisted primarily of accruals for employee termination benefits payable under our ongoing severance benefit plan. We record accruals for employee termination benefits when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. As such, judgment is involved in determining when it is appropriate to record restructuring accruals. Additionally, we are required to make estimates and assumptions in calculating the restructuring accruals as, on some occasions, employees choose to voluntarily leave the company prior to their termination date or they secure another position within the company. In these situations, the employees do not receive termination benefits. To the extent our assumptions and estimates differ from our actual costs, subsequent adjustments to restructuring accruals have been and will be required. Restructuring accruals are included in accrued liabilities in our consolidated balance sheets. In addition to employee termination benefits, we also typically incur other costs related to restructuring activities including, but not limited to, information technology costs, employee and equipment moves, training and travel. These costs are expensed as incurred. Litigation – We are party to legal actions and claims arising in the ordinary course of business. We record accruals for legal matters when the expected outcome of these matters is either known or considered probable and can be reasonably estimated. Our accruals do not include related legal and other costs expected to be incurred in defense of legal actions. Further information regarding litigation can be found in Note 14. Income taxes – Deferred income taxes result from temporary differences between the financial reporting basis of assets and liabilities and their respective tax reporting bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences reverse. Net deferred tax assets are recognized to the extent that realization of such benefits is more likely than not. For periods prior to October 1, 2015, current deferred tax assets and liabilities were netted by jurisdiction in the consolidated balance sheets, as were non-current deferred tax assets and liabilities. On October 1, 2015, we adopted Accounting Standards Update (ASU) No. 2015-17, Balance Sheet Classification of Deferred Taxes . This standard requires that all deferred income tax assets and liabilities be classified as non-current in the consolidated balance sheets. We adopted this standard on a prospective basis. As such, information for prior periods has not been revised for this change in accounting principle. We are subject to tax audits in numerous domestic and foreign tax jurisdictions. Tax audits are often complex and can require several years to complete. In the normal course of business, we are subject to challenges from the Internal Revenue Service and other tax authorities regarding the amount of taxes due. These challenges may alter the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. We recognize the benefits of tax return positions in the financial statements when they are more-likely-than-not to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than 50% likely to be realized. Accrued interest and penalties related to unrecognized tax positions are included in our provision for income taxes in the consolidated statements of income. Derivative financial instruments – Information regarding our derivative financial instruments is included in Note 6. We do not use derivative financial instruments for speculative or trading purposes. Our policy is that all derivative transactions must be linked to an existing balance sheet item or firm commitment, and the notional amount cannot exceed the value of the exposure being hedged. We recognize all derivative financial instruments in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. As of December 31, 2015 and December 31, 2014 , they are included in other non-current liabilities in the consolidated balance sheets. Changes in the fair value of derivative financial instruments are recognized periodically either in income or in shareholders' equity as a component of accumulated other comprehensive loss, depending on whether the derivative financial instrument qualifies for hedge accounting, and if so, whether it qualifies as a fair value hedge or a cash flow hedge and whether the hedge is effective. Generally, changes in fair values of derivatives accounted for as fair value hedges are recorded in income along with the portion of the change in the fair value of the hedged items that relate to the hedged risk. Changes in fair values of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in accumulated other comprehensive loss, net of tax. We classify the cash flows from derivative instruments that have been designated as fair value or cash flow hedges in the same category as the cash flows from the items being hedged. Changes in fair values of derivatives not qualifying as hedges and the ineffective portion of hedges are reported in income. Revenue recognition – In general, revenue is recognized when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the sales price is fixed or determinable, and (4) collectibility is reasonably assured. Revenue is presented in the consolidated statements of income net of rebates, discounts, amortization of contract acquisition costs, and sales tax. The majority of our revenues are generated from the sale of products for which revenue is recognized upon shipment or customer receipt, based upon the transfer of title. Product revenue includes amounts billed to customers for shipping and handling and pass-through costs, such as marketing materials for which our financial institution clients reimburse us. Costs incurred for shipping and handling and pass-through costs are reflected in cost of products. For sales with a right of return, we record a reserve for estimated sales returns based on significant historical experience. We enter into contractual agreements with financial institution clients for rebates on certain products we sell. We record these amounts as reductions of revenue in the consolidated statements of income and as accrued liabilities in the consolidated balance sheets when the related revenue is recorded. At times, we may also sell products at discounted prices or provide free products to customers when they purchase a specified product. Discounts are recorded as reductions of revenue when the related revenue is recorded. The cost of free products is recorded as cost of products when the revenue for the related order is recorded. Reported revenue for our Financial Services segment does not reflect the full retail price paid by end-consumers to their financial institutions. Instead, revenue reflects the amounts paid to us by our financial institution clients. Our services consist primarily of web design, hosting and other web services; fraud prevention; marketing services, including email, mobile, social media and other self-service marketing solutions, as well as data and analytics marketing solutions; financial technology solutions; financial institution customer acquisition and loyalty programs; payroll services; and logo design. We recognize the majority of these service revenues as the services are provided. In some situations, our web hosting and applications services are billed on a quarterly, semi-annual or annual basis. When a customer pays in advance for services, we defer the revenue and recognize it as the services are performed. Up-front set-up fees related to our web hosting, applications services and outsourcing services are deferred and recognized as revenue on the straight-line basis over the term of the customer relationship. Deferred revenue is included in accrued liabilities in the consolidated balance sheets. A portion of the revenue generated by Wausau Financial Systems, Inc., which was acquired in October 2014 (Note 5), results from the sale of bundled arrangements that may include hardware, software and professional services. As these arrangements involve customization and modification of the software, we recognize revenues from these contracts using the percentage-of-completion method of accounting, which involves calculating the percentage of services provided during the reporting period compared with the total estimated services to be provided over the duration of the contract. We record costs and earnings in excess of billings on uncompleted contracts within other current assets and billings in excess of costs and earnings on uncompleted contracts within other current liabilities in the consolidated balance sheets. The amount included in other current assets related to these contracts was $7,471 as of December 31, 2015 and $8,407 as of December 31, 2014 . The amount included in other current liabilities related to these contracts was $569 as of December 31, 2015 and $708 as of December 31, 2014 . At time |
Supplemental balance sheet and
Supplemental balance sheet and cash flow information | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental balance sheet and cash flow information [Abstract] | |
Supplemental balance sheet and cash flow information | Supplemental balance sheet and cash flow information Trade accounts receivable – Net trade accounts receivable was comprised of the following at December 31: (in thousands) 2015 2014 Trade accounts receivable – gross $ 128,470 $ 117,991 Allowances for uncollectible accounts (4,816 ) (4,335 ) Trade accounts receivable – net $ 123,654 $ 113,656 Changes in the allowances for uncollectible accounts for the years ended December 31 were as follows: (in thousands) 2015 2014 2013 Balance, beginning of year $ 4,335 $ 3,861 $ 3,912 Bad debt expense 4,858 3,994 3,722 Write-offs, net of recoveries (4,377 ) (3,520 ) (3,773 ) Balance, end of year $ 4,816 $ 4,335 $ 3,861 Inventories and supplies – Inventories and supplies were comprised of the following at December 31: (in thousands) 2015 2014 Raw materials $ 5,719 $ 5,899 Semi-finished goods 8,208 8,990 Finished goods 24,955 21,298 Supplies 3,074 3,224 Inventories and supplies $ 41,956 $ 39,411 Available-for-sale securities – Available-for-sale marketable securities included within funds held for customers and other current assets were comprised of the following: December 31, 2015 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Canadian and provincial government securities $ 7,932 $ — $ (91 ) $ 7,841 Canadian guaranteed investment certificate 7,226 — — 7,226 Available-for-sale securities (funds held for customers) (1) 15,158 — (91 ) 15,067 Canadian money market fund (other current assets) 1,616 — — 1,616 Available-for-sale securities $ 16,774 $ — $ (91 ) $ 16,683 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2015 , also included cash of $38,276 . 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 certificate 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 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 December 31, 2015 were as follows: (in thousands) Fair value Due in one year or less $ 10,606 Due in two to five years 3,270 Due in six to ten years 2,807 Available-for-sale securities $ 16,683 Further information regarding the fair value of available-for-sale marketable securities can be found in Note 7. Property, plant and equipment – Property, plant and equipment was comprised of the following at December 31: 2015 2014 (in thousands) Gross carrying amount Accumulated depreciation Net carrying amount Gross carrying amount Accumulated depreciation Net carrying amount Land and improvements $ 28,118 $ (7,836 ) $ 20,282 $ 28,367 $ (7,612 ) $ 20,755 Buildings and improvements 110,100 (73,052 ) 37,048 109,307 (69,882 ) 39,425 Machinery and equipment 292,299 (263,897 ) 28,402 298,479 (271,036 ) 27,443 Property, plant and equipment $ 430,517 $ (344,785 ) $ 85,732 $ 436,153 $ (348,530 ) $ 87,623 Assets held for sale/facility sale – Assets held for sale as of December 31, 2014, included the operations of five small business distributors that 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 2015, we sold the operations of four of these distributors in exchange for notes receivable, realizing an immaterial net pre-tax gain. The distributors that purchased these businesses from us remain part of our Safeguard distributor network. 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 at December 31: (in thousands) 2015 2014 Balance sheet caption Current assets $ 3 $ 687 Other current assets Intangibles 13,533 25,926 Assets held for sale Other non-current assets 436 893 Assets held for sale Accrued liabilities (366 ) (1,058 ) Accrued liabilities Non-current deferred income tax liabilities (5,777 ) (8,774 ) Other non-current liabilities Net assets held for sale $ 7,829 $ 17,674 During 2014, we sold our Colorado Springs, Colorado facility and entered into an operating lease on a portion of the facility. We received cash proceeds of $8,451 from the sale and recognized the full amount of the net pre-tax loss on the sale of $735 . Intangibles – Intangibles were comprised of the following at December 31: 2015 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 375,037 (310,665 ) 64,372 364,229 (303,340 ) 60,889 Customer lists/relationships 202,682 (54,990 ) 147,692 106,218 (40,097 ) 66,121 Trade names 64,881 (36,325 ) 28,556 69,281 (37,623 ) 31,658 Software to be sold 28,500 (3,765 ) 24,735 28,500 (601 ) 27,899 Other 2,858 (2,002 ) 856 8,160 (6,647 ) 1,513 Amortizable intangibles 673,958 (407,747 ) 266,211 576,388 (388,308 ) 188,080 Intangibles $ 693,058 $ (407,747 ) $ 285,311 $ 595,488 $ (388,308 ) $ 207,180 Amortization expense related to intangibles was as follows for the years ended December 31: (in thousands) 2015 2014 2013 Internal-use software $ 31,752 $ 34,282 $ 32,555 Software to be sold 3,164 601 — Other amortizable intangibles 25,784 14,192 14,096 Amortization of intangibles $ 60,700 $ 49,075 $ 46,651 Based on the intangibles in service as of December 31, 2015 , estimated amortization expense for each of the next five years ending December 31 is as follows: (in thousands) Estimated amortization expense 2016 $ 63,610 2017 49,487 2018 35,610 2019 27,698 2020 23,046 In the normal course of business, we acquire internal-use software. In conjunction with acquisitions, we also acquire internal-use software and other amortizable intangible assets. The following intangible assets were acquired during the years ended December 31: 2015 2014 2013 (in thousands) Amount Weighted-average amortization period (in years) Amount Weighted-average amortization period (in years) Amount Weighted-average amortization period (in years) Internal-use software $ 35,945 4 $ 33,867 4 $ 34,455 3 Customer lists/relationships 101,867 8 45,869 9 16,610 8 Software to be sold — — 28,500 9 — — Trade names 1,400 2 2,000 3 200 2 Other — — 50 2 3,310 4 Acquired intangibles $ 139,212 7 $ 110,286 7 $ 54,575 5 The table above does not include intangible assets acquired in 2014 and 2013 via the acquisition of small business distributors that were classified as held for sale upon purchase. Further information regarding acquisitions can be found in Note 5. Goodwill – Changes in goodwill by reportable segment and in total were as follows: (in thousands) Small Business Services Financial Services Direct Checks Total Balance, December 31, 2013: Goodwill, gross $ 652,554 $ 41,717 $ 148,506 $ 842,777 Accumulated impairment charges (20,000 ) — — (20,000 ) Goodwill, net of accumulated impairment charges 632,554 41,717 148,506 822,777 Adjustment for acquisition of Destination Rewards, Inc. — (1,375 ) — (1,375 ) Acquisition of Wausau Financial Systems, Inc. — 45,521 — 45,521 Acquisition of NetClime, Inc. 1,615 — — 1,615 Currency translation adjustment (162 ) — — (162 ) 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. — (714 ) — (714 ) Acquisition of Verify Valid 5,650 — — 5,650 Acquisition of small business distributor 9,285 — — 9,285 Acquisition of Tech Assets 2,628 — — 2,628 Acquisition of Datamyx LLC — 91,465 — 91,465 Currency translation adjustment (275 ) — — (275 ) Balance, December 31, 2015: Goodwill, gross 671,295 176,614 148,506 996,415 Accumulated impairment charges (20,000 ) — — (20,000 ) Goodwill, net of accumulated impairment charges $ 651,295 $ 176,614 $ 148,506 $ 976,415 Information regarding the businesses acquired can be found in Note 5. Other non-current assets – Other non-current assets were comprised of the following at December 31: (in thousands) 2015 2014 Contract acquisition costs $ 58,792 $ 74,101 Loans and notes receivable from distributors 23,957 14,583 Postretirement benefit plan asset (Note 12) 16,250 24,243 Deferred advertising costs 7,500 8,922 Other 7,559 9,792 Other non-current assets $ 114,058 $ 131,641 Changes in contract acquisition costs were as follows for the years ended December 31: (in thousands) 2015 2014 2013 Balance, beginning of year $ 74,101 $ 35,421 $ 43,036 Additions (1) 6,999 57,225 10,072 Amortization (18,741 ) (18,105 ) (17,197 ) Other (3,567 ) (440 ) (490 ) Balance, end of year $ 58,792 $ 74,101 $ 35,421 (1) Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $12,806 for 2015 , $16,567 for 2014 and $12,133 for 2013 . Accrued liabilities – Accrued liabilities were comprised of the following at December 31: (in thousands) 2015 2014 Funds held for customers $ 52,366 $ 42,944 Deferred revenue 48,119 48,514 Performance-based compensation 40,683 38,259 Customer rebates 18,900 20,550 Contract acquisition costs due within one year 9,045 9,815 Restructuring due within one year (Note 8) 3,864 4,276 Other 55,446 54,763 Accrued liabilities $ 228,423 $ 219,121 Supplemental cash flow information – Cash payments for income taxes and interest were as follows for the years ended December 31: (in thousands) 2015 2014 2013 Income taxes paid $ 110,999 $ 100,639 $ 90,322 Interest paid 24,286 39,946 38,676 |
Earnings per share
Earnings per share | 12 Months Ended |
Dec. 31, 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. (dollars, shares and options in thousands, except per share amounts) 2015 2014 2013 Earnings per share – basic: Net income $ 218,629 $ 199,794 $ 186,652 Income allocated to participating securities (1,460 ) (1,075 ) (846 ) Income available to common shareholders $ 217,169 $ 198,719 $ 185,806 Weighted-average shares outstanding 49,445 49,827 50,550 Earnings per share – basic $ 4.39 $ 3.99 $ 3.68 Earnings per share – diluted: Net income $ 218,629 $ 199,794 $ 186,652 Income allocated to participating securities (1,453 ) (1,068 ) (840 ) Re-measurement of share-based awards classified as liabilities (89 ) 183 314 Income available to common shareholders $ 217,087 $ 198,909 $ 186,126 Weighted-average shares outstanding 49,445 49,827 50,550 Dilutive impact of potential common shares 380 435 460 Weighted-average shares and potential common shares outstanding 49,825 50,262 51,010 Earnings per share – diluted $ 4.36 $ 3.96 $ 3.65 Antidilutive options excluded from calculation 354 7 12 |
Other comprehensive income
Other comprehensive income | 12 Months Ended |
Dec. 31, 2015 | |
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 component Amounts reclassified from accumulated other comprehensive loss Affected line item in consolidated statements of income (in thousands) 2015 2014 2013 Amortization of loss on interest rate locks (1) $ — $ (1,282 ) $ (1,711 ) Interest expense Tax benefit — 501 671 Income tax provision Amortization of loss on interest rate locks, net of tax — (781 ) (1,040 ) Net income Amortization of postretirement benefit plan items: Prior service credit 1,421 1,421 1,421 (2) Net actuarial loss (3,120 ) (3,418 ) (4,439 ) (2) Total amortization (1,699 ) (1,997 ) (3,018 ) (2) Tax benefit 450 661 954 (2) Amortization of postretirement benefit plan items, net of tax (1,249 ) (1,336 ) (2,064 ) (2) Total reclassifications, net of tax $ (1,249 ) $ (2,117 ) $ (3,104 ) (1) Relates to interest rate locks executed in 2004. Further information regarding these financial instruments can be found in Note 6. (2) Amortization of postretirement benefit plan items is included in the computation of net periodic benefit income. Additional details can be found in Note 12. Accumulated other comprehensive loss – The components of accumulated other comprehensive loss at December 31 were as follows: (in thousands) Postretirement benefit plans, net of tax Loss on derivatives, net of tax (1) Net unrealized (loss) gain on marketable securities, net of tax Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2012 $ (45,303 ) $ (1,821 ) $ (92 ) $ 6,569 $ (40,647 ) Other comprehensive income (loss) before reclassifications 8,365 — (184 ) (4,062 ) 4,119 Amounts reclassified from accumulated other comprehensive loss 2,064 1,040 — — 3,104 Net current-period other comprehensive income (loss) 10,429 1,040 (184 ) (4,062 ) 7,223 Balance, December 31, 2013 (34,874 ) (781 ) (276 ) 2,507 (33,424 ) Other comprehensive income (loss) before reclassifications 1,133 — 151 (6,315 ) (5,031 ) Amounts reclassified from accumulated other comprehensive loss 1,336 781 — — 2,117 Net current-period other comprehensive income (loss) 2,469 781 151 (6,315 ) (2,914 ) Balance, December 31, 2014 (32,405 ) — (125 ) (3,808 ) (36,338 ) Other comprehensive (loss) income before reclassifications (7,666 ) — 11 (12,459 ) (20,114 ) Amounts reclassified from accumulated other comprehensive loss 1,249 — — — 1,249 Net current-period other comprehensive (loss) income (6,417 ) — 11 (12,459 ) (18,865 ) Balance, December 31, 2015 $ (38,822 ) $ — $ (114 ) $ (16,267 ) $ (55,203 ) (1) Relates to interest rate locks executed in 2004. Further information regarding these financial instruments can be found in Note 6. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions We periodically complete business combinations that align with our business strategy. The assets and liabilities acquired are recorded at their estimated fair values and the results of operations of each acquired business are included in our consolidated statements of income from their acquisition dates. Transaction costs related to acquisitions are expensed as incurred and were not significant to our consolidated statements of income. 2015 acquisitions – During 2015, we completed the following acquisitions: • In January 2015, we acquired selected assets of Range, Inc., a marketing services provider. The results of this business are included in our Small Business Services segment. • In February 2015, we acquired selected assets of Verify Valid LLC, a provider of electronic check payment services. The results of this business are included in our Small Business Services segment. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $5,650 . This 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. • In August 2015, we acquired selected assets of Tech Assets, Inc., a provider of shared hosting websites to small businesses using cPanel web hosting technology. The results of this business are included in our Small Business Services segment. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $2,628 . This acquisition resulted in goodwill as we expect to accelerate revenue growth by combining our capabilities with Tech Asset's tools and hosting technology. • In September 2015, we acquired selected assets of FMC Resource Management Corporation, a marketing services provider. The results of this business are included in our Small Business Services segment. • In October 2015, we acquired 100% of Datamyx LLC, a provider of risk-based, data-driven marketing solutions. The results of this business are included in our Financial Services segment. We expect to finalize the allocation of the purchase price by mid-2016 when our valuation of certain acquired liabilities is finalized. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $91,465 . This acquisition resulted in goodwill as it will enhance our Financial Services product set by providing valuable marketing tools and other analytical services our customers use to help them market their businesses. The assets acquired and liabilities assumed consisted primarily of a $61,000 customer list intangible asset. • In December 2015, we acquired substantially all of the assets of FISC Solutions, a provider of back-office treasury management and outsourcing services. The results of this business are included in our Financial Services segment. We expect to finalize the allocation of the purchase price to the assets acquired and liabilities assumed by mid-2016 when our valuation of all of the acquired assets and liabilities is finalized. • During 2015, we acquired the operations of eight small business distributors. The results of six of these businesses are included within our Small Business Services segment. The results of the two remaining distributors are included in our Financial Services segment, as their customers consist primarily of financial institutions. The allocation of the purchase price based upon the estimated fair values of the assets acquired and liabilities assumed resulted in tax-deductible goodwill of $9,285 related to one of the Small Business Services distributors. This acquisition resulted in goodwill as we expect to accelerate revenue growth in business and marketing communications solutions by adding an established customer base that gives us a larger presence in the western United States. 2014 acquisitions – During 2014, we completed the following acquisitions: • In January 2014, we acquired all of the outstanding capital stock of NetClime, Inc., a provider of website development software. The results of this business are included in our Small Business Services segment. The allocation of the purchase price based upon the estimated fair value of the assets acquired and liabilities assumed resulted in goodwill of $1,615 . The acquisition resulted in goodwill as we expected to drive future revenue as we incorporated NetClime's software solution into our technology platform and the marketing solutions services we offer our customers. • I n May 2014, we acquired selected assets of Gift Box Corporation of America (GBCA), a supplier of retail packaging solutions, including gift boxes, bags, bows, ribbons and wraps. We are operating this business under the name WholeStyle Packaging TM . The results of this business are included in our Small Business Services segment. • 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 this business are included in our Financial Services segment. The allocation of the purchase price based upon the estimated fair value of the assets acquired and liabilities assumed resulted in goodwill of $44,807 . This 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. • During 2014, we acquired the operations of several small business distributors, one of which was classified as held for sale upon acquisition. The results of these businesses are included within our Small Business Services segment. Further information regarding net assets held for sale can be found in Note 2. 2013 acquisitions – During 2013, we completed the following acquisitions: • In June 2013, we acquired all of the outstanding capital stock of VerticalResponse, Inc., a provider of self-service marketing solutions for small businesses, including email marketing, social media, online event marketing, postcard marketing and on-line surveys. The results of this business are included in our Small Business Services segment. The allocation of the purchase price based upon the estimated fair value of the assets acquired and liabilities assumed resulted in goodwill of $18,735 . The acquisition resulted in goodwill as we expected to accelerate revenue growth in marketing solutions by adding VerticalResponse's established customer base and online promotional and internet marketing capabilities. • In August 2013, we acquired substantially all of the assets of Acton Marketing, LLC (Acton), a provider of direct marketing services for financial institutions. The results of operations of this business are included in our Financial Services segment. 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 $1,459 . The acquisition resulted in goodwill as we expected to accelerate revenue growth in marketing solutions by combining the Acton business with our existing marketing solutions, bringing the best of these collective programs to both the Deluxe and Acton customer bases. • In December 2013, we acquired substantially all of the assets of Destination Rewards, Inc., a rewards and loyalty program provider. The results of operations of this business are included in our Financial Services segment. 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 $11,705 . The acquisition resulted in goodwill as we planned to offer Destination Rewards to our clients as a key component of our marketing solutions product set. • During 2013, we acquired the operations of five small business distributors, four of which were classified as held for sale upon acquisition. The results of these businesses are included within our Small Business Services segment. Further information regarding net assets held for sale can be found in Note 2. As our acquisitions were immaterial to our operating results both individually and in the aggregate, pro forma results of operations are not provided. The following illustrates the allocation of the aggregate purchase price for the above acquisitions to the assets acquired and liabilities assumed, reduced for any cash or cash equivalents acquired with the acquisitions. (in thousands) 2015 acquisitions 2014 acquisitions (1) 2013 acquisitions (2) Net tangible assets acquired and liabilities assumed $ 4,329 $ (17,091 ) $ (12,418 ) Identifiable intangible assets: Customer lists/relationships 101,867 45,022 43,229 Software to be sold — 28,500 — Internal-use software 4,902 1,300 8,446 Trade names 1,400 2,000 200 Other — 50 2,100 Total intangible assets 108,169 76,872 53,975 Goodwill 109,028 46,422 31,899 Total aggregate purchase price 221,526 106,203 73,456 Liabilities for holdback payments and contingent consideration (3) (7,404 ) (1,600 ) (3,922 ) Non-cash consideration (4) (5,419 ) (371 ) — Net cash paid for current year acquisitions 208,703 104,232 69,534 Holdback payments for prior year acquisitions 4,287 797 175 Payments for acquisitions, net of cash acquired $ 212,990 $ 105,029 $ 69,709 (1) Includes adjustments recorded in 2015 for the finalization of purchase accounting for the Wausau acquisition. These adjustments decreased goodwill $714 from the preliminary amount recorded as of December 31, 2014, with the offset to certain income and sales tax accounts. The amount of intangible assets acquired includes assets classified as held for sale upon acquisition of $1,353 . (2) Includes adjustments recorded in 2014 for the finalization of purchase accounting for the Destination Rewards acquisition. These adjustments decreased goodwill $1,375 from the preliminary amount recorded as of December 31, 2013, with the offset to intangible assets. The amount of intangible assets acquired includes assets classified as held for sale upon acquisition of $24,502 . (3) Consists of holdback payments due at a future date and liabilities for contingent consideration related primarily to the 2015 acquisitions of Verify Valid and a small business distributor. Further information regarding liabilities for contingent consideration can be found in Note 7. (4) Consists of pre-acquisition amounts owed to us by certain of the acquired businesses. Net tangible assets acquired and liabilities assumed for the 2014 acquisitions consisted primarily of a liability for deferred revenue of $14,200 related to the Wausau acquisition. Net tangible assets acquired and liabilities assumed for the 2013 acquisitions consisted primarily of acquired deferred income tax liabilities. Further information regarding the calculation of the estimated fair values of the intangibles acquired and the liability for deferred revenue can be found in Note 7. |
Derivative financial instrument
Derivative financial instruments | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative financial instruments | Derivative financial instruments Fair value hedges – We have entered into interest rate swaps to hedge against changes in the fair value 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 $4,842 as of December 31, 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 $4,842 as of December 31, 2015 and $8,067 as of December 31, 2014 . During 2014 and 2013, we also held interest rate swaps related to our long-term debt that 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 statements of income. Information regarding hedge ineffectiveness during 2014 and 2013 is presented in Note 7. Cash flow hedges – During 2004, we entered into forward starting interest rate swaps to hedge, or lock-in, the interest rate on a portion of our long-term debt that matured in October 2014. The termination of the lock agreements in 2004 yielded a deferred pre-tax loss of $17,877 . This loss was reflected, net of tax, in accumulated other comprehensive loss in the consolidated balance sheet and was reclassified ratably to the statements of income as an increase to interest expense through the related debt's maturity date of October 2014. |
Fair value measurements
Fair value measurements | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | Fair value measurements Annual asset impairment analyses – We evaluate the carrying value of goodwill and our indefinite-lived trade name as of July 31 of each year and between annual evaluations if events occur or circumstances change that would indicate a possible impairment. Our policy on impairment of indefinite-lived intangibles and goodwill in Note 1 explains our methodology for assessing impairment of these assets. In completing the 2015 annual goodwill impairment analysis, we elected to perform a qualitative assessment for all of our reporting units to which goodwill is assigned, with the exception of our Financial Services Commercial reporting unit, which was acquired subsequent to our 2014 annual impairment analysis. Our qualitative analysis evaluated factors including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the quantitative analysis we completed as of July 31, 2014. In completing the 2015 qualitative analysis, we noted no changes in events or circumstances which would have required us to complete the two-step quantitative goodwill impairment analysis for any of the reporting units analyzed. In addition, the quantitative analysis completed for our Financial Services Commercial reporting unit indicated that its fair value exceeded its carrying value by approximately 13% . Total goodwill for this reporting unit was approximately $45,000 as of July 31, 2015. In completing the 2015 annual impairment analysis of our indefinite-lived trade name, we elected to perform a quantitative assessment which indicated that the calculated fair value of the asset exceeded its carrying value of $19,100 by approximately $20,000 as of July 31, 2015. As such, we recorded no impairment charges as a result of our 2015 annual impairment analyses. In completing the 2014 annual goodwill impairment analysis, we elected to perform a quantitative assessment for all of our reporting units to which goodwill was assigned, as our previous quantitative analysis was completed during 2010. Our 2014 analysis indicated that the estimated fair values of our reporting units' net assets exceeded their carrying values by approximate amounts between $74,000 and $1,128,000 , or by amounts between 47% and 482% above the carrying values of their net assets. In completing the 2013 annual goodwill impairment analysis, we elected to perform a qualitative assessment for all of our reporting units to which goodwill was assigned. This qualitative analysis evaluated factors including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting units. We also considered the quantitative analysis we completed as of July 31, 2010. In completing our qualitative analysis, we noted no changes in events or circumstances which would have required us to complete the two-step quantitative goodwill impairment analysis for any of our reporting units. Non-recurring asset impairment analyses – During the third quarter of 2014, we performed an impairment analysis related to our Small Business Services search engine marketing and optimization business. Revenue and the related cash flows from this business had been lower than previously projected, and as a result of our annual planning process completed during the third quarter of 2014, we decided to reduce the revenue base of this business in order to improve its financial performance. As such, we revised our estimates of future revenues and cash flows to reflect these decisions during the third quarter of 2014. We calculated the estimated fair values of the assets as the net present value of estimated future cash flows (level 3 fair value measurement). Our analysis resulted in an impairment charge of $6,468 during 2014, which reflects writing down the net book value of the related intangible assets to zero. During the fourth quarter of 2013, we performed an impairment analysis of a customer relationship intangible asset within our Small Business Services segment. The impairment analysis was performed because revenue from the applicable group of customers was lower than previously projected. We calculated the estimated fair value of the asset as the net present value of estimated future cash flows. This analysis resulted in an impairment charge of $5,000 during 2013. Information regarding these nonrecurring fair value measurements was as follows: Fair value measurements using Fair value as of measurement date Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Asset impairment charge (in thousands) (Level 1) (Level 2) (Level 3) 2014: Internal-use software $ — $ — $ — $ — $ 4,036 Customer relationships — — — — 1,952 Trade name — — — — 480 Total impairment charge $ 6,468 2013: Customer relationships $ 2,120 $ — $ — $ 2,120 $ 5,000 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. Information regarding the acquisitions completed during 2015 can be found in Note 5. The identifiable net assets acquired were comprised primarily of customer lists associated with the acquisitions of Datamyx, Range, Tech Assets, FMC and FISC Solutions, as well as several small business distributors. We also acquired internal-use software associated with the acquisitions of Datamyx, Verify Valid and a small business distributor. The aggregate fair value of the acquired customer lists was $101,867 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 $4,902 . The fair value of a portion of the software was estimated using the relief from royalty method, which calculates the cost savings associated with owning rather than licensing the technology. Assumed royalty rates were applied to the projected revenues for the remaining useful life of the software to estimate the royalty savings. The fair value of the remainder of the software 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 the acquirees. Information regarding the estimated useful lives of acquired intangibles can be found in Note 2. Liabilities for contingent consideration related primarily to the acquisitions of Verify Valid and a small business distributor. Under the Verify Valid purchase agreement, we are required to make 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 . Under the small business distributor purchase agreement, we are required to make annual contingent payments over a period of up to three years , based on the gross profit generated by the business. A specified payment percentage for each year is applied to the gross profit generated by the business in that year to determine the amount of the payment. The maximum contingent payment in any year of the agreement is $925 . The fair value of the liabilities for contingent payments recognized upon acquisition was estimated by discounting to present value the probability-weighted contingent payments expected to be made. Assumptions used in the calculations included the discount rate, projected revenue or gross profit based on our most recent internal forecast, and factors indicating the probability of achieving the forecasted revenue or gross profit. The liabilities are remeasured each reporting period. Increases or decreases in projected revenue or gross profit and the related probabilities may result in a higher or lower fair value measurement. Changes in fair value resulting from changes in the timing, amount of, or likelihood of contingent payments are included in SG&A expense in the consolidated statements of income. Changes in fair value resulting from accretion for the passage of time are included in interest expense in the consolidated statements of income. 2014 acquisitions – The identifiable net assets acquired during 2014 (Note 5) were comprised primarily of customer lists associated with the acquisitions of Wausau, small business distributors and GBCA, as well as software to be sold associated with the acquisition of Wausau. The estimated fair values for the intangibles acquired in the Wausau acquisition were preliminary as of December 31, 2014 and were finalized during the first quarter of 2015. The aggregate fair value of the customer lists acquired was $45,022 , which was estimated using the multi-period excess earnings method. Assumptions used in the calculations included same-customer revenue growth rates and estimated customer retention rates based on the acquirees' historical information. The aggregate fair value of the acquired software to be sold was $28,500 . This software was associated with the Wausau acquisition and was estimated using a relief from royalty method, which calculates the cost savings associated with owning rather than licensing the technology. Assumed royalty rates were applied to the projected revenues for the expected remaining useful lives of each product technology component to estimate the royalty savings. Information regarding the estimated useful lives of acquired intangibles can be found in Note 2. Additionally, we acquired a liability for deferred revenue of $14,200 related to the Wausau acquisition. The fair value of this liability was estimated as the direct and incremental costs to provide the services required plus an estimated profit margin. 2013 acquisitions – The identifiable net assets acquired during 2013 (Note 5) were comprised primarily of customer relationships associated with each of the acquired businesses, as well as internal-use software associated with the acquisitions of VerticalResponse and Destination Rewards. The estimated fair values for the intangibles acquired in the Destination Rewards acquisition were preliminary as of December 31, 2013 and were finalized during 2014. The aggregate fair value of the customer lists acquired was $43,229 , which was estimated using the multi-period excess earnings method. Assumptions used in the calculations included same-customer revenue growth rates and estimated customer retention rates based on the acquirees' historical information. The aggregate fair value of the acquired internal-use software was $8,446 , which was estimated using a cost of reproduction method. The primary components of the software were identified and the estimated cost to reproduce the software was calculated. As a portion of the acquired software was recently developed, the estimated cost to reproduce was based on the actual time and labor rates incurred by the acquiree. For the remainder of the acquired software, we utilized estimated time and labor rates derived from our historical data from previous upgrades of similar size and nature. Information regarding the estimated useful lives of acquired intangibles can be found in Note 2. Recurring fair value measurements – Funds held for customers included available-for-sale marketable securities (Note 2). These securities consisted of a mutual fund investment that 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 income and were not significant during the past three years. Other current assets included available-for-sale marketable securities (Note 2). These securities consisted of a Canadian money market fund that 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 past three years. 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. Information regarding the accounting for this investment is provided in our long-term investments policy in Note 1. Realized gains recognized during the past three years were not significant, nor were unrealized losses recognized during 2014. We recognized net unrealized losses on the investment in mutual funds of $281 during 2015 and unrealized gains of $323 during 2013. The fair value of interest rate swaps (Note 6) 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 the related long-term debt are equal. The short-cut method was not being 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 income and were as follows: (in thousands) 2015 2014 2013 Gain (loss) from derivatives $ 3,225 $ 6,014 $ (13,750 ) (Loss) gain from change in fair value of hedged debt (3,225 ) (6,603 ) 13,851 Net (increase) decrease in interest expense $ — $ (589 ) $ 101 Information regarding recurring fair value measurements completed during each period was as follows: Fair value measurements using Fair value as of December 31, 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) $ 15,067 $ — $ 15,067 $ — Available-for-sale marketable securities (other current assets) 1,616 — 1,616 — Long-term investment in mutual funds 2,091 2,091 — — Derivative liabilities (4,842 ) — (4,842 ) — Accrued contingent consideration (5,861 ) — — (5,861 ) 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 ) — 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 2015 or 2014 . Accrued contingent consideration related primarily to the acquisitions of Verify Valid and a small business distributor, as discussed above under the caption 2015 acquisitions . Changes in accrued contingent consideration during 2015 were as follows: (in thousands) 2015 Balance, December 31, 2014 $ 409 Acquisition date fair value 5,575 Change in fair value 187 Payments (310 ) Balance, December 31, 2015 $ 5,861 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 receivables 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 December 31, 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 $ 62,427 $ 62,427 $ 62,427 $ — $ — Cash (funds held for customers) 38,276 38,276 38,276 — — Loans and notes receivable from distributors 25,745 23,383 — — 23,383 Short-term borrowings 434,000 434,000 434,000 — — Long-term debt (1) 195,158 207,000 — 207,000 — (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 | 12 Months Ended |
Dec. 31, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring charges | Restructuring charges Net restructuring charges for the years ended December 31 consisted of the following components: (in thousands) 2015 2014 2013 Severance accruals $ 5,891 $ 8,411 $ 7,495 Severance reversals (1,197 ) (1,513 ) (805 ) Operating lease obligations 338 — 216 Operating lease obligations reversals — — (157 ) Net restructuring accruals 5,032 6,898 6,749 Other costs 1,202 2,757 4,157 Net restructuring charges $ 6,234 $ 9,655 $ 10,906 Number of employees included in severance accruals 290 260 230 The net restructuring charges for the years ended December 31 are reflected in the consolidated statements of income as follows: (in thousands) 2015 2014 2013 Total cost of revenue $ 1,816 $ 879 $ 1,471 Operating expenses 4,418 8,776 9,435 Net restructuring charges $ 6,234 $ 9,655 $ 10,906 In each of the past three years, the net restructuring accruals included severance charges related to employee reductions across functional areas as we continued to reduce costs, primarily within our sales and marketing, information technology and fulfillment functions. These charges were reduced by the reversal of restructuring accruals, 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 $3,864 as of December 31, 2015 and $4,276 as of December 31, 2014 are reflected in the consolidated balance sheets as accrued liabilities. The majority of the employee reductions are expected to be completed in the first quarter of 2016, and we expect most of the related severance payments to be paid by the third quarter of 2016, utilizing cash from operations. The remaining payments due under operating lease obligations will be paid through the third quarter of 2016. As of December 31, 2015 , approximately 70 employees had not yet started to receive severance benefits. Accruals for our restructuring initiatives, summarized by year, were as follows: (in thousands) 2010/2011 initiatives 2012 initiatives 2013 initiatives 2014 initiatives 2015 initiatives Total Balance, December 31, 2012 $ 106 $ 4,544 $ — $ — $ — $ 4,650 Restructuring charges 49 283 7,379 — — 7,711 Restructuring reversals (3 ) (822 ) (137 ) — — (962 ) Payments (152 ) (3,596 ) (2,013 ) — — (5,761 ) Balance, December 31, 2013 — 409 5,229 — — 5,638 Restructuring charges — 21 250 8,140 — 8,411 Restructuring reversals — (12 ) (859 ) (642 ) — (1,513 ) Payments — (386 ) (4,492 ) (3,382 ) — (8,260 ) Balance, December 31, 2014 — 32 128 4,116 — 4,276 Restructuring charges — — — 102 6,127 6,229 Restructuring reversals — — (48 ) (691 ) (458 ) (1,197 ) Payments — (32 ) (80 ) (3,351 ) (1,981 ) (5,444 ) Balance, December 31, 2015 $ — $ — $ — $ 176 $ 3,688 $ 3,864 Cumulative amounts: Restructuring charges $ 18,854 $ 8,012 $ 7,629 $ 8,242 $ 6,127 $ 48,864 Restructuring reversals (3,267 ) (1,363 ) (1,044 ) (1,333 ) (458 ) (7,465 ) Payments (15,587 ) (6,649 ) (6,585 ) (6,733 ) (1,981 ) (37,535 ) Balance, December 31, 2015 $ — $ — $ — $ 176 $ 3,688 $ 3,864 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 (1) Small Business Services Financial Services Direct Checks Total Balance, December 31, 2012 $ 643 $ 1,090 $ 44 $ 2,472 $ 251 $ — $ 150 $ 4,650 Restructuring charges 2,459 2,619 407 2,010 164 — 52 7,711 Restructuring reversals (129 ) (249 ) (4 ) (423 ) (157 ) — — (962 ) Payments (1,349 ) (1,469 ) (82 ) (2,551 ) (108 ) — (202 ) (5,761 ) Balance, December 31, 2013 1,624 1,991 365 1,508 150 — — 5,638 Restructuring charges 3,566 2,897 36 1,912 — — — 8,411 Restructuring reversals (858 ) (306 ) (37 ) (312 ) — — — (1,513 ) Payments (2,920 ) (2,734 ) (364 ) (2,124 ) (118 ) — — (8,260 ) Balance, December 31, 2014 1,412 1,848 — 984 32 — — 4,276 Restructuring charges 2,254 1,451 — 2,186 285 53 — 6,229 Restructuring reversals (684 ) (235 ) — (278 ) — — — (1,197 ) Inter-segment transfer 41 (14 ) — (27 ) — — — — Payments (2,000 ) (2,166 ) — (1,006 ) (261 ) (11 ) — (5,444 ) Balance, December 31, 2015 $ 1,023 $ 884 $ — $ 1,859 $ 56 $ 42 $ — $ 3,864 Cumulative amounts (2) : Restructuring charges $ 14,440 $ 13,057 $ 3,776 $ 16,080 $ 779 $ 53 $ 679 $ 48,864 Restructuring reversals (2,850 ) (1,575 ) (253 ) (2,630 ) (157 ) — — (7,465 ) Inter-segment transfer 350 36 (38 ) (348 ) — — — — Payments (10,917 ) (10,634 ) (3,485 ) (11,243 ) (566 ) (11 ) (679 ) (37,535 ) Balance, December 31, 2015 $ 1,023 $ 884 $ — $ 1,859 $ 56 $ 42 $ — $ 3,864 (1) As discussed in Note 16, corporate costs are allocated to our business segments. As such, the net corporate restructuring charges are reflected in the business segment operating income presented in Note 16 in accordance with our allocation methodology. (2) Includes accruals related to our cost reduction initiatives for 2010 through 2015. |
Income tax provision
Income tax provision | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income tax provision | Income tax provision Income before income taxes was comprised of the following for the years ended December 31: (in thousands) 2015 2014 2013 United States $ 312,157 $ 279,326 $ 263,427 Foreign 15,790 17,855 17,632 Income before income taxes $ 327,947 $ 297,181 $ 281,059 The components of the income tax provision were as follows for the years ended December 31: (in thousands) 2015 2014 2013 Current tax provision: Federal $ 98,000 $ 91,630 $ 80,262 State 10,632 8,674 11,599 Foreign 3,942 4,496 4,789 Total current tax provision 112,574 104,800 96,650 Deferred tax provision: Federal (3,591 ) (6,165 ) (1,403 ) State 354 (1,491 ) (618 ) Foreign (19 ) 243 (222 ) Total deferred tax provision (3,256 ) (7,413 ) (2,243 ) Income tax provision $ 109,318 $ 97,387 $ 94,407 The effective tax rate on pre-tax income reconciles to the U.S. federal statutory tax rate of 35% for the years ended December 31 as follows: 2015 2014 2013 Income tax at federal statutory rate 35.0 % 35.0 % 35.0 % State income tax expense, net of federal income tax benefit 2.3 % 2.3 % 2.8 % Qualified production activities deduction (2.9 %) (2.8 %) (2.8 %) Other (1.1 %) (1.7 %) (1.4 %) Income tax provision 33.3 % 32.8 % 33.6 % A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties and the federal benefit of deductible state income tax, is as follows: (in thousands) Unrecognized tax benefits Balance, December 31, 2012 $ 5,619 Additions for tax positions of current year 617 Additions for tax positions of prior years 834 Fair value of acquired tax positions 316 Reductions for tax positions of prior years (1,178 ) Lapse of statutes of limitations (203 ) Balance, December 31, 2013 6,005 Additions for tax positions of current year 487 Additions for tax positions of prior years 500 Fair value of acquired tax positions 65 Reductions for tax positions of prior years (902 ) Lapse of statutes of limitations (214 ) Adoption of ASU No. 2013-11 (1) (669 ) Balance, December 31, 2014 5,272 Additions for tax positions of current year 625 Additions for tax positions of prior years 802 Reductions for tax positions of prior years (225 ) Settlements (541 ) Lapse of statutes of limitations (190 ) Balance, December 31, 2015 $ 5,743 (1) On January 1, 2014, we adopted ASU No. 2013-11, Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists . Adoption of this standard resulted in an increase in non-current deferred income tax liabilities and a corresponding decrease in other non-current liabilities. If the unrecognized tax benefits as of December 31, 2015 were recognized in our consolidated financial statements, $5,743 would positively affect income tax expense and our related effective tax rate. Accruals for interest and penalties, excluding the tax benefits of deductible interest, were $1,151 as of December 31, 2015 and $982 as of December 31, 2014 . Our income tax provision included expense for interest and penalties of $177 in 2015 and $7 in 2014 and a credit for interest and penalties of $198 in 2013. Within the next 12 months, it is reasonably possible that our unrecognized tax benefits will change in the range of a decrease of $3,900 to an increase of $1,300 as we attempt to resolve certain federal and state tax matters or as federal and state statutes of limitations expire. Due to the nature of the underlying liabilities and the extended time frame often needed to resolve income tax uncertainties, we cannot provide reliable estimates of the amount or timing of cash payments that may be required to settle these liabilities. The statute of limitations for federal tax assessments for 2011 and prior years has expired. Our federal income tax returns through 2013 have been audited by the Internal Revenue Service (IRS), and our returns for 2014 through 2015 remain subject to IRS examination. In general, income tax returns for the years 2011 through 2015 remain subject to examination by foreign, state and city tax jurisdictions. In the event that we have determined not to file income tax returns with a particular state or city, all years remain subject to examination by the tax jurisdiction. The ultimate outcome of tax matters may differ from our estimates and assumptions. Unfavorable settlement of any particular issue would require the use of cash and could result in increased income tax expense. Favorable resolution would result in reduced income tax expense. Tax-effected temporary differences that gave rise to deferred tax assets and liabilities as of December 31 were as follows: 2015 2014 (in thousands) Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities Goodwill $ — $ 60,506 $ — $ 56,875 Intangible assets — 37,842 — 40,010 Prepaid assets — 4,285 — 4,640 Deferred advertising costs — 3,786 — 4,176 Early extinguishment of debt — 2,342 — 3,129 Employee benefit plans 14,279 — 9,485 — Reserves and accruals 8,305 — 8,119 — Net operating loss and capital loss carryforwards 5,793 — 7,797 — Inventories 3,100 — 2,992 — Federal benefit of state uncertain tax positions 2,201 — 1,882 — All other 3,184 5,143 1,844 4,612 Total deferred taxes 36,862 113,904 32,119 113,442 Valuation allowances (2,796 ) — (2,945 ) — Net deferred taxes $ 34,066 $ 113,904 $ 29,174 $ 113,442 The valuation allowances as of December 31, 2015 and December 31, 2014 related primarily to capital loss carryforwards in Canada and net operating loss carryforwards in various state jurisdictions and in Ireland, which we do not currently expect to fully realize. The provision for income taxes included charges of $140 for 2015 and $732 for 2013 and benefits of $37 for 2014 related to changes in the valuation allowances. The remainder of the change in the valuation allowances was attributable to foreign currency translation. As of December 31, 2015 , undistributed earnings of our Canadian subsidiary companies totaled approximately $94,000 . We intend to indefinitely reinvest these undistributed earnings outside of the U.S. and, therefore, no U.S. deferred income taxes have been recognized on these earnings. We would only repatriate these earnings if it were tax efficient to do so. If all or a portion of these earnings were to be distributed by dividend or loan, or upon sale of Canadian subsidiary company stock to a third party, our related U.S. income tax liability may be reduced by Canadian income taxes paid on those earnings. Our ability to reduce the related U.S. income tax liability using foreign tax credits is hampered by a tax attribute acquired with New England Business Service, Inc. in 2004. Determination of the amount of the unrecognized U.S. deferred income tax liability related to book-tax basis differences, primarily these undistributed foreign earnings, is not practical as the assumed timing of any distribution impacts the amount of the liability. As of December 31, 2015 , the amount of cash, cash equivalents and marketable securities held by our Canadian subsidiaries was $56,087 . As of December 31, 2015 , we had the following net operating loss and capital loss carryforwards: • State net operating loss carryforwards of $54,354 , which expire at various dates up to 2035 ; • Capital loss carryforwards of $4,649 in Canada which do not expire ; • Federal net operating loss carryforwards of $3,821 , which expire at various dates between 2025 and 2032 ; and • Net operating loss carryforwards of $3,692 in Ireland which do not expire . |
Share-based compensation plans
Share-based compensation plans | 12 Months Ended |
Dec. 31, 2015 | |
Share-based Compensation [Abstract] | |
Share-based compensation plans | Share-based compensation plans Our employee share-based compensation plans consist of our employee stock purchase plan and our long-term incentive plan. Effective May 2, 2012, our shareholders approved the Deluxe Corporation 2012 Long-Term Incentive Plan, simultaneously terminating our previous plan. Under this plan, 5,000 shares of common stock plus any shares released as a result of the forfeiture or termination of awards issued under our prior plans are reserved for issuance, with 2,964 shares remaining available for issuance as of December 31, 2015 . Full value awards such as restricted stock, restricted stock units and share-based performance awards reduce the number of shares available for issuance by a factor of 2.23 , or if such an award were forfeited or terminated without delivery of the shares, the number of shares that again become eligible for issuance would be multiplied by a factor of 2.23 . During the past three years, we had non-qualified stock options, restricted stock units and restricted share awards outstanding under our current and previous plans. Additionally, we began granting performance share awards during 2014. See the employee share-based compensation policy in Note 1 for our policies regarding the recognition of compensation expense for employee share-based awards. The following amounts were recognized in our consolidated statements of income for share-based compensation awards for the years ended December 31 : (in thousands) 2015 2014 2013 Stock options $ 3,964 $ 4,305 $ 4,705 Restricted shares and restricted stock units 5,407 4,111 2,556 Performance share awards 2,115 966 — Employee stock purchase plan 408 394 301 Total share-based compensation expense $ 11,894 $ 9,776 $ 7,562 Income tax benefit $ (3,965 ) $ (3,204 ) $ (2,595 ) As of December 31, 2015 , the total compensation expense for unvested awards not yet recognized in our consolidated statements of income was $13,365 , net of the effect of estimated forfeitures. This amount is expected to be recognized over a weighted-average period of 1.7 years . Non-qualified stock options – All options allow for the purchase of shares of common stock at prices equal to the stock's market value at the date of grant. Options become exercisable beginning one year after the grant date, with one-third vesting each year over three years . Options may be exercised up to seven years following the date of grant. Beginning one year after the grant date, in the case of qualified retirement, death or disability, options vest immediately and the period over which the options can be exercised is shortened. Beginning one year after the grant date, in the case of involuntary termination without cause, a pro-rata portion of the options vest immediately and the period over which the options can be exercised is shortened. For options granted prior to 2013, in the case of involuntary termination without cause, all options vest immediately and the period over which the options can be exercised is shortened. Employees forfeit unvested options when they voluntarily terminate their employment with the company, and they have up to three months to exercise vested options before they are canceled. In the case of involuntary termination with cause, the entire unexercised portion of the award is canceled. All options may vest immediately upon a change of control, as defined in the award agreement. The following weighted-average assumptions were used in the Black-Scholes option pricing model in determining the fair value of stock options granted: 2015 2014 2013 Risk-free interest rate 1.3 % 1.2 % 0.7 % Dividend yield 1.8 % 2.0 % 2.6 % Expected volatility 31.7 % 36.1 % 50.5 % Weighted-average option life (in years) 4.0 4.3 4.3 The risk-free interest rate for periods within the expected option life is based on the U.S. Treasury yield curve in effect at the grant date. The dividend yield is estimated over the expected life of the option based on historical dividends paid. Expected volatility is based on the historical volatility of our stock over the most recent historical period equivalent to the expected life of the option. The expected life is the average length of time over which we expect the employee groups will exercise their options, based on historical experience with similar grants. Each option is convertible into one share of common stock upon exercise. Information regarding options issued under the current and all previous plans was as follows: Number of options (in thousands) Weighted-average exercise price per option Aggregate intrinsic value Weighted-average remaining contractual term (in years) Outstanding, December 31, 2012 2,222 $ 24.96 Granted 465 38.74 Exercised (912 ) 27.19 Forfeited or expired (135 ) 30.03 Outstanding, December 31, 2013 1,640 27.22 Granted 290 50.48 Exercised (552 ) 23.81 Forfeited or expired (66 ) 37.53 Outstanding, December 31, 2014 1,312 33.28 Granted 268 67.02 Exercised (186 ) 27.36 Forfeited or expired (40 ) 55.13 Outstanding, December 31, 2015 1,354 40.11 $ 22,658 4.0 Exercisable at December 31, 2013 759 $ 22.09 Exercisable at December 31, 2014 645 25.76 Exercisable at December 31, 2015 820 29.99 $ 20,135 3.1 The weighted-average grant-date fair value of options granted was $14.97 per option for 2015 , $12.97 per option for 2014 and $13.02 per option for 2013 . The intrinsic value of a stock award is the amount by which the fair value of the underlying stock exceeds the exercise price of the award. The total intrinsic value of options exercised was $6,882 for 2015 , $17,074 for 2014 and $13,614 for 2013 . Restricted stock units – Certain management employees have the option to receive a portion of their bonus payment in the form of restricted stock units. When employees elect this payment method, we provide an additional matching amount of restricted stock units equal to 50% of the restricted stock units earned under the bonus plan. These awards vest two years from the date of grant. In the case of approved retirement, death, disability or change of control, the units vest immediately. In the case of involuntary termination without cause or voluntary termination, employees receive a cash payment for the units earned under the bonus plan, but forfeit the company-provided matching amount. In addition to awards granted to employees, non-employee members of our board of directors can elect to receive all or a portion of their fees in the form of restricted stock units. Directors are issued shares in exchange for the units upon the earlier of the tenth anniversary of February 1 st of the year following the year in which the non-employee director ceases to serve on the board or such other objectively determinable date pre-elected by the director. Each restricted stock unit is convertible into one share of common stock upon completion of the vesting period. Information regarding our restricted stock units was as follows: Number of units (in thousands) Weighted-average grant date fair value per unit Weighted-average remaining contractual term (in years) Outstanding at December 31, 2012 123 $ 24.56 Granted 45 36.74 Vested (11 ) 24.33 Forfeited (7 ) 26.78 Outstanding at December 31, 2013 150 27.11 Granted 30 53.64 Vested (13 ) 23.42 Forfeited (1 ) 34.08 Outstanding at December 31, 2014 166 30.51 Granted 34 63.28 Vested (30 ) 25.05 Forfeited (3 ) 58.04 Outstanding at December 31, 2015 167 34.74 3.9 Of the awards outstanding as of December 31, 2015 , 28 restricted stock units with a value of $1,513 were included in accrued liabilities and other non-current liabilities in our consolidated balance sheet. As of December 31, 2015 , these units had a fair value of $54.54 per unit and a weighted-average remaining contractual term of seven months . The total fair value of restricted stock units that vested was $1,970 for 2015 , $654 for 2014 and $390 for 2013 . We made cash payments of $120 during 2015 , $25 during 2013 and $64 during 2012 to settle share-based liabilities. Restricted shares – Our restricted share awards have a set vesting period at which time the restrictions on the shares lapse. The vesting period on these awards currently ranges from one year to three years . The restrictions lapse immediately in the case of qualified retirement, death or disability. In the case of involuntary termination without cause or a change of control, restrictions on a pro-rata portion of the shares lapse based on how much of the vesting period has passed. In the case of voluntary termination of employment or termination with cause, the unvested restricted shares are forfeited. Information regarding unvested restricted shares was as follows: Number of shares (in thousands) Weighted-average grant date fair value per share Weighted-average remaining contractual term (in years) Unvested at December 31, 2012 40 $ 23.73 Granted 17 37.50 Vested (33 ) 23.68 Forfeited (3 ) 23.45 Unvested at December 31, 2013 21 35.24 Granted 121 51.08 Vested (11 ) 37.06 Forfeited (11 ) 48.14 Unvested at December 31, 2014 120 49.96 Granted 72 66.99 Vested (14 ) 50.72 Forfeited (8 ) 58.58 Unvested at December 31, 2015 170 56.35 1.5 The total fair value of restricted shares that vested was $925 for 2015 , $624 for 2014 and $1,233 for 2013 . Performance share awards – We began granting performance share awards during 2014. These awards have a three -year vesting period and shares will be issued at the end of the vesting period if performance targets relating to revenue and total shareholder return are achieved. If employment is terminated for any reason prior to the one -year anniversary of the commencement of the performance period, the award is forfeited. On or after the one -year anniversary of the commencement of the performance period, a pro-rata portion of the shares awarded at the end of the performance period would be issued in the case of qualified retirement, death, disability, involuntary termination without cause or resignation for good reason, as defined in the agreement. The following weighted-average assumptions were used in the Monte Carlo simulation model in determining the fair value of market-based performance shares granted: 2015 2014 Risk-free interest rate 1.0 % 0.7 % Dividend yield 1.9 % 2.4 % Expected volatility 22.7 % 30.5 % The risk-free interest rate for periods within the expected award life is based on the U.S. Treasury yield curve in effect at the grant date. The dividend yield is estimated over the expected life of the award based on historical dividends paid. Expected volatility is based on the historical volatility of our stock. The performance share information presented in the table below represents the target amount of awards granted. The actual number of shares awarded upon vesting may be higher or lower depending upon our execution relative to the performance targets as of the end of the performance period. Performance shares (in thousands) Weighted-average grant date fair value per share Weighted-average remaining contractual term (in years) Unvested at December 31, 2013 — $ — Granted 74 50.14 Forfeited (5 ) 50.14 Unvested at December 31, 2014 69 50.14 Granted 62 67.09 Forfeited (9 ) 58.28 Unvested at December 31, 2015 122 58.13 1.6 Employee stock purchase plan – During 2015 , 43 shares were issued under this plan at prices of $55.19 and $54.77 . During 2014 , 44 shares were issued under this plan at prices of $41.27 and $46.76 . During 2013 , 51 shares were issued under this plan at prices of $31.27 and $34.86 . |
Employee benefit plans
Employee benefit plans | 12 Months Ended |
Dec. 31, 2015 | |
Employee benefit plans [Abstract] | |
Employee benefit plans | Employee benefit plans Profit sharing/401(k) plan – We maintain a profit sharing/401(k) plan to provide retirement benefits for certain employees. The plan covers a majority of our full-time employees, as well as some part-time employees. Employees are eligible to participate in the plan on the first day of the quarter following their first full year of service. Profit sharing contributions are made solely by Deluxe and are remitted to the plan's trustee. These contributions vary based on the company's performance. 401(k) contributions are made by both employees and Deluxe. Employees under the age of 50 could contribute up to the lesser of $18 or 50% of eligible wages during 2015 . Employees 50 years of age or older could make contributions of up to $24 during 2015 . For the majority of employees, we match 100% of the first 1% of wages contributed by employees and 50% of the next 5% of wages contributed, beginning on the first day of the quarter following an employee's first full year of service. All employee and employer contributions are remitted to the plan's trustee. Benefits provided by the plan are paid from accumulated funds of the trust. Employees are provided a broad range of investment options to choose from when investing their profit sharing/401(k) plan funds. Investing in our common stock is not one of these options, although funds selected by employees may at times hold our common stock. Cash bonus programs – We provide both short-term and long-term cash bonus programs under which employees may receive cash bonus payments based on specified performance criteria. Our short-term programs are based on our performance for a given fiscal year and payments earned are paid directly to employees shortly after the end of the year. Our long-term incentive programs have performance periods of three years , and any payments earned are paid directly to employees shortly after the end of each three-year period. Expense recognized in the consolidated statements of income for these plans was as follows for the years ended December 31: (in thousands) 2015 2014 2013 Performance-based compensation plans (1) $ 27,456 $ 29,629 $ 25,561 401(k) expense 7,628 7,209 7,004 (1) Includes expense for profit sharing contributions, as they vary based on our performance. Excludes expense for stock-based compensation, which is discussed in Note 10. Deferred compensation plan – We have a non-qualified deferred compensation plan that allows eligible employees to defer a portion of their compensation. Participants can elect to defer up to 100% of their base salary plus up to 50% of their bonus for the year. The compensation deferred under this plan is credited with earnings or losses measured by the mirrored rate of return on phantom investments elected by plan participants, which are similar to the investments available for funds invested under our profit sharing/401(k) plan. Each participant is fully vested in all deferred compensation and earnings. A participant may elect to receive deferred amounts in a lump-sum payment or in monthly installments upon termination of employment or disability. Our total liability under this plan was $3,126 as of December 31, 2015 and $3,466 as of December 31, 2014 . These amounts are reflected in accrued liabilities and other non-current liabilities in the consolidated balance sheets. We hold investments in an irrevocable rabbi trust for our deferred compensation plan. These assets consist of investments in company-owned life insurance policies, which are included in long-term investments in the consolidated balance sheets, and totaled $13,397 as of December 31, 2015 and $12,873 as of December 31, 2014 . Voluntary employee beneficiary association (VEBA) trust – We previously maintained a VEBA trust to fund employee and retiree medical costs and severance benefits. Contributions to the VEBA trust were tax deductible, subject to annual limitations contained in the Internal Revenue Code. VEBA assets consisted of investments in cash equivalents. During 2014, we made the decision to no longer pre-fund the trust. As such, there was no longer any reason to maintain the trust and we discontinued it, effective December 31, 2015. Beginning in 2016, we will pay benefits directly, as opposed to paying them through the VEBA trust. As we were not pre-funding the trust during 2015, this change does not affect the timing or amount of the related cash flows. Total contributions to the VEBA trust were $25,574 in 2015 , $14,000 in 2014 and $25,700 in 2013 . |
Postretirement benefits
Postretirement benefits | 12 Months Ended |
Dec. 31, 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. Employees hired prior to January 1, 2002 become eligible for benefits if they attain the appropriate years of service and age prior to retirement. Employees hired on January 1, 2002 or later are not eligible to participate in our retiree health care plan. In addition to our retiree health care plan, we also have a supplemental executive retirement plan (SERP) in the United States. The SERP is no longer an active plan. It is not adding new participants and all of the current participants are retired. The SERP has no plan assets, but our obligation is fully funded by investments in company-owned life insurance policies. Obligations and funded status – The following tables summarize the change in benefit obligation, plan assets and funded status during 2015 and 2014 : (in thousands) Postretirement benefit plan Pension plan Change in benefit obligation: Benefit obligation, December 31, 2013 $ 108,567 $ 3,428 Interest cost 4,414 139 Net actuarial (gain) loss (3,513 ) 621 Benefits paid from plan assets and company funds (9,878 ) (324 ) Medicare Part D reimbursements 842 — Benefit obligation, December 31, 2014 100,432 3,864 Interest cost 3,309 128 Net actuarial loss (gain) 5,258 (130 ) Benefits paid from plan assets and company funds (10,122 ) (324 ) Pharmacy rebates and Medicare Part D reimbursements 2,007 — Benefit obligation, December 31, 2015 $ 100,884 $ 3,538 Change in plan assets: Fair value of plan assets, December 31, 2013 $ 133,548 $ — Return on plan assets 7,701 — Benefits paid (8,434 ) — Transfer of assets to VEBA trust (8,140 ) — Fair value of plan assets, December 31, 2014 124,675 — Return on plan assets 391 — Benefits paid (7,932 ) — Fair value of plan assets, December 31, 2015 $ 117,134 $ — Funded status, December 31, 2014 $ 24,243 $ (3,864 ) Funded status, December 31, 2015 $ 16,250 $ (3,538 ) As of December 31, 2015 and 2014 , the accumulated benefit obligation for the SERP equaled its projected benefit obligation. Previously, a portion of our plan assets could be used only to pay prescription drug benefits for pre-1986 retirees. During 2014, a plan amendment was executed that allowed these assets to be used for medical and severance benefits for retired and active employees. As such, as of our December 31, 2014 measurement date, these assets were no longer plan assets of our postretirement benefit plan, but became assets of our VEBA trust (Note 11). Plan assets were reduced $8,140 as a result of this amendment. The funded status of our plans was recognized in the consolidated balance sheets as of December 31 as follows: Postretirement benefit plan Pension plan (in thousands) 2015 2014 2015 2014 Other non-current assets $ 16,250 $ 24,243 $ — $ — Accrued liabilities — — 324 324 Other non-current liabilities — — 3,214 3,540 Amounts included in accumulated other comprehensive loss as of December 31 that have not been recognized as components of postretirement benefit income were as follows: (in thousands) 2015 2014 Unrecognized prior service credit $ 18,442 $ 19,863 Unrecognized net actuarial loss (74,524 ) (65,073 ) Tax effect 17,260 12,805 Amount recognized in accumulated other comprehensive loss, net of tax $ (38,822 ) $ (32,405 ) The unrecognized prior service credit relates to our postretirement benefit plan and is a result of previous plan amendments that reduced the accumulated postretirement benefit obligation. A reduction is first used to reduce any existing unrecognized prior service cost, then to reduce any remaining unrecognized transition obligation. The excess is the unrecognized prior service credit. The prior service credit is being amortized on the straight-line basis over a weighted-average period of 21 years . The amortization period for the prior service credit is the average remaining life expectancy of plan participants at the time of the plan amendment. The unrecognized net actuarial loss resulted from experience different from that assumed and from changes in assumptions. Unrecognized actuarial gains and losses for our postretirement benefit plan are being amortized over the average remaining life expectancy of inactive plan participants, as a large percentage of the plan participants are classified as inactive. This amortization period is currently 16.5 years . Amounts included in accumulated other comprehensive loss as of December 31, 2015 that we expect to recognize in postretirement benefit income during 2016 are as follows: (in thousands) Amounts expected to be recognized Prior service credit $ (1,421 ) Net actuarial loss 3,797 Total $ 2,376 Postretirement benefit income – Postretirement benefit income for the years ended December 31 consisted of the following components: (in thousands) 2015 2014 2013 Interest cost $ 3,437 $ 4,553 $ 3,652 Expected return on plan assets (7,833 ) (8,734 ) (8,030 ) Amortization of prior service credit (1,421 ) (1,421 ) (1,421 ) Amortization of net actuarial losses 3,120 3,418 4,439 Net periodic benefit income $ (2,697 ) $ (2,184 ) $ (1,360 ) Actuarial assumptions – In measuring benefit obligations as of December 31, the following discount rate assumptions were used: Postretirement benefit plan Pension plan 2015 2014 2015 2014 Discount rate 4.02 % 3.45 % 3.88 % 3.45 % In measuring net periodic benefit income for the years ended December 31, the following assumptions were used: 2015 2014 2013 Discount rate 3.45 % 4.25 % 3.15 % Expected return on plan assets 6.50 % 6.75 % 6.75 % The discount rate assumption is based on the rates of return on high-quality, fixed-income instruments currently available whose cash flows approximate the timing and amount of expected benefit payments. In determining the discount rate used in measuring net periodic benefit income for 2015, we utilized the Aon Hewitt AA Above Median Curve and the Citigroup Pension Discount yield curves to discount each cash flow stream at an interest rate specifically applicable to the timing of each respective cash flow. The present value of each cash flow stream was aggregated and used to impute a weighted-average discount rate. Effective December 31, 2015, we changed the method we use to determine the discount rate used in calculating the interest component of net periodic benefit income. Instead of using a single weighted-average discount rate, we elected to utilize a full yield curve approach by applying separate discount rates to each future projected benefit payment based on time until payment. We made this change to provide a more precise measurement of interest costs by improving the correlation between projected cash flows and the corresponding yield curve rates. This change does not affect the measurement of our total benefit obligation, but is expected to reduce the interest component of net periodic benefit income $881 in 2016. This is a change in accounting estimate, and accordingly, we are accounting for it on a prospective basis. In determining the expected long-term rate of return on plan assets, we utilize our historical returns and then adjust these returns for estimated inflation and projected market returns. Our inflation assumption is primarily based on analysis of historical inflation data. In measuring benefit obligations as of December 31 for our postretirement benefit plan, the following assumptions for health care cost trend rates were used: 2015 2014 2013 Participants under age 65 Participants age 65 and older Participants under age 65 Participants age 65 and older Participants under age 65 Participants age 65 and older Health care cost trend rate assumed for next year 7.25 % 6.75 % 7.50 % 7.00 % 7.75 % 7.25 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5.00 % 5.00 % 5.00 % 5.00 % 5.00 % 5.00 % Year that the rate reaches the ultimate trend rate 2026 2024 2021 2020 2021 2020 Assumed health care cost trend rates have an effect on the amounts reported for health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects: (in thousands) One percentage point increase One percentage point decrease Effect on total of service and interest cost $ 65 $ (61 ) Effect on benefit obligation 1,614 (1,513 ) Plan assets – The allocation of plan assets by asset category as of December 31 was as follows: Postretirement benefit plan 2015 2014 U.S. large capitalization equity securities 33 % 33 % International equity securities 18 % 18 % Mortgage-backed securities 17 % 14 % U.S. corporate debt securities 15 % 14 % Government debt securities 10 % 14 % U.S. small and mid-capitalization equity securities 7 % 7 % Total 100 % 100 % Our postretirement benefit plan has assets that are intended to meet long-term obligations. In order to meet these obligations, we employ a total return investment approach that considers cash flow needs and balances long-term projected returns against expected asset risk, as measured using projected standard deviations. Risk tolerance is established through consideration of projected plan liabilities, the plan's funded status, projected liquidity needs and current corporate financial condition. The target asset allocation percentages for our postretirement benefit plan are based on our liability and asset projections. The targeted allocation of plan assets is 33% large capitalization equity securities, 42% fixed income securities, 18% international equity securities and 7% small and mid-capitalization equity securities. Information regarding fair value measurements of plan assets was as follows: Fair value measurements using Fair value as of December 31, 2015 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) (Level 1) (Level 2) (Level 3) U.S. large capitalization equity securities $ 38,629 $ — $ 38,629 $ — International equity securities 21,209 20,520 689 — Mortgage-backed securities 20,157 — 20,157 — U.S. corporate debt securities 16,974 — 16,974 — Government debt securities 11,808 — 11,808 — U.S. small and mid-capitalization equity securities 8,095 6,799 1,296 — Other debt securities 262 149 113 — Total $ 117,134 $ 27,468 $ 89,666 $ — 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) U.S. large capitalization equity securities $ 40,847 $ — $ 40,847 $ — International equity securities 22,416 21,823 593 — U.S. corporate debt securities 17,823 — 17,823 — Mortgage-backed securities 17,713 — 17,713 — Government debt securities 17,031 — 17,031 — U.S. small and mid-capitalization equity securities 8,702 7,090 1,612 — Other debt securities 143 54 89 — Total $ 124,675 $ 28,967 $ 95,708 $ — The fair value of Level 2 mortgage-backed securities is estimated using pricing models with inputs derived principally from observable market data. The fair value of our other Level 2 debt securities is typically estimated using pricing models, quoted prices of securities with similar characteristics or discounted cash flow calculations that maximize observable inputs, such as current yields for similar instruments adjusted for trades and other pertinent market information. Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred. Cash flows – We made no contributions to plan assets during the past three years. We have fully funded the United States SERP obligation with investments in company-owned life insurance policies. The cash surrender value of these policies is included in long-term investments in the consolidated balance sheets and totaled $7,573 as of December 31, 2015 and $7,239 as of December 31, 2014 . The following benefit payments are expected to be paid during the years indicated: (in thousands) Postretirement benefit plan Pension plan 2016 $ 9,565 $ 320 2017 9,692 320 2018 9,592 320 2019 9,141 310 2020 8,579 300 2021 - 2025 35,149 1,410 |
Debt and lease obligations
Debt and lease obligations | 12 Months Ended |
Dec. 31, 2015 | |
Debt and lease obligations [Abstract] | |
Debt and lease obligations | Debt and lease obligations Debt outstanding was comprised of the following at December 31: (in thousands) 2015 2014 7.0% senior notes due March 15, 2019 $ — $ 200,000 6.0% senior notes due November 15, 2020 (1) 195,158 191,933 Long-term portion of capital lease obligations 1,064 1,468 Long-term portion of debt 196,222 393,401 Amount drawn on credit facility 434,000 160,000 Capital lease obligations due within one year 1,045 911 Total debt $ 631,267 $ 554,312 (1) Includes decrease due to cumulative change in fair value of hedged debt of $4,842 as of December 31, 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. 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 this agreement. 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 that 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 17. At any time prior to November 15, 2016 , we may redeem some or all of the notes at a price equal to 100% of the principal amount plus accrued and unpaid interest and a make-whole premium. At any time on or after 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 that were due in June 2015. The fair value of the notes issued in November 2012 was $207,000 as of December 31, 2015 , based on quoted prices that are directly observable. As discussed in Note 6, we have entered into interest rate swaps to hedge these notes. In March 2011 , we issued $200,000 of 7.0% senior notes that were scheduled to mature 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 that 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 2015, consisting of a contractual call premium and the write-off of related debt issuance costs. This retirement was funded utilizing our credit facility and a short-term bank loan that we have since repaid. Short-term borrowings – In March 2015 , we entered into a $75,000 short-term variable rate bank loan that was required to be repaid by March 2016 . Proceeds from this loan, net of related 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 that were scheduled to mature on March 15, 2019 . During December 2015, we elected to repay this loan in full. As of December 31, 2015 , we had a $525,000 credit facility, which is scheduled to expire in February 2019 . As of December 31, 2014, the commitment under this credit facility was $350,000 . In conjunction with the acquisition of Datamyx LLC in October 2015 (Note 5), we exercised our right to increase the size of our existing credit facility to $525,000 . 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 December 31, 2015, $434,000 was drawn on our credit facility at a weighted-average interest rate of 1.89% . As of December 31, 2014, $160,000 was drawn on our credit facility at a weighted-average interest rate of 1.63% . The credit agreement governing our credit facility contains customary covenants regarding limits on levels of subsidiary indebtedness and capital expenditures, liens, investments, acquisitions, certain mergers, certain asset sales outside the ordinary course of business, and change in control as defined in the agreement. The agreement also contains financial covenants regarding our leverage ratio, interest coverage and liquidity. No amounts were borrowed under our credit facility during 2013. Daily average amounts outstanding under our short-term borrowing arrangements during 2015 and 2014 were as follows: (in thousands) 2015 2014 Short-term bank loan: Daily average amount outstanding $ 47,178 $ — Weighted-average interest rate 1.59 % — Credit facility: Daily average amount outstanding $ 270,063 $ 43,675 Weighted-average interest rate 1.66 % 1.63 % As of December 31, 2015 , amounts were available for borrowing under our credit facility as follows: (in thousands) Total available Credit facility commitment $ 525,000 Amount drawn on credit facility (434,000 ) Outstanding letters of credit (1) (12,726 ) Net available for borrowing as of December 31, 2015 $ 78,274 (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. Lease obligations – We had capital lease obligations of $2,109 as of December 31, 2015 and $2,379 as of December 31, 2014 related to information technology hardware. The lease obligations will be paid through October 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. A portion of the leased assets have not yet been placed in service. The balance of those leased assets placed in service as of December 31 was as follows: (in thousands) 2015 2014 Machinery and equipment $ 4,193 $ 2,911 Accumulated depreciation (1,942 ) (926 ) Net assets under capital leases $ 2,251 $ 1,985 In addition to capital leases, we also have operating leases on certain facilities and equipment. Rental expense was $15,372 for 2015 , $13,099 for 2014 and $11,855 for 2013 . As of December 31, 2015 , future minimum lease payments under our capital lease obligations and noncancelable operating leases with terms in excess of one year were as follows: (in thousands) Capital lease obligations Operating lease obligations 2016 $ 1,078 $ 6,626 2017 731 5,318 2018 303 3,642 2019 47 2,979 2020 — 1,216 Thereafter — 2,389 Total minimum lease payments 2,159 $ 22,170 Less portion representing interest (50 ) Present value of minimum lease payments $ 2,109 |
Other commitments and contingen
Other commitments and contingencies | 12 Months Ended |
Dec. 31, 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 do not believe that any 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 that 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 $5,952 as of December 31, 2015 and $7,942 as of December 31, 2014 , primarily related to facilities that 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 that 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 our consolidated statements of income for environmental matters was $1,142 for 2015 , $1,079 for 2014 and $1,169 for 2013 . We purchased an insurance policy during 2002 that covers up to $12,911 of remediation costs, of which $12,884 had been paid through December 31, 2015 . The insurance policy also covers up to $10,000 of third-party claims through 2032 at certain owned, leased and divested sites, as well as any conditions discovered at certain owned or leased sites through 2012. No accruals have been recorded in our consolidated financial statements related to this $10,000 of coverage. We also have an additional environmental site liability insurance policy providing coverage on facilities that 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. We do not anticipate significant net cash outlays for environmental matters within the next five years. Self-insurance – We are self-insured for certain costs, primarily workers' compensation claims and medical and dental benefits for active employees and those employees on long-term disability. The liabilities associated with these items represent our best estimate of the ultimate obligations for reported claims plus those incurred, but not reported, and totaled $6,457 as of December 31, 2015 and $6,401 as of December 31, 2014 . Our workers' compensation liability is accounted for on a present value basis. The difference between the discounted and undiscounted liability was not significant as of December 31, 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. Litigation – On September 2, 2014, one of our suppliers filed a petition for binding arbitration under the Commercial Rules of the American Arbitration Association, alleging that they are entitled to additional payment from us under our reseller agreement. They are seeking damages of up to approximately $43,000 . The arbitration hearing has been concluded and the parties completed their post-hearing briefs and other submissions on February 5, 2016. We expect the arbitrator to render a decision in March 2016. We have not recorded a liability for damages in connection with this matter because any potential loss is not currently probable or reasonably estimable under generally accepted accounting principles in the United States. Additionally, we cannot reasonably estimate the range of loss, if any, that may result from this matter. Recorded liabilities for legal matters were not material to our financial position, results of operations or liquidity, and we do not believe that any of the currently identified claims or litigation will materially affect our financial position, results of operations or liquidity upon resolution. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, it may cause a material adverse impact on our financial position, results of operations or liquidity for the period in which the ruling occurs or future periods. |
Shareholders' equity
Shareholders' equity | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' equity | Shareholders’ equity Common shares repurchased – 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 966 shares remained available for purchase under this authorization as of December 31, 2015 . During 2015 , we repurchased 996 shares for $59,952 , during 2014 we repurchased 1,133 shares for $60,119 and during 2013 we repurchased 1,162 shares for $48,798 . Common stock purchase rights – In February 1988, we adopted a shareholder rights plan under which common stock purchase rights automatically attach to each share of common stock we issue. The rights plan is governed by a rights agreement between us and Wells Fargo Bank, National Association, as rights agent. This agreement was most recently amended and restated as of December 20, 2006 (Restated Agreement). Pursuant to the Restated Agreement, upon the occurrence of certain events, each right will entitle the holder to purchase one share of common stock at an exercise price of $100 per share. The exercise price may be adjusted from time to time upon the occurrence of certain events outlined in the Restated Agreement. In certain circumstances described in the Restated Agreement, if (i) any person becomes the beneficial owner of 20% or more of the company's common stock, (ii) the company is acquired in a merger or other business combination or (iii) upon the occurrence of other events, each right will entitle its holder to purchase a number of shares of common stock of the company, or the acquirer or the surviving entity if the company is not the surviving corporation in such a transaction. The number of shares purchasable at the then-current exercise price will be equal to the exercise price of the right divided by 50% of the then-current market price of one share of common stock of the company, or other surviving entity, subject to adjustments provided in the Restated Agreement. The rights expire December 31, 2016 , and may be redeemed by the company at a price of $0.01 per right at any time prior to the occurrence of the circumstances described above. |
Business segment information
Business segment information | 12 Months Ended |
Dec. 31, 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, telecommunications clients and other partners; Safeguard distributors; a network of independent local dealers; a direct sales force that focuses on selling to and through 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. No single customer accounted for more than 10% of revenue during the past three years. Effective January 1, 2015, two company-owned small business distributors were no longer managed as part of our Small Business Services segment. Because their customers consist primarily of financial institutions, we concluded 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. In 2014, revenue for these businesses was $22,745 and operating income was $1,109 . In 2013, revenue for these businesses was $13,982 and operating income was $468 . Our product and service offerings are comprised of the following: Checks – We remain one of the largest providers of checks in the United States. During 2015, checks represented 40.1% of our Small Business Services segment's revenue, 59.7% of our Financial Services segment's revenue and 84.6% of our Direct Checks segment's revenue. Marketing solutions and other services – We offer products and services that help small businesses and/or financial institutions promote their businesses and acquire customers, as well as various other service offerings. Our Small Business Services segment offers services designed to fulfill the marketing and sales needs of small businesses, including logo and web design, hosting and other web services; search engine optimization; marketing programs, including email, mobile, social media and other self-service marketing solutions; and digital printing services. In addition, Small Business Services offers specialized services, including fraud protection and security, payroll services and electronic checks, as well as promotional solutions such as postcards, brochures, retail packaging supplies, apparel, greeting cards and business cards. Financial Services offers a suite of financial technology ("FinTech") solutions focused on enabling financial institutions to better manage the customer life cycle for their retail and commercial customers. These FinTech offerings include outsourced marketing campaign targeting and execution, digital channel onboarding, loyalty and rewards, technology-enabled treasury services, financial performance management, and fraud protection and security services. Our Direct Checks segment provides fraud protection and security services, as well as package insert programs under which third parties' 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 offers products designed to provide small business owners with the customized documents necessary to efficiently manage their business, including envelopes, office supplies, stamps and labels. 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 Note 1. 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; and inventories and supplies related to our corporate shared services functions of manufacturing, information technology and real estate, as well as long-term investments. Depreciation and amortization expense related to corporate assets, which was allocated to the segments, was $32,505 in 2015 , $34,801 in 2014 and $37,893 in 2013 . 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 years ended December 31: Reportable Business Segments (in thousands) Small Business Services Financial Services Direct Checks Corporate Consolidated Total revenue from external 2015 $ 1,151,916 $ 455,390 $ 165,511 $ — $ 1,772,817 customers: 2014 1,106,505 391,129 176,448 — 1,674,082 2013 1,036,268 357,142 191,414 — 1,584,824 Operating income: 2015 203,933 91,539 58,859 — 354,331 2014 187,226 87,908 57,499 — 332,633 2013 175,420 82,811 59,683 — 317,914 Depreciation and amortization 2015 45,513 26,807 4,380 — 76,700 expense: 2014 44,418 14,675 6,749 — 65,842 2013 45,329 11,231 7,913 — 64,473 Asset impairment charges: 2015 — — — — — 2014 6,468 — — — 6,468 2013 5,000 — — — 5,000 Total assets: 2015 995,445 435,632 161,987 251,338 1,844,402 2014 949,521 274,086 164,171 300,613 1,688,391 2013 942,048 111,432 167,283 348,766 1,569,529 Capital asset purchases: 2015 — — — 43,261 43,261 2014 — — — 41,119 41,119 2013 — — — 37,459 37,459 Revenue by product and service category for the years ended December 31 was as follows: (in thousands) 2015 2014 2013 Checks $ 873,298 $ 870,910 $ 884,605 Marketing solutions and other services 532,465 427,098 343,006 Forms 215,663 216,842 200,560 Accessories and other products 151,391 159,232 156,653 Total revenue $ 1,772,817 $ 1,674,082 $ 1,584,824 The following information for the years ended December 31 is based on the geographic locations of our subsidiaries: (in thousands) 2015 2014 2013 Total revenue from external customers: United States $ 1,701,566 $ 1,593,898 $ 1,501,176 Foreign, primarily Canada 71,251 80,184 83,648 Total revenue $ 1,772,817 $ 1,674,082 $ 1,584,824 Substantially all of our long-lived assets reside in the United States. Long-lived assets of our foreign subsidiaries are located primarily in Canada and are not significant to our consolidated financial position. |
Supplemental guarantor financia
Supplemental guarantor financial information | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental guarantor financial information [Abstract] | |
Supplemental guarantor financial information | Supplemental guarantor financial information Our long-term notes due in 2020 (Note 13), 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 that 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 December 31, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total ASSETS Current assets: Cash and cash equivalents $ 5,187 $ 940 $ 56,422 $ (122 ) $ 62,427 Trade accounts receivable, net — 115,951 7,703 — 123,654 Inventories and supplies — 39,758 2,198 — 41,956 Funds held for customers — — 53,343 — 53,343 Other current assets 9,233 32,765 2,610 — 44,608 Total current assets 14,420 189,414 122,276 (122 ) 325,988 Deferred income taxes 13,498 — 1,238 (13,498 ) 1,238 Long-term investments 34,304 7,387 — — 41,691 Property, plant and equipment, net 10,111 71,017 4,604 — 85,732 Assets held for sale — — 13,969 — 13,969 Intangibles, net 9,066 273,051 3,194 — 285,311 Goodwill — 974,973 1,442 — 976,415 Investments in consolidated subsidiaries 1,248,549 81,099 — (1,329,648 ) — Intercompany receivable 99,506 — — (99,506 ) — Other non-current assets 6,107 107,767 184 — 114,058 Total assets $ 1,435,561 $ 1,704,708 $ 146,907 $ (1,442,774 ) $ 1,844,402 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 15,625 $ 69,809 $ 2,263 $ (122 ) $ 87,575 Accrued liabilities 23,567 148,279 56,577 — 228,423 Short-term borrowings 434,000 — — — 434,000 Long-term debt due within one year 1,026 — 19 — 1,045 Total current liabilities 474,218 218,088 58,859 (122 ) 751,043 Long-term debt 196,191 — 31 — 196,222 Deferred income taxes — 94,574 — (13,498 ) 81,076 Intercompany payable — 98,365 1,141 (99,506 ) — Other non-current liabilities 20,083 45,132 5,777 — 70,992 Total shareholders' equity 745,069 1,248,549 81,099 (1,329,648 ) 745,069 Total liabilities and shareholders' equity $ 1,435,561 $ 1,704,708 $ 146,907 $ (1,442,774 ) $ 1,844,402 Deluxe Corporation Condensed Consolidating Balance Sheet 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 Year Ended December 31, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 1,378,579 $ 73,415 $ — $ 1,451,994 Service revenue 113,226 299,484 26,433 (118,320 ) 320,823 Total revenue 113,226 1,678,063 99,848 (118,320 ) 1,772,817 Cost of products — (489,590 ) (36,717 ) — (526,307 ) Cost of services (120,575 ) (105,824 ) (7,987 ) 121,484 (112,902 ) Total cost of revenue (120,575 ) (595,414 ) (44,704 ) 121,484 (639,209 ) Gross profit (7,349 ) 1,082,649 55,144 3,164 1,133,608 Operating expenses — (737,600 ) (38,513 ) (3,164 ) (779,277 ) Operating (loss) income (7,349 ) 345,049 16,631 — 354,331 Loss on early debt extinguishment (8,917 ) — — — (8,917 ) Interest expense (19,516 ) (11,355 ) (2 ) 10,574 (20,299 ) Other income 10,556 1,978 872 (10,574 ) 2,832 (Loss) income before income taxes (25,226 ) 335,672 17,501 — 327,947 Income tax benefit (provision) 15,324 (119,951 ) (4,691 ) — (109,318 ) (Loss) income before equity in earnings of consolidated subsidiaries (9,902 ) 215,721 12,810 — 218,629 Equity in earnings of consolidated subsidiaries 228,531 12,810 — (241,341 ) — Net income $ 218,629 $ 228,531 $ 12,810 $ (241,341 ) $ 218,629 Comprehensive income $ 199,764 $ 210,558 $ 362 $ (210,920 ) $ 199,764 Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2014 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 1,311,729 $ 99,129 $ — $ 1,410,858 Service revenue 78,019 237,712 30,047 (82,554 ) 263,224 Total revenue 78,019 1,549,441 129,176 (82,554 ) 1,674,082 Cost of products — (449,603 ) (52,268 ) — (501,871 ) Cost of services (83,982 ) (95,776 ) (9,693 ) 85,044 (104,407 ) Total cost of revenue (83,982 ) (545,379 ) (61,961 ) 85,044 (606,278 ) Gross profit (5,963 ) 1,004,062 67,215 2,490 1,067,804 Operating expenses — (677,767 ) (47,711 ) (2,490 ) (727,968 ) Asset impairment charge — (6,468 ) — — (6,468 ) Net loss on sale of facility — (735 ) — — (735 ) Operating (loss) income (5,963 ) 319,092 19,504 — 332,633 Interest expense (36,368 ) (12,157 ) — 11,996 (36,529 ) Other income 9,976 2,496 601 (11,996 ) 1,077 (Loss) income before income taxes (32,355 ) 309,431 20,105 — 297,181 Income tax benefit (provision) 17,445 (109,289 ) (5,543 ) — (97,387 ) (Loss) income before equity in earnings of consolidated subsidiaries (14,910 ) 200,142 14,562 — 199,794 Equity in earnings of consolidated subsidiaries 214,704 14,562 — (229,266 ) — Net income $ 199,794 $ 214,704 $ 14,562 $ (229,266 ) $ 199,794 Comprehensive income $ 196,880 $ 210,756 $ 8,398 $ (219,154 ) $ 196,880 Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2013 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 1,293,257 $ 76,454 $ — $ 1,369,711 Service revenue 9,042 188,767 34,962 (17,658 ) 215,113 Total revenue 9,042 1,482,024 111,416 (17,658 ) 1,584,824 Cost of products — (429,432 ) (34,055 ) — (463,487 ) Cost of services (7,597 ) (85,693 ) (12,532 ) 8,193 (97,629 ) Total cost of revenue (7,597 ) (515,125 ) (46,587 ) 8,193 (561,116 ) Gross profit 1,445 966,899 64,829 (9,465 ) 1,023,708 Operating expenses — (664,218 ) (46,041 ) 9,465 (700,794 ) Asset impairment charge — (5,000 ) — — (5,000 ) Operating income 1,445 297,681 18,788 — 317,914 Interest expense (38,236 ) (8,442 ) (3 ) 8,380 (38,301 ) Other income 7,283 2,027 516 (8,380 ) 1,446 (Loss) income before income taxes (29,508 ) 291,266 19,301 — 281,059 Income tax benefit (provision) 16,597 (105,812 ) (5,192 ) — (94,407 ) (Loss) income before equity in earnings of consolidated subsidiaries (12,911 ) 185,454 14,109 — 186,652 Equity in earnings of consolidated subsidiaries 199,563 14,109 — (213,672 ) — Net income $ 186,652 $ 199,563 $ 14,109 $ (213,672 ) $ 186,652 Comprehensive income $ 193,875 $ 205,595 $ 9,862 $ (215,457 ) $ 193,875 Deluxe Corporation Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Net cash provided by operating activities $ 2,467 $ 285,962 $ 16,297 $ 3,207 $ 307,933 Cash flows from investing activities: Purchases of capital assets (3,447 ) (37,158 ) (2,656 ) — (43,261 ) Payments for acquisitions, net of cash acquired (26 ) (212,964 ) — — (212,990 ) Proceeds from company-owned life insurance policies 3,973 — — — 3,973 Other (488 ) 1,610 16 — 1,138 Net cash provided (used) by investing activities 12 (248,512 ) (2,640 ) — (251,140 ) Cash flows from financing activities: Net proceeds from short-term borrowings 274,000 — — — 274,000 Payments on long-term debt, including costs of debt reacquisition (208,045 ) — (17 ) — (208,062 ) Payments for debt issue costs (749 ) — — — (749 ) Proceeds from issuing shares under employee plans 5,895 — — — 5,895 Excess tax benefit from share-based employee awards 2,244 — — — 2,244 Payments for common shares repurchased (59,952 ) — — — (59,952 ) Cash dividends paid to shareholders (59,755 ) — — — (59,755 ) Advances from (to) consolidated subsidiaries 40,735 (40,692 ) (43 ) — — Other — (160 ) (150 ) — (310 ) Net cash used by financing activities (5,627 ) (40,852 ) (210 ) — (46,689 ) Effect of exchange rate change on cash — — (9,218 ) — (9,218 ) Net change in cash and cash equivalents (3,148 ) (3,402 ) 4,229 3,207 886 Cash and cash equivalents, beginning of year 8,335 4,342 52,193 (3,329 ) 61,541 Cash and cash equivalents, end of year $ 5,187 $ 940 $ 56,422 $ (122 ) $ 62,427 Deluxe Corporation Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2014 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Net cash (used) provided by operating activities $ (12,298 ) $ 278,281 $ 14,638 $ (226 ) $ 280,395 Cash flows from investing activities: Purchases of capital assets (1,269 ) (38,118 ) (1,732 ) — (41,119 ) Payments for acquisitions, net of cash acquired (89,824 ) (15,205 ) — — (105,029 ) Proceeds from company-owned life insurance policies 897 — — — 897 Proceeds from sale of facility — 8,451 — — 8,451 Other (432 ) 1,175 14 — 757 Net cash used by investing activities (90,628 ) (43,697 ) (1,718 ) — (136,043 ) Cash flows from financing activities: Net proceeds from short-term borrowings 160,000 (125 ) — — 159,875 Payments on long-term debt, including costs of debt reacquisition (254,376 ) (20 ) (7 ) — (254,403 ) Payments for debt issue costs (1,085 ) — — — (1,085 ) Proceeds from issuing shares under employee plans 9,148 — — — 9,148 Excess tax benefit from share-based employee awards 4,992 — — — 4,992 Payments for common shares repurchased (60,119 ) — — — (60,119 ) Cash dividends paid to shareholders (57,603 ) — — — (57,603 ) Advances from (to) consolidated subsidiaries 238,332 (236,938 ) (1,394 ) — — Other — (150 ) — — (150 ) Net cash provided (used) by financing activities 39,289 (237,233 ) (1,401 ) — (199,345 ) Effect of exchange rate change on cash — — (4,555 ) — (4,555 ) Net change in cash and cash equivalents (63,637 ) (2,649 ) 6,964 (226 ) (59,548 ) Cash and cash equivalents, beginning of year 71,972 6,991 45,229 (3,103 ) 121,089 Cash and cash equivalents, end of year $ 8,335 $ 4,342 $ 52,193 $ (3,329 ) $ 61,541 Deluxe Corporation Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2013 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Net cash (used) provided by operating activities $ (7,462 ) $ 243,906 $ 24,160 $ 898 $ 261,502 Cash flows from investing activities: Purchases of capital assets — (32,659 ) (4,800 ) — (37,459 ) Payments for acquisitions, net of cash acquired — (69,709 ) — — (69,709 ) Proceeds from company-owned life insurance policies 3,641 958 — — 4,599 Other 1,181 326 12 — 1,519 Net cash provided (used) by investing activities 4,822 (101,084 ) (4,788 ) — (101,050 ) Cash flows from financing activities: Payments on long-term debt, including costs of debt reacquisition (224 ) — (1,331 ) — (1,555 ) Payments for debt issue costs (236 ) — — — (236 ) Proceeds from issuing shares under employee plans 15,948 — — — 15,948 Excess tax benefit from share-based employee awards 3,055 — — — 3,055 Payments for common shares repurchased (48,798 ) — — — (48,798 ) Cash dividends paid to shareholders (50,711 ) — — — (50,711 ) Advances from (to) consolidated subsidiaries 140,716 (139,059 ) (1,657 ) — — Net cash provided (used) by financing activities 59,750 (139,059 ) (2,988 ) — (82,297 ) Effect of exchange rate change on cash — — (2,501 ) — (2,501 ) Net change in cash and cash equivalents 57,110 3,763 13,883 898 75,654 Cash and cash equivalents, beginning of year 14,862 3,228 31,346 (4,001 ) 45,435 Cash and cash equivalents, end of year $ 71,972 $ 6,991 $ 45,229 $ (3,103 ) $ 121,089 |
SUMMARIZED QUARTERLY FINANCIAL
SUMMARIZED QUARTERLY FINANCIAL DATA (Unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Data [Abstract] | |
Summarized Quarterly Financial Data (Unaudited) | DELUXE CORPORATION SUMMARIZED QUARTERLY FINANCIAL DATA (Unaudited) (in thousands, except per share amounts) 2015 Quarter Ended March 31 June 30 September 30 December 31 Total revenue $ 433,617 $ 435,874 $ 439,816 $ 463,510 Gross profit 280,936 279,936 280,514 292,222 Net income 45,940 56,063 56,917 59,709 Earnings per share: Basic 0.92 1.12 1.14 1.21 Diluted 0.91 1.11 1.13 1.20 Cash dividends per share 0.30 0.30 0.30 0.30 2014 Quarter Ended March 31 June 30 September 30 December 31 Total revenue $ 406,955 $ 405,410 $ 413,204 $ 448,513 Gross profit 262,027 259,519 263,054 283,204 Net income 47,324 50,076 44,431 57,963 Earnings per share: Basic 0.94 1.00 0.89 1.16 Diluted 0.93 0.99 0.88 1.16 Cash dividends per share 0.25 0.30 0.30 0.30 Significant items affecting the comparability of quarterly results were as follows: • First quarter 2015 – pre-tax loss on early extinguishment of debt of $8,917 . • Second quarter 2015 – net pre-tax restructuring charges of $1,154 related to our cost reduction initiatives. • Third quarter 2015 – net pre-tax restructuring charges of $1,738 related to our cost reduction initiatives. • Fourth quarter 2015 – net pre-tax restructuring charges of $3,078 related to our cost reduction initiatives and a reduction of $1,160 in income tax expense for discrete items, primarily prior year state income tax credits. • First quarter 2014 – net pre-tax restructuring charges of $3,532 related to our cost reduction initiatives. • Third quarter 2014 – net pre-tax restructuring charges of $4,355 related to our cost reduction initiatives and a $6,468 pre-tax asset impairment charge related to Small Business Services intangible assets. • Fourth quarter 2014 – a reduction of $2,282 in income tax expense for discrete items, primarily prior year state income tax credits. |
Significant accounting polici26
Significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Nature of operations | Nature of operations – We employ a multi-channel strategy to provide a suite of life cycle-driven solutions to our customers. We offer a wide range of services and products to small businesses, including website development and hosting, email marketing, social media, search engine optimization and logo design, in addition to our core checks and forms offerings. For financial institutions, we offer programs in customer acquisition and loyalty, fraud prevention and profitability, and financial technology solutions, including receivables management and data analytics, as well as our check program solutions. We are also a leading printer of checks and accessories sold directly to consumers. |
Consolidation | Consolidation – The consolidated financial statements include the accounts of Deluxe Corporation and its wholly-owned subsidiaries. All intercompany accounts, transactions and profits have been eliminated. |
Use of estimates | Use of estimates – We have prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States. In this process, it is necessary for us to make certain assumptions and estimates affecting the amounts reported in the consolidated financial statements and related notes. These estimates and assumptions are developed based upon all available information. However, actual results can differ from assumed and estimated amounts. |
Foreign currency translation | Foreign currency translation – The financial statements of our foreign subsidiaries are measured in the respective subsidiaries' functional currencies, primarily Canadian dollars, and are translated into U.S. dollars. Assets and liabilities are translated using the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average exchange rates during the year. The resulting translation gains and losses are reflected in accumulated other comprehensive loss in the shareholders' equity section of the consolidated balance sheets. Foreign currency transaction gains and losses are recorded in other income in the consolidated statements of income. |
Cash and cash equivalents | Cash and cash equivalents – We consider all cash on hand and other highly liquid investments with original maturities of three months or less to be cash and cash equivalents. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents approximate fair value. |
Marketable securities | Marketable securities – Marketable securities consist of a Canadian money market fund, which is classified as available for sale. The investment is carried at fair value and is included within other current assets in the consolidated balance sheets. 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. |
Trade accounts receivable | Trade accounts receivable – Trade accounts receivable are initially recorded at the invoiced amount upon the sale of goods or services to customers, and they do not bear interest. They are stated net of allowances for uncollectible accounts, which represent estimated losses resulting from the inability of customers to make the required payments. When determining the allowances for uncollectible accounts, we take several factors into consideration, including the overall composition of accounts receivable aging, our prior history of accounts receivable write-offs, the type of customer and our day-to-day knowledge of specific customers. Changes in the allowances for uncollectible accounts are included in selling, general and administrative (SG&A) expense in our consolidated statements of income. The point at which uncollected accounts are written off varies by type of customer, but generally does not exceed one year from the due date of the receivable. |
Inventories and supplies | Inventories and supplies – Inventories and supplies are stated at the lower of average cost or market. Average cost approximates cost calculated on a first-in, first-out basis. Supplies consist of items not used directly in the production of goods, such as maintenance and other supplies utilized in the production area. |
Funds held for customers | Funds held for customers – Our Canadian payroll services business collects funds from clients to pay their payroll and related taxes. We hold these funds temporarily until payments are remitted to the clients' employees and the appropriate taxing authorities. These funds, consisting of cash and available-for-sale marketable securities, are reported as funds held for customers in the consolidated balance sheets. The corresponding liability for these obligations is included in accrued liabilities in the consolidated balance sheets. The available-for-sale marketable securities are carried at fair value, with unrealized gains and losses included in accumulated other comprehensive loss in the consolidated balance sheets. Realized gains and losses are included in revenue in our consolidated statements of income. Realized gains recognized during the past three years were not significant. |
Long-term investments | Long-term investments – Long-term investments consist primarily of cash surrender values of company-owned life insurance policies. Certain of these policies fund amounts due under our deferred compensation plan and our inactive supplemental executive retirement plan. Further information regarding these plans can be found in Note 11 and Note 12. Additionally, long-term investments include an investment in domestic mutual funds with a fair value of $2,091 as of December 31, 2015 and $2,384 as of December 31, 2014 . We have elected to account for this investment 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. Realized and unrealized gains and losses, as well as dividends earned by the mutual fund investment, are included in SG&A expense in the consolidated statements of income. This investment corresponds to a liability under an officers' deferred compensation plan that 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 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 consolidated statements of income. The cost of securities sold is determined using the average cost method. |
Property, plant and equipment | Property, plant and equipment – Property, plant and equipment, including leasehold and other improvements that extend an asset's useful life or productive capabilities, are stated at historical cost less accumulated depreciation. Buildings have been assigned useful lives of 40 years and machinery and equipment are generally assigned useful lives ranging from one year to 11 years , with a weighted-average useful life of seven years as of December 31, 2015 . Buildings are depreciated using the 150% declining balance method, and machinery and equipment are depreciated using the sum-of-the-years' digits method. Leasehold and building improvements are depreciated on the straight-line basis over the estimated useful life of the property or the life of the lease, whichever is shorter. Maintenance and repairs are expensed as incurred. Fully depreciated assets are retained in property, plant and equipment until disposal. Any gains or losses resulting from the disposition of property, plant and equipment are included in SG&A expense in the consolidated statements of income, with the exception of building sales. Such gains and losses are reported separately in the consolidated statements of income. |
Intangibles | Intangibles – Intangible assets are stated at historical cost less accumulated amortization. Amortization expense is generally determined on the straight-line basis over periods ranging from one year to 20 years , with a weighted-average useful life of seven years as of December 31, 2015 . Customer lists are generally amortized using accelerated methods that reflect the pattern in which we receive the economic benefit of the asset. Each reporting period, we evaluate the remaining useful lives of our amortizable intangibles to determine whether events or circumstances warrant a revision to the remaining period of amortization. If our estimate of an asset's remaining useful life is revised, the remaining carrying amount of the asset is amortized prospectively over the revised remaining useful life. As of December 31, 2015 , we held a trade name asset that has been assigned an indefinite useful life. As such, this asset is not amortized, but is subject to impairment testing on at least an annual basis. Any gains or losses resulting from the disposition of intangibles are included in SG&A expense in the consolidated statements of income. We capitalize costs of software developed or obtained for internal use, including website development costs, once the preliminary project stage has been completed, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. Capitalized costs include only (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project, and (3) interest costs incurred, when significant, while developing internal-use software. Costs incurred in populating websites with information about the company or products are expensed as incurred. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. The carrying value of internal-use software is reviewed in accordance with our policy on impairment of long-lived assets and amortizable intangibles. We incur costs in connection with the development of certain software products that we sell to our customers. Costs for the development of software products to be sold are expensed as incurred until technological feasibility is established, at which time, such costs are capitalized until the product is available for general release to customers. We acquired software to be sold via the acquisition of Wausau Financial Systems, Inc. in October 2014 (Note 5). |
Impairment of long-lived assets and amortizable intangibles | Impairment of long-lived assets and amortizable intangibles – We evaluate the recoverability of property, plant, equipment and amortizable intangibles not held for sale whenever events or changes in circumstances indicate that an asset's carrying amount may not be recoverable. Such circumstances could include, but are not limited to, (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used or in its physical condition, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of an asset. We compare the carrying amount of the asset to the estimated undiscounted future cash flows associated with it. If the sum of the expected future net cash flows is less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds the fair value of the asset. As quoted market prices are not available for the majority of our assets, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. During 2014 and 2013, we recorded asset impairment charges related to Small Business Services intangible assets. Further information regarding the impairment charges can be found in Note 7. We evaluate the recoverability of property, plant, equipment and intangibles held for sale by comparing the asset's carrying amount with its fair value less costs to sell. Should the fair value less costs to sell be less than the carrying value of the long-lived asset, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds the fair value of the asset less costs to sell. The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. |
Impairment of indefinite-lived intangibles and goodwill | Impairment of indefinite-lived intangibles and goodwill – We evaluate the carrying value of indefinite-lived intangibles and goodwill on July 31 st of each year and between annual evaluations if events occur or circumstances change that would indicate a possible impairment. Such circumstances could include, but are not limited to, (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, (3) an adverse action or assessment by a regulator, or (4) an adverse change in market conditions that are indicative of a decline in the fair value of the assets. In completing the annual impairment analysis of our indefinite-lived trade name in each of the past three years, we elected to perform a quantitative assessment. This assessment compares the carrying amount of the asset to its estimated fair value. The estimate of fair value is based on a relief from royalty method, which calculates the cost savings associated with owning rather than licensing the trade name. An assumed royalty rate is applied to forecasted revenue and the resulting cash flows are discounted. If the estimated fair value is less than the carrying value of the asset, an impairment loss would be recognized for the difference. The impairment analysis completed in each of the past three years indicated no impairment of our indefinite-lived trade name. In addition to the required impairment analysis, we regularly evaluate the remaining useful life of this asset to determine whether events and circumstances continue to support an indefinite useful life. If we were to determine that the asset has a finite useful life, we would test it for impairment and then amortize its remaining carrying value over its estimated remaining useful life. To analyze goodwill for impairment, we must assign our goodwill to individual reporting units. Identification of reporting units includes an analysis of the components that comprise each of our operating segments, which considers, among other things, the manner in which we operate our business and the availability of discrete financial information. Components of an operating segment are aggregated to form one reporting unit if the components have similar economic characteristics. We periodically review our reporting units to ensure that they continue to reflect the manner in which we operate our business. When completing our annual goodwill impairment analysis, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after this qualitative assessment, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step, quantitative impairment test is unnecessary. During 2015 and 2013, we elected to perform a qualitative assessment for all of our reporting units to which goodwill was assigned, with the exception of our Financial Services Commercial reporting unit, which was acquired subsequent to our 2014 annual impairment analysis. We noted no changes in events or circumstances which would have required us to complete the two-step quantitative goodwill impairment analysis for any of the reporting units analyzed. In addition, the quantitative analysis completed for the Financial Services Commercial reporting unit in 2015 indicated no impairment. As such, no goodwill impairment charges were recorded as a result of our 2015 or 2013 annual goodwill impairment analyses. In completing the 2015 goodwill impairment analysis for our Financial Services Commercial reporting unit and the 2014 annual goodwill impairment analysis for all of our reporting units, we elected to perform a quantitative assessment. Our previous quantitative analysis was completed during 2010. First, we calculated the estimated fair value of each reporting unit to which goodwill was assigned and compared this estimated fair value to the carrying amount of the reporting unit's net assets. In calculating the estimated fair value, we used the income approach. The income approach is a valuation technique under which we estimated future cash flows using the reporting unit's financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we projected revenue and applied our fixed and variable cost experience rates to the projected revenue to arrive at the future cash flows. A terminal value was then applied to the projected cash flow stream. Future estimated cash flows were discounted to their present value to calculate the estimated fair value. The discount rate used was the value-weighted average of our estimated cost of capital derived using both known and customary market metrics. In determining the estimated fair values of our reporting units, we were required to estimate a number of factors, including projected operating results, terminal growth rates, economic conditions, anticipated future cash flows, the discount rate and the allocation of shared or corporate items. Because our 2014 quantitative analysis included all of our reporting units, the summation of our reporting units' fair values was compared to our consolidated fair value, as indicated by our market capitalization, to evaluate the reasonableness of our calculations. If the carrying amount of a reporting unit's net assets exceeds its estimated fair value, the second step of the goodwill impairment analysis requires us to measure the amount of the impairment loss. An impairment loss is calculated by comparing the implied fair value of the goodwill to its carrying amount. To calculate the implied fair value of goodwill, the fair value of the reporting unit's assets and liabilities, excluding goodwill, is estimated. The excess of the fair value of the reporting unit over the amount assigned to its assets and liabilities, excluding goodwill, is the implied fair value of the reporting unit's goodwill. We were not required to complete the second step of the goodwill impairment analysis for any of our reporting units, and no goodwill impairment charges were recorded during 2014. Further information regarding our annual impairment analyses can be found in Note 7. |
Contract acquisition costs | Contract acquisition costs – We record contract acquisition costs when we sign or renew certain contracts with our financial institution clients. These costs, which are essentially pre-paid product discounts, consist of cash payments or accruals related to amounts owed to financial institution clients by our Financial Services segment. Contract acquisition costs are amortized as reductions of revenue over the related contract term, generally on the straight-line basis. Currently, these amounts are being amortized over periods ranging from one year to 10 years , with a weighted-average life of six years as of December 31, 2015 . Whenever events or changes occur that impact the related contract, including significant declines in the anticipated profitability, we evaluate the carrying value of the contract acquisition costs to determine if impairment has occurred. Should a financial institution cancel a contract prior to the agreement's termination date, or should the volume of orders realized through a financial institution fall below contractually-specified minimums, we generally have a contractual right to a refund of the remaining unamortized contract acquisition costs. These costs are included in other non-current assets in the consolidated balance sheets. |
Advertising costs | Advertising costs – Deferred advertising costs include materials, printing, labor and postage costs related to direct response advertising programs of our Direct Checks and Small Business Services segments. These costs are amortized as SG&A expense over periods (not exceeding 18 months ) that correspond to the estimated revenue streams of the individual advertisements. The actual revenue streams are analyzed at least annually to monitor the propriety of the amortization periods. Judgment is required in estimating the future revenue streams, especially with regard to check re-orders, which can span an extended period of time. Significant changes in the actual revenue streams would require the amortization periods to be modified, thus impacting our results of operations during the period in which the change occurred and in subsequent periods. Within our Direct Checks segment, approximately 87% of the costs of individual advertisements is expensed within six months of the advertisement. The deferred advertising costs of our Small Business Services segment are fully amortized within six months of the advertisement. Deferred advertising costs are included in other current assets and other non-current assets in the consolidated balance sheets. Non-direct response advertising projects are expensed as incurred. Catalogs provided to financial institution clients of our Financial Services segment are accounted for as prepaid assets until they are shipped to financial institutions. The total amount of advertising expense was $87,396 in 2015 , $91,937 in 2014 and $93,872 in 2013 . |
Loans and notes receivable from distributors | Loans and notes receivable from distributors – We have, at times, provided loans to certain of our Safeguard® distributors to allow them to purchase the operations of other small business distributors. We have also sold the operations of distributors that we own in exchange for notes receivable. These loans and notes receivable are included in other current assets and other non-current assets in the consolidated balance sheets. Interest is accrued at market interest rates as earned. We generally withhold commissions payable to the distributors to settle the monthly payments due on the receivables. As of December 31, 2015 and December 31, 2014 , past due amounts, allowances for credit losses and receivables placed on non-accrual status were not significant. The determination to place receivables on non-accrual status is completed on a case-by-case basis, evaluating the specifics of each situation. |
Restructuring charges | Restructuring charges – Over the past several years, we have recorded restructuring charges as a result of various cost management efforts, including facility closings, the relocation of business activities, and fundamental changes in the manner in which certain business functions are conducted. These charges have consisted primarily of accruals for employee termination benefits payable under our ongoing severance benefit plan. We record accruals for employee termination benefits when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. As such, judgment is involved in determining when it is appropriate to record restructuring accruals. Additionally, we are required to make estimates and assumptions in calculating the restructuring accruals as, on some occasions, employees choose to voluntarily leave the company prior to their termination date or they secure another position within the company. In these situations, the employees do not receive termination benefits. To the extent our assumptions and estimates differ from our actual costs, subsequent adjustments to restructuring accruals have been and will be required. Restructuring accruals are included in accrued liabilities in our consolidated balance sheets. In addition to employee termination benefits, we also typically incur other costs related to restructuring activities including, but not limited to, information technology costs, employee and equipment moves, training and travel. These costs are expensed as incurred. |
Litigation | Litigation – We are party to legal actions and claims arising in the ordinary course of business. We record accruals for legal matters when the expected outcome of these matters is either known or considered probable and can be reasonably estimated. Our accruals do not include related legal and other costs expected to be incurred in defense of legal actions. Further information regarding litigation can be found in Note 14. |
Income taxes | Income taxes – Deferred income taxes result from temporary differences between the financial reporting basis of assets and liabilities and their respective tax reporting bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences reverse. Net deferred tax assets are recognized to the extent that realization of such benefits is more likely than not. For periods prior to October 1, 2015, current deferred tax assets and liabilities were netted by jurisdiction in the consolidated balance sheets, as were non-current deferred tax assets and liabilities. On October 1, 2015, we adopted Accounting Standards Update (ASU) No. 2015-17, Balance Sheet Classification of Deferred Taxes . This standard requires that all deferred income tax assets and liabilities be classified as non-current in the consolidated balance sheets. We adopted this standard on a prospective basis. As such, information for prior periods has not been revised for this change in accounting principle. We are subject to tax audits in numerous domestic and foreign tax jurisdictions. Tax audits are often complex and can require several years to complete. In the normal course of business, we are subject to challenges from the Internal Revenue Service and other tax authorities regarding the amount of taxes due. These challenges may alter the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. We recognize the benefits of tax return positions in the financial statements when they are more-likely-than-not to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than 50% likely to be realized. Accrued interest and penalties related to unrecognized tax positions are included in our provision for income taxes in the consolidated statements of income. |
Derivative financial instruments | Derivative financial instruments – Information regarding our derivative financial instruments is included in Note 6. We do not use derivative financial instruments for speculative or trading purposes. Our policy is that all derivative transactions must be linked to an existing balance sheet item or firm commitment, and the notional amount cannot exceed the value of the exposure being hedged. We recognize all derivative financial instruments in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. As of December 31, 2015 and December 31, 2014 , they are included in other non-current liabilities in the consolidated balance sheets. Changes in the fair value of derivative financial instruments are recognized periodically either in income or in shareholders' equity as a component of accumulated other comprehensive loss, depending on whether the derivative financial instrument qualifies for hedge accounting, and if so, whether it qualifies as a fair value hedge or a cash flow hedge and whether the hedge is effective. Generally, changes in fair values of derivatives accounted for as fair value hedges are recorded in income along with the portion of the change in the fair value of the hedged items that relate to the hedged risk. Changes in fair values of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in accumulated other comprehensive loss, net of tax. We classify the cash flows from derivative instruments that have been designated as fair value or cash flow hedges in the same category as the cash flows from the items being hedged. Changes in fair values of derivatives not qualifying as hedges and the ineffective portion of hedges are reported in income. |
Revenue recognition | Revenue recognition – In general, revenue is recognized when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the sales price is fixed or determinable, and (4) collectibility is reasonably assured. Revenue is presented in the consolidated statements of income net of rebates, discounts, amortization of contract acquisition costs, and sales tax. The majority of our revenues are generated from the sale of products for which revenue is recognized upon shipment or customer receipt, based upon the transfer of title. Product revenue includes amounts billed to customers for shipping and handling and pass-through costs, such as marketing materials for which our financial institution clients reimburse us. Costs incurred for shipping and handling and pass-through costs are reflected in cost of products. For sales with a right of return, we record a reserve for estimated sales returns based on significant historical experience. We enter into contractual agreements with financial institution clients for rebates on certain products we sell. We record these amounts as reductions of revenue in the consolidated statements of income and as accrued liabilities in the consolidated balance sheets when the related revenue is recorded. At times, we may also sell products at discounted prices or provide free products to customers when they purchase a specified product. Discounts are recorded as reductions of revenue when the related revenue is recorded. The cost of free products is recorded as cost of products when the revenue for the related order is recorded. Reported revenue for our Financial Services segment does not reflect the full retail price paid by end-consumers to their financial institutions. Instead, revenue reflects the amounts paid to us by our financial institution clients. Our services consist primarily of web design, hosting and other web services; fraud prevention; marketing services, including email, mobile, social media and other self-service marketing solutions, as well as data and analytics marketing solutions; financial technology solutions; financial institution customer acquisition and loyalty programs; payroll services; and logo design. We recognize the majority of these service revenues as the services are provided. In some situations, our web hosting and applications services are billed on a quarterly, semi-annual or annual basis. When a customer pays in advance for services, we defer the revenue and recognize it as the services are performed. Up-front set-up fees related to our web hosting, applications services and outsourcing services are deferred and recognized as revenue on the straight-line basis over the term of the customer relationship. Deferred revenue is included in accrued liabilities in the consolidated balance sheets. A portion of the revenue generated by Wausau Financial Systems, Inc., which was acquired in October 2014 (Note 5), results from the sale of bundled arrangements that may include hardware, software and professional services. As these arrangements involve customization and modification of the software, we recognize revenues from these contracts using the percentage-of-completion method of accounting, which involves calculating the percentage of services provided during the reporting period compared with the total estimated services to be provided over the duration of the contract. We record costs and earnings in excess of billings on uncompleted contracts within other current assets and billings in excess of costs and earnings on uncompleted contracts within other current liabilities in the consolidated balance sheets. The amount included in other current assets related to these contracts was $7,471 as of December 31, 2015 and $8,407 as of December 31, 2014 . The amount included in other current liabilities related to these contracts was $569 as of December 31, 2015 and $708 as of December 31, 2014 . At times, a financial institution client may terminate its contract with us prior to the end of the contract term. In substantially all of these cases, the financial institution is contractually required to remit a contract termination payment. Such payments are recorded as revenue when the termination agreement is executed, provided that we have no further service or contractual obligations, and collection of the funds is assured. If we have a continuing service obligation following the execution of a contract termination agreement, we record the related revenue over the remaining service period. |
Employee share-based compensation | Employee share-based compensation – Our share-based compensation consists of non-qualified stock options, restricted stock units, restricted stock and an employee stock purchase plan. Additionally, we began granting performance share awards during 2014. Employee share-based compensation expense is included in total cost of revenue and in SG&A expense in our consolidated statements of income, based on the functional areas of the employees receiving the awards, and is recognized as follows: • The fair value of stock options is measured on the grant date using the Black-Scholes option pricing model. The related compensation expense is recognized on the straight-line basis, net of estimated forfeitures, over the options' vesting periods. • The fair value of restricted stock and a portion of our restricted stock unit awards is measured on the grant date based on the market value of our common stock. The related compensation expense, net of estimated forfeitures, is recognized over the applicable service period. • Certain of our restricted stock unit awards may be settled in cash if an employee voluntarily chooses to leave the company. These awards are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets and are re-measured at fair value as of each balance sheet date. • Compensation expense resulting from the 15% discount provided under our employee stock purchase plan is recognized over the purchase period of six months . • The performance share awards specify certain performance/market-based conditions that must be achieved in order for the awards to vest. For the portion of the awards based on a performance condition, the performance target is not considered in determining the fair value of the awards and thus, fair value is measured on the grant date based on the market value of our common stock. The related compensation expense for this type of award is recognized, net of estimated forfeitures, over the related service period. The amount of compensation expense is dependent on our periodic assessment of the probability of the targets being achieved and our estimate, which may vary over time, of the number of shares that ultimately will be issued. For the portion of the awards based on a market condition, fair value is calculated on the grant date using the Monte Carlo simulation model. All compensation cost for these awards is recognized, net of estimated forfeitures, over the related service period, even if the market condition is never satisfied. |
Earnings per share | Earnings per share – We calculate earnings per share using the two-class method as we have unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalent payments. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Basic earnings per share is based on the weighted-average number of common shares outstanding during the year. Diluted earnings per share is based on the weighted-average number of common shares outstanding during the year, adjusted to give effect to potential common shares such as stock options and shares to be issued under our employee stock purchase plan. When determining the denominator for the diluted earnings per share calculation under the treasury stock method, we exclude from assumed proceeds the impact of pro forma deferred tax assets. |
Comprehensive income | Comprehensive income – Comprehensive income includes charges and credits to shareholders' equity that are not the result of transactions with shareholders. Our total comprehensive income consists of net income, amortization of gains and losses on derivative instruments, changes in the funded status and amortization of amounts related to our postretirement benefit plans, unrealized gains and losses on available-for-sale marketable securities, and foreign currency translation adjustments. The items of comprehensive income, with the exception of net income, are included in accumulated other comprehensive loss in the consolidated balance sheets and statements of shareholders' equity. |
Recently adopted accounting pronouncements and accounting pronouncements not yet adopted | Recently adopted accounting pronouncements – In April 2014, the Financial Accounting Standards Board (FASB) issued 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, on a prospective basis. As such, this standard is applicable to any new disposals or new classifications of disposal groups as held for sale that occur on or after January 1, 2015. As of December 31, 2015, the adoption of this standard has had no impact on our consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes . This standard requires that all deferred income tax assets and liabilities be classified as non-current in the consolidated balance sheets. We adopted this guidance early on October 1, 2015, on a prospective basis. As such, information for prior periods has not been revised for this change in accounting principle. 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 sheets 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 December 31, 2015 , we had debt issuance costs of $2,249 related to long-term debt, which will be reclassified from other non-current assets upon adoption of this standard. In August 2015, the FASB issued ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements – Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting . This new standard adds SEC paragraphs pursuant to the SEC Staff announcement at the June 18, 2015 Emerging Issues Task Force (EITF) meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. Under this guidance, the SEC Staff would not object to presenting such costs as an asset and subsequently amortizing the deferred costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings under the arrangement. As of December 31, 2015 , debt issuance costs of $2,003 related to our line-of-credit arrangement were included within other current assets in our consolidated balance sheet and are being amortized ratably over the term of the arrangement. Upon the adoption of ASU No. 2015-03 on January 1, 2016, we will continue to include these costs within other current assets and we will continue to amortize them over the term of the arrangement. 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. In May 2015, the FASB issued ASU No. 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent) . Under the new standard, investments measured at net asset value (NAV) as a practical expedient for fair value are excluded from the fair value hierarchy. As such, they are not assigned a fair value measurement level in financial statement disclosures of fair value. This new standard will impact our disclosures regarding the plan assets of our postretirement benefit plan as presented in Note 12. The new guidance is effective for us on January 1, 2016 and we will apply the standard retrospectively to all periods presented. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory . The new standard requires that inventory within the scope of the guidance be measured at the lower of cost or net realizable value. Previously, inventory was measured at the lower of cost or market. The new guidance is effective for us on January 1, 2017 and will be applied prospectively. We do not expect the application of this standard to have a significant impact on our results of operations or financial position. In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. When recording the purchase price allocation for a business combination in the financial statements, an acquirer may record preliminary amounts when measurements are incomplete as of the end of a reporting period. When the required information is received to finalize the purchase price allocation, the preliminary amounts are adjusted. These adjustments are referred to as measurement-period adjustments. The new guidance eliminates the requirement to restate prior period financial statements for measurement-period adjustments. Instead, it requires that the cumulative impact of a measurement-period adjustment be recognized in the reporting period in which the adjustment is identified. The new guidance is effective for us on January 1, 2016 and will be applied prospectively. We do not expect the application of this standard to have a significant impact on our results of operations or financial position. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities . The new standard is intended to improve the recognition, measurement, presentation and disclosure of financial instruments. The new guidance is effective for us on January 1, 2018. We do not expect the application of this standard to have a significant impact on our results of operations or financial position. |
Fair value measurements (Polici
Fair value measurements (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair value level transfers, recurring fair value measurements | 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 an28
Supplemental balance sheet and cash flow information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental balance sheet and cash flow information [Abstract] | |
Trade accounts receivable | Trade accounts receivable – Net trade accounts receivable was comprised of the following at December 31: (in thousands) 2015 2014 Trade accounts receivable – gross $ 128,470 $ 117,991 Allowances for uncollectible accounts (4,816 ) (4,335 ) Trade accounts receivable – net $ 123,654 $ 113,656 Changes in the allowances for uncollectible accounts for the years ended December 31 were as follows: (in thousands) 2015 2014 2013 Balance, beginning of year $ 4,335 $ 3,861 $ 3,912 Bad debt expense 4,858 3,994 3,722 Write-offs, net of recoveries (4,377 ) (3,520 ) (3,773 ) Balance, end of year $ 4,816 $ 4,335 $ 3,861 |
Inventories and supplies | Inventories and supplies – Inventories and supplies were comprised of the following at December 31: (in thousands) 2015 2014 Raw materials $ 5,719 $ 5,899 Semi-finished goods 8,208 8,990 Finished goods 24,955 21,298 Supplies 3,074 3,224 Inventories and supplies $ 41,956 $ 39,411 |
Available-for-sale securities | Available-for-sale securities – Available-for-sale marketable securities included within funds held for customers and other current assets were comprised of the following: December 31, 2015 (in thousands) Cost Gross unrealized gains Gross unrealized losses Fair value Canadian and provincial government securities $ 7,932 $ — $ (91 ) $ 7,841 Canadian guaranteed investment certificate 7,226 — — 7,226 Available-for-sale securities (funds held for customers) (1) 15,158 — (91 ) 15,067 Canadian money market fund (other current assets) 1,616 — — 1,616 Available-for-sale securities $ 16,774 $ — $ (91 ) $ 16,683 (1) Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2015 , also included cash of $38,276 . 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 certificate 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 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 December 31, 2015 were as follows: (in thousands) Fair value Due in one year or less $ 10,606 Due in two to five years 3,270 Due in six to ten years 2,807 Available-for-sale securities $ 16,683 |
Property, plant and equipment | Property, plant and equipment – Property, plant and equipment was comprised of the following at December 31: 2015 2014 (in thousands) Gross carrying amount Accumulated depreciation Net carrying amount Gross carrying amount Accumulated depreciation Net carrying amount Land and improvements $ 28,118 $ (7,836 ) $ 20,282 $ 28,367 $ (7,612 ) $ 20,755 Buildings and improvements 110,100 (73,052 ) 37,048 109,307 (69,882 ) 39,425 Machinery and equipment 292,299 (263,897 ) 28,402 298,479 (271,036 ) 27,443 Property, plant and equipment $ 430,517 $ (344,785 ) $ 85,732 $ 436,153 $ (348,530 ) $ 87,623 |
Assets held for sale | Net assets held for sale consisted of the following at December 31: (in thousands) 2015 2014 Balance sheet caption Current assets $ 3 $ 687 Other current assets Intangibles 13,533 25,926 Assets held for sale Other non-current assets 436 893 Assets held for sale Accrued liabilities (366 ) (1,058 ) Accrued liabilities Non-current deferred income tax liabilities (5,777 ) (8,774 ) Other non-current liabilities Net assets held for sale $ 7,829 $ 17,674 |
Intangibles | Intangibles – Intangibles were comprised of the following at December 31: 2015 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 375,037 (310,665 ) 64,372 364,229 (303,340 ) 60,889 Customer lists/relationships 202,682 (54,990 ) 147,692 106,218 (40,097 ) 66,121 Trade names 64,881 (36,325 ) 28,556 69,281 (37,623 ) 31,658 Software to be sold 28,500 (3,765 ) 24,735 28,500 (601 ) 27,899 Other 2,858 (2,002 ) 856 8,160 (6,647 ) 1,513 Amortizable intangibles 673,958 (407,747 ) 266,211 576,388 (388,308 ) 188,080 Intangibles $ 693,058 $ (407,747 ) $ 285,311 $ 595,488 $ (388,308 ) $ 207,180 |
Amortization of intangibles | Amortization expense related to intangibles was as follows for the years ended December 31: (in thousands) 2015 2014 2013 Internal-use software $ 31,752 $ 34,282 $ 32,555 Software to be sold 3,164 601 — Other amortizable intangibles 25,784 14,192 14,096 Amortization of intangibles $ 60,700 $ 49,075 $ 46,651 |
Estimated amortization expense | Based on the intangibles in service as of December 31, 2015 , estimated amortization expense for each of the next five years ending December 31 is as follows: (in thousands) Estimated amortization expense 2016 $ 63,610 2017 49,487 2018 35,610 2019 27,698 2020 23,046 |
Acquired intangibles | In the normal course of business, we acquire internal-use software. In conjunction with acquisitions, we also acquire internal-use software and other amortizable intangible assets. The following intangible assets were acquired during the years ended December 31: 2015 2014 2013 (in thousands) Amount Weighted-average amortization period (in years) Amount Weighted-average amortization period (in years) Amount Weighted-average amortization period (in years) Internal-use software $ 35,945 4 $ 33,867 4 $ 34,455 3 Customer lists/relationships 101,867 8 45,869 9 16,610 8 Software to be sold — — 28,500 9 — — Trade names 1,400 2 2,000 3 200 2 Other — — 50 2 3,310 4 Acquired intangibles $ 139,212 7 $ 110,286 7 $ 54,575 5 |
Goodwill | Goodwill – Changes in goodwill by reportable segment and in total were as follows: (in thousands) Small Business Services Financial Services Direct Checks Total Balance, December 31, 2013: Goodwill, gross $ 652,554 $ 41,717 $ 148,506 $ 842,777 Accumulated impairment charges (20,000 ) — — (20,000 ) Goodwill, net of accumulated impairment charges 632,554 41,717 148,506 822,777 Adjustment for acquisition of Destination Rewards, Inc. — (1,375 ) — (1,375 ) Acquisition of Wausau Financial Systems, Inc. — 45,521 — 45,521 Acquisition of NetClime, Inc. 1,615 — — 1,615 Currency translation adjustment (162 ) — — (162 ) 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. — (714 ) — (714 ) Acquisition of Verify Valid 5,650 — — 5,650 Acquisition of small business distributor 9,285 — — 9,285 Acquisition of Tech Assets 2,628 — — 2,628 Acquisition of Datamyx LLC — 91,465 — 91,465 Currency translation adjustment (275 ) — — (275 ) Balance, December 31, 2015: Goodwill, gross 671,295 176,614 148,506 996,415 Accumulated impairment charges (20,000 ) — — (20,000 ) Goodwill, net of accumulated impairment charges $ 651,295 $ 176,614 $ 148,506 $ 976,415 |
Other non-current assets | Other non-current assets – Other non-current assets were comprised of the following at December 31: (in thousands) 2015 2014 Contract acquisition costs $ 58,792 $ 74,101 Loans and notes receivable from distributors 23,957 14,583 Postretirement benefit plan asset (Note 12) 16,250 24,243 Deferred advertising costs 7,500 8,922 Other 7,559 9,792 Other non-current assets $ 114,058 $ 131,641 |
Changes in contract acquisition costs | Changes in contract acquisition costs were as follows for the years ended December 31: (in thousands) 2015 2014 2013 Balance, beginning of year $ 74,101 $ 35,421 $ 43,036 Additions (1) 6,999 57,225 10,072 Amortization (18,741 ) (18,105 ) (17,197 ) Other (3,567 ) (440 ) (490 ) Balance, end of year $ 58,792 $ 74,101 $ 35,421 (1) Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $12,806 for 2015 , $16,567 for 2014 and $12,133 for 2013 . |
Accrued liabilities | Accrued liabilities – Accrued liabilities were comprised of the following at December 31: (in thousands) 2015 2014 Funds held for customers $ 52,366 $ 42,944 Deferred revenue 48,119 48,514 Performance-based compensation 40,683 38,259 Customer rebates 18,900 20,550 Contract acquisition costs due within one year 9,045 9,815 Restructuring due within one year (Note 8) 3,864 4,276 Other 55,446 54,763 Accrued liabilities $ 228,423 $ 219,121 |
Supplemental cash flow information | Supplemental cash flow information – Cash payments for income taxes and interest were as follows for the years ended December 31: (in thousands) 2015 2014 2013 Income taxes paid $ 110,999 $ 100,639 $ 90,322 Interest paid 24,286 39,946 38,676 |
Earnings per share (Tables)
Earnings per share (Tables) | 12 Months Ended |
Dec. 31, 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. (dollars, shares and options in thousands, except per share amounts) 2015 2014 2013 Earnings per share – basic: Net income $ 218,629 $ 199,794 $ 186,652 Income allocated to participating securities (1,460 ) (1,075 ) (846 ) Income available to common shareholders $ 217,169 $ 198,719 $ 185,806 Weighted-average shares outstanding 49,445 49,827 50,550 Earnings per share – basic $ 4.39 $ 3.99 $ 3.68 Earnings per share – diluted: Net income $ 218,629 $ 199,794 $ 186,652 Income allocated to participating securities (1,453 ) (1,068 ) (840 ) Re-measurement of share-based awards classified as liabilities (89 ) 183 314 Income available to common shareholders $ 217,087 $ 198,909 $ 186,126 Weighted-average shares outstanding 49,445 49,827 50,550 Dilutive impact of potential common shares 380 435 460 Weighted-average shares and potential common shares outstanding 49,825 50,262 51,010 Earnings per share – diluted $ 4.36 $ 3.96 $ 3.65 Antidilutive options excluded from calculation 354 7 12 |
Other comprehensive income (Tab
Other comprehensive income (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
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 component Amounts reclassified from accumulated other comprehensive loss Affected line item in consolidated statements of income (in thousands) 2015 2014 2013 Amortization of loss on interest rate locks (1) $ — $ (1,282 ) $ (1,711 ) Interest expense Tax benefit — 501 671 Income tax provision Amortization of loss on interest rate locks, net of tax — (781 ) (1,040 ) Net income Amortization of postretirement benefit plan items: Prior service credit 1,421 1,421 1,421 (2) Net actuarial loss (3,120 ) (3,418 ) (4,439 ) (2) Total amortization (1,699 ) (1,997 ) (3,018 ) (2) Tax benefit 450 661 954 (2) Amortization of postretirement benefit plan items, net of tax (1,249 ) (1,336 ) (2,064 ) (2) Total reclassifications, net of tax $ (1,249 ) $ (2,117 ) $ (3,104 ) (1) Relates to interest rate locks executed in 2004. Further information regarding these financial instruments can be found in Note 6. (2) Amortization of postretirement benefit plan items is included in the computation of net periodic benefit income. Additional details can be found in Note 12. |
Accumulated other comprehensive loss | Accumulated other comprehensive loss – The components of accumulated other comprehensive loss at December 31 were as follows: (in thousands) Postretirement benefit plans, net of tax Loss on derivatives, net of tax (1) Net unrealized (loss) gain on marketable securities, net of tax Currency translation adjustment Accumulated other comprehensive loss Balance, December 31, 2012 $ (45,303 ) $ (1,821 ) $ (92 ) $ 6,569 $ (40,647 ) Other comprehensive income (loss) before reclassifications 8,365 — (184 ) (4,062 ) 4,119 Amounts reclassified from accumulated other comprehensive loss 2,064 1,040 — — 3,104 Net current-period other comprehensive income (loss) 10,429 1,040 (184 ) (4,062 ) 7,223 Balance, December 31, 2013 (34,874 ) (781 ) (276 ) 2,507 (33,424 ) Other comprehensive income (loss) before reclassifications 1,133 — 151 (6,315 ) (5,031 ) Amounts reclassified from accumulated other comprehensive loss 1,336 781 — — 2,117 Net current-period other comprehensive income (loss) 2,469 781 151 (6,315 ) (2,914 ) Balance, December 31, 2014 (32,405 ) — (125 ) (3,808 ) (36,338 ) Other comprehensive (loss) income before reclassifications (7,666 ) — 11 (12,459 ) (20,114 ) Amounts reclassified from accumulated other comprehensive loss 1,249 — — — 1,249 Net current-period other comprehensive (loss) income (6,417 ) — 11 (12,459 ) (18,865 ) Balance, December 31, 2015 $ (38,822 ) $ — $ (114 ) $ (16,267 ) $ (55,203 ) (1) Relates to interest rate locks executed in 2004. Further information regarding these financial instruments can be found in Note 6. |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Allocation of the aggregate purchase price for acquisitions completed during the period | The following illustrates the allocation of the aggregate purchase price for the above acquisitions to the assets acquired and liabilities assumed, reduced for any cash or cash equivalents acquired with the acquisitions. (in thousands) 2015 acquisitions 2014 acquisitions (1) 2013 acquisitions (2) Net tangible assets acquired and liabilities assumed $ 4,329 $ (17,091 ) $ (12,418 ) Identifiable intangible assets: Customer lists/relationships 101,867 45,022 43,229 Software to be sold — 28,500 — Internal-use software 4,902 1,300 8,446 Trade names 1,400 2,000 200 Other — 50 2,100 Total intangible assets 108,169 76,872 53,975 Goodwill 109,028 46,422 31,899 Total aggregate purchase price 221,526 106,203 73,456 Liabilities for holdback payments and contingent consideration (3) (7,404 ) (1,600 ) (3,922 ) Non-cash consideration (4) (5,419 ) (371 ) — Net cash paid for current year acquisitions 208,703 104,232 69,534 Holdback payments for prior year acquisitions 4,287 797 175 Payments for acquisitions, net of cash acquired $ 212,990 $ 105,029 $ 69,709 (1) Includes adjustments recorded in 2015 for the finalization of purchase accounting for the Wausau acquisition. These adjustments decreased goodwill $714 from the preliminary amount recorded as of December 31, 2014, with the offset to certain income and sales tax accounts. The amount of intangible assets acquired includes assets classified as held for sale upon acquisition of $1,353 . (2) Includes adjustments recorded in 2014 for the finalization of purchase accounting for the Destination Rewards acquisition. These adjustments decreased goodwill $1,375 from the preliminary amount recorded as of December 31, 2013, with the offset to intangible assets. The amount of intangible assets acquired includes assets classified as held for sale upon acquisition of $24,502 . (3) Consists of holdback payments due at a future date and liabilities for contingent consideration related primarily to the 2015 acquisitions of Verify Valid and a small business distributor. Further information regarding liabilities for contingent consideration can be found in Note 7. (4) Consists of pre-acquisition amounts owed to us by certain of the acquired businesses. |
Fair value measurements (Tables
Fair value measurements (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Nonrecurring fair value measurements | Information regarding these nonrecurring fair value measurements was as follows: Fair value measurements using Fair value as of measurement date Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Asset impairment charge (in thousands) (Level 1) (Level 2) (Level 3) 2014: Internal-use software $ — $ — $ — $ — $ 4,036 Customer relationships — — — — 1,952 Trade name — — — — 480 Total impairment charge $ 6,468 2013: Customer relationships $ 2,120 $ — $ — $ 2,120 $ 5,000 |
Gain (loss) from derivative instruments | 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 income and were as follows: (in thousands) 2015 2014 2013 Gain (loss) from derivatives $ 3,225 $ 6,014 $ (13,750 ) (Loss) gain from change in fair value of hedged debt (3,225 ) (6,603 ) 13,851 Net (increase) decrease in interest expense $ — $ (589 ) $ 101 |
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 December 31, 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) $ 15,067 $ — $ 15,067 $ — Available-for-sale marketable securities (other current assets) 1,616 — 1,616 — Long-term investment in mutual funds 2,091 2,091 — — Derivative liabilities (4,842 ) — (4,842 ) — Accrued contingent consideration (5,861 ) — — (5,861 ) 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 ) — |
Change in accrued contingent consideration | Accrued contingent consideration related primarily to the acquisitions of Verify Valid and a small business distributor, as discussed above under the caption 2015 acquisitions . Changes in accrued contingent consideration during 2015 were as follows: (in thousands) 2015 Balance, December 31, 2014 $ 409 Acquisition date fair value 5,575 Change in fair value 187 Payments (310 ) Balance, December 31, 2015 $ 5,861 |
Fair value measurements of other financial instruments | Fair value measurements using December 31, 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 $ 62,427 $ 62,427 $ 62,427 $ — $ — Cash (funds held for customers) 38,276 38,276 38,276 — — Loans and notes receivable from distributors 25,745 23,383 — — 23,383 Short-term borrowings 434,000 434,000 434,000 — — Long-term debt (1) 195,158 207,000 — 207,000 — (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) | 12 Months Ended |
Dec. 31, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring charges by type and income statement category | Net restructuring charges for the years ended December 31 consisted of the following components: (in thousands) 2015 2014 2013 Severance accruals $ 5,891 $ 8,411 $ 7,495 Severance reversals (1,197 ) (1,513 ) (805 ) Operating lease obligations 338 — 216 Operating lease obligations reversals — — (157 ) Net restructuring accruals 5,032 6,898 6,749 Other costs 1,202 2,757 4,157 Net restructuring charges $ 6,234 $ 9,655 $ 10,906 Number of employees included in severance accruals 290 260 230 The net restructuring charges for the years ended December 31 are reflected in the consolidated statements of income as follows: (in thousands) 2015 2014 2013 Total cost of revenue $ 1,816 $ 879 $ 1,471 Operating expenses 4,418 8,776 9,435 Net restructuring charges $ 6,234 $ 9,655 $ 10,906 |
Restructuring accruals, initiatives summarized by year | Accruals for our restructuring initiatives, summarized by year, were as follows: (in thousands) 2010/2011 initiatives 2012 initiatives 2013 initiatives 2014 initiatives 2015 initiatives Total Balance, December 31, 2012 $ 106 $ 4,544 $ — $ — $ — $ 4,650 Restructuring charges 49 283 7,379 — — 7,711 Restructuring reversals (3 ) (822 ) (137 ) — — (962 ) Payments (152 ) (3,596 ) (2,013 ) — — (5,761 ) Balance, December 31, 2013 — 409 5,229 — — 5,638 Restructuring charges — 21 250 8,140 — 8,411 Restructuring reversals — (12 ) (859 ) (642 ) — (1,513 ) Payments — (386 ) (4,492 ) (3,382 ) — (8,260 ) Balance, December 31, 2014 — 32 128 4,116 — 4,276 Restructuring charges — — — 102 6,127 6,229 Restructuring reversals — — (48 ) (691 ) (458 ) (1,197 ) Payments — (32 ) (80 ) (3,351 ) (1,981 ) (5,444 ) Balance, December 31, 2015 $ — $ — $ — $ 176 $ 3,688 $ 3,864 Cumulative amounts: Restructuring charges $ 18,854 $ 8,012 $ 7,629 $ 8,242 $ 6,127 $ 48,864 Restructuring reversals (3,267 ) (1,363 ) (1,044 ) (1,333 ) (458 ) (7,465 ) Payments (15,587 ) (6,649 ) (6,585 ) (6,733 ) (1,981 ) (37,535 ) Balance, December 31, 2015 $ — $ — $ — $ 176 $ 3,688 $ 3,864 |
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 (1) Small Business Services Financial Services Direct Checks Total Balance, December 31, 2012 $ 643 $ 1,090 $ 44 $ 2,472 $ 251 $ — $ 150 $ 4,650 Restructuring charges 2,459 2,619 407 2,010 164 — 52 7,711 Restructuring reversals (129 ) (249 ) (4 ) (423 ) (157 ) — — (962 ) Payments (1,349 ) (1,469 ) (82 ) (2,551 ) (108 ) — (202 ) (5,761 ) Balance, December 31, 2013 1,624 1,991 365 1,508 150 — — 5,638 Restructuring charges 3,566 2,897 36 1,912 — — — 8,411 Restructuring reversals (858 ) (306 ) (37 ) (312 ) — — — (1,513 ) Payments (2,920 ) (2,734 ) (364 ) (2,124 ) (118 ) — — (8,260 ) Balance, December 31, 2014 1,412 1,848 — 984 32 — — 4,276 Restructuring charges 2,254 1,451 — 2,186 285 53 — 6,229 Restructuring reversals (684 ) (235 ) — (278 ) — — — (1,197 ) Inter-segment transfer 41 (14 ) — (27 ) — — — — Payments (2,000 ) (2,166 ) — (1,006 ) (261 ) (11 ) — (5,444 ) Balance, December 31, 2015 $ 1,023 $ 884 $ — $ 1,859 $ 56 $ 42 $ — $ 3,864 Cumulative amounts (2) : Restructuring charges $ 14,440 $ 13,057 $ 3,776 $ 16,080 $ 779 $ 53 $ 679 $ 48,864 Restructuring reversals (2,850 ) (1,575 ) (253 ) (2,630 ) (157 ) — — (7,465 ) Inter-segment transfer 350 36 (38 ) (348 ) — — — — Payments (10,917 ) (10,634 ) (3,485 ) (11,243 ) (566 ) (11 ) (679 ) (37,535 ) Balance, December 31, 2015 $ 1,023 $ 884 $ — $ 1,859 $ 56 $ 42 $ — $ 3,864 (1) As discussed in Note 16, corporate costs are allocated to our business segments. As such, the net corporate restructuring charges are reflected in the business segment operating income presented in Note 16 in accordance with our allocation methodology. (2) Includes accruals related to our cost reduction initiatives for 2010 through 2015. |
Income tax provision (Tables)
Income tax provision (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income before income taxes | Income before income taxes was comprised of the following for the years ended December 31: (in thousands) 2015 2014 2013 United States $ 312,157 $ 279,326 $ 263,427 Foreign 15,790 17,855 17,632 Income before income taxes $ 327,947 $ 297,181 $ 281,059 |
Components of income tax provision | The components of the income tax provision were as follows for the years ended December 31: (in thousands) 2015 2014 2013 Current tax provision: Federal $ 98,000 $ 91,630 $ 80,262 State 10,632 8,674 11,599 Foreign 3,942 4,496 4,789 Total current tax provision 112,574 104,800 96,650 Deferred tax provision: Federal (3,591 ) (6,165 ) (1,403 ) State 354 (1,491 ) (618 ) Foreign (19 ) 243 (222 ) Total deferred tax provision (3,256 ) (7,413 ) (2,243 ) Income tax provision $ 109,318 $ 97,387 $ 94,407 |
Effective tax rate reconciliation | The effective tax rate on pre-tax income reconciles to the U.S. federal statutory tax rate of 35% for the years ended December 31 as follows: 2015 2014 2013 Income tax at federal statutory rate 35.0 % 35.0 % 35.0 % State income tax expense, net of federal income tax benefit 2.3 % 2.3 % 2.8 % Qualified production activities deduction (2.9 %) (2.8 %) (2.8 %) Other (1.1 %) (1.7 %) (1.4 %) Income tax provision 33.3 % 32.8 % 33.6 % |
Rollforward of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties and the federal benefit of deductible state income tax, is as follows: (in thousands) Unrecognized tax benefits Balance, December 31, 2012 $ 5,619 Additions for tax positions of current year 617 Additions for tax positions of prior years 834 Fair value of acquired tax positions 316 Reductions for tax positions of prior years (1,178 ) Lapse of statutes of limitations (203 ) Balance, December 31, 2013 6,005 Additions for tax positions of current year 487 Additions for tax positions of prior years 500 Fair value of acquired tax positions 65 Reductions for tax positions of prior years (902 ) Lapse of statutes of limitations (214 ) Adoption of ASU No. 2013-11 (1) (669 ) Balance, December 31, 2014 5,272 Additions for tax positions of current year 625 Additions for tax positions of prior years 802 Reductions for tax positions of prior years (225 ) Settlements (541 ) Lapse of statutes of limitations (190 ) Balance, December 31, 2015 $ 5,743 |
Deferred tax assets and liabilities | Tax-effected temporary differences that gave rise to deferred tax assets and liabilities as of December 31 were as follows: 2015 2014 (in thousands) Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities Goodwill $ — $ 60,506 $ — $ 56,875 Intangible assets — 37,842 — 40,010 Prepaid assets — 4,285 — 4,640 Deferred advertising costs — 3,786 — 4,176 Early extinguishment of debt — 2,342 — 3,129 Employee benefit plans 14,279 — 9,485 — Reserves and accruals 8,305 — 8,119 — Net operating loss and capital loss carryforwards 5,793 — 7,797 — Inventories 3,100 — 2,992 — Federal benefit of state uncertain tax positions 2,201 — 1,882 — All other 3,184 5,143 1,844 4,612 Total deferred taxes 36,862 113,904 32,119 113,442 Valuation allowances (2,796 ) — (2,945 ) — Net deferred taxes $ 34,066 $ 113,904 $ 29,174 $ 113,442 |
Share-based compensation plans
Share-based compensation plans (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Share-based Compensation [Abstract] | |
Share-based compensation expense | The following amounts were recognized in our consolidated statements of income for share-based compensation awards for the years ended December 31 : (in thousands) 2015 2014 2013 Stock options $ 3,964 $ 4,305 $ 4,705 Restricted shares and restricted stock units 5,407 4,111 2,556 Performance share awards 2,115 966 — Employee stock purchase plan 408 394 301 Total share-based compensation expense $ 11,894 $ 9,776 $ 7,562 Income tax benefit $ (3,965 ) $ (3,204 ) $ (2,595 ) |
Weighted-average assumptions used in Black-Scholes option pricing model | The following weighted-average assumptions were used in the Black-Scholes option pricing model in determining the fair value of stock options granted: 2015 2014 2013 Risk-free interest rate 1.3 % 1.2 % 0.7 % Dividend yield 1.8 % 2.0 % 2.6 % Expected volatility 31.7 % 36.1 % 50.5 % Weighted-average option life (in years) 4.0 4.3 4.3 |
Stock options rollforward | Information regarding options issued under the current and all previous plans was as follows: Number of options (in thousands) Weighted-average exercise price per option Aggregate intrinsic value Weighted-average remaining contractual term (in years) Outstanding, December 31, 2012 2,222 $ 24.96 Granted 465 38.74 Exercised (912 ) 27.19 Forfeited or expired (135 ) 30.03 Outstanding, December 31, 2013 1,640 27.22 Granted 290 50.48 Exercised (552 ) 23.81 Forfeited or expired (66 ) 37.53 Outstanding, December 31, 2014 1,312 33.28 Granted 268 67.02 Exercised (186 ) 27.36 Forfeited or expired (40 ) 55.13 Outstanding, December 31, 2015 1,354 40.11 $ 22,658 4.0 Exercisable at December 31, 2013 759 $ 22.09 Exercisable at December 31, 2014 645 25.76 Exercisable at December 31, 2015 820 29.99 $ 20,135 3.1 |
Restricted stock units rollforward | Information regarding our restricted stock units was as follows: Number of units (in thousands) Weighted-average grant date fair value per unit Weighted-average remaining contractual term (in years) Outstanding at December 31, 2012 123 $ 24.56 Granted 45 36.74 Vested (11 ) 24.33 Forfeited (7 ) 26.78 Outstanding at December 31, 2013 150 27.11 Granted 30 53.64 Vested (13 ) 23.42 Forfeited (1 ) 34.08 Outstanding at December 31, 2014 166 30.51 Granted 34 63.28 Vested (30 ) 25.05 Forfeited (3 ) 58.04 Outstanding at December 31, 2015 167 34.74 3.9 |
Restricted shares rollforward | Information regarding unvested restricted shares was as follows: Number of shares (in thousands) Weighted-average grant date fair value per share Weighted-average remaining contractual term (in years) Unvested at December 31, 2012 40 $ 23.73 Granted 17 37.50 Vested (33 ) 23.68 Forfeited (3 ) 23.45 Unvested at December 31, 2013 21 35.24 Granted 121 51.08 Vested (11 ) 37.06 Forfeited (11 ) 48.14 Unvested at December 31, 2014 120 49.96 Granted 72 66.99 Vested (14 ) 50.72 Forfeited (8 ) 58.58 Unvested at December 31, 2015 170 56.35 1.5 |
Weighted-average assumptions used in Monte Carlo simulation pricing model, performance share awards | The following weighted-average assumptions were used in the Monte Carlo simulation model in determining the fair value of market-based performance shares granted: 2015 2014 Risk-free interest rate 1.0 % 0.7 % Dividend yield 1.9 % 2.4 % Expected volatility 22.7 % 30.5 % |
Performance share awards rollforward | The performance share information presented in the table below represents the target amount of awards granted. The actual number of shares awarded upon vesting may be higher or lower depending upon our execution relative to the performance targets as of the end of the performance period. Performance shares (in thousands) Weighted-average grant date fair value per share Weighted-average remaining contractual term (in years) Unvested at December 31, 2013 — $ — Granted 74 50.14 Forfeited (5 ) 50.14 Unvested at December 31, 2014 69 50.14 Granted 62 67.09 Forfeited (9 ) 58.28 Unvested at December 31, 2015 122 58.13 1.6 |
Employee benefit plans (Tables)
Employee benefit plans (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Employee benefit plans [Abstract] | |
Expense recognized for employee compensation plans | Expense recognized in the consolidated statements of income for these plans was as follows for the years ended December 31: (in thousands) 2015 2014 2013 Performance-based compensation plans (1) $ 27,456 $ 29,629 $ 25,561 401(k) expense 7,628 7,209 7,004 (1) Includes expense for profit sharing contributions, as they vary based on our performance. Excludes expense for stock-based compensation, which is discussed in Note 10. |
Postretirement benefits (Tables
Postretirement benefits (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Change in benefit obligation, plan assets and funded status | Obligations and funded status – The following tables summarize the change in benefit obligation, plan assets and funded status during 2015 and 2014 : (in thousands) Postretirement benefit plan Pension plan Change in benefit obligation: Benefit obligation, December 31, 2013 $ 108,567 $ 3,428 Interest cost 4,414 139 Net actuarial (gain) loss (3,513 ) 621 Benefits paid from plan assets and company funds (9,878 ) (324 ) Medicare Part D reimbursements 842 — Benefit obligation, December 31, 2014 100,432 3,864 Interest cost 3,309 128 Net actuarial loss (gain) 5,258 (130 ) Benefits paid from plan assets and company funds (10,122 ) (324 ) Pharmacy rebates and Medicare Part D reimbursements 2,007 — Benefit obligation, December 31, 2015 $ 100,884 $ 3,538 Change in plan assets: Fair value of plan assets, December 31, 2013 $ 133,548 $ — Return on plan assets 7,701 — Benefits paid (8,434 ) — Transfer of assets to VEBA trust (8,140 ) — Fair value of plan assets, December 31, 2014 124,675 — Return on plan assets 391 — Benefits paid (7,932 ) — Fair value of plan assets, December 31, 2015 $ 117,134 $ — Funded status, December 31, 2014 $ 24,243 $ (3,864 ) Funded status, December 31, 2015 $ 16,250 $ (3,538 ) |
Amounts recognized in consolidated balance sheets | The funded status of our plans was recognized in the consolidated balance sheets as of December 31 as follows: Postretirement benefit plan Pension plan (in thousands) 2015 2014 2015 2014 Other non-current assets $ 16,250 $ 24,243 $ — $ — Accrued liabilities — — 324 324 Other non-current liabilities — — 3,214 3,540 |
Amounts included in other comprehensive loss that have not been recognized as components of postretirement benefit income | Amounts included in accumulated other comprehensive loss as of December 31 that have not been recognized as components of postretirement benefit income were as follows: (in thousands) 2015 2014 Unrecognized prior service credit $ 18,442 $ 19,863 Unrecognized net actuarial loss (74,524 ) (65,073 ) Tax effect 17,260 12,805 Amount recognized in accumulated other comprehensive loss, net of tax $ (38,822 ) $ (32,405 ) |
Amounts included in accumulated other comprehensive loss expected to be recognized in next 12 months | Amounts included in accumulated other comprehensive loss as of December 31, 2015 that we expect to recognize in postretirement benefit income during 2016 are as follows: (in thousands) Amounts expected to be recognized Prior service credit $ (1,421 ) Net actuarial loss 3,797 Total $ 2,376 |
Components of net periodic benefit income | Postretirement benefit income – Postretirement benefit income for the years ended December 31 consisted of the following components: (in thousands) 2015 2014 2013 Interest cost $ 3,437 $ 4,553 $ 3,652 Expected return on plan assets (7,833 ) (8,734 ) (8,030 ) Amortization of prior service credit (1,421 ) (1,421 ) (1,421 ) Amortization of net actuarial losses 3,120 3,418 4,439 Net periodic benefit income $ (2,697 ) $ (2,184 ) $ (1,360 ) |
Actuarial assumptions used in measuring benefit obligation and net periodic benefit income | Actuarial assumptions – In measuring benefit obligations as of December 31, the following discount rate assumptions were used: Postretirement benefit plan Pension plan 2015 2014 2015 2014 Discount rate 4.02 % 3.45 % 3.88 % 3.45 % In measuring net periodic benefit income for the years ended December 31, the following assumptions were used: 2015 2014 2013 Discount rate 3.45 % 4.25 % 3.15 % Expected return on plan assets 6.50 % 6.75 % 6.75 % |
Health care cost trend rate assumptions | In measuring benefit obligations as of December 31 for our postretirement benefit plan, the following assumptions for health care cost trend rates were used: 2015 2014 2013 Participants under age 65 Participants age 65 and older Participants under age 65 Participants age 65 and older Participants under age 65 Participants age 65 and older Health care cost trend rate assumed for next year 7.25 % 6.75 % 7.50 % 7.00 % 7.75 % 7.25 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5.00 % 5.00 % 5.00 % 5.00 % 5.00 % 5.00 % Year that the rate reaches the ultimate trend rate 2026 2024 2021 2020 2021 2020 |
Effect of one-percentage-point change in assumed health care cost trend rates | Assumed health care cost trend rates have an effect on the amounts reported for health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects: (in thousands) One percentage point increase One percentage point decrease Effect on total of service and interest cost $ 65 $ (61 ) Effect on benefit obligation 1,614 (1,513 ) |
Allocation of plan assets by asset category | Plan assets – The allocation of plan assets by asset category as of December 31 was as follows: Postretirement benefit plan 2015 2014 U.S. large capitalization equity securities 33 % 33 % International equity securities 18 % 18 % Mortgage-backed securities 17 % 14 % U.S. corporate debt securities 15 % 14 % Government debt securities 10 % 14 % U.S. small and mid-capitalization equity securities 7 % 7 % Total 100 % 100 % Our postretirement benefit plan has assets that are intended to meet long-term obligations. In order to meet these obligations, we employ a total return investment approach that considers cash flow needs and balances long-term projected returns against expected asset risk, as measured using projected standard deviations. Risk tolerance is established through consideration of projected plan liabilities, the plan's funded status, projected liquidity needs and current corporate financial condition. The target asset allocation percentages for our postretirement benefit plan are based on our liability and asset projections. The targeted allocation of plan assets is 33% large capitalization equity securities, 42% fixed income securities, 18% international equity securities and 7% small and mid-capitalization equity securities. Information regarding fair value measurements of plan assets was as follows: Fair value measurements using Fair value as of December 31, 2015 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (in thousands) (Level 1) (Level 2) (Level 3) U.S. large capitalization equity securities $ 38,629 $ — $ 38,629 $ — International equity securities 21,209 20,520 689 — Mortgage-backed securities 20,157 — 20,157 — U.S. corporate debt securities 16,974 — 16,974 — Government debt securities 11,808 — 11,808 — U.S. small and mid-capitalization equity securities 8,095 6,799 1,296 — Other debt securities 262 149 113 — Total $ 117,134 $ 27,468 $ 89,666 $ — 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) U.S. large capitalization equity securities $ 40,847 $ — $ 40,847 $ — International equity securities 22,416 21,823 593 — U.S. corporate debt securities 17,823 — 17,823 — Mortgage-backed securities 17,713 — 17,713 — Government debt securities 17,031 — 17,031 — U.S. small and mid-capitalization equity securities 8,702 7,090 1,612 — Other debt securities 143 54 89 — Total $ 124,675 $ 28,967 $ 95,708 $ — |
Expected benefit payments | The following benefit payments are expected to be paid during the years indicated: (in thousands) Postretirement benefit plan Pension plan 2016 $ 9,565 $ 320 2017 9,692 320 2018 9,592 320 2019 9,141 310 2020 8,579 300 2021 - 2025 35,149 1,410 |
Debt and lease obligations (Tab
Debt and lease obligations (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt and lease obligations [Abstract] | |
Debt outstanding | Debt outstanding was comprised of the following at December 31: (in thousands) 2015 2014 7.0% senior notes due March 15, 2019 $ — $ 200,000 6.0% senior notes due November 15, 2020 (1) 195,158 191,933 Long-term portion of capital lease obligations 1,064 1,468 Long-term portion of debt 196,222 393,401 Amount drawn on credit facility 434,000 160,000 Capital lease obligations due within one year 1,045 911 Total debt $ 631,267 $ 554,312 (1) Includes decrease due to cumulative change in fair value of hedged debt of $4,842 as of December 31, 2015 and $8,067 as of December 31, 2014 . |
Short-term borrowings, daily average amount outstanding | No amounts were borrowed under our credit facility during 2013. Daily average amounts outstanding under our short-term borrowing arrangements during 2015 and 2014 were as follows: (in thousands) 2015 2014 Short-term bank loan: Daily average amount outstanding $ 47,178 $ — Weighted-average interest rate 1.59 % — Credit facility: Daily average amount outstanding $ 270,063 $ 43,675 Weighted-average interest rate 1.66 % 1.63 % |
Credit facility, amount available for borrowing | As of December 31, 2015 , amounts were available for borrowing under our credit facility as follows: (in thousands) Total available Credit facility commitment $ 525,000 Amount drawn on credit facility (434,000 ) Outstanding letters of credit (1) (12,726 ) Net available for borrowing as of December 31, 2015 $ 78,274 (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. |
Leased assets, capital leases | The balance of those leased assets placed in service as of December 31 was as follows: (in thousands) 2015 2014 Machinery and equipment $ 4,193 $ 2,911 Accumulated depreciation (1,942 ) (926 ) Net assets under capital leases $ 2,251 $ 1,985 |
Future minimum lease payments due under capital and noncancelable operating leases | Rental expense was $15,372 for 2015 , $13,099 for 2014 and $11,855 for 2013 . As of December 31, 2015 , future minimum lease payments under our capital lease obligations and noncancelable operating leases with terms in excess of one year were as follows: (in thousands) Capital lease obligations Operating lease obligations 2016 $ 1,078 $ 6,626 2017 731 5,318 2018 303 3,642 2019 47 2,979 2020 — 1,216 Thereafter — 2,389 Total minimum lease payments 2,159 $ 22,170 Less portion representing interest (50 ) Present value of minimum lease payments $ 2,109 |
Business segment information (T
Business segment information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Business segment information | The following is our segment information as of and for the years ended December 31: Reportable Business Segments (in thousands) Small Business Services Financial Services Direct Checks Corporate Consolidated Total revenue from external 2015 $ 1,151,916 $ 455,390 $ 165,511 $ — $ 1,772,817 customers: 2014 1,106,505 391,129 176,448 — 1,674,082 2013 1,036,268 357,142 191,414 — 1,584,824 Operating income: 2015 203,933 91,539 58,859 — 354,331 2014 187,226 87,908 57,499 — 332,633 2013 175,420 82,811 59,683 — 317,914 Depreciation and amortization 2015 45,513 26,807 4,380 — 76,700 expense: 2014 44,418 14,675 6,749 — 65,842 2013 45,329 11,231 7,913 — 64,473 Asset impairment charges: 2015 — — — — — 2014 6,468 — — — 6,468 2013 5,000 — — — 5,000 Total assets: 2015 995,445 435,632 161,987 251,338 1,844,402 2014 949,521 274,086 164,171 300,613 1,688,391 2013 942,048 111,432 167,283 348,766 1,569,529 Capital asset purchases: 2015 — — — 43,261 43,261 2014 — — — 41,119 41,119 2013 — — — 37,459 37,459 |
Revenue by product and service category | Revenue by product and service category for the years ended December 31 was as follows: (in thousands) 2015 2014 2013 Checks $ 873,298 $ 870,910 $ 884,605 Marketing solutions and other services 532,465 427,098 343,006 Forms 215,663 216,842 200,560 Accessories and other products 151,391 159,232 156,653 Total revenue $ 1,772,817 $ 1,674,082 $ 1,584,824 |
Geographic information | The following information for the years ended December 31 is based on the geographic locations of our subsidiaries: (in thousands) 2015 2014 2013 Total revenue from external customers: United States $ 1,701,566 $ 1,593,898 $ 1,501,176 Foreign, primarily Canada 71,251 80,184 83,648 Total revenue $ 1,772,817 $ 1,674,082 $ 1,584,824 Substantially all of our long-lived assets reside in the United States. Long-lived assets of our foreign subsidiaries are located primarily in Canada and are not significant to our consolidated financial position. |
Supplemental guarantor financ40
Supplemental guarantor financial information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental guarantor financial information [Abstract] | |
Condensed Consolidating Balance Sheets | Deluxe Corporation Condensed Consolidating Balance Sheet December 31, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total ASSETS Current assets: Cash and cash equivalents $ 5,187 $ 940 $ 56,422 $ (122 ) $ 62,427 Trade accounts receivable, net — 115,951 7,703 — 123,654 Inventories and supplies — 39,758 2,198 — 41,956 Funds held for customers — — 53,343 — 53,343 Other current assets 9,233 32,765 2,610 — 44,608 Total current assets 14,420 189,414 122,276 (122 ) 325,988 Deferred income taxes 13,498 — 1,238 (13,498 ) 1,238 Long-term investments 34,304 7,387 — — 41,691 Property, plant and equipment, net 10,111 71,017 4,604 — 85,732 Assets held for sale — — 13,969 — 13,969 Intangibles, net 9,066 273,051 3,194 — 285,311 Goodwill — 974,973 1,442 — 976,415 Investments in consolidated subsidiaries 1,248,549 81,099 — (1,329,648 ) — Intercompany receivable 99,506 — — (99,506 ) — Other non-current assets 6,107 107,767 184 — 114,058 Total assets $ 1,435,561 $ 1,704,708 $ 146,907 $ (1,442,774 ) $ 1,844,402 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 15,625 $ 69,809 $ 2,263 $ (122 ) $ 87,575 Accrued liabilities 23,567 148,279 56,577 — 228,423 Short-term borrowings 434,000 — — — 434,000 Long-term debt due within one year 1,026 — 19 — 1,045 Total current liabilities 474,218 218,088 58,859 (122 ) 751,043 Long-term debt 196,191 — 31 — 196,222 Deferred income taxes — 94,574 — (13,498 ) 81,076 Intercompany payable — 98,365 1,141 (99,506 ) — Other non-current liabilities 20,083 45,132 5,777 — 70,992 Total shareholders' equity 745,069 1,248,549 81,099 (1,329,648 ) 745,069 Total liabilities and shareholders' equity $ 1,435,561 $ 1,704,708 $ 146,907 $ (1,442,774 ) $ 1,844,402 Deluxe Corporation Condensed Consolidating Balance Sheet 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 Year Ended December 31, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 1,378,579 $ 73,415 $ — $ 1,451,994 Service revenue 113,226 299,484 26,433 (118,320 ) 320,823 Total revenue 113,226 1,678,063 99,848 (118,320 ) 1,772,817 Cost of products — (489,590 ) (36,717 ) — (526,307 ) Cost of services (120,575 ) (105,824 ) (7,987 ) 121,484 (112,902 ) Total cost of revenue (120,575 ) (595,414 ) (44,704 ) 121,484 (639,209 ) Gross profit (7,349 ) 1,082,649 55,144 3,164 1,133,608 Operating expenses — (737,600 ) (38,513 ) (3,164 ) (779,277 ) Operating (loss) income (7,349 ) 345,049 16,631 — 354,331 Loss on early debt extinguishment (8,917 ) — — — (8,917 ) Interest expense (19,516 ) (11,355 ) (2 ) 10,574 (20,299 ) Other income 10,556 1,978 872 (10,574 ) 2,832 (Loss) income before income taxes (25,226 ) 335,672 17,501 — 327,947 Income tax benefit (provision) 15,324 (119,951 ) (4,691 ) — (109,318 ) (Loss) income before equity in earnings of consolidated subsidiaries (9,902 ) 215,721 12,810 — 218,629 Equity in earnings of consolidated subsidiaries 228,531 12,810 — (241,341 ) — Net income $ 218,629 $ 228,531 $ 12,810 $ (241,341 ) $ 218,629 Comprehensive income $ 199,764 $ 210,558 $ 362 $ (210,920 ) $ 199,764 Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2014 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 1,311,729 $ 99,129 $ — $ 1,410,858 Service revenue 78,019 237,712 30,047 (82,554 ) 263,224 Total revenue 78,019 1,549,441 129,176 (82,554 ) 1,674,082 Cost of products — (449,603 ) (52,268 ) — (501,871 ) Cost of services (83,982 ) (95,776 ) (9,693 ) 85,044 (104,407 ) Total cost of revenue (83,982 ) (545,379 ) (61,961 ) 85,044 (606,278 ) Gross profit (5,963 ) 1,004,062 67,215 2,490 1,067,804 Operating expenses — (677,767 ) (47,711 ) (2,490 ) (727,968 ) Asset impairment charge — (6,468 ) — — (6,468 ) Net loss on sale of facility — (735 ) — — (735 ) Operating (loss) income (5,963 ) 319,092 19,504 — 332,633 Interest expense (36,368 ) (12,157 ) — 11,996 (36,529 ) Other income 9,976 2,496 601 (11,996 ) 1,077 (Loss) income before income taxes (32,355 ) 309,431 20,105 — 297,181 Income tax benefit (provision) 17,445 (109,289 ) (5,543 ) — (97,387 ) (Loss) income before equity in earnings of consolidated subsidiaries (14,910 ) 200,142 14,562 — 199,794 Equity in earnings of consolidated subsidiaries 214,704 14,562 — (229,266 ) — Net income $ 199,794 $ 214,704 $ 14,562 $ (229,266 ) $ 199,794 Comprehensive income $ 196,880 $ 210,756 $ 8,398 $ (219,154 ) $ 196,880 Deluxe Corporation Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2013 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Product revenue $ — $ 1,293,257 $ 76,454 $ — $ 1,369,711 Service revenue 9,042 188,767 34,962 (17,658 ) 215,113 Total revenue 9,042 1,482,024 111,416 (17,658 ) 1,584,824 Cost of products — (429,432 ) (34,055 ) — (463,487 ) Cost of services (7,597 ) (85,693 ) (12,532 ) 8,193 (97,629 ) Total cost of revenue (7,597 ) (515,125 ) (46,587 ) 8,193 (561,116 ) Gross profit 1,445 966,899 64,829 (9,465 ) 1,023,708 Operating expenses — (664,218 ) (46,041 ) 9,465 (700,794 ) Asset impairment charge — (5,000 ) — — (5,000 ) Operating income 1,445 297,681 18,788 — 317,914 Interest expense (38,236 ) (8,442 ) (3 ) 8,380 (38,301 ) Other income 7,283 2,027 516 (8,380 ) 1,446 (Loss) income before income taxes (29,508 ) 291,266 19,301 — 281,059 Income tax benefit (provision) 16,597 (105,812 ) (5,192 ) — (94,407 ) (Loss) income before equity in earnings of consolidated subsidiaries (12,911 ) 185,454 14,109 — 186,652 Equity in earnings of consolidated subsidiaries 199,563 14,109 — (213,672 ) — Net income $ 186,652 $ 199,563 $ 14,109 $ (213,672 ) $ 186,652 Comprehensive income $ 193,875 $ 205,595 $ 9,862 $ (215,457 ) $ 193,875 |
Condensed Consolidating Statements of Cash Flows | Deluxe Corporation Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2015 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Net cash provided by operating activities $ 2,467 $ 285,962 $ 16,297 $ 3,207 $ 307,933 Cash flows from investing activities: Purchases of capital assets (3,447 ) (37,158 ) (2,656 ) — (43,261 ) Payments for acquisitions, net of cash acquired (26 ) (212,964 ) — — (212,990 ) Proceeds from company-owned life insurance policies 3,973 — — — 3,973 Other (488 ) 1,610 16 — 1,138 Net cash provided (used) by investing activities 12 (248,512 ) (2,640 ) — (251,140 ) Cash flows from financing activities: Net proceeds from short-term borrowings 274,000 — — — 274,000 Payments on long-term debt, including costs of debt reacquisition (208,045 ) — (17 ) — (208,062 ) Payments for debt issue costs (749 ) — — — (749 ) Proceeds from issuing shares under employee plans 5,895 — — — 5,895 Excess tax benefit from share-based employee awards 2,244 — — — 2,244 Payments for common shares repurchased (59,952 ) — — — (59,952 ) Cash dividends paid to shareholders (59,755 ) — — — (59,755 ) Advances from (to) consolidated subsidiaries 40,735 (40,692 ) (43 ) — — Other — (160 ) (150 ) — (310 ) Net cash used by financing activities (5,627 ) (40,852 ) (210 ) — (46,689 ) Effect of exchange rate change on cash — — (9,218 ) — (9,218 ) Net change in cash and cash equivalents (3,148 ) (3,402 ) 4,229 3,207 886 Cash and cash equivalents, beginning of year 8,335 4,342 52,193 (3,329 ) 61,541 Cash and cash equivalents, end of year $ 5,187 $ 940 $ 56,422 $ (122 ) $ 62,427 Deluxe Corporation Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2014 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Net cash (used) provided by operating activities $ (12,298 ) $ 278,281 $ 14,638 $ (226 ) $ 280,395 Cash flows from investing activities: Purchases of capital assets (1,269 ) (38,118 ) (1,732 ) — (41,119 ) Payments for acquisitions, net of cash acquired (89,824 ) (15,205 ) — — (105,029 ) Proceeds from company-owned life insurance policies 897 — — — 897 Proceeds from sale of facility — 8,451 — — 8,451 Other (432 ) 1,175 14 — 757 Net cash used by investing activities (90,628 ) (43,697 ) (1,718 ) — (136,043 ) Cash flows from financing activities: Net proceeds from short-term borrowings 160,000 (125 ) — — 159,875 Payments on long-term debt, including costs of debt reacquisition (254,376 ) (20 ) (7 ) — (254,403 ) Payments for debt issue costs (1,085 ) — — — (1,085 ) Proceeds from issuing shares under employee plans 9,148 — — — 9,148 Excess tax benefit from share-based employee awards 4,992 — — — 4,992 Payments for common shares repurchased (60,119 ) — — — (60,119 ) Cash dividends paid to shareholders (57,603 ) — — — (57,603 ) Advances from (to) consolidated subsidiaries 238,332 (236,938 ) (1,394 ) — — Other — (150 ) — — (150 ) Net cash provided (used) by financing activities 39,289 (237,233 ) (1,401 ) — (199,345 ) Effect of exchange rate change on cash — — (4,555 ) — (4,555 ) Net change in cash and cash equivalents (63,637 ) (2,649 ) 6,964 (226 ) (59,548 ) Cash and cash equivalents, beginning of year 71,972 6,991 45,229 (3,103 ) 121,089 Cash and cash equivalents, end of year $ 8,335 $ 4,342 $ 52,193 $ (3,329 ) $ 61,541 Deluxe Corporation Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2013 (in thousands) Deluxe Corporation Guarantor subsidiaries Non-guarantor subsidiaries Eliminations Total Net cash (used) provided by operating activities $ (7,462 ) $ 243,906 $ 24,160 $ 898 $ 261,502 Cash flows from investing activities: Purchases of capital assets — (32,659 ) (4,800 ) — (37,459 ) Payments for acquisitions, net of cash acquired — (69,709 ) — — (69,709 ) Proceeds from company-owned life insurance policies 3,641 958 — — 4,599 Other 1,181 326 12 — 1,519 Net cash provided (used) by investing activities 4,822 (101,084 ) (4,788 ) — (101,050 ) Cash flows from financing activities: Payments on long-term debt, including costs of debt reacquisition (224 ) — (1,331 ) — (1,555 ) Payments for debt issue costs (236 ) — — — (236 ) Proceeds from issuing shares under employee plans 15,948 — — — 15,948 Excess tax benefit from share-based employee awards 3,055 — — — 3,055 Payments for common shares repurchased (48,798 ) — — — (48,798 ) Cash dividends paid to shareholders (50,711 ) — — — (50,711 ) Advances from (to) consolidated subsidiaries 140,716 (139,059 ) (1,657 ) — — Net cash provided (used) by financing activities 59,750 (139,059 ) (2,988 ) — (82,297 ) Effect of exchange rate change on cash — — (2,501 ) — (2,501 ) Net change in cash and cash equivalents 57,110 3,763 13,883 898 75,654 Cash and cash equivalents, beginning of year 14,862 3,228 31,346 (4,001 ) 45,435 Cash and cash equivalents, end of year $ 71,972 $ 6,991 $ 45,229 $ (3,103 ) $ 121,089 |
SUMMARIZED QUARTERLY FINANCIA41
SUMMARIZED QUARTERLY FINANCIAL DATA (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Data [Abstract] | |
Summarized Quarterly Financial Data | DELUXE CORPORATION SUMMARIZED QUARTERLY FINANCIAL DATA (Unaudited) (in thousands, except per share amounts) 2015 Quarter Ended March 31 June 30 September 30 December 31 Total revenue $ 433,617 $ 435,874 $ 439,816 $ 463,510 Gross profit 280,936 279,936 280,514 292,222 Net income 45,940 56,063 56,917 59,709 Earnings per share: Basic 0.92 1.12 1.14 1.21 Diluted 0.91 1.11 1.13 1.20 Cash dividends per share 0.30 0.30 0.30 0.30 2014 Quarter Ended March 31 June 30 September 30 December 31 Total revenue $ 406,955 $ 405,410 $ 413,204 $ 448,513 Gross profit 262,027 259,519 263,054 283,204 Net income 47,324 50,076 44,431 57,963 Earnings per share: Basic 0.94 1.00 0.89 1.16 Diluted 0.93 0.99 0.88 1.16 Cash dividends per share 0.25 0.30 0.30 0.30 |
Significant accounting polici42
Significant accounting policies (cash and cash equivalents, trade accounts receivable and long-term investments) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash and cash equivalents | ||
Maximum maturity of cash equivalents | 3 months | |
Trade accounts receivable | ||
Period for write-off of trade accounts receivable | 1 year | |
Long-term investments | ||
Long-term investment in mutual funds | $ 2,091 | $ 2,384 |
Significant accounting polici43
Significant accounting policies (property, plant and equipment) (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Building [Member] | |
Property, plant and equipment [Line Items] | |
Useful life | 40 years |
Machinery and equipment [Member] | Minimum [Member] | |
Property, plant and equipment [Line Items] | |
Useful life | 1 year |
Machinery and equipment [Member] | Maximum [Member] | |
Property, plant and equipment [Line Items] | |
Useful life | 11 years |
Machinery and equipment [Member] | Weighted-average [Member] | |
Property, plant and equipment [Line Items] | |
Useful life | 7 years |
Significant accounting polici44
Significant accounting policies (intangibles and impairment of indefinite-lived intangibles and goodwill) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Impairment of indefinite-lived intangibles and goodwill | |||
Date of annual impairment test | July 31 | ||
Impairment charges, indefinite-lived intangibles | $ 0 | $ 0 | $ 0 |
Impairment charges, goodwill | $ 0 | $ 0 | $ 0 |
Minimum [Member] | |||
Amortizable intangibles [Line Items] | |||
Useful life | 1 year | ||
Maximum [Member] | |||
Amortizable intangibles [Line Items] | |||
Useful life | 20 years | ||
Weighted-average [Member] | |||
Amortizable intangibles [Line Items] | |||
Useful life | 7 years |
Significant accounting polici45
Significant accounting policies (contract acquisition costs) (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Minimum [Member] | |
Contract acquisition costs [Line Items] | |
Amortization period | 1 year |
Maximum [Member] | |
Contract acquisition costs [Line Items] | |
Amortization period | 10 years |
Weighted-average [Member] | |
Contract acquisition costs [Line Items] | |
Amortization period | 6 years |
Significant accounting polici46
Significant accounting policies (advertising costs) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Advertising costs [Line Items] | |||
Advertising expense | $ 87,396 | $ 91,937 | $ 93,872 |
Maximum [Member] | |||
Advertising costs [Line Items] | |||
Deferred advertising costs amortization period | 18 months | ||
Small Business Services [Member] | Actual [Member] | |||
Advertising costs [Line Items] | |||
Deferred advertising costs amortization period | 6 months | ||
Direct Checks [Member] | |||
Advertising costs [Line Items] | |||
Percentage of deferred advertising costs expensed within six months | 87.00% |
Significant accounting polici47
Significant accounting policies (income taxes, revenue recognition and employee share-based compensation) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income taxes | ||
Measurement of tax benefit, minimum percentage tax benefit must be likely to be realized | 50.00% | |
Revenue recognition | ||
Costs and earnings in excess of billings | $ 7,471 | $ 8,407 |
Billings in excess of costs and earnings | $ 569 | $ 708 |
Employee share-based compensation | ||
Employee stock purchase plan discount | 15.00% | |
Employee stock purchase plan purchase period | 6 months |
Significant accounting polici48
Significant accounting policies (accounting pronouncements not yet adopted) (Details) $ in Thousands | Dec. 31, 2015USD ($) |
Senior notes due 2020 [Member] | |
Debt instruments [Line Items] | |
Debt issuance costs | $ 2,249 |
Credit facility [Member] | |
Debt instruments [Line Items] | |
Debt issuance costs | $ 2,003 |
Supplemental balance sheet an49
Supplemental balance sheet and cash flow information (trade accounts receivable) (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Trade accounts receivable | ||||
Trade accounts receivable - gross | $ 128,470 | $ 117,991 | ||
Allowances for uncollectible accounts | (4,816) | (4,335) | $ (3,861) | $ (3,912) |
Trade accounts receivable - net | $ 123,654 | $ 113,656 |
Supplemental balance sheet an50
Supplemental balance sheet and cash flow information (allowances for uncollectible accounts, inventories and supplies) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Allowances for uncollectible accounts | |||
Balance, beginning of year | $ 4,335 | $ 3,861 | $ 3,912 |
Bad debt expense | 4,858 | 3,994 | 3,722 |
Write-offs, net of recoveries | (4,377) | (3,520) | (3,773) |
Balance, end of year | 4,816 | 4,335 | $ 3,861 |
Inventories and supplies | |||
Raw materials | 5,719 | 5,899 | |
Semi-finished goods | 8,208 | 8,990 | |
Finished goods | 24,955 | 21,298 | |
Supplies | 3,074 | 3,224 | |
Inventories and supplies | $ 41,956 | $ 39,411 |
Supplemental balance sheet an51
Supplemental balance sheet and cash flow information (available-for-sale securities) (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | ||
Available-for-sale securities [Line Items] | ||||
Cost | $ 16,774 | $ 19,745 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | (91) | (120) | ||
Available-for-sale securities | 16,683 | 19,625 | ||
Expected maturities of available-for-sale securities | ||||
Due in one year or less | 10,606 | |||
Due in two to five years | 3,270 | |||
Due in six to ten years | 2,807 | |||
Available-for-sale securities | 16,683 | 19,625 | ||
Funds held for customers [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Cost | 15,158 | [1] | 17,850 | [2] |
Gross unrealized gains | 0 | [1] | 0 | [2] |
Gross unrealized losses | (91) | [1] | (120) | [2] |
Available-for-sale securities | 15,067 | [1] | 17,730 | [2] |
Funds held for customers, cash | 38,276 | 25,874 | ||
Expected maturities of available-for-sale securities | ||||
Available-for-sale securities | 15,067 | [1] | 17,730 | [2] |
Funds held for customers [Member] | Canadian and provincial government securities [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Cost | 7,932 | 9,245 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | (91) | (120) | ||
Available-for-sale securities | 7,841 | 9,125 | ||
Expected maturities of available-for-sale securities | ||||
Available-for-sale securities | 7,841 | 9,125 | ||
Funds held for customers [Member] | Guaranteed investment certificate [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Cost | 7,226 | 8,605 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | 0 | 0 | ||
Available-for-sale securities | 7,226 | 8,605 | ||
Expected maturities of available-for-sale securities | ||||
Available-for-sale securities | 7,226 | 8,605 | ||
Other current assets [Member] | Money market securities [Member] | Canadian [Member] | ||||
Available-for-sale securities [Line Items] | ||||
Cost | 1,616 | 1,895 | ||
Gross unrealized gains | 0 | 0 | ||
Gross unrealized losses | 0 | 0 | ||
Available-for-sale securities | 1,616 | 1,895 | ||
Expected maturities of available-for-sale securities | ||||
Available-for-sale securities | $ 1,616 | $ 1,895 | ||
[1] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2015, also included cash of $38,276. | |||
[2] | Funds held for customers, as reported on the consolidated balance sheet as of December 31, 2014, also included cash of $25,874. |
Supplemental balance sheet an52
Supplemental balance sheet and cash flow information (property, plant and equipment) (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Property, plant and equipment [Line Items] | ||
Gross carrying amount | $ 430,517 | $ 436,153 |
Accumulated depreciation | (344,785) | (348,530) |
Net carrying amount | 85,732 | 87,623 |
Land and improvements [Member] | ||
Property, plant and equipment [Line Items] | ||
Gross carrying amount | 28,118 | 28,367 |
Accumulated depreciation | (7,836) | (7,612) |
Net carrying amount | 20,282 | 20,755 |
Buildings and improvements [Member] | ||
Property, plant and equipment [Line Items] | ||
Gross carrying amount | 110,100 | 109,307 |
Accumulated depreciation | (73,052) | (69,882) |
Net carrying amount | 37,048 | 39,425 |
Machinery and equipment [Member] | ||
Property, plant and equipment [Line Items] | ||
Gross carrying amount | 292,299 | 298,479 |
Accumulated depreciation | (263,897) | (271,036) |
Net carrying amount | $ 28,402 | $ 27,443 |
Supplemental balance sheet an53
Supplemental balance sheet and cash flow information (assets held for sale/facility sale) (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)business | Dec. 31, 2014USD ($)business | Dec. 31, 2013USD ($) | |
Assets held for sale/facility sale [Line Items] | |||
Number of businesses held for sale | business | 5 | ||
Number of businesses sold | business | 4 | ||
Net loss on sale of facility | $ 0 | $ 735 | $ 0 |
Colorado Springs, Colorado facility [Member] | |||
Assets held for sale/facility sale [Line Items] | |||
Proceeds from sale of facility | 8,451 | ||
Net loss on sale of facility | 735 | ||
Assets held for sale [Member] | Small business distributors [Member] | |||
Assets held for sale/facility sale [Line Items] | |||
Current assets | 3 | 687 | |
Intangibles | 13,533 | 25,926 | |
Other non-current assets | 436 | 893 | |
Accrued liabilities | (366) | (1,058) | |
Non-current deferred income tax liabilities | (5,777) | (8,774) | |
Net assets held for sale | $ 7,829 | $ 17,674 |
Supplemental balance sheet an54
Supplemental balance sheet and cash flow information (intangibles) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Intangibles [Line Items] | |||
Gross carrying amount | $ 693,058 | $ 595,488 | |
Accumulated amortization | (407,747) | (388,308) | |
Net carrying amount | 285,311 | 207,180 | |
Amortization of intangibles | 60,700 | 49,075 | $ 46,651 |
Intangibles acquired | $ 139,212 | $ 110,286 | $ 54,575 |
Weighted-average amortization period (in years) | 7 years | 7 years | 5 years |
Estimated amortization expense | |||
2,016 | $ 63,610 | ||
2,017 | 49,487 | ||
2,018 | 35,610 | ||
2,019 | 27,698 | ||
2,020 | 23,046 | ||
Internal-use software [Member] | |||
Intangibles [Line Items] | |||
Intangibles acquired | $ 35,945 | $ 33,867 | $ 34,455 |
Weighted-average amortization period (in years) | 4 years | 4 years | 3 years |
Customer lists/relationships [Member] | |||
Intangibles [Line Items] | |||
Intangibles acquired | $ 101,867 | $ 45,869 | $ 16,610 |
Weighted-average amortization period (in years) | 8 years | 9 years | 8 years |
Trade names [Member] | |||
Intangibles [Line Items] | |||
Intangibles acquired | $ 1,400 | $ 2,000 | $ 200 |
Weighted-average amortization period (in years) | 2 years | 3 years | 2 years |
Software to be sold [Member] | |||
Intangibles [Line Items] | |||
Intangibles acquired | $ 0 | $ 28,500 | $ 0 |
Weighted-average amortization period (in years) | 9 years | ||
Other [Member] | |||
Intangibles [Line Items] | |||
Intangibles acquired | 0 | $ 50 | $ 3,310 |
Weighted-average amortization period (in years) | 2 years | 4 years | |
Indefinite-lived intangibles [Member] | Trade names [Member] | |||
Intangibles [Line Items] | |||
Gross carrying amount | 19,100 | $ 19,100 | |
Net carrying amount | 19,100 | 19,100 | |
Amortizable intangibles [Member] | |||
Intangibles [Line Items] | |||
Gross carrying amount | 673,958 | 576,388 | |
Accumulated amortization | (407,747) | (388,308) | |
Net carrying amount | 266,211 | 188,080 | |
Amortizable intangibles [Member] | Internal-use software [Member] | |||
Intangibles [Line Items] | |||
Gross carrying amount | 375,037 | 364,229 | |
Accumulated amortization | (310,665) | (303,340) | |
Net carrying amount | 64,372 | 60,889 | |
Amortization of intangibles | 31,752 | 34,282 | $ 32,555 |
Amortizable intangibles [Member] | Customer lists/relationships [Member] | |||
Intangibles [Line Items] | |||
Gross carrying amount | 202,682 | 106,218 | |
Accumulated amortization | (54,990) | (40,097) | |
Net carrying amount | 147,692 | 66,121 | |
Amortizable intangibles [Member] | Trade names [Member] | |||
Intangibles [Line Items] | |||
Gross carrying amount | 64,881 | 69,281 | |
Accumulated amortization | (36,325) | (37,623) | |
Net carrying amount | 28,556 | 31,658 | |
Amortizable intangibles [Member] | Software to be sold [Member] | |||
Intangibles [Line Items] | |||
Gross carrying amount | 28,500 | 28,500 | |
Accumulated amortization | (3,765) | (601) | |
Net carrying amount | 24,735 | 27,899 | |
Amortization of intangibles | 3,164 | 601 | 0 |
Amortizable intangibles [Member] | Other [Member] | |||
Intangibles [Line Items] | |||
Gross carrying amount | 2,858 | 8,160 | |
Accumulated amortization | (2,002) | (6,647) | |
Net carrying amount | 856 | 1,513 | |
Amortizable intangibles [Member] | Other amortizable intangibles [Member] | |||
Intangibles [Line Items] | |||
Amortization of intangibles | $ 25,784 | $ 14,192 | $ 14,096 |
Supplemental balance sheet an55
Supplemental balance sheet and cash flow information (goodwill) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Changes in goodwill | |||
Goodwill, gross, beginning of year | $ 888,376 | $ 842,777 | |
Accumulated impairment charges, beginning of year | (20,000) | (20,000) | |
Goodwill, net of accumulated impairment charges, beginning of year | 868,376 | 822,777 | |
Currency translation adjustment | (275) | (162) | |
Goodwill, gross, end of period | 996,415 | 888,376 | $ 842,777 |
Accumulated impairment charges, end of period | (20,000) | (20,000) | (20,000) |
Goodwill, net of accumulated impairment charges, end of period | 976,415 | 868,376 | 822,777 |
Destination Rewards, Inc. [Member] | |||
Changes in goodwill | |||
Goodwill acquired during period | 11,705 | ||
Adjustment to goodwill | (1,375) | ||
Wausau Financial Systems, Inc. [Member] | |||
Changes in goodwill | |||
Goodwill acquired during period | 44,807 | ||
Goodwill acquired during period, preliminary amount | 45,521 | ||
Adjustment to goodwill | (714) | ||
NetClime, Inc. [Member] | |||
Changes in goodwill | |||
Goodwill acquired during period | 1,615 | ||
Verify Valid [Member] | |||
Changes in goodwill | |||
Goodwill acquired during period | 5,650 | ||
Small business distributors [Member] | |||
Changes in goodwill | |||
Goodwill acquired during period | 9,285 | ||
Tech Assets [Member] | |||
Changes in goodwill | |||
Goodwill acquired during period | 2,628 | ||
Datamyx LLC [Member] | |||
Changes in goodwill | |||
Goodwill acquired during period | 91,465 | ||
Small Business Services [Member] | |||
Changes in goodwill | |||
Goodwill, gross, beginning of year | 654,007 | 652,554 | |
Accumulated impairment charges, beginning of year | (20,000) | (20,000) | |
Goodwill, net of accumulated impairment charges, beginning of year | 634,007 | 632,554 | |
Currency translation adjustment | (275) | (162) | |
Goodwill, gross, end of period | 671,295 | 654,007 | 652,554 |
Accumulated impairment charges, end of period | (20,000) | (20,000) | (20,000) |
Goodwill, net of accumulated impairment charges, end of period | 651,295 | 634,007 | 632,554 |
Small Business Services [Member] | NetClime, Inc. [Member] | |||
Changes in goodwill | |||
Goodwill acquired during period | 1,615 | ||
Small Business Services [Member] | Verify Valid [Member] | |||
Changes in goodwill | |||
Goodwill acquired during period | 5,650 | ||
Small Business Services [Member] | Small business distributors [Member] | |||
Changes in goodwill | |||
Goodwill acquired during period | 9,285 | ||
Small Business Services [Member] | Tech Assets [Member] | |||
Changes in goodwill | |||
Goodwill acquired during period | 2,628 | ||
Financial Services [Member] | |||
Changes in goodwill | |||
Goodwill, gross, beginning of year | 85,863 | 41,717 | |
Accumulated impairment charges, beginning of year | 0 | 0 | |
Goodwill, net of accumulated impairment charges, beginning of year | 85,863 | 41,717 | |
Goodwill, gross, end of period | 176,614 | 85,863 | 41,717 |
Accumulated impairment charges, end of period | 0 | 0 | 0 |
Goodwill, net of accumulated impairment charges, end of period | 176,614 | 85,863 | 41,717 |
Financial Services [Member] | Destination Rewards, Inc. [Member] | |||
Changes in goodwill | |||
Adjustment to goodwill | (1,375) | ||
Financial Services [Member] | Wausau Financial Systems, Inc. [Member] | |||
Changes in goodwill | |||
Goodwill acquired during period, preliminary amount | 45,521 | ||
Adjustment to goodwill | (714) | ||
Financial Services [Member] | Datamyx LLC [Member] | |||
Changes in goodwill | |||
Goodwill acquired during period | 91,465 | ||
Direct Checks [Member] | |||
Changes in goodwill | |||
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 | |
Goodwill, gross, end of period | 148,506 | 148,506 | 148,506 |
Accumulated impairment charges, end of period | 0 | 0 | 0 |
Goodwill, net of accumulated impairment charges, end of period | $ 148,506 | $ 148,506 | $ 148,506 |
Supplemental balance sheet an56
Supplemental balance sheet and cash flow information (other non-current assets) (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Other non-current assets | ||||
Contract acquisition costs | $ 58,792 | $ 74,101 | $ 35,421 | $ 43,036 |
Loans and notes receivable from distributors | 23,957 | 14,583 | ||
Postretirement benefit plan asset (Note 12) | 16,250 | 24,243 | ||
Deferred advertising costs | 7,500 | 8,922 | ||
Other | 7,559 | 9,792 | ||
Other non-current assets | $ 114,058 | $ 131,641 |
Supplemental balance sheet an57
Supplemental balance sheet and cash flow information (other) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Changes in contract acquisition costs | ||||
Balance, beginning of year | $ 74,101 | $ 35,421 | $ 43,036 | |
Additions | [1] | 6,999 | 57,225 | 10,072 |
Amortization | (18,741) | (18,105) | (17,197) | |
Other | (3,567) | (440) | (490) | |
Balance, end of year | 58,792 | 74,101 | 35,421 | |
Contract acquisition payments | 12,806 | 16,567 | 12,133 | |
Accrued liabilities | ||||
Funds held for customers | 52,366 | 42,944 | ||
Deferred revenue | 48,119 | 48,514 | ||
Performance-based compensation | 40,683 | 38,259 | ||
Customer rebates | 18,900 | 20,550 | ||
Contract acquisition costs due within one year | 9,045 | 9,815 | ||
Restructuring due within one year (Note 8) | 3,864 | 4,276 | ||
Other | 55,446 | 54,763 | ||
Accrued liabilities | 228,423 | 219,121 | ||
Supplemental cash flow information | ||||
Income taxes paid | 110,999 | 100,639 | 90,322 | |
Interest paid | $ 24,286 | $ 39,946 | $ 38,676 | |
[1] | Contract acquisition costs are accrued upon contract execution. Cash payments made for contract acquisition costs were $12,806 for 2015, $16,567 for 2014 and $12,133 for 2013. |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Earnings per share - basic: | |||||||||||
Net income | $ 59,709 | $ 56,917 | $ 56,063 | $ 45,940 | $ 57,963 | $ 44,431 | $ 50,076 | $ 47,324 | $ 218,629 | $ 199,794 | $ 186,652 |
Income allocated to participating securities | (1,460) | (1,075) | (846) | ||||||||
Income available to common shareholders | $ 217,169 | $ 198,719 | $ 185,806 | ||||||||
Weighted-average shares outstanding | 49,445 | 49,827 | 50,550 | ||||||||
Earnings per share - basic | $ 1.21 | $ 1.14 | $ 1.12 | $ 0.92 | $ 1.16 | $ 0.89 | $ 1 | $ 0.94 | $ 4.39 | $ 3.99 | $ 3.68 |
Earnings per share - diluted: | |||||||||||
Net income | $ 59,709 | $ 56,917 | $ 56,063 | $ 45,940 | $ 57,963 | $ 44,431 | $ 50,076 | $ 47,324 | $ 218,629 | $ 199,794 | $ 186,652 |
Income allocated to participating securities | (1,453) | (1,068) | (840) | ||||||||
Re-measurement of share-based awards classified as liabilities | (89) | 183 | 314 | ||||||||
Income available to common shareholders | $ 217,087 | $ 198,909 | $ 186,126 | ||||||||
Weighted-average shares outstanding | 49,445 | 49,827 | 50,550 | ||||||||
Dilutive impact of potential common shares | 380 | 435 | 460 | ||||||||
Weighted-average shares and potential common shares outstanding | 49,825 | 50,262 | 51,010 | ||||||||
Earnings per share - diluted | $ 1.20 | $ 1.13 | $ 1.11 | $ 0.91 | $ 1.16 | $ 0.88 | $ 0.99 | $ 0.93 | $ 4.36 | $ 3.96 | $ 3.65 |
Antidilutive options excluded from calculation | 354 | 7 | 12 |
Other comprehensive income (rec
Other comprehensive income (reclassification adjustments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Reclassification adjustments [Line Items] | ||||||||||||
Interest expense | $ (20,299) | $ (36,529) | $ (38,301) | |||||||||
Income tax provision | (109,318) | (97,387) | (94,407) | |||||||||
Net income | $ 59,709 | $ 56,917 | $ 56,063 | $ 45,940 | $ 57,963 | $ 44,431 | $ 50,076 | $ 47,324 | 218,629 | 199,794 | 186,652 | |
Total reclassifications, net of tax | (1,249) | (2,117) | (3,104) | |||||||||
Amortization of loss on interest rate locks [Member] | ||||||||||||
Reclassification adjustments [Line Items] | ||||||||||||
Total reclassifications, net of tax | [1] | 0 | (781) | (1,040) | ||||||||
Amortization of postretirement benefit plan items [Member] | ||||||||||||
Reclassification adjustments [Line Items] | ||||||||||||
Total reclassifications, net of tax | (1,249) | (1,336) | (2,064) | |||||||||
Amounts reclassified from accumulated other comprehensive loss [Member] | ||||||||||||
Reclassification adjustments [Line Items] | ||||||||||||
Total reclassifications, net of tax | (1,249) | (2,117) | (3,104) | |||||||||
Amounts reclassified from accumulated other comprehensive loss [Member] | Amortization of loss on interest rate locks [Member] | ||||||||||||
Reclassification adjustments [Line Items] | ||||||||||||
Interest expense | [2] | 0 | (1,282) | (1,711) | ||||||||
Income tax provision | 0 | 501 | 671 | |||||||||
Net income | 0 | (781) | (1,040) | |||||||||
Amounts reclassified from accumulated other comprehensive loss [Member] | Amortization of postretirement benefit plan items [Member] | ||||||||||||
Reclassification adjustments [Line Items] | ||||||||||||
Prior service credit | [3] | 1,421 | 1,421 | 1,421 | ||||||||
Net actuarial loss | [3] | (3,120) | (3,418) | (4,439) | ||||||||
Total amortization | [3] | (1,699) | (1,997) | (3,018) | ||||||||
Tax benefit | [3] | 450 | 661 | 954 | ||||||||
Amortization of postretirement benefit plan items, net of tax | [3] | $ (1,249) | $ (1,336) | $ (2,064) | ||||||||
[1] | Relates to interest rate locks executed in 2004. Further information regarding these financial instruments can be found in Note 6. | |||||||||||
[2] | Relates to interest rate locks executed in 2004. Further information regarding these financial instruments can be found in Note 6. | |||||||||||
[3] | Amortization of postretirement benefit plan items is included in the computation of net periodic benefit income. Additional details can be found in Note 12. |
Other comprehensive income (acc
Other comprehensive income (accumulated other comprehensive loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Accumulated other comprehensive loss [Line Items] | ||||
Balance, beginning of year | $ (36,338) | $ (33,424) | $ (40,647) | |
Other comprehensive income (loss) before reclassifications | (20,114) | (5,031) | 4,119 | |
Amounts reclassified from accumulated other comprehensive loss | 1,249 | 2,117 | 3,104 | |
Net current-period other comprehensive income (loss) | (18,865) | (2,914) | 7,223 | |
Balance, end of year | (55,203) | (36,338) | (33,424) | |
Postretirement benefit plans, net of tax [Member] | ||||
Accumulated other comprehensive loss [Line Items] | ||||
Balance, beginning of year | (32,405) | (34,874) | (45,303) | |
Other comprehensive income (loss) before reclassifications | (7,666) | 1,133 | 8,365 | |
Amounts reclassified from accumulated other comprehensive loss | 1,249 | 1,336 | 2,064 | |
Net current-period other comprehensive income (loss) | (6,417) | 2,469 | 10,429 | |
Balance, end of year | (38,822) | (32,405) | (34,874) | |
Loss on derivatives, net of tax [Member] | ||||
Accumulated other comprehensive loss [Line Items] | ||||
Balance, beginning of year | [1] | 0 | (781) | (1,821) |
Other comprehensive income (loss) before reclassifications | [1] | 0 | 0 | 0 |
Amounts reclassified from accumulated other comprehensive loss | [1] | 0 | 781 | 1,040 |
Net current-period other comprehensive income (loss) | [1] | 0 | 781 | 1,040 |
Balance, end of year | [1] | 0 | 0 | (781) |
Net unrealized (loss) gain on marketable securities, net of tax [Member] | ||||
Accumulated other comprehensive loss [Line Items] | ||||
Balance, beginning of year | (125) | (276) | (92) | |
Other comprehensive income (loss) before reclassifications | 11 | 151 | (184) | |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 | |
Net current-period other comprehensive income (loss) | 11 | 151 | (184) | |
Balance, end of year | (114) | (125) | (276) | |
Currency translation adjustment [Member] | ||||
Accumulated other comprehensive loss [Line Items] | ||||
Balance, beginning of year | (3,808) | 2,507 | 6,569 | |
Other comprehensive income (loss) before reclassifications | (12,459) | (6,315) | (4,062) | |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 | |
Net current-period other comprehensive income (loss) | (12,459) | (6,315) | (4,062) | |
Balance, end of year | $ (16,267) | $ (3,808) | $ 2,507 | |
[1] | Relates to interest rate locks executed in 2004. Further information regarding these financial instruments can be found in Note 6. |
Acquisitions (Details)
Acquisitions (Details) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2015USD ($)business | Dec. 31, 2014USD ($)business | Dec. 31, 2013USD ($)business | ||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | $ 139,212 | $ 110,286 | $ 54,575 | |||
Holdback payments for prior year acquisitions | 4,287 | 797 | [1] | 175 | [2] | |
Payments for acquisitions, net of cash acquired | 212,990 | $ 105,029 | [1] | $ 69,709 | [2] | |
Verify Valid [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill | 5,650 | |||||
Verify Valid [Member] | Small Business Services [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill | 5,650 | |||||
Tech Assets [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill | 2,628 | |||||
Tech Assets [Member] | Small Business Services [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill | 2,628 | |||||
Datamyx LLC [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill | 91,465 | |||||
Datamyx LLC [Member] | Customer lists/relationships [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | 61,000 | |||||
Datamyx LLC [Member] | Financial Services [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill | $ 91,465 | |||||
Small business distributors [Member] | ||||||
Acquisitions [Line Items] | ||||||
Number of businesses acquired | business | 8 | 5 | ||||
Number of businesses classified as held for sale | business | 1 | 4 | ||||
Allocation of aggregate purchase price | ||||||
Goodwill | $ 9,285 | |||||
Small business distributors [Member] | Small Business Services [Member] | ||||||
Acquisitions [Line Items] | ||||||
Number of businesses acquired | business | 6 | |||||
Allocation of aggregate purchase price | ||||||
Goodwill | $ 9,285 | |||||
Small business distributors [Member] | Financial Services [Member] | ||||||
Acquisitions [Line Items] | ||||||
Number of businesses acquired | business | 2 | |||||
NetClime, Inc. [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill | $ 1,615 | |||||
NetClime, Inc. [Member] | Small Business Services [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill | 1,615 | |||||
Wausau Financial Systems, Inc. [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill | 44,807 | |||||
Goodwill, purchase accounting adjustment | $ (714) | |||||
Deferred revenue acquired | 14,200 | |||||
Wausau Financial Systems, Inc. [Member] | Financial Services [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill, purchase accounting adjustment | (714) | |||||
Vertical Response Inc. [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill | $ 18,735 | |||||
Acton Marketing, LLC [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill | 1,459 | |||||
Destination Rewards, Inc. [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill | 11,705 | |||||
Goodwill, purchase accounting adjustment | (1,375) | |||||
Destination Rewards, Inc. [Member] | Financial Services [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Goodwill, purchase accounting adjustment | (1,375) | |||||
2015 acquisitions [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Net tangible assets acquired and liabilities assumed | 4,329 | |||||
Identifiable intangible assets | 108,169 | |||||
Goodwill | 109,028 | |||||
Total aggregate purchase price | 221,526 | |||||
Liabilities for holdback payments and contingent consideration | [3] | (7,404) | ||||
Non-cash consideration | [4] | (5,419) | ||||
Payments for acquisitions, net of cash acquired | 208,703 | |||||
2015 acquisitions [Member] | Customer lists/relationships [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | 101,867 | |||||
2015 acquisitions [Member] | Software to be sold [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | 0 | |||||
2015 acquisitions [Member] | Internal-use software [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | 4,902 | |||||
2015 acquisitions [Member] | Trade names [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | 1,400 | |||||
2015 acquisitions [Member] | Other [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | $ 0 | |||||
2014 acquisitions [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Net tangible assets acquired and liabilities assumed | [1] | (17,091) | ||||
Identifiable intangible assets | [1] | 76,872 | ||||
Goodwill | [1] | 46,422 | ||||
Total aggregate purchase price | [1] | 106,203 | ||||
Liabilities for holdback payments and contingent consideration | [1],[3] | (1,600) | ||||
Non-cash consideration | [1],[4] | (371) | ||||
Payments for acquisitions, net of cash acquired | [1] | 104,232 | ||||
2014 acquisitions [Member] | Assets held for sale [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | 1,353 | |||||
2014 acquisitions [Member] | Customer lists/relationships [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | [1] | 45,022 | ||||
2014 acquisitions [Member] | Software to be sold [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | [1] | 28,500 | ||||
2014 acquisitions [Member] | Internal-use software [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | [1] | 1,300 | ||||
2014 acquisitions [Member] | Trade names [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | [1] | 2,000 | ||||
2014 acquisitions [Member] | Other [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | [1] | $ 50 | ||||
2013 acquisitions [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Net tangible assets acquired and liabilities assumed | [2] | (12,418) | ||||
Identifiable intangible assets | [2] | 53,975 | ||||
Goodwill | [2] | 31,899 | ||||
Total aggregate purchase price | [2] | 73,456 | ||||
Liabilities for holdback payments and contingent consideration | [2],[3] | (3,922) | ||||
Non-cash consideration | [2],[4] | 0 | ||||
Payments for acquisitions, net of cash acquired | [2] | 69,534 | ||||
2013 acquisitions [Member] | Assets held for sale [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | 24,502 | |||||
2013 acquisitions [Member] | Customer lists/relationships [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | [2] | 43,229 | ||||
2013 acquisitions [Member] | Software to be sold [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | [2] | 0 | ||||
2013 acquisitions [Member] | Internal-use software [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | [2] | 8,446 | ||||
2013 acquisitions [Member] | Trade names [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | [2] | 200 | ||||
2013 acquisitions [Member] | Other [Member] | ||||||
Allocation of aggregate purchase price | ||||||
Identifiable intangible assets | [2] | $ 2,100 | ||||
[1] | Includes adjustments recorded in 2015 for the finalization of purchase accounting for the Wausau acquisition. These adjustments decreased goodwill $714 from the preliminary amount recorded as of December 31, 2014, with the offset to certain income and sales tax accounts. The amount of intangible assets acquired includes assets classified as held for sale upon acquisition of $1,353. | |||||
[2] | Includes adjustments recorded in 2014 for the finalization of purchase accounting for the Destination Rewards acquisition. These adjustments decreased goodwill $1,375 from the preliminary amount recorded as of December 31, 2013, with the offset to intangible assets. The amount of intangible assets acquired includes assets classified as held for sale upon acquisition of $24,502. | |||||
[3] | Consists of holdback payments due at a future date and liabilities for contingent consideration related primarily to the 2015 acquisitions of Verify Valid and a small business distributor. Further information regarding liabilities for contingent consideration can be found in Note 7. | |||||
[4] | Consists of pre-acquisition amounts owed to us by certain of the acquired businesses. |
Derivative financial instrume62
Derivative financial instruments (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Oct. 31, 2004 | Dec. 31, 2015 | Dec. 31, 2014 | |
Fair value hedge related to long-term debt due in 2020 [Member] | |||
Derivative financial instruments [Line Items] | |||
Notional amount | $ 200,000 | $ 200,000 | |
Fair value of interest rate swaps | 4,842 | 8,067 | |
Cash flow hedge, interest rate swaps 2004 [Member] | |||
Derivative financial instruments [Line Items] | |||
Pre-tax loss on cash flow hedge | $ 17,877 | ||
Senior notes due 2020 [Member] | |||
Derivative financial instruments [Line Items] | |||
Decrease in debt due to fair value adjustments | $ (4,842) | $ (8,067) |
Fair value measurements (annual
Fair value measurements (annual asset impairment analyses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Sep. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Jul. 31, 2015 | Jul. 31, 2014 | |
Schedule of goodwill and indefinite-lived intangibles [Line Items] | ||||||
Date of annual impairment test | July 31 | |||||
Goodwill | $ 976,415 | $ 868,376 | $ 822,777 | |||
Carrying value of indefinite-lived trade name | $ 19,100 | |||||
Excess of fair value over carrying value of indefinite-lived trade name | $ 20,000 | |||||
Asset impairment charge | $ 6,468 | 0 | $ 6,468 | $ 5,000 | ||
Goodwill [Member] | ||||||
Schedule of goodwill and indefinite-lived intangibles [Line Items] | ||||||
Asset impairment charge | 0 | |||||
Indefinite-lived intangibles [Member] | ||||||
Schedule of goodwill and indefinite-lived intangibles [Line Items] | ||||||
Asset impairment charge | $ 0 | |||||
Financial Services Commercial [Member] | ||||||
Schedule of goodwill and indefinite-lived intangibles [Line Items] | ||||||
Excess of fair value over carrying value of reporting unit's net assets, percentage | 13.00% | |||||
Goodwill | $ 45,000 | |||||
Minimum [Member] | ||||||
Schedule of goodwill and indefinite-lived intangibles [Line Items] | ||||||
Excess of fair value over carrying value of reporting unit's net assets, percentage | 47.00% | |||||
Excess of fair value over carrying value of reporting unit's net assets | $ 74,000 | |||||
Maximum [Member] | ||||||
Schedule of goodwill and indefinite-lived intangibles [Line Items] | ||||||
Excess of fair value over carrying value of reporting unit's net assets, percentage | 482.00% | |||||
Excess of fair value over carrying value of reporting unit's net assets | $ 1,128,000 |
Fair value measurements (non-re
Fair value measurements (non-recurring asset impairment analyses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Non-recurring fair value measurements [Line Items] | ||||
Asset impairment charge | $ 6,468 | $ 0 | $ 6,468 | $ 5,000 |
Internal-use software [Member] | ||||
Non-recurring fair value measurements [Line Items] | ||||
Fair value as of measurement date | 0 | |||
Asset impairment charge | 4,036 | |||
Internal-use software [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | ||||
Non-recurring fair value measurements [Line Items] | ||||
Fair value as of measurement date | 0 | |||
Internal-use software [Member] | Significant other observable inputs (Level 2) [Member] | ||||
Non-recurring fair value measurements [Line Items] | ||||
Fair value as of measurement date | 0 | |||
Internal-use software [Member] | Significant unobservable inputs (Level 3) [Member] | ||||
Non-recurring fair value measurements [Line Items] | ||||
Fair value as of measurement date | 0 | |||
Customer lists/relationships [Member] | ||||
Non-recurring fair value measurements [Line Items] | ||||
Fair value as of measurement date | 0 | 2,120 | ||
Asset impairment charge | 1,952 | 5,000 | ||
Customer lists/relationships [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | ||||
Non-recurring fair value measurements [Line Items] | ||||
Fair value as of measurement date | 0 | 0 | ||
Customer lists/relationships [Member] | Significant other observable inputs (Level 2) [Member] | ||||
Non-recurring fair value measurements [Line Items] | ||||
Fair value as of measurement date | 0 | 0 | ||
Customer lists/relationships [Member] | Significant unobservable inputs (Level 3) [Member] | ||||
Non-recurring fair value measurements [Line Items] | ||||
Fair value as of measurement date | 0 | $ 2,120 | ||
Trade names [Member] | ||||
Non-recurring fair value measurements [Line Items] | ||||
Fair value as of measurement date | 0 | |||
Asset impairment charge | $ 480 | |||
Trade names [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | ||||
Non-recurring fair value measurements [Line Items] | ||||
Fair value as of measurement date | 0 | |||
Trade names [Member] | Significant other observable inputs (Level 2) [Member] | ||||
Non-recurring fair value measurements [Line Items] | ||||
Fair value as of measurement date | 0 | |||
Trade names [Member] | Significant unobservable inputs (Level 3) [Member] | ||||
Non-recurring fair value measurements [Line Items] | ||||
Fair value as of measurement date | $ 0 |
Fair value measurements (acquis
Fair value measurements (acquisitions) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Acquisitions [Line Items] | ||||
Intangibles acquired | $ 139,212 | $ 110,286 | $ 54,575 | |
2015 acquisitions [Member] | ||||
Acquisitions [Line Items] | ||||
Intangibles acquired | 108,169 | |||
2015 acquisitions [Member] | Customer lists/relationships [Member] | ||||
Acquisitions [Line Items] | ||||
Intangibles acquired | 101,867 | |||
2015 acquisitions [Member] | Internal-use software [Member] | ||||
Acquisitions [Line Items] | ||||
Intangibles acquired | 4,902 | |||
2015 acquisitions [Member] | Software to be sold [Member] | ||||
Acquisitions [Line Items] | ||||
Intangibles acquired | $ 0 | |||
Verify Valid [Member] | ||||
Acquisitions [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 | |||
Small business distributors [Member] | ||||
Acquisitions [Line Items] | ||||
Contingent consideration, period | 3 years | |||
Liability for contingent consideration, maximum amount | $ 925 | |||
2014 acquisitions [Member] | ||||
Acquisitions [Line Items] | ||||
Intangibles acquired | [1] | 76,872 | ||
2014 acquisitions [Member] | Customer lists/relationships [Member] | ||||
Acquisitions [Line Items] | ||||
Intangibles acquired | [1] | 45,022 | ||
2014 acquisitions [Member] | Internal-use software [Member] | ||||
Acquisitions [Line Items] | ||||
Intangibles acquired | [1] | 1,300 | ||
2014 acquisitions [Member] | Software to be sold [Member] | ||||
Acquisitions [Line Items] | ||||
Intangibles acquired | [1] | 28,500 | ||
Wausau Financial Systems, Inc. [Member] | ||||
Acquisitions [Line Items] | ||||
Deferred revenue acquired | $ 14,200 | |||
2013 acquisitions [Member] | ||||
Acquisitions [Line Items] | ||||
Intangibles acquired | [2] | 53,975 | ||
2013 acquisitions [Member] | Customer lists/relationships [Member] | ||||
Acquisitions [Line Items] | ||||
Intangibles acquired | [2] | 43,229 | ||
2013 acquisitions [Member] | Internal-use software [Member] | ||||
Acquisitions [Line Items] | ||||
Intangibles acquired | [2] | 8,446 | ||
2013 acquisitions [Member] | Software to be sold [Member] | ||||
Acquisitions [Line Items] | ||||
Intangibles acquired | [2] | $ 0 | ||
[1] | Includes adjustments recorded in 2015 for the finalization of purchase accounting for the Wausau acquisition. These adjustments decreased goodwill $714 from the preliminary amount recorded as of December 31, 2014, with the offset to certain income and sales tax accounts. The amount of intangible assets acquired includes assets classified as held for sale upon acquisition of $1,353. | |||
[2] | Includes adjustments recorded in 2014 for the finalization of purchase accounting for the Destination Rewards acquisition. These adjustments decreased goodwill $1,375 from the preliminary amount recorded as of December 31, 2013, with the offset to intangible assets. The amount of intangible assets acquired includes assets classified as held for sale upon acquisition of $24,502. |
Fair value measurements (invest
Fair value measurements (investments and hedge ineffectiveness) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Long-term investments | |||
Net unrealized (loss) gain on investment in mutual funds | $ (281) | $ 323 | |
Fair value measurements, hedge ineffectiveness | |||
Gain (loss) from derivatives | 3,225 | $ 6,014 | (13,750) |
(Loss) gain from change in fair value of hedged debt | (3,225) | (6,603) | 13,851 |
Net (increase) decrease in interest expense | $ 0 | (589) | 101 |
Funds held for customers [Member] | Guaranteed investment certificate [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), available-for-sale securities | $ 0 | $ 0 | $ 0 |
Fair value measurements (recurr
Fair value measurements (recurring fair value measurements ) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | |||
Recurring fair value measurements [Line Items] | ||||
Available-for-sale marketable securities | $ 16,683 | $ 19,625 | ||
Long-term investment in mutual funds | 2,091 | 2,384 | ||
Transfer between fair value levels, recurring fair value measurements | 0 | 0 | ||
Funds held for customers [Member] | ||||
Recurring fair value measurements [Line Items] | ||||
Available-for-sale marketable securities | 15,067 | [1] | 17,730 | [2] |
Recurring fair value measurements [Member] | ||||
Recurring fair value measurements [Line Items] | ||||
Long-term investment in mutual funds | 2,091 | 2,384 | ||
Derivative liabilities | (4,842) | (8,067) | ||
Accrued contingent consideration | (5,861) | |||
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 | 2,091 | 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 | (4,842) | (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 | (5,861) | |||
Recurring fair value measurements [Member] | Funds held for customers [Member] | ||||
Recurring fair value measurements [Line Items] | ||||
Available-for-sale marketable securities | 15,067 | 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 | 15,067 | 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 | 1,616 | 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 | 1,616 | 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 December 31, 2015, also included cash of $38,276. | |||
[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 measurements) (Details) - Accrued contingent consideration [Member] $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Change in accrued contingent consideration | |
Balance, beginning of year | $ 409 |
Acquisition date fair value | 5,575 |
Change in fair value | 187 |
Payments | (310) |
Balance, end of year | $ 5,861 |
Fair value measurements (other
Fair value measurements (other financial instruments) (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | |
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 | 434,000 | 160,000 | |
Long-term debt | [1] | 0 | 0 |
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] | 207,000 | 419,000 |
Significant unobservable inputs (Level 3) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Loans and notes receivable from distributors | 23,383 | 15,765 | |
Short-term borrowings | 0 | 0 | |
Long-term debt | [1] | 0 | 0 |
Cash and cash equivalents [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 62,427 | 61,541 | |
Cash and cash equivalents [Member] | Significant other observable inputs (Level 2) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 0 | 0 | |
Cash and cash equivalents [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 0 | 0 | |
Funds held for customers [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 38,276 | 25,874 | |
Funds held for customers [Member] | Significant other observable inputs (Level 2) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 0 | 0 | |
Funds held for customers [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 0 | 0 | |
Carrying value [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Loans and notes receivable from distributors | 25,745 | 16,915 | |
Short-term borrowings | 434,000 | 160,000 | |
Long-term debt | [1] | 195,158 | 391,933 |
Carrying value [Member] | Cash and cash equivalents [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 62,427 | 61,541 | |
Carrying value [Member] | Funds held for customers [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 38,276 | 25,874 | |
Fair value [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Loans and notes receivable from distributors | 23,383 | 15,765 | |
Short-term borrowings | 434,000 | 160,000 | |
Long-term debt | [1] | 207,000 | 419,000 |
Fair value [Member] | Cash and cash equivalents [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | 62,427 | 61,541 | |
Fair value [Member] | Funds held for customers [Member] | |||
Fair value measurements, other financial instruments [Line Items] | |||
Cash | $ 38,276 | $ 25,874 | |
[1] | Amounts exclude capital lease obligations. |
Restructuring charges (Details)
Restructuring charges (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2015USD ($)Employees | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2015USD ($)Employees | Dec. 31, 2014USD ($)Employees | Dec. 31, 2013USD ($)Employees | |
Net restructuring charges by component | ||||||||
Severance accruals | $ 5,891 | $ 8,411 | $ 7,495 | |||||
Severance reversals | (1,197) | (1,513) | (805) | |||||
Operating lease obligations | 338 | 0 | 216 | |||||
Operating lease obligations reversals | 0 | 0 | (157) | |||||
Net restructuring accruals | 5,032 | 6,898 | 6,749 | |||||
Other costs | 1,202 | 2,757 | 4,157 | |||||
Net restructuring charges | $ 3,078 | $ 1,738 | $ 1,154 | $ 4,355 | $ 3,532 | 6,234 | 9,655 | 10,906 |
Total cost of revenue | 1,816 | 879 | 1,471 | |||||
Operating expenses | $ 4,418 | $ 8,776 | $ 9,435 | |||||
Number of employees included in severance accruals | Employees | 290 | 260 | 230 | |||||
Other restructuring charges disclosures | ||||||||
Restructuring accruals | $ 3,864 | $ 3,864 | $ 4,276 | |||||
Number of employees that have not started to receive severance benefits | Employees | 70 | 70 |
Restructuring charges (restruct
Restructuring charges (restructuring accruals by year and by segment) (Details) - USD ($) $ in Thousands | 12 Months Ended | 24 Months Ended | 36 Months Ended | 48 Months Ended | 72 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2015 | |||
Restructuring accruals [Line Items] | |||||||||
Balance, beginning of year | $ 4,276 | $ 5,638 | $ 4,650 | $ 5,638 | $ 4,650 | ||||
Restructuring charges | 6,229 | 8,411 | 7,711 | $ 48,864 | [1] | ||||
Restructuring reversals | (1,197) | (1,513) | (962) | (7,465) | [1] | ||||
Inter-segment transfer | 0 | 0 | [1] | ||||||
Payments | (5,444) | (8,260) | (5,761) | (37,535) | [1] | ||||
Balance, end of year | 3,864 | 4,276 | 5,638 | 3,864 | 3,864 | $ 3,864 | 3,864 | ||
2010/2011 initiatives [Member] | |||||||||
Restructuring accruals [Line Items] | |||||||||
Balance, beginning of year | 0 | 0 | 106 | 0 | 106 | ||||
Restructuring charges | 0 | 0 | 49 | 18,854 | |||||
Restructuring reversals | 0 | 0 | (3) | (3,267) | |||||
Payments | 0 | 0 | (152) | (15,587) | |||||
Balance, end of year | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
2012 initiatives [Member] | |||||||||
Restructuring accruals [Line Items] | |||||||||
Balance, beginning of year | 32 | 409 | 4,544 | 409 | 4,544 | ||||
Restructuring charges | 0 | 21 | 283 | 8,012 | |||||
Restructuring reversals | 0 | (12) | (822) | (1,363) | |||||
Payments | (32) | (386) | (3,596) | (6,649) | |||||
Balance, end of year | 0 | 32 | 409 | 0 | 0 | 0 | 0 | ||
2013 initiatives [Member] | |||||||||
Restructuring accruals [Line Items] | |||||||||
Balance, beginning of year | 128 | 5,229 | 0 | 5,229 | 0 | ||||
Restructuring charges | 0 | 250 | 7,379 | 7,629 | |||||
Restructuring reversals | (48) | (859) | (137) | (1,044) | |||||
Payments | (80) | (4,492) | (2,013) | (6,585) | |||||
Balance, end of year | 0 | 128 | 5,229 | 0 | 0 | 0 | 0 | ||
2014 initiatives [Member] | |||||||||
Restructuring accruals [Line Items] | |||||||||
Balance, beginning of year | 4,116 | 0 | 0 | 0 | 0 | ||||
Restructuring charges | 102 | 8,140 | 0 | 8,242 | |||||
Restructuring reversals | (691) | (642) | 0 | (1,333) | |||||
Payments | (3,351) | (3,382) | 0 | (6,733) | |||||
Balance, end of year | 176 | 4,116 | 0 | 176 | 176 | 176 | 176 | ||
2015 Initiatives [Member] | |||||||||
Restructuring accruals [Line Items] | |||||||||
Balance, beginning of year | 0 | 0 | 0 | 0 | 0 | ||||
Restructuring charges | 6,127 | 0 | 0 | ||||||
Restructuring reversals | (458) | 0 | 0 | ||||||
Payments | (1,981) | 0 | 0 | ||||||
Balance, end of year | 3,688 | 0 | 0 | 3,688 | 3,688 | 3,688 | 3,688 | ||
Employee severance benefits [Member] | Small Business Services [Member] | |||||||||
Restructuring accruals [Line Items] | |||||||||
Balance, beginning of year | 1,412 | 1,624 | 643 | 1,624 | 643 | ||||
Restructuring charges | 2,254 | 3,566 | 2,459 | 14,440 | [1] | ||||
Restructuring reversals | (684) | (858) | (129) | (2,850) | [1] | ||||
Inter-segment transfer | 41 | 350 | [1] | ||||||
Payments | (2,000) | (2,920) | (1,349) | (10,917) | [1] | ||||
Balance, end of year | 1,023 | 1,412 | 1,624 | 1,023 | 1,023 | 1,023 | 1,023 | ||
Employee severance benefits [Member] | Financial Services [Member] | |||||||||
Restructuring accruals [Line Items] | |||||||||
Balance, beginning of year | 1,848 | 1,991 | 1,090 | 1,991 | 1,090 | ||||
Restructuring charges | 1,451 | 2,897 | 2,619 | 13,057 | [1] | ||||
Restructuring reversals | (235) | (306) | (249) | (1,575) | [1] | ||||
Inter-segment transfer | (14) | 36 | [1] | ||||||
Payments | (2,166) | (2,734) | (1,469) | (10,634) | [1] | ||||
Balance, end of year | 884 | 1,848 | 1,991 | 884 | 884 | 884 | 884 | ||
Employee severance benefits [Member] | Direct Checks [Member] | |||||||||
Restructuring accruals [Line Items] | |||||||||
Balance, beginning of year | 0 | 365 | 44 | 365 | 44 | ||||
Restructuring charges | 0 | 36 | 407 | 3,776 | [1] | ||||
Restructuring reversals | 0 | (37) | (4) | (253) | [1] | ||||
Inter-segment transfer | 0 | (38) | [1] | ||||||
Payments | 0 | (364) | (82) | (3,485) | [1] | ||||
Balance, end of year | 0 | 0 | 365 | 0 | 0 | 0 | 0 | ||
Employee severance benefits [Member] | Corporate | |||||||||
Restructuring accruals [Line Items] | |||||||||
Balance, beginning of year | [2] | 984 | 1,508 | 2,472 | 1,508 | 2,472 | |||
Restructuring charges | [2] | 2,186 | 1,912 | 2,010 | 16,080 | [1] | |||
Restructuring reversals | [2] | (278) | (312) | (423) | (2,630) | [1] | |||
Inter-segment transfer | [2] | (27) | (348) | [1] | |||||
Payments | [2] | (1,006) | (2,124) | (2,551) | (11,243) | [1] | |||
Balance, end of year | [2] | 1,859 | 984 | 1,508 | 1,859 | 1,859 | 1,859 | 1,859 | |
Operating lease obligations [Member] | Small Business Services [Member] | |||||||||
Restructuring accruals [Line Items] | |||||||||
Balance, beginning of year | 32 | 150 | 251 | 150 | 251 | ||||
Restructuring charges | 285 | 0 | 164 | 779 | [1] | ||||
Restructuring reversals | 0 | 0 | (157) | (157) | [1] | ||||
Inter-segment transfer | 0 | 0 | [1] | ||||||
Payments | (261) | (118) | (108) | (566) | [1] | ||||
Balance, end of year | 56 | 32 | 150 | 56 | 56 | 56 | 56 | ||
Operating lease obligations [Member] | Financial Services [Member] | |||||||||
Restructuring accruals [Line Items] | |||||||||
Balance, beginning of year | 0 | 0 | 0 | 0 | 0 | ||||
Restructuring charges | 53 | 0 | 0 | 53 | [1] | ||||
Restructuring reversals | 0 | 0 | 0 | 0 | [1] | ||||
Inter-segment transfer | 0 | 0 | [1] | ||||||
Payments | (11) | 0 | 0 | (11) | [1] | ||||
Balance, end of year | 42 | 0 | 0 | 42 | 42 | 42 | 42 | ||
Operating lease obligations [Member] | Direct Checks [Member] | |||||||||
Restructuring accruals [Line Items] | |||||||||
Balance, beginning of year | 0 | 0 | 150 | 0 | 150 | ||||
Restructuring charges | 0 | 0 | 52 | 679 | [1] | ||||
Restructuring reversals | 0 | 0 | 0 | 0 | [1] | ||||
Inter-segment transfer | 0 | 0 | [1] | ||||||
Payments | 0 | 0 | (202) | (679) | [1] | ||||
Balance, end of year | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||
[1] | Includes accruals related to our cost reduction initiatives for 2010 through 2015. | ||||||||
[2] | As discussed in Note 16, corporate costs are allocated to our business segments. As such, the net corporate restructuring charges are reflected in the business segment operating income presented in Note 16 in accordance with our allocation methodology. |
Income tax provision (Details)
Income tax provision (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Income before income taxes | ||||
United States | $ 312,157 | $ 279,326 | $ 263,427 | |
Foreign | 15,790 | 17,855 | 17,632 | |
Income before income taxes | 327,947 | 297,181 | 281,059 | |
Current tax provision: | ||||
Federal | 98,000 | 91,630 | 80,262 | |
State | 10,632 | 8,674 | 11,599 | |
Foreign | 3,942 | 4,496 | 4,789 | |
Total current tax provision | 112,574 | 104,800 | 96,650 | |
Deferred tax provision: | ||||
Federal | (3,591) | (6,165) | (1,403) | |
State | 354 | (1,491) | (618) | |
Foreign | (19) | 243 | (222) | |
Total deferred tax provision | (3,256) | (7,413) | (2,243) | |
Income tax provision | $ 109,318 | $ 97,387 | $ 94,407 | |
Reconciliation of effective tax rate | ||||
Income tax at federal statutory rate | 35.00% | 35.00% | 35.00% | |
State income tax, net of federal income tax benefit | 2.30% | 2.30% | 2.80% | |
Qualified production activities deduction | (2.90%) | (2.80%) | (2.80%) | |
Other | (1.10%) | (1.70%) | (1.40%) | |
Income tax provision | 33.30% | 32.80% | 33.60% | |
Changes in unrecognized tax benefits | ||||
Balance, beginning of year | $ 5,272 | $ 6,005 | $ 5,619 | |
Additions for tax positions of current year | 625 | 487 | 617 | |
Additions for tax positions of prior years | 802 | 500 | 834 | |
Fair value of acquired tax positions | 65 | 316 | ||
Reductions for tax positions of prior years | (225) | (902) | (1,178) | |
Settlements | (541) | |||
Lapse of statutes of limitations | (190) | (214) | (203) | |
Adoption of ASU No. 2013-11 | [1] | (669) | ||
Balance, end of year | 5,743 | 5,272 | 6,005 | |
Unrecognized tax benefits | ||||
Unrecognized tax benefits that would impact income tax expense | 5,743 | |||
Accruals for interest and penalties | 1,151 | 982 | ||
Net increase to income tax provision for interest and penalties | 177 | 7 | ||
Net decrease to income tax provision for interest and penalties | 198 | |||
Amount by which it is reasonably possible that unrecognized tax benefits will decrease in next 12 months | 3,900 | |||
Amount by which it is reasonably possible that unrecognized tax benefits will increase in next 12 months | 1,300 | |||
Deferred tax assets | ||||
Employee benefit plans | 14,279 | 9,485 | ||
Reserves and accruals | 8,305 | 8,119 | ||
Net operating loss and capital loss carryforwards | 5,793 | 7,797 | ||
Inventories | 3,100 | 2,992 | ||
Federal benefit of state uncertain tax positions | 2,201 | 1,882 | ||
All other | 3,184 | 1,844 | ||
Total deferred taxes | 36,862 | 32,119 | ||
Valuation allowances | (2,796) | (2,945) | ||
Net deferred taxes | 34,066 | 29,174 | ||
Deferred tax liabilities | ||||
Goodwill | 60,506 | 56,875 | ||
Intangible assets | 37,842 | 40,010 | ||
Prepaid assets | 4,285 | 4,640 | ||
Deferred advertising costs | 3,786 | 4,176 | ||
Early extinguishment of debt | 2,342 | 3,129 | ||
All other | 5,143 | 4,612 | ||
Total deferred taxes | 113,904 | 113,442 | ||
Net deferred taxes | 113,904 | 113,442 | ||
Income tax provision (benefit), change in valuation allowance | 140 | $ (37) | $ 732 | |
Canadian [Member] | ||||
Undistributed earnings [Line Items] | ||||
Undistributed earnings of subsidiary companies | 94,000 | |||
Cash and investments | $ 56,087 | |||
[1] | On January 1, 2014, we adopted ASU No. 2013-11, Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. Adoption of this standard resulted in an increase in non-current deferred income tax liabilities and a corresponding decrease in other non-current liabilities. |
Income tax provision (net opera
Income tax provision (net operating loss and capital loss carryforwards) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
State [Member] | |
Tax carryforwards [Line Items] | |
Net operating loss carryforwards | $ 54,354 |
Net operating loss carryforwards, expiration dates | various dates up to 2035 |
Federal [Member] | |
Tax carryforwards [Line Items] | |
Net operating loss carryforwards | $ 3,821 |
Net operating loss carryforwards, expiration dates | between 2025 and 2032 |
Foreign [Member] | |
Tax carryforwards [Line Items] | |
Net operating loss carryforwards | $ 3,692 |
Net operating loss carryforwards, expiration dates | do not expire |
Capital loss carryforwards | $ 4,649 |
Capital loss carryforwards, expiration dates | do not expire |
Share-based compensation plan74
Share-based compensation plans (long-term incentive plan and share-based compensation expense) (Details) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)shares | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Share-based compensation plans [Line Items] | |||
Common stock reserved for issuance | shares | 5,000 | ||
Common stock available for issuance | shares | 2,964 | ||
Full value awards factor (in ones) | 2.23 | ||
Share-based compensation expense | $ 11,894 | $ 9,776 | $ 7,562 |
Income tax benefit | (3,965) | (3,204) | (2,595) |
Compensation expense not yet recognized for unvested awards | $ 13,365 | ||
Weighted-average period over which expense for unvested awards will be recognized | 1 year 8 months | ||
Stock options [Member] | |||
Share-based compensation plans [Line Items] | |||
Share-based compensation expense | $ 3,964 | 4,305 | 4,705 |
Restricted shares and restricted stock units [Member] | |||
Share-based compensation plans [Line Items] | |||
Share-based compensation expense | 5,407 | 4,111 | 2,556 |
Performance share awards [Member] | |||
Share-based compensation plans [Line Items] | |||
Share-based compensation expense | 2,115 | 966 | 0 |
Employee stock purchase plan | |||
Share-based compensation plans [Line Items] | |||
Share-based compensation expense | $ 408 | $ 394 | $ 301 |
Share-based compensation plan75
Share-based compensation plans (award terms) (Details) | 12 Months Ended |
Dec. 31, 2015shares | |
Stock options [Member] | |
Share-based compensation plans [Line Items] | |
Options vesting each year during vesting period | 33.30% |
Term of award | 7 years |
Period after grant when vesting of stock options may be modified in certain circumstances outlined in award agreement | 1 year |
Exercise period of award following voluntary termination of employment | 3 months |
Number of shares of common stock into which each award is convertible | 1 |
Stock options [Member] | Minimum [Member] | |
Share-based compensation plans [Line Items] | |
Award vesting period | 1 year |
Stock options [Member] | Maximum [Member] | |
Share-based compensation plans [Line Items] | |
Award vesting period | 3 years |
Restricted stock units [Member] | |
Share-based compensation plans [Line Items] | |
Award vesting period | 2 years |
Number of shares of common stock into which each award is convertible | 1 |
Company matching amount, restricted stock units | 50.00% |
Restricted shares [Member] | Minimum [Member] | |
Share-based compensation plans [Line Items] | |
Award vesting period | 1 year |
Restricted shares [Member] | Maximum [Member] | |
Share-based compensation plans [Line Items] | |
Award vesting period | 3 years |
Performance share awards [Member] | |
Share-based compensation plans [Line Items] | |
Award vesting period | 3 years |
Period after grant when pro-rata portion of performance shares awards may vest | 1 year |
Share-based compensation plan76
Share-based compensation plans (stock options) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Weighted-average exercise price per option | |||
Outstanding, beginning of year | $ 33.28 | $ 27.22 | $ 24.96 |
Granted | 67.02 | 50.48 | 38.74 |
Exercised | 27.36 | 23.81 | 27.19 |
Forfeited or expired | 55.13 | 37.53 | 30.03 |
Outstanding, end of year | 40.11 | 33.28 | 27.22 |
Exercisable, end of year | $ 29.99 | $ 25.76 | $ 22.09 |
Change in number of stock options | |||
Outstanding, beginning of year | 1,312 | 1,640 | 2,222 |
Granted | 268 | 290 | 465 |
Exercised | (186) | (552) | (912) |
Forfeited or expired | (40) | (66) | (135) |
Outstanding, end of year | 1,354 | 1,312 | 1,640 |
Exercisable, end of year | 820 | 645 | 759 |
Additional disclosures | |||
Aggregate intrinsic value, options outstanding, end of year | $ 22,658 | ||
Aggregate intrinsic value, options exercisable, end of year | $ 20,135 | ||
Weighted average remaining contractual term, options outstanding, end of year | 4 years | ||
Weighted-average remaining contractual term, options exercisable, end of year | 3 years 1 month | ||
Weighted-average grant date fair value, options granted | $ 14.97 | $ 12.97 | $ 13.02 |
Total intrinsic value, options exercised | $ 6,882 | $ 17,074 | $ 13,614 |
Stock options [Member] | |||
Assumptions, Black-Scholes option pricing model | |||
Risk-free interest rate | 1.30% | 1.20% | 0.70% |
Dividend yield | 1.80% | 2.00% | 2.60% |
Expected volatility | 31.70% | 36.10% | 50.50% |
Weighted-average option life (in years) | 4 years | 4 years 4 months | 4 years 4 months |
Share-based compensation plan77
Share-based compensation plans (restricted stock units, restricted shares and performance share awards) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Restricted stock units [Member] | |||
Changes in share-based compensation awards (in thousands) | |||
Outstanding, beginning of year | 166 | 150 | 123 |
Granted | 34 | 30 | 45 |
Vested | (30) | (13) | (11) |
Forfeited | (3) | (1) | (7) |
Outstanding, end of year | 167 | 166 | 150 |
Weighted-average grant date fair value | |||
Outstanding, beginning of year | $ 30.51 | $ 27.11 | $ 24.56 |
Granted | 63.28 | 53.64 | 36.74 |
Vested | 25.05 | 23.42 | 24.33 |
Forfeited | 58.04 | 34.08 | 26.78 |
Outstanding, end of year | $ 34.74 | $ 30.51 | $ 27.11 |
Additional disclosures | |||
Weighted-average remaining contractual term, outstanding, end of year | 3 years 11 months | ||
Fair value, awards vested | $ 1,970 | $ 654 | $ 390 |
Restricted stock units classified as liabilities [Member] | |||
Changes in share-based compensation awards (in thousands) | |||
Outstanding, end of year | 28 | ||
Additional disclosures | |||
Aggregate intrinsic value, outstanding, end of year | $ 1,513 | ||
Weighted-average remaining contractual term, outstanding, end of year | 7 months | ||
Fair value per unit, end of year | $ 54.54 | ||
Cash payments to settle restricted stock units | $ 120 | $ 25 | $ 64 |
Restricted shares [Member] | |||
Changes in share-based compensation awards (in thousands) | |||
Outstanding, beginning of year | 120 | 21 | 40 |
Granted | 72 | 121 | 17 |
Vested | (14) | (11) | (33) |
Forfeited | (8) | (11) | (3) |
Outstanding, end of year | 170 | 120 | 21 |
Weighted-average grant date fair value | |||
Outstanding, beginning of year | $ 49.96 | $ 35.24 | $ 23.73 |
Granted | 66.99 | 51.08 | 37.50 |
Vested | 50.72 | 37.06 | 23.68 |
Forfeited | 58.58 | 48.14 | 23.45 |
Outstanding, end of year | $ 56.35 | $ 49.96 | $ 35.24 |
Additional disclosures | |||
Weighted-average remaining contractual term, outstanding, end of year | 1 year 6 months | ||
Fair value, awards vested | $ 925 | $ 624 | $ 1,233 |
Performance share awards [Member] | |||
Assumptions, Monte Carlo simulation model | |||
Risk-free interest rate | 1.00% | 0.70% | |
Dividend yield | 1.90% | 2.40% | |
Expected volatility | 22.70% | 30.50% | |
Changes in share-based compensation awards (in thousands) | |||
Outstanding, beginning of year | 69 | 0 | |
Granted | 62 | 74 | |
Forfeited | (9) | (5) | |
Outstanding, end of year | 122 | 69 | 0 |
Weighted-average grant date fair value | |||
Outstanding, beginning of year | $ 50.14 | $ 0 | |
Granted | 67.09 | 50.14 | |
Forfeited | 58.28 | 50.14 | |
Outstanding, end of year | $ 58.13 | $ 50.14 | $ 0 |
Additional disclosures | |||
Weighted-average remaining contractual term, outstanding, end of year | 1 year 7 months |
Share-based compensation plan78
Share-based compensation plans (employee stock purchase plan) (Details) - $ / shares shares in Thousands | 12 Months Ended | ||||||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Jul. 31, 2015 | Jan. 30, 2015 | Jul. 31, 2014 | Jan. 31, 2014 | Jul. 31, 2013 | Jan. 31, 2013 | |
Employee stock purchase plan | |||||||||
Number of shares issued, employee stock purchase plan | 43 | 44 | 51 | ||||||
Purchase price per share, employee stock purchase plan | $ 54.77 | $ 55.19 | $ 46.76 | $ 41.27 | $ 34.86 | $ 31.27 |
Employee benefit plans (Details
Employee benefit plans (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Compensation plan expense | ||||
Performance period, long-term cash bonus programs | 3 years | |||
Performance-based compensation plans | [1] | $ 27,456 | $ 29,629 | $ 25,561 |
401(k) expense | $ 7,628 | 7,209 | 7,004 | |
Deferred compensation plan | ||||
Maximum percentage of base salary employees can defer | 100.00% | |||
Maximum percentage of bonus employees can defer | 50.00% | |||
Deferred compensation plan liability | $ 3,126 | 3,466 | ||
Deferred compensation plan assets | 13,397 | 12,873 | ||
Voluntary employee beneficiary association (VEBA) trust | ||||
Contributions to VEBA trust | $ 25,574 | $ 14,000 | $ 25,700 | |
First 1% of wages contributed by employee [Member] | ||||
Profit sharing/401(k) plan disclosures [Line Items] | ||||
Employer matching 401(k) contribution, percentage | 100.00% | |||
Next 5% of wages contributed by employee [Member] | ||||
Profit sharing/401(k) plan disclosures [Line Items] | ||||
Employer matching 401(k) contribution, percentage | 50.00% | |||
100% employer match [Member] | ||||
Profit sharing/401(k) plan disclosures [Line Items] | ||||
Employee 401(k) contribution receiving employer match, percent of wages | 1.00% | |||
50% employer match [Member] | ||||
Profit sharing/401(k) plan disclosures [Line Items] | ||||
Employee 401(k) contribution receiving employer match, percent of wages | 5.00% | |||
Employees under the age of 50 [Member] | ||||
Profit sharing/401(k) plan disclosures [Line Items] | ||||
401(k) contributions, maximum annual employee contribution, amount | $ 18 | |||
401(k) contributions, maximum annual employee contribution, percent of wages | 50.00% | |||
Employees aged 50 or older [Member] | ||||
Profit sharing/401(k) plan disclosures [Line Items] | ||||
401(k) contributions, maximum annual employee contribution, amount | $ 24 | |||
[1] | Includes expense for profit sharing contributions, as they vary based on our performance. Excludes expense for stock-based compensation, which is discussed in Note 10. |
Postretirement benefits (obliga
Postretirement benefits (obligations and funded status) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Change in benefit obligation | |||
Interest cost | $ 3,437 | $ 4,553 | $ 3,652 |
Amounts recognized in balance sheets | |||
Other non-current assets | 16,250 | 24,243 | |
Amounts recognized in accumulated other comprehensive loss | |||
Unrecognized prior service credit | 18,442 | 19,863 | |
Unrecognized net actuarial loss | (74,524) | (65,073) | |
Tax effect | 17,260 | 12,805 | |
Amount recognized in accumulated other comprehensive loss, net of tax | (38,822) | (32,405) | |
Amounts in accumulated other comprehensive loss which are expected to be recognized in the next 12 months | |||
Prior service credit | (1,421) | ||
Net actuarial loss | 3,797 | ||
Total | 2,376 | ||
Postretirement benefit plan [Member] | |||
Change in benefit obligation | |||
Benefit obligation, beginning of year | 100,432 | 108,567 | |
Interest cost | 3,309 | 4,414 | |
Net actuarial (gain) loss | 5,258 | (3,513) | |
Benefits paid from plan assets and company funds | (10,122) | (9,878) | |
Pharmacy rebates and Medicare Part D reimbursements | 2,007 | 842 | |
Benefit obligation, end of year | 100,884 | 100,432 | 108,567 |
Change in plan assets | |||
Fair value of plan assets, beginning of year | 124,675 | 133,548 | |
Return on plan assets | 391 | 7,701 | |
Benefits paid | (7,932) | (8,434) | |
Transfer of assets to VEBA trust | (8,140) | ||
Fair value of plan assets, end of year | 117,134 | 124,675 | 133,548 |
Funded status | 16,250 | 24,243 | |
Amounts recognized in balance sheets | |||
Other non-current assets | 16,250 | 24,243 | |
Accrued liabilities | 0 | 0 | |
Other non-current liabilities | $ 0 | 0 | |
Amounts recognized in accumulated other comprehensive loss | |||
Weighted-average amortization period, prior service credit | 21 years | ||
Amortization period net actuarial loss | 16 years 6 months | ||
Pension plan [Member] | |||
Change in benefit obligation | |||
Benefit obligation, beginning of year | $ 3,864 | 3,428 | |
Interest cost | 128 | 139 | |
Net actuarial (gain) loss | (130) | 621 | |
Benefits paid from plan assets and company funds | (324) | (324) | |
Benefit obligation, end of year | 3,538 | 3,864 | $ 3,428 |
Change in plan assets | |||
Funded status | (3,538) | (3,864) | |
Amounts recognized in balance sheets | |||
Other non-current assets | 0 | 0 | |
Accrued liabilities | 324 | 324 | |
Other non-current liabilities | $ 3,214 | $ 3,540 |
Postretirement benefits (net pe
Postretirement benefits (net periodic benefit income and actuarial assumptions) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Net periodic benefit income | ||||
Interest cost | $ 3,437 | $ 4,553 | $ 3,652 | |
Expected return on plan assets | (7,833) | (8,734) | (8,030) | |
Amortization of prior service credit | (1,421) | (1,421) | (1,421) | |
Amortization of net actuarial losses | 3,120 | 3,418 | 4,439 | |
Net periodic benefit income | $ (2,697) | $ (2,184) | $ (1,360) | |
Actuarial assumptions | ||||
Discount rate, net periodic benefit income | 3.45% | 4.25% | 3.15% | |
Scenario, Forecast [Member] | ||||
Actuarial assumptions | ||||
Change in discount rate assumption, financial effect | $ (881) | |||
Postretirement benefit plan [Member] | ||||
Net periodic benefit income | ||||
Interest cost | $ 3,309 | $ 4,414 | ||
Actuarial assumptions | ||||
Discount rate, benefit obligation | 4.02% | 3.45% | ||
Expected return on plan assets | 6.50% | 6.75% | 6.75% | |
Effect of one-percentage-point change in assumed health care cost trend rates | ||||
One percentage point increase, effect on total of service and interest cost | $ 65 | |||
One percentage point decrease, effect on total of service and interest cost | (61) | |||
One percentage point increase, effect on benefit obligation | 1,614 | |||
One percentage point decrease, effect on benefit obligation | $ (1,513) | |||
Postretirement benefit plan [Member] | Participants under age 65 [Member] | ||||
Health care cost trend rates | ||||
Health care cost trend rate assumed for next year | 7.25% | 7.50% | 7.75% | |
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 5.00% | 5.00% | 5.00% | |
Year that the rate reaches the ultimate trend rate | 2,026 | 2,021 | 2,021 | |
Postretirement benefit plan [Member] | Participants age 65 and older [Member] | ||||
Health care cost trend rates | ||||
Health care cost trend rate assumed for next year | 6.75% | 7.00% | 7.25% | |
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 5.00% | 5.00% | 5.00% | |
Year that the rate reaches the ultimate trend rate | 2,024 | 2,020 | 2,020 | |
Pension plan [Member] | ||||
Net periodic benefit income | ||||
Interest cost | $ 128 | $ 139 | ||
Actuarial assumptions | ||||
Discount rate, benefit obligation | 3.88% | 3.45% |
Postretirement benefits (plan a
Postretirement benefits (plan assets) (Details) - Postretirement benefit plan [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 100.00% | 100.00% | |
Fair value of plan assets | $ 117,134 | $ 124,675 | $ 133,548 |
Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 27,468 | 28,967 | |
Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 89,666 | 95,708 | |
Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
Equity securities [Member] | International [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 18.00% | 18.00% | |
Target allocation of plan assets | 18.00% | ||
Fair value of plan assets | $ 21,209 | $ 22,416 | |
Equity securities [Member] | International [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 20,520 | 21,823 | |
Equity securities [Member] | International [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 689 | 593 | |
Equity securities [Member] | International [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
Equity securities [Member] | Large capitalization [Member] | United States [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 33.00% | 33.00% | |
Target allocation of plan assets | 33.00% | ||
Fair value of plan assets | $ 38,629 | $ 40,847 | |
Equity securities [Member] | Large capitalization [Member] | United States [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Equity securities [Member] | Large capitalization [Member] | United States [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 38,629 | 40,847 | |
Equity securities [Member] | Large capitalization [Member] | United States [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
Equity securities [Member] | Small and mid-capitalization [Member] | United States [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 7.00% | 7.00% | |
Target allocation of plan assets | 7.00% | ||
Fair value of plan assets | $ 8,095 | $ 8,702 | |
Equity securities [Member] | Small and mid-capitalization [Member] | United States [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 6,799 | 7,090 | |
Equity securities [Member] | Small and mid-capitalization [Member] | United States [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 1,296 | 1,612 | |
Equity securities [Member] | Small and mid-capitalization [Member] | United States [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
Mortgage-backed securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 17.00% | 14.00% | |
Fair value of plan assets | $ 20,157 | $ 17,713 | |
Mortgage-backed securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Mortgage-backed securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 20,157 | 17,713 | |
Mortgage-backed securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
U.S. corporate debt securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 15.00% | 14.00% | |
Fair value of plan assets | $ 16,974 | $ 17,823 | |
U.S. corporate debt securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
U.S. corporate debt securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 16,974 | 17,823 | |
U.S. corporate debt securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
Government debt securities [Member] | |||
Postretirement benefits [Line Items] | |||
Allocation of plan assets | 10.00% | 14.00% | |
Fair value of plan assets | $ 11,808 | $ 17,031 | |
Government debt securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Government debt securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 11,808 | 17,031 | |
Government debt securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Other debt securities [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 262 | 143 | |
Other debt securities [Member] | Quoted prices in active markets for identical assets (Level 1) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 149 | 54 | |
Other debt securities [Member] | Significant other observable inputs (Level 2) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | 113 | 89 | |
Other debt securities [Member] | Significant unobservable inputs (Level 3) [Member] | |||
Postretirement benefits [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 | |
Fixed income securities [Member] | |||
Postretirement benefits [Line Items] | |||
Target allocation of plan assets | 42.00% |
Postretirement benefits (cash f
Postretirement benefits (cash flows) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Postretirement benefit plan [Member] | |||
Postretirement benefits [Line Items] | |||
Company contributions | $ 0 | $ 0 | $ 0 |
Expected benefit payments | |||
2,016 | 9,565 | ||
2,017 | 9,692 | ||
2,018 | 9,592 | ||
2,019 | 9,141 | ||
2,020 | 8,579 | ||
2021 - 2025 | 35,149 | ||
Pension plan [Member] | |||
Postretirement benefits [Line Items] | |||
Cash surrender value of insurance polices which fund pension plan | 7,573 | $ 7,239 | |
Expected benefit payments | |||
2,016 | 320 | ||
2,017 | 320 | ||
2,018 | 320 | ||
2,019 | 310 | ||
2,020 | 300 | ||
2021 - 2025 | $ 1,410 |
Debt and lease obligations (deb
Debt and lease obligations (debt) (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2015USD ($) | Nov. 30, 2012USD ($) | Mar. 31, 2011USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | ||
Debt instruments [Line Items] | ||||||||
Long-term portion of debt | $ 196,222 | $ 393,401 | ||||||
Short-term borrowings | 434,000 | 160,000 | ||||||
Capital lease obligations due within one year | 1,045 | 911 | ||||||
Total debt | $ 631,267 | 554,312 | ||||||
Ratio of EBITDA to interest expense | 2 | |||||||
Ratio of total debt less unrestricted cash to EBITDA | 2.75 | |||||||
Loss on early debt extinguishment | $ 8,917 | $ 8,917 | 0 | $ 0 | ||||
Senior notes due 2019 [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Long-term portion of debt | 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 | |||||||
Principal amount retired | $ 200,000 | |||||||
Loss on early debt extinguishment | $ 8,917 | |||||||
Senior notes due 2020 [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Long-term portion of debt | [1] | 195,158 | 191,933 | |||||
Decrease in debt due to fair value adjustments | (4,842) | (8,067) | ||||||
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 | $ 207,000 | |||||||
Senior notes due 2020 [Member] | First optional redemption period [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Redemption period, end date | Nov. 15, 2016 | |||||||
Redemption price | 100.00% | |||||||
Senior notes due 2020 [Member] | Second optional redemption period [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Redemption period, start date | Nov. 15, 2016 | |||||||
Senior notes due 2020 [Member] | Second optional redemption period [Member] | Minimum [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Redemption price | 100.00% | |||||||
Senior notes due 2020 [Member] | Second optional redemption period [Member] | Maximum [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Redemption price | 103.00% | |||||||
Senior notes due 2020 [Member] | Mandatory redemption [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Redemption price | 101.00% | |||||||
Capital lease obligations [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Long-term portion of debt | $ 1,064 | 1,468 | ||||||
Credit facility [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
Short-term borrowings | $ 434,000 | $ 160,000 | ||||||
Short-term bank loan [Member] | ||||||||
Debt instruments [Line Items] | ||||||||
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 $4,842 as of December 31, 2015 and $8,067 as of December 31, 2014. |
Debt and lease obligations (sho
Debt and lease obligations (short-term borrowings) (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Mar. 31, 2015 | Mar. 31, 2011 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Debt instruments [Line Items] | ||||||
Short-term borrowings | $ 434,000 | $ 160,000 | ||||
Credit facility commitment | $ 525,000 | $ 350,000 | ||||
Credit facility, date of expiration | Feb. 21, 2019 | |||||
Credit facility, amount outstanding, interest rate | 1.89% | 1.63% | ||||
Daily average amount outstanding | $ 270,063 | $ 43,675 | $ 0 | |||
Daily average amount outstanding, weighted-average interest rate | 1.66% | 1.63% | ||||
Outstanding letters of credit | [1] | $ (12,726) | ||||
Net available for borrowing as of December 31, 2015 | $ 78,274 | |||||
Minimum [Member] | ||||||
Debt instruments [Line Items] | ||||||
Commitment fee percentage | 0.20% | |||||
Maximum [Member] | ||||||
Debt instruments [Line Items] | ||||||
Commitment fee percentage | 0.40% | |||||
Short-term bank loan [Member] | ||||||
Debt instruments [Line Items] | ||||||
Debt issuance date | Mar. 5, 2015 | |||||
Principal amount issued | $ 75,000 | |||||
Debt maturity date, end | Mar. 3, 2016 | |||||
Proceeds from loan, net of offering costs | $ 74,880 | |||||
Short-term borrowings, daily average amount outstanding | $ 47,178 | $ 0 | ||||
Short-term borrowings, weighted-average interest rate | 1.59% | 0.00% | ||||
Senior notes due 2019 [Member] | ||||||
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] | ||||||
Debt instruments [Line Items] | ||||||
Short-term borrowings | $ 434,000 | $ 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. |
Debt and lease obligations (lea
Debt and lease obligations (lease obligations) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Capital lease obligations [Line Items] | |||
Capital lease obligations | $ 2,109 | $ 2,379 | |
Capital lease obligations, expiration date | Oct. 31, 2019 | ||
Capital lease obligations, future payments | |||
2,016 | $ 1,078 | ||
2,017 | 731 | ||
2,018 | 303 | ||
2,019 | 47 | ||
Total minimum lease payments | 2,159 | ||
Less portion representing interest | (50) | ||
Present value of minimum lease payments | 2,109 | ||
Operating lease obligations, future payments | |||
2,016 | 6,626 | ||
2,017 | 5,318 | ||
2,018 | 3,642 | ||
2,019 | 2,979 | ||
2,020 | 1,216 | ||
Thereafter | 2,389 | ||
Total minimum lease payments | 22,170 | ||
Net rental expense | 15,372 | 13,099 | $ 11,855 |
Machinery and equipment [Member] | |||
Capital lease obligations [Line Items] | |||
Machinery and equipment | 4,193 | 2,911 | |
Accumulated depreciation | (1,942) | (926) | |
Net assets under capital leases | $ 2,251 | $ 1,985 |
Other commitments and conting87
Other commitments and contingencies (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Environmental matters [Line Items] | |||
Accruals for environmental matters | $ 5,952 | $ 7,942 | |
Expense for environmental matters | 1,142 | 1,079 | $ 1,169 |
Self-insurance | |||
Self-insurance liabilities | 6,457 | $ 6,401 | |
Litigation | |||
Damages sought | 43,000 | ||
Environmental insurance policy purchased during 2002 [Member] | Environmental remediation costs [Member] | |||
Environmental matters [Line Items] | |||
Environmental insurance coverage | 12,911 | ||
Cumulative benefits received under insurance policy | 12,884 | ||
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] | |||
Environmental insurance coverage | $ 15,000 |
Shareholders' equity (Details)
Shareholders' equity (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)$ / shares$ / Unitshares | Dec. 31, 2014USD ($)shares | Dec. 31, 2013USD ($)shares | |
Common shares repurchased | |||
Common shares authorized for repurchase | 10,000,000 | ||
Common shares that remain available for repurchase | 966,000 | ||
Common shares repurchased | 996,000 | 1,133,000 | 1,162,000 |
Payments for common shares repurchased | $ | $ 59,952 | $ 60,119 | $ 48,798 |
Common stock purchase rights | |||
Number of common shares each right entitles holder to purchase | 1 | ||
Exercise price of common stock purchase rights (per share) | $ / shares | $ 100 | ||
Beneficial ownership that could trigger the exercise of stock purchase rights | 20.00% | ||
Percentage of market price of one common share used to determine number of shares purchasable | 50.00% | ||
Expiration date of rights | Dec. 31, 2016 | ||
Redemption price of stock purchase rights (per right) | $ / Unit | 0.01 |
Business segment information (D
Business segment information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Business segment information [Line Items] | |||||||||||
Number of reportable business segments | 3 | ||||||||||
Number of businesses reclassified in segment reporting | 2 | ||||||||||
Businesses reclassified in segement reporting, revenue | $ 22,745 | $ 13,982 | |||||||||
Businesses reclassified in segement reporting, operating income | 1,109 | 468 | |||||||||
Depreciation and amortization expense related to corporate assets which was allocated to segments | $ 32,505 | 34,801 | 37,893 | ||||||||
Total revenue from external customers: | $ 463,510 | $ 439,816 | $ 435,874 | $ 433,617 | $ 448,513 | $ 413,204 | $ 405,410 | $ 406,955 | 1,772,817 | 1,674,082 | 1,584,824 |
Operating income: | 354,331 | 332,633 | 317,914 | ||||||||
Depreciation and amortization expense: | 76,700 | 65,842 | 64,473 | ||||||||
Asset impairment charges | $ 6,468 | 0 | 6,468 | 5,000 | |||||||
Total assets: | 1,844,402 | 1,688,391 | 1,844,402 | 1,688,391 | 1,569,529 | ||||||
Capital asset purchases: | $ 43,261 | $ 41,119 | $ 37,459 | ||||||||
Customer concentration risk [Member] | |||||||||||
Business segment information [Line Items] | |||||||||||
Percentage of concentration risk | 10.00% | 10.00% | 10.00% | ||||||||
Checks [Member] | |||||||||||
Business segment information [Line Items] | |||||||||||
Total revenue from external customers: | $ 873,298 | $ 870,910 | $ 884,605 | ||||||||
Small Business Services [Member] | Checks [Member] | Product concentration risk [Member] | |||||||||||
Business segment information [Line Items] | |||||||||||
Percentage of concentration risk | 40.10% | ||||||||||
Financial Services [Member] | Checks [Member] | Customer concentration risk [Member] | |||||||||||
Business segment information [Line Items] | |||||||||||
Percentage of concentration risk | 59.70% | ||||||||||
Direct Checks [Member] | Checks [Member] | Customer concentration risk [Member] | |||||||||||
Business segment information [Line Items] | |||||||||||
Percentage of concentration risk | 84.60% | ||||||||||
Reportable business segments [Member] | Small Business Services [Member] | |||||||||||
Business segment information [Line Items] | |||||||||||
Total revenue from external customers: | $ 1,151,916 | 1,106,505 | 1,036,268 | ||||||||
Operating income: | 203,933 | 187,226 | 175,420 | ||||||||
Depreciation and amortization expense: | 45,513 | 44,418 | 45,329 | ||||||||
Asset impairment charges | 0 | 6,468 | 5,000 | ||||||||
Total assets: | 995,445 | 949,521 | 995,445 | 949,521 | 942,048 | ||||||
Capital asset purchases: | 0 | 0 | 0 | ||||||||
Reportable business segments [Member] | Financial Services [Member] | |||||||||||
Business segment information [Line Items] | |||||||||||
Total revenue from external customers: | 455,390 | 391,129 | 357,142 | ||||||||
Operating income: | 91,539 | 87,908 | 82,811 | ||||||||
Depreciation and amortization expense: | 26,807 | 14,675 | 11,231 | ||||||||
Asset impairment charges | 0 | 0 | 0 | ||||||||
Total assets: | 435,632 | 274,086 | 435,632 | 274,086 | 111,432 | ||||||
Capital asset purchases: | 0 | 0 | 0 | ||||||||
Reportable business segments [Member] | Direct Checks [Member] | |||||||||||
Business segment information [Line Items] | |||||||||||
Total revenue from external customers: | 165,511 | 176,448 | 191,414 | ||||||||
Operating income: | 58,859 | 57,499 | 59,683 | ||||||||
Depreciation and amortization expense: | 4,380 | 6,749 | 7,913 | ||||||||
Asset impairment charges | 0 | 0 | 0 | ||||||||
Total assets: | 161,987 | 164,171 | 161,987 | 164,171 | 167,283 | ||||||
Capital asset purchases: | 0 | 0 | 0 | ||||||||
Corporate [Member] | |||||||||||
Business segment information [Line Items] | |||||||||||
Total revenue from external customers: | 0 | 0 | 0 | ||||||||
Operating income: | 0 | 0 | 0 | ||||||||
Depreciation and amortization expense: | 0 | 0 | 0 | ||||||||
Asset impairment charges | 0 | 0 | 0 | ||||||||
Total assets: | $ 251,338 | $ 300,613 | 251,338 | 300,613 | 348,766 | ||||||
Capital asset purchases: | $ 43,261 | $ 41,119 | $ 37,459 |
Business segment information (r
Business segment information (revenue by product and service) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenue by product and service category | |||||||||||
Total revenue | $ 463,510 | $ 439,816 | $ 435,874 | $ 433,617 | $ 448,513 | $ 413,204 | $ 405,410 | $ 406,955 | $ 1,772,817 | $ 1,674,082 | $ 1,584,824 |
Checks [Member] | |||||||||||
Revenue by product and service category | |||||||||||
Total revenue | 873,298 | 870,910 | 884,605 | ||||||||
Marketing solutions and other services [Member] | |||||||||||
Revenue by product and service category | |||||||||||
Total revenue | 532,465 | 427,098 | 343,006 | ||||||||
Forms [Member] | |||||||||||
Revenue by product and service category | |||||||||||
Total revenue | 215,663 | 216,842 | 200,560 | ||||||||
Accessories and other products [Member] | |||||||||||
Revenue by product and service category | |||||||||||
Total revenue | $ 151,391 | $ 159,232 | $ 156,653 |
Business segment information (g
Business segment information (geographic information) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Geographic information [Line Items] | |||||||||||
Total revenue | $ 463,510 | $ 439,816 | $ 435,874 | $ 433,617 | $ 448,513 | $ 413,204 | $ 405,410 | $ 406,955 | $ 1,772,817 | $ 1,674,082 | $ 1,584,824 |
United States [Member] | |||||||||||
Geographic information [Line Items] | |||||||||||
Total revenue | 1,701,566 | 1,593,898 | 1,501,176 | ||||||||
Foreign, primarily Canada | |||||||||||
Geographic information [Line Items] | |||||||||||
Total revenue | $ 71,251 | $ 80,184 | $ 83,648 |
Supplemental guarantor financ92
Supplemental guarantor financial information (Condensed Consolidating Balance Sheets) (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Current assets: | ||||
Cash and cash equivalents | $ 62,427 | $ 61,541 | $ 121,089 | $ 45,435 |
Trade accounts receivable - net | 123,654 | 113,656 | ||
Inventories and supplies | 41,956 | 39,411 | ||
Deferred income taxes | 0 | 10,159 | ||
Funds held for customers | 53,343 | 43,604 | ||
Other current assets | 44,608 | 50,519 | ||
Total current assets | 325,988 | 318,890 | ||
Deferred income taxes | 1,238 | 1,411 | ||
Long-term investments | 41,691 | 46,451 | ||
Property, plant and equipment, net | 85,732 | 87,623 | ||
Assets held for sale | 13,969 | 26,819 | ||
Intangibles, net | 285,311 | 207,180 | ||
Goodwill | 976,415 | 868,376 | 822,777 | |
Investments In consolidated subsidiaries | 0 | 0 | ||
Intercompany receivable | 0 | 0 | ||
Other non-current assets | 114,058 | 131,641 | ||
Total assets | 1,844,402 | 1,688,391 | 1,569,529 | |
Current liabilities: | ||||
Accounts payable | 87,575 | 87,216 | ||
Accrued liabilities | 228,423 | 219,121 | ||
Short-term borrowings | 434,000 | 160,000 | ||
Long-term debt due within one year | 1,045 | 911 | ||
Total current liabilities | 751,043 | 467,248 | ||
Long-term debt | 196,222 | 393,401 | ||
Deferred income taxes | 81,076 | 95,838 | ||
Intercompany payable | 0 | 0 | ||
Other non-current liabilities | 70,992 | 84,407 | ||
Total shareholders' equity | 745,069 | 647,497 | 550,457 | 432,935 |
Total liabilities and shareholders' equity | 1,844,402 | 1,688,391 | ||
Deluxe Corporation | ||||
Current assets: | ||||
Cash and cash equivalents | 5,187 | 8,335 | 71,972 | 14,862 |
Trade accounts receivable - net | 0 | 0 | ||
Inventories and supplies | 0 | 0 | ||
Deferred income taxes | 8,929 | |||
Funds held for customers | 0 | 0 | ||
Other current assets | 9,233 | 8,538 | ||
Total current assets | 14,420 | 25,802 | ||
Deferred income taxes | 13,498 | 660 | ||
Long-term investments | 34,304 | 38,623 | ||
Property, plant and equipment, net | 10,111 | 4,868 | ||
Assets held for sale | 0 | 0 | ||
Intangibles, net | 9,066 | 987 | ||
Goodwill | 0 | 0 | ||
Investments In consolidated subsidiaries | 1,248,549 | 1,268,918 | ||
Intercompany receivable | 99,506 | 0 | ||
Other non-current assets | 6,107 | 9,675 | ||
Total assets | 1,435,561 | 1,349,533 | ||
Current liabilities: | ||||
Accounts payable | 15,625 | 13,792 | ||
Accrued liabilities | 23,567 | 26,278 | ||
Short-term borrowings | 434,000 | 160,000 | ||
Long-term debt due within one year | 1,026 | 903 | ||
Total current liabilities | 474,218 | 200,973 | ||
Long-term debt | 196,191 | 393,387 | ||
Deferred income taxes | 0 | 0 | ||
Intercompany payable | 0 | 83,294 | ||
Other non-current liabilities | 20,083 | 24,382 | ||
Total shareholders' equity | 745,069 | 647,497 | ||
Total liabilities and shareholders' equity | 1,435,561 | 1,349,533 | ||
Guarantor subsidiaries | ||||
Current assets: | ||||
Cash and cash equivalents | 940 | 4,342 | 6,991 | 3,228 |
Trade accounts receivable - net | 115,951 | 100,197 | ||
Inventories and supplies | 39,758 | 34,097 | ||
Deferred income taxes | 1,182 | |||
Funds held for customers | 0 | 0 | ||
Other current assets | 32,765 | 38,912 | ||
Total current assets | 189,414 | 178,730 | ||
Deferred income taxes | 0 | 0 | ||
Long-term investments | 7,387 | 7,828 | ||
Property, plant and equipment, net | 71,017 | 76,306 | ||
Assets held for sale | 0 | 3,102 | ||
Intangibles, net | 273,051 | 203,967 | ||
Goodwill | 974,973 | 866,659 | ||
Investments In consolidated subsidiaries | 81,099 | 90,960 | ||
Intercompany receivable | 0 | 82,758 | ||
Other non-current assets | 107,767 | 121,549 | ||
Total assets | 1,704,708 | 1,631,859 | ||
Current liabilities: | ||||
Accounts payable | 69,809 | 73,380 | ||
Accrued liabilities | 148,279 | 141,816 | ||
Short-term borrowings | 0 | 0 | ||
Long-term debt due within one year | 0 | 0 | ||
Total current liabilities | 218,088 | 215,196 | ||
Long-term debt | 0 | 0 | ||
Deferred income taxes | 94,574 | 96,498 | ||
Intercompany payable | 98,365 | 0 | ||
Other non-current liabilities | 45,132 | 51,247 | ||
Total shareholders' equity | 1,248,549 | 1,268,918 | ||
Total liabilities and shareholders' equity | 1,704,708 | 1,631,859 | ||
Non-guarantor subsidiaries | ||||
Current assets: | ||||
Cash and cash equivalents | 56,422 | 52,193 | 45,229 | 31,346 |
Trade accounts receivable - net | 7,703 | 13,459 | ||
Inventories and supplies | 2,198 | 5,314 | ||
Deferred income taxes | 48 | |||
Funds held for customers | 53,343 | 43,604 | ||
Other current assets | 2,610 | 3,069 | ||
Total current assets | 122,276 | 117,687 | ||
Deferred income taxes | 1,238 | 1,411 | ||
Long-term investments | 0 | 0 | ||
Property, plant and equipment, net | 4,604 | 6,449 | ||
Assets held for sale | 13,969 | 23,717 | ||
Intangibles, net | 3,194 | 2,226 | ||
Goodwill | 1,442 | 1,717 | ||
Investments In consolidated subsidiaries | 0 | 0 | ||
Intercompany receivable | 0 | 536 | ||
Other non-current assets | 184 | 417 | ||
Total assets | 146,907 | 154,160 | ||
Current liabilities: | ||||
Accounts payable | 2,263 | 3,373 | ||
Accrued liabilities | 56,577 | 51,027 | ||
Short-term borrowings | 0 | 0 | ||
Long-term debt due within one year | 19 | 8 | ||
Total current liabilities | 58,859 | 54,408 | ||
Long-term debt | 31 | 14 | ||
Deferred income taxes | 0 | 0 | ||
Intercompany payable | 1,141 | 0 | ||
Other non-current liabilities | 5,777 | 8,778 | ||
Total shareholders' equity | 81,099 | 90,960 | ||
Total liabilities and shareholders' equity | 146,907 | 154,160 | ||
Eliminations | ||||
Current assets: | ||||
Cash and cash equivalents | (122) | (3,329) | $ (3,103) | $ (4,001) |
Trade accounts receivable - net | 0 | 0 | ||
Inventories and supplies | 0 | 0 | ||
Deferred income taxes | 0 | |||
Funds held for customers | 0 | 0 | ||
Other current assets | 0 | 0 | ||
Total current assets | (122) | (3,329) | ||
Deferred income taxes | (13,498) | (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 | (1,329,648) | (1,359,878) | ||
Intercompany receivable | (99,506) | (83,294) | ||
Other non-current assets | 0 | 0 | ||
Total assets | (1,442,774) | (1,447,161) | ||
Current liabilities: | ||||
Accounts payable | (122) | (3,329) | ||
Accrued liabilities | 0 | 0 | ||
Short-term borrowings | 0 | 0 | ||
Long-term debt due within one year | 0 | 0 | ||
Total current liabilities | (122) | (3,329) | ||
Long-term debt | 0 | 0 | ||
Deferred income taxes | (13,498) | (660) | ||
Intercompany payable | (99,506) | (83,294) | ||
Other non-current liabilities | 0 | 0 | ||
Total shareholders' equity | (1,329,648) | (1,359,878) | ||
Total liabilities and shareholders' equity | $ (1,442,774) | $ (1,447,161) |
Supplemental guarantor financ93
Supplemental guarantor financial information (Condensed Consolidating Statements of Comprehensive Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Condensed Consolidating Statements of Comprehensive Income | |||||||||||
Product revenue | $ 1,451,994 | $ 1,410,858 | $ 1,369,711 | ||||||||
Service revenue | 320,823 | 263,224 | 215,113 | ||||||||
Total revenue | $ 463,510 | $ 439,816 | $ 435,874 | $ 433,617 | $ 448,513 | $ 413,204 | $ 405,410 | $ 406,955 | 1,772,817 | 1,674,082 | 1,584,824 |
Cost of products | (526,307) | (501,871) | (463,487) | ||||||||
Cost of services | (112,902) | (104,407) | (97,629) | ||||||||
Total cost of revenue | (639,209) | (606,278) | (561,116) | ||||||||
Gross profit | 292,222 | 280,514 | 279,936 | 280,936 | 283,204 | 263,054 | 259,519 | 262,027 | 1,133,608 | 1,067,804 | 1,023,708 |
Operating expenses | (779,277) | (727,968) | (700,794) | ||||||||
Asset impairment charges | (6,468) | 0 | (6,468) | (5,000) | |||||||
Net loss on sale of facility | 0 | (735) | 0 | ||||||||
Operating income | 354,331 | 332,633 | 317,914 | ||||||||
Loss on early debt extinguishment | (8,917) | (8,917) | 0 | 0 | |||||||
Interest expense | (20,299) | (36,529) | (38,301) | ||||||||
Other income | 2,832 | 1,077 | 1,446 | ||||||||
Income before income taxes | 327,947 | 297,181 | 281,059 | ||||||||
Income tax benefit (provision) | (109,318) | (97,387) | (94,407) | ||||||||
Net income | $ 59,709 | $ 56,917 | $ 56,063 | $ 45,940 | $ 57,963 | $ 44,431 | $ 50,076 | $ 47,324 | 218,629 | 199,794 | 186,652 |
Equity In earnings of consolidated subsidiaries | 0 | 0 | 0 | ||||||||
Net income | 218,629 | 199,794 | 186,652 | ||||||||
Comprehensive income | 199,764 | 196,880 | 193,875 | ||||||||
Deluxe Corporation | |||||||||||
Condensed Consolidating Statements of Comprehensive Income | |||||||||||
Product revenue | 0 | 0 | 0 | ||||||||
Service revenue | 113,226 | 78,019 | 9,042 | ||||||||
Total revenue | 113,226 | 78,019 | 9,042 | ||||||||
Cost of products | 0 | 0 | 0 | ||||||||
Cost of services | (120,575) | (83,982) | (7,597) | ||||||||
Total cost of revenue | (120,575) | (83,982) | (7,597) | ||||||||
Gross profit | (7,349) | (5,963) | 1,445 | ||||||||
Operating expenses | 0 | 0 | 0 | ||||||||
Asset impairment charges | 0 | 0 | |||||||||
Net loss on sale of facility | 0 | ||||||||||
Operating income | (7,349) | (5,963) | 1,445 | ||||||||
Loss on early debt extinguishment | (8,917) | ||||||||||
Interest expense | (19,516) | (36,368) | (38,236) | ||||||||
Other income | 10,556 | 9,976 | 7,283 | ||||||||
Income before income taxes | (25,226) | (32,355) | (29,508) | ||||||||
Income tax benefit (provision) | 15,324 | 17,445 | 16,597 | ||||||||
Net income | (9,902) | (14,910) | (12,911) | ||||||||
Equity In earnings of consolidated subsidiaries | 228,531 | 214,704 | 199,563 | ||||||||
Net income | 218,629 | 199,794 | 186,652 | ||||||||
Comprehensive income | 199,764 | 196,880 | 193,875 | ||||||||
Guarantor subsidiaries | |||||||||||
Condensed Consolidating Statements of Comprehensive Income | |||||||||||
Product revenue | 1,378,579 | 1,311,729 | 1,293,257 | ||||||||
Service revenue | 299,484 | 237,712 | 188,767 | ||||||||
Total revenue | 1,678,063 | 1,549,441 | 1,482,024 | ||||||||
Cost of products | (489,590) | (449,603) | (429,432) | ||||||||
Cost of services | (105,824) | (95,776) | (85,693) | ||||||||
Total cost of revenue | (595,414) | (545,379) | (515,125) | ||||||||
Gross profit | 1,082,649 | 1,004,062 | 966,899 | ||||||||
Operating expenses | (737,600) | (677,767) | (664,218) | ||||||||
Asset impairment charges | (6,468) | (5,000) | |||||||||
Net loss on sale of facility | (735) | ||||||||||
Operating income | 345,049 | 319,092 | 297,681 | ||||||||
Loss on early debt extinguishment | 0 | ||||||||||
Interest expense | (11,355) | (12,157) | (8,442) | ||||||||
Other income | 1,978 | 2,496 | 2,027 | ||||||||
Income before income taxes | 335,672 | 309,431 | 291,266 | ||||||||
Income tax benefit (provision) | (119,951) | (109,289) | (105,812) | ||||||||
Net income | 215,721 | 200,142 | 185,454 | ||||||||
Equity In earnings of consolidated subsidiaries | 12,810 | 14,562 | 14,109 | ||||||||
Net income | 228,531 | 214,704 | 199,563 | ||||||||
Comprehensive income | 210,558 | 210,756 | 205,595 | ||||||||
Non-guarantor subsidiaries | |||||||||||
Condensed Consolidating Statements of Comprehensive Income | |||||||||||
Product revenue | 73,415 | 99,129 | 76,454 | ||||||||
Service revenue | 26,433 | 30,047 | 34,962 | ||||||||
Total revenue | 99,848 | 129,176 | 111,416 | ||||||||
Cost of products | (36,717) | (52,268) | (34,055) | ||||||||
Cost of services | (7,987) | (9,693) | (12,532) | ||||||||
Total cost of revenue | (44,704) | (61,961) | (46,587) | ||||||||
Gross profit | 55,144 | 67,215 | 64,829 | ||||||||
Operating expenses | (38,513) | (47,711) | (46,041) | ||||||||
Asset impairment charges | 0 | 0 | |||||||||
Net loss on sale of facility | 0 | ||||||||||
Operating income | 16,631 | 19,504 | 18,788 | ||||||||
Loss on early debt extinguishment | 0 | ||||||||||
Interest expense | (2) | 0 | (3) | ||||||||
Other income | 872 | 601 | 516 | ||||||||
Income before income taxes | 17,501 | 20,105 | 19,301 | ||||||||
Income tax benefit (provision) | (4,691) | (5,543) | (5,192) | ||||||||
Net income | 12,810 | 14,562 | 14,109 | ||||||||
Equity In earnings of consolidated subsidiaries | 0 | 0 | 0 | ||||||||
Net income | 12,810 | 14,562 | 14,109 | ||||||||
Comprehensive income | 362 | 8,398 | 9,862 | ||||||||
Eliminations | |||||||||||
Condensed Consolidating Statements of Comprehensive Income | |||||||||||
Product revenue | 0 | 0 | 0 | ||||||||
Service revenue | (118,320) | (82,554) | (17,658) | ||||||||
Total revenue | (118,320) | (82,554) | (17,658) | ||||||||
Cost of products | 0 | 0 | 0 | ||||||||
Cost of services | 121,484 | 85,044 | 8,193 | ||||||||
Total cost of revenue | 121,484 | 85,044 | 8,193 | ||||||||
Gross profit | 3,164 | 2,490 | (9,465) | ||||||||
Operating expenses | (3,164) | (2,490) | 9,465 | ||||||||
Asset impairment charges | 0 | 0 | |||||||||
Net loss on sale of facility | 0 | ||||||||||
Operating income | 0 | 0 | 0 | ||||||||
Loss on early debt extinguishment | 0 | ||||||||||
Interest expense | 10,574 | 11,996 | 8,380 | ||||||||
Other income | (10,574) | (11,996) | (8,380) | ||||||||
Income before income taxes | 0 | 0 | 0 | ||||||||
Income tax benefit (provision) | 0 | 0 | 0 | ||||||||
Net income | 0 | 0 | 0 | ||||||||
Equity In earnings of consolidated subsidiaries | (241,341) | (229,266) | (213,672) | ||||||||
Net income | (241,341) | (229,266) | (213,672) | ||||||||
Comprehensive income | $ (210,920) | $ (219,154) | $ (215,457) |
Supplemental guarantor financ94
Supplemental guarantor financial information (Condensed Consolidating Statements of Cash Flows) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |||
Condensed Consolidating Statements of Cash Flows | |||||
Net cash (used) provided by operating activities | $ 307,933 | $ 280,395 | $ 261,502 | ||
Cash flows from investing activities: | |||||
Purchases of capital assets | (43,261) | (41,119) | (37,459) | ||
Payments for acquisitions, net of cash acquired | (212,990) | (105,029) | [1] | (69,709) | [2] |
Proceeds from company-owned life insurance policies | 3,973 | 897 | 4,599 | ||
Proceeds from sale of facility | 0 | 8,451 | 0 | ||
Other | 1,138 | 757 | 1,519 | ||
Net cash used by investing activities | (251,140) | (136,043) | (101,050) | ||
Cash flows from financing activities: | |||||
Net proceeds from short-term borrowings | 274,000 | 159,875 | 0 | ||
Payments on long-term debt, including costs of debt reacquisition | (208,062) | (254,403) | (1,555) | ||
Payments for debt issue costs | (749) | (1,085) | (236) | ||
Proceeds from issuing shares under employee plans | 5,895 | 9,148 | 15,948 | ||
Excess tax benefit from share-based employee awards | 2,244 | 4,992 | 3,055 | ||
Payments for common shares repurchased | (59,952) | (60,119) | (48,798) | ||
Cash dividends paid to shareholders | (59,755) | (57,603) | (50,711) | ||
Advances from (to) consolidated subsidiaries | 0 | 0 | 0 | ||
Other | (310) | (150) | 0 | ||
Net cash used by financing activities | (46,689) | (199,345) | (82,297) | ||
Effect of exchange rate change on cash | (9,218) | (4,555) | (2,501) | ||
Net change in cash and cash equivalents | 886 | (59,548) | 75,654 | ||
Cash and cash equivalents, beginning of year | 61,541 | 121,089 | 45,435 | ||
Cash and cash equivalents, end of year | 62,427 | 61,541 | 121,089 | ||
Deluxe Corporation | |||||
Condensed Consolidating Statements of Cash Flows | |||||
Net cash (used) provided by operating activities | 2,467 | (12,298) | (7,462) | ||
Cash flows from investing activities: | |||||
Purchases of capital assets | (3,447) | (1,269) | 0 | ||
Payments for acquisitions, net of cash acquired | (26) | (89,824) | 0 | ||
Proceeds from company-owned life insurance policies | 3,973 | 897 | 3,641 | ||
Proceeds from sale of facility | 0 | ||||
Other | (488) | (432) | 1,181 | ||
Net cash used by investing activities | 12 | (90,628) | 4,822 | ||
Cash flows from financing activities: | |||||
Net proceeds from short-term borrowings | 274,000 | 160,000 | |||
Payments on long-term debt, including costs of debt reacquisition | (208,045) | (254,376) | (224) | ||
Payments for debt issue costs | (749) | (1,085) | (236) | ||
Proceeds from issuing shares under employee plans | 5,895 | 9,148 | 15,948 | ||
Excess tax benefit from share-based employee awards | 2,244 | 4,992 | 3,055 | ||
Payments for common shares repurchased | (59,952) | (60,119) | (48,798) | ||
Cash dividends paid to shareholders | (59,755) | (57,603) | (50,711) | ||
Advances from (to) consolidated subsidiaries | 40,735 | 238,332 | 140,716 | ||
Other | 0 | 0 | |||
Net cash used by financing activities | (5,627) | 39,289 | 59,750 | ||
Effect of exchange rate change on cash | 0 | 0 | 0 | ||
Net change in cash and cash equivalents | (3,148) | (63,637) | 57,110 | ||
Cash and cash equivalents, beginning of year | 8,335 | 71,972 | 14,862 | ||
Cash and cash equivalents, end of year | 5,187 | 8,335 | 71,972 | ||
Guarantor subsidiaries | |||||
Condensed Consolidating Statements of Cash Flows | |||||
Net cash (used) provided by operating activities | 285,962 | 278,281 | 243,906 | ||
Cash flows from investing activities: | |||||
Purchases of capital assets | (37,158) | (38,118) | (32,659) | ||
Payments for acquisitions, net of cash acquired | (212,964) | (15,205) | (69,709) | ||
Proceeds from company-owned life insurance policies | 0 | 0 | 958 | ||
Proceeds from sale of facility | 8,451 | ||||
Other | 1,610 | 1,175 | 326 | ||
Net cash used by investing activities | (248,512) | (43,697) | (101,084) | ||
Cash flows from financing activities: | |||||
Net proceeds from short-term borrowings | 0 | (125) | |||
Payments on long-term debt, including costs of debt reacquisition | 0 | (20) | 0 | ||
Payments for debt issue costs | 0 | 0 | 0 | ||
Proceeds from issuing shares under employee plans | 0 | 0 | 0 | ||
Excess tax benefit from share-based employee awards | 0 | 0 | 0 | ||
Payments for common shares repurchased | 0 | 0 | 0 | ||
Cash dividends paid to shareholders | 0 | 0 | 0 | ||
Advances from (to) consolidated subsidiaries | (40,692) | (236,938) | (139,059) | ||
Other | (160) | (150) | |||
Net cash used by financing activities | (40,852) | (237,233) | (139,059) | ||
Effect of exchange rate change on cash | 0 | 0 | 0 | ||
Net change in cash and cash equivalents | (3,402) | (2,649) | 3,763 | ||
Cash and cash equivalents, beginning of year | 4,342 | 6,991 | 3,228 | ||
Cash and cash equivalents, end of year | 940 | 4,342 | 6,991 | ||
Non-guarantor subsidiaries | |||||
Condensed Consolidating Statements of Cash Flows | |||||
Net cash (used) provided by operating activities | 16,297 | 14,638 | 24,160 | ||
Cash flows from investing activities: | |||||
Purchases of capital assets | (2,656) | (1,732) | (4,800) | ||
Payments for acquisitions, net of cash acquired | 0 | 0 | 0 | ||
Proceeds from company-owned life insurance policies | 0 | 0 | 0 | ||
Proceeds from sale of facility | 0 | ||||
Other | 16 | 14 | 12 | ||
Net cash used by investing activities | (2,640) | (1,718) | (4,788) | ||
Cash flows from financing activities: | |||||
Net proceeds from short-term borrowings | 0 | 0 | |||
Payments on long-term debt, including costs of debt reacquisition | (17) | (7) | (1,331) | ||
Payments for debt issue costs | 0 | 0 | 0 | ||
Proceeds from issuing shares under employee plans | 0 | 0 | 0 | ||
Excess tax benefit from share-based employee awards | 0 | 0 | 0 | ||
Payments for common shares repurchased | 0 | 0 | 0 | ||
Cash dividends paid to shareholders | 0 | 0 | 0 | ||
Advances from (to) consolidated subsidiaries | (43) | (1,394) | (1,657) | ||
Other | (150) | 0 | |||
Net cash used by financing activities | (210) | (1,401) | (2,988) | ||
Effect of exchange rate change on cash | (9,218) | (4,555) | (2,501) | ||
Net change in cash and cash equivalents | 4,229 | 6,964 | 13,883 | ||
Cash and cash equivalents, beginning of year | 52,193 | 45,229 | 31,346 | ||
Cash and cash equivalents, end of year | 56,422 | 52,193 | 45,229 | ||
Eliminations | |||||
Condensed Consolidating Statements of Cash Flows | |||||
Net cash (used) provided by operating activities | 3,207 | (226) | 898 | ||
Cash flows from investing activities: | |||||
Purchases of capital assets | 0 | 0 | 0 | ||
Payments for acquisitions, net of cash acquired | 0 | 0 | 0 | ||
Proceeds from company-owned life insurance policies | 0 | 0 | 0 | ||
Proceeds from sale of facility | 0 | ||||
Other | 0 | 0 | 0 | ||
Net cash used by investing activities | 0 | 0 | 0 | ||
Cash flows from financing activities: | |||||
Net proceeds from short-term borrowings | 0 | 0 | |||
Payments on long-term debt, including costs of debt reacquisition | 0 | 0 | 0 | ||
Payments for debt issue costs | 0 | 0 | 0 | ||
Proceeds from issuing shares under employee plans | 0 | 0 | 0 | ||
Excess tax benefit from share-based employee awards | 0 | 0 | 0 | ||
Payments for common shares repurchased | 0 | 0 | 0 | ||
Cash dividends paid to shareholders | 0 | 0 | 0 | ||
Advances from (to) consolidated subsidiaries | 0 | 0 | 0 | ||
Other | 0 | 0 | |||
Net cash used by financing activities | 0 | 0 | 0 | ||
Effect of exchange rate change on cash | 0 | 0 | 0 | ||
Net change in cash and cash equivalents | 3,207 | (226) | 898 | ||
Cash and cash equivalents, beginning of year | (3,329) | (3,103) | (4,001) | ||
Cash and cash equivalents, end of year | $ (122) | $ (3,329) | $ (3,103) | ||
[1] | Includes adjustments recorded in 2015 for the finalization of purchase accounting for the Wausau acquisition. These adjustments decreased goodwill $714 from the preliminary amount recorded as of December 31, 2014, with the offset to certain income and sales tax accounts. The amount of intangible assets acquired includes assets classified as held for sale upon acquisition of $1,353. | ||||
[2] | Includes adjustments recorded in 2014 for the finalization of purchase accounting for the Destination Rewards acquisition. These adjustments decreased goodwill $1,375 from the preliminary amount recorded as of December 31, 2013, with the offset to intangible assets. The amount of intangible assets acquired includes assets classified as held for sale upon acquisition of $24,502. |
SUMMARIZED QUARTERLY FINANCIA95
SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Quarterly Financial Data [Abstract] | |||||||||||
Total revenue | $ 463,510 | $ 439,816 | $ 435,874 | $ 433,617 | $ 448,513 | $ 413,204 | $ 405,410 | $ 406,955 | $ 1,772,817 | $ 1,674,082 | $ 1,584,824 |
Gross profit | 292,222 | 280,514 | 279,936 | 280,936 | 283,204 | 263,054 | 259,519 | 262,027 | 1,133,608 | 1,067,804 | 1,023,708 |
Net income | $ 59,709 | $ 56,917 | $ 56,063 | $ 45,940 | $ 57,963 | $ 44,431 | $ 50,076 | $ 47,324 | $ 218,629 | $ 199,794 | $ 186,652 |
Earnings per share: | |||||||||||
Earnings per share - basic | $ 1.21 | $ 1.14 | $ 1.12 | $ 0.92 | $ 1.16 | $ 0.89 | $ 1 | $ 0.94 | $ 4.39 | $ 3.99 | $ 3.68 |
Earnings per share - diluted | 1.20 | 1.13 | 1.11 | 0.91 | 1.16 | 0.88 | 0.99 | 0.93 | 4.36 | 3.96 | 3.65 |
Cash dividends per share | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.25 | $ 1.20 | $ 1.15 | $ 1 |
Items affecting comparability of results | |||||||||||
Loss on early debt extinguishment | $ 8,917 | $ 8,917 | $ 0 | $ 0 | |||||||
Net pre-tax restructuring charges | $ 3,078 | $ 1,738 | $ 1,154 | $ 4,355 | $ 3,532 | 6,234 | 9,655 | 10,906 | |||
Reduction in income tax expense for discrete items | $ 1,160 | $ 2,282 | |||||||||
Asset impairment charge | $ 6,468 | $ 0 | $ 6,468 | $ 5,000 |